[Senate Hearing 114-240]
[From the U.S. Government Publishing Office]
S. Hrg. 114-240
THE GAO REPORT ON INDIAN ENERGY
DEVELOPMENT: POOR MANAGEMENT BY BIA HAS HINDERED DEVELOPMENT ON INDIAN
LANDS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 21, 2015
__________
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COMMITTEE ON INDIAN AFFAIRS
JOHN BARRASSO, Wyoming, Chairman
JON TESTER, Montana, Vice Chairman
JOHN McCAIN, Arizona MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska TOM UDALL, New Mexico
JOHN HOEVEN, North Dakota AL FRANKEN, Minnesota
JAMES LANKFORD, Oklahoma BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana HEIDI HEITKAMP, North Dakota
MIKE CRAPO, Idaho
JERRY MORAN, Kansas
T. Michael Andrews, Majority Staff Director and Chief Counsel
Anthony Walters, Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on October 21, 2015................................. 1
Statement of Senator Barrasso.................................... 1
Statement of Senator Daines...................................... 5
Statement of Senator Franken..................................... 4
Statement of Senator Heitkamp.................................... 53
Statement of Senator Hoeven...................................... 4
Statement of Senator Lankford.................................... 55
Statement of Senator Tester...................................... 2
Witnesses
Cuch, Cameron J., Vice President of Government Affairs, Crescent
Point Energy U.S. Corporation.................................. 32
Prepared statement........................................... 34
Olguin, Hon. James ``Mike'', Tribal Council Member, Southern Ute
Indian Tribe................................................... 18
Prepared statement........................................... 20
Roberts, Lawrence S., Principal Deputy Assistant Secretary,
Indian Affairs, U.S. Department of the Interior................ 6
Prepared statement........................................... 8
Rusco, Frank, Director, Natural Resources and Environment, U.S.
Government Accountability Office............................... 12
Prepared statement........................................... 13
Stafne, Hon. Grant, Councilman, Fort Peck Assiniboine and Sioux
Tribes......................................................... 26
Prepared statement........................................... 27
Appendix
Chapoose, Shaun, Chairman, Ute Indian Tribe of the Uintah and
Ouray Reservation Business Committee, prepared statement....... 71
Fox, Hon. Mark, Chairman, Mandan Hidatsa and Arikara Nation, Fort
Berthold Reservation, prepared statement....................... 63
Response to written questions submitted by Hon. Steve Daines to
Lawrence S. Roberts............................................ 76
THE GAO REPORT ON INDIAN ENERGY
DEVELOPMENT: POOR MANAGEMENT BY BIA HAS HINDERED DEVELOPMENT ON
INDIAN LANDS
----------
WEDNESDAY, OCTOBER 21, 2015
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m. in room
628, Dirksen Senate Office Building, Hon. John Barrasso,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
The Chairman. I will ask the witnesses to please head to
the table in order to testify and we will move along with the
hearing.
As the witnesses are taking their seats, I am going to call
to order this hearing. We will examine today the Government
Accountability Office June of 2015 report on Indian Energy
Development. I requested this report on January 4th, 2014, for
several reasons. Energy development holds much promise for
Indian communities. According to the Department of the
Interior, in 2014, revenues for tribal energy development
exceeded $1.1 billion dollars. That figure should be much
higher.
Over the years, this Committee has received concerns from
Indian tribes and energy developers regarding the complexity of
Federal regulation and decision-making relating to Indian
lands. These issues either drive up costs and drive away
developers or delay the payment of royalties to Indian land
owners. In fact, the Government Accountability Office report
noted that one private energy developer reported that an oil
and gas well developing Indian resource generally costs almost
65 percent more for regulatory compliance than a similar well
for private resources.
In another instance highlighted in the report, an eight-
year delay by the Bureau of Indian Affairs in reviewing tribal
documents caused the tribe an estimate $95 million in lost
permitting fees, severance tax and royalty revenues. To improve
energy development on Indian lands, we needed to get to the
bottom of this complexity and the delays.
This report confirms several issues this Committee has been
working to address in a bipartisan way. On January 21st, 2015,
the Vice Chairman, Senator Tester, and I introduced S. 209, the
Indian Tribal Energy Development and Self-Determination Act
Amendments of 2015. This bill would reduce much of the
bureaucracy and delays associated with the Secretarial review
of leases, business agreements and rights-of-way for Indian
energy development.
The Committee unanimously passed this bill and it is being
hotlined for Senate consideration. Congress needs to pass this
bill this year so the tribes may begin energy development
without these continued delays.
Other management and interagency challenges were
highlighted in the report. I look forward to hearing from the
Department of Interior on the progress made in addressing these
issues.
I just want to remind the Department of the Interior that
when we send out invitations to testify, they are non-
transferable. There is an expectation that when we confirm
appointees to these bureaus that these appointees will be
responsive to the Committee and come back to testify upon
request.
Mr. Roberts, I know you are the messenger for the Interior
Department today. Please pass on my remarks to the Secretary.
The GAO report noted the overlap of agency responsibilities
in Indian energy development. It stands to reason that
officials with overlapping responsibility would be responsive
to this Committee.
With that, I would like to welcome the witnesses and I look
forward to the testimony.
Senator Tester, any opening statement?
STATEMENT OF HON. JON TESTER,
U.S. SENATOR FROM MONTANA
Senator Tester. Yes, thank you, Mr. Chairman, and thank you
for holding this hearing on energy development in Indian
Country today. We have had similar hearings in the past to
discuss Indian energy bills, the delays in energy development
on tribal lands. This hearing is in that same vein. I think it
is warranted, as we discussed. The GAO's recent report
detailing concerns with Indian energy development.
Quite frankly, it is the same conversation we have had on
these issues for quite a while. I remember when Senator Dorgan
was sitting in your chair, and it was earlier on in his
chairmanship. We had a visit about dysfunction in energy
development in Indian Country. The Department of Interior has
not been good at enabling tribal energy development. And the
GAO report echoes what tribes have been saying for years.
There are staffing issues. The BIA doesn't have enough
staff to process all the leases. The staff it does have isn't
always qualified to work specifically on oil and gas or
renewable energy project leases. Staffing issues probably start
with funding. You can't always hire the right staff if the
agencies don't have the funding that they need to hire those
staff.
But it is also a process issue. Tribes and the GAO report
talk about delays due to the lack of proper information systems
and multiple agencies being involved. I just don't understand
why this is this difficult. We have trust responsibilities to
help tribes develop their resources. I would think that
responsibility would mean tribes should be getting in on the
ground floor any time there is a boom in the industry or new
markets open up.
But that doesn't happen. Tribes are always several steps
behind and we need to get this done in a more prompt way.
I remember Senator Dorgan, when the Bakken was first being
developed, talking about oil wells everywhere except in Indian
Country. That is unacceptable. I think the primary solution is
to get as much of the decision-making as possible in the hands
of tribes. They know their resources and their communities'
priorities. Self-governance has proven to be an effective
policy for the last 40 years.
That is why I co-sponsored the Indian Energy bill with the
Chairman to help fix the Tribal Energy Resource Agreement
process. TERAs would give tribes the authority to develop their
own energy resources without further involvement from the DOI.
But since the passage of the 2005 Tribal Energy Bill that
created TERAs, no tribe has entered into one. There are a
number of reasons for that. I think it is a good idea to fix
the TERA process, but I am more than happy to go straight to
the HEARTH Act-like model for tribal energy if that is what we
need to do. That model has worked for surface leasing, and I
think tribes would make it work for minerals.
I would like to hear what the witnesses today think about
that. I am fine with doing both, fixing the TERA process and
utilizing the HEARTH Act model as an alternative. If we can
only pass a tribal energy bill once in 10 or 15 years, I want
to do as much as we can to improve energy development in Indian
Country.
I also want to commend the Administration for its proposal
to coordinate energy development by placing all the agencies
under one roof. If you are going to have multiple agencies
involved, the least you can do is put them in a room together
to make sure they are talking to one another. But if we don't
have the right people involved, the right process in place and
the right funding behind the idea, it simply is not going to be
efficient.
That is why I am glad we are having this hearing today. We
need to get out of this rut so the tribes can develop their
resources. I think everyone wants that to happen. So I hope we
hear some new ideas, some good ideas today about how to address
these issues.
Finally, I want to thank Grant Stafne for coming all the
way out from Fort Peck Indian Reservation. Energy development
in the past has been a big driver of Fort Peck's economy, and
it can be again in the future. You have been serving your
community on the council for a number of years now. I want to
commend you for that. I look forward to getting your input
today. I am glad you came. I want to make sure the Committee
and the Congress are giving the tribes and the BIA the tools
they need for success.
I appreciate everyone who is going to speak today. I look
forward to the question rounds. Once again, the 2,000-mile hike
you made, Grant, we appreciate it.
The Chairman. Thank you very much, Senator Tester. Since
you mentioned Senator Dorgan, we have two Senators from North
Dakota on the Committee right now. You will remember that map
of the State of North Dakota that he brought to this Committee.
It showed all of the oil and gas activity and the energy
activity. There was a big area that was completely blocked off,
and we wondered how it was that the resources had followed such
a perfect line as not being there.
In fact, the resources were there but just were being
blocked. So I appreciate the continued efforts in a bipartisan
way with the two Senators from North Dakota here who are
clearly aware of the situation.
Any other members have opening statement they would like to
make? Senator Franken.
STATEMENT OF HON. AL FRANKEN,
U.S. SENATOR FROM MINNESOTA
Senator Franken. Actually, Mr. Chairman, I don't have one
prepared, but we have had these hearings, very dramatic
hearings, on things like suicide, child suicide. And there is a
vicious circle in terms of housing and economic development and
addictions and domestic violence. When you are housed with
another family, exponentially being exposed to that.
One thing that I think we all agree on is there is nothing
like economic development. When we heard from Pine Ridge, from
Red Lake, the conclusion they came to is that we have to do
everything we can to create economic development. This
testimony says that there is energy there, both in renewable
and in non-renewables. I want energy projects in Indian Country
to create jobs, create economic activity so that we can do
something to break this cycle. Anything we can do. I don't
care, you know me, I am Mr. Global Warming is a Real Problem.
But if they find a coal mine on a reservation, let's use it.
So I want to do everything I can----
The Chairman. Save that videotape.
[Laughter.]
Senator Franken. Oh well. I wanted to jolly up the
Chairman.
The Chairman. Oh, well, we are inviting you to sit on this
side of the dais. Come on over.
[Laughter.]
Senator Franken. There is also sun, there is also wind. To
me, there is nothing more important than finding a way to get
jobs in Indian Country. This is definitely a way that we can do
it. That is my opening statement.
The Chairman. Senator Hoeven?
STATEMENT OF HON. JOHN HOEVEN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Hoeven. Mr. Chairman, just picking up on comments
made by both yourself and the ranking member, in 2008 I was
Governor in North Dakota and signed an agreement with the Three
Affiliated Tribes. At that time, there was one well on the
Three Affiliated Tribes' reservation.
Essentially what that agreement did is it brought parity
between the regulation on and off the reservation, so that the
regulations off-reservation in North Dakota and on the
reservation in North Dakota were the same. Since then, they
have drilled hundreds of wells. I think now if the Three
Affiliated Tribes were an independent State, they would be the
ninth largest oil-producing State in the Nation.
So if we find a way to make it easier to do business,
companies respond. Investments are made, jobs are created,
Senator Franken. So that is what this hearing today is about.
It is not just the investment to produce more energy. That
investment also produces better environmental stewardship,
because we get the investment in the new technologies and the
gathering systems and the pipelines we need in order to move
gas to market rather than throwing it off, which I look very
much forward to talking about.
I thank both of you for calling this hearing today.
The Chairman. Thank you, Senator Hoeven. Senator Daines?
STATEMENT OF HON. STEVE DAINES,
U.S. SENATOR FROM MONTANA
Senator Daines. Thanks, Mr. Chairman. I want to thank you
as well as Ranking Member Tester for this hearing today.
As I travel across Indian Country in Montana, I hear about
the challenges associated with energy development. Senator
Franken, I look forward to touring with you the coal operations
at the Crow Reservation in Montana. We have more recoverable
coal than any State in the Union.
Senator Franken. Let me be clear. I am sorry to interrupt
you. But that coal in Indian Country would replace coal being
mined elsewhere in Wyoming.
[Laughter.]
Senator Daines. There are always conditions.
But to that point, the unemployment rate today on the Crow
Reservation is north of 40 percent. Without those coal-mining
jobs, the unemployment rate is over 80 percent. This is a key
to future prosperity, certainly in these energy jobs.
I too want to welcome Councilman Stafne. Thanks for making
the long trek from Montana, from the Fort Peck Reservation. As
you are going to hear in his written testimony, it is rich in
oil and gas reserves coming from that Bakken Formation that the
Governor, now Senator from North Dakota was talking about, the
Bakken Three Forks Formation. It also has significant wind
potential as well.
As the GAO report and the witnesses are going to tell us
today, energy development in Indian lands is laden with red
tape. It is expensive. It is detracting investors. It ignores
the most important responsibility of the Federal Government to
uphold its trust responsibility with Indian nations. Frankly, I
think it is a disgrace that the Federal Government has not done
more to ensure that our Indian nations can foster their own
tribal sovereignty doing the best they can to create a better
livelihood for their members.
Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Daines.
I want to welcome the witnesses again, and remind you that
your complete statements will be part of the record and ask you
to keep your statements to five minutes or less.
Today we are going to hear from Mr. Larry Roberts, who is
Principal Deputy Assistant Secretary of Indian Affairs at the
Department of the Interior; Mr. Frank Rusco, Director, Natural
Resources and Environment, U.S. Government Accountability
Office; the Honorable James ``Mike'' Olguin, who is the Tribal
Council Member from the Southern Ute Indian Tribe in Colorado;
Mr. Grant Stafne, who has been welcomed by your two Senators
from Montana; and Mr. Cameron Cuch, who is the Vice President
of Government Affairs, Crescent Point Energy, U.S. Corporation,
from Denver.
Mr. Roberts?
STATEMENT OF LAWRENCE S. ROBERTS, PRINCIPAL DEPUTY ASSISTANT
SECRETARY, INDIAN AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR
Mr. Roberts. Thank you, Chairman Barrasso, Vice Chairman
Tester, members of the Committee.
My name is Lawrence Roberts. I am the Principal Deputy
Assistant Secretary for Indian Affairs at the Department of
Interior. I am a member of the Oneida Nation of Wisconsin. I
thank you for the opportunity to testify today.
I have with me today BIA Director Mike Black, Acting
Director of Indian Energy and Economic Development Office; Jack
Stevens and our Division Chief, Steve Many Deeds, and staff
from his office.
As many of you have noted in your statements, energy is
critically important to tribes. Commercial and community scale
tribal energy development is a priority for this Administration
because it provides significant economic and social benefits to
tribes and individual Indians.
Working closely with tribes, we have seen revenues from
tribal energy development grow from just under $400 million in
2009 to over $1.9 billion in 2014. While most of the increase
in the revenue has been in the area of conventional energy,
several tribes are now well situated to develop substantial
renewable energy resources, including solar and wind energy.
The Bureau of Indian Affairs and the Indian Energy and
Economic Development Office work closely with the tribes
testifying today. The Southern Ute is a well-recognized leader
in the field, and their testimony speaks to the importance of
retaining committed and engaged local staff, such as agency
superintendent Priscilla Bancroft.
At Fort Peck, we recently provided a substantial grant to
investigate potential petroleum reserves that exist on the
reservation and make recommendations as to where new
opportunities are located. We have also installed our NIOGEMS
system at the tribal energy office and at the BIA agency
office. Our work with the Ute Tribe has included providing
staff to work on site to expedite well permitting, onsite
inspections and environmental review, as well as installing the
NIOGEMS system at the tribal energy office.
Our work across Indian Country touches on all aspects of
energy development. At this moment, we are either funding or
providing technical assistance to energy and mineral projects
in over 70 different tribal communities. For example, we have
funded business planning for the Salish and Kootenai Tribes on
their hydroelectric project.
More recently, we have seen growing interest in smaller
renewable energy projects, ranging from 250 kilowatts to 3
megawatts. The projects are distinguished from those utility-
scale projects where power is sold and used off-reservation.
These smaller projects have lower capital expense, they
allow for 100 percent tribal ownership, benefits accrue locally
and provide an alternative to high local energy rates. For
example, we have assisted the Blue Lake Rancheria in developing
a small scale biomass combined heat and power facility that
will generate modest income and jobs.
Senator Tester spoke about the success under the HEARTH
Act. Congress's enactment of that HEARTH Act in 2012 has been
extremely successful. Over 20 tribes have utilized the HEARTH
Act for many business, solar and wind energy developments. The
HEARTH Act is an example of how Congress and the Administration
can work together to foster tribal self-governance and self-
determination in energy development.
The GAO report makes a number of recommendations that we
agree with and that we are working to implement. For example,
we agree that GIS mapping and a tracking system is exceedingly
important. The Department's NIOGEMS system is a tool that can
provide this mapping and tracking service for oil and gas
development. We are working to improve it to include other
forms of energy development.
NIOGEMS is available to our other Federal agencies. It is
available to tribes and it is available to our local staff on
the ground. It is used at a number of locations, including Wind
River, Navajo, Jicarilla Apache and others. In addition, we are
actively working with BLM to identify the needs for cadastral
surveys. Further, we agree with GAO's recommendation to develop
TERA guidance and to evaluate the effectiveness of our capacity
grants.
As the GAO report underscores, the Department and Congress
working together can do much to promote tribal energy
development. For example, Assistant Secretary Washburn
testified last Congress on what is now Chairman Barrasso's
bill, S. 209. There is a lot the Department likes about that
Act, and there is a need to improve the 2005 Act.
Finally, the GAO report underscores the lengthy review
times and the need to improve efficiency and transparency. We
have sought to address this problem by proposing in the 2016
budget to establish an Indian Energy Service Center located in
Denver, Colorado. That would include personnel from the various
Interior agencies that must coordinate energy development in
Indian Country, including BIA, IEED, the Office of Natural
Resource Revenue, BLM, and the Office of Special Trustee.
Thank you for providing this opportunity to testify today.
The Department will continue to work with tribes to promote
energy development and will continue to work closely with this
Committee as well as our Federal and State partners to address
energy development issues and solutions. I am happy to answer
any questions the Committee may have.
[The prepared statement of Mr. Roberts follows:]
Prepared Statement of Lawrence S. Roberts, Principal Deputy Assistant
Secretary, Indian Affairs, U.S. Department of the Interior
Chairman Barrasso, Vice-Chairman Tester, and Members of the
Committee, my name is Lawrence Roberts and I am the Principal Deputy
Assistant Secretary of Indian Affairs at the Department of the Interior
(Department). Thank you for this opportunity to testify on the June
2015, GAO Report ``Indian Energy Development, Poor Management by BIA
Has Hindered Energy Development on Indian Lands.''
Energy is critically important to tribes. Commercial and community
scale tribal energy development is a priority for this Administration
because it provides significant economic and social benefits to tribes,
and individual Indians. The Administration has worked very hard to help
tribes assess, develop and market conventional energy resources, while
also assisting supporting tribes as they explore development of
renewable energy resources, such as wind and solar energy. Working
closely with tribes, we have seen revenues from tribal energy
development grow from just under $400 million when President Obama took
office in 2009 to over $1.1 billion in 2014. While most of the increase
in revenue has been in the area of conventional energy, several tribes
are also now well-situated to develop substantial renewable energy
resources, including solar and wind energy. We will continue to support
tribes in both areas, conventional and renewable, to ensure that tribes
play a crucial role in America's energy future.
Yet, as the GAO report shows, the Department and Congress, working
together, can do much more to promote tribal energy development. As
discussed in more detail below, the Department largely agrees with
GAO's recommendations and, despite fiscal challenges, we are working to
implement widespread improvements. We have been working hard to address
each of the subjects raised by the GAO report and have substantial
progress to report. For example, the GAO report underscores the lengthy
review times and the need to improve efficiency and transparency. We
have sought to address this problem by breaking down the silos that
create obstacles to close coordination in the federal bureaucracy. As
detailed in the President's 2016 Budget, the Department proposes to
establish an Indian Energy Service Center (Service Center) centrally
located in Denver, Colorado, to address this need. The Service Center
will include personnel from the various Interior Agencies that must
coordinate energy development in Indian Country including the Bureau of
Indian Affairs (BIA), the Office of Indian Energy and Economic
Development (IEED), the Office of Natural Resource Revenue (ONRR), the
Office of the Special Trustee for American Indians (OST), and the
Bureau of Land Management (BLM). The Service Center would provide
expertise, policy guidance, standardized procedures, and technical
assistance across a broad spectrum of services. The idea has been well-
received by energy-producing tribes because it would provide a
centralized, one-stop shop for energy services.
The GAO Report provides seven (7) recommendation areas. My
testimony today will summarize how we are working to implement
solutions in those areas and conclude with further detail about the
Indian Energy Service Center
Recommendation 1: To ensure it can verify ownership in a timely
manner and identify resources available for development, BIA should
take steps to complete its GIS mapping module in TAAMS.
The GAO report recommended that the Geographic Information System
(GIS) mapping module be added to the Trust Asset and Accounting
Management System (TAAMS). TAAMS represents a significant, long-term
investment in the Department's efforts to meet its trust
responsibility. As we explained in our discussions with GAO, TAAMS was
not designed as a geospatial mapping system, but simply to reflect
legal descriptions as they appear on documents recorded as required by
federal law.
We agree, however, that GIS mapping of Indian lands is exceedingly
important. As we discussed with GAO, the Department has developed the
National Indian Oil and Gas Evaluation Management System (NIOGEMS),
which is a map-oriented GIS computer application, for managing
reservation lease, well, and production data for oil and gas and other
energy/mineral resources. NIOGEMS assists energy producing Indian
tribes by allowing tribal, BIA and other Interior resource managers to
gain ready access to financial, realty, geo-technical information and
complex resource data aggregated from other data systems/sources, for
tracking and making decisions on leasing, developing, and managing
energy/mineral resources.
NIOGEMS incorporates aggregated data and presents information in
concise user-friendly data view and map-based forms, and allows
generation of reports, sharable maps, and data extractions for use in
other analytical software. While no system is perfect, NIOGEMS has
helped us improve our performance of our responsibilities to Tribes and
individual trust owners. As the DOI's Inspector General's Report No.:
CR-EV-BIA-0001-2011 stated in its list of promising technologies and
practices for oil and gas in Indian country:
``[T]he National Indian Oil and Gas Evaluation Management
System (NIOGEMS) . . . represents a significant improvement
over the current Trust Asset and Accounting Management System
database for managing oil and gas activities, including leasing
and production data, by incorporating geospatial information as
well as a digital mapping capability. The Wind River Agency in
Wyoming reported a tenfold improvement in productivity for
certain realty activities after implementing NIOGEMS.''
NIOGEMS can provide regularly updated mapped ownership tracts,
energy Leases, as well as BLM agreements data for Tribes, BIA agencies,
and supporting federal agencies for a large set of reservations. Staff
also develops and gathers an array of Indian energy resource data, for
regional areas and in detail on a reservation project area basis. For
the reservations supported in NIOGEMS, this data is combined in the
NIOGEMS database to meet the need for comprehensive data to identify
ownership and resources available for energy development, particularly
oil and gas. Though it began with oil and gas related information,
NIOGEMS is expanding to include additional energy/mineral resource data
and supporting functionality. We will begin visiting reservation sites
to train staff on how to log onto NIOGEMS from the Albuquerque server.
We are also taking steps to develop a land boundary and ownership
repository that will be incorporated into TAAMS for all tribal lands.
Our goal is that legal land descriptions entered in TAAMS from these
conveyance documents will be regularly extracted and aligned with BLM
survey data to produce GIS products that illustrate current Indian land
ownership. In sum, we are continuing to invest heavily in TAAMS and
related systems that have improved our ability to meet our various
responsibilities. We are committed to avoiding past mistakes and having
the technical resources that we need to manage vast tribal resources
successfully.
Recommendation 2: To ensure it can verify ownership in a timely
manner and identify resources available for development, BIA should
work with BLM to identify cadastral survey needs.
In more than a century since the establishment of Indian
reservations, the federal government has not yet fully surveyed all
Indian reservation lands. For example, in the nearly 150 years since
establishment of the Navajo Reservation, portions of that reservation
have never been fully surveyed. A survey is an important step in
developing a full inventory of trust resources. The GAO report
recommended that the BIA and BLM work together to identify cadastral
survey needs. As in years past, the BIA and the BLM, in a coordinated
and focused effort, have prepared a Reimbursable Service Agreement
(RSA) between the two agencies to identify and deliver survey-related
products and services needed to identify and address the realty and
boundary issues, in terms of asset/resource protection, of American
Indian and Alaska Native Trust beneficiaries. Moreover, in February of
2015, the President asked Congress for $2.791 million for Fiscal Year
(FY) 2016 to fund this effort. Absent a budget, it is unclear when the
fuding will be available. However, the Department agrees that this is
an urgent need in the BIA, particularly where reservations and trust
lands lay along a river or where the river created the border. Such
landmarks tend to move creating uncertainty as to ownership. During FY
2015, the BIA and BLM held quarterly meetings to discuss the cadastral
survey needs, along with specific requests and the development of a
mechanism to collect survey requests from the field. The BLM continues
to provide boundary solutions by utilizing innovations in survey
technology. Planning meetings between the BIA and the BLM will continue
in FY 2016. A methodology to collect survey needs has been established
and further refinement of the data collection will be completed by the
end of FY 2016.
