[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
TRIBAL PROSPERITY AND SELF-DETERMINATION THROUGH ENERGY DEVELOPMENT
=======================================================================
OVERSIGHT FIELD HEARING
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
Tuesday, October 4, 2016 at Santa Fe, New Mexico
__________
Serial No. 114-54
__________
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COMMITTEE ON NATURAL RESOURCES
ROB BISHOP, UT, Chairman
RAUL M. GRIJALVA, AZ, Ranking Democratic Member
Don Young, AK Grace F. Napolitano, CA
Louie Gohmert, TX Madeleine Z. Bordallo, GU
Doug Lamborn, CO Jim Costa, CA
Robert J. Wittman, VA Gregorio Kilili Camacho Sablan,
John Fleming, LA CNMI
Tom McClintock, CA Niki Tsongas, MA
Glenn Thompson, PA Pedro R. Pierluisi, PR
Cynthia M. Lummis, WY Jared Huffman, CA
Dan Benishek, MI Raul Ruiz, CA
Jeff Duncan, SC Alan S. Lowenthal, CA
Paul A. Gosar, AZ Donald S. Beyer, Jr., VA
Raul R. Labrador, ID Norma J. Torres, CA
Doug LaMalfa, CA Debbie Dingell, MI
Jeff Denham, CA Ruben Gallego, AZ
Paul Cook, CA Lois Capps, CA
Bruce Westerman, AR Jared Polis, CO
Garret Graves, LA Wm. Lacy Clay, MO
Dan Newhouse, WA Vacancy
Ryan K. Zinke, MT
Jody B. Hice, GA
Aumua Amata Coleman Radewagen, AS
Thomas MacArthur, NJ
Alexander X. Mooney, WV
Cresent Hardy, NV
Darin LaHood, IL
Jason Knox, Chief of Staff
Lisa Pittman, Chief Counsel
David Watkins, Democratic Staff Director
Sarah Lim, Democratic Chief Counsel
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CONTENTS
----------
Page
Hearing held on Tuesday, October 4, 2016......................... 1
Statement of Members:
Bishop, Hon. Rob, a Representative in Congress from the State
of Utah.................................................... 1
Prepared statement of.................................... 3
Westerman, Hon. Bruce, a Representative in Congress from the
State of Arkansas.......................................... 3
Statement of Witnesses:
Denetsosie, Louis, President and CEO, Navajo Nation Oil and
Gas Company, Window Rock, Arizona.......................... 20
Prepared statement of.................................... 21
Ferguson, Hon. Jack, Confederated Tribes of the Colville
Reservation, Representative, Intertribal Timber Council,
Nespelem, Washington....................................... 11
Prepared statement of.................................... 13
Glenn, Richard, Executive Vice President, Lands and Natural
Resources, Arctic Slope Regional Corporation, Barrow,
Alaska..................................................... 15
Prepared statement of.................................... 17
Henson, Eric, Senior Vice President, Compass Lexecon,
Research Affiliate, Harvard Project on American Indian
Economic Development, Tucson, Arizona...................... 23
Prepared statement of.................................... 25
Olguin, Hon. James M. ``Mike'', Tribal Council Member,
Southern Ute Indian Tribe, Ignacio, Colorado............... 5
Prepared statement of.................................... 7
OVERSIGHT FIELD HEARING ON TRIBAL PROSPERITY AND SELF-DETERMINATION
THROUGH ENERGY DEVELOPMENT
----------
Tuesday, October 4, 2016
U.S. House of Representatives
Committee on Natural Resources
Santa Fe, New Mexico
----------
The committee met, pursuant to call, at 10:00 a.m., at 490
Old Santa Fe Trail, Santa Fe, New Mexico, Hon. Rob Bishop
[Chairman of the Committee] presiding.
Present: Representatives Bishop and Westerman.
The Chairman. Hi. Thank you all for being here. I
appreciate you coming and joining us in this official committee
hearing today.
I actually had to wait until it was after 10:00 just
because of tradition, but you should know, by my time, we are
still 8 minutes early. So, it may be after 10:00, but this is
my time.
The committee is meeting today to hear testimony on the
following topic: ``Tribal Prosperity and Self-Determination
through Energy Development.'' Under Committee Rule 4(f), oral
opening statements at the hearing are limited to the Chairman,
Ranking Member, and any other Member who happens to be here, so
we will all get a chance to say something.
I ask unanimous consent that all Members' opening
statements be made a part of the hearing record if they are
submitted to the Clerk by 5:00 p.m. or if they say them here in
the actual meeting. And hearing no objection, that is so
ordered.
So, let me begin with my opening statement, if I could.
STATEMENT OF THE HON. ROB BISHOP, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF UTAH
The Chairman. I first want to thank the Legislature of New
Mexico for their kindness and cooperation in allowing us to use
this facility. I understand this is the Natural Resources
Committee room for New Mexico, in which case, this is the
appropriate place for us to be. So, thank you for allowing us
to borrow your facilities for this hearing, and particularly
when this is a busy time.
We are gathered here to review what I think is an important
topic. It is an issue at its core that deals with human
dignity, self-determination, and opportunity. These concepts
underlie the relationship between government and people, and
this particular relationship is a little bit different because
tribes and the Federal Government are both sovereigns. A
failure to understand this fundamental difference on the part
of the Federal agencies is one of the reasons why I think we
are here today.
Increasingly, the Federal Government treated tribal lands
like they are Federal lands. Rather than working with tribes to
promote self-governance, Federal agencies have imposed a
cumbersome web of blanket mandates and policies where
consultation is merely an afterthought, not the first step in
the process. In many cases, this is taking place despite policy
from Congress to devolve control over trust lands to the
rightful Indian owners.
For Native communities, the decision to develop their
energy resources can provide a multitude of economic,
educational, and infrastructural benefits. Some tribes have
stated that revenues from energy development fund up to 90
percent of their government operations.
Unfortunately, nearly every aspect of energy development on
tribal lands is influenced or controlled by the Federal
Government, a policy stemming from some old notions that some
people cannot manage their own resources, which is totally
inaccurate.
Many of the laws and regulations that apply to Indian
Country are complex and cumbersome, increasing development
costs and causing delays and uncertainty to the development of
resources on tribal land.
When a tribe wants to lease its trust lands to drill an oil
well, that lease is not valid until it is approved, if it is
ever approved, by the Interior Department, which imposes an
array of regulatory obstacles and investor uncertainty.
Further, if any tribe wishes to enter into an agreement
with a private company, the parties must go through an onerous
49-step process which involves more than 15 Federal agencies
and offices and unelected bureaucrats to acquire a permit for
an energy development project.
As many tribal representatives have testified before
Congress, it is not uncommon for several years to pass before
any determination is made by Interior on whether energy
development projects may move forward. This often leads to less
development on Indian lands than on adjacent Federal property,
and definitely less than on private property.
Many tribes, rich in land and natural resources, suffer
unemployment rates up to 50 percent or higher. They live in
some of the most impoverished conditions known in America
today. The bipartisan Federal policy of promoting tribal self-
determination launched by President Nixon in 1970 cannot be
fully realized as long as there are paternalistic Federal laws
and policies that remain on the books or, as we have seen,
Federal agencies that act beyond what I think is their proper
authority.
Today's hearing is intended to let a number of Native
leaders, as well as an economist, tell us about the impacts of
energy development on tribal lands. This is a source of
legislation that the House has passed, and the Senate passed. I
would like to see it passed in both bodies of the Congress so
we can move forward in this particular area, but I would also
like to see us change the overall policy, so that our goal is
actually to develop the resources that are here, so that tribal
areas have the same benefit of those resources that private and
state lands currently have.
I want this to be both a positive sketch of how tribes are
managing their resources for the benefit of their communities,
and a critical analysis of what more needs to be done with the
Federal obstacles that stand in the way of that development.
[The prepared statement of Mr. Bishop follows:]
Prepared Statement of the Hon. Rob Bishop, Chairman, Committee on
Natural Resources
I first want to thank the Legislature of New Mexico for their
kindness and cooperation in allowing this committee to borrow their
State Capitol facilities for this hearing, particularly during a busy
time for them.
We have gathered here to review an important topic. The issue at
its core deals with human dignity, self-determination and opportunity.
These concepts underlie the relationship between government and people.
In this particular relationship, it's different.
Why? The relationship between tribes and the Federal Government is
between sovereigns. A failure to understand this fundamental difference
on the part of Federal agencies is one reason why we are here today.
Increasingly, the Federal Government has treated tribal lands like
they are Federal. Rather than work with tribes to promote self-
governance, Federal agencies have imposed a cumbersome web of blanket
mandates and policies where consultation is a mere afterthought. In
many cases, this is taking place despite congressional policy to
devolve control over trust lands to their Indian owners.
For Native communities, the decision to develop their energy
resources can provide a multitude of economic, educational,
infrastructural benefits. Some tribes have stated that revenues from
energy development fund up to 90 percent of their government
operations.
Unfortunately, nearly every aspect of energy development on tribal
lands is influenced or controlled by the Federal Government, a policy
stemming from old notions that Natives are incapable of or unwilling to
manage their resources. Many of the laws and regulations that apply to
Indian Country are complex and cumbersome, increasing development costs
and causing delays and uncertainty to the development of energy
resources on tribal land.
When a tribe wants to lease its trust lands to drill an oil well,
the lease is not valid until it is approved--if it is approved--by the
Interior Department, which imposes an array of regulatory obstacles and
investor uncertainty.
Further, if any tribe wishes to enter into agreements with a
private company, the parties must go through an onerous 49-step process
which involves more than 15 Federal agencies and offices--unelected
bureaucrats, to acquire a permit for energy development projects.
Many tribal representatives have testified before Congress that it
is not uncommon for several years to pass before any determination is
made by the Interior on whether energy development project may be able
to move forward. This often leads to less development on Indian lands
than adjacent Federal and private lands.
Many tribes rich in land and natural resources suffer unemployment
rates of 50 percent and higher and live in the most impoverished
conditions known in America today. The bipartisan Federal policy of
promoting tribal self-determination launched in President Nixon's 1970
``Special Message on Indian Affairs'' cannot be fully realized as long
as paternalistic Federal laws and policies remain on the books, or, as
we've seen, Federal agencies act beyond their authorities.
Today's hearing is intended to let a number of Native leaders, as
well as an economist, tell us about the impacts of energy development
on Indian lands. I want this to be both a positive discussion about how
tribes are managing resources for the benefit of their communities, and
a critical analysis of what more needs to be done with the Federal
obstacles that stand in their way.
______
The Chairman. I appreciate everyone being here. I look
forward to the testimony.
I will yield to Mr. Westerman if he wants to say a few
words in opening.
STATEMENT OF THE HON. BRUCE WESTERMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARKANSAS
Mr. Westerman. Thank you, Mr. Chairman. I would also like
to thank the state of New Mexico and the New Mexico legislature
for hosting us today, and I would like to thank Chairman Bishop
for his work in getting out in these field hearings across the
country. I know he spends a lot of time doing that, and it is
an honor to be here with him today.
Like Chairman Bishop, I served in my state legislature in
Arkansas. But before I did that, the first elected office I
held was on the school board. I was just discussing earlier
with someone about how I firmly believe that government is most
effective when it is closest to the people, and those decisions
that are made locally have a big impact on local communities.
The further away the government gets from the decisions that
are being made, the more overbearing, unrealistic, and
unattainable are the goals that need to be accomplished.
When I ran for Congress--and I am in my first term--my
campaign slogan was ``less hassle, more freedom,'' and it was
about this very kind of issue where Americans want to live
their lives with less hassle from the Federal Government, and
they want to have more freedom to raise their families, to
create jobs, to grow communities, and sometimes we get in the
way of that in the Federal Government, which I think is the
classic example of what is happening here with over-reach.
When we look at poverty, the number-one anti-poverty
program has always been a job, and it is the local entities, it
is the tribes, it is the businesses that create jobs. But when
they are working in an environment where they cannot create
jobs, that hurts everyday people who are just trying to make a
living and raise their families.
So, I hope that we can move forward here and put the
decisionmaking where it belongs, and that is in the hands of
the tribes and the local community.
With that, I yield back, Mr. Chairman.
The Chairman. Thank you. I appreciate that, and thank you
for joining us here, Mr. Westerman, and coming from Arkansas to
do it.
I want to thank the witnesses who are going to be here to
provide testimony, both orally as well as for the record. Let
me introduce them to you all at the beginning.
First, the Honorable James M. Olguin, who is a Tribal
Council Member from the Southern Ute Tribe. Thank you for being
with us again.
The Honorable Jack Ferguson, Confederated Tribes of the
Colville Reservation. He is also a representative on the
Intertribal Timber Council. Appreciate you being here.
Mr. Richard Glenn, who is the Executive Vice President,
Lands and Natural Resources for the Arctic Slope Regional
Corporation. Thank you for coming from Alaska to be down here.
Mr. Louis Denetsosie. Did I come close to that? I didn't
come close at all, did I?
[Laughter.]
The Chairman. But anyway, he is a significant player in
this issue as the President and CEO of the Navajo Nation Oil
and Gas Company. So, I thank you even though I slaughtered your
name. I thank you for being here to give your testimony.
And Mr. Eric Henson, who is a Senior Vice President for
Compass Lexecon and a Research Affiliate for the Harvard
Project on American Indian Economic Development.
For the five of you, thank you for being here.
Many of you have testified before. This is still a
congressional hearing, so we will run it under the rules of a
congressional hearing. Anything that you have to add as far as
written testimony will obviously be part of the record. Oral
testimony should be limited to 5 minutes.
This is a smaller gathering. We don't have that many people
here. Usually, I am a stickler with that and I try to cut you
off when the 5 minutes ends. I am not going to do that this
time, unless you go way beyond that. We can be a little bit
more generous as far as the timing because I do appreciate you
taking the time to be here.
But we have the lights in front of you for you to utilize.
When the red light lights, it is trouble time.
With that, I am going to recognize Mr. Olguin first to give
oral testimony that will be in addition to your written
testimony. And once again, I am so grateful for you being down
here. I appreciate it very much.
Mr. Olguin.
STATEMENT OF THE HON. JAMES M. ``MIKE'' OLGUIN, TRIBAL COUNCIL
MEMBER, SOUTHERN UTE INDIAN TRIBE, IGNACIO, COLORADO
Mr. Olguin. Thank you. Good morning, Chairman Bishop and
distinguished members of the committee. My name is Mike Olguin,
and I am the treasurer and a member of the Southern Ute Indian
Tribal Council. It is my great honor to appear before you today
on behalf of the Southern Ute Indian Tribe. Our reservation is
located several hours from here in southwestern Colorado.
As the premiere natural gas producer in the United States,
the Southern Ute Indian Tribe is a great example of the
positive impacts of Indian energy development. We became
involved in oil and gas development on our reservation in the
1940s, and we have increased our participation in the
development process, doing aggressive effort to assume control
over our mineral resources.
In 1982, we enacted a severance tax by which we have
collected $800 million over the last three decades. In 1992,
the tribe started Red Willow Production Company, which operates
wells on the reservation. In 1994, the tribe partnered to
create Red Cedar Gathering Company, which provides gathering
and training services throughout the reservation.
Less than 50 years ago, the Tribal Council had to suspend
the practice of distributing per-capita payments to tribal
members because the tribe could not afford them. Today, the
tribe conducts sizable oil and gas activity in 10 states and is
the largest employer in the Four Corners region. Today, the
tribe provides health insurance for its tribal members and
promises all members a college education.
The tribe is the only tribe in the Nation with a Triple-A-
plus credit rating from Standard and Poor's. Approximately 30
percent of the tribe's income comes from energy development on
the reservation. There is no question that energy resource
development has put the tribe, our members, and the surrounding
community on a more stable economic footing.
We can tell you firsthand that Federal oversight often
impedes tribal self-determination. Despite decades of success
in managing our own affairs and conducting highly complex
business transactions on and off the reservation, the tribe
remains subject to Federal regulations that require Federal
review and approval of even the most basic transactions. This
causes delays and subverts tribal economic development.
For example, the BLM issues building permits on tribal
lands, which takes 4 to 6 months. The state of Colorado issues
building permits on private lands, which typically takes 45
days. Building permits on tribal lands cost $9,500, while
building permits on private lands are free. Operators obviously
prepare to drill on private lands, and, unfortunately for
Southern Ute, our reservation is a combination of tribal and
private lands.
We are here to tell you that willing and able tribes should
be allowed greater authority over energy development on tribal
lands. The tribe has consistently demonstrated that it can
complete major projects more quickly and effectively than
Federal agencies can. Yet, the same agencies often hinder or
flat-out refuse the tribe's efforts to assist in carrying out
their functions.
For example, after a 2014 Office of Trust review and audit
report revealed massive mishandling by the BIA of the tribe's
historical records at the Southern Ute Agency, the tribe made
countless offers to assist the BIA in solving the problem.
Months after the problem was revealed, the BIA finally entered
into a 638 contract authorizing the tribe to scan and organize
the files at the agency. Interior provided $250,000 to fund the
contract, while the tribe contributed more than a million
dollars of its own money and its tribal staff to complete the
scanning project.
As another example, the tribe has a streamlined process of
approving in a single transaction renewals of all rights-of-way
that an operator has on the reservation, usually numbering in
the hundreds. This allows the tribe to easily monitor
expiration dates and negotiate renewals. When the tribe
presented one of these rights-of-way packages to the Southern
Ute Agency for approval, it took the agency approximately 4
years to approve the package because there was no way to enter
the rights-of-way into the Department's Trust Asset and County
Management System, or TAMS.
To overcome this inadequacy of the BIA realty function, the
tribe created its own GIS system known as the Land Information
Management System. This system allows the tribe to scan realty
records into its database, where each document has a location
on the map, a function that TAMS lacks.
It is perfectly clear that the BIA does not have the data,
resources, technological capabilities, or staffing to meet the
needs of the tribe. Meanwhile, the tribe has the capability
and, most importantly, the incentive to improve the situation.
In conclusion, like other energy tribes, the Southern Ute
Indian Tribe's economic prosperity is due in large part to
responsible energy development. The Southern Ute Indian Tribe,
like many other tribes, is well-equipped to responsibly develop
its own energy resources to achieve ever-increasing self-
determination. The tribe respectfully suggests that in some
instances the best way for the United States to uphold its
trust responsibility would be to step aside.
The tribe appreciates the efforts of this committee and
others to encourage tribal self-determination through economic
and energy development. Thank you for this opportunity to
appear before you today, and I would be happy to answer any
questions.
[The prepared statement of Mr. Olguin follows:]
Prepared Statement of the Honorable James M. ``Mike'' Olguin,
Treasurer, Southern Ute Indian Tribal Council on behalf of the Southern
Ute Indian Tribe
introduction
Chairman Bishop and distinguished members of the committee, my name
is Mike Olguin and I am the Treasurer and a Member of the Southern Ute
Indian Tribal Council. Appearing before you today on behalf of the
Southern Ute Indian Tribe is a great honor.
The Southern Ute Indian Reservation consists of approximately
700,000 acres of land located in southwestern Colorado, approximately
311,000 acres of which is held in trust by the Federal Government for
the benefit of the Tribe. As a result of the complex history of the
Reservation, the Tribe also owns severed oil and gas minerals and coal
estates on additional portions of the Reservation that are held in
trust by the United States. The Tribe, which is comprised of just over
1,500 members, is a leader in Indian Country with a demonstrated and
sterling record of foresight and business acumen. The Tribe is the only
tribe in the Nation with an AAA+ credit rating, which was earned
through years of steady governance and successful and prudent business
transactions. Though the Tribe has a diversified portfolio, energy
development remains a key component of the Tribe's strategy.
Approximately 30 percent of the Tribe's income comes from energy
development on the Reservation. Accordingly, we are well positioned to
speak to the relationship between energy development, prosperity, and
tribal self-determination.
careful planning led the southern ute indian tribe to become the
premier indian tribal natural gas producer in the united states
The Southern Ute Indian Tribe is a great example of the positive
impacts of Indian energy development. Our Reservation is part of the
San Juan Basin, which has been a prolific source of oil and natural gas
production since the 1940s. Beginning in 1949, the Tribe began issuing
leases under the supervision of the Secretary of the Interior. For
several decades, we remained the recipients of modest royalty revenue,
but were not engaged in any comprehensive resource management planning.
That changed in the 1970s as we and other energy resource tribes in the
West recognized the potential importance of monitoring oil and gas
companies for lease compliance and keeping a watchful eye on the
Federal agencies charged with managing our resources. In 1974, the
Tribal Council placed a moratorium on oil and gas development on the
Reservation until the Tribe could gain better understanding and control
over the process. That moratorium remained in place for 10 years while
the Tribe compiled information and evaluated the quality and extent of
its mineral resources.
A series of events in the 1980s laid the groundwork for our
subsequent success in energy development. In 1980, the Tribal Council
established an in-house Energy Department, which spent several years
gathering historical information about our energy resources and lease
records. In 1982, following the Supreme Court's decision in Merrion v.
Jicarilla Apache Tribe, the Tribal Council enacted a severance tax,
which has produced more than $800 million in revenue over the last
three decades. After Congress passed the Indian Mineral Development Act
of 1982, we carefully negotiated mineral development agreements with
oil and gas companies involving unleased lands, and insisted upon
flexible provisions that vested the Tribe with business options and
greater involvement in resource development. Because the Tribe's
leaders believed that the Tribe could do a better job of monitoring its
own resources than Federal agencies, shortly after passage of the
Federal Oil and Gas Royalty Management Act of 1982, the Tribe entered
into a cooperative agreement with the Minerals Management Service
permitting the Tribe to conduct its own royalty accounting and
auditing.
In 1992, we started our own gas operating company, Red Willow
Production Company, which was initially capitalized through a
Secretarially approved plan for use of $8 million of tribal trust funds
received by our tribe in settlement of reserved water right claims.
Through conservative acquisition of on-Reservation leasehold interests,
we began operating our own wells and received working interest income
as well as royalty and severance tax revenue. In 1994, we participated
with a partner to purchase one of the main pipeline gathering companies
on the Reservation. Today, the Tribe is the majority owner of Red Cedar
Gathering Company, which provides gathering, processing, and treating
services throughout the Reservation. Ownership of Red Cedar Gathering
Company allowed us to put the infrastructure in place to further
develop and market coal bed methane gas from Reservation lands and
provided an additional source of revenue. Our tribal leaders recognized
that the peak level of on-Reservation gas development would be reached
in approximately 2005, and in order to continue our economic growth, we
expanded operations off the Reservation.
These acts of energy development through self-determination are key
to the Tribe's economic success. Today the Southern Ute Indian Tribe,
through its subsidiary energy companies, conducts sizable oil and gas
activities in approximately 10 states and in the Gulf of Mexico. Today
we are the largest employer in the Four Corners Region. Energy resource
development has unquestionably had a great positive impact on the
Tribe, our members, and the surrounding community. The regional
community college even has a new associate degree program in Tribal
Energy Management, and because of the Tribe's vast experience in this
realm, the college has enlisted the Tribe's assistance and input.
indian energy development has an enormous impact on the economic
prosperity of tribes and the livelihood of individual tribal members
Less than 50 years ago the Tribal Council had to suspend the
practice of distributing per capita payments to tribal members because
the Tribe could not afford them. Today the Tribe provides health
insurance for its tribal members, promises all members a college
education, and has a campus dotted with state-of-the art buildings.
This success was not an accident. Without a prolonged effort to take
control of its natural resources, the Southern Ute Indian Tribe would
not be the economic powerhouse that it is today. Our energy-related
economic successes have resulted in a higher standard of living for our
tribal members. Our members have jobs. Our educational programs provide
meaningful opportunities at all levels. Our elders have stable
retirement benefits. We have exceeded many of our financial goals, and
we are well on the way to providing our grandchildren and their
grandchildren the opportunity to maintain our Tribe and its lands in
perpetuity.
Along the way, we have encountered and overcome numerous obstacles,
some of which are institutional in nature. We have also collaborated
with Congress over the decades in an effort to make the path easier for
other tribes to take full advantage of the economic promise afforded by
tribal energy resources. As we have stated repeatedly to anyone who
will listen to us, ``We are the best protectors of our own resources
and the best stewards of our own destiny; provided that we have the
tools to use what is ours.'' Successful energy development, in spite of
institutional obstacles, has also enabled the Tribe to invest in
diverse, non-energy projects, laying the foundation for long-lasting
economic prosperity. For example, the Tribe has made real estate
investments in 11 markets located in 8 states. These investments
include residential, commercial, industrial, and hotel properties
throughout California, Nevada, Colorado, Texas, Kansas, Illinois, Ohio,
and Maryland. Return on these investments has spurred further economic
growth for the Tribe, which would not have been possible but for the
Tribe's active efforts to control and develop its energy resources.
federal oversight often impedes tribal self-determination
The Tribe has achieved its stature despite the Federal Government's
stifling role in Indian energy development. We have been carrying this
same message to Capitol Hill since at least 2002. A memorandum from our
legal counsel to the Senate Committee on Indian Affairs' legal counsel
dated June 30, 2002 states:
The problems with Secretarial approval of tribal business
activities include an absence of available expertise within the
agency to be helpful . . . Some structural alternative is
needed. The alternative should be an optional mechanism that
allows tribes to elect to escape the bureaucracy for mineral
development purposes, provided the Secretary has a reasonable
indication that an electing tribe will act prudently once cut
free.
More than a decade later, the Tribe's long-standing concerns were
supported by the findings of a 2015 GAO Report that weaknesses in the
Bureau of Indian Affairs' (BIA) management of oil and gas resources
contributed to a general preference by industry to acquire oil and gas
leases on non-Indian lands over Indian lands. This conclusion comes as
no surprise to the Tribe, which is all too aware of this reality. For
example, the state of Colorado, which issues drilling permits on fee
lands, typically issues a permit in approximately 45 days. If the
permit is not issued within 75 days, the operator has a right to a
hearing. In comparison, on tribal lands, BLM issues the permits to
drill, which typically take 4 to 6 months. There are no regulatory
commitments to a processing time frame; operators must simply wait. In
addition, permitting costs are much higher on tribal lands than on fee
lands. The BLM's drilling permit fee is $9,500, and none of that money
goes to the Tribe. In comparison, a state drilling permit in Colorado
is free. These disparities create a problem that is exacerbated on
reservations like the Southern Ute Indian Reservation, where tribal
land and non-Indian fee land are arranged like a checkerboard, and oil
or gas operators can develop on non-Indian fee land for less time and
money, all-the-while depleting Indian minerals.
Despite the Tribe's decades-long success in managing its own
affairs and conducting highly complex business transactions, both on
and off of the Reservation, Federal law and regulations still require
Federal review and approval of even the most basic realty transaction
occurring on the lands held in trust for the Tribe on the Reservation.
Federal involvement invariably delays a proposed tribal project. These
delays are exacerbated by the fact that a Federal approval often
constitutes a Federal action, which triggers environmental and other
review requirements, even for simple and straightforward realty
transactions. In essence, the Tribe's own lands are treated as public
lands, and, if Federal approval is involved, no action--not even some
initiated by the Tribe itself--can occur until the Federal Government
has analyzed the potential impacts. In order to eliminate these delays
and in recognition of the Tribe's ability to protect its own interests
and assets without assistance from Federal agencies, the statutory and
regulatory requirements for Federal approval of tribal transactions
must be modified so that Federal review and approval of realty-related
tribal projects is not required.
The Energy Policy Act of 2005 offered a new and creative
alternative to this situation in the form of ``Tribal Energy Resource
Agreements'' (TERAs), which are essentially bi-lateral agreements
between an electing tribe and the Secretary of the Interior that would
govern energy resource development on Indian lands. Under an approved
TERA, a tribe would have the authority to negotiate and enter leases,
business agreements, rights-of-way and other agreements without the
prior review or approval of the Secretary.
Entering into a TERA would--at least in theory--address the
problems the Tribe has faced. However, the implementing regulations
diminished the scope of authority to be obtained by a TERA tribe by
preserving the Federal Government's prerogative in carrying out an
array of functions--called ``inherently Federal functions'' in the
vernacular--an undefined term that could render the Act's goal of
fostering tribal decision making and self-determination practically
meaningless. Despite the Tribe's repeated requests for clarification of
the TERA process, and in particular, for clarification on what
constitutes an ``inherently Federal function'' for which the Tribe
would not be allowed to assume authority under the Department's
regulations, the Department of the Interior has refused to provide
guidance. Fortunately, Indian energy legislation currently pending
would address other inefficiencies in the TERA process, but does not
address the ``inherently Federal function'' dilemma.
The Department is also hoping that its ``one stop shop'' (the
Indian Energy Service Center) will help address the problem of delays
in energy transaction processing on Indian lands, but the Tribe has
opposed this idea since its inception out of concern that it could pull
already scarce staffing resources from local agencies. Insufficient
staffing at the Southern Ute Agency is a long-standing problem, and the
Regional Office has told the Tribe it could take up to 4 years to
obtain the cost of living adjustment needed to help attract qualified
staff. For a time, the Southern Ute Agency's realty staff consisted of
one administrative assistant. If the creation of the Indian Energy
Service Center will serve as another obstacle to strengthening local
agencies, the Service Center will be no solution at all. The Tribe has
recently learned that the Service Center is now open for business, but
the Tribe has not received official notification of its opening and
neither the Tribe nor the Southern Ute Agency have received
instructions as to how to utilize the Center.
willing and able tribes should be allowed greater authority over energy
development on tribal lands
Some tribes do not need or desire the current level of Federal
interference and ``oversight'' in tribal energy development, and in
some instances like at Southern Ute, the Federal ``oversight'' is a
massive and quantifiable impediment to the Tribe's ability to develop
its own resources. The Tribe has consistently demonstrated that it can
successfully complete major undertakings more quickly and effectively
than Federal agencies can.
For example, after a 2014 Office of Trust Review and Audit (OTRA)
report revealed the massive mishandling of the Tribe's priceless,
historical trust and realty records at the Southern Ute Agency, and
after months of the Tribe virtually begging Interior to be allowed to
help solve the problem, the BIA finally entered into a P.L. 93-638
contract that authorized the Tribe to (largely with the Tribe's own
funding) scan and organize the Bureau's own files at the Southern Ute
Agency before they would be sent to the American Indian Records
Repository. The electronic files will then be sent off site, where they
will be organized in accordance with the Bureau's filing protocol, the
16 BIAM, which has been only loosely followed at the Southern Ute
Agency in past decades. The electronic files are then being indexed
into the Tribe's proprietary Geographic Information System (GIS). This
scanning project, which utilizes $250,000 from the Department of the
Interior and more than $1M of tribal money and the dedication of tribal
staff, is well worth the money to the Tribe. The Tribe is well-equipped
to define and articulate its best interests, yet the ethos of Federal
agencies is to second-guess and over-rule it. This makes no sense,
particularly given that Federal agencies cannot themselves meet the
Tribe's needs, and in at least this instance, was the cause of the
problem.
As another example, the Southern Ute Indian Tribe, as well as
operators on the Reservation, prefer to handle the renewal of an
operator's rights-of-way all at once. This utterly rational approach
allows the Tribe to more easily monitor the end date and renegotiate
renewals when an operator's hundreds of rights-of-way are handled
together. In one instance, the Tribe was even able to leverage the
renewals to require an operator on the Reservation to replace several
grandfathered high pollutant-emitting 1950s-era compressor engines in
lieu of paying compensation for the right-of-way renewal. However, when
the Tribe presented one such ``global rights-of-way'' package to the
Southern Ute Agency for approval, it took the Agency approximately 4
years to approve it. The Tribe later learned that the biggest hurdle to
prompt approval was that there was no effective way to enter the
rights-of-way into the Department's Trust Asset and Accounting
Management System (TAAMS). The unwieldiness of TAAMS has been cited
numerous times as an excuse for delays in energy transaction processing
and as an excuse for why the BIA cannot assist the Tribe. The problem
with the TAAMS system is well documented. (See U.S. Gov't
Accountability Office, GAO-15-502, Indian Energy Development: Poor
Management by BIA Has Hindered Energy Development on Indian Lands;
Office of Inspector General, U.S. Dep't of the Interior, Report No.:
CR-EV-BIA-0011-2014, Bureau of Indian Affairs' Southern Ute Agency's
Management of the Southern Ute Tribe's Energy Resources.)
To improve access to critical mineral resource information and to
avoid being hamstrung by TAAMS, the Tribe's Department of Energy has
scanned its entire set of files and developed an associated GIS system
that allows each document to be linked to a location on a map. Together
the store of digital documents and the GIS make up the Tribe's
Department of Energy's ``Land Information Management System'' and
represents a major improvement to tribal operations. Basically, because
the BIA lacks the technology and sophistication required to manage the
Tribe's energy resources adequately, the Tribe developed its own
database in-house, complete with the GIS module that TAAMS lacks.
Juxtapositions like these--the disparity between the Tribe's
technological acuity as compared to Interior's technological
bankruptcy--make the ``inherent Federal function'' requirement all the
more patronizing and meaningless.
``What is it that we need to do, to help you help us?'' is a common
refrain in meetings between the Southern Ute Tribal Council and
Interior officials. The Tribe has implored the BIA in particular to
accept the Tribe's countless offers to assist. BIA has repeatedly
resisted those offers for reasons that are not particularly compelling.
It is perfectly clear that the BIA does not have the data, resources,
technological capabilities, or staffing to meet the needs of tribes.
The Tribe has data, resources, staffing, technological capabilities,
and the incentive to improve the situation.
The Department constantly cites lack of resources as the reason for
delays, but in the Tribe's experience, it sometimes seems as if more
Federal resources are expended trying to thwart the Tribe's exercise of
self-determination than are spent supporting the Tribe. For example,
when the Agency's records were discovered to be in utter disarray, and
after an OTRA audit resulted in findings of records in jeopardy, the
Tribe tried to assist the Bureau with cleanup and organization.
However, the Bureau told the Tribe that because of its trust
responsibility, tribal employees assisting with the Tribe's records
needed to have extensive background checks, and staff from the BIA's
Albuquerque Area Office met with tribal representatives in Ignacio to
explain that the tribal employees did not have the knowledge and
expertise necessary to assist. To address this, the Tribe had several
of its employees go through the Department's background check process,
which involved a long application, a 160-mile round trip drive to be
finger-printed and have a photograph taken for facial recognition, and
an hour-long interview with an Office of Personnel Management contract
investigator. This process took many months, as did the negotiation of
an MOU to establish the parameters within which the Tribe could provide
assistance. The Tribe even hired local museum archivists to conduct
training on archival techniques for Agency and tribal staff so that the
BIA would allow tribal staff to handle the tribal records that had been
desecrated by the BIA for decades. Time and time again the BIA held up
its trust responsibility to the Tribe as the reason it could not allow
the Tribe to assist.
conclusion
Like other energy tribes, the Southern Ute Indian Tribe's economic
prosperity is due in large part to responsible energy development, and
because of the Tribe's energy resources, tribal members have education,
health, and employment benefits they would not likely otherwise have.