Recommendation 3: To improve the efficiency and transparency of its
review process, BIA should develop a documented process to track its
review and response times.
The GAO report recommended the BIA should develop a process to
track BIA review and response times. As the recommendation applies to
oil and gas leasing, the BIA will make a concerted effort to implement
a tracking and monitoring effort in compliance with regulatory
requirements to demonstrate timely reviews and approvals within the
system of record, TAAMS. This will assist the BIA's field offices with
maintaining a single current and accurate system. The goal is to have
tracking mechanisms in TAAMS by the end of FY 2017. Additionally, IEED
uses a formal Internal Control Review process for ensuring timely
review of Indian Minerals Development Act of 1982 (IMDA) agreements for
oil, gas, and other minerals. Under these procedures, IEED must
identify all major risks that would prevent the review of agreements
from meeting a deadline, and then to establish procedures (controls) to
eliminate identified risks. The IEED's time line for reviewing
agreements and providing technical comments (including economic
analysis of negotiated agreement terms) is 30 days.
Recommendation 4: To improve the efficiency and transparency of its
review process, BIA should enhance data collection efforts to ensure it
has data needed to track its review and response times.
The GAO report recommended that the BIA enhance data collection for
its tracking of BIA review and response times. We are working hard and
investing heavily to improve tracking. In addition to the TAAMS
enhancements, NIOGEMS currently tracks permits, rights of way, and
environmental studies associated with energy development. The next
version of NIOGEMS, scheduled for implementation in the next few
months, will provide the user with the ability to develop ad hoc
tracking.
Recommendation 5: Provide additional energy development-specific
guidance on provisions of TERA regulations that tribes have identified
to Interior as unclear.
The Department agrees with the report's recommendation that it
provide additional energy development-specific guidance on provisions
of TERA regulations that tribes have identified to the Department as
unclear. IEED and our Office of the Solicitor believe that this clarity
can be best achieved by amending the IMDA to insert tribal self-
determination language similar to that found in the Helping Expedite
and Advance Responsible Tribal Homeownership (HEARTH) Act of 2012. The
HEARTH Act permits tribes to lease surface trust lands for renewable
energy purposes absent approval by the Department, by implementing
their own leasing regulations. The Department respectfully asks
Congress to make this possible in the conventional energy arena by
amending the law to match the HEARTH Act provisions. We would be happy
to work with your staff on such an amendment.
The GAO report highlights the need to track the benefits of its
Tribal Energy Development Capacity (TEDC) grant program and to
determine whether these grants have enabled tribes to develop the
administrative and technical capacity to enter into Tribal Energy
Resource Agreements (TERAs). To address the deficiencies identified in
the GAO report, the Department modified this grant program to
complement the HEARTH Act. In recognition of the growing need for
tribal regulatory infrastructure since passage of the HEARTH Act, the
Department reformed the program to encourage tribes to establish the
legal infrastructure to regulate energy-related activities, including
the adoption of commercial codes, establishment of electrical utility
authorities, and enactment of energy-related regulations. For example,
of the ten TEDC grants that the Department disbursed at the close of FY
2015, half were awarded to equip Tribes to establish tribal utility
authorities, a substantial step in assuming sovereign control of
electrical resources.
Recommendation 6: To ensure the TEDC grant program is effective in
moving tribes closer to developing the capacity needed to pursue TERAs,
IEED should take steps to develop a documented process for evaluating
the effectiveness of TEDC grants.
The Department will establish an evaluation process involving
program staff and other stakeholders to gauge the extent to which TEDC
grants have increased tribal capacity to enter into a TERA. We will
seek feedback from tribal leaders, project managers, consultants and
others on features of the program that are problematic. We will work
with them to find ways to cure the deficiencies that they have
identified. We will also reevaluate TEDC's efficacy at the close of
each fiscal year. Staff will monitor the progress of each grant and
furnish technical assistance to each grantee, identifying and
addressing any problems while grant projects are still in process.
Moreover, the Department will administer an anonymous, follow-up online
survey with tribal stakeholders on the effectiveness of each grant,
which will include questions related to progress in developing
capacity, challenges or concerns, and suggestions for improvement. The
information gathered from this survey will assist staff to guide
further improvements in the TEDC grants.
Recommendation 7: To ensure the TEDC grant program is effective in
moving tribes closer to developing the capacity needed to pursue TERAs,
IEED should take steps to identify features of the TEDC grant program
that could limit the effectiveness of the program to help tribes
eliminate capacity gaps.
In response to the GAO report's Recommendation 7, the IEED staff
will establish two methods to help identify features of the TEDC
program that could limit the effectiveness of the program in addressing
capacity gaps. The first method will be to seek TEDC feedback by
reaching out directly to stakeholders such as tribal council members,
tribal leadership, consultants and others. The IEED will compile and
evaluate responses to establish effective solutions to the deficiencies
recognized through the TEDC stakeholder outreach. The second method
would be an internal reevaluation of effectiveness of the TEDC program
at the end of each closing fiscal year. The IEED staff will be
responsible for project monitoring and for providing technical
assistance to the TEDC grant recipients. Staff and recipients will
possess firsthand knowledge of the deficiencies limiting the grants'
effectiveness after the first year of project monitoring. The IEED
staff will then evaluate these findings to create solutions and make
adjustments to the program.
Sixty (60) days after the 2015 TEDC solicitation closure or at the
end of FY 2015, IEED staff plans to begin initial outreach for
evaluating the effectiveness of TEDC grants, and for identifying the
features of the TEDC grant program that could limit the effectiveness
of the program to help tribes eliminate capacity gaps. At the end of FY
2016, IEED staff will follow up with a second outreach and re-evaluate
the effectiveness of TEDC grants.
Moving Forward: Indian Energy Service Center
As noted above, the Department will be implementing the Indian
Energy Service Center, if funded, in FY 2016. As identified in the 2015
GAO report, the increased demands of oil and gas development have
challenged the existing staff and management structure in providing
timely efficient services. To address this demand, an interagency team
from the BIA, IEED. ONRR, BLM, and OST have collaborated on solutions.
The role of the Indian Energy Service Center would be to maintain a
responsive, administrative and technical capacity, that when needed,
can bolster local or regional staff faced with surging workload thus
avoiding or eliminating backlogs.
The proposal reflects the spirit of the White House Council on
Native American Affairs, which seeks to break down barriers between
federal agency ``silos'' and also builds on recent innovations such as
the IEED's detailing of critical personnel to Fort Berthold, the rapid
contracting of services by the Federal Indian Minerals Office at
Navajo, and the BLM's ``Tiger Team'' formed to address backlog
Applications for Permit to Drill at Fort Berthold. By adopting some of
these short-term innovations, improving protocols, and building up a
technical specialist corps that can collaborate across agency lines, we
can efficiently institutionalize these types of rapid response efforts
to ensure sustainable, scalable and timely, delivery of service, both
to Indian country and the nation.
The Indian Energy Service Center would improve performance of
federal trust responsibilities in energy development. As proposed, it
would provide technical and administrative functions that require
minimal field presence. By fulfilling a support role for field offices
through regional/state level offices, the field personnel would be able
to focus on the local issues and challenges that accompany rapid
expansion, making the Department and its many components more
responsive to urgent needs in energy development.
The Indian Energy Service Center would support numerous units,
including the BIA regional offices; the BLM field and state offices;
the OST fiduciary trust officers and regional trust administrators; and
ONRR. The Indian Energy Service center would expedite the leasing,
permitting, developing, and reporting for oil and gas development on
Indian trust lands. Fundamental to this effort is responsiveness to
Indian mineral owners (tribal or individual) and coordination between
Federal agencies. In support of this mission, the Indian Energy Service
Center would serve as a processing center for certain nationwide trust
functions where this service is more efficiently provided by an off-
site work team in support of agencies and field, regional, or state
offices. The Indian Energy Service Center would also dispatch expertise
to the impacted agency or field office to evaluate the situation and
make a determination how best to address the workload, particularly
when the pending workload directly affects income being generated for
beneficiaries.
Conclusion
Thank you for providing this opportunity to showcase the myriad
efforts being made at the Department to improve energy development on
Indian lands. The Department will continue to work with Tribes to
promote energy development and will continue to work closely with this
Committee as well as our federal and state partners to address energy
development issues and solutions.
Thank you also for focusing attention on this important topic. I am
available to answer any questions the Committee may have.
The Chairman. Thank you, Mr. Roberts. Now we turn to Mr.
Frank Rusco.
STATEMENT OF FRANK RUSCO, DIRECTOR, NATURAL
RESOURCES AND ENVIRONMENT, U.S. GOVERNMENT
ACCOUNTABILITY OFFICE
Mr. Rusco. Thank you. Chairman Barrasso, Vice Chairman
Tester and members of the Committee, I am happy to be here
today to discuss the results of our report on Indian energy
development.
As you know, there is great potential for the development
of energy resources on tribal and Indian lands, including
hydroelectricity, oil and gas, and wind and solar. When we look
at a map of energy development, you will see development
happening all around and up to tribal and Indian lands. But
with only a few exceptions, such energy development stops right
at the borders.
In our recent report to this Committee, we found numerous
challenges facing tribes and individual Indians that own energy
resources and want to develop them. Key among these challenges
are that the Bureau of Indian Affairs has failed to perform its
duties in an efficient and thorough way to review and approve
energy development, to identify Indian land owners and to hire
and retain key skilled staff who have the expertise to evaluate
energy-related documents.
The consequence of BIA's mismanagement is that numerous
energy development projects languish for months or even years
without proper review, without appropriate communication
between the agency and the applicants and without even
explanation for such delays. To be fair, in doing our work, we
found many dedicated BIA staff and managers who were trying
their best to adapt to the changing energy landscape. However,
they have not received the support they need from BIA
headquarters or the Department of the Interior to build the
capacity needed to perform these required tasks.
Meanwhile, the Country has seen an explosion of energy
development over the last five to ten years on private, State
and Federal lands. For example, State renewable energy
portfolio standards for electric utilities have sparked a boom
in wind and solar development. Many tribal lands have great
potential for developing wind and solar projects, but the lack
of a functional approval and permitting process at BIA has
contributed to what amounts to a staggering loss of opportunity
for tribes and Indian land owners.
Once State renewable energy portfolio standards are met,
the opportunity will be gone. So the clock is ticking for BIA
to fix its management problems.
Similarly, oil and gas resources exist on many tribal and
Indian lands, but the recent resurgence of such development in
the United States has largely passed these lands by. When an
oil and gas company can deal with private, State or Federal
land and resource owners, they are able to make development
plans in which the steps needed for approval are known and the
time frames are reasonable or at least predictable. Sadly, this
is not the case when dealing with BIA. In fact, BIA does not
track its review and response times, so the agency itself
cannot predict how long these processes take.
In our recent report, we found that a number of challenges
have hindered the ability and willingness of tribes to seek
Tribal Energy Resource Agreements, or TERAs, which Congress
created to allow tribes to take charge of more of the elements
of energy development on their lands. These challenges include
uncertainty about TERA regulations, unreimbursed costs of
assuming activities that have been historically conducted by
Federal agencies, and the complex application process.
For example, TERA has not defined inherently Federal
functions, a provision in the TERA regulations. As a result
tribes interested in seeking TERA approval do not have clear
guidance on which functions they would take over from Federal
agencies and which would remain inherently Federal.
Congress has also directed in TERA to help tribes develop
the capacity needed to pursue TERAs. They found that TERAs'
approach to tribal capacity-building was not well developed and
lacked documented processes for evaluating the effectiveness of
such capacity building.
We are currently doing additional work for this Committee,
looking at BIA's human capital challenges and evaluating what
BIA is doing to resolve these issues.
I will be happy to answer any questions you may have. Thank
you.
[The prepared statement of Mr. Rusco follows:]
Prepared Statement of Frank Rusco, Director, Natural Resources and
Environment, U.S. Government Accountability Office
Chairman Barrasso, Vice-Chairman Tester, and Members of the
Committee:
I am pleased to be here today to discuss our recent report on the
development of Indian energy resources. \1\ As you know, Indian energy
resources hold significant potential for development and, for some
Indian tribes and their members, energy development already provides
economic benefits, including funding for education, infrastructure, and
other public services. According to Department of the Interior
(Interior) data, in fiscal year 2014, development of Indian energy
resources provided over $1 billion in revenue to tribes and individual
Indian resource owners. However, even with considerable energy
resources, according to a 2014 Interior document, Indian energy
resources are underdeveloped relative to surrounding non-Indian
resources.
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\1\ GAO, Indian Energy Development: Poor Management by BIA Has
Hindered Energy Development on Indian Lands, GAO-15-502 (Washington,
D.C.: June 8, 2015).
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Development of Indian energy resources is a complex process that
may involve a range of stakeholders, including federal, tribal, and
state agencies. Interior's Bureau of Indian Affairs (BIA), through its
various regional, agency, and other offices, has primary authority for
managing Indian energy development and, in many cases, holds final
decisionmaking authority. Federal management and oversight of Indian
energy development is to be conducted consistent with the federal
government's fiduciary trust responsibility to federally recognized
Indian tribes and individual Indians. \2\ However, in recent decades,
Indian tribes and individual Indians have asserted that Interior has
failed to fulfill its trust responsibility, mainly with regard to the
management and accounting of tribal and individual trust funds and
trust assets. For example, Interior recently settled numerous ``breach
of trust'' lawsuits, including Cobell v. Salazar, one of the largest
class action suits filed against the United States. \3\
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\2\ The federal trust responsibility is a fiduciary obligation on
the part of the United States to federally recognized Indian tribes and
tribal members. The Supreme Court has recognized a general trust
relationship with Indian tribes since 1831. See Cherokee Nation v.
Georgia, 30 U.S. (5 Pet.) 1 (1831). The trust responsibility originates
from the unique, historical relationship between the United States and
Indian tribes and consists of the ``highest moral and legal
obligations'' that the federal government must meet to ensure the
protection of tribal and individual Indian lands, assets and resources,
but is legally enforceable only to the extent it is specifically
defined by federal laws. See Seminole Nation v. United States, 316 U.S.
286, 296-297 (1942), and United States v. Jicarilla Apache Nation, 564
U.S. __, 131 S. Ct. 2313 (2011). Letter
\3\ Cobell v. Salazar was a class action lawsuit initially filed in
1996 by Elouise Cobell, a member of the Blackfeet Tribe, and others
against the federal government concerning Interior's management of
individual Indian trust fund accounts. Those accounts contain funds
from leases of Indian land, some of which involve energy development.
The settlement in Cobell required congressional authorization, which
was provided in the Claims Resolution Act of 2010, Pub. L. No. 111-291,
101, 124 Stat. 3064, 3066 (2010).
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Federal policy has supported greater tribal autonomy and control by
promoting and supporting opportunities for increased tribal self-
determination and self-governance, including promoting tribal oversight
and management of energy resource development on tribal lands. For
example, in 2005, Congress passed the Indian Tribal Energy Development
and Self-Determination Act (ITEDSA), part of the Energy Policy Act of
2005, to provide an option for federally recognized tribes to exercise
greater control of decisionmaking over their own energy resources. \4\
The ITEDSA provides for interested tribes to pursue a Tribal Energy
Resource Agreement (TERA)--an agreement between a tribe and the
Secretary of the Interior that allows the tribe, at its discretion, to
enter into leases, business agreements, and right-of-way (ROW)
agreements for energy resource development on tribal lands without
review and approval by the Secretary. However, no tribe has entered
into a TERA with Interior, and shortcomings in BIA's management that we
identified in our June 2015 report highlight the need for tribes to
build the capacity to perform the duties that would enable them to
obtain greater tribal control and decisionmaking authority over the
development of their resources. \5\
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\4\ Federally recognized tribes have a government-to-government
relationship with the United States and are eligible to receive certain
protections, services, and benefits by virtue of their unique status as
Indian tribes.
\5\ GAO-15-502.
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In this context, my testimony today discusses the findings from our
June 2015 report on Indian energy development. Accordingly, this
testimony addresses the factors that have (1) hindered Indian energy
resource development and (2) deterred tribes from seeking TERAs. In
addition, I will highlight several key actions that we recommended in
our report that Interior can take to help overcome challenges
associated with the administration and management of Indian energy
resources.
To conduct the work for our June 2015 report, we reviewed and
synthesized literature including more than 40 reports, conference
proceedings, hearings statements, and other publications from federal
and tribal governments; industry; academics; and nonprofit
organizations. We also obtained available data on key dates associated
with the review and approval of energy-related documents for planned or
completed utility-scale renewable projects from several BIA regional
and local officials, tribal officials, and industry representatives.
Further, we interviewed a nongeneralizable sample of stakeholders
representing 33 Indian tribes, energy development companies, and
numerous federal agencies and organizations, including officials from
BIA, Office of Indian Energy and Economic Development, Department of
Energy, National Renewable Energy Laboratory, and the Bureau of Land
Management (BLM). \6\ We did not evaluate tribal activities or actions
to govern the development of their resources or assess any potential
barriers to energy development such actions or activities may pose. Our
June 2015 report includes a detailed explanation of the scope and
methodology used to conduct our work.
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\6\ Within BIA, we interviewed officials from all 12 BIA regional
offices and 9 BIA agency offices.
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We conducted the work on which this testimony is based in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Shortcomings in BIA's Management and a Variety of Other Factors Have
Hindered Indian Energy Development
Factors, such as shortcomings in BIA's management and additional
factors generally outside of BIA's management responsibilities--such as
a complex regulatory framework, tribes' limited capital and
infrastructure, and varied tribal capacity--have hindered Indian energy
development. Specifically, according to some of the literature we
reviewed and several stakeholders we interviewed, BIA's management has
three key shortcomings.
First, BIA does not have the data it needs to verify ownership of
some oil and gas resources, easily identify resources available for
lease, or easily identify where leases are in effect, inconsistent with
Interior's Secretarial Order 3215, which calls for the agency to
maintain a system of records that identifies the location and value of
Indian resources and allows for resource owners to obtain information
regarding their assets in a timely manner. The ability to account for
Indian resources would assist BIA in fulfilling its federal trust
responsibility, and determining ownership is a necessary step for BIA
to approve leases and other energy-related documents. However, in some
cases, BIA cannot verify ownership because federal cadastral surveys--
the means by which land is defined, divided, traced, and recorded--
cannot be found or are outdated. It is additionally a concern that BIA
does not know the magnitude of its cadastral survey needs or what
resources would be needed to address them.
We recommended in our June 2015 report that the Secretary of the
Interior direct the Director of the BIA to take steps to work with BLM
to identify cadastral survey needs. \7\ In its written comments on our
report, Interior did not concur with our recommendation. However, in an
August 2015 letter to GAO after the report was issued, Interior stated
that it agrees this is an urgent need and reported it has taken steps
to enter into an agreement with BLM to identify survey-related products
and services needed to identify and address realty and boundary issues.
In addition, the agency stated in its letter that it will finalize a
data collection methodology to assess cadastral survey needs by October
2016.
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\7\ GAO-15-502.
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In addition, BIA does not have an inventory of Indian resources in
a format that is readily available, such as a geographic information
system (GIS). Interior guidance identifies that efficient management of
oil and gas resources relies, in part, on GIS mapping technology
because it allows managers to easily identify resources available for
lease and where leases are in effect. According to a BIA official,
without a GIS component, identifying transactions such as leases and
ROW agreements for Indian land and resources requires a search of paper
records stored in multiple locations, which can take significant time
and staff resources. For example, in response to a request from a
tribal member with ownership interests in a parcel of land, BIA
responded that locating the information on existing leases and ROW
agreements would require that the tribal member pay $1,422 to cover
approximately 48 hours of staff research time and associated costs. In
addition, officials from a few Indian tribes told us that they cannot
pursue development opportunities because BIA cannot provide the tribe
with data on the location of their oil and gas resources--as called for
in Interior's Secretarial Order 3215. Further, in 2012, a report from
the Board of Governors of the Federal Reserve System found that an
inventory of Indian resources could provide a road map for expanding
development opportunities. \8\ Without data to verify ownership and use
of resources in a timely manner, the agency cannot ensure that Indian
resources are properly accounted for or that Indian tribes and their
members are able to take full advantage of development opportunities.
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\8\ Board of Governors of the Federal Reserve System, Growing
Economies in Indian Country: Taking Stock of Progress and Partnerships,
A Summary of Challenges, Recommendations, and Promising Efforts (April
2012). This report was the result of a series of workshops that
included nine federal agencies, four Federal Reserve Bank partners, and
representatives from 63 Indian tribes. The effort was focused on
economic development in Indian Country.
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To improve BIA's efforts to verify ownership in a timely manner and
identify resources available for development, we recommended in our
June 2015 report that Interior direct BIA to take steps to complete GIS
mapping capabilities. \9\ In its written comments in response to our
report, Interior stated that the agency is developing and implementing
applications that will supplement the data it has and provide GIS
mapping capabilities, although it noted that one of these applications,
the National Indian Oil and Gas Evaluation Management System (NIOGEMS),
is not available nationally. Interior stated in its August 2015 letter
to GAO that a national dataset composed of all Indian land tracts and
boundaries with visualization functionality is expected to be completed
within 4 years, depending on budget and resource availability.
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\9\ According to Interior's 2014-2015 performance plan, it was to
incorporate a GIS mapping component into its Trust Asset and Accounting
Management System in fiscal year 2014.
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Second, BIA's review and approval is required throughout the
development process, including the approval of leases, ROW agreements,
and appraisals, but BIA does not have a documented process or the data
needed to track its review and response times. \10\ In 2014, an
interagency steering committee that included Interior identified best
practices to modernize federal decisionmaking processes through
improved efficiency and transparency. \11\ The committee determined
that federal agencies reviewing permits and other applications should
collect consistent data, including the date the application was
received, the date the application was considered complete by the
agency, the issuance date, and the start and end dates for any
``pauses'' in the review process. The committee concluded that these
dates could provide agencies with greater transparency into the
process, assist agency efforts to identify process trends and drivers
that influence the review process, and inform agency discussions on
ways to improve the process.
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\10\ In 2014, an interagency Steering Committee developed in
response to Executive Order 13604 identified best practices to
modernize federal decision-making processes. The committee found that
federal agencies reviewing permits and other applications should
collect consistent data, including the date the application was
received, the date the application was considered complete by the
agency, the issuance date, and the start and end dates for any
``pauses'' in the review process.
\11\ This government-wide initiative was developed in response to
Executive Order 13604 and was led by an interagency Steering Committee,
which is composed of Deputy Secretaries or their equivalent from 12
federal agencies, including the Department of the Interior. In 2014,
the Steering Committee released an implementation plan for the
Presidential Memorandum on Modernizing Infrastructure Permitting.
Executive Order 13604 calls for agencies to improve federal permitting
and review processes.
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However, BIA does not collect the data the interagency steering
committee identified as needed to ensure transparency and, therefore,
it cannot provide reasonable assurance that its process is efficient. A
few stakeholders we interviewed and some literature we reviewed stated
that BIA's review and approval process can be lengthy. For example,
stakeholders provided examples of lease and ROW applications that were
under review for multiple years. Specifically, in 2014, the Acting
Chairman for the Southern Ute Indian Tribe testified before this
committee that BIA's review of some of its energy-related documents
took as long as 8 years. In the meantime, the tribe estimates it lost
more than $95 million in revenues it could have earned from tribal
permitting fees, oil and gas severance taxes, and royalties. According
to a few stakeholders and some literature we reviewed, the lengthy
review process can increase development costs and project times and, in
some cases, result in missed development opportunities and lost
revenue. Without a documented process or the data needed to track its
review and response times, BIA cannot ensure transparency into the
process and that documents are moving forward in a timely manner, or
determine the effectiveness of efforts to improve the process.
To address this shortcoming, we recommended in our June 2015 report
that Interior direct BIA to develop a documented process to track its
review and response times and enhance data collection efforts to ensure
that the agency has the data needed to track its review and response
times. In its written comments, Interior did not fully concur with this
recommendation. Specifically, Interior stated that it will use NIOGEMS
to assist in tracking review and response times. However, this
application does not track all realty transactions or processes and has
not been deployed nationally. Therefore, while NIOGEMS may provide some
assistance to the agency, it alone cannot ensure that BIA's process to
review energy-related documents is transparent or that documents are
moving forward in a timely manner. In its August 2015 letter to GAO,
Interior stated it will try to implement a tracking and monitoring
effort by the end of fiscal year 2017 for oil and gas leases on Indian
lands. The agency did not indicate if it intends to improve the
transparency of its review and approval process for other energy-
related documents, such as ROW agreements and surface leases--some of
which were under review for multiple years.