The Southern Ute Indian Tribe, like many other tribes, is well-equipped
to utilize its own energy resources, particularly if given ever-
increasing self-determination, and if limited Federal resources are
used to encourage those efforts rather than stifling them. The Tribe
respectfully suggests that in some instances, the best way for the
United States to uphold its trust responsibility would be to step
aside. The Tribe appreciates the continued efforts of this committee
and others to encourage tribal self-determination through economic and
energy development.
______
The Chairman. Thank you. I appreciate your willingness to
be here.
[Disturbance in Hearing Room.]
The Chairman. I am sorry. This is a congressional hearing,
and this kind of demonstration is not allowed in Congress. So,
if you would walk away, I would appreciate it.
Voice of Law Enforcement Officer. I will ask you again to
leave. There are no signs allowed in here, so you are going to
be asked to leave. So, would you do that, please, before you
are removed? Are you not going to leave? It is simply a yes or
no question. Please leave. You guys need to go. You guys need
to leave. Please do that. Are you going to leave on your own,
or are we going to have to remove you? Come on, let's go.
The Chairman. All right. Now, we will continue to see how
real people can actually be helped in this situation.
Mr. Ferguson, you are the next witness. We appreciate you
being here. You are recognized for 5 minutes for your
presentation.
STATEMENT OF THE HONORABLE JACK FERGUSON, CONFEDERATED TRIBES
OF THE COLVILLE RESERVATION, REPRESENTATIVE, INTERTRIBAL TIMBER
COUNCIL, NESPELEM, WASHINGTON
Mr. Ferguson. Good morning, Chairman Bishop and members of
the committee. My name is Jack Ferguson, and I am a member of
the Colville Business Council, which is the governing body of
the Colville Confederated Tribes of the Colville Reservation. I
also serve as the Colville Tribes' delegate to the Intertribal
Timber Council. My testimony today is on behalf of both the
Colville Tribes and the ITC. I am joined today by Cody
Desautel, the Land and Property Director for the Colville
Tribes, who will be able to answer any type of questions.
As explained in my written statement, both Colville Tribes
and ITC urge Congress to authorize new tools to promote tribal
biomass development and forest help on Federal forest land. The
Colville Reservation is located in North Central Washington
State and covers 1.4 million acres. More than 920,000 of those
acres are forest land, and the reservation borders two national
forests. Colville Tribes has explored woody biomass
opportunities in the past and continues to evaluate
opportunities to make use of on-reservation and neighboring
forest land.
Between fuel costs, hauling distance, access to power grid,
and fluctuating incentives for renewable energy, profit margins
are razor thin for forest biomass energy. Having a reliable
wood supply is absolutely critical for tribes and outside
investors to connect resources to biomass projects.
The Colville Tribes developed the Tribal Biomass
Demonstration Project which is included as Section 6 in
Congressman Don Young's Native American Energy Act. It would
amend the Tribal Forest Protection Act to require Federal
agencies to enter into long-term contracts with Indian tribes
to allow the tribes to develop biomass resources on Federal
lands.
Existing authorities authorize but do not direct Federal
agencies to enter into such arrangements. This new language
would change that and provide a more certain wood supply. It
would also authorize tribes to use on-reservation forest
management practices on those Federal lands that are included
in the demonstration projects.
As this committee has examined in prior areas, tribal
forest management practices are much more sustainable,
effective, and efficient than those of Federal land managers.
We believe that this new demonstration project authority, if
enacted into law, would provide certainty of wood supply and
enhance forest health on Federal lands. The ability to enter
into agreements with terms longer than 10 years, the current
limit under existing authorities, will greatly contribute to
the ability of Indian tribes to secure financing and otherwise
develop biomass projects.
The Colville Tribes and the ITC urge the committee to
ensure that this provision is included in any final version of
a national energy bill.
Congress should provide additional tools to expedite
harvesting of small-diameter logs and improve forest health on
Federal lands. Beyond the biomass demonstration project, the
Colville Tribes and the ITC also believe that Congress should
enact additional tools that would accelerate the harvest of
small-diameter timber on Federal lands. Several of these tools
are currently being discussed as part of the House-Senate
Conference on the national energy bill.
For example, time lines could be added to ensure that the
tribes are able to meaningfully utilize the Tribal Forest
Protection Act. Only a handful of TFPA projects have been
implemented in the last 12 years since enactment. Part of the
reason is that Federal agencies do not have firm deadlines to
complete scoping and planning work for these projects.
Like many other reservations, the Colville Reservation's
forests face imminent threat from pests that have infected
large areas of the Colville and Okanogan National Forests,
specifically the spruce budworm and mountain pine beetle. Some
of the affected areas are currently just a few miles north of
our reservation boundary. Wild land fire from neighboring
Federal lands also continues to pose a danger to the Colville
Reservation. Many areas of the neighboring national forests
contain overstocked stands with fuel loadings well outside
historic ranges. When fires occur on these stands, they are
extremely difficult to manage.
The ITC and the Colville Tribes also support the use of 638
contracting for all Federal departments to allow tribes to
directly conduct TFPA projects to protect their lands and
communities. This authority, also under current discussion in
the House and Senate energy conference, would allow tribes to
bring more of their knowledge of the landscape to Federal
forest management. In the future, the Colville Tribes would
also like to see additional authority to conduct and contract
other Forest Service activities under 638 authority.
Finally, ITC and the Colville Tribes support the provisions
in the Tribal Forestry Participation and Protection Act that
authorize the Secretaries of Agriculture and Interior to work
with tribes to carry out additional forest health projects
using the Federal laws and regulations that are currently used
on tribal trust forests. Again, in our experience, Indian
tribes are far superior forest land managers than Federal
agencies.
The Colville Tribes and the ITC thank the committee for
convening this hearing. This concludes my testimony and I will
be happy to answer any questions that members of the committee
may have.
[The prepared statement of Mr. Ferguson follows:]
Prepared Statement of Jack Ferguson, Member, Colville Business Council,
Confederated Tribes of the Colville Reservation and Board Member,
Intertribal Timber Council
Good morning Chairman Bishop and members of the committee. My name
is Jack Ferguson and I am a member of the Colville Business Council,
the governing body of the Confederated Tribes of the Colville
reservation (``Colville Tribes'' or the ``CCT''). I also serve as the
Colville Tribes' delegate to the Intertribal Timber Council (``ICT'').
My testimony today is behalf of both the Colville Tribes and the ITC
and focuses on the need for Congress to authorize new tools to promote
tribal biomass development and forest health on Federal forest land.
Although now considered a single Indian tribe, the Confederated
Tribes of the Colville Reservation is a confederation of 12 aboriginal
tribes and bands from all across eastern Washington State. The present
day Colville Reservation covers approximately 1.4 million acres and its
boundaries include parts of Okanogan and Ferry Counties. The CCT has
more than 9,400 enrolled members, making it one of the largest Indian
tribes in the Pacific Northwest and the second largest in the state of
Washington. About half of the Colville Tribes' members live on or near
the Colville Reservation. Of the 1.4 million acres that comprise the
Colville Reservation, more than 922,240 acres are forested land.
The Colville Reservation originally consisted of nearly 3 million
acres and included all of the area north of the present day Reservation
bounded by the Columbia and Okanogan Rivers. This 1.5-million-acre
area, referred to as the ``North Half,'' was opened to the public
domain in 1891 in exchange for reserving hunting and fishing rights to
the CCT and its members. Most of the Colville National Forest and
significant portions of the Okanogan National Forest are located within
the North Half. Both forests are contiguous to most of the northern
boundary of the Colville Reservation.
the need for reliable wood supply for biomass projects
Between fuel costs, hauling distance, access to the power grid, and
fluctuating incentives for renewable energy, profit margins are razor
thin for forest biomass energy. As such, certainty of wood supply is
absolutely critical for tribes or third party financiers to invest
resources in biomass projects.
The Colville Tribes developed the Tribal Biomass Demonstration
Project, which is included as section 6 in the Native American Energy
Act (H.R. 538) and was included in versions of that legislation
introduced in prior Congresses. Section 6 would add a new section to
the Tribal Forest Protection Act of 2004 (``TFPA'') that would
establish a 5-year demonstration project. The demonstration project
would require the Secretaries of Agriculture and Interior to enter into
contracts or other agreements with Indian tribes to promote biomass
energy production by providing reliable supplies of woody biomass from
Federal land.
The demonstration project in H.R. 538 would require the applicable
Secretary to enter into at least four new projects during the 5-year
authorization that meet the requisite eligibility criteria--a total of
20 projects. Existing authorities authorize, but do not direct, Federal
agencies to enter into such arrangements. It would also allow for
tribal management practices to apply to areas included in contracts or
agreements entered into under demonstration projects. As this committee
has examined in prior hearings on Indian forest management, tribal
forest sustainable management practices are much more effective and
efficient than those of Federal land managers.
Contracts or agreements entered into under the demonstration
project could have maximum terms of 20 years, with the ability to renew
for additional 10-year terms. The ability to enter into agreements with
terms longer than 10 years--the current limit under existing
authorities--will greatly contribute to the ability of Indian tribes to
secure financing and otherwise develop biomass projects.
The demonstration project is also included in S. 209, which is part
of the House-Senate conference on the Energy Policy Modernization Act
(EPMA). Mandatory agreements with Federal land management agencies like
those provided in the Tribal Biomass Demonstration Project would be
extremely helpful in providing some level of certainty of wood supply
and enhancing forest health on Federal lands. The Colville Tribes and
the ITC urge the committee to ensure that this provision is included in
any final version of the EPMA.
congress should provide additional tools to expedite harvest of small
diameter logs and improve forest health on federal lands
Additional tools should be provided to Federal agencies to
accelerate and sustain the production of small diameter material
available for biomass projects and to otherwise improve forest health
on Federal lands. Like the Native American Energy Act, many of these
tools are currently being discussed as part of the House-Senate
conference on the EPMA. Examples include:
Timelines for TFPA Projects: The TFPA currently allows
tribes to request forest health treatments be conducted on
Federal land adjacent to tribal forests. However, only a
handful of TFPA projects have been implemented in the 12
years since enactment. Like many other reservations, the
Colville Reservation's forests face an imminent threat from
pests that have infected large areas of the Colville and
the Okanogan National Forests, specifically the spruce
budworm and mountain pine beetle. Some of the infected
areas are currently just a few miles north of our
Reservation boundary. Wildland fire from neighboring
Federal lands also continues to pose a danger to the
Colville Reservation. Many areas of the neighboring
national forests contain overstocked stands with fuel
loadings well outside historic ranges. When fires occur on
these stands they are extremely difficult to manage and
pose an extreme risk to the CCT's trust lands.
The ITC and the U.S. Forest Service have worked to improve TFPA
implementation and there is a growing number of projects in
the pipeline. Both the ITC and the Colville Tribes supports
provisions in H.R. 2647, the House substitute amendment to
EPMA, and Senator Daines' ``Tribal Forestry Participation
and Protection Act'' that would improve the certainty and
timeliness of TFPA projects.
638 Authority for TFPA: The ITC and the Colville Tribes
support the use of ``638'' contracting for all Federal
departments to allow tribes to directly conduct TFPA
projects to protect their lands and communities. This
authority, also under current discussion in the EPMA
conference, would allow tribes to bring more of their
knowledge of the landscape to Federal forest management. In
the future, the Colville Tribes would also like to see
additional authority to contract other Forest Service
activities under 638 authority.
Tribal management pilot project: Finally, ITC and the
Colville Tribes support the provisions in the ``Tribal
Forestry Participation and Protection Act'' that authorize
the Secretaries of Agriculture and Interior to work with
tribes to carry out additional forest health projects using
the Federal laws and regulations that are currently used on
tribal trust forests. This is a discretionary, limited
authority under which tribes and Federal land managers can
replicate lessons and efficiencies found on tribal forests.
This authority could also be used to implement section 6 of
the Native American Energy Act and promote biomass.
The Colville Tribes and the ITC appreciates the committee convening
this hearing and its interest in expanding tribes' ability to develop
energy resources.
______
The Chairman. Thank you. I appreciate that.
We next turn to Mr. Glenn of the Arctic Slope Regional
Corporation.
STATEMENT OF RICHARD GLENN, EXECUTIVE VICE PRESIDENT, LANDS AND
NATURAL RESOURCES, ARCTIC SLOPE REGIONAL CORPORATION, BARROW,
ALASKA
Mr. Glenn. Thank you, Chairman Bishop, Member Westerman,
and fellow panelists and guests. My name is Richard Glenn. I am
the Vice President for Lands and Natural Resources----
The Chairman. I am sorry. You are going to be interrupted
again. I apologize for that.
[Disturbance in hearing room.]
The Chairman. All right. Before you start again, let me
express my appreciation to the law enforcement here in New
Mexico for handling this in a very nice, calm, and easy way,
and hopefully no one will interrupt you again.
Mr. Glenn, why don't you start over again?
Mr. Glenn. Thank you, Mr. Chairman.
Mr. Chairman, Member Westerman and committee members,
staff, and my panel guests, I am from Barrow, Alaska, the
northern-most part of the state. I work for Arctic Slope
Regional Corporation as the Vice President of Lands and Natural
Resources. Our region contains eight communities. They are not
connected by any roads, in an area about the size of Montana.
Our residents are Inupiat Eskimos. They rely on a clean
environment for a subsistence lifestyle from the river, the
land, and the ocean. And we also rely on energy development for
the communities that we can come home to from our subsistence
activities.
ASRC was created by the Alaska Native Claims Settlement Act
of 1971. It owns about 5 million acres of land on the North
Slope, much of it with energy and mineral potential.
The story in Alaska is a little bit different, but I am
thankful that the Southern Ute story was told before mine
because I get to save a little bit of time. There are a lot of
parallels between our two stories, but the Alaska story is a
little bit different.
Briefly, the indigenous leadership of Alaska sanctioned the
formation of our tribes. The same leadership at first opposed
and then abided by the terms of the Native Claims Settlement
Act, which extinguished aboriginal title to lands. Tribes
continue to exist but, in general, tribes do not own lands in
our region. The land ownership of formerly tribal land now
exists in these Native-owned regional and village corporations.
In addition to that, we use the tools of the state
government to exercise influence and control and to benefit
from the presence of any industry in our region. In our case,
the only industry that was present was the oil and gas
exploration industry.
In 1972, the residents of our region voted to form a
borough, a county-like government to tax the presence of
industry in our region and to use the taxes to provide quality-
of-life improvements to our communities, to exercise permitting
and zoning controls, and basically to build communities from
scratch.
This story in and of itself is a story of self-
determination. But interwoven with this story is the story of
the regional corporation and its ownership of mineral lands.
Most of the oil and gas produced on Alaska's North Slope has
been produced on state lands, which has been great for tax
benefits and for jobs, but there is no royalty involved
directly to our Native corporations. It was not until the year
2000 that lands began to produce natural resources that were
owned jointly by the state and our Native people.
Yet, this small, brief time of production has yielded great
benefits both to the Native people in our eight communities and
to the Alaska Natives statewide in Alaska. It can be summarized
by the history of production from the Alpine field located in
the Colville River Delta. This is Alaska's Colville River. In
this case, we have joint ownership of the subsurface by the
state and the Alaska Natives of the area, and we have this
little bit of socialism programmed into the Settlement Act that
says for any Native regional corporation that hosts mineral
wealth, 70 percent of that wealth shall be distributed to all
the other regions of the state; and hopefully, if there is
mineral wealth elsewhere, 70 percent of their wealth is
distributed similarly. In this way, there is a fishnet fabric
of sharing of resource revenue.
So, over the course of its production, the alpine field on
Native-owned lands in Alaska has distributed about a billion
dollars to Alaska Natives statewide. If you use the 70/30
formula, about several hundred million, actually equaling tens
of millions of dollars a year has directly benefited Alaska's
North Slope Native people. We have used this resource revenue
to bootstrap our Native Corporation to advance and evolve into
other areas. We are doing things beyond resource development,
and we are engaged in commercial enterprises across the
country.
The story of our history is different, yet, we are a region
that depends on resource development. We have shepherded it and
controlled it to the greatest degree possible, and the story
continues. We are involved in continued exploration of gas and
oil resources in our region, and we have improved the quality
of life for the residents of our small communities.
Thank you.
[The prepared statement of Mr. Glenn follows:]
Prepared Statement of Richard K. Glenn, Executive Vice-President for
Lands and Natural Resources, Arctic Slope Regional Corporation
My name is Richard Glenn and I am a resident of Barrow, on Alaska's
North Slope. I serve as Executive Vice President for Lands and Natural
Resources of Arctic Slope Regional Corporation (ASRC).
about asrc
The Arctic Slope Regional Corporation is 1 of 12 land-owning Alaska
Native regional corporations representing created at the direction of
Congress under the terms of the Alaska Native Claims Settlement Act of
1971 (ANCSA). ASRC's region is the North Slope of Alaska and
encompasses 55 million acres (the informal names ``North Slope'' and
``Arctic Slope'' are geographically identical and are alternately used
when one or the other has become more associated with a given usage or
is a part of a formal name). The North Slope region includes the
villages of Point Hope, Point Lay, Wainwright, Atqasuk, Barrow,
Nuiqsut, Kaktovik, and Anaktuvuk Pass. The North Slope residents of the
villages that I have named are also citizens of the North Slope
Borough, a home-rule municipality. The residents are largely Inupiat
(North Alaskan ``Eskimos''); and they comprise many of the shareholder
owners of ASRC. North Slope village residents depend on subsistence
resources from the land, rivers and ocean, as they have for millennia.
Within this large region ASRC also holds title to approximately 5
million acres of surface and subsurface estate conveyed to it by ANCSA,
much of it with energy, mineral and other resource potential. Among
many other efforts, ASRC pursues and benefits from natural resource
development on and near its lands. Energy development of Native-owned
and State-owned lands is a major component of the success of ASRC and
its region. Energy resource development and in some cases energy
resource ownership have provided for substantial gains in economic
self-determination for ASRC's growing shareholder base of approximately
13,000.
Under ANCSA, Congress created Native corporations, including ASRC,
as profit-making entities ``to provide benefits to its shareholders who
are Natives or descendants of Natives or to its shareholders' immediate
family members who are Natives or descendants of Natives to promote the
health, education or welfare of such shareholders or family members.''
Consistent with this unique mandate, ASRC is committed both to
providing sound financial returns to our shareholders in the form of
jobs and dividends, and to preserving our Inupiat way of life, culture
and traditions, including the ability to hunt for food to provide for
our communities. A portion of our corporate revenues are invested in
initiatives that aim to promote and support an educated shareholder
base, healthy communities and sustainable local economies. Our
perspective is based on the dual realities that our Inupiat culture and
communities depend upon a healthy ecosystem and the subsistence
resources it provides and upon present and future oil and gas
development as the foundation of a sustained North Slope economy.
Perhaps however it is useful to see how Native corporations are related
to Alaska Native tribes and local communities and governments.
why alaska is different: north slope land and resource ownership
Mr. Chairman and committee members, the present layers of local
government, resource ownership and representation in our region can be
very confusing for outsiders, even for those who are familiar with
tribal relations and governance. A brief review may be helpful for some
and is included in my written testimony.
The Native-occupied lands of northern Alaska were never ceded away
by any treaty nor lost in any battle. The Treaty of Cession, which
ratified the United States' 1867 purchase of Alaska from Russia
recognized that the Native residents of Alaska existed and had rights.
Following Alaska's purchase, however, the Alaska Natives' land rights
remained in limbo for generations. While Alaska was still a territory,
the Federal Government appropriated massive swaths of land with little
regard for the land ownership rights of the Natives who lived there (In
the Arctic Slope region there were two: In 1926--the formation of the
23-million acre Naval Petroleum Reserve No. 4 by President Harding, and
in 1960--the formation of the 8-million acre Arctic National Wildlife
Range by President Eisenhower.).
Statehood in Alaska, in 1959, similarly overlooked aboriginal land
and resource ownership rights. The state did allow for the formation of
city (and eventually borough) governments which could tax, zone, and
offer community improvements within their areas of authority, but
offered no method to validate the assertion of aboriginal title.
Against this land ownership vacuum, the exploration for energy
resources around known oil and gas seeps on the North Slope intensified
in the 1960s, including the gobbling up of North Slope lands by the
young state of Alaska for its own benefit. Tensions rose and eventually
action was taken at the Federal level. In 1966 Interior Secretary
Stewart Udall declared that no oil would be developed and no more state
lands would be conveyed to Alaska until the issue of aboriginal title
was resolved. The ``land freeze'' occurred right before the discovery
of the massive Prudhoe Bay oil field in 1968-69. The terms of ANCSA
were negotiated and debated in Congress and eventually ratified by
December of 1971.
The result was the extinguishment of aboriginal land title in
Alaska and the formation of land-owning Native regional and village
corporations. The land base represented a fraction (in ASRC's case
about 10 percent) of the land that was originally claimed by the
Natives. The Federal Government offered a cash settlement as additional
compensation. With the land base and cash settlement as startup assets,
the ANCSA corporations were intended to succeed as profitable
corporations delivering benefits to their Alaskan Native shareholders.
Briefly, the indigenous leadership of the people of the North Slope
sanctioned the formation of what were to become federally-recognized
tribes. The same leadership at first opposed, and then abided by the
terms of ANCSA, which extinguished aboriginal title. Some lands with
resource potential were conveyed back to the Arctic Slope Native
corporations, along with an additional cash settlement. The Federal and
state governments took the remainder of the lands, a taking which still
pains many of those who argued for or against the terms of ANCSA before
ratification. Those of us who came of age during these years are of
mixed views on this history. For the most part the leadership that
negotiated the terms of ANCSA and my colleagues and I at ASRC today
have been trying to make the best of the Act for the benefit of our
shareholders.
Using myself as an example: By virtue of Indian Law, ANCSA law, and
State law, I am a tribal member, a city and Borough resident, and a
village and regional corporation shareholder. My tribe today possesses
many rights similar to those of other Indian tribes, but in general
owns no land or natural resources. My city and more predominantly my
borough governments provide civic infrastructure and quality of life
improvements to communities inhabited largely by our tribal members but
also comprised of citizens of other ethnic groups. And my village and
regional corporations own title to ANCSA-conveyed lands and natural
resources, and have formed for-profit operating subsidiaries that offer
employment and dividend benefits to their shareholders. The
institutions that represent us are thus split into three broad swaths,
yet braided together like rope and operate on our behalf.
energy development as a tool of self-determination--the north slope
borough
The 1972 formation of the North Slope Borough, a state-chartered
home-rule government, was largely driven by the interest of the Inupiat
community in protecting our traditional way of life and exercising
permitting, zoning and taxation controls on the industry that was to
develop after the Prudhoe Bay discovery. The foundational goals of the
North Slope Borough were to protect the environment and to use local
government tools to improve the quality of life in communities within
its boundaries.
By using a strong permitting and zoning process, the Borough today
(as it has ever since its inception) regulates energy development on
its terms to the greatest degree possible. The Borough then taxes the
real property value of the pipelines, drill rigs, and other oil field
production and transportation infrastructure. The Borough uses the
infrastructure-derived tax proceeds to build, operate and maintain
local education facilities and quality of life improvements (airstrips,
roads, reliable power, improved housing and health care centers) in
every one of the villages of our region.
The presence of the oil and gas industry in our region is the
economic base for what have become improvements to our cities and
towns. Our community is empowered by oil and gas development. The North
Slope Borough employs the largest number of village residents on the
North Slope; maintains its own Department of Wildlife Management, which
invests heavily in protecting our subsistence resources; and maintains
stringent permitting requirements for oil and gas companies that
operate within our region. Our people therefore depend on a healthy
Arctic environment to support subsistence species (caribou, waterfowl,
marine mammals, fish and others), and also depend on a healthy energy
industry to provide the tax base that fuels the North Slope Borough
government operations. While these dependencies appear to be in
conflict, it is the view of many on the North Slope that it is a
totally appropriate one.
native ownership of lands and natural resources: the asrc story
For ASRC North Slope energy development presented a related but
different set of opportunities and issues. The lands conveyed to ASRC,
some 5 million acres in total are located in areas that either have
known resources or are highly prospective for oil, gas, coal, and
minerals. Some of the lands are remote and very distant from areas of
current exploration and production. The State and Federal lands of the
North Slope also contain similar energy resource potential. In fact the
overwhelming majority of lands developed in Alaska to date have been on
state-owned lands. The supergiant Prudhoe Bay (initial production in
the 1970s) and Kuparuk River (1980s) fields were discovered and
developed on state-owned lands, for example. Their development was a
boon to the North Slope Borough tax base and to local Alaska Native
corporation contractors offering jobs in oilfield construction and
operations. Generations of ASRC shareholders and North Slope village
residents have explored job opportunities in the development of state-
owned North Slope fields. But the development of the state-owned lands
offered no direct royalty benefits to the shareholders of ASRC.
Exploration and development of oil and gas resources moved westward
from the Prudhoe Bay/Kuparuk fields and eventually toward and into the
Colville River delta. Finally, in the mid-1990s oil discoveries were
made on Colville River delta lands that were owned jointly by the state
of Alaska and Alaska Natives of ASRC (subsurface) and the Kuukpik
Corporation (the surface landowner which was the ANCSA village
corporation representing the people of the Colville River delta village
of Nuiqsut). Facilities were carefully planned and constructed over the
next 10 years and in 2000 production finally began from the ARCO Alaska
Inc.-operated Alpine oil field. ASRC became a royalty revenue owner.
Since production began, the Alpine oil field and its related satellite
fields have produced a half a billion barrels of quality crude oil that
has been shipped down the Trans Alaska Pipeline along with oil from the
Prudhoe/Kuparuk and related fields that continue to produce to this
day. Other Kuukpik/ASRC lands are slated for additional production.
The royalty benefits from the Alpine and satellite fields and from
fields yet to produce represent tens of millions of dollars of benefits
per year to ASRC and its shareholders over the lifetime of production.
In addition a much larger portion of the royalty revenue has been
distributed to all of the regional and village corporations of the
state of Alaska by virtue of a provision in ANCSA that mandated for the
sharing of natural resource wealth between all ANCSA corporations. The
Act states in general, that Seventy Per Cent (70 percent) of natural
resource royalty revenue received by a given regional corporation (and
this includes oil, gas, minerals and timber resources) be shared
amongst all the ANCSA regional corporations within Alaska, who must
also share with the respective village corporations within their
regions. As a result of its Colville River delta royalty position and
the terms of ANCSA, ASRC has shared over a billion dollars to date with
other ANCSA corporations in Alaska. Energy development has thus been a
part of the economic self-determination of every Alaska Native who is a
member of a village or regional corporation.
economic self-determination of alaska's north slope alaska natives
In summary, the development of oil and gas resources in our region
has fostered a stable local tax base that provides local education and
community improvements that would otherwise be lacking or furnished at
great expense by the Federal Government and other agencies. The
development of Native-owned lands has provided a regular stream of
royalty revenue that has allowed ASRC to grow its non-royalty
subsidiaries. Today, royalty revenue is a significant, but not the only
or even the largest contributing sector to ASRC's bottom line, and ASRC
has become the largest privately owned corporation in Alaska.
Meanwhile, ASRC distributes a significant portion of its annual net
income to its shareholders in regularly distributed dividends.
The relationship with energy resources does not stop at the
shoreline. The village of Wainwright, for example, is located within
the ASRC region about 90 miles west of Barrow, Alaska. Wainwright's
Native village corporation, Olgoonik, has been involved in the
preliminary stages of Arctic OCS development. Since 2007, Olgoonik has
supported oil industry activities with marine mammal observers,
communications coordination between the industry and subsistence
hunters, and crew change and supply support services. Olgoonik also has
managed marine science studies in the Chukchi and Beaufort Seas. Other
village corporations as well as ASRC itself have made similar inroads
in this field of work.
And ASRC, along with six of our village corporations, created its
own offshore development company, Arctic Inupiat Offshore (AIO). Where
else in America does BOEM find indigenous people investing proactively
in offshore development so they may be positioned to assure that
development benefits their communities while also protecting their way
of life and culture? AIO representatives believe, by the way, that for
the Bureau of Ocean Energy Management to set aside vast areas of the
Beaufort and Chukchi Seas, or to give up completely on its Arctic Outer
Continental Shelf program, would be to completely fail our Arctic
communities who are not afraid to admit that they depend upon
successful new exploration and production for the survival of our
communities and our Native enterprises.
ASRC itself is engaged in the exploration and development of lands
that are not part of its ANCSA conveyance. It is leasing and exploring
state and federally owned lands much like the major oil companies that
have dominated the history of North Slope exploration and production.
Success in private exploration has the potential to yield many new
benefits to the shareholders of ASRC.
In some parts of the world and some parts of America, indigenous
people have been reduced to conservation refugees within their own
homelands. Energy development on Alaska's North Slope has provided the
wellspring for the growth of economic self-determination of the Natives
of Alaska's North Slope and the whole state of Alaska. We have formed a
home-rule government in our own region and diversified and grown ASRC
into a multi-billion dollar corporation thanks in large part to
successful exploration and development of Native-owned lands. To me,
this sounds like the definition of economic-self determination.
______
The Chairman. Thank you.
Next we will have Mr. Denetsosie from the Navajo Oil and
Gas Company. We recognize you for 5 minutes, please.
STATEMENT OF LOUIS DENETSOSIE, PRESIDENT AND CEO, NAVAJO NATION
OIL AND GAS COMPANY, WINDOW ROCK, ARIZONA
Mr. Denetsosie. Thank you. Chairman Bishop, members of the
committee, members of the public, and fellow presenters, good
morning. My name is Louis Denetsosie. I am the CEO and
President of the Navajo Nation Oil and Gas Company. It is a
corporation owned by the Navajo Nation. I should mention that I
am also former Attorney General for the Navajo Nation.
Right now, NNOGC produces over a million barrels of oil a
year on the Navajo Nation, operates an 87-mile crude oil
pipeline, and operates c-stores on the Navajo Nation. We have
84 employees, and that is down from about 115 since the oil
prices went south.
I thank you for the opportunity to testify here on the
important topic of tribal prosperity and self-determination
through energy development. The Navajo Nation is really a major
story in Indian Country. When the Navajos came back from the
Bosque Redondo, they had 3 million acres. Now they have 17
million acres, and that is through the leadership and the
culture of the people that managed to do this, and the Navajo
has always reinvented itself. Unfortunately, our tribe became
very dependent on coal, oil, and gas and the resource curse,
and it is really time for the Navajo Nation to reinvent itself
again. I heartily agree with Mr. Olguin. It is time for the
government to step aside to let the Indian Nations do their
thing.
They are very self-reliant. They have been in business with
themselves and with the surrounding communities. So, in my
testimony here today, I would like to shed some light on the
barriers and regulatory hurdles faced by the oil and gas
industry and how Congress can help spur more economic activity
by eliminating these barriers.
The main thing with the legislation that is pending for
reconciliation before Congress--and that is H.R. 538 and Senate
Bill 209--we would like to see those reconciled and sent to the
President for his signature. There are some very important
provisions in there, and one of them is to allow Navajo to
issue its own leases.
The Navajo Nation government is a very sophisticated
government. It has its own laws to protect the environment.
There is even fracking legislation pending in the Navajo Nation
Council today. They face many of the same issues that are faced
on the outside. But the Navajo Land Department and other
executive branches of the Navajo Nation, they do a
comprehensive and thorough job of performing environmental,
archaeological, biological, and cultural resource studies of
the impacts on the environment from oil and gas extraction, and
that includes impacts from applications for permits to drill.
We would like this legislation to clarify the Nation's
authority to issue its own oil and gas leases, and at the same
time clarifying that and allowing the Nation to issue
applications for permits to drill. They already approve them
anyway. But let's remove all these different layers of
regulation by the BIA and the Bureau of Land Management and do
away with these redundant approvals that are required to issue
permits, seismic permits and drilling permits. It takes a
minimum of 4 years to start a drilling program on Navajo. That
is really how it goes. Navajo has helium resources sitting in
the ground right now. We can't even touch it.
Therefore, we urge very strongly that the legislation be
reconciled and amendments to 25 U.S.C. 415(e) be passed by the
Council.
As another example, BLM last week announced that they are
adjusting the fee for APDs to $9,610. Well, I have been the
Attorney General, and as a member raised on the Navajo Nation,
I just object to BLM collecting that money on our land,
especially when the Navajo people do all the work for the
issuance of those permits. That should rightfully go to Navajo.
They can collect it on BLM land, fine. But in this case, that
should not apply to Navajo at all, and I am sure it is the same
with other tribes.
With regard to Senate Bill 209, there will be changes to
the requirements for entering into energy resource agreements,
or TERAs. One of the provisions in there is the creation of the
Tribal Energy Development Organization. That is an entity that
would be majority owned by the tribal landowner. Under that
TERA, the tribe can issue leases and rights-of-way to the TEDO,
much like NNOGC, without further BIA approval. Every tribe is a
little bit different, but we like these options, and that
should also go forward, too.
There are very many issues facing Indian Country. I
probably have more time but I like to be brief and make my
pitch for reconciling that legislation. Thank you very much.
[The prepared statement of Mr. Denetsosie follows:]
Prepared Statement of Louis Denetsosie, Chief Executive Officer, Navajo
Nation Oil and Gas Company
Good morning. I am Louis Denetsosie, President and CEO of the
Navajo Nation Oil and Gas Company (``NNOGC'') and a member of the
Navajo Nation. I am also a former Attorney General for the Navajo
Nation. NNOGC produces over a million barrels of oil a year on the
Navajo Nation and operates an 87 mile crude oil pipeline and a number
of c-stores and service stations on the Navajo Nation. NNOGC currently
has 84 employees, virtually all of them tribal members.
Thank you for the opportunity to testify on the important topic of
Tribal Prosperity and Self Determination through Energy Development.
The Navajo Nation has been a major producer of coal for electricity
generation and oil and gas in the Four Corners region of the
reservation. The downturn in these industries has already had an
adverse impact on the Navajo Nation economy as well as NNOGC and will
continue to do so in coming years, therefore it is gratifying to have
the Congress address these issues.
It is hoped that my testimony here will shed some light on some of
the barriers and regulatory hurdles faced by the oil and gas industry
in Indian Country and how Congress can spur more economic activity by
lowering these barriers, including enacting legislation pending for
reconciliation by the House of Representatives and the Senate.
NNOGC is in support of the legislation passed by the House of
Representatives in H.R. 538 (Oct. 8, 2015), titled ``An Act to
facilitate the development of energy on Indian lands by reducing
Federal regulations that impede tribal development of Indian lands, and
for other purposes,'' and similar legislation passed by the Senate in
S. 209, titled ``An Act to amend the Indian Tribal Energy Development
and Self Determination Act of 2005, and for other purposes.'' Enactment
of a reconciled version of these two pieces of legislation by Congress,
and particularly the amendments to 25 U.S.C. Sec. 415(e), is of
tremendous importance to the Navajo Nation and NNOGC. The House version
of those amendments is preferable from a self-determination
perspective, as it would leave any requirement for a 10 year
development period for oil and gas leases to be placed in an operating
agreement or lease in the discretion of the Navajo Nation.