Third, some BIA regional and agency offices do not have staff with
the skills needed to effectively evaluate energy-related documents or
adequate staff resources, according to a few stakeholders we
interviewed and some of the literature we reviewed. For instance,
Interior officials told us that the number of BIA personnel trained in
oil and gas development is not sufficient to meet the demands of
increased development. In another example, a BIA official from an
agency office told us that leases and other permits cannot be reviewed
in a timely manner because the office does not have enough staff to
conduct the reviews. We are conducting ongoing work for this committee
that will include information on key skills and staff resources at BIA
involved with the development of energy resources on Indian lands.
According to stakeholders we interviewed and literature we
reviewed, additional factors, generally outside of BIA's management
responsibilities, have also hindered Indian energy development,
including
a complex regulatory framework consisting of multiple
jurisdictions that can involve significantly more steps than
the development of private and state resources, increase
development costs, and add to the timeline for development;
fractionated, or highly divided, land and mineral ownership
interests;
tribes' limited access to initial capital to start projects
and limited opportunities to take advantage of federal tax
credits;
dual taxation of resources by states and tribes that does
not occur on private, state, or federally owned resources;
perceived or real concerns about the political stability and
capacity of some tribal governments; and
limited access to infrastructure, such as transmission lines
needed to carry power generated from renewable sources to
market and transportation linkages to transport oil and gas
resources to processing facilities.
A Variety of Factors Have Deterred Tribes from Entering into TERAs
A variety of factors have deterred tribes from pursuing TERAs.
Uncertainty associated with Interior's TERA regulations is one factor.
For example, TERA regulations authorize tribes to assume responsibility
for energy development activities that are not ``inherently federal
functions,'' but Interior officials told us that the agency has not
determined what activities would be considered inherently federal
because doing so could have far-reaching implications throughout the
federal government. According to officials from one tribe we
interviewed, the tribe has repeatedly asked Interior for additional
guidance on the activities that would be considered inherently federal
functions under the regulations. According to the tribal officials,
without additional guidance on inherently federal functions, tribes
considering a TERA do not know what activities the tribe would be
assuming or what efforts may be necessary to build the capacity needed
to assume those activities.
We recommended in our June 2015 report that Interior provide
additional energy development-specific guidance on provisions of TERA
regulations that tribes have identified as unclear. \12\ Additional
guidance could include examples of activities that are not inherently
federal in the energy development context, which could assist tribes in
identifying capacity building efforts that may be needed. Interior
agreed with the recommendation and stated it is considering further
guidance but did not provide additional details regarding issuance of
the guidance.
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\12\ GAO-15-502.
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In addition, the costs associated with assuming activities
currently conducted by federal agencies and a complex application
process were identified by literature we reviewed and stakeholders we
interviewed as other factors that have deterred any tribe from entering
into a TERA with Interior. Specifically, through a TERA, a tribe
assuming control for energy development activities that are currently
conducted by federal agencies does not receive federal funding for
taking over the activities from the federal government. Several tribal
officials we interviewed told us that the tribe does not have the
resources to assume additional responsibility and liability from the
federal government without some associated support from the federal
government.
In conclusion, our review identified a number of areas in which BIA
could improve its management of Indian energy resources and enhance
opportunities for greater tribal control and decisionmaking authority
over the development of their energy resources. Interior stated it
intends to take some steps to implement our recommendations, but we
believe Interior needs to take additional actions to address data
limitations and track its review process. We look forward to continuing
to work with this committee in overseeing BIA and other federal
programs to ensure that they are operating in the most effective and
efficient manner.
Chairman Barrasso, Ranking Member Tester, and Members of the
Committee, this concludes my prepared statement. I would be pleased to
answer any questions that you may have at this time.
The Chairman. Thank you so much for your insightful and
helpful testimony. It is a staggering loss of opportunity, to
take your words.
Next we will hear from the Honorable James ``Mike'' Olguin,
who is a Tribal Council Member from the Southern Ute Indian
Tribe. Welcome back to the Committee.
STATEMENT OF HON. JAMES ``MIKE'' OLGUIN, TRIBAL COUNCIL MEMBER,
SOUTHERN UTE INDIAN TRIBE
Mr. Olguin. It is a pleasure. Good afternoon, Chairman
Barrasso, Vice Chairman Tester and Committee members.
Thank you for the opportunity to provide a statement on
behalf of the Southern Ute Indian Tribe regarding BIA
supervision of Indian energy development. And thank you for
commissioning this important report.
My name is Mike Olguin. I am an elected member of the
Southern Ute Indian Tribal Council, which is the governing body
of the Southern Ute Indian Tribe.
The Tribe was very happy to cooperate with GAO staff and a
few of the report's key points here bear repeating. According
to the report, BIA's mismanagement of oil and gas resources led
to an industry preference to acquire oil and gas leases on non-
Indian lands over Indian lands.
The Tribe is not surprised by this conclusion, since
development on the reservation involves three Federal agencies
and compliance with a multitude of Federal statutes that do not
apply on adjacent fee land. The BLM's new hydraulic fracturing
rule would dramatically compound this problem if it ultimately
goes into effect.
In addition, permitting costs are much higher on tribal
lands than on fee lands. While the GAO report noted that the
BLM's drilling permit fee is $6,500, as of today that fee is
actually $9,500. A permit from the State of Colorado to drill
in adjacent fee land is free. This disparity creates a problem
that is made worse on reservations like our Tribe's, where
tribal land and non-Indian fee land are arranged like a
checkerboard and oil and gas operators can develop non-Indian
fee land for less time and money, all while depleting Indian
minerals.
There is no improvement in sight. Entering into a Tribal
Energy Resource Agreement, or TERA, could help address delays
caused by Federal oversight. Despite the Tribe's repeated
request for clarification on what constitutes a Federal
inherent function, the Tribe learned that the Interior
officials told GAO that the agency has no plans to provide
additional clarification.
If BIA can't help itself, it should readily accept
assistance from tribes when offered. The GAO report makes
perfectly clear that the BIA does not have the resources to
meet the Tribe's needs. The Tribe has the resources and has
made countless offers to assist the BIA, but the BIA has
repeatedly resisted these offers for reasons that are not
particularly compelling.
For example, the Tribe tried to assist with its Trust Asset
Accounting Management System, TAMS, only to be told that it was
not permissible for the tribe to assist unless it has a P.L.
638 contract in place. The Tribe tried to assist with
organizing the records at the Southern Ute Agency but the
Bureau said tribal employees did not have the expertise
necessary to assist, and that the employees needed to have
background checks. Those checks took months to complete and
required a 160-mile round trip drive to be fingerprinted and
have a photograph taken for facial recognition, and an hour-
long interview with an OPM contract investigator.
Time and time again, the Bureau held up its trust
responsibility to the Tribe as a reason it could not allow the
Tribe to assist. Shouldn't the trust responsibility analysis
start with common sense? Who is the Bureau afraid to sue if the
Bureau didn't require these background checks? The Bureau's
circular reasoning, we can't allow the Tribe to assist in
cleaning up tribal records, or they might not sue us for not
requiring them to have the required background checks, was
illogical, patronizing and contrary to the Tribe's best
interests, as articulated by the Tribe.
Trust responsibilities of the BIA to the Tribe must be
modified so that the agency can provide support for the Tribe's
decisions. Many months after the Office of Trust Records'
assessment report, after the arrival of a new, helpful agency
superintendent, the Bureau has entered into a P.L. 638 contract
with the Tribe to scan and organize the agency's files before
they are sent to the archives. The scanning project utilizes
less than $100,000 from the Department of Interior and more
than $1 million of tribal money and the dedication of tribal
staff.
The Southern Ute Agency's belated cooperation on this
project is a radical change from past practice. The Bureau's
past attempts to protect the Tribe from itself are patronizing,
at best, and a breach of trust, at worst. What is more is that
they don't make sense.
In this instance, upholding a trust responsibly did not
require the Bureau to find millions of dollars and staff to
meet the Tribe's needs. All it required was facilitating the
Tribe's efforts by removing the meaningless requirements like
facial recognition scans, so that the Tribe could take care of
the problem itself.
The Tribe is well-equipped to define and articulate its
best interests. Yet the ethic of the Bureau is to second guess
and overrule it. It does not make sense, particularly given the
Bureau itself cannot meet the Tribe's needs. The Bureau must be
more flexible.
Lastly, Southern Ute recognizes the Bureau cannot be all
things to all tribes, and each tribe is different. But that
trust responsibility means different things to different
tribes. Each agency must try to understand the needs of the
tribes that it serves, and the Bureau should not try to rely on
a one size fits all approach. For example, the inflexibility of
TAMS has been cited numerous times as an excuse for delays. On
the other hand, because the BIA lacks the technology required
to manage the Tribe's resources adequately, the Tribe's
department of energy has scanned its entire set of files and
developed its own data base in-house, complete with a GIS
module that TAMS lacks. It is the juxtaposition, like these,
the disparity between the Tribe's technological acumen as
compared to the Bureau's technical paralysis, that make the
inherent Federal function requirement all the more patronizing
and meaningless.
With that, the shortcomings of the BIA are not fresh
revelations. As you know, last week the House did pass the
Native Energy Act, which would tackle many of these problems
identified in the GAO report. The Tribe supports that bill and
supports Chairman Barrasso's Indian Tribal Energy Development
and Self-Determination Act Amendments.
With that, we are ready to answer any questions. Thank you.
[The prepared statement of Mr. Olguin follows:]
Prepared Statement of Hon. James ``Mike'' Olguin, Tribal Council
Member, Southern Ute Indian Tribe
Good afternoon Chairman Barrasso, Vice Chairman Tester, and
Committee members. Thank you for the opportunity to provide a statement
on behalf of the Southern Ute Indian Tribe regarding BIA's supervision
of Indian Energy Development, and thank you for commissioning this
important GAO report.
My name is Mike Olguin. I am an elected member of the Southern Ute
Indian Tribal Council, which is the governing body of the Southern Ute
Indian Tribe. The Tribe occupies the Southern Ute Indian Reservation
(Reservation) in southwest Colorado. The Reservation comprises
approximately 700,000 total acres and its boundaries include
approximately 311,000 surface and mineral acres of land 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 had spent a great deal of time with staff from the
Government Accountability Office who prepared this report. Tribal
officials and staff met with GAO auditors and provided information
regarding the Tribe's experience with the Bureau of Indian Affairs. The
Tribe was pleased with the final product and would like to take this
opportunity to focus on some of the key points and share with you
stories of the Southern Ute Indian Tribe's experience.
Indian Energy--Conventional and Renewable--has Enormous Potential for
Indian Tribes and their Members in Terms of Jobs and Household
Incomes
The Southern Ute Indian Tribe is a great example of the positive
impacts of Indian energy development. Less than fifty years ago the
Tribal Council had to end 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 in the face
of numerous obstacles, including BIA mismanagement, the Southern Ute
Indian Tribe would not be the economic powerhouse that it is today. 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. As part of that process, in 1980,
the Tribe created its Department of Energy. Because the Tribe's leaders
believed that the Tribe could do a better job of monitoring its own
resources than federal agencies did, 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. These acts of energy development self-determination are key
to the Tribe's economic success.
The Tribe is a leader in Indian Country with a demonstrated and
sterling record of business and administrative acumen. The Tribe is the
only tribe in the nation with a AAA+ credit rating, which was earned
through years of successful and prudent business transactions. Though
the Tribe has a diversified economic development strategy, energy
development remains the key component of the Tribe's strategy.
Approximately thirty percent of the Tribe's income comes from energy
development on the Reservation. Accordingly, barriers to energy
development--including BIA's poor management--have a direct bearing on
the Tribe's economic success. That in turn has a direct bearing on the
health and welfare of the Tribe's 1,500 members.
The Federal Role in Indian Energy Development has Enormous Impact--
Largely Negative--on Revenue for the Southern Ute Indian Tribe
from Reservation Energy Development
The Tribe has achieved its stature at times with the assistance of,
but often in spite of, the BIA's role in Indian energy development.
According to the GAO Report, in 2012, the Department of the Interior's
Inspector General found that weaknesses in BIA's 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, who is all too aware of
this reality. The Tribe's wholly owned oil and gas company has had to
weigh the uncertainties associated with BIA administrative delays and
the quality of BIA and BLM management decisions when considering
whether to invest in energy development on Tribe's own lands or off the
Reservation. The Tribe is hopeful that the GAO's conclusion in this
regard brings additional attention to this problem. The GAO noted that
``According to Interior officials, while the potential for oil and gas
development can be identical regardless of the type of land ownership--
such as state, private, or Indian--the added complexity of the federal
process stops many developers from pursuing Indian oil and gas
resources for development.'' In addition to a cumbersome process than
involves not one but three federal agencies (BIA, BLM and ONRR),
development of minerals on Indian lands also requires compliance with
NEPA and the National Historic Preservation Act, which can add
significant delay. Based on an interview with a private investment
firm, GAO learned that an oil or gas well that develops Indian
resources generally costs almost 65 percent more for regulatory
compliance than a similar well developing private resources. The BLM's
new hydraulic fracturing rule, currently stayed by the U.S. District
Court in Wyoming, would dramatically compound this problem if it
ultimately goes into effect.
These regulatory compliance costs are magnified when oil is trading
around $50 a barrel, as it is now. 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 with 75 days, the
operator has a right to a hearing. In comparison, on tribal lands, BLM
issues the permits to drill, which typically take four to six months.
There are no regulatory commitments to a processing timeframe;
operators must just wait. In addition, permitting costs are much higher
on tribal lands than on fee lands. While the GAO Report noted that the
BLM's drilling permit fee is $6500.00, as of today that fee is actually
$9500.00, 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
the BIA to review and approve even the most basic realty transaction
occurring on the lands held in trust for the Tribe on the Reservation.
The Tribe must generally wait upon approval from the Agency, which will
invariably delay a proposed tribal project. These delays are
exacerbated by the fact that the Agency 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 the BIA, the statutory and regulatory requirements for
BIA approval of tribal transactions must be modified so that BIA review
and approval of realty-related tribal projects is not required.
Entering into a Tribal Energy Resource Agreement (TERA) would-at least
in theory-address this problem, but despite the Tribe's repeated
requests for clarification of the TERA process, and in particular, for
clarification on what constitutes an ``inherent 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. The Tribe now learns in the GAO Report that
``Interior officials told GAO that the agency has no plans to provide
additional clarification.'' The Tribe notes that this is a problem
Interior created for itself, as the term ``inherent federal functions''
is only contained within Interior's regulations, and is found nowhere
in the Indian Tribal Energy Development and Self-Determination Act, the
statute through which Congress created TERAs.
Tribes like Southern Ute that Actually Practice Self-Determination
Still Need the BIA to be Effective, Efficient, and Responsive
to the Tribe's Needs When it Comes to Federal Functions
The BIA, particularly at the local Southern Ute Agency office, has
been underfunded and understaffed for decades. As a result, the review
and approval process often causes substantial delays that damage the
Tribe and its interests. At one point in time several years ago, the
Tribe estimated that delays associated with the review and approval of
pipeline projects had cost the Tribe over $90M in lost revenue. To make
up for the BIA's shortcomings and ensure that tribal business can
continue, the Tribe has committed tribal staff and resources to
ensuring that the work needed to be done by the BIA to approve
transactions can be completed in a timely manner.
Unfortunately, none of the GAO Report's Recommendations for
Executive Action address the problem of underqualified and untrained
staff. The Department of the Interior's comments stated that the
development of an Indian Energy Service Center will solve this problem,
but this solution still will not solve the problem at a local level. In
addition, before an Indian Energy Service Center is implemented, there
should be a review of existing organizations (e.g., various offices and
services provided by the OST) that were created to assist in the wake
of the Cobell lawsuit.
The high cost of living in the Durango area is often cited as the
reason that the Bureau cannot attract candidates to staff the Southern
Ute Agency, yet the Bureau does not advertise locally and in forums
where local people look for jobs in the area. If flight risk and high
cost of living make it difficult to attract staff who will stay here,
why would the Bureau not look to candidates who already live in and are
committed to this Region, and then provide training?
If BIA Cannot Help Itself, it Should Readily Accept Assistance from
Tribes when Offered
``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 Bureau
officials. The Southern Ute Indian Tribe has implored the BIA to accept
the Tribe's countless offers to assist. BIA has repeatedly resisted
those offers for reasons that are not particularly compelling. The
GAO's report makes perfectly clear that the BIA does not have the data,
resources, technological capabilities, or staffing to meet the needs of
tribes. The Bureau also has no apparent incentive to meet tribal needs.
\1\ The Tribe has data, resources, staffing, technological
capabilities, and the incentive to improve the situation. To help with
the backlog in processing transactions, the Tribe has attempted to
assist with Trust Asset Accounting Management System (TAAMS) encoding,
only to be told that it was not permissible for the Tribe to assist
unless it has a 638 contract. \2\ This fact was only communicated after
the Bureau led the Tribe on for several years, requiring technology
expenditures and requiring and conducting extensive background checks
for tribal employees who would be assisting.
---------------------------------------------------------------------------
\1\ This appears to be a systemic issue. The Tribe's few positive
experiences with the BIA in the past decade are limited to positive
interactions with motivated, committed, engaged individual Agency
employees, such as the Tribe's new Agency Superintendent, Priscilla
Bancroft.
\2\ The Tribe has repeatedly told the Bureau that it will not enter
into a 638 contract for realty functions unless and until the Bureau
organizes its records. The lack of a 638 contract is nevertheless
heralded as the reason the Tribe cannot assist with TAAMS encoding.
---------------------------------------------------------------------------
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 Tribe was told that tribal employees assisting with the
Tribe's records needed to have extensive background checks, and that
the tribal employees did not have the knowledge and expertise necessary
to assist. The Tribe had several of its employees go through the
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 OPM contract
investigator. This process took many months. The Tribe even hired local
museum archivists to conduct a training on archival techniques for
Agency and tribal staff so that the Bureau would allow tribal staff to
handle the tribal records that had been desecrated by the Bureau for
decades. Time and time again the Bureau held up its trust
responsibility to the Tribe as the reason it could not allow the Tribe
to assist. This circular reasoning (if we let the Tribe, without proper
background checks and training, assist us in organizing and
inventorying the irreplaceable historic records that we have
haphazardly thrown in open cardboard boxes on the floor below shelves
of industrial size bottles of toilet bowl cleaner, they might sue us
for not upholding our trust responsibility to protect their records
from tribal staff who do not have the requisite background checks and
training) was illogical, maddening, patronizing, and contrary to the
Tribe's best interests, as articulated by the Tribe.
The Trust Responsibilities of the BIA to the Tribe must be Modified so
that the Agency Can Provide Support for and Enforcement of the
Tribe's
Decisions Rather than Delay the Implementation of those
Decisions
Many months after the OTRA report, after the arrival of a new,
helpful Agency Superintendent, the Bureau has entered into a PL 93-638
contract which allows the Tribe to, largely with the Tribe's own
funding, scan and organize the Agency's files before they are sent to
the American Indian Records Repository. The records will be prepared
and scanned using 300 dpi scanners. The electronic files will 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 will then
be indexed into the Tribe's proprietary Geographic Information System
(GIS). This scanning project, which utilizes less than $100,000 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 Southern Ute Agency's belated cooperation on this project brings a
sigh of relief and a radical change from past practice. The Bureau's
past attempts to protect the Tribe from itself are patronizing at best,
and a breach of trust, at worst. The Tribe is well-equipped to define
and articulate its best interests, yet the ethic of the Bureau is to
second-guess and overrule it. This does not make sense, particularly
given that the Bureau itself cannot meet the Tribe's needs. The Bureau
must be more flexible.
The BIA Cannot Be All Things to All Tribes, but in Consultation with
Tribes, it Should Identify Those Things It Will Do and then
Endeavor to do them Extremely Well
Southern Ute recognizes that the Bureau cannot be all things to all
tribes, and that each tribe is different. Too, the trust responsibility
means different things to different tribes. This underscores the need
for each Agency to endeavor to truly understand the needs of the tribes
that it serves, and to work toward responding to those needs. This will
mean that the Bureau will not be able to rely on a one-size-fits-all
approach. The Bureau is not particularly well equipped for flexibility,
unfortunately. For example, the Southern Ute Indian Tribe, as well as
operators on the Reservation, prefer to handle 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. However,
when the Southern Ute Indian Tribe presented one of these ``global
rights-of-way'' packages to the Southern Ute Agency for approval, it
took the Agency approximately four years to approve them. 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 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
Bureau cannot assist the Tribe. If this system is so fundamental to the
Bureau's ability to function, why did the Bureau select and contract
for a system that is so poorly designed and so inadequate?
The GAO Report identified problems with TAAMS. As the Report noted,
``BIA does not have geographic information system (GIS) mapping data
identifying resource ownership and use of resources, such as existing
leases. Interior guidance identifies that efficient management of oil
and gas resource relies, in part, on GIS mapping technology because it
allows managers to easily identify resources available for lease and
where leases are in effect. However, BIA's database for recording and
maintaining historical and current data on ownership and leasing of
Indian land and mineral resources (TAAMS), does not include a GIS
mapping component.'' The Report noted that ``according to a BIA
official, without a GIS component, the process to identify transactions
such as leases and ROW agreements for Indian land and resources can
take significant time and staff resources to search paper records
stored in multiple locations.''
To improve access to critical mineral resource information, 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 Department of Energy's Land Information
Management System and represents a major improvement to tribal
operations. Basically, because the BIA lacks the technology 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.
It is juxtapositions like these--the disparity between the Tribe's
technological acumen as compared to the Bureau's technological
paralysis--that make the ``inherent federal function'' requirement all
the more patronizing and meaningless.
The shortcomings of the BIA are not fresh revelations and, as you
know, last week the House passed the ``Native Energy Act'' (H.R. 538),
which would tackle many of the problems identified in the GAO report.
The Tribe supports that bill as it supports Chairman Barrasso's
``Indian Tribal Energy Development and Self-Determination Act
Amendments'' (S. 209). With a short calendar remaining in 2015, we hope
the Senate takes up S. 209 in the days ahead.
Thank you for the opportunity to appear before you today. I would
be happy to answer any questions the Committee may have.
Attachment
Supplemental Statement of James M. ``Mike'' Olguin
Chairman Barrasso, Vice Chairman Tester, and Committee members, on
behalf of the Southern Ute Indian Tribe, I would again like to thank
you for allowing us to participate in this Oversight Hearing. The
Committee's review of the GAO Report on BIA's management of energy
development on Indian lands signaled bi-partisan recognition that the
current system of managing energy development in Indian country is
simply unacceptable. During the hearing on October 21st, members of the
Committee asked questions and received testimony on several matters
that are deserving of additional comment. Specifically, the items we
wish to address are: (1) shortcomings in the BIA's land records system;
(2) the dilemma of withholding ``inherent federal functions'' from
tribal administration; and (3) the role of the BIA in advocating tribal
best interests to sister agencies. We respectfully request that you
consider our Tribe's supplemental comments on these subjects.
1. The Records System for Indian Land Title Is Grossly Inadequate
The GAO Report found that the BIA ``does not have the data it needs
to verify ownership of some oil and gas resources, easily identify
resources available for lease, or easily identify where leases are in
effect.'' GAO Report at 18. Quite separate from the slow conversion of
the BIA's automated land records system, the Trust Asset and Accounting
Management System (TAAMS), to facilitate GIS mapping, the underlying
deficiency in verifiable land and mineral ownership records is a
foundational concern with enormous ramifications. Based on the
experience of Southern Ute, we understand that the BIA has never
successfully completed the importation of historic, hard-copy title
records into the TAAMS system. Further, because successful encoding of
historic or current transactional documents into TAAMS is an
administrative condition to such documents actually being recorded in
the BIA's Land Title and Records Offices (LTROs) (the official regional
locations for maintaining land title records), whether a critical
document actually exists in the official LTRO records depends--not on
its timely delivery for recording--but rather on whether the BIA
personnel have had the time and training to convert the written
document into TAAMS data. At Southern Ute, backlogs in TAAMS encoding
have correspondingly diminished the reliability of LTRO as the
definitive source for ascertaining Indian land title. We sincerely hope
that our concern regarding this matter derives from circumstances that
are localized and anomalous, but we respectfully urge the Committee to
delve deeper into this issue. It is the fundamental, bedrock trust
function of the BIA to maintain accurate records of Indian land
ownership.