Removing the Bureau of Indian Affairs from the mineral lease
approval process will eliminate unnecessary and burdensome layers of
Federal regulation. The Navajo Nation has a sophisticated three-branch
government. Through its Land Department and other executive branch
agencies, the Navajo Nation comprehensively and thoroughly performs
environmental, archaeological, biological and cultural resource studies
of impacts on the environment from proposed oil and gas extraction,
including impacts from applications for permit to drill (``APDs'').
Clarifying the Navajo Nation's authority to issue its own oil and gas
leases and drilling permits will remove additional layers of regulation
by the Bureau of Indian Affairs and the Bureau of Land Management
(``BLM''). Due to the redundant approvals that are required at present,
it takes approximately 4 years to initiate a drilling program in Indian
Country. That delay can make oil and gas exploration and production
simply uneconomic on the Navajo Nation, and has been a significant
hindrance to energy development by NNOGC. I therefore urge that
reconciled legislation adopting the amendments to 25 U.S.C. Sec. 415(e)
be passed by the House of Representatives.
I would also like to note to the committee that just last week the
BLM announced that it is adjusting the fee for APDs on tribal lands to
$9,610. As a tribal member, I have no objection to the collection of
this fee on BLM lands but any fees collected for APDs issued on Navajo
land should go to the Navajo Nation. The Navajo Nation performs the
vast majority of the environmental studies and evaluations necessary
for issuance of APDs on reservation lands and the services provided by
the BLM relative to APDs are minimal.
From my understanding, S. 209 would also make much needed changes
to the requirements for entering into tribal energy resource
agreements, or ``TERAs,'' under Title V of the 2005 Energy Policy Act,
P.L. 109-58. Although TERAs, once executed between tribes and the
Federal Government, were intended to be a vehicle to improve energy
development in Indian Country by removing requirements for further
Federal approvals, to my knowledge, not a single tribe has entered into
a TERA because the requirements are so onerous. S. 209 would streamline
those requirements and would also create a new option for tribes to
issue, without Federal approval, leases and rights-of-ways on tribal
lands to a certified Tribal Energy Development Organization, or
``TEDO,'' an entity that would be majority owned by the tribal
landowner. Thus, an energy and business arm of the tribe, like NNOGC,
could be certified as a TEDO and no longer have to get BIA approval for
energy development on behalf of its tribal owner. TEDOs and TERAs,
under the proposed amendments to P.L. 109-58, are excellent vehicles
for tribal self-determination in energy development, and I urge that
reconciled legislation adopting this language in S. 209 be passed by
the House of Representatives.
Concerning other regulations not addressed by H.R. 538 and S. 209,
NNOGC has concerns about the proposed BLM regulations to reduce waste
of natural gas from venting, flaring and leaks during oil and natural
gas production activities and establishing when produced gas lost
through venting, flaring or leaks is subject to royalties. The
regulations, which are quite strict, are proposed to be codified at 43
Parts 3178 and 3179. The proposed regulations address an activity
already regulated by states and other departments of the Federal
Government. There are very few oil and gas pipelines on the Navajo
Nation and thus venting and flaring under reasonable regulations is
necessary if the industry is to be viable. For that reason alone, these
regulations should not apply in Indian Country without the consent of
the affected Indian tribe. Moreover, the regulations may be beyond
BLM's delegated authority from Congress. In recently striking down
hydraulic fracturing regulations promulgated by the BLM, the U.S.
District Court for the District of Wyoming ruled that Congress has not
delegated any authority to regulate environmental impacts from oil and
gas activities to the Department of the Interior. See State of Wyoming
et al. v. Department of the Interior et al.,--F.Supp.3d--, 2016 WL
3509415 (D. Wyo. June 21, 2016). That case is on appeal to the Tenth
Circuit Court of Appeals, which will hopefully agree with the District
Court's well-reasoned opinion.
Thank you for the opportunity to provide this testimony, and for
your interest and assistance in improving tribal prosperity and self-
determination in Indian Country and on the Navajo Nation, through
energy development.
______
The Chairman. Thank you. Thank you again so very much.
Mr. Henson, you are, I believe, our economist on the panel,
which means you have a right to be boring if you want.
[Laughter.]
Mr. Henson. I will try not to be.
The Chairman. OK. I recognize you for 5 minutes.
STATEMENT OF ERIC HENSON, SENIOR VICE PRESIDENT, COMPASS
LEXECON, RESEARCH AFFILIATE, HARVARD PROJECT ON AMERICAN INDIAN
ECONOMIC DEVELOPMENT, TUCSON, ARIZONA
Mr. Henson. My name is Eric Henson. I am a citizen of the
Chickasaw Nation, located in Oklahoma. As you heard, I have a
couple of jobs. I work at a place called Compass Lexecon in
Boston, and I do economics consulting full time. I am also a
Research Affiliate at the Harvard Project on American Indian
Economic Development. A very short synopsis of the research
that Harvard has done over the past 32 or so years is something
you have already heard mentioned today--tribal governments do
better when they have control over their own resources. This
squares very nicely with the evolution that we have seen in a
lot of government elections.
The incentives for risk and reward line up better when
those who make the decisions potentially benefit the most from
those decisions, and also potentially suffer the consequences
of bad decisions. Having a Federal authority from thousands of
miles away decide which leases should be approved and what
appraisals should come in at, just does not square with the
kind of risk and reward trade-off we tend to see that really
helps economies in any setting, not just Indian Country.
One of the things everyone here knows is how important
energy development is to a number of tribal lands, particularly
out West and in Alaska. Mr. Glenn and I share the distinction
of growing up in some of the world's greatest oil producing
regions. I went to high school in a tiny little town in west
Texas, and so I personally observed the benefits that can come
with sensible oil and gas development. Of course, those same
kinds of regulatory frameworks that allow that to happen and
increase the right incentives for that to happen apply to all
sorts of Indian resources, including solar, biomass, and
lumber. This is not confined only to hard minerals and
nonrenewables.
As you have heard a couple of people talk about, the
statistics for tribes are still pretty terrible in terms of the
socioeconomic. There is this kind of, I think, knee-jerk
reaction to the notion that, well, tribes have gaming now, so
Indian tribes are not poor anymore. That is really not the
case. We have a great diversity of tribes with incredibly
divergent outcomes in terms of different enterprises. And
gaming, because we have a few examples of large revenues coming
into certain tribes, has tended to unfairly dominate the
conversation. It kind of puts energy development in a bin that
does not get the attention it deserves.
I really support the notion that you are trying to get some
public attention for tribes that do not necessarily have gaming
revenues driving their economies, kick-starting some
development that really does make a big difference to a lot of
people on the reservation and in places like Alaska, not only
those that have the resources in the south.
A few things about the bill itself, H.R. 538. It appears to
me to be on this trajectory now, the TERA and the HEARTH Act
and the ITEDSA exclusive component, components of the HEARTH
Act, or HEARTH-like components to them. I suppose that is a
question that we can get into in the Q&A a little bit about its
somewhat limited scope, Navajo-only and certain limitations
that I would like to know more about in terms of why that
cannot be expanded more broadly across Indian Country.
It has some explicit attempt to get the appraisal process
moving more quickly, and I think that is a really great idea,
and there are a number of other ideas we can probably pursue to
bolster the appraisal process getting done more quickly. I have
done some work for a number of tribes, including places like
the Crow Reservation. Folks up there have these tremendous
delays. I hear from people on the ground about how some of the
delay problems arise from lack of funding at the BIA, lack of
personnel in terms of skill and expertise, and background and
workload. So, there are ways we can address this with maybe the
carrot and the stick in the funding mechanisms, an explicit
time limit, maybe some funding that goes directly to tribes for
appraisals, just take those off the backlog that the BIA has,
some process by which we can approach it from a multi-part
solution rather than just only sticking with time limits for
the BIA to approve.
One of the things I think we ought to keep in mind as we
address the delay in things like appraisals is how incredibly
important the BIA still is to energy development on tribal
lands. In my work with tribes, one thing that you cannot do if
you work 20 years in Indian Country is not recognize the great
diversity that is out there. So, I hear from tribes like the
Southern Ute about the delays that are still tremendously
problematic, and I also hear from other tribes in certain
situations, ``Hey, you know, we have a well-funded, well-
staffed area office, and we have this kind of ability to
utilize some expertise that is already there. It is working for
us as is.''
In any proposed solution, I would urge everyone on the
committee, while drafting legislation, keep in mind the
incredible diversity and leave it in the tribal purview about
how much of this might come under tribal activities versus how
much might stay with the BIA, because the experiences out there
on the ground are very different.
I have heard quite a bit over the last few weeks, as I have
thought about this legislation, about other approaches that
sometimes work, potentially funding appraisal teams inside
tribes, or this notion of a one-stop shop where located close
to Indian Country you can have the expertise instead of relying
on the area offices, and different ways that tribes might be
able to take on some of the backlog of the appraisals
themselves and then run the approvals by the BIA without it
flowing the other direction with this many-months delay we seem
to be having.
That is, I think, my 5 minutes. I will stop there and look
forward to the Q&A.
[The prepared statement of Mr. Henson follows:]
Prepared Statement of Eric Conrad Henson, Senior Vice President,
Compass Lexecon and Research Affiliate, The Harvard Project on American
Indian Economic Development
I would like to take a moment to thank you for the opportunity to
speak to you today in beautiful Santa Fe. My name is Eric Henson, and I
am a Senior Vice President at Compass Lexecon, which is an economics
consulting firm with offices located around the world.\1\ I primarily
work out of the Compass Lexecon offices in Boston, Massachusetts and
Tucson, Arizona. In my economics consulting, I have worked on numerous
projects involving oil and gas development, coal production, electric
utilities, and the energy marketplace more broadly. A number of my
consulting engagements have involved working with Native American
tribes such as the Navajo Nation and the Crow Nation, both of which
have substantial energy resources of the types at issue here. I also
serve as a Research Affiliate with the Harvard Project on American
Indian Economic Development,\2\ and in that position I am engaged in an
ongoing effort to understand what makes tribal economies work best.\3\
I am a citizen of the Chickasaw Nation, and I grew up in one of the
country's great oil producing regions, the Permian Basin of West
Texas.\4\
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\1\ Compass Lexecon is an international economics consulting firm
and is part of FTI Consulting.
\2\ Referred to herein as ``HPAIED'' or ``Harvard Project.'' The
Harvard Project is based at Harvard's John F. Kennedy School of
Government in Cambridge, MA. We partner with the Native Nations
Institute, which is located at the University of Arizona in Tucson, AZ.
The Native Nations Institute provides executive education and
leadership programs, uniquely tailored to senior executives and
managers within Native communities.
\3\ See, e.g., The Harvard Project on American Indian Economic
Development, The State of the Native Nations: Conditions Under U.S.
Policies of Self-Determination, New York: Oxford University Press,
2008.
\4\ I appear today not as a representative of Compass Lexecon or
Harvard University. Furthermore, I have no financial interest in
pending legislation that might impact my opinions in any way.
---------------------------------------------------------------------------
I have a Master's Degree in Public Policy from the John F. Kennedy
School of Government at Harvard University, an MA in Economics from
Southern Methodist University, and a BBA in Business Economics from the
University of Texas at San Antonio. I attended Harvard as the Kennedy
School's Christian Johnson Native American Fellow. I have been engaged
in Indian affairs since graduate school; my Master's thesis at Harvard
examined the importance of a uniform commercial code for economic
development on the Crow Reservation.\5\ I've had the great privilege of
visiting many of the tribal lands we will be discussing today.
---------------------------------------------------------------------------
\5\ A copy of my curriculum vitae was submitted for the Committee
record.
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the harvard project on american indian economic development
Since its inception in 1987, the Harvard Project has collaborated
with Native Nations to understand how and why tribal economies, social
institutions, and political systems either succeed or fail. At the
Harvard Project, my colleagues and I undertake research and teaching
specifically tailored to meet the needs of tribal communities and
tribal leadership.
One of the major questions the Harvard Project has been grappling
with is: How is it that, despite widely cited poverty and social
distress, which is prevalent across numerous American Indian
reservations, more and more tribes have been able to cast off the bonds
of external economic dependence? We have seen an increasing number of
tribes taking part in what we have often referred to as an ``Indian
Renaissance,'' where dynamic self-sustaining economies are created by
tribal actions. These economies are built upon, and supported by,
vibrant political and social institutions. The success stories are
wide-ranging, from the property development and management of the
Tulalip Tribes in Washington State, to sustained energy-based projects
at Southern Ute, to the diverse array of professional and construction
services offered by Ho Chunk, Inc. in Nebraska. Many tribes have begun
actively challenging century-long economic paradigms and demonstrating
effective self-determination and governance. It is curious that,
contemporaneously, a number of other tribes experience continued
economic hardship, high unemployment, rampant social and physical
health challenges, and the like. What might be the causes of the
striking economic and social divergences within Indian Country?
In the first years of HPAIED, the founding researchers recognized
that what was needed in Indian Country was not additional unsolicited
interference from outsiders, but culturally specific educational
programs and research, developed for tribes, and undertaken hand-in-
hand with tribal governments. The results of these studies are
channeled back to those who must deal with the daily challenges of
improving the economies and social conditions in Native communities
(i.e., Indian people working in Indian Country).
In accordance with the above-mentioned approach, graduate students
at the Kennedy School of Government and at the Native Nations Institute
(working in close coordination with tribes) have completed several
hundred projects and field research reports, many of which were on
matters specifically requested by the tribes. These field projects have
ranged from welfare reform at the Navajo Nation to bison ranching at
Cheyenne River, and from judicial reform at Hualapai to ski resort
management for the White Mountain Apache. As part of our organization's
mission, many of these reports are available on our website from which
all tribes can learn.\6\
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\6\ See the Harvard Project website at http://www.hpaied.org/.
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Another important facet of the Harvard Project's work is our
Honoring Nations program. Honoring Nations is a competitive awards
program that identifies, celebrates, and shares outstanding success
stories in tribal governance. We honor tribes that exemplify successful
tribal governance, and to date the Harvard Project has recognized
tribal governmental programs ranging from the Eastern Band of Cherokee
for their Tribal Sanitation Program (in 1999), to the Effective Law
Enforcement Program of the Gila River Police Department (in 2003), to
the Seniors Skilled Nursing Facility at the Tohono O'odham Hospice (in
2008), to the Tribal Fisheries Department at Nez Perce (in 2015). Since
1999, we have honored about 130 tribal governmental initiatives.\7\
HPAIED remains committed to empowering Native Nations through
identifying the common characteristics of tribes that are successfully
charting a course toward a socially, culturally, politically, and
economically healthy future.
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\7\ For more examples, see ``Honoring Nations: Directory of Honored
Programs 1998-2010,'' Honoring Nations Program, The Harvard Project on
American Indian Economic Development, at pages 9 and 11, at http://
hpaied.org/sites/default/files/documents/finalhndirectory.pdf.
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research findings
Prior to the 1980s, there was a notable lack of research pertaining
to economic development in Indian Country. The small amount that was
available contained at least two consistent themes: First, the over-
riding focus of thinking and policymaking was on what the Federal
Government could do to create jobs, raise income, and increase
household wealth. This helped contribute to the unbalanced relationship
between the Bureau of Indian Affairs (``BIA''), other Federal programs,
and the tribes, which often became dependent on Federal funding and
expertise.
Second, the Federal policies and programs that did exist within
Indian Country constituted what we refer to as a ``Planner's Approach''
to economic and community development. The Planner's Approach was
simplistic in treating economic development as a fundamental question
of resources and expertise, as opposed to one of incentives and
institutions. Viewing the world through the lens of the Planner's
Approach, academics, government officials, and tribal leaders
interpreted the underdevelopment seen on reservations as stemming from
a lack of access to financial capital, technical skills, and managerial
expertise. The Planner's Approach typically provided grants and loans
in a well-intended effort to stimulate economic development. However,
this heavy-handed approach was driven by Federal budget allocations and
has had a strong adverse impact on many Native communities. This
approach created a world in which grant writers were always in short
supply and tribal politics revolved around which elected officials
could most effectively capture (or perhaps extract), funds from the
Federal Government. Under the Planner's Approach, what was originally
intended to be a solution to underdevelopment instead seems to have
perpetuated it, degrading the core tenets of economic development into
a series of rent-seeking behaviors.\8\
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\8\ ``Rent seeking'' is a term from economics and occurs when an
organization or individual(s) seeks to obtain economic gain from others
without reciprocating in the form of further wealth creation.
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A fundamental flaw of the Planner's Approach was the erroneous
assumption that a nation's economic development is a mechanical process
that can be achieved by way of the imposition of a predetermined
blueprint. While it is advisable and even advantageous to plan ahead,
it is an exercise of hubris to think that one can ``plan'' an economy,
in the sense of expecting tribal councils, national legislatures, or
Federal planners to correctly select a portfolio of businesses,
projects, and activities that will not only survive, but will meet the
needs of tribal citizens, and will thrive over time.\9\
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\9\ Consider the natural experiment of the German economies after
World War II. The parts of former Germany subjected to market forces
(i.e., West Germany) became a powerhouse of development in post-war
Europe. The parts of the former Germany subjected to centralized
planning (i.e., East Germany) stagnated and the citizenry had to be
forcefully restrained from leaving for better opportunities elsewhere.
For a discussion in the context of Indian Country, see, the Statement
of Joseph P. Kalt, Establishing a Tribal Development Corporation,
Before the U.S. Senate Committee on Indian Affairs, September 20, 2004
(hereinafter, ``2004 Kalt Testimony''), noting that ``Economic
development is an organic process. In an environment in which
opportunities are subject to the vicissitudes of competition and
continually changing marketplace conditions, economic development
occurs as the sum of small, adaptive decisions of myriad individuals
who by luck or preparation are in the right place at the right time to
take advantage of unplanned prospects. Economic development is much
more analogous to tenacious plants looking for places to pop up and
take root, than to an engineered system.''
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The discussion above raises one obvious question: If one cannot
``plan'' an economy to arrive at productive and sustainable
development, what is the alternative? While there is no predetermined
blueprint for success, there are some general tenets for effective,
long-term economic development, and these tenets are now being
demonstrated by a large number of tribes in Indian Country. We have
found that these tenets of sustainable development are applicable to
developing nations the world over, and are being acted upon by many
successful tribes in Indian Country. A discussion of these tenets is
found below, and in contrast to the Planner's Approach, we refer to
tribes that are building their communities under these principles as
governments engaged in a ``Nation Building'' process.\10\
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\10\ For more information on the Nation Building approach, see: The
Harvard Project on American Indian Economic Development, The State of
the Native Nations: Conditions Under U.S. Policies of Self-
Determination, New York: Oxford University Press, 2008, starting at
page 26.
Institutions Matter: The nature of a society's institutions,
whether social, cultural, and/or governmental, determines the
incentives around productive or unproductive activity. Within the scope
of our research, the Harvard Project and the Native Nations Institute
have consistently found that a tribe's economic development is anemic,
or worse, unless the tribe's institutions personify at least three
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characteristics. The key attributes are:
A Rule of Law. A respect for tribal law and the
establishment of legitimate means for dispute resolution.
Separation of Politics from Day-to-Day Administration and
Business Affairs. Enterprises and economic transactions are
free from societal politics and power struggles.
Efficient Bureaucracy. Clarity of procedures, good
recordkeeping, efficient administration processes, reliable
computer networks, and the like.
Culture Matters: Given the importance of institutions within a
society, the social norms and world view of the citizens that interact
with those institutions also matter.\11\ This lesson, observed
repeatedly in our research with Native Nations, is an important tenet
regarding economic development. The importance of local conditions and
political willpower in building and promoting effective institutions as
part of economic development cannot be ignored. However, our research
in Indian Country indicates that, for governing institutions to provide
the foundation upon which sustained economic development can take
place, there first must be a cultural match.\12\
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\11\ Miriam Jorgensen, Bringing the Background Forward: Evidence
from Indian Country on the Social and Cultural Determinants of Economic
Development, Doctoral Dissertation, May 2000, at page 129.
\12\ 2004 Kalt Testimony at pages 13-14.
One can think of cultural match as the consonance between the
structure of a society's formal institutions of governance (and its
economic development initiatives) and its underlying norms of political
power and authority (i.e., culture).\13\ In order to function
effectively, a society's institutions and corresponding economic
development must be consistent with underlying cultural, political, and
organizational norms. Simply put, they must be seen as legitimate in
the eyes of the society's citizenry.
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\13\ 2004 Kalt Testimony at page 14.
Sovereignty Matters: Self-determination is a key issue within
Indian Country and its importance to economic development cannot be
overlooked. There are four inseparable issues connecting sovereignty
and self-determination to economic and community development within
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Indian Country. They are:
Design issues. Without self-determination, it is
impractical (and perhaps impossible) to change institutions
so that they more closely match those of Native Nations and
their unique economic needs.
Ownership issues. Absent a strong sense of ownership, it
is unquestionably difficult to get a local community
involved and interested in the payoff from tribal economic
investments.
Accountability issues. Linked closely with the concept of
ownership, those making the investments and program
decisions need to be held accountable for how all Federal
(and tribal) resources are used.
Leadership development issues. There are an increasing
number of astute, capable, highly experienced leaders
emerging within Indian Country. This is demonstrated by
tribes (and tribal leadership) taking charge of issues
irrespective of historical (or concurrently existing)
Federal support.
After years of research, it has become clear that tribes must have
autonomy in order to foster institutions that are a cultural match for
their societies. Successful tribal governments all exhibit effective
institutions paired with a cultural match. We have come to believe that
this is why policies of sovereignty and self-determination have been
the only strategy that has shown any prospect of breaking the patterns
of poverty and dependence that became so familiar on reservations from
the late 1800s until at least the 1990s. It is only logical that it
requires self-rule for a culture to put in place institutions that are
a cultural match. Thus, we can restate the uniform qualities that have
marked successful economic development in Indian Country as aggressive
assertions of sovereignty, resulting in self-governed institutions that
are characterized by a cultural match. It has repeatedly been shown
that, when a tribe takes control of its institutions and runs them in
congruence with its own cultural norms, the result is a set of
economic, social, and political systems that work for its citizens.\14\
Continued dependence on the Federal Government for grants and guidance
removes accountability for tribal leadership and undermines the
processes necessary for stable and lasting economic development. The
negative results of such dependence should not be surprising.
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\14\ Stephen Cornell and Joseph P. Kalt, ``Reloading the Dice:
Improving the Chances for Economic Development on American Indian
Reservations,'' Joint Occasional Papers on Native Affairs, No. 2003-02,
2003.
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energy development on native american lands
The importance of furthering Native American economic development
and reducing Federal dependence can be highlighted by looking the
socioeconomic conditions of Native American tribes. Consider a few
basic statistics, illustrated in Figures 1 and 2. As shown in Figure 1,
the annual per-capita income of American Indians living on the
reservations has been consistently lower than (and often less than half
that of) the U.S. average. In the period between 2006 and 2010,
American Indians living on reservations had an average per-capita
income of $12,459, compared to the national average of $26,893. Family
poverty levels reflect this same shortfall: despite a decrease from
1990 to 2010, the family poverty rate for Native Americans in the 2006-
2010 time period was 33.5 percent for the Navajo Nation and 31.7
percent for reservations other than Navajo, approximately three times
the U.S. average for that same time period (see Figure 2). Figure 3
further highlights income disparities for Native Americans, with
particular focus on the Crow and Navajo Nations. As the figure shows,
approximately 40 percent of Crow and Navajo people were living in
poverty in 2014, relative to the 15 percent nationally.\15\ A potential
contributing factor to this income disparity in 2014 could be that
employment rates for many tribes, including some of the energy-
producing tribes, lag behind the national average (see Figure 4).
Lagging socioeconomic indicators such as these persist across energy-
producing tribes; consider, for example, the Blackfeet, Sioux and
Tohono O'odham tribes, which, like the Navajo and Crow Nations, are all
endowed with substantial natural resources. Unemployment rates for
these tribes are consistently much higher than the national average
across the United States (unemployment data from 2007 to 2014 are shown
by Figure 5). In 2012, the unemployment rate gap was the highest shown
(at 14.2 percent); in 2008 the divergence in unemployment rates was
``merely'' 7.6 percent.
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\15\ The U.S. Census, American Community Survey (``ACS'') 5-year
data are presented for Figures 3 and 5, because the U.S. Census
typically provides the most complete and reliable data available.
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It is striking that these socioeconomic conditions were (and are)
present on these reservations, despite the tribes' abundance of
valuable and accessible natural resources. The wealth of available
resources available to select tribes is detailed in Figure 6. Data for
all tribes indicate that Indian lands hold almost 30 percent of the
nation's coal reserves west of the Mississippi, 50 percent of potential
uranium reserves, and 20 percent of known oil and natural gas
reserves.\16\ These resources are estimated to be worth approximately
$1.5 trillion.\17\ Figure 7 further illustrates how important tribal
energy resources are. As this figure shows, potential production of
important commodities such as coal, uranium, and oil and natural gas is
substantial. The largest producing states do in fact generate more of
each of these energy sources than the potential from tribal lands, but
the potential from tribal lands eclipses the second largest producing
states (that is, tribal production of coal could be greater than that
of West Virginia, tribal production of uranium could be greater than
that of Texas, and tribal production of oil and gas could be greater
than that of North Dakota).
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\16\ Shawn Regan and Terry L. Anderson, ``Unlocking the Wealth of
Indian Nations: Overcoming Obstacles to Tribal Energy Development,''
Property and Environment Research Center, February 2014 (hereinafter
referred to as ``PERC Report'') at page 4.
\17\ PERC Report at page 4.
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In addition to coal, uranium, oil, and gas, tribal lands also hold
large potential renewable energy resources. Wind, solar, geothermal and
hydroelectric energy are all accessible in many tribal areas, but
relatively few examples exist to demonstrate successful development of
renewable energy supplies. For example, the U.S. Department of Energy
notes that ``Overall, the analysis shows that the technical potential
on tribal lands is about 6 percent of the total national technical
generation potential. This is disproportionately larger than the 2
percent tribal lands in the United States, indicating an increased
potential density for renewable energy development on tribal lands.''
\18\ The potential that tribal energy development represents is largely
untapped; the Department of the Interior indicates that only 2.1
million acres of Indian lands are being developed for their energy
resources, while an additional 15 million acres with energy potential
remain undeveloped. In other words, 88 percent of Indian surface lands
have resources that could provide tremendous economic and social
benefits to a number of tribes, but have yet to be developed.
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\18\ E. Doris, A. Lopez and D. Beckley, ``Geospatial Analysis of
Renewable Energy Technical Potential on Tribal Lands,'' U.S. Department
of Energy, February 2013, at pages 1-2.
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Our meeting today has been arranged so that we can discuss the
potential for enhancing energy development on American Indian lands by
reducing Federal regulations that impede the process. By any measure,
the potential resource base found on tribal lands is substantial. These
largely untapped assets offer significant and unique prospects for
individual citizens as well as entire tribal communities; successful
energy development represents important revenue streams and higher
socioeconomic standards for a number of tribes. If tribes choose to
pursue energy development, they can see benefits from well-managed
development such as well-paying jobs, substantial royalty and tax
revenues to the tribes, and greater access to critical healthcare and
social services, among several others. If these resources remain
effectively inaccessible to tribes, then what is already a set of
complex and difficult socioeconomic challenges that face the most
economically disadvantaged people in the country could easily degrade
further.\19\
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\19\ Maura Grogan, Rebecca Morse and April Youpee-Roll, ``Native
American Lands and Natural Resource Development,'' Revenue Watch
Institute, 2011, at pages 6-7.
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The bill we are discussing today, H.R. 538, looks to streamline
energy development on tribal lands by decreasing Federal oversight and
regulation. Lessening the need for this regulation and oversight moves
toward tribal autonomy and self-governance, and as the research noted
above indicates, successful tribal development will depend on enhanced
tribal decision-making authority over governmental and economic
policies that affect tribal lands and resources.\20\ Promoting
opportunities for tribal self-determination and governance is something
the Federal Government has tried to do over the last several decades,
but has largely fallen short of in regard to energy development.
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\20\ Stephen Cornell and Joseph P. Kalt, ``Two Approaches to
Economic Development on American Indian Reservations: One Works, the
Other Doesn't,'' Joint Occasional Papers on Native Affairs No. 2005-02,
2006, at pages 14-15.
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Congressional efforts to facilitate energy development on tribal
lands include the Indian Tribal Energy Development and Self-
Determination Act (``ITEDSA'') of 2005 (which is part of the Energy
Policy Act of 2005). This legislation was an attempt to give tribes the
option to exercise greater authority over their own energy resources.
Under the ITEDSA, something known as the Tribal Energy Resource
Agreement (``TERA'') allows a tribe, at its own discretion, to enter
into leases, business agreements and right-of-way agreements for energy
development on their lands without review or approval from the
Secretary of the Interior. However, as is well known, not a single
tribe has entered into a TERA agreement, about a decade after passage
of the Act. This lack of adoption of TERAs is due to factors such as
uncertainty about some of the TERA regulations and a complicated,
confusing, and time-consuming application process.\21\
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\21\ Indian Energy Development: Poor Management by BIA Has Hindered
Energy Development on Indian Lands, U.S. Government Accountability
Office, June 15, 2015 (``GAO Report''), at pages 32-33.
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In contrast to the unutilized TERA, the more recent Helping
Expedite and Advance Responsible Tribal Homeownership Act of 2012
(``HEARTH'') provides a model which should help tribes accelerate the
leasing of tribal surface lands.\22\ My understanding is that HEARTH
has as its foundation ideas that were articulated in earlier limited
legislation authorizing tribes such as the Navajo Nation to
independently lease surface lands without Secretarial approval for each
individual lease; HEARTH extended these rights to all tribes.\23\ In
the context of energy, HEARTH allows for projects that lease only
surface land and does not extend tribal leasing authority over
subsurface extraction or exploration. Energy projects on surface land
are often renewable energy projects, such as utility-scale solar or
wind farms. While it is promising that under HEARTH tribes can
implement their own regulations governing the leasing of Indian lands
(including for renewable energy development), such projects have not
yet taken off on tribal lands. As of March 2015 only one utility-scale
wind facility was in operation on tribal land, with one more such
facility and one utility-scale solar facility under construction at
that time.\24\ This is in stark contrast with the significant
developments in utility-scale wind and solar capacity in the United
States. Data indicate that in the decade between 2004 and 2013, 686
utility-scale wind projects and 778 utility-scale solar projects were
constructed nationally.\25\ This difference between renewable capacity
added nationally and on tribal lands illustrates the need to create
further provisions for tribes to develop their energy resources.
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\22\ HEARTH does not cover subsurface leasing or the ability to
grant rights-of-way (Code of Federal Regulations, Title 25--Indians, at
Sec. 162.006(b)(1)).
\23\ Monte Mills, ``New Approaches to Energy Development in Indian
Country,'' The Federal Lawyer, April 2016 (``Mills Report'') at page
53. Under HEARTH, the Pueblo of Sandia was the second tribe (after the
Federated Indians of Graton Rancheria) to be approved for tribal
regulations on their land (U.S. Department of the Interior, ``Secretary
Salazar Signs Historic Agreement in New Mexico to Help Spur Economic
Development in Indian Country,'' March 14, 2013). The Governor of the
Pueblo, Victor Montoya, said at the time he expected HEARTH to aid with
elimination of red tape and quicker negotiations with companies looking
to lease land. With the help of HEARTH, the Pueblo has been working to
develop its airport and improve its retail center (Albuquerque Journal,
``A `historic day' at pueblo,'' March 15, 2013).
\24\ GAO Report at page 2.
\25\ GAO Report at page 3.
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H.R. 538 takes the HEARTH provision of tribal surface land leasing
one step further, specifically in the context of energy development and
the Navajo Nation. Section 8 of the proposed bill contains a provision
to allow the Navajo Nation to lease tribal land for the exploration,
development, or extraction of mineral resources without Federal
approval. This would allow for the Navajo Nation to engage in energy
development beyond projects limited to the surface (i.e., such as
utility-scale solar and wind facilities). It is possible that the
Navajo Nation will benefit from such a provision as it is a tribe with
substantial natural resources, and a capable governmental bureaucracy.
However, Section 8 appears to be narrow in scope; it does not extend
the subsurface leasing rights to tribes more broadly and somewhat
constrains the Navajo Nation's ability to fully exploit energy projects
as the Nation sees fit. Allowing tribes to develop and control their
own resources has, in certain instances, been tremendously successful.
Consider the example of the Red Willow Production Company, which is
owned and operated by the Southern Ute Tribe in Colorado. Red Willow,
which engages in oil extraction in a number of geographic areas and
produces throughout the Western United States and offshore in the Gulf
of Mexico, is but one of five energy companies operated by the Southern
Ute Tribe. The success of the tribe's energy endeavors has allowed it
to create a growth fund worth billions of dollars, and to provide
sizable dividends to the tribe's citizens over a number of years.\26\
Extending this section of H.R. 538 to tribes beyond the Navajo Nation,
in a way that maintains the trust responsibility held by the United
States toward tribes, could promote significant economic and energy
development on tribal lands.
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\26\ PERC Report at pages 17-18.
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In addition to the provision for Navajo subsurface leasing without
Federal approval, H.R. 538 sets out to reduce the time required for the
approval process and lessen the potential for legal challenges (for
example, imposing binding time limits on the appraisal and approval
processes could significantly speed up the time taken to greenlight a
project and prevent bureaucratic delays). Tribal energy development
projects that have been stymied in the past have caused significant
economic damages to tribes, and have led to skepticism in pursuing
tribal projects among nontribal industry participants in the energy
market. Streamlining the Federal appraisal process could make it easier
for tribes to undertake energy development in pursuit of tribally-
driven economic development and determination.\27\ Similarly, language
limiting legal fees that might be recovered by those bringing legal
challenges to energy project could help insulate tribal energy
development projects from costly delays, but may also have unintended
consequences through chilling judicial access for parties that have
legitimate standing to challenge certain developments.
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\27\ Mills Report at page 57. National Congress of American
Indians, ``Policy Update, 2016 Mid-Year Conference,'' 2016, at pages
13-14.
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While tribes such as the Southern Ute are benefiting from energy
development, research has noted that some tribes that engage in the
natural resource industries are often overly and unjustly burdened by
the current system. Cumbersome regulations and/or past mismanagement by
the Federal Government deter some tribes from proceeding with energy
development. Complying with unwieldy Federal regulations and
application processes can be incredibly time-intensive and complex, and
mismanagement and delays of energy projects cost tribes a significant
amount of revenues. Consider one example of bureaucratic impediments
that have stymied energy development for tribes such as the Crow
Nation. In January 2005, the Crow Tribal Council approved an oil and
gas lease on tribal lands,\28\ but development of the resource was
blocked until September 2007 due to the excessively slow review and
approval process in place at the BIA.\29\ Additionally, the Crow Nation
reports that BIA's records for surface and mineral ownership are
repeatedly missing or out-of-date.\30\ Persisting issues and
inefficiencies, layers of regulatory oversight, lack of access to
markets, higher-than-elsewhere permitting costs, and persistent
infrastructure challenges create an environment of uncertainty and
contribute to lackluster economic development.\31\
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\28\ Clair Johnson, ``Crow Tribe signs lease with oil exploration
firm,'' Billings Gazette, May 16, 2005, at http://billingsgazette.com/
news/state-and-regional/montana/crow-tribe-signs-lease-with-oil-
exploration-firm/article85763605-8812-5993-a56d-8717f7c71bff.html. See
also, ``Crow Tribe Signs oil and gas development deal,'' May 17, 2005,
at http://www.indianz.com/News/2005/008205.asp.