2. The Secretary's Unwillingness to Permit Tribes to Assume
``Inherently Federal Functions'' Stymies Congress' Intent Under
Either TERAs or HEARTH Act Approaches
Commencing several years before passage of the Energy Policy Act of
2005, the Southern Ute Indian Tribe was one of several tribes
advocating the creation of a statutory vehicle by which an electing
tribe, with demonstrated capacity, could obtain Secretarial approval to
bypass the Secretarial approval requirements for energy leases, rights-
of-way and other business agreements. The reasons for seeking this
optional statutory mechanism reflected the reality that the capacity
and sophistication of some tribes and the complexity of their
transactions (such as monetization of Section 29 non-conventional fuel
tax credits) had simply outstripped the expertise of BIA. As debate
began, however, multiple issues were identified by various tribes and
non-tribal groups, including: applicability of NEPA, development of
tribal environmental review procedures, public comment opportunity,
waivers of trust responsibility, retrocession of TERAs, and tribal
capacity determinations. The resulting TERA statute embodied in the
Indian Tribal Energy Development and Self Determination Act (25 U.S.C.
3504) is a complicated and daunting vehicle for achieving what was
intended to be a simple objective.
While the TERA statute addresses many matters, Congress recognized
that the Secretary would need to supplement those provisions with
implementing regulations and directed that the Secretary promulgate the
regulations within one year of passage of the statute. 25 U.S.C. 3504
(e)(8). Recognizing that such deadlines are sometimes missed (it took
11 years for the Secretary to promulgate regulations supplementing the
Indian Mineral Development Act of 1982, only ten and a half years
overdue), the Southern Ute Indian Tribe offered the services of its
staff and attorneys to take a preliminary stab at creating a conceptual
draft. The BIA not only accepted the Tribe's offer, but also assigned
officials from the Office of Indian Energy and Economic Development and
the Solicitors' Office to participate in the preliminary process.
The immediate question confronted by the drafting participants was
whether the permissible scope of a TERA might include the regulatory
and administrative functions typically performed by the BIA or BLM in
implementing a Secretarially approved energy lease, right-of-way or
business agreement. For example, if a tribally approved oil and gas
lease under a TERA still required BLM approval of an Application for
Permit to Drill, could the Secretary authorize a TERA tribe to review
and approve the APD? With support from the highest levels of the BIA,
the participants were encouraged to maximize the potential scope of the
TERA, consistent with the statutory language and Congress' intent.
Upon completion of the initial drafting, the participants delivered
the conceptual document to the BIA, which gave the BIA a head start in
preparing draft regulations later circulated for public comment in
conformity with the Administrative Procedures Act. To the consternation
of tribal participants, the draft published regulations and the final
TERA regulations carved an undefined exception from the potential scope
of a TERA by withholding ``inherently Federal functions'' from the
ancillary administrative activities that could be undertaken by a TERA
tribe in overseeing activities on a non-federally approved lease,
right-of-way or business agreement. 25 C.F.R. 224.53(e)(2). Despite
repeated efforts to obtain an explanation from the BIA about what
``inherently Federal functions'' means in the context of the potential
scope of a TERA, the Tribe has been stonewalled. The GAO was also
unsuccessful in obtaining clarification on this point because ``the
agency has not determined what activities would be considered
inherently federal . . . and doing so could have far-reaching
implications throughout the federal government.'' GAO Report at 32.
Indeed, when questioned at the Oversight Hearing about the BIA's
unwillingness to clarify this non-statutory exception to the scope of a
TERA, the Secretary's representative, Principal Deputy Assistant
Secretary, Indian Affairs Lawrence S. Roberts, provided little
assurance that an interested tribe will ever have advanced knowledge
about the potential scope of a TERA.
Significantly, as Deputy Assistant Secretary Roberts reminded the
Committee, Assistant Secretary Washburn has previously advocated
extension of the HEARTH Act (25 U.S.C. 415(h)) to energy related
leases, rights-of-way, and business agreements, as a preferable
alternative to clarifying the TERA statute or regulation. The HEARTH
Act is clearly a simpler mechanism for removing Secretarial approval
requirements than the TERA statute. However, in attempting to address
post-approval administrative powers, the TERA regulations are much more
ambitious than the HEARTH Act for a reason; the administrative
functions and approvals related to energy project operations interplay
directly with the performance of energy lease obligations and those
administrative activities are also points of delay in energy resource
development in Indian country. If the HEARTH Act is extended to energy
development, we believe that Indian country and Congress will demand a
clearer understanding of what ``inherently Federal functions'' are and
why they may not be assumed by capable tribes.
3. As Evidenced in the BLM's Rulemaking for Hydraulic Fracturing, It Is
not Apparent That BIA Has Been an Effective Advocate for Tribal
Best Interests in Sister Agency Rulemaking
Because of the importance of oil and gas development to our Tribe,
we participated in every stage of consultation offered by the BLM
regarding its proposed hydraulic fracturing regulation beginning in
January of 2012. Frankly, BLM was not forthright about the advanced
status of its rulemaking activities when it began those discussions
with tribes, and it never seriously entertained repeated tribal
recommendations that its rule separately address Indian lands from
public lands or that tribes be afforded an opportunity to opt-out of
its rule. As recently found by United States District Court Judge
Skavdahl, ``The BLM had already drafted a proposed rule by the time the
agency initiated consultation with Indian tribes in January of 2012.''
Order on Motions For Preliminary Injunction at 39, Doc. 119, Sept. 30,
2015, Wyoming v. United States Department of the Interior, Case No.
2:15-CV-043-SWS (D. Wyoming). Additionally, in granting a preliminary
injunction suspending the rule, Judge Skavdahl determined that ``the
BLM summarily dismissed legitimate tribal concerns, simply citing its
consistency in applying uniform regulations governing mineral resource
development of Indian and federal lands and disavowing any authority to
delegate regulatory responsibilities to tribes.'' Id.
Although not discussed in the Wyoming case, the Southern Ute Indian
Tribe and other energy producing tribes had also made repeated requests
to the BIA to intervene with BLM on behalf of tribes. At a hastily
assembled meeting with BIA officials who were attending the annual NCAI
meeting in Nevada in June of 2013, a room full of tribal
representatives brought the pending BLM rule to the attention of BIA
officials, who seemed unfamiliar with the fact that the rule was
pending. Tribal concerns at that time were evidenced by the adoption of
NCAI Resolution No. REN-13-077, which called for separation between
regulation of Indian lands and public lands and greater deference to
tribal sovereignty. At various subsequent occasions in 2013 and 2014,
tribal representatives traveled to Denver and Washington, D.C. to
communicate their concerns, not just to BLM, but to urge BIA to speak
on their behalf in this matter. To the very end, BLM refused to
consider treating Indian lands and public lands differently or allowing
electing tribes to opt out of the rule. To be sure, the final BLM rule
did set up a waiver mechanism permitting the applicable State BLM
Director to permit a tribe or state to substitute its own rules for
BLM's, but only upon a finding that such a rule meets the federal
objectives of the BLM rule. The BLM Director's determination is
entirely discretionary and not subject to administrative challenge
under the currently enjoined BLM rule.
It is possible that the referenced waiver provision is due in part
to BIA involvement; however, we were never advised of that involvement.
We were disappointed by the lack of visible support of the BIA for our
position. We also believe that, because of its unique expertise and
responsibilities, it should be active in assisting tribes when the
actions of sister agencies implicate legitimate tribal interests.
Conclusion
We respectfully thank you for the opportunity to address these
matters and look forward to working with you in the future with regard
to Indian energy issues.
The Chairman. Thank you very much, Mr. Olguin.
Mr. Stafne?
STATEMENT OF HON. GRANT STAFNE, COUNCILMAN, FORT PECK
ASSINIBOINE AND SIOUX TRIBES
Mr. Stafne. Good afternoon, Chairman Barrasso, Vice
Chairman Tester and members of the Committee.
My name is Grant Stafne. I serve as a member of the Tribal
Executive Board of the Assiniboine and Sioux Tribes of the Fort
Peck Reservation.
On behalf of Chairman A.T. Stafne, I thank the Committee
for holding this important hearing. It highlights the GAO
findings concerning Indian energy development, namely, that
poor management by BIA has hindered energy development on
Indian lands.
The Fort Peck Reservation lies within the western part of
the Williston Basin, which include the oil-producing formation
commonly known as the Bakken and Three Forks Formation.
Estimates are that Bakken and Three Forks collectively hold 24
billion barrels of potentially recoverable crude oil, 20
billion barrels in oil and 40 billion barrels in natural gas. I
am here today to provide specific recommendations that I hope
the Committee will help implement, because as for the Fort Peck
Reservation, the GAO findings are all true.
At Fort Peck, we have experienced long delays by the Fort
Peck agency in processing mineral leases, appraisals and
requests for drilling permits, raising Federal permit and
rights-of-way fees and other energy development costs well
above off-reservation fee lands, sometimes setting rates three
times the going rate in our area. And poor allocation of agency
personnel who can expedite permits, rights-of-way and other
Federal requirements.
We have considerable experience in oil and gas development,
dating to the 1950s. It is simply unacceptable to my tribe that
agency shortcomings have resulted in missed development
opportunities for tribes, lost revenues and jeopardization of
otherwise viable energy projects. The United States must do a
better job of honoring its trust obligations to all tribal
nations in the field of natural resource development. The
Departments of Interior and Energy should work together more
closely.
We make the following six recommendations. One, improve the
BIA's administration of energy development. This starts with
having qualified and trained personnel in realty appraisals and
permitting being detailed to the relevant BIA agency and
regional offices. Energy developers will not pursue otherwise
viable tribal energy leases if they fear they will be subject
to delays and arbitrary fees and costs that they do not
encounter off-reservation.
Two, reduce oil and gas fees. BLM currently charges $6,500
for a permit application to drill on Indian and tribal trust
lands. The State of Montana charges $75 to process the same
kind of permit on State fee land. Had Congress known this, we
doubt it would have set so high a fee as to discourage energy
development on tribal trust lands.
Three, ensure that the lease bid deposits are placed in
interest-bearing accounts. This was done historically and
should be reinstituted.
Four, eliminate dual taxation. As the GAO report found,
dual taxation hinders oil and gas development on Indian lands
as a result of the wrongly-decided Supreme Court decision in
Cotton Petroleum that allows States to tax certain activities
by non-Indian companies on Indian and tribal trust lands. This
discourages economic activities on tribal lands. Cotton was
wrongly decided. We ask Congress once again to pass legislation
returning full taxing authority to tribal governments.
Five, eliminate barriers to wind energy and other renewable
energy projects. Our reservation provides a great opportunity
for wind development, but ever-changing national energy polices
and the lack of inexpensive and accessible transmission line
capacity hinders wind energy development at Fort Peck.
Six, develop environmentally and culturally sustainable
energy projects. We fully support job creation initiative and
economic development opportunities when such activities are
balanced with longstanding ranching and farming activities and
a sacred commitment to preserve our tribal homelands.
In conclusion, we do not suggest the elimination of Federal
oversight over tribal energy projects. We ask, however, that
the Federal Government do its job more efficiently and with
greater consultation with tribal governments.
[Phrase in Native tongue.]
[The prepared statement of Mr. Stafne follows:]
Prepared Statement of Hon. Grant Stafne, Councilman, Fort Peck
Assiniboine and Sioux Tribes
I. Introduction
My name is Grant Stafne, and I am a member of the Tribal Executive
Board of the Assiniboine and Sioux Tribes of the Fort Peck Reservation.
Tribal Chairman AT Stafne and my fellow Tribal Executive Board members
send their best wishes and thanks to Chairman Barrasso, Vice Chairman
Tester, and the Committee for holding this important oversight hearing
on the GAO's report on the effects of BIA's management on development
on Indian Lands, GAO-15-502, Indian Energy Development: Poor Management
by BIA has Hindered Energy Development on Indian Lands (``Report'').
The Fort Peck Reservation consists of over two thousand square
miles of land in northeastern Montana. The Assiniboine and Sioux Tribes
and individual Indians own about one million acres of land. Over 6,700
Tribal members and non-member Indians live on the Reservation, along
with over 3,200 non-Indians. We have been developing oil and gas
reserves on our Reservation since the early 1950s.
II. The Opportunities and Challenges of Energy Development on the Fort
Peck Reservation
The Fort Peck Reservation lies within the western part of the
Williston Basin, which includes many oil producing formations,
including what is commonly known as the Bakken formation and the Three
Forks formation. Since the 1950s, a major part of the Tribes' economy
has been based on oil and gas development. In the 1950s, the Tribes
began to lease substantial amounts of Tribal mineral lands to non-
Indian companies for oil and gas development. In the oil boom of the
1970s and early 1980s, we asserted much greater control over this
process, insisting on increased royalty rates for new Tribal leases,
and entering into service contracts where the Tribes hired a private
company to explore and develop Tribal oil and gas for our own benefit.
We also imposed a Tribal severance tax on energy development. During
the early 1980s, Tribal revenues from oil and gas lease rents and
royalties came to over $8 million in some years. Over the last two
decades, oil and gas development on the Fort Peck Reservation has
tapered off significantly.
However, the development of horizontal drilling techniques allows
for better access to known oil and gas reservoirs in the Bakken and
Three Forks formations on our Reservation. These reserves were
previously inaccessible due to the low porosity and low permeability of
the Bakken and Three Forks rock formations containing the oil and gas,
which made it difficult to extract the product using conventional
vertical drilling techniques. The oil and gas is essentially trapped in
the dense rock formation and cannot be extracted merely by drilling
downward. Instead, the oil and gas must be released through horizontal
drilling and a process called hydraulic fracture stimulation or more
commonly ``fracking.'' An April 2008 U.S. Geological Survey Report
determined that horizontal drilling and fracturing techniques could
provide access to 3 to 4.3 billion barrels of recoverable oil in the
Bakken formation alone. In 2011, Continental Resources Inc., a
petroleum liquids producer in the U.S., declared that the ``Bakken play
in the Williston Basin could become the world's largest discovery in
the last 30-40 years.'' Continental estimates the Bakken and Three
Forks collectively hold 24 billion barrels of potentially recoverable
crude oil equivalent: 20 billion in oil and 4 billion in natural gas.
While much of the recent Bakken play has focused on reserves in North
Dakota, it is now moving back to Montana and to the Fort Peck
Reservation in particular.
Even though the recent drop in the price of oil presents an
additional obstacle to development of our oil and gas resources, the
Fort Peck Tribes sees this technological advance as an opportunity for
our Tribal government--working in close collaboration with our Federal
trustee--to use the bounty of our natural resources to create jobs and
spur sustainable economic development to erase the persistently high
rates of unemployment and poverty on our Reservation. Despite our best
efforts over the past decades to develop our natural resources in an
economically and environmentally sustainable manner, the difficulty of
tapping these reserves, along with the challenges of dealing with
multiple jurisdictions, have made it difficult for our Tribal
government to make a significant dent in the unemployment and poverty
that still plague our Reservation. We can and must do better, but this
will only happen if our Federal trustee works with us to avoid the
mistakes of the past. Unfortunately many of the factors identified in
the recent GAO report on Indian Energy Development have had direct
impacts on the pace of development of the oil and gas resources on our
Reservation.
For example, the Report identifies the nature of ``checkerboard''
and fractionated land interests as a serious problem. See, e.g., Report
at 28. Like most reservations in Montana, our Reservation was opened to
homesteaders a century ago, with trust and fee lands interspersed in a
``checkerboard'' ownership pattern. Consequently, the development of
lands and resources within our Reservation is subject to oversight from
many federal, state and tribal agencies and laws. If done properly and
with respect for tribal sovereignty, federal government oversight and
regulation should not unduly impede energy development or infringe on
the proper exercise of Tribal governmental authority on our
Reservation. Unfortunately, our experience has taught us that federal
involvement is not always helpful, particularly in the field of energy
development.
Federal and state agencies often do not coordinate well with one
another or with tribal agencies. And as the Report identifies, this
leads to long delays in the approval of required paperwork and in the
implementation of tribally-beneficial energy development policies.
While there are many excellent, highly-motivated officials in the
Department of the Interior (DOI) and the Department of Energy (DOE)
working to provide useful technical assistance to tribes, too often
this technical expertise does not make it down to the BIA Regional
Offices and Agencies on the reservations. BIA Regional and Agency staff
often do not have adequate technical expertise in the complex field of
energy development, and they do not always appreciate that ``time is of
the essence'' when it comes to energy development. Our experience lines
up with the Report's findings on the need for more--and better trained
and resourced--staff to work on Indian energy issues.
The Fort Peck Agency's long delays in processing mineral leases and
other critical energy development paperwork often frustrate our energy
development plans and serve only to push oil, gas, and other types of
energy and mineral development off the Reservation. In fact, BIA
approval of oil and gas leases can take so long that Indian probate
cases have been known to open and close before any BIA action is ever
taken. Time is money to energy producers. Federal inaction can often be
as bad as wrong action, and we have found instances where the BIA has
simply failed to carry out its trust responsibility by waiting months,
even years, to act on mineral leases, appraisals, requests for drilling
permits, and other documents requiring prompt action.
Just as time is money to energy producers, money is money to energy
producers. If the costs of ``on-reservation'' energy production is much
higher than the cost of ``off-reservation'' energy production, energy
producers will naturally locate where it is less expensive to operate.
We have already seen this pattern in the Williston Basin and do not
want to see it continue. Federal permit fees and other energy
development costs should not be vastly higher on tribal lands than they
are on state lands. By and large, the market should decide these costs
and fees, not federal bureaucrats.
The United States must do a better job of honoring its trust
obligation to all tribal nations in the field of natural resource
development. As discussed in the recommendation section below, DOI and
DOE policymakers should work together to place knowledgeable oil and
gas development experts at every BIA Agency where tribes are actively
working to develop oil production in the Bakken and Three Forks
formations. These locally-based experts could help the BIA Agency staff
improve their turn-around time for required approval of a wide-range of
energy-related documents. These experts should also be qualified to aid
tribal leaders and BIA officials in planning for (and identifying
funding resources for) the critical transportation infrastructure
needed to support energy development in a safe manner. We have
witnessed the damage created on the Fort Berthold Reservation to the
Tribal road systems when oil production truck traffic increased rapidly
with no corresponding increase in the transportation infrastructure
needed to support it. Roads were destroyed and lives were lost in
preventable traffic accidents.
Congress and the Administration have important roles to play in
helping all tribes gain the benefits of sound and sustainable
development of the Bakken and Three Forks formations. Congressional
support for reservation-based transportation infrastructure, road
maintenance and traffic safety program funding are critical to the safe
and efficient development of the Bakken and Three Forks oil fields.
Energy development activities also need to be coordinated with law
enforcement officials, employee training center directors,
environmental protection officials, school superintendent, and housing
program directors so that the great crush of new people and economic
activity on the Reservation does not overwhelm the Tribes' limited
governmental resources in these areas. Fort Peck Tribal members must
also be adequately trained and equipped for jobs in the oil and gas
industry.
Greater federal funding assistance and technical support for the
Tribal law enforcement, housing, environmental, career training, and
educational programs will help us ensure that the many positives that
come from sound energy development are not overshadowed by the negative
consequences of traffic congestion, traffic safety concerns, and
environmental damage.
Our Tribal government is entrusted with protecting our homelands
for the next seven generations. We have a duty to our ancestors to
ensure that the land they fought to preserve for us is maintained in a
culturally and environmentally sound manner to sustain our people for
generations to come. Thus, as we consider the positive job creation and
economic development potential of Bakken energy development or other
major projects such as the Keystone XL Pipeline, we have a
corresponding duty to ensure that these projects are carefully planned
and studied to ensure that they do not put our sacred sites at risk or
otherwise imperil the sacred trust we have to preserve our homelands
for future generations.
III. Recommendations for Improving Reservation-Based Energy
Development
This hearing is timely and important. The Tribes believe the
specific recommendations set out below will help ensure that tribal
nations--indeed the entire Nation--will be in a better position to
capitalize on the great economic and job creation opportunity presented
by the Bakken and Three Forks oil plays. These recommendations will
also help tribal nations become engines of economic growth in the
broader field of energy development--including renewable energy
development--for the benefit of all.
A. Improve BIA's Administration of Energy Development
The GAO Report identified the BIA's review and response times and
the cost of permitting as hindering energy development. Report at 21,
27. We agree. However, in addition to the length of time it takes for
the BIA Agency to act on leases, permits and other paperwork, a great
area of concern is the deficiencies within the BIA's Realty Division.
Specifically, there is not a certified realty appraiser at the Fort
Peck Agency. Consequently, the BIA's assessed values for rights-of-way
and well-pad sites are sometimes 300 percent what they should be. For
example, the Fort Peck Energy Company (FPEC), which the Tribes' former
energy development arm, paid $15,000 each for two well-pad sites. This
price may be consistent with the amounts now paid in North Dakota,
where major development activities are already ongoing, but it is
inconsistent with normal appraising practices in a place where oil has
not yet been located in paying quantities. FPEC paid this fee under
protest because it did not have the luxury of time to dispute the BIA's
actions. Available drilling rigs are in high demand and difficult to
get so FPEC had to secure the well-pad sites even though it strongly
disagreed with the BIA Agency assessment. This is but one example of
our Federal trustee charging a tribally-owned corporation an improper
assessment due to a lack of oil development expertise and appraisal
experience.
We have encountered the same difficulty in securing rights-of-way
(ROW) for oil exploration activities. We are aware of one company that
has cancelled its plans to develop two wells on the Fort Peck
Reservation because the BIA Agency staff insisted on a ROW fee in
excess of $28,000, which is far more than would be paid off-
reservation. While it is of course important that allottees and our
Tribal trust lands receive fair compensation for ROW usage, it is
equally important that appraisals are not so unfair or arbitrary that
they discourage legitimate oil exploration activities. In the Tribes'
view, these fees were arbitrary and were based on the unreasonable
judgment of BIA personnel who are not trained appraisers. This lack of
technical expertise discourages energy development on the Fort Peck
Reservation because potential developers fear they will be subjected to
arbitrary fees and costs they do not encounter off the Reservation.
Private business interests have often complained to our Tribal
Executive Board that they do not like to deal with BIA Agency staff
that too often seems uninterested in working with private companies in
a fair, timely, and efficient manner. More must be done to enhance the
technical capacity and expertise of Fort Peck Agency staff in the areas
of energy development, land use, and ROW appraisals.
Senior DOI and DOE officials should work together to place highly-
motivated, well-trained technical staff at the Fort Peck Agency and all
other BIA Agencies located on Indian reservations within the active
Bakken and Three Forks formation oil plays. These teams would be
similar to the ``one-stop'' technical assistance team established on
the Fort Berthold Agency and should include not only trained oil and
gas lease specialists, but also a ROW specialist, a trained appraiser,
and a geologist with oil and gas development experience. More than any
other single recommendation, we believe this action will help seize
this once-in-a-lifetime economic development opportunity for the Fort
Peck Tribes, for other Tribes in the region, and for our Nation as a
whole.
B. Reduce Oil and Gas Fees
Although this hearing is concentrated on BIA, it is important to
note that another disincentive to drilling on Indian allottee and
tribal trust lands is the $6,500 that the BLM charges for a permit
application to drill on federal land, including Indian and tribal trust
lands. In FY 2010, Congress increased this fee from $4,000 to $6,500.
In theory, this fee is intended to cover the BLM's cost of processing
the drilling permit application. However, the fee is highly
disproportionate to the $75 that the State of Montana charges to
process the same kind of permit on State fee land, which is analogous
to the differential fee problem identified in the report. See Report at
27. We see no good reason for the BLM fee to be so high on Indian and
tribal trust lands and doubt Congress even considered the potential
negative impact on oil and gas development in Indian Country when it
made this change in the law. Economic development in Indian country
should not be used to off-set the federal deficit.
C. Ensure that Lease Bid Deposits are Placed in Interest-bearing Trust
Accounts
The Tribes also seek congressional support for legislation--or at a
minimum renewed pressure for administrative action--to ensure that bid
deposits for oil and gas lease sales on Indian and tribal trust lands
are once again held in interest-bearing accounts. Historically, bid
deposits were held in interest-bearing trust accounts and, upon
Secretarial approval of the lease or contract, both the principal and
interest were paid to the tribal and individual Indian landowners.
However, DOI policy changed several years ago despite our strong
protests. Now, the DOI holds bid deposits and other advance payments
made by successful bidders in non-interest-bearing federal accounts
until the lease or contract is approved by the Secretary.
As noted above, it can unfortunately take months and sometimes even
years for a successful bidder to secure BIA approval of a mineral
lease. Consequently, these bid deposits sit idle in federal accounts
without earning interest for the beneficial land-owner, whether a tribe
or an Indian allottee. By the time the funds are finally paid to tribes
and individual Indian landowners, the value of the bid deposit has been
eroded by inflation.
In the Tribes' view, the DOI's current practice is illegal and
contrary to the federal trust responsibility. Our Tribal leadership has
discussed this matter with senior BIA and DOI Office of Trust Fund
Management officials, but they have responded by stating that they do
not believe they have the statutory authority to place these funds at
interest. At the same time, these officials agreed that bid deposit
funds should start earning interest once the successful bidder is
selected, and that tribes and individual Indians should not bear the
costs of the time that it takes for the BIA to review and approve
leases.
Although the Tribes believe DOI has sufficient legal authority and
a clear trust obligation to place bid deposit funds at interest now,
legislation mandating it would solve the problem once and for all and
avoid future litigation over DOI's improper handling of these funds.
D. Eliminate Dual Taxation
As the Report identifies, the problem of dual taxation is a serious
hindrance to oil and gas development on Indian lands. Report at 29-30.
The Fort Peck Tribes were one of the first Tribes in the country to
institute a severance tax on oil and gas development on our
Reservation. However, the 1989 U.S. Supreme Court decision in Cotton
Petroleum Corp. v. New Mexico, 490 U.S.163 (1989), allows States to tax
certain activities by non-Indian companies on Indian and tribal trust
lands. When Cotton applies to allow States to impose taxes in addition
to tribal taxes, economic activity on tribal lands is discouraged.
Tribal and State taxes are owed for energy development activities in
Indian Country where only State taxes must be paid for energy
development elsewhere. This double taxation creates a serious
disincentive to energy and mineral development on Tribal lands and is
inconsistent with well-established federal policies designed to promote
Tribal economic development and self-sufficiency.
Our Tribal government has long urged Congress to overturn the
poorly decided Cotton decision and to bar State taxation of commercial
activities on Indian and tribal trust lands, but Congress has
repeatedly failed to act. Therefore, the only way we could avoid the
disadvantage Cotton creates was either to forego our right to tax
energy development on Reservation lands altogether or seek to enter
into an innovative tax sharing agreement with State of Montana.
As an example of our Tribes' leadership in this area, we reached an
historic tax-collection and tax-sharing agreement with the State of
Montana on March 25, 2008. While we are pleased with this agreement and
believe it presents a model for other tribes to follow, we also
continue to believe it is a poor substitute for congressional action.
Simply put, the Cotton ruling was wrongly decided. We ask Congress once
again to pass legislation returning full taxing authority to tribal
governments for commercial activities on Indian and tribal trust lands.
E. Eliminate Barriers to Wind Energy and Other Renewable Energy
Projects
The Fort Peck Tribes believe further development of wind energy is
an important part of America's energy independence. Montana is one of
the five windiest states in the union and the Fort Peck Reservation in
northeast Montana presents one of the greatest opportunities for wind
energy development in the entire State. With the support of the DOE and
other federal agencies, the Fort Peck Tribes spent many years
researching and quantifying our wind energy resources, and we know that
the potential energy that can be derived from wind power is
considerable. With proper support from the Federal government and
better connections to transmission lines on the national energy grid,
we could attract reputable business interests to partner with us to
develop commercially viable and sustainable wind energy projects on the
Fort Peck Reservation.
Unfortunately, we and many others in Montana who wish to develop
our wind energy resources are severely hampered by ever-changing
national energy policies and by a lack of inexpensive and accessible
transmission line capacity. Tribal wind energy projects cannot get off
the ground if there is no commercially viable way to get our abundant
wind power to energy consumers. Many of the transmission lines in
Montana were built and are maintained by the Western States Power
Authority (WAPA), a federal agency. In 2005, Congress directed the
Secretaries of the Army and the Interior to conduct the Wind and
Hydropower Feasibility Study (WHFS), which was completed in 2009, to
determine the feasibility of blending wind generation with hydropower
on the Missouri River, and to evaluate tribal wind generation. While
the WHFS concluded that a 350MW Tribal Wind Demonstration Project was
not feasible, it recommended studying facilities under 300MW and
indicated that WAPA believed economic risk could be mitigated through
the development of a 50MW facility, if authorized and funded prior to
2015. Unfortunately, neither WAPA nor Congress has undertaken the
development of a Tribal Wind Demonstration Project. Congress should now
take action to authorize and fund a Tribal Wind Demonstration Project
at Fort Peck and throughout Indian country generally, as its next step
in obtaining American energy independence.
F. Develop Environmentally and Culturally Sustainable Energy Projects
Finally, related to our interest in wind energy development is our
foundational belief that all economic development projects must be
undertaken in ways that protect and enhance our Tribal homelands,
sacred sites, and cultural resources. We fully support job-creation
initiatives and economic development opportunities that allow us to
develop our natural resources and improve the quality of life for our
Tribal members. However, all of our development efforts must be
balanced with our sacred commitment to preserve our Tribal homelands
and to protect the spiritual and cultural heritage which our ancestors
suffered so much to preserve for future generations. The people
residing on our Reservation need clean land, water, and air in order to
live and work in a healthy environment. In addition, ranching and
farming are vital industries on the Fort Peck Reservation, so they too
must be able to coexist and thrive alongside energy development.
Otherwise, we have simply promoted one important Tribal industry at the
expense of others, which would make no sense, economic or otherwise.
As a Tribal government, we endeavor to support only those
initiatives that are done in a manner that is backed by sound science
and that minimizes potential adverse impacts to our Tribal lands and
resources. Moreover, while we have suggested improved technical
capacity and responsiveness within the federal government, as well as a
reduction in certain fees that we believe should be decided by market
conditions, we do not suggest the elimination of federal oversight over
any projects that have an impact on Indian trust resources and
sovereign tribal governments. We ask that the Committee continue to
provide oversight regarding Federal agencies' administration of
programs that impact energy development on Indian reservations to help
ensure that Tribes and our Federal trustees can work together to
further Tribal priorities and both improve and protect our communities.
We thank the Committee for allowing us to submit testimony on this
critical issue and look forward to working with Congress and the
Administration to make real progress toward energy independence in
Indian Country.
The Chairman. Thank you so much for your testimony.
Now if I could call on Mr. Cuch. Thank you.
STATEMENT OF CAMERON J. CUCH, VICE PRESIDENT OF
GOVERNMENT AFFAIRS, CRESCENT POINT ENERGY U.S. CORPORATION
Mr. Cuch. Good afternoon, Chairman Barrasso, Vice Chairman
Tester, and members of the Committee on Indian Affairs.
My name is Cameron Cuch, and I am Vice President of
Government Affairs at Crescent Point Energy, U.S. Corporation.
I am also a member of the Uinta Indian Tribe at Uinta and Ouray
Indian Reservation, Utah. Thank you for the opportunity to
testify on our company's experiences developing new tribal oil
and gas resources in the Uinta Basin of eastern Utah.
We have made a significant investment in Ute tribal oil and
gas properties. However, the regulatory uncertainty with the
inability to predict project permitting times and a shifting
landscape of regulatory requirements is frustrating Crescent
Point's ability to cost effectively develop tribal oil and gas
resources. From our perspective, the incentive for oil and gas
operators to make long-term investments on tribal lands would
be greatly improved if operators were able to work directly
with individual tribes in the permitting and development of
these projects, rather than having to work through the BIA as
an intermediary.
Crescent Point is one of Canada's largest oil producers. As
of 2012, it has been one of the largest producers in Utah. In
2012, Crescent Point saw a tremendous opportunity to partner
with the Ute Tribe by acquiring Ute Energy Upstream Holdings,
an oil and gas company majority owned by the Ute Tribe and a
private equity partner in Houston, Texas. Our corporate
development strategy is focused on long-term growth and cost-
effective full field development. One of the primary components
of achieving cost effective development is regulatory certainty
and the ability to predicted permitting times and requirements.
Crescent Point paid $861 million to acquire Ute Energy. One
of the primary targets of Crescent Point's acquisition was the
right to develop in and around the Randlett area, an area that
was covered by an exploration development agreement between Ute
Energy and the Ute Tribe. To date, Crescent Point has made a
total investment of $1.6 billion in the Uinta Basin. We
currently operate 349 wells in the Basin, 64 of which are
tribal. We have long-term plans to develop roughly 1,000
additional Ute tribal wells.
The delays and uncertainties we have experienced in
obtaining drilling permits and other authorizations is
jeopardizing our future development plans. During 2015, it has
taken an average of 405 days for Crescent Point to receive a
drilling permit from BLM and BIA for tribal wells. In contrast,
it has taken the State of Utah only 73 days on average to issue
Crescent Point drilling permits for private and State-managed
lands.
The permitting delays have resulted in lost revenue to the
Tribe and jeopardized economic viability of certain projects.
Given the precipitous drop in crude oil prices between 2014 and
2015, many of the wells we would have drilled in 2014, had we
been able to obtain permits, are uneconomic in today's price
environment and we have elected to defer drilling these
locations.
We estimate that the lost revenue to the tribe for these
wells is approximately $2.3 million in royalty and $800,000 in
severance tax per well even in today's low oil prices. We have
also run into Federal resistance to the Tribe's plans to
develop oil and gas resources located along the Duchesne River
and its tributaries, which bisect the Randlett EDA area. Under
pressure from EPA and Fish and Wildlife Service and over the
Tribe's objection, BIA has indicated that it will not allow
development within the flood plain, which makes up roughly 30
percent of the Randlett EDA area.
Under a full development scenario, we estimate that the Ute
Tribe will lose $571 million in royalties and $148 million in
severance taxes if the BIA ultimately disallows flood plain
development. In sum, we believe that many of the permitting
delays and additional burdens to development are a result of
poor coordination among BIA and the other Federal agencies. We
also believe that the BIA is overly deferential to these other
agencies to the detriment of tribal interests.
For operators, there would be a substantial benefit to
being able to work directly with tribes without numerous
Federal intermediaries. We suggest that tribes be authorized to
lead energy project permitting with BIA playing a technical
support function, but without having to go through the onerous
process of entering into a TERA. We have observed that this
sort of arrangement is already happening informally and a
formal adoption of this practice would allow for tribes to
ensure environmentally responsible oil and gas development in a
manner consistent with tribal objectives.
From an operator's perspective, consolidation of decision-
making authority within individually affected tribes will
increase efficiencies and regulatory certainty, increasing our
incentives to invest in tribal projects.
In closing, I would like to thank Chairman Barrasso and
Vice Chairman Tester and the members of the Committee for the
opportunity to present these issues on behalf of Crescent Point
Energy. I am happy to respond to any questions or provide
further information. Thank you.
[The prepared statement of Mr. Cuch follows:]
Prepared Statement of Cameron J. Cuch, Vice President of Government
Affairs, Crescent Point Energy U.S. Corporation
Good afternoon Chairman Barrasso, Vice-Chairman Tester and Members
of the Committee on Indian Affairs. My name is Cameron Cuch and I am
Vice President of Governmental Affairs at Crescent Point Energy U.S.
Corporation (``Crescent Point'').
I. Executive Summary
Crescent Point has made a significant investment in exploring for
and developing oil and gas resources owned by the Ute Tribe of the
Uintah and Ouray Reservation in Eastern Utah. However, the regulatory
uncertainty associated with an inability to predict project permitting
times and a shifting landscape of regulatory requirements is
frustrating Crescent Point's ability to cost-effectively develop Tribal
oil and gas resources. From our perspective, the incentives for oil and
gas operators to make long term investments in the development of
Tribal oil and gas resources would be significantly improved if
operators were able to work directly with individual Tribes in the
permitting and development of these projects, rather than having to
work through BIA as a federal intermediary.
We believe that Tribes are in the best position to manage and make
decisions about development of their resources and that BIA should be a
strong advocate for Tribal self-governance. However, we have often seen
BIA defer to other federal agencies' views on resource development
issues that, at times, have been contrary to Tribal goals, management
plans and regulations. We believe that Tribes should be empowered to
take over management of certain aspects of energy development that will
allow the Tribe to achieve its own internally-determined goals and
objectives while still providing for robust environmental review and
protections.
II. Development Opportunities--Corporate Approach
Crescent Point is one of Canada's largest light to medium oil
producers. We are publicly traded (New York and Toronto Stock
Exchanges) and are headquartered in Calgary, Alberta with a U.S.
headquarters in Denver, Colorado. We entered the U.S. in 2011 with a
significant acquisition in North Dakota and followed in 2012 with a
large acquisition in the Uinta Basin of Eastern Utah, which included
contractual interests in a number of properties on the Uintah and Ouray
Reservation. Our primary operations are currently located in
Saskatchewan, Alberta, North Dakota and Utah. Our average production in
2015 has been 165,500 barrels per day, with approximately 20,000 coming
from the United States, 15,000 of which are produced in the Uinta
Basin.
Crescent Point has a three-part business strategy that we have
implemented for the purpose of ensuring consistent returns to our
shareholders: (1) acquisition of high-quality, large resource-in-place
pools with the potential for upside in production, reserves, technology
and value; (2) management of risk by maintaining a conservative balance
sheet with significant underutilized lines of credit and a 3.5 year
hedging program; and (3) development of our large, low risk drilling
inventory to maintain production, reserves and dividends. A primary
component of Crescent Point operations is our commitment to
environmental responsibility and conducting our business in a manner
that minimizes our impact on the air, land and water surrounding our
operations.
We generally fund our acquisitions internally and strive to
maximize shareholder return with long-term growth, dividend income and
cost-effective field development. One of the primary components of
achieving cost-effective development is regulatory certainty and the
ability to predict permitting times and requirements.
a) Considerations for Corporate Investment--Partnership with the Ute
Tribe
In 2012, Crescent Point acquired Ute Energy Upstream Holdings, LLC
(``Ute Energy''), majority-owned by the Ute Tribe of the Uintah and
Ouray Reservation (``Ute Tribe'') and a private equity partner based in
Houston, Texas. Ute Energy was formed in 2005 in order to provide a
vehicle to efficiently develop Tribal oil and gas resources to generate
revenue for the Tribe. Exhibit 1 shows an overview of the Uintah and
Ouray Reservation. In 2010, Ute Energy and the Tribe entered into the
Randlett Exploration and Development Agreement (EDA), which gave Ute
Energy the right to explore for and develop Tribal oil and gas
resources within a geographically defined area around the small town of
Randlett, Utah. The Tribe executed the EDA under the authority granted
by the Indian Mineral Development Act of 1982, 25 U.S.C. 2101-2108,
which specifically authorizes Tribes to enter into agreements with
private industry to develop their natural resources for the purpose of
achieving economic independence. As required by the Indian Mineral
Development Act, the EDA was approved by BIA. The EDA area can be seen
on Exhibit 2. Exhibit 3 shows Indian Country and the external
boundaries of the Uintah and Ouray Reservation.
When Crescent Point acquired Ute Energy, one of the primary assets
of interest was the Randlett area and the exploration and production
opportunities created under the EDA. We believed that the BIA-approved
EDA would enable us to explore and develop the Randlett area in a
phased and predictable manner under which we would operate existing
wells while at the same time exploring the area in anticipation of
full-field development. Crescent Point has had a number of positive
experiences working with First Nations in Canada, and believed the
opportunity to partner with the Ute Tribe would be a substantial
benefit to Crescent Point. Because of these considerations, Crescent
Point paid a total of $861 million to acquire Ute Energy. Crescent
Point also operates one township in the Rocky Point Exploration and
Development Agreement area, which lies directly west of the Randlett
EDA area.
To date, Crescent Point has made a total investment of $1.658
billion in the Uinta Basin, including a $689 million investment in
development capital. We currently operate 349 wells in the Uinta Basin,
64 of which are Tribal wells, and the remainder of which are located on
private and federal lands. We have also paid over $5 million to Tribal
companies for support services, including water hauling, road and well
pad construction and roustabout services. In addition, we employ a
number of Tribal members and roughly 30 percent of our Uinta Basin
field staff are American Indians, Alaska Natives and Hawaiian
Islanders.
We currently have applications pending for 203 drilling permits in
the Uinta Basin, 95 of which are Tribal. Additionally, BIA is
finalizing a Programmatic Environmental Assessment that will enable the
drilling of up to 300 additional Tribal wells and we recently initiated
an Environmental Impact Statement for all of our Uinta Basin assets,
which will analyze the impacts of developing 725 Tribal wells.
Crescent Point has made a significant investment to develop oil
from Ute Tribal lands and is committed to being a responsible and cost-
effective partner with the Tribe. However, the delay and uncertainties
that we have experienced in obtaining permitting approvals and
authorizations from the BIA has had a substantial negative impact on
our ability to develop Tribal oil and gas resources and, thereby,
generate income for the Tribe.
III. Permit Challenges, Economic Impacts and Project Viability
As Crescent Point began to undertake exploration and development
within the Randlett EDA area, we encountered a number of challenges to
obtaining permits, largely related a lack of inter- and intra- agency
coordination, duplicative review processes, and long review periods.
This is particularly true in the context of drilling permits, which
requires that BIA manage and coordinate consultations between several
federal agencies.
a) The Permitting Process
Under federal statutes and regulations, and unless a Tribal Energy
Resource Development Agreement (TERA) has been entered into pursuant to
the Energy Policy Act of 2005, in order to permit a well on Tribal
lands, an operator must receive a federal drilling permit. To initiate
the process, the operator must request drilling permit approval from
BIA. Because this constitutes ``federal action,'' BIA must comply with
NEPA, even in cases where BIA has already approved of the development
in general by, among other things, authorizing an EDA. BIA will then
require that an appropriate NEPA analysis be performed, usually an
Environmental Assessment, the costs of which are paid by the operator.
During the NEPA process, a number of other federal agencies may become
involved in review of the document. For operations on the Uintah and
Ouray Reservation, the United States Fish and Wildlife Service will
consult on the document under Endangered Species Act Section 7
authority and the Environmental Protection Agency will often consult on
air and water quality issues.
Once the Environmental Assessment is completed, a process that, in
the best of situations, takes roughly 8 months, BIA will issue a
decision record. Once BIA issues the decision record, permitting is
handed over to BLM because federal regulations require that BLM perform
all downhole analyses and is the agency that ultimately issues the
drilling permit. BLM must then provide a NEPA concurrence and process
the permit application. Thus, in order to receive a drilling permit, at
least two federal agencies, and often four or more, will have had the
opportunity to weigh in on the proposal.
Because of the numerous agencies involved, the wait times
associated with obtaining permits is often substantial and in almost
all instances impossible to predict. Further, because of the multiple
opportunities for inter-agency comments, BIA often receives comments
from these other agencies proposing numerous project modifications and
mitigation measures that were not contained in the initial proposed
action. All of this adds substantial time and cost to the permitting
process.
b) Permit Approval Timing
During 2015, it has taken an average of 405 days for Crescent Point
to receive a drilling permit from BLM and BIA for Tribal wells. This is
down slightly from 2014, when it took an average of 427 days. In
contrast, the State of Utah averaged 73 days to issue Crescent Point a
drilling permit to drill on private or State-managed lands during the
same time period. In 2014, it took an average of 121 days for the State
of Utah to issue a drilling permit. See Exhibit 4.
c) BIA Concurrence to BLM Issuance
Even after BIA has approved the NEPA documentation required to
authorize a drilling permit, BLM concurrence times take an average of
135 days, and have taken as long as 203 days. Exhibit 5 shows the
additive delays associated BLM concurrence times.
By comparison, Crescent Point estimates that it takes a total of 4-
6 months to receive all authorizations necessary, including performing
environmental analyses, to develop oil and gas projects with First
Nations. Similarly, we estimate that it takes, on average, one day for
the provincial government to approve drilling permits that have been
authorized by First Nations. These projects require concurrence and
approval from just one Canadian governmental agency.
d) NEPA-Timing Delays Lead to Either Delayed or Lost Revenue to the
Tribe
The considerable amount of time it takes BIA and BLM to complete
NEPA analyses and issue permits has resulted in, at best, delay of
projects and income to the Tribe and, at worst, project scale-back and
cancellation. Given the precipitous drop in crude prices between 2014-
2015, many of the wells that we would have drilled in 2014 had we been
able to obtain permits are uneconomic in today's price environment.
For example, we submitted an application for a permit to drill the
Ute Tribal 9-30-3-2E well on May 22, 2013. BIA issued a decision record
on the NEPA Environmental Assessment on February 21, 2014. Building in
a generous amount of time for approval, Crescent Point estimated that
we would receive the permit in April of 2014 and would drill and
complete the well during May and June, with first production coming on
line in July. However, we did not receive an approved permit until
September 12, 2014, which would have put us on track to receive first
production from the well in January 2015. Unfortunately, between June
and October of 2014, oil prices plunged, taking our rate of return on
the well from 37 percent with a payout in just 2.2 years to 13.7
percent with a payout in 5.9 years. With the precipitous drop in oil
prices, Crescent Point elected to postpone drilling the 9-30-3-2E,
something that we would have done had we received the permit as
anticipated in April 2014. See Exhibit 6.
Crescent Point also experienced considerable delay and extra costs
associated with obtaining permits to conduct a seismic data acquisition
in the Randlett EDA area. In June of 2013, Crescent Point submitted an
application to conduct the seismic operation, completion of which would
be of substantial benefit to the Tribe because it would allow Crescent
Point to drill more profitable wells and because Crescent Point agreed
to share the data directly with the Tribe. Department of Interior
policies provide for a NEPA categorical exclusion for seismic
operations, \1\ under which NEPA review is not required unless
``extraordinary circumstances'' are identified by the lead agency.
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\1\ 516 DM 10 10.5(G):
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Although BIA initially indicated that the project would be
permitted under a categorical exclusion, after four months of inaction
and under significant pressure from the U.S. Fish and Wildlife Service
and the Bureau of Reclamation (who had surface management authority
over a very small portion of the project area), BIA informed Crescent
Point that it would be required to complete an Environmental Assessment
based on the potential impacts the data acquisition could have on plant
and animal species. One of the primary issues the Fish and Wildlife
Service was concerned with was potential impacts to the Uinta Basin
Hookless Cactus, a small cactus listed under the Endangered Species
Act, but with prolific populations in the Uinta Basin. Although the Ute
Tribe has adopted a regulation concerning the cactus, which requires
setbacks from cactus populations and the payment of funds directly to a
Tribal cactus mitigation fund administered by the Tribe, the Fish and
Wildlife Service pushed for adoption of the federal guidelines
concerning cactus setbacks and insisted that payments be made to the
nationally-administered conservation fund. \2\ Ultimately, after
significant push-back from Crescent Point, it was agreed that
mitigation funds would be split between the Tribe and the federal
conservation fund.
---------------------------------------------------------------------------
\2\ The Ute Tribe can obtain access to the national funds, but must
apply to the federal government in order to receive them.
---------------------------------------------------------------------------
Crescent Point had initially planned to conduct the seismic
acquisition during the fall and winter of 2013-2014; however, the
Environmental Assessment was not completed until the summer of 2014 and
we did not receive permits until the end of September 2014. Although
the Environmental Assessment ultimately concluded that the data
acquisition would not have a significant impact on the human
environment and Crescent Point won an award for its environmental
stewardship on the project from the State of Utah, a permitting process
that should have taken several months under a categorical exclusion
took over 15 months to complete, delaying our seismic acquisition by
one year. Had we been able to conduct the seismic acquisition as
planned, we would have had usable data during the 2014 drilling season,
which would have enabled us to drill more accurate and profitable wells
with a smaller surface impact.
e) Regulatory Uncertainty Jeopardizes the Viability of Projects
The Randlett EDA area is bisected by the Duchesne River and several
tributaries. Although BIA approved the EDA, which provides for
development of all areas within the EDA boundaries, BIA has become
increasingly less willing to allow surface disturbance within the 100-
year floodplain. As demonstrated on Exhibit 2, roughly 30 percent of
the Randlett EDA area is within the 100-year floodplain and 7,404.7
acres of floodplain within the EDA area are located on Ute Tribal and
allotted lands.
We note that it is common to develop oil and gas resources within
100-year floodplains and there are no federal regulations addressing
floodplain development. In cases where floodplain development occurs,
Crescent Point has implemented a robust system of protocols to protect
against damages in the case of a flood event. Nonetheless, during the
development of the Randlett Programmatic Environmental Assessment,
which analyzes the impacts of drilling up to 300 Tribal wells, in
response to comments BIA received from the Environmental Protection
Agency and the Fish and Wildlife Service, BIA developed a so-called
``Resource Protection Alternative'' under which no wells could be
developed within the floodplain. This is in spite of the fact that the
Ute Tribe has adopted a regulation governing oil and gas development
within floodplains that expressly authorizes such development and has
publicly supported development of all locations in the Randlett EDA
area. Under the Resource Protection Alternative, 29 wells were removed
from analysis because of their proximity to the floodplain. The removal
of these 29 wells will result in a loss of $66.5 million in royalties
to the Tribe and $23 million in Tribal severance tax. We anticipate
that the Resource Protection Alternative will be the selected
alternative when the decision record is issued later this year.