\29\ Tribal Development of Energy Resources and the Creation of
Energy Jobs on Indian Lands, Before the House Committee on Natural
Resources, Subcommittee on Indian and Alaska Native Affairs, 112th
Cong. (2011), Statement of Scott Russell, Secretary of the Crow Nation,
at page 13. Delayed approval of oil and gas leases can have a
particularly detrimental impact on the potential revenues earned from
energy development projects in a world of falling oil and gas prices.
In cases where oil and gas prices have fallen significantly in the long
waiting period between application submission and BIA approval, tribes
have seen development opportunities abandoned. Development efforts not
completed have effectively forced certain tribes to forego the
potentially significant revenues that would have started flowing at
higher price levels.
\30\ See, e.g., On Improving Tribal-Corporate Relation in the
Mining Sector: A White Paper on Strategies for Both Sides of the Table,
HPAIED, April 2014, at http://hpaied.org/sites/default/files/documents/
miningrelations.pdf, at page 91.
\31\ Joseph P. Kalt, ``The Mining of Crow Nation Coal: Economic
Impact on Crow Reservation, Big Horn County and Montana,'' February 4,
2014, at page 2.
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Due to these bureaucratic inefficiencies and challenges, the BIA is
not always able to aid tribal energy development to the best of its
capabilities. The BIA is extremely important for the administration and
management of tribal land held in trust by the Federal Government, and
its smooth and timely functioning is essential for tribal energy
development. An understaffed and overburdened BIA impedes tribes from
capitalizing on their own resources. In recent discussions I have had
with those working on the ground in energy development for tribes, I
have heard differing views on the BIA's role. For example, I have found
several instances where a lack of funding, staffing, and expertise at
the BIA acts as a roadblock to the timely energy development that
tribes seek; I have also found that there are instances where tribes
look to the BIA for its built-in expertise and assistance in leasing
oil and gas properties, and report that the area BIA office works
quickly and efficiently.\32\ As tribal experiences with the BIA are not
positive across the board, it is important to reduce inefficiencies and
streamline the BIA's approval and appraisal process. This can be
accomplished by using Federal appropriations to provide the BIA with
more of the funding it needs to increase its staff and expertise and by
providing incentives for quick and timely action by existing BIA
offices.
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\32\ I note that the positive BIA feedback I have recently heard
involves energy leases on tribal lands that are not reservation lands.
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Other options to alleviate the congestion at the BIA include the
possibility of administering block grants and/or setting up additional
offices that serve as ``one-stop shops'' for tribes for appraisals,
regulation enforcement, and administration of lands held in trust by
the Federal Government. In recent discussions I have had with tribes
engaged in energy development, the idea of block grants, or funding
directly to certain tribes to carry out functions typically performed
by the BIA, was largely well-received as a potential way to improve
efficiency in tribal leasing for energy development. These types of
grants could provide a given tribe with a fixed amount of funding for
the tribe to hire third-party appraisers, to hire experts to assist in
negotiating agreements with outside investors and developers, and to
review royalty rate provisions and distribute royalty payments.\33\
Consider the bottleneck that the appraisal process has often become. By
giving tribes funding to cover what it costs to do the appraisals
itself, in some circumstances the BIA could alleviate the backlog in
reviewing lease applications, and reduce the financial burden of
increasing its own staffing to handle a larger number of applications
(and overcome existing backlogs where such backlogs exist).
Additionally, more ``one-stop shop'' offices like the Federal Indian
Minerals Leasing Office (``FIMO'') situated at the Four Corners Region
serving the Navajo, Hopi, Ute and Zuni Tribes should be set up. This
office is the first of its kind, and both its proximity to tribes and
its understanding of conditions on the ground uniquely position it to
help streamline and accelerate projects on tribal lands.\34\ Directing
funding to the establishment of such offices could be beneficial to
energy development for tribes by further alleviating congestion at the
BIA and providing tribes with more accessible expertise.\35\
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\33\ U.S. Department of the Interior, ``Tribal Grant Program to
Assess, Evaluate and Promote Development of Tribal Energy and Mineral
Resources.''
\34\ Office of Natural Resources Revenue, Department of the
Interior, ``Federal Indian Minerals Office,'' March 31, 2016 at http://
www.onrr.gov/IndianServices/fimo.htm.
\35\ Another ``one-stop shop'' is the still-nascent Indian Energy
Service Center in Denver, CO. The Service Center will include personnel
from several relevant segments of the Department of the Interior, and
is expected to provide expertise, policy guidance, standardized
procedures, and technical assistance as needed by tribes (see, e.g.,
Written Testimony of Lawrence Roberts, U.S. Government Accountability
Office Report, ``Indian Energy Development--Poor Management by BIA has
Hindered Energy Development on Indian Lands,'' Before the U.S. Senate
Committee on Indian Affairs, October 21, 2015). While the ``one-stop
shops'' noted here might be beneficial, there are also potential
drawbacks to consider. If not executed properly, these offices may
exacerbate existing bottlenecks to energy development by simply
consolidating them into one location, such as Denver. Offices of this
type may also draw experienced technical advisers away from field
offices where those personnel might have made a greater impact working
more directly with the tribes located nearer the area offices.
---------------------------------------------------------------------------
Energy development is an important goal for tribes, and granting
them the ability to capitalize on their own resources without Federal
impediments will go a long way toward improving socioeconomic
conditions for a number of tribes. This is evidenced by the significant
gains in wealth for those tribes who have been able to develop and
operate their own energy projects and by the significant losses for
those tribes whose efforts have been stymied by failures in the current
Federal system for oversight of these important energy developments.
Streamlining energy development and minimizing Federal oversight that
is inefficient will empower tribes to control their own lands in a more
efficient and beneficial manner. At the same time, it is important to
proceed with any new legislation in a way that maintains the trust
responsibility held by the U.S. Government toward the tribes. The goal
is not to upend the balance of responsibility but to create a business
optimal environment for the tribes and help them benefit from the
resources on their lands. There are several ways to work toward this,
such as extending the subsurface leasing provisions included in H.R.
538 to tribes beyond the Navajo Nation, by providing the BIA with more
funding to increase its staff and reduce the backlog of lease
applications, by providing block grants to tribes for third-party
appraisers, and by establishing more ``one-stop shop'' offices such as
the FIMO.
The efforts I have described here can help promote the development
of Native American energy resources, resulting in benefits to Native
Nations and individual tribal citizens, through both enhanced economic
development opportunities and more efficient exploitation of the energy
resources we are all collectively fortunate to have within the
boundaries of the United States. Clearly, this is an issue that is
worthy of serious consideration by the U.S. Congress, and I thank you
for allowing me to take part in this important discussion.
______
The Chairman. Thank you.
I appreciate all five of you for coming and sharing these
concepts with us, both written as well as oral recommendations.
Now, under Rule 3(e), we have the opportunity for asking
questions, a 5-minute limit for each of the questions, but once
again we can be pretty flexible with that situation here.
I am going to ask Mr. Westerman if he would like to start
the questioning process.
Mr. Westerman. Thank you, Mr. Chairman. I would also like
to thank the witnesses for their time today and for their
enlightening testimony. I mentioned I was a freshman, so a lot
of this is a learning experience to me, and it is beneficial to
be here and to hear what is happening out in the real world.
Mr. Ferguson, you discussed woody biomass projects and how
they are needed not only for economic development but also to
keep forests healthy, and you also talked about how tribes are
better at managing timberland than the Federal Government. I
had a classmate in forestry school who was the president of the
Intertribal Timber Council, and he has testified before this
committee before. I would say that the data that I have seen
from him, as well as other data, strongly supports what you
said about tribes being better timberland managers.
In my home state of Arkansas, we have a lot of forests
there, and in my district it is about 86 percent forested. We
have a problem in Arkansas, the fact that we are growing so
many trees. If you take everything that is harvested,
everything that dies or is destroyed by fire, and then look at
what grows every year, there is about 15 to 16 million tons
more of timber in my state right now than there was at this
time last year. To put that in perspective, every minute our
forests grow a new truckload of logs. So, there is a huge
abundance of wood in my state, and I know that is true in many
other places because we are seeing a lot of forest fires.
I think it is very safe to say that we are at a point right
now where the forests need industry much more than the industry
needs forests, because there is so much timber out there. When
we talk about the benefits of a healthy forest, to keep those
forests working and productive and to reduce insects, disease,
infestation, and ultimately forest fires, we need a home for
that biomass when we take it off of there.
Do you believe that forests are less healthy, and the
environment is in turn less healthy and robust under the
current administration's forest management policies than it
would be under a tribal management policy?
Mr. Ferguson. I do. I am going to lean on Cody for more of
the technical answers on that. But from what I have seen
growing up in the forestry industry and working as a forestry
tech for our tribe, I have to agree with everything you said.
It is apparent on our border with the Federal lands in the
Northwest, the Colville and the Okanogan National Forests, that
the overstocking and--I don't want to call it mismanagement--
but the under-managing has created very bad health issues and
fire hazards. If you were to come to our reservation, we could
show you that.
Just north of our border, just as we have stated, the
health of that forest is in decline. Ours is growing well.
Mr. Desautel. A lot of the problems we face with Federal
land managers is they seem to think that there is one treatment
to fix forest management. Everybody who manages forests
understands that that is not a static forest. There is always
change. So, a forest management activity needs to continue over
time. One forest health treatment does not fix that problem
forever. In the tribe's management we look at 15-year re-entry
cycles to make sure that we continually manage those acres. We
are managing different acres on every entry. We have good
diversity to supply all the ecological needs we have for water
quality, fish habitat, wildlife habitat, cultural plants, those
types of things, along with healthy forests that are resilient
to fires.
What we saw last year, we burned in 2015 upwards of 250,000
acres on a 1.4 million-acre reservation, which is huge. But we
also saw a lot of beneficial fire because of the management
that we have done. We had good early species composition, trees
that are very resilient to fire. We had stands that had very
low stocking. We had opportunities to go in there to catch
those fires, but we had a lack of fire-fighting suppression----
Mr. Westerman. So, you were using good forest management to
keep your forest healthy. But for your neighbor, a Federal
forest that may not be managed as well, the insects, the
disease, the fires, it does not recognize your boundaries.
You mentioned a great point about how forests are dynamic
and constantly changing and need management.
Mr. Chairman, are we going to do a second round of
questions, or should I finish up?
The Chairman. No, we will do more.
Mr. Westerman. OK. I will come back again.
The Chairman. Why don't you both take a seat in front of
the microphones? Thank you for sacrificing your chair.
Let me go to each of you, if I could. One of the things
that we are talking about in our committee is the concept of
consultation, which is in law but sometimes not necessarily
used. Can I ask you your experience dealing with both BIA and
BLM, the Department of the Interior, on how consultation is
working? Is it being done? Is it effective? Could it be
improved? Very quickly, and then I will go through some
specifics.
So, Mr. Olguin, with the Southern Utes, has the Federal
Government been effective in their consultation? Could it be
improved?
Mr. Olguin. From my perspective, and I think speaking on
behalf of the Southern Ute Tribe, there is always going to be
room for improvement. Nothing is perfect. When we look at
consultation, there are so many things that come into play,
whether that is the NACRA, the NEETHA, the air quality, the
clean water. There are so many environmental components that it
really begs the question of are we doing enough to ensure
tribes are consulted on matters that are significant and
important, especially when it comes to areas of territory and
historical use as far as sites and area.
The Southern Ute, as an example, covering the western third
of the state of Colorado, that is a lot of country to cover
from the standpoint of consultation, with a lot of sites that
are significant to us as mountain people. But at the end of the
day, some agencies do better than others. When it comes to the
point of the tribes themselves, they also have to play a very
significant role in this consultation. Receiving a notice or
receiving a letter just does not meet the letter of
consultation as far as the process. It is a dual-pronged
approach where tribes have to be at the table as well to ensure
they provide adequate and significant consultation back to the
agencies.
The Chairman. Mr. Glenn, you have a different kind of
situation up in Alaska than they have on the reservations. Just
respond to that same thing about does consultation work.
Mr. Glenn. Once again you have saved me many words in my
own answer. Consultation exists on the North Slope with the
Federal Government, in my case most directly with the Bureau of
Land Management and the Bureau of Ocean Energy Management. It
does happen, and it does include Alaska's Native Village
Corporations, and even some of the municipalities.
Where I find a weakness in the consultation is in several
ways. At the same time that consultation is invoked, the agency
seems to be apologizing for the fact that they are not doing a
very good job at it. ``Give us some time, we are practicing,
this is all kind of new to us.'' It seems that their approach
to consultation is, ``This is what we are going to do, and we
are here to tell you we are going to do it,'' rather than
meeting with us upstream of the crystallization of their idea,
whatever it is, and having us be informed as to how they got to
that idea, having us affect it one way or another with our
local knowledge, local expertise, and then being a true
consultation.
So again, the letter that says we are making a meeting and
this is a consultation where we have no effect on what they
were going to do anyway, that sounds paternalistic and very
ineffective.
The Chairman. We have to do something a little bit
differently here.
Mr. Denetsosie, let me ask you a specific one. There is
going to be a bending and flaring rule coming out here. Has the
Navajo Nation been consulted by BLM on anything with that
potential rule going forward?
Mr. Denetsosie. I have seen the tribal leader letters, and
I know that the Navajo Nation had a committee member that
attended those meetings. We did that.
The Chairman. I understand there are going to be
consultation sessions with Interior, Justice, and Army that
they have scheduled in the next few months. Do you know if this
is going to be a topic of that conversation?
Mr. Denetsosie. No, I don't.
The Chairman. I only have 45 seconds. Mr. Westerman, let me
go back to you for questions. I have a few more for some of the
other witnesses, as well.
Mr. Westerman. Thank you, Mr. Chairman.
I want to go back to the woody biomass for a moment. We
talked about how important keeping our forests healthy is and
the science behind it. It is good for the environment, it is
good for the economy, better air, better water, better wildlife
habitat, to get more recreational opportunities. There is not a
downside to having healthy forests, and that includes on the
environmental side.
So, with that in mind, do you believe that the Federal
Government is allocating enough resources to research and
demonstration projects, like you mentioned, for woody biomass
compared to other renewable fuels?
Mr. Desautel. I think there is adequate research, but the
research tends to point at the same thing. The woody biomass
utilization is often a cost. It is not necessarily something
that is economically viable by itself. If you mix it with other
forest management activities, I think that is where you have an
opportunity. You can use some of the revenue generated from
commercial timber harvests to cover some of the costs of non-
commercial harvests.
A lot of the national forests that we see up in Washington,
at least, seem to trend toward non-commercial treatments, I
think, just because they are less controversial. They think
they can get those through the NEPA process because people
understand them for fuel treatments, but a lot of times those
treatments are non-commercial. They remove a small amount of
biomass, and they are not necessarily effective for very long
from what we see from fuel treatments in----
Mr. Westerman. One of the drivers in that is the fact that
the energy market is not very well developed around woody
biomass. I went to the National Foundation around the research
labs trying to see if they were doing any research on how to
better capture and extract the energy that is in the woody
biomass, and there was one project they took me to see at the
Lawrence Livermore Lab in Berkeley where they are actually
breaking the biomass down into simple sugars that can be
digested into a whole spectrum of chemicals and fuels, which
has great core economic backbone to it. It would make it cost
effective to go out and harvest woody biomass if you had a
developed market like that.
But it appears to me that we are not out getting enough
resources to develop those markets. We are relying on old
combustion technology to burn this and make steam and
electricity. So, I think we need to push for more research and
more demonstration projects.
Also, this Administration--and this baffles me because we
know the environmental benefits of having healthy forests--they
are very lethargic in recognizing the scientific natural
process of photosynthesis and recognizing woody biomass is a
carbon-neutral material, like most other developed countries
have done.
Do you think this is in any way hindering the development
of woody biomass as a fuel?
Mr. Desautel. Yes, I would agree with that. We have looked
at what the traditional methods are economically, but there
would be other markets, and the investment costs of this is I
think the biggest driver. We have looked at a biomass facility
because we harvest a lot of wood annually, about 77 million
board feet a year, which produces a lot of ton wood and
residues, but it is about $100 million per facility, up to $120
million per facility, and we don't know how many megawatts it
will produce. But again, that is a huge investment, and you
need long-term guarantees on supply to make that kind of
investment. I think that is why this 20-year commitment for a
stewardship contract is a huge part of what would ultimately
bring in an outside investor to build that type of facility.
Mr. Westerman. That is right. We have seen a lot of wood
facilities close down, particularly in the West. If you try to
get investors to come in and utilize this biomass, they are
just not going to invest that kind of money if there is not
some assurance that they can have a forest for their facility
or the life cycle of the facility. That is definitely another
issue I think we need to work on federally, on Federal forests,
to make sure that we have a large landscape-wide stewardship
contract.
Mr. Chairman, I will yield back, and I promise to have a
question about something other than woody biomass next time.
The Chairman. That is OK. You can keep doing the forestry
side. That is your forte.
I am going to go back to consultation because that is
something on which I am still unsure. Let me ask Mr. Olguin and
Mr. Glenn again, you both talked about H.R. 538. The White
House issued a statement of administration policy opposing that
bill, in part because it removes oversight for appraisal of
Indian lands or trust assets.
You described how the Interior Department appraisal process
has been problematic, at best. I guess the question I have is,
before that administrative policy was actually set--Mr. Glenn,
let me ask you--did anyone in the Administration talk to you
before they came up with that policy? The same thing for Mr.