If Crescent Point continues to full field development of the
Randlett area and BIA does not approve development of resources within
the floodplain, we estimate that the Tribe will lose $571.14 million in
royalties and $148.38 million in lost severance taxes.
f. Shifting Federal Regulation and Executive Action
In addition to the regulatory uncertainty created by unpredictable
project permitting timelines, the relentless pace of executive branch
rulemaking affecting Tribal lands has substantially impacted our
ability to develop economic Tribal wells. These changes have included
new Secretarial Onshore Orders 3, 4, and 5, new Secretarial Orders
regarding Tribal consultation at FWS, the BLM's hydraulic fracturing
rule, and the Environmental Protection Agency's rule defining waters
within Clean Water Act jurisdiction.
V. Nature of the Mineral Estate
As shown on Exhibit 7, much of the land within the Randlett area,
as with the rest of the Uintah and Ouray Reservation, is made up of a
checkerboard of parcel ownership, with parcels owned by the Tribe,
private owners, the federal government, the State of Utah and
individual Tribal allottees. In addition, there is a substantial amount
of split estate, particularly areas with Tribal surface overlying
federal minerals.
Presently, there is very little development of Ute Tribal oil and
gas resources. There is, however, currently substantial development of
federal oil and gas resources underlying Tribal surface. In these
cases, the Tribe bears the burdens associated with oil and gas
development, but does not share in the benefits. In contrast, the
development proposed by Crescent Point will directly benefit the Tribe
by developing Tribal minerals from Tribal surface. We believe that the
BIA does not appropriately consider the financial benefits that
development of oil and gas resources will provide for the Ute Tribe
when reviewing permit applications and NEPA documents, and instead
focusses only on potential negative environmental consequences. BIA
should distinguish between projects involving development of Tribal
minerals, from which the Tribe will benefit greatly, and projects on
Tribal surface that develop federal minerals, from which the Tribe will
experience the negative consequences associated with oil and gas
development without any of the benefits.
Because of the large amount of time and lack of certainty
associated with obtaining permits to drill Ute Tribal wells, in certain
instances Crescent Point has been forced to drill wells on private
lands within the Randlett area rather than on nearby Tribal parcels. In
a large number of cases, this is simply a function of our inability to
obtain permits to drill Tribal wells within a reasonable timeframe and
our need to develop wells for the benefit of our shareholders and keep
a drilling rig in operation. If there were assurances in place that we
could obtain drilling permits within specified timeframes, our
incentive to drill wells on Tribal rather than private parcels would
increase substantially.
Finally, and while this is not the primary factor for Crescent
Point, we note that it is substantially less expensive to obtain
permits to drill wells on private minerals than Tribal minerals. We
estimate that the average hard costs of permitting a well on Tribal
surface to Tribal minerals are approximately $41,000. In contrast, the
average hard costs of permitting a well on private surface to private
minerals are $20,500. The primary differentials are the federal permit
fee and the costs of performing the NEPA analysis. The breakdown of
these costs is shown on Exhibit 8.
VI. Agency Failures and Proposed Solutions
Many of the permitting delays Crescent Point has experienced relate
to strained BIA budgets and agency inability to appropriately staff
projects and commit the resources necessary to ensure that economic
development projects can be approved within reasonable timeframes. We
believe that much of the delay associated with permitting is a result
of poor coordination among the BIA and the other federal agencies with
which it must consult on project approvals. We are further concerned
that because of limited budgets, BIA is unable to appropriately staff
offices with enough personnel knowledgeable about energy development.
Because of this, we believe that overworked BIA personnel are often
overly deferential to other, more powerful and better funded agencies,
sometimes to the detriment of Tribal interests.
On several permitting projects we have observed that, in spite of
decades of federal agency guidance outlining agencies' obligations to
consult with Tribes, there is a fundamental failure on the part of
other federal agencies to engage in meaningful consultation with
Tribes. BIA should be the agency tasked with ensuring that consultation
is occurring and that Tribal sovereignty is being respected. And, we
note that several agencies within the Department of the Interior have
recently faced significant criticism for their failure to take their
consultation obligations seriously and, indeed, a federal court
recently enjoined BLM's hydraulic fracturing rule in part because of a
failure to substantively engage in Tribal consultation. Nonetheless, we
have observed BIA receive and concede to pressure from other federal
agencies on several occasions, the result of which has been increased
permitting times and costly project modifications that have neither
been requested nor approved of by the Tribe. We believe this is related
to understaffing at BIA agency offices and a lack of direction from BIA
leadership empowering BIA personnel to stand up to these other federal
agencies and decline proposed project modification when they do not
correlate to Tribally-set policies and regulations.
a) Tribal Lands treated as Public Lands
We have observed a failure on the part of many of the federal
agencies with which BIA must interact on permitting approvals to
understand the distinction between Tribal lands and federal public
lands. We have routinely observed these agencies attempt to
inappropriately impose federal land use restrictions and policies on
Tribal lands. For example, although U.S. Fish and Wildlife Service
regulations and policies are clear that Tribal lands are not federal
public lands and that Tribes should not be forced to bear a
disproportionate burden for species conservation, the Fish and Wildlife
Service regularly proposes permit restrictions for Tribal projects that
are identical to the restrictions proposed for projects on federal
lands. Rather than refuse to adopt these proposals, BIA often agrees
and includes them as additional permitting requirements or conditions
of approval.
This occurred recently on an Environmental Assessment prepared by
BIA for 11 wells in the Randlett area. Following consultation with the
Fish and Wildlife Service, BIA attached a number of conditions of
approval to the permits requiring onerous setbacks and mitigation
requirements applicable to operations in the vicinity of Uinta Basin
Hookless Cactus populations and in areas that could serve as potential
Yellow-billed cuckoo habitat. These additional requirements, which are
neither mandated by federal law or regulation, were facially
inconsistent with Tribal regulations and substantially increased the
costs of the project. In addition, BIA has recently sought public
comment on several Environmental Assessments analyzing development of
purely Tribal resources. Federal regulations do not require public
comment on Environmental Assessments, and BIA generally has a policy
not to solicit input from the public at large on Tribal projects. This
policy makes sense from a Tribal sovereignty perspective, as members of
the public who are not Tribal members should have not say over Tribal
development projects. However, in response to comments BIA received
from the Environmental Protection Agency, BIA has decided to seek
public comment on the last 3 Environmental Assessments it has prepared.
b) Proposed Solutions
We believe that Tribes are in a much better position to perform
environmental analyses, require project modifications and craft best
management practices and resource conservation plans than the BIA and
that, in many cases, Tribes are already performing many of these
functions informally.
While the GAO report pointed out that some BIA offices do not have
staff with the skills needed to effectively manage Indian mineral
development, many Tribes have staffs that possess these qualifications.
The Ute Tribe has numerous highly trained employees who can perform
many of these tasks in a manner that is consistent with Tribal
management policies and goals. For example, the Tribe's Fish and
Wildlife Department has 5 biologists on staff, compared to BIA's Uintah
and Ouray Agency, which employs none. We believe that the Tribe's Fish
and Wildlife Department can perform many of the plant and wildlife
consultations the U.S. Fish and Wildlife Service currently performs in
a more efficient manner. Similarly, the Ute Tribe's Energy and Minerals
Department had a budget of $2.3 million in 2014 and has 25 employees
working on energy development reviews, royalty issues, land work and
regulatory compliance. Further, as pointed out by the GAO report, BIA
lacks GIS systems and other data identifying ownership of resources and
resource uses and authorizations. However, the Ute Tribe has this
information as well as a GIS database system for the vast majority of
Reservation lands.
We believe that the resources the Ute Tribe already possesses
should be put to greater use by allowing the Tribe increased authority
over energy-related decisionmaking. In particular, we think that a
mechanism should be developed that would allow for the following:
Automatic deference to Tribal resource management and
conservation plans. At present, Tribal resource management and
conservation plans are considered, if at all, only during the
NEPA process and we have found that BIA is often unaware of the
existence of Tribal resource management and conservation plans
that directly address matters under review.
Replace Endangered Species Act Section 7 consultation, which
requires BIA to consult with the Fish and Wildlife Service any
time a proposed action might affect a listed or candidate
species or its habitat, with Tribal consultation and issuance
of a Tribal resource permit.
Tribal facilitation of right-of-way preparation. Presently,
all right-of-way applications must go through BIA, which does
not have the personnel or data necessary to efficiently process
such applications. In contrast, the Ute Tribe has adequate
personnel and data systems in place to process these
applications within a much shorter timeframe.
VII. TERAS
a) Operators Working Directly with Tribes Can Provide Greater
Regulatory Certainty
As an operator, Crescent Point questions whether TERAs, as provided
for under the Energy Policy Act of 2005, can realistically improve the
efficiencies associated with development of Tribal oil and gas
resources. From our perspective, we believe that TERAs are overly
complex and that time has shown that they are not a useful tool to
improve BIA efficiencies related to energy development. Nonetheless,
for operators, there is a substantial benefit to being able to work
directly with Tribes without numerous federal agency intermediaries. We
would very much like to see a mechanism in place that would allow for
direct Tribal approval and decisionmaking authority on Tribal oil and
gas projects. We believe that the regulatory certainty this would
provide would create a substantial incentive to invest in oil and gas
development on Tribal lands.
We suggest that the Committee consider development of a program
under which individual Tribes can assume responsibility for certain
aspects of energy development without needing to enter into a TERA. As
previously suggested, we think that, for example, the Ute Tribe is in a
very good position to assume responsibility for management of plant and
wildlife considerations associated with energy development. Under this
approach, individual Tribes could decide which aspects of energy
development they would like to assume, without having to take on the
onerous task of entering into a TERA. We also suggest that the
Committee also consider a mechanism under which Tribes could enter into
TERAs for specific geographic locations, such as locations where they
own both the surface and the mineral estate. This would allow Tribes to
concentrate resources on areas in which they receive the benefit of oil
and gas development and not on areas where there interest is limited to
the surface.
We also believe that determinations about whether a Tribe has the
capacity to regulate all or certain aspects of energy development
should be made at the individual BIA agency office, rather than at the
Region or the Office of Indian Energy and Economic Development. BIA
agency offices regularly work with Tribes and know whether individual
Tribes are ready to take over management of energy development.
b) Coordination Between Tribes and Operators Can More Effectively and
Efficiently Develop Appropriate Mitigation Measures to Address
Tribal Resource Concerns
In addition to the efficiencies and regulatory certainty that would
accompany a direct working relationship between operators and Tribes,
we also believe that there would be a substantial benefit to
consolidating project decisionmaking authority within the individually
affected Tribe. Not only would this significantly decrease the overlap
and inefficiencies associated with the need to obtain BIA approval for
permits, but we believe that Tribes are often in a better position than
the federal government to make decisions about management of their
resources. From an operator's perspective, this will increase the
incentive to invest in Tribal projects by allowing us to work
collaboratively with our Tribal partners to tailor project components
to meet Tribal objectives and to react quickly to changing
circumstances without a federal intermediary.
In closing, I would like to thank Chairman Barrasso and Vice
Chairman Tester and the Members of the Committee for the opportunity to
present these issues on behalf of Crescent Point. I firmly believe that
there are numerous opportunities for Tribes and private industry to
work together to develop Tribal energy resources in an environmentally
responsible manner and according to Tribally-set objectives and
policies. All operators and Tribes need from the federal government to
accomplish this goal is less federal oversight of Tribal decisionmaking
and more opportunities for direct management by Tribes.
Attachments
The Chairman. Thank you so much to each of you for your
testimony. We will start with some questions. I believe Senator
Hoeven is first.
Senator Hoeven. Thank you, Mr. Chairman. Thanks to both you
and the Ranking Member for holding this important hearing
today.
Mr. Roberts, how are you responding to the GAO findings on
the backlog on right-of-way approvals in Indian Country?
Mr. Roberts. Some of the things that we are doing on right-
of-way approvals is we put out a proposed rule on rights-of-way
to streamline that process. That rule is well on its way to
being finalized. The comment period is closed.
We are hoping that that rule, which has had a lot of tribal
engagement and a lot of public comment, that that rule will
streamline the process. A couple of years ago now, 2012, we
updated our leasing regulations. Those leasing regulations are
very deferential to tribal decision-making in terms of those
agreements and those sorts of things.
Our proposed rule for the right-of-way regulations sort of
took the same path, I will say. Like I said, we are hoping to
finalize those right-of-way regulations in the near future. We
think that will be a big improvement.
Senator Hoeven. When do you anticipate finalizing it, and
do you anticipate it having significant impact in reducing the
backlogs?
Mr. Roberts. We hope to finalize it as soon as we can.
Senator Hoeven. Which would be when?
Mr. Roberts. I don't know, Senator.
Senator Hoeven. A year? Two years?
Mr. Roberts. Before this Administration ends, hopefully.
Senator Hoeven. So less than a year?
Mr. Roberts. Less than a year. Well, more than a year, but
yes.
Senator Hoeven. Okay. So within the next year, and you
think it will have a significant impact?
Mr. Roberts. I do. I think it will be very helpful.
Senator Hoeven. The Chairman of this Committee has authored
and submitted the Indian Trial Energy Development and Self-
Determination Act to streamline the application process for
right-of-way approvals. I am pleased to co-sponsor it, as are
other members of this Committee, in a bipartisan fashion. Are
you supportive of that legislation? Are you willing to help get
it passed and enacted into law?
Mr. Roberts. Kevin Washburn, the Assistant Secretary,
testified on, I think, identical legislation last Congress. He
identified a number of areas where the Administration is
supportive and some areas where we had concerns. We suggested,
for example, that the legislation, rather than having a
capacity determination, that we try to streamline that
legislation to be similar to what is done in the HEARTH Act.
Senator Hoeven. I am not sure what that means. My concern
is that this process is not moving forward. I listened to both
the Chairman and the Ranking Member talk about how former
members of this Committee expressed concern about the very same
problem that we are expressing concern about today.
So how are we going to get beyond talking about this
problem and maybe doing something a year from now to actually
getting something accomplished today?
Mr. Roberts. Senator, we do hope to finalize those
regulations as soon as we can on rights-of-way in terms of the
Chairman's bill. We have testified on that in the last
Congress. We are supportive of a number of provisions in that
bill. If it is enacted into law, we will certainly implement
it.
Senator Hoeven. Are you willing to work with the States to
avoid some of the duplication, for example, in the hydraulic
fracturing rule that Interior has brought forward, and give the
tribes more discretion in the right-of-way process?
Mr. Roberts. In terms of hydraulic fracking, as I am sure
everyone is aware, that is subject to litigation at this point
in time. I will note that the final rule on hydraulic fracking
provided an opportunity for BLM to issue modifications to the
rule if a tribe or a State would come to BLM to talk about
those modifications. So I know that the rule is in litigation
right now. It is not being implemented. That is about all I can
say on that.
Senator Hoeven. But you would support that flexibility for
States and tribes?
Mr. Roberts. The flexibility was in the final rule.
Senator Hoeven. Right. And you would support acting on that
and empowering tribes to use that flexibility and giving them
more discretion?
Mr. Roberts. Sure.
Senator Hoeven. Mr. Rusco, what is your recommendation to
move this along? How do we get this going faster?
Mr. Rusco. Well, we don't want to comment on ongoing
legislation.
Senator Hoeven. Well, I don't mean just the legislation. I
mean action, reducing the backlog and getting activity
expedited.
Mr. Rusco. I think that some things that have worked, we
have encountered similar problems with BLM and their management
of oil and gas on Federal lands, not as extreme as what we
found here. But some of the things that worked were pulling
qualified staff with the right skills from other locations and
bringing them to places where there were hotspots. They did
that in North Dakota, they brought people in to reduce a
backlog. It was very effective in doing so.
We are going to have to do something like that, because
there are many offices that just plain don't have the right
staff to do the job.
Senator Hoeven. Thank you.
The Chairman. Senator Tester?
Senator Tester. Thanks, Mr. Chairman. First things first,
Mike, great haircut. I am just telling you.
[Laughter.]
Senator Tester. The Department has been, we have been doing
energy development for 100 years or longer in tribal. It is
true that this Administration has tripled the number of leases
in Indian Country. But we are still not where we need to be.
I had mentioned in my opening statement that the TERA
agreements, no tribe has taken advantage of them. Mr. Olguin
said that they had asked for clarification and the BIA and
Larry, tell me, they didn't want to give any? The statement by
Mike -
Mr. Roberts. Senator, I understand his statement that, the
statement that he made was whether the Department would provide
guidance on what is an inherent Federal function. The GAO
raised that issue and I think we are committed to providing
guidance on what is not an inherent Federal function, to
provide more clarity.
So for example, when we are contracting with tribes under
638 contracts, for example, if there is a Federal approval that
is needed at the end, a number of tribes are successfully
implementing the Federal program up to the point of approval.
So we will provide guidance on what is not an inherent Federal
function.
Senator Tester. So what is the problem? I mean, I am not
talking about the TERAs. I do want to get out there, because I
think the tribes are asking for something, you just can't say
no. So that is good. But what is the real problem here? Is it
that the BLM has their fingers in the cookie jar on this stuff
and that the BIA has to do their thing and the permitting costs
more money than it does on fee land? This can be fixed. You
have to tell us how to fix it. So tell us how to fix it.
Mr. Roberts. There are a lot of challenges that GAO raised,
both within our lane and outside of our lane, quite frankly. I
think every member of this panel touched upon the fact that we
are dealing with a complicated land ownership situation,
fractionation, allotment. The allotment policy passed in the
1880s. It leads to a lot of our difficulties here today.
If we can make some headway, and we are making headway on a
lot of different fronts, in restoring tribal homelands,
consolidating lands, those sorts of things will help in the big
picture. In the small picture, in terms of oil and gas
development and energy development, we need to and we are more
closely collaborating within the Federal family.
But I think one answer, Senator, very clearly is what Kevin
Washburn testified to in the last Congress, which was a HEARTH
Act approach for oil and gas development. The HEARTH Act is
working in Indian Country. Like I said, we have over 20 tribes
that have taken advantage of the HEARTH Act.
So when a tribe that has taken advantage of the HEARTH Act
for let's say, surface leasing of lands for wind or solar
development, those approvals no longer need to come back to the
Department of Interior. The tribes can approve those projects.
So some of the things that the GAO report highlighted----
Senator Tester. Will be done with the HEARTH Act, if we get
that model passed or you get that model through rule.
So okay, Mr. Rusco spoke of pulling qualified staff within
the BLM and the high growth areas. Do you have that capability?
Mr. Roberts. No, we have a very hard time.
Senator Tester. Why do you not have that?
Mr. Roberts. Because we can't compete with the private
sector.
Senator Tester. You mean you can't hire people because your
wage is not high enough?
Mr. Roberts. That is right.
Senator Tester. Okay. So is that an Office of Personnel
Management problem or is that a budgetary problem?
Mr. Roberts. It may be a budgetary problem, it may be a
statutory problem. That is not to say that we don't have great
staff.
Senator Tester. I am not saying that. What I am asking is
that if you don't have enough great staff.
Mr. Roberts. Right.
Senator Tester. And that is what I heard you say.
Mr. Roberts. Yes.
Senator Tester. When you put your budget forth to us, did
it include enough dollars for hiring the folks you needed?
Mr. Roberts. It included increases for realty services, it
included increases for an oil and gas -
Senator Tester. What impact did sequestration have on that
budget?
Mr. Roberts. Significant. It was across the board.
Operating under a continuing resolution, we are stuck now until
December 11th. We have a very limited budget. We have
memorandums of agreement and are ready to go on the oil and gas
service center once we get a budget.
Senator Tester. I have to do this, if you will just give me
this flexibility, because Grant is here, and there was just one
question I wanted to ask. You had six recommendations. I
appreciate that, by the way. I like solutions. Thank you for
that, Grant.
Can you tell me how much earnings Fort Peck has lost
because the deposits are not held in interest-bearing accounts?
Mr. Stafne. Substantial. As a former Federal employee, we
used to have special deposit accounts. Oil and gas companies
would come onto our reservation and bid on hundreds, thousands
of tracts. When they bid on those tracts, they were required to
bring a portion of the money and we would put that in special
deposit accounts until the leases were approved. That sometimes
took six, seven, eight months.
By the time they were distributed or disbursed to the
rightful land owners, it was pretty good revenue for the land
owners. Senator, I cannot give you a figure, but just from what
I said, you can imagine what that impact would be.
Senator Tester. Excuse me, Mr. Chairman, who did that? Why
isn't this still being done this way?
Mr. Roberts. I can get you an answer to that. I don't know
the answer to it.
Senator Tester. Okay, thank you.
The Chairman. Thank you, Senator Tester. Senator Daines?
Senator Daines. Thanks, Mr. Chairman. I want to explore the
challenges regarding responsible energy development in Indian
Country and talk about possible solutions. I know, Councilman
Stafne, you have some ideas there as well. Senator Barrasso, I
think, has a good bill to strengthen the tribes' abilities to
control their own destinies and have more authority in
developing their own energy.
I remind members of this Committee the House recently
passed H.R. 538, the Native American Energy Act, with a very
strong bipartisan vote of 254 to 173, which includes some good
provisions to streamline permitting processes and make some
worthwhile improvements in the BIA such as appraisals and
ensuring the seven regional offices are going off the same
playbook, some standardization.
The GAO report mentions one challenge to Indian energy
development, and that is a lack of access to energy tax credits
in Indian Country. Senator Tester and I have introduced a bill
to make permanent the Indian Coal Production Tax Credit to
incentivize on Indian reservations for energy development where
it is already too costly and where it is needed most.
Questions I have, I will start with Mr. Cuch and Mr.
Olguin. You both mentioned frustration with meaningful
consultation with the BIA and other Federal agencies regarding
energy projects. In particular, you mentioned the hydraulic
fracturing rule. We know in Montana, and especially in
Councilman Stafne's neck of the woods, how important that
technology, hydraulic fracturing, has been in unlocking
prosperity for rural communities.
My question is, could you expand on the challenges
associated with the hydraulic fracturing rule? Let me start
with Mr. Cuch.
Mr. Cuch. The new proposed rule we find to be duplicative
of what States already provide. It means added time and cost to
our operations to be able to follow those new regs, wherever
they may end up being. So that would be my comment related to
that.
Senator Daines. Mr. Olguin?
Mr. Olguin. For us, the challenge is as far as
consultation. It did occur from the very beginning, when we
didn't feel we had fruitful consultation on what the BLM rule
was going to be comprised of, let alone what it was going to
become. We ended up at the point where we drafted our own
regulation, passed it through tribal resolution and we are at
the point now where we have filed suit against BLM for their
regulation being imposed on tribal lands. So we are in
litigation now.
There is a stay from the judge and with that, we are
working on settlement.
Senator Daines. So why don't you think you receive
meaningful consultation? My experience has been, meaningful
consultation by the bureaucracy tends to be, well, we received
a letter, we had a meeting, we had a cup of coffee, we came to
a conference room. But it seems like you are not being listened
to in terms of the substance of your proposals and argument.
Mr. Olguin. That is true. When we look at the initial, it
was a PowerPoint presentation of here is what hydraulic
fracturing is. Well, we know what hydraulic fracturing is, we
have been doing it for 50 years. So it wasn't necessarily that
we needed an education component. We need to understand, what
is the rule, what was the rule intended to do, and let's have
this meaningful conversation face to face, discuss the issues,
argue back and forth, if that is what it takes, but come to an
understanding that we are talking the same thing.
Senator Daines. So do you believe that these agencies
understand what meaningful consultation really is?
Mr. Olguin. Yes, I think they do today.
Senator Daines. Why aren't you being heard?
Mr. Olguin. Well, today we are because of the lawsuit.
Senator Daines. But that seems to be a failure in their
process that we should be trying to avoid the course and have
the meaningful consultation up front.
Mr. Olguin. I am not sure. I have my own speculation but I
really don't know.
Senator Daines. Mr. Roberts, did the BIA work with BLM on
the implications of the hydraulic fracturing rule in Indian
Country?
Mr. Roberts. The implications?
Senator Daines. Right. There is a disconnect here, there
are implications, there are consequences.
Mr. Roberts. It is BLM's rule, I know that it is in
litigation. There is not a whole lot, unfortunately, I can say
about that. As the Honorable Mr. Olguin said, we are in
settlement discussions with the tribe on their lawsuit.
Senator Daines. The BIA, do you work with these other
agencies like the BLM to ensure that the tribal trust
responsibility is upheld appropriately? I don't think it has
been upheld appropriately.
Mr. Roberts. Sure. We do work with the other Federal
agencies. That is one of the things that we are trying to
incorporate in the service center. So the service center, if we
get funding from Congress to move forward with that, it will be
BLM, it will be ONR, it will be BIA. We will all be co-located,
so that we are all working together.
Senator Daines. That is an activity. I am looking for
results. It looks like what has happened here has been a
failure in that process, where the tribe is saying they don't
believe they really experienced meaningful consultation.
Mr. Roberts. There is really not a lot at this point,
again, because it is in litigation, Senator, I can't really
comment on the adequacy of consultation in that process.
Senator Daines. Thank you.
The Chairman. Thank you, Senator Daines. Senator Heitkamp?
STATEMENT OF HON. HEIDI HEITKAMP,
U.S. SENATOR FROM NORTH DAKOTA
Senator Heitkamp. Thank you, Mr. Chairman.
Mr. Roberts, would you agree with the statement that the
lands that are managed by the Bureau of Indian Affairs and by
BLM for the tribes and for individual members of the tribes are
not public lands?
Mr. Roberts. They are different than our normal public
lands.
Senator Heitkamp. Yes or no. They are not public lands.
Mr. Roberts. We hold them in trust for the tribes.
Senator Heitkamp. That is right. And I think that is the
crux of the problem here. These are not public lands.
But yet they get treated all the time as if they are, as if
they are minerals that are owned by the people of the United
States, as opposed to minerals that are owned by sovereign
nations and by the people of sovereign nations. Until we really
start appreciating that there is a differentiation here, I
think we will always be at this table arguing this point over
and over and over again.
You can say, well, this was set up, because there is this
trust obligation. But the facts that were revealed in the
Cobell litigation tell us that fiduciary obligation and that
trust obligation hasn't been well managed, it continues to not
be well managed by the Department of Interior.
Mr. Roberts. Senator, I can assure you that we take our
trust responsibilities very seriously. It was this
Administration that settled the Cobell litigation. It is this
Administration that has settled over 80 trust settlements with
tribes.
Senator Heitkamp. I understand that. I am trying to make a
point which is historic. It is not just about this
Administration. We constantly try and deal with the facts that
are in front of us instead of looking at this in an historic
context, which is that these are minerals that belong to a
different sovereign nation. Just as you shouldn't require an
EIS for the State to drill on, lease its own minerals, I don't
know why we are in this situation, delaying permits and
delaying leases and delaying the things that need to be done,
when you have elected tribal governments that have that
responsibility.
I think that is an historic anomaly. But that is why we are
here. We are here because of the structure that we have set up
here in Congress that manages minerals that are owned by people
other than the people of the United States. Obviously, citizens
of the United States, but not in the context of traditional BLM
minerals.
I want to get to the employment issue that Senator Tester
raised. I have done a lot of work on this with OPM. We have
been able to get various accommodations from OPM through the
Department of Defense. We are working now with USDA. Department
of Interior has been really slow to work with us to try and
make sure that OPM is doing what they can to deal with high
cost of living and low participation rates in the Federal
workforce. We can't get this work done until we staff to get
this work done.
So I want a commitment from you, Mr. Roberts, that you will
take back to Department of Interior my frustration that we
continue to work on this but we haven't gotten very far in
terms of making sure that we get salary adjustments that will
add to the workforce.
Mr. Roberts. Absolutely, Senator.
Senator Heitkamp. Just a final point, I don't have a lot of
time left. Mandan, Hidatsa and Arikara Nation has counted 100
steps and up to seven agencies who provide a permit for
drilling on tribal land. Let me repeat that. A hundred steps
and up to seven agencies. I am glad that you are talking about
centralizing this. It is what some of the tribes have done. I
think the tribe's proposal, the Mandan, Hidatsa and Arikara
proposal is to provide a director to oversee permitting
requirements for all the agencies involved.
Would creating this office under your plan resolve staffing
issues, and having one point of accountability for the tribes
to actually, instead of trying to deal with Fish and Wildlife,
trying to deal with BLM, trying to deal with a myriad of
Federal agencies, shouldn't there just be one person
accountable in all of this?
Mr. Roberts. That is the design of the service center. You
are right, Senator, we heard that from tribes and we have
consulted with tribes. It was their idea for the service
center. So we are trying to implement that.
Senator Heitkamp. This is incredibly frustrating, because
the time when we could have been producing oil at $100 a
barrel, that opportunity, as we look at oil prices now at $45.
If you are looking at, from the standpoint of a production
company or a drilling company, and you have all the headaches
of trying to work through 100 different steps and seven
agencies, you are not going to drill in Indian Country.
I would like at some point somebody to really examine this
issue of going back and just thinking about this differently.
It is not public land. It is land that is owned by sovereign
nations. It is land that is owned by members of sovereign
nations. A lot of the system was set up to be paternal and kind
of dictate. There is nothing that would recommend in the past,
and I am not saying it is this Administration, but when you go
past, that would recommend that we have really fulfilled our
fiduciary obligation or our trust obligation to either
individual members of the tribe or the tribe themselves.
So there is no doubt there is a legitimacy to the
frustration that we see today and we continue to see. So this
needs to be resolved maybe in a broader context.
The Chairman. Thank you, Senator Heitkamp. Senator
Lankford?
STATEMENT OF HON. JAMES LANKFORD,
U.S. SENATOR FROM OKLAHOMA
Senator Lankford. Thank you all for your testimony. And on
what Senator Heitkamp was just saying, I couldn't agree more.
We have to be able to streamline this process. There should be
ongoing conversation, rather than hearing it again and again
and again and saying, there is a problem. There has to be some
conversation to say, how do we actually resolve this, so it is
not an ongoing conversation.
Let me ask a follow-up as well, to what Senator Daines was
talking about also. Mr. Roberts, before the BLM released their
frack rule, did the BLM consult with BIA and say, we are about
to do this rule, what would be the consequences in Indian
Country if this rule is released? Did that conversation occur?
Mr. Roberts. My understanding is that BIA participated in
some of the consultations, if not all of them. I don't have the
details for you, Senator, today. But I think there was
coordination between BIA and BLM.
Senator Lankford. Was there a conversation between BIA and
back to BLM during that consultation to say, here is what the
financial consequences will be to tribes if this rule is
imposed?
Mr. Roberts. I don't know.
Senator Lankford. Was there an estimate of the financial
consequences on tribes and the effect on jobs if that rule is
imposed? Was there any study that was done or any conversation
or BIA advising BLM, if you do this, this is the consequences
on tribes?
Mr. Roberts. I don't know, Senator.
Senator Lankford. How can we find out? Obviously there is
this trust responsibility to make sure that we are managing
that. When that rule is being discussed behind closed doors, we
trust BIA to actually speak out on behalf and say, if BLM does
this and imposes this on tribes, here is the effect of it. That
is important to know how that is being fulfilled.
Mr. Roberts. I would be happy to follow up with you,
Senator.
Senator Lankford. Please do. We would love to have some
notes on that, just the back and forth on that. For instance,
when EPA and Corps of Engineers are discussing the Waters of
the U.S. Rule, there was swapping back and forth between the
attorneys. We have those documents, how they swapped back and
forth and were having those internal conversations. We would
like to know how BIA was advising that back to BLM.
Let me ask this as well, dealing with Osage and the Osage
Nation area and Osage County in Oklahoma. It is a unique energy
issue, because of the mineral rights in that area. I would be
confident that you are aware of some of the issues there. BIA
earlier this year released new regulations for conducting
operations in Osage County. During that time period of
releasing those new regulations, royalties had dropped in half
during that time period. It has been a very significant change
on that.
Can you give me an update on the status of the suit and
newly released regulations that may be pending for Osage?
Mr. Roberts. I just know that it is still in litigation.
There has been a stay. Mike Black, the Director of BIA, has
been thoroughly involved with this. He has been working with
Kevin and I on this. I know we are in close coordination with
your staff as well, Senator.
Senator Lankford. Do you know if BIA will put out new
regulations for the Osage mineral stay, if that is in the
conversation?
Mr. Roberts. I don't know.
Senator Lankford. Can you help me understand something that
has happened recently in the Osage area? My understanding is
BIA has decided that all permit applications, activity reports,
historical information about production activity, individual
wells, has now been taken into BIA and is considered to be
private information that is inaccessible. If someone wants to
get a history of a well, now rather than that being available,
they have to get a FOIA request to get background information
on a well.
Do you know if that is true?
Mr. Roberts. I think it is true. I think the staff at Osage
are, obviously they have to comply with Federal law. My
understanding is that there were some instances where perhaps
information as not, was being provided without a FOIA request.
But we do need our staff to provide the information in
accordance with law. That is what I understand our staff is
doing now, Senator.
Senator Lankford. So let me help with the hurdle here
again. Not only is it more expensive to then do production in
Indian Country, not only does the permitting take five times
longer, but now if you are interested in buying that well, you
can't just go get the information. One county over, you could
actually go online and get that information if it is anywhere
else in the State, and be able to find it, if you want to get
it and deal with production. Now you also have to jump through
a FOIA request hurdle on this as well.
Mr. Roberts. My understanding is that we are working with
staff to make as much of the publicly-available information
available to the public without a FOIA request.
Senator Lankford. I am just trying to figure out why
suddenly you have to go through a FOIA request hurdle. Why was
that even a consideration for publicly-available information,
what has been historically publicly-available, now a new hurdle
has been added to a million other hurdles that are there?
Mr. Roberts. My understanding, Senator, is that some of the
information that was being released may have contained Privacy
Act information. So we obviously don't want that to occur. We
are looking at that information now. We will try to put out as
much publicly-available information as possible. I know
Director Black and his staff have been at Osage both last week
and this week.
Senator Lankford. Has any of that information been lost? Do
you know if all that information has been retained? Is there
any missing information on any of the wells?
Mr. Roberts. I am not aware of any missing information,
Senator.
Senator Lankford. Obviously there are multiple issues as we
deal with Osage. It is a unique issue but it is characteristic
of what is happening in a lot of the energy development along
this. The greater number of hurdles that are placed there, the
incentive is go somewhere else. That directly affects what is
happening in Osage County. That directly affects the tribe.
That directly affects everything in Indian Country across my
State and other States as well.
The more hurdles, the more expensive this is, the longer
the process, the more people say, I will go next door. Which
has a direct effect, in this case, just on headright owners
there, where it has been cut in half just this year. So there
are significant effects that are happening. We are trying to
figure out, how do we help the tribe and how do we provide some
sort of level stability, and where are we going to be able to
get efficiency in the process and who is an advocate for the
tribes to be able to say to other agencies, if you do that,
here is how it hurts. Let's find a way to be able to except out
the tribes so this doesn't make a hard process even harder.
I yield back.
The Chairman. Thank you, Senator Lankford. Senator Franken?
Senator Franken. Let's make a hard process easier. It
should be easier to do energy projects on Indian land than
anywhere else. Because we have a trust responsibility.
Mr. Roberts, do you disagree with anything in the GAO
report?
Mr. Roberts. Senator, as I testified, we are implementing
almost all the recommendations. The one thing that I would say,
an area of disagreement with the GAO report is more a small
picture than big picture. The GAO report basically says we
should have GIS mapping capability that is provided to tribes.
And that it should be in a certain system of records.
What we have responded to GAO is that we have that system.
It is called the NIOGEMS system. It is freely available to
tribes. In fact, we are utilizing it at a number of
reservations today. I am more than happy to have our staff, who
are familiar with that, work with your staff to show you.
Because it is state of the art.
You can go on, for example, Fort Berthold----
Senator Franken. Okay, I got that. But I am struck with the
staggering loss of opportunity, as well as the Chairman was.
And you sense the frustration here. We here on Indian Affairs,
we are the ones who hear this testimony. We are the ones who
hear the testimony about youth suicide. We are the ones who
hear about the inability to get housing. We are the ones who
hear that we can't get law enforcement because we don't have
housing, that families have to double up because there isn't
housing.
We are so frustrated. Then it is hard to argue for funding
which you need when you are having reports like Mr. Rusco's
that say the BIA is not operating efficiently. That is another
catch-22. Why should we fund the Bureau of Indian Affairs? The
Bureau of Indian Affairs isn't doing its job if it is
dysfunctional.
We all want to see this happen yesterday. I want your
pledge that you will get this done in terms of making this
process more efficient, so that we can help you. Secretary
Moniz was testifying about the budget a while ago in the Energy
Committee. By the time it got to me, I think I had all the time
I needed so I just said, is there anything you want to say? He
said, yes, we put $11 million loan guarantee for Indian energy.
This is something that Congress authorized a loan guarantee
program in the Department of Energy, dedicated to tribal energy
development, in 2005. It has never been funded.
The President included $11 million for the program in his
budget request this year. My staff has talked to the Chairman's
staff about this. He expressed concern that it was just
renewables that would be in this. Again, I said ``a coal
mine,'' as painful as that is for me to say, a coal mine, oil,
gas. I would love my colleagues to urge the appropriators to
appropriate that. They have already resolved, without it, they
finished their package. But I want an amendment to get this $11
million, which can leverage $90 million, $100 million in
projects in Indian Country.
But I want to be able to say, going forward, that we will
be able to do these projects. I think a loan guarantee will
help get these projects done. Do you agree on that?
Mr. Roberts. Yes, sure. Absolutely.
Senator Franken. Okay. Mr. Rusco, can I ask you what the
barriers would be to, say, doing a solar project in Arizona for
a tribe? Just give us a typical, let's say a tribe wants to
start a solar project. There is plenty of sun. I am sorry to go
over my time here.
I have been in Arizona in the summer. It is just sun. Let's
say a tribe wanted to do that. What barriers would you see? Can
you paint a picture for us?
Mr. Rusco. I think Senator Heitkamp said it much better
than I could. You have to deal with multiple agencies, and you
will have to do that on their time and go through their
processes. There is nobody to turn to to guide you through that
process.
There is a good example in the Federal Government of a
permitting process that actually works where there is a one-
stop shop, and it is not a small group in one State, it is the
Federal Energy Regulatory Commission for permitting pipelines.
You go across multiple Federal and private jurisdictions, you
have to go to all the resource agencies and you have to get all
kinds of permits and studies and all that sort of thing.
But FERC coordinates with all the agencies and makes sure
that they are understanding the process and they are guiding
the applicant through the process from step one all the way to
the end. That kind of a model can work. I am not making a
recommendation. I don't know how to fix it.
Senator Franken. Would you write that piece of legislation
for me and have it on my desk tomorrow? Or on the Chairman's?
[Laughter.]
Mr. Rusco. Absolutely.
The Chairman. Al Franken for pipelines.
Senator Franken. Well, I am for pipelines. We have
pipelines, and they need to be approved, so that we don't have
what happened in Enbridge, in Michigan. You need pipelines,
especially because we have a lot of Bakken oil coming through
Minnesota by rail and taking space that could deliver farm
produce or product.
Don't get me wrong, I am for pipelines. I just want to see
it easier to do this. It should be easier in Indian Country
than anywhere else. That should be our goal. Thank you.
The Chairman. Thank you so much, Senator Franken.
Mr. Roberts, I want to go back to something you said. Why
is the DOI opposed to Southern Utes doing their own fracking
rule? Doesn't the DOI support sovereignty of the tribes?
Mr. Roberts. This matter is in litigation, Chairman. I will
say that the fracking rule provided a process, a variance
process, a process where the tribes could work through BLM or
States, for that matter, and utilize tribal regulations for
fracking.
The Chairman. Mr. Rusco, your report on Indian energy
development identified poor management by the BIA as an
impediment to Indian energy development. A number of us picked
up on your staggering loss of opportunity comment. Your written
testimony noted one tribe estimated that approximately $95
million in potential revenues from royalties, permitting fees,
severance taxes was lost due to agency delays.
Can you elaborate a little bit on the extent of the effects
on tribes and tribal members as a result of this agency's
management shortcomings?
Mr. Rusco. Unfortunately, the record-keeping and the
information systems can't give you a comprehensive picture. But
I can give you some examples. We talked to a tribe trying to
develop a wind project, wind energy project. And for years they
had gone through trying to get approval through BIA for the
basic permits. They had a purchase power agreement, they had a
utility willing to pay them for the power.
It took so long to do that that after several years, in the
middle of this process, the tribe went ahead and went through
the process of getting, of implementing the HEARTH Act in order
to bypass that. That was faster than actually getting through
the other process.
But they didn't actually still get the project built.
Because by the time all the delays took place, the purchase
power agreement expired. So now they are looking for a new
buyer. I don't think you can estimate the value that these
kinds of delays cost, because if you miss the train, it is not
coming back through sometimes. You have a case where you are
buying power from a bunch of places, and when they are bought
up, you are not on the list any more.
Oil and gas is not that different. If an area is being
developed and they are building infrastructure and if all that
gets done and the service companies move out and the pipelines
that are going to be there are there, and now you want to
develop a new area, you have to ramp it all up again. This is
what the delays cost.
The Chairman. And $100 oil versus $50 oil in terms of the
potential.
Mr. Rusco. Exactly.
The Chairman. Secretary Roberts, the GAO report highlighted
that the BIA faces limitations in staff expertise needed to
administer energy development functions. We have heard
testimony indicating that the number of agency personnel
trained in oil and gas development work isn't sufficient to
meet the demands of the increased energy development on Indian
lands.
What is the BIA doing now to ensure proper staff expertise
is available to assist the tribes and their energy partners in
developing resources?
Mr. Roberts. We are utilizing every incentive that is
available to us for hiring. As I said, we are competing with
private companies and corporations. We are also losing great
folk from the Bureau to tribal leadership positions and other
positions.
So we are working actively to fill those. But it is a
matter of competing with industry.
The Chairman. I think members of the Committee find it
troubling from the GAO report that the Bureau of Indian Affairs
doesn't have the data needed to verify ownership of oil and gas
resources, that data isn't readily available to identify
resources available for lease or identify where the leases are
in effect. The report noted that in some cases, agency
personnel would have to search paper records stored in multiple
locations to find the data. The Department's response letter to
the GAO from August of this past year noted that a national
data set of all Indian land tracts with visualization
functionality is expected to be completed, they say, within
four years.
What is the BIA going to do in the interim when tribes and
tribal members need the data to develop their energy resources?
Mr. Roberts. We are working as hard as possible, Senator.
It is a matter of limited resources. I know that on a number of
reservations where there are significant oil and gas resources,
we do have those, we do have that technology, and tribes are
using the NIOGEMS system to track not only - we can go to a
parcel of land, we can say, okay, here is when the application
came in, here is when it was issued, here is when the APD was
issued, here is where they are in the NEPA process. We can do
some of those things. We can't do it nationwide, that is right.
But with our resources that we have, we are trying to move
as quickly as possible.
The Chairman. Mr. Olguin, your written testimony
highlighted several frustrating instances that your tribe
experienced in trying to develop its resources. The tribe found
that the BIA records were in disarray, staff were untrained,
staff were underqualified. Likewise the existing system for
tracking rights-of-way was unwieldy. The tribal energy resource
agreement would authorize the tribe to develop its energy
resources, which may include tracking the rights-of-way and
leases.
Could you just explain how would your tribe benefit if you
had a tribal energy resource agreement in place?
Mr. Olguin. What it would do, it definitely would give us
the ability to approve a lot of things on our own, particularly
these leases and rights-of-way and put control in the tribe's
hands. Along that line, I believe that with a lot of those
factors that come into play with the deficiencies, it gives the
tribes the capability and capacity to really manage its own
affairs on its own terms. We still have to realize, we are
still going to be stuck with what is inherent Federal
functions. That is still going to be a key component, even if
the TERA issue came forth.
We haven't applied, we are thinking about applying. We are
thinking about pushing that envelope to either get an approval
or a denial to test the system to see if it is going to work.
The Chairman. Mr. Cuch, you have a map of Utah next to you.
Your written testimony noted that it takes approximately 405
days for your company to receive a drilling permit from the
Bureau of Land Management and the BIA for tribal wells,
correct?
Mr. Cuch. Correct.
The Chairman. Meanwhile, it takes 73 days, or it takes over
a year to get it from BLM and the BIA, only 73 days, a little
over two months, to receive a permit from the State of Utah for
a well in non-tribal areas. So there is an 11-month difference
there in the permitting time. It is almost a year difference.
What additional risks or costs are incurred by the tribe
and your company because of delays associated with the
development of tribal wells?
Mr. Cuch. Certainly time is an issue. One of the things we
have witnessed is that the BIA, they handle the rights-of-way
and the NEPA. So the NEPA process is really what takes probably
the longest amount of time. There are a lot of consultations
that take place with outside Federal agencies that often add to
additional mitigation requirements and things like that, that
they require. That has been a challenge.
We found that the BIA often sort of defers to these outside
agencies, rather than saying, this is the proposed action, the
tribe is good with it, we would like to move forward. We think
that the BIA could be a stronger advocate for tribes.
Another thing I will share with you is that, and I can't
speak for the Ute Tribe, I am a tribal member, I am here on
behalf of industry, but what we have witnessed is that the
tribe has a much bigger budget than BIA. They have the staff on
hand, at their Energy and Minerals Department. They have a very
sophisticated government. They have a fish and wildlife
department of their own. They have several biologists on staff.
They have a natural resources department. We think they are
fully capable of handling those environmental projects, which
would do away with that Federal action piece.
So already, the tribe has taken over the right-of-way
piece. If you look at Exhibit 4, you will see that we have
actually had some decreases in time. It is not here, it is in
your packet. That is largely because the tribe has taken over
the right-of-way function and the BIA at the agency are
supportive of working with the tribe to handle that aspect.
Then of course, the other additional delay is kind of to my
right, where you see an additional amount of time, 176 to 203
days, from when the BLM receives the right-of-way and NEPA
concurrences for them to do their part for the down-hole
analysis. We need to see better coordination, we think, between
the agencies, to ensure that tribal projects are getting
prioritized and are getting support from the various agencies
who share the trust responsibility that BIA has.
The Chairman. Your companies make significant investments,
$1.5 billion in the Uinta Basin, including 64 Ute tribal wells,
your company has applications pending I think for about 95 more
wells for the Ute Tribe, and an environmental process underway
for over 1,000 more tribal wells in the Basin. The testimony
stated that under Federal law unless a tribe has a tribal
energy resource agreement pursuant to Title V of the Energy
Policy Act of 2005, an operator will have to obtain a Federal
drilling permit. But because of the delay and the uncertainties
in obtaining permitting approvals, authorization from the BIA,
that there is a substantial negative impact on your ability to
develop tribal oil and gas resources and generate income for
the tribe.
So how would the tribe and your company benefit if the
tribe had this tribal energy resource agreement that we are
talking about today?
Mr. Cuch. Well, certainly it is up to the tribe to decide
if that is the route it wants to go. But I think they are fully
capable of taking over and being in a position to enter into a
TERA where they would take a greater role in the permitting
process. In our testimony, we have shared several examples of
how the current process has led to delays and has impacted
revenues to the tribe. I think it is important to understand
that tribes are governments without a tax base, so they largely
require this revenue to support core government services to the
members.
Again, one of the biggest challenges we are seeing is that
there are a lot of outside Federal intermediaries that as well
as administrative rulemakings, that are sort of adding to the
difficulty to develop tribal resources. I think as Senator
Heitkamp mentioned, tribal lands are not public lands. I think
the Bureau could do a lot to try and work to educate those
other agencies so they understand that and also be willing to
take a stronger stance with those agencies to move tribal
projects forward.
The Chairman. I want to thank each and every one of you for
being here. Obviously this is an area where there is a lot of
interest. You had 13 different United States Senators here
today to hear what you had to say. Some had to come and go,
some may actually want to have questions in writing that they
will submit to you.
The hearing record will remain open for two weeks for
additional testimony and some follow-up. I want to thank each
of you for being here today as witnesses. The hearing is
adjourned.
[Whereupon, at 4:05 p.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Mark Fox, Chairman, Mandan Hidatsa and
Arikara Nation, Fort Berthold Reservation
I. Introduction
Chairman Barrasso, Vice-Chairman Tester and Members of the
Committee, thank you for the opportunity to testify on the Government
Accountability Office's (GAO) report entitled ``Indian Energy
Development: Poor Management Has Hindered Energy Development on Indian
Lands.'' My name is Mark Fox. I am the Chairman of the Mandan Hidatsa
and Arikara Nation (MHA Nation) of the Fort Berthold Reservation.
The MHA Nation appreciates the Chairman's oversight and
investigation into the barriers we face every day as we work to develop
our energy resources, mitigate the impacts of energy development,
protect our homelands and provide for our members. The GAO report
requested by the Chairman is an important piece in the Committee's 8
years of investigations into the barriers to Indian energy development.
With the GAO report and volumes of testimony from tribes, tribal
organizations and our industry partners, it is time to take action to
resolve these issues. The MHA Nation agrees with and supports the
comments of many of the Senators who attended the hearing that Congress
and the Bureau of Indian Affairs (BIA) should take action on these
issues immediately.
Passage of Chairman Barrasso's bill, S. 209, the Indian Tribal
Energy Development and Self-Determination Act Amendments of 2015, would
be an important step forward. In addition, now that Congress has passed
a budget, the MHA Nation asks for the Committee's support of the
Administration's $4.5 million budget proposal for an Indian Energy
Service Center in Denver, Colorado. The proposed Service Center would
go a long way to resolving many of the issues identified in the GAO
report.