Olguin. Did anyone talk to someone in your tribe before they
actually came up with their policy statement?
Mr. Glenn. No.
The Chairman. OK. That is easy enough.
Mr. Olguin. I don't recall off the top of my head. I don't
think so. Of course, for us, we do our own appraisals.
The Chairman. That becomes troubling as well.
Let me go to the Navajo Oil and Gas Company. APD stands for
what again, Mr. Denetsosie?
Mr. Denetsosie. Application for Permit to Drill.
The Chairman. As you were talking about that, I cannot look
at this in any other way than actually something more than just
a tax on the resources of the Navajo land. Am I looking at this
unfairly? It is not really a user fee. It is actually a tax
just to generate money for the Federal Government?
Mr. Denetsosie. Well, I know that BLM does very minimal
work on the Application for Permit to Drill on Navajo, and the
project preview office does all the studies for that.
The Chairman. So, your nation is actually doing the effort
there?
Mr. Denetsosie. Right, all of it.
The Chairman. And they get the money.
Mr. Denetsosie. So, I see it as a tax, too.
The Chairman. Mr. Henson, let me ask you a question once
again. You talked about how different areas are treated
differently. I think one of the issues, when you were talking
about how it is about 45 days for permitting that you all can
do versus what the state can do, the 4 to 6 years the BIA is
coming up with the permitting, and it is common in some areas,
it is not common in other areas. Some areas are faster than
others. Is this simply based on the incompetence of the Federal
Government, that when you are so far away from the area that
you simply had too much land to manage and it is not going to
be done efficiently or effectively? Or is this a by-product of
staffing decisions? Is the delay because of staffing, or is it
both of them?
Mr. Henson. I think it is probably several things. One is
just kind of aligning the incentives track. If you work in
private industry and you have a deadline, you work very hard to
meet it. If you have little incentive and little potential
upside from getting through a large backlog in a quick and
rapid manner, then you just do not have any incentive to do so.
So, I think some of it is incentives, the dislocation of
potential upside from development happening from those who have
the decisionmaking authority. I have heard quite a lot just in
the last few months from different tribes out West about how
hard it is to attract the right kind of staff, which in a low
price environment for oil and gas it might be the best time in
which you could potentially hire people. Denver, Houston, New
Orleans--there are plenty of folks walking around looking for
jobs these days that have the right kind of expertise. But the
Federal H.R. apparatus is not necessarily set up to identify
those folks, convince them to move to somewhere like Durango,
Colorado, take up a new job working for the Feds, even though
their skills would be the right set of skills.
You have kind of a mismatch in H.R. policies, a mismatch in
the skills available, and funding issues. The BIA is under-
funded in plenty of different ways. The allocation of the risk
and reward, I think, is the critical thing from the economics
perspective, because you do not have an incentive to work
really hard to get that backlog solved when you work for the
Federal Government far, far away.
The Chairman. Mr. Olguin, you were talking to me about
staffing situations you have there. As long as BIA has to
provide that, there is a problem. But I am assuming the tribe
could actually do that work. You are already there. You are
effective. You could handle that one.
Mr. Olguin. Yes. In fact, we do a majority of the work for
the Bureau of Indian Affairs as staff, and it is really that
concept of what do we have to do to help you help us. That is a
model we have been using for quite a few years. Along that
line, what it really entails is because the agency has
struggled with finding competent people, qualified people,
people who understand the responsibilities when it comes to
realty work, because there is no training program out there in
tribal energy development when it comes to paperwork, we are
seeing some very good opportunity with the San Juan College
School of Energy where they are developing this curriculum
right now. It is a long time coming, but when the tribe has to
step in and do the work--and in our case it is very fortunate
that we have hired good people, competent people, and pay them
well, because an issue that does come into play is that the
Federal system is underpaid.
When you look at competition, they are looking for
competitive jobs in the Durango area. Of course, the cost of
living is very high there. When the Bureau does advertise
positions, people do show interest. When they get to the point
of actually accepting the job, all of a sudden they find out
the cost of living is too high, they cannot afford to move
there, so they decline the position. It is a recurring cycle.
We have also experienced situations where not every region
handles realty functions the same. Each region is different.
What people learn through on-the-job training is different.
Some folks do get transferred or get assigned to different
regions. They bring that skill set with them, but it may not
fit with the region where they end up working. So, the
conflicts do create themselves in that respect as well.
The Chairman. Thank you.
Let me change the rules here. I have two more questions.
Let me just throw them out, and then you can finish off the
questioning.
Mr. Westerman. All right.
The Chairman. For as long as you need to.
Look, I appreciate what you are doing. Obviously,
consultation was one of the issues that I would like to see
done differently. Obviously, the process that we go through I
would like to see done smoothly, faster, differently. You are
talking here about how a devolution of these decisions probably
is the only way you can do it, because Indian Country is not
monolithic. There are differences in every one of those.
I have two other specific issues to go into, if I could.
Mr. Glenn, there are Members of the House, even some
members of our committee, who have co-sponsored efforts to try
to make the Slope, the coastal areas and ANWR a wilderness area
or a national monument. They don't ever talk to you guys about
that? And does your area support any of that kind of approach?
Mr. Glenn. In general, we oppose setting aside huge swaths
of land for any reason because even with the best of
intentions, it ends up unfairly limiting our people, the
residents, for any purpose into the future in some
unanticipated way. We set aside a huge corner of our ocean for
a bird called the spectacled eider who hardly nests there in
comparison to where it nests elsewhere. So, we cannot develop
any of our land that directly abuts that coastline. We cannot
access the coastline by any kind of marine transportation
because we are in critical habitat, nesting birds.
Wilderness issues are difficult for us. They present
subsistence access problems in the name of protecting the
environment. Our own people cannot hunt on top of the tundra
for caribou in summertime. We have become more like wards of an
agency rather than citizens of our own land. So, we generally
oppose wilderness and national monuments, and we oppose the
unnecessarily excessive critical habitat designations. We are
the ones who depend on the animals more than anyone else, and
we know what would or would not jeopardize their condition. In
the name of protecting them, the critical habitat designations
do not improve their living environment one iota, and yet they
reduce our ability to access our own land.
So, the short answer, again, is no.
The Chairman. One of my passions back in Congress is the
concept of federalism. I do think that is the solution to our
country's problems. But it also applies here with Indian
Country as well, even though the concepts are not necessarily
always talked about in the same sentence. But the idea of
federalism, it is not liberal, it is not conservative policy.
It is not either small government or big government. It is
simply giving people the choices of having what they want in
their particular area without impacting someone else.
So, if there is a state that wants a robust government,
fine, let them do it, just so it does not impact my state. We
get to make decisions for ourselves. It seems like we are
saying basically the same thing with a lot of these areas in
Indian Country. If we can actually allow you to make those
decisions for yourselves according to your circumstances, those
will be better decisions, those will be wiser decisions, those
will be more effective decisions simply because people want it.
Sometimes when we talk about federalism, people's eyes
glaze over. They don't really understand the term. It is that
essay they did not write when they were a junior in high
school. But what it actually means to me is, as I told a group
of 20-something bloggers once, I said federalism is like an app
for government, and all of a sudden they got excited and their
fingers started dancing on the computer. I still don't know
what I told them.
But it seems that the more you can actually give those
decisions, devolve that decision down, especially when we have
reservations, Indian Country, that already is a sovereign, the
more we can do that, the better off we would be, and we simply
are not moving in that direction.
I just want to ask one other question, Mr. Ferguson. You
talked about forest lands that are under-managed, which I think
is probably a good term to use in Washington State. It impacts
Idaho, Montana, wherever the Forest Service is dominant. As I
am looking at that, there are two factors that I look at with
the Forest Service which makes it difficult for them to manage
their land.
The first one deals with the cost of fighting wildfires,
which is ever-growing. The second biggest cost the Forest
Service has is the litigation. I guess one of the questions I
have is why is that litigation issue not as big in Indian
Country as it is on Federal forest land, and is there not
something we could do to try to mitigate that litigation?
I think in every bill we have had, we have tried to deal
with the concepts of litigation. If we cannot bring the
litigation threat into check, I don't know how we can ever
provide enough money for actually not under-managing the forest
lands.
Do you want to address that, and do you feel comfortable
doing that?
Mr. Ferguson. I think I would feel more comfortable with
Cody. He has dealt with more of this than I have. Just to let
the committee know, I was last minute asked to come.
The Chairman. We appreciate you coming regardless of when
you were asked.
Mr. Desautel. Mr. Chairman, the biggest difference in NEPA
for us, and I think what helps us get through the process
faster, is our scope of public is limited to the tribal
membership. While we hear a lot of the same concerns we hear
from other special interest groups, those groups are just
smaller. The BIA requires if you are going to appeal a project,
that you have to put up a cash bond and you have to show a
vested interest in the project, which I think is very critical.
A lot of times what you see in Federal projects is some college
student from New Hampshire opposes the project just because
they are environmentally friendly and don't understand what the
benefits of the project are. So, I think that is the biggest
difference between them, is the scope of who the public is and
the requirements of what you have to do if you want to oppose a
project.
The Chairman. Thank you for adding that, which I think is
good because, Mr. Westerman, that was part of your bill, wasn't
it?
Mr. Westerman. It was.
The Chairman. OK. I will let you have the last round of
questions.
Mr. Westerman. Thank you again, Mr. Chairman.
We addressed issues earlier where the Federal Government or
this Administration has greatly under-performed. Where I am
from, we say actions speak louder than words. The words I hear
from this Administration is it is all about protecting the
environment. We have to keep this for future generations. But
the actions on the ground are not part of protecting the
environment or helping out future generations, or helping
current generations get out of poverty.
Mr. Chairman, I think this goes along with what we were
just talking about. You referenced the Administration's
opposition to H.R. 538 earlier. I would just like to quote what
the Administration said, why they oppose H.R. 538. They said,
``It would undermine the public participation and transparency
of review of projects on Indian lands under the National
Environmental Policy Act, set unrealistic deadlines, remove
oversight for appraisals of Indian lands for trust assets,
prohibit awards under the Equal Access to Justice Act, or
payment of fees or expenses to a plaintiff from the judgment
fund and energy-related actions.''
When they say it would prohibit awards under the Equal
Access to Justice Act, I am not sure if everybody understands
what that means, that the Federal Government will pay you to
sue the Federal Government. The Administration, I think it is
more about protecting special interests than protecting the
environment and preserving it for future generations.
So, as we transition from their under-performance more to
their over-reach, we see that a lot of these regulations,
particularly with the tribes, are duplicative. There are
already regulations and rules in place to address the issues
that the Federal Government is coming in and trying to put
layers on top of layers.
I just want to open it up to the panel to maybe talk about
some of the specific duplicative regulations and how they
directly impact what you are trying to do on the tribal lands
from a cost standpoint and a development standpoint. Does
anybody want to jump on that first?
Mr. Glenn. I have a couple of examples. Thank you.
I think that no one has done more in recent times to
elevate the visibility of tribes than this Administration at
the very top. But at the same time, at the administrative
levels, we have encountered so many instances where issues of
duplicative safeguarding or duplicative actions in the name of
safeguarding start to take multiple bites at the apple, overly
excessive, to the detriment, like you said, of the people who
are living there and not really helping the stated goal of
safeguarding the environment for future generations. So, there
is a disconnect there.
One example is mitigation, wetlands mitigation or
mitigation in general, which says if you disturb an acre of
environment over here with a project, you should preserve an
acre of environment over there, somewhere else, some similar
landscape classification system. Sometimes they use a
multiplier; if you disturb 1 acre, you have to save 3, or 5, or
10 acres, depending on the classification of the landscape,
which sounds like a pretty good system if you somehow have an
ability to weigh in on what should be the exchange rate.
But my problem with the overall concept of mitigation is
you have multiple agencies looking for mitigation for the same
project. So, you will have Wetlands mitigation, Corps
mitigation, NEPA mitigation, Fish and Wildlife Service
mitigation, overall BLM mitigation. Now each one of their
agencies are taking their pound of flesh from the same project,
and the project can only tolerate so much. It has its own
checks and balances. One of them includes whether or not it is
financially viable. If you start to overly burden a project
with mitigation, even with the best of intentions, then away
goes the project, and now you have people who are hurting for
more industry. They are in more poverty. They are in need of
more Federal programs. So, on a big, global scale, good
intentions end up with bad results, and mitigation is just one
example.
Mr. Westerman. I would like to say, in the forestry sector,
we are loving the trees to death and not doing what we need to
help them.
Mr. Henson. I have one thing on what the layers of overlap
are and what the impacts are. I think you were trying to
address this here, but it kind of gets lost a little bit in the
shuffle, and that is how incredibly important energy projects
are for certain tribes.
I think for the Crow, two-thirds of the tribal budget is
not directly from Federal dollars. It comes from the single
production line they have in the mine. We heard some factoids
about how, for the Jicarilla Apache, 90 percent of their tribal
budget is oil and gas production. Today, we heard for the
Southern Ute, 30 percent of the tribal budget is on-reservation
oil production and gas production. For the Navajo, 90 percent
of the workforce is Native.
One thing that happens when you stymie the next development
is you prevent the hiring of that next 90 percent of Native
workers. In lots of places where the unemployment rate is
really high, sometimes the best jobs available in terms of
skill set, pay, employment security, really do depend on these
types of projects. So, to the extent you can help bring tribes
into their next energy development project, you are really
talking about real people, real jobs, living wages, important
impacts on the individual tribal citizens that I think kind of
gets overlooked a bit.
And the second layer of that is one of the great things
about a lot of the revenues that these things generate, because
they tend to go into the tribal general funds, is they allow
things like we heard mentioned by Mr. Glenn, diversification
into a wide array of industries, sectors, and diversification
of energy development. Not all your development is in Alaska
and small towns. You are able to really diversify your
portfolio of investments and secure long-term revenues, long-
term job security, and long-term educational opportunities for
a wide range of people. A lot of that does not depend on the
next mine shaft at Navajo, but on your ability to use those
revenues very broadly.
So, I encourage you to keep that in mind as you continue to
work on these kinds of bills.
Mr. Westerman. I appreciate that insight, Mr. Henson. You
hit directly on the point that what seems like a good idea from
a building in Washington, DC, has real impact out on the ground
across the country and affects real people's lives. The
duplicativeness of mitigation and all the other ways that
projects get loaded up with regulations ultimately kill these
projects. Without them, we are not going to see economic
development the way we would like to.
Mr. Glenn. May I expand on Mr. Henson's point with an
example, a real-world example from the North? Which is that he
is correct that there are a lot of unseen ripple effects of the
presence or absence of industry in the region. In our case, the
industry is the oil and gas industry. Yet, if you look at the
largest employers of people in our region, it is the home rule
government, the North Slope Borough, and the North Slope
Borough School District. Yet, 100 percent, or 99.9 percent, of
the tax base for the operational and capital budgets of those
governments is the presence of industry in the region. So, even
our schools are being built because of the presence of industry
in our region, and our safe water, our electricity, our
runways, our roads, and our health clinics are funded because
we have a tax base which in our case is the oil and gas
industry. It is doubly so for our region, for the Native
corporations and for the local government. Thank you.
Mr. Westerman. Cody?
Mr. Desautel. If I could just add a little bit, I don't
think it is just the regulations that are the issue, but
sometimes we get policy. For example, the Secretary will order
3336 about sage grouse. We have seen a lot of issues that will
affect Indian Country, especially as we move toward--well,
hopefully we don't move toward it, but as we move toward this
risk-based management funding allocation. That is a Secretarial
Order from the Secretary of the Interior that will have
detrimental impacts to all tribes in the West, because it will
shuffle funding and resources to those areas that are critical
sage grouse habitat.
I understand that is more an oil and gas issue, but we
should deal with oil and gas issues if that is the case and not
try to hide that behind sage grouse habitat.
Mr. Westerman. I would argue that that is regulation
because that is not a bill that we debated, or that I, or Rob,
or anybody in the U.S. Senate voted on. That is an unelected
bureaucrat writing policy, which is what a regulation is.
With that, I will yield back, Mr. Chairman.
The Chairman. I had never heard of sage grouse before in my
life. Thank you for saying that, especially because I think
there will be some announcements either today or tomorrow to
deal with that specific issue, so I thank you.
I thank everyone for being here. You were right in saying
for me this is a significant issue because I come from one of
the two states that allows no gaming, whatsoever. For my Native
Americans within the state of Utah, this is an essential issue
if there is going to be economic development on their
reservation land.
I want to thank the New Mexico legislature for working with
us and allowing us to use their facilities.
I want to thank the law enforcement here for your calm
professionalism and the kindness with which you handled these
things. Somebody went to a lot of effort to make signs, and I
didn't even get a chance to see them.
[Laughter.]
The Chairman. Maybe when you show me back the video,
because I think one mentioned me. Can I actually get that later
on to put in the office? Never mind. Forget it.
[Laughter.]
The Chairman. To the five gentlemen, or six, who came and
testified today, thank you so much for traveling here to do
that. I would let you know that members of the committee may
have other questions. That means Westerman and I. You may be
bored tonight and come up with something else. I don't really
think you are going to be worried about that, but our Committee
Rules do say that if we do have questions, we may send those to
you, and we would appreciate a timely response to them.
The committee hearing under Rule 4(h), the record for the
committee will be open for 10 business days for those
responses, if there are any, and for anything else you would
like to add to the record at the same time.
And I appreciate the audience being here, as well as the
staff for setting this up and doing everything so
professionally. I thank you for your presence.
I think this has been a very good hearing, at least for me.
I have some new insights and some things I really want to move
forward on as we go into the future.
If there is no other business, the committee will stand
adjourned. Thank you.
[Whereupon, at 11:30 a.m., the committee was adjourned.]
[all]