The MHA Nation knows the issues highlighted in the GAO report first
hand. The MHA Nation and our Fort Berthold Reservation are in the heart
of the Bakken Formation--still one of the most active oil and gas plays
in the United States. Our Reservation, located in west-central North
Dakota, is the equivalent of about the 7th highest producing oil and
gas state in the Country. In less than 7 years, North Dakota, including
our Reservation, became the second highest producing state in the
Country. Only Texas produces more. Currently, there are 8 drilling
rigs, more than 30,000 semi-trucks, and more than 1,300 oil and gas
wells producing about 200,000 barrels of oil per day on our
Reservation. The MHA Nation struggles daily with BIA, BLM and other
Federal agencies for every single permit needed to get oil and gas
wells into production and to keep them operating.
II. GAO Report
The GAO report confirms years of testimony by Indian tribes and our
energy partners before this Committee and the House Natural Resources
Subcommittee on Indian Insular and Alaska Native Affairs. The MHA
Nation and other tribes have long expressed frustration about the
Federal government's overly complex energy permitting process, a lack
of BIA staff and expertise to approve energy permits, and a lack of
financing for energy projects on Indian lands. GAO's June 2015 report
confirms our frustrations.
The GAO report found that the following factors have hindered
Indian energy development: (1) shortcomings in BIA management of Indian
energy development including a lack of comprehensive data, a lack of
staff and a lack of energy expertise; (2) an overly complex regulatory
framework; (3) fractionated ownership interests; (4) a lack of capital
and tax credits; (5) dual taxation of Indian energy resources by state
governments; (6) lack of tribal capacity to oversee energy development;
and, (7) limited tribal or reservation infrastructure. GOV'T
ACCOUNTABILITY OFFICE, INDIAN ENERGY DEVELOPMENT--POOR MANAGEMENT BY
BIA HAS HINDERED ENERGY DEVELOPMENT ON INDIAN LANDS 18 (June 2015). The
Tribe asks that the Committee consider and approve legislation that
would address these issues.
The two most important actions the Committee could take to address
the issues identified by GAO would be to prevent state dual taxation of
Indian energy resources and enact our proposal for an Indian Energy
Regulatory Office. Preventing state dual taxation would ensure that
Tribes receive the full benefit of their Indian energy resources,
including maximum needed tax revenue to mitigate energy impacts,
support tribal self-determination and tribal infrastructure. Enacting
our proposal for an Indian Energy Regulatory Office would streamline
permitting and increase Indian energy staffing and expertise. Our
testimony focuses on these two solutions to the issues raised by the
GAO report.
III. Providing Tribes with the Full Value of Energy Resources
The GAO report found that state dual taxation hindered Indian
energy development. GAO concluded that ``dual taxation of Indian energy
resources by state governments'' was one of the reasons why ``Indian
energy resources are underdeveloped relative to surrounding non-Indian
resources.'' Id. at 29 to 30. State dual taxation takes the revenues
that tribes need to exercise self-determination over their energy
resources and provide tribal infrastructure to support energy
development. Tribes cannot take over significant roles in energy
permitting without the tax revenues that every other government relies
on to staff government offices and support infrastructure.
Enacting the Indian Mineral Leasing Act of 1938, the Indian Mineral
Development Act of 1982 and the Indian Tribal Energy Development and
Self-Determination Act of 2005, Congress intended for Indian tribes to
receive the full value of their energy resources. Congress intended for
development of these tribal trust resources to provide tribes with
financial resources, fund tribal government activities, promote
economic development and provide on-reservation jobs. Congress did not
intend that State governments would directly benefit from the
development of tribal trust resources or receive a windfall by taxing
development of those resources.
Yet, that is exactly what is happening. States are collecting taxes
from the development of Indian trust resources while providing little
to no on-reservation benefits. In 1989, the Supreme Court questioned
whether Congress intended for tribes to receive the full benefit of
their resources. Finding the Congress did not speak clearly on this
issue, the Supreme Court allowed state dual taxation of Indian energy
resources. Notably, the affected Tribe was not even a party to the
case. Congress should resolve this issue by passing legislation that
affirms that Indian mineral development laws are intended to ensure
that tribes receive the full benefit their resources, and this includes
the full benefit of the tax revenue derived from energy production.
Currently, state dual taxation forces tribes into tax agreements
with states to share taxes from energy development on reservation
lands. Without these tax agreements, state taxation doubles the tax
rate for development of Indian energy resources and stifles
development. Only by agreeing to give up half or more of their tax
revenues can tribes ensure that energy development on reservation lands
is competitive with surrounding lands.
At the same time, tribal governments must pay for the heavy burdens
that energy development puts on tribal government in all areas,
including destruction of roads, increased crime, hazardous spills, and
an overall burden on government infrastructure. Because Tribes are not
able to maximize available tax revenue to mitigate these impacts, they
must in many cases use royalty revenue. This is unjust. Tribes should
not have to give up tax revenue because of dual state and local
taxation when they are faced with the brunt of the burden that comes
with energy development.
The case of the MHA Nation demonstrates the impact of dual state
taxation. Job and development killing dual state taxation forced us
into an unfair tax agreement with the State of North Dakota whose
coffers are so full they have a $3.6 billion surplus and created
investment accounts that exceed a billion dollars whose funds cannot be
spent until 2017. In addition:
From 2008 to the present, the State is approaching $1
billion in tax revenues from energy production on tribal trust
land.
During this time period, the State took the majority of the
tax revenues from energy production on the Reservation--over 51
percent of all of the tax revenues.
Over the next five years, the State will get about $1
billion more in taxes from tribal resources.
The State does not report how these funds benefit the
Reservation.
We do know that in 2011 the State collected about $82
million in taxes from energy development on the Reservation,
but spent less than $2 million on state roads on the
Reservation and zero on tribal and BIA roads.
In addition, we do not collect a dime in taxes from
pipelines that cross the Reservation because pipeline operators
pay taxes to the counties, even though we bear the expense of
cleaning up spills and regulating activity.
To make matters worse, in the Spring of 2015, the North Dakota
State legislature unilaterally voted to reduce tax rates which also
lowers the revenues the MHA Nation will receive. We estimate that over
the next 20 years we will lose $700 million under the new lower tax. We
are not running budget surpluses like the State. The MHA Nation needs
tax revenue to provide the infrastructure needed to support the energy
industry.
To provide the tribes with the resources we need to exercise self-
determination over our energy resources, the Committee should consider
and approve legislation affirming that Indian mineral leasing status
are intended to provide tribes with the full benefit of their energy
resources. The following amendments should be added to S. 209, the
Indian Tribal Energy Development and Self-Determination Act Amendments
of 2015, as it is considered on the Senate floor:
Sec. XX. Amendments to Indian Mineral Leasing.
(a) Act of March 3, 1909.-The twelfth undesignated paragraph under
the heading ``COMMISSIONER'' of title I of the Act of March 3, 1909 (25
U.S.C. 396), is amended--
(1) by striking ``That all lands'' and inserting the
following:
``(a) Leases.-All land''; and
(2) by adding at the end the following:
``(b) Leases approved under this Act shall provide Indian
tribes and Indian mineral owners with the maximum governmental
and economic benefits associated with mineral leasing and
development, including all revenue derived therefrom, to
encourage tribal self-determination and economic development on
Indian lands.
``(c) Within one hundred and eighty days of the date of
enactment of this Act, the Secretary of the Interior shall
promulgate rules and regulations to facilitate implementation
of this Act.''
(b) The first section of the Act of May 11, 1938 (25 U.S.C. 396a),
is amended--
(1) by striking ``That hereafter unallotted lands within''
and inserting the following:
``(a) Leases.-Effective beginning on May 11, 1938, the
unallotted land within''; and
(2) by adding at the end the following:
``(b) Leases approved under this Act shall provide Indian
tribes and Indian mineral owners with the maximum governmental
and economic benefits associated with mineral leasing and
development, including all revenue derived therefrom, to
encourage tribal self-determination and economic development on
Indian lands.
``(c) Within one hundred and eighty days of the date of
enactment of this Act, the Secretary of the Interior shall
promulgate rules and regulations to facilitate implementation
of this Act.''
(c) The third section of Indian Mineral Development Act of 1982 (25
U.S.C. 2102), is amended--
(1) by adding at the end the following:
``(c) Agreements approved under this Act shall provide Indian
tribes and Indian mineral owners with the maximum governmental
and economic benefits associated with mineral leasing and
development, including all revenue derived therefrom, to
encourage tribal selfdetermination and economic development on
Indian lands.
`(d) Within one hundred and eighty days of the date of
enactment of this Act, the Secretary of the Interior shall
revise and promulgate rules and regulations to facilitate
implementation of this Act.
(d) Section 2604 (h) of the Energy Policy Act of 1992 (25 U.S.C.
3503 (h)) is amended--
(1) by adding at the end the following:
``(c) Agreements approved under this Act shall provide Indian
tribes and Indian mineral owners with the maximum governmental
and economic benefits associated with mineral leasing and
development, including all revenue derived therefrom, to
encourage tribal selfdetermination and economic development on
Indian lands.
``(d) Within one hundred and eighty days of the date of
enactment of this Act, the Secretary of the Interior shall
revise and promulgate rules and regulations to facilitate
implementation of this Act.
IV. Indian Energy Regulatory Office
Almost as important as the problem of dual taxation is a continued
lack of Federal staff, expertise and coordination in the processing of
Indian energy permits. The MHA Nation supports BIA's efforts to create
an Indian Energy Service Center to coordinate and support Indian energy
permitting, however, much more is needed. In addition to the BIA's
effort, the MHA Nation asks that the Committee support and pass
legislation to create an Indian Energy Regulatory Office.
The MHA Nation's proposal for an Indian Energy Regulatory Office
was developed in coordination with the Coalition of Large Tribes and
supported by the National Congress of American Indians. This proposal
and resolutions support it are attached to my testimony. Legislation
creating an Indian Energy Regulatory Office would provide BIA the
authority it needs to ensure that its Service Center is a success. Our
proposal would:
require all of the agencies involved in Indian energy
permitting to co-locate staff in a single office;
provide a Director with the authority to reach across
Federal agencies to get permits approved;
direct the office to be guided by basic Indian trust
principles that have been lost in the current unorganized
Federal system for overseeing energy development on Indian
lands and prevent application of public land standards to
Indian lands; and,
provide resources within Interior and BIA for the efficient
processing of Indian energy permits and approvals.
Our proposal would solve most if not all of the BIA management
problems identified by GAO. By centralizing BIA support for Indian
energy development, BIA could generate comprehensive data for the
ownership and use of resources, develop a centralized tracking system,
and provide a home within BIA for Indian energy staff and expertise.
Congress provided similar authority for federal public lands 10
years ago in Section 365 of the Energy Policy Act of 2005. Section 365
established a number of Permit Processing Improvement Offices in
regions with high oil and gas permitting activity on federal public
lands. These pilot offices were then made permanent by S. 2440 in the
113th Congress. The same support should be provided for Indian lands.
Particularly given that the benefits of energy development far exceed
the benefits on Federal lands. Energy development on Indian lands
provides jobs, economic development, revenues for tribal governments,
and, if managed properly, long-term investment reservation
infrastructure.
V. Conclusion
The GAO report concluded that, ``The development of Indian energy
resources has the potential to provide significant benefits to Indian
tribes, tribal members, and the Nation through both tribal economic
development opportunities and by contributing to the Nation's energy
production.'' However, GAO found that a number of factors, including
poor management by BIA, limits the ability of Tribes to developer their
resources. GAO recommended that, ``Federal policy calls for providing
enhanced self-determination and economic development opportunities for
Indian tribes by promoting tribal oversight and management of energy
resource development on tribal lands.''
In addition to GAO's findings and 8 years of testimony from Indian
tribes, the Committee should follow the calls for action from the many
Committee members who attended the hearing and spoke passionately about
the need for changes in the management of Indian energy development.
Legislative changes are needed to provide the staff, expertise and
resources to for the Federal government to effectively oversee and
manage Indian energy resources. Change is also needed to ensure that
tribes receive the full benefit from developing their resources and
have the tax revenues needed take over portions of the permitting
process and exercise self-determination in the development of our
resources.
Thank you for the opportunity to provide this testimony.
Attachments
COALITION OF LARGE TRIBES--RESOLUTION # 1-5-21-14
Title: A New Interior Office to Promote Indian Energy, Sovereignty,
Self-Determination and American Energy Independence
WHEREAS, the Coalition of Large Tribes (COLT) was formally
established in April 2011, and is comprised of tribes with a large land
base, including the Mandan, Hidatsa and Arikara Nation (MHA Nation),
the Oglala Sioux Tribe, the Crow Tribe, the Navajo Nation, the Sisseton
Wahpeton Sioux Tribe, the Blackfeet Tribe of Montana, the Rosebud Sioux
Tribe, the Ute Indian Tribe, the Shoshone-Bannock Tribes, the Colville
Confederated Tribes, Spokane Tribe, and the Cheyenne River Sioux Tribe.
COLT is chaired by Chairman Tex Hall of the MHA Nation; and
WHEREAS, COLT was organized to provide a unified advocacy base for
tribes that govern large trust land bases and that strive to ensure the
most beneficial use of those lands for the tribes and individual Indian
landowners; and
WHEREAS, several COLT members are currently located in the Bureau
of Indian Affairs' (BIA) Phoenix, Rocky Mountain, Great Plains, and
Albuquerque Regions and are energy producing tribes or are among those
tribes with potential for energy production that rely or might rely in
the future on conventional or renewable energy resource development to
support infrastructure, economic development, jobs, government revenues
and income; and
WHEREAS, at the COLT DC Impact Meetings held in Washington, D.C.
from March 5 to 6, 2014, with a quorum present, COLT adopted Resolution
#3-3-6-14 entitled ``Request that the Department of the Interior Create
a New Office for Energy Producing Tribes;'' and
WHEREAS, the United States Congress is currently considering and
the Department of the Interior (DOI) and the Bureau of Indian Affairs
(BIA) are currently developing a proposal for a new Indian energy
office; and
WHEREAS, it is in the best interest of COLT to provide the
Congress, DOI and BIA with additional information and detail about the
proposed office to ensure that the office will effectively serve Indian
tribes; and
WHEREAS, COLT proposes to amend Section 2602(a) of the Energy
Policy Act of 1992 (25 U.S.C. 3502(a)) to create a new Indian Energy
Regulatory Office (Office) that would be centrally located in Denver,
Colorado and utilize and refocus the existing staff, resources and
office space of the Office of Indian Energy and Economic Development's
(OIEED) Division of Energy and Mineral Development; and
WHEREAS, establishing the Office in Denver, Colorado provides
adequate housing and ease of recruiting new employees to a major
metropolitan area, and proximity to other federal agencies involved in
the energy permitting process; and
WHEREAS, the Office would be established within the Secretary's
Office, similar to the Indian Water Rights Office, to ensure that the
Director of the Office has authority over the various agencies
involved; and
WHEREAS, the Office would serve as a new BIA Regional Office that
energy producing Indian tribes may voluntarily select to replace an
Indian tribe's existing BIA Regional Office for review and approval of
all energy related projects and would not result in duplicative review
and approval of energy projects; and
WHEREAS, the Office would not replace current BIA Regional Offices
nor the Farmington Federal Indian Minerals Office authorities and
responsibilities except for those energy producing Indian tribes that
elect to utilize the Office; and
WHEREAS, the Office would provide energy resource assessments and
feasibility studies, technical assistance and training in energy
development proposal review, increase federal permitting capacity and
permit streamlining, provide support for permitting conducted by
federal Agency and Field Offices, improve coordination within Interior
agencies and with other Departments, provide technical assistance and
training in the oversight and management of energy and financial
resources, and ensure that Indian lands are not managed according to
Federal public land management standards; and
WHEREAS, Indian tribes seeking greater DOI support in the areas of
energy development, oversight, management, proposal review and energy
related financial management could elect to be served by this Office or
could elect to contract the functions of this Office in a manner
consistent with P.L. 93-638; and
WHEREAS, existing BIA Regional Offices would continue to provide
Indian tribes that have elected to utilize the new Office with support
and oversight for all non-energy related issues; and
WHEREAS, to coordinate and streamline permitting, the Office would
also include staff from other DOI agencies and offices involved in
energy permitting on Indian lands, including: the Bureau of Indian
Affairs, the Bureau of Land Management, the Office of Valuation
Services, the Office of Natural Resources Revenue, the Fish and
Wildlife Service, the Office of Special Trustee, the Office of the
Solicitor, mining engineering and minerals realty specialists from the
Office of Surface Mining, and any other DOI offices involved in energy
permitting on Indian lands; and
WHEREAS, the establishment of the Office would utilize existing
funding and resources from the OIEED's Division of Energy and Mineral
Development and from each of the agencies and offices listed above, and
allow for supplemental funding from industry partners in addition to
new federal appropriations; and
WHEREAS, within one year or less, the Office would enter into
agreements with other Federal agencies to coordinate and streamline
permitting, including: the Environmental Protection Agency, the United
States Department of Agriculture, and the Army Corps of Engineers; and
WHEREAS, on May 21, 2014, the Senate Committee on Indian Affairs
approved with amendments S. 2132, a bill to amend the Indian Tribal
Energy Development and Self-Determination Act of 2005 and for other
purposes, however, the bill, as amended, would only study energy
permitting delays for a year, meanwhile, Congressional action is
immediately needed to reform and restructure federal oversight and
permitting of Indian energy development.
NOW, THEREFORE, BE IT RESOLVED, COLT calls upon Congress to pass
legislation and that DOI take administrative action pursuant to a
Secretarial Order to establish and implement an Indian Energy
Regulatory Office as described in this resolution and the attached
legislative proposal; and
BE IT FURTHER RESOLVED, COLT calls upon Senator Tester, the
Chairman of the Senate Committee on Indian Affairs, and other members
of the Committee and the Senate to work with COLT and amend S. 2132
before it comes to the Senate floor to include the attached legislative
proposal; and
BE IT FINALLY RESOLVED, this resolution shall be the policy of COLT
until it is withdrawn or modified by subsequent resolution.
CERTIFICATION
This resolution was enacted at a duly called meeting of the
Coalition of Large Tribes held in Washington, D.C. on May 21, 2014, at
which a quorum was present, with 4 members voting in favor, 0 members
opposed, 0 members abstaining.
Proposed Legislative Language for Indian Energy Regulatory Office
Section 2602(a) of the Energy Policy Act of 1992 (25 U.S.C.
3502(a)) is amended--
(1) by redesignating paragraph (3) as paragraph (4);
(2) by inserting after paragraph (2) the following:
``(3) INDIAN ENERGY REGULATORY OFFICE.--
" ``(A) ESTABLISHMENT.--To assist the Secretary in carrying out
the Program, the Secretary shall establish an `Indian Energy
Regulatory Office' within the Secretary's Office to be located
in Denver, Colorado. The Office shall utilize the existing
resources of the Department's Office of Indian Energy and
Economic Development Division of Indian Energy and Mineral
Development.
``(B) DIRECTOR.--The Office shall be led by a Director who
shall be compensated at a rate equal to that of level IV of the
Executive Schedule under section 5315 of title 5, United States
Code and who shall report directly to the Deputy Secretary.
``(C) FUNCTIONS.--The Office shall serve as a new Bureau of
Indian Affairs (BIA) Regional Office that energy producing
Indian tribes may voluntarily select to replace an Indian
tribe's existing BIA Regional Office for the following
functions:
(i) notwithstanding any other law, oversee, coordinate,
process and approve all Federal leases, easements, right-of-
ways, permits, policies, environmental reviews, and any other
authorities related to energy development on Indian lands.
(ii) support BIA Agency Office and tribal review and
evaluation of energy proposals, permits, mineral leases and
rights-of-way, and Indian Mineral Development Agreements for
final approval, conducting environmental reviews, and
conducting surface monitoring;
(iii) review and prepare Applications for Permits to Drill,
Communitization Agreements and well spacing proposals for
approval, provide production monitoring, inspection and
enforcement, and oversee drainage issues;
(iv) provide energy related technical assistance and
financial management training to BIA Agency Offices and tribal;
(v) develop best practices in the area of Indian energy
development, including, standardizing energy development
processes, procedures, and forms among BIA Regions and Agency
Offices;
(vi) minimize delays and obstacles to Indian energy
development and,
(vii) provide technical assistance to Indian tribes in the
areas of energy related engineering, environmental analysis,
management and oversight of energy development, assessment of
energy development resources, proposals and financing,
development of conventional and renewable energy resources.
``(D) RELATIONSHIP TO BUREAU OF INDIAN AFFAIRS REGIONAL AND
AGENCY OFFICES.--
(i) The Office shall have the authority to review and approve
all energy related matters for those tribes that elect to
utilize the Office, without subsequent or duplicative review
and approval by other BIA Regional Offices or other Interior
agencies. Existing BIA Regional Offices shall continue to
oversee, support and provide approvals for all other non-energy
related matters for those tribes that elect to utilize the
Office.
(ii) BIA Agency offices and Bureau of Land Management (BLM)
State and Field offices shall continue to provide regional and
local services related to Indian energy development including,
local realty functions, on-site evaluations and inspections,
direct services as requested by Indian tribes and individual
Indian and any other local functions to related to energy
development on Indian lands.
(iii) The Office shall provide technical assistance and
support to the BIA and BLM in all areas related to energy
development on Indian lands.
``(E) DESIGNATION OF INTERIOR STAFF.--The Secretary shall
designate and transfer to the Office existing staff and
resources of the Division of Energy and Mineral Development,
the Bureau of Indian Affairs, the Bureau of Land Management,
the Office of Valuation Services, the Office of Natural
Resources Revenue, the Fish and Wildlife Service, the Office of
Special Trustee, the Office of the Solicitor, mining
engineering and minerals realty specialists from the Office of
Surface Mining, and any other Interior agency or office
involved in energy development on Indian lands to provide for
the review, processing and approval of:
(i) permits and regulatory matters under the Indian Mineral
Leasing Act of 1938 (25 U.S.C. 396a et seq.), the Indian
Mineral Development Act of 1982 (25 U.S.C. 2101 et seq.),
the Indian Tribal Energy Development and Self-Determination
Act, included as Title V of the Energy Policy Act of 2005 (25
U.S.C. 3501 et seq.), the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1201) and its provisions
on Tribal Primacy; the Indian Right-Of-Way Act of 1948 (25
U.S.C. 323 to 328) and its implementing regulations at 25
C.F.R. Part 169, leasing provisions of 25 U.S.C. 415, and
surface leasing regulations at 25 C.F.R. Part 162;
(ii) the consultations and preparation of biological opinions
under section 7 of the Endangered Species Act of 1973 (16
U.S.C. 1536) (ESA);
(iii) the preparation of analyses under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.)
(NEPA); and,
(iv) providing technical assistance and training in various
forms of energy development on Indian lands.
(F) MANAGEMENT OF INDIAN LANDS.--The Director shall ensure
that all environmental reviews and permitting decisions comply
with the United States' unique legal relationship with Indian
tribal governments as set forth in the Constitution of the
United States, treaties, statutes, Executive Orders, and court
decisions, and are exercised in a manner that promotes tribal
authority over Indian lands consistent with the federal policy
of Indian Self-Determination. The Director shall also ensure
that Indian lands shall not be considered to be Federal public
lands, part of the public domain or managed according to
federal public land laws and policies.
``(G) INDIAN SELF-DETERMINATION.--Programs and services
operated by this Office shall be provided pursuant to contracts
and grants awarded under the Indian Self Determination and
Education Assistance Act of 1975 (25 U.S.C. 450f).
(H) TRANSFER OF FUNDS.--To establish the Office and advance
these efforts, the Secretary shall authorize, for a period of
not to exceed two years, the expenditure or transfer of such
funds as are necessary from the annual budgets of:
(i) the Bureau of Indian Affairs;
(ii) the United States Fish and Wildlife Service;
(iii) the Bureau Land Management;
(iv) the Office of Surface Mining;
(v) the Office of Natural Resources Revenue; and,
(vi) the Office of Mineral Valuation.
``(I) BASE BUDGET.--Following the two year periods described
in (G) above, the combined total of the funds transferred
pursuant to those provisions shall serve the base budget for
the Office.
``(J) APPROPRIATIONS OFFSET.--All fees generated from
Applications for Permits to Drill, inspection, nonproducing
acreage, or any other fees related to energy development on
Indian Lands shall, commencing on the date the Office is
opened, be transferred to the budget of the Office and may be
utilized to advance or fulfill any of its stated duties and
purposes.
``(K) REPORT.--The Office shall keep detailed records
documenting its activities and submit an annual report to
Congress detailing, among others:
(i) the number and type of federal approvals granted;
(ii) the time it has taken to process each type of
application;
(iii) the need for additional similar offices to be located
in other regions; and, (iv) proposed changes in existing law to
facilitate the development of energy resources on Indian lands,
improve oversight of energy development on Indian lands.
``(L) COORDINATION WITH ADDITIONAL FEDERAL AGENCIES.--Within
one year of establishing the Office, the Secretary shall enter
into a memorandum of understanding for the purposes
coordinating and streamlining energy related permits with--
(i) the Administrator of the Environmental Protection Agency;
(ii) the Assistant Secretary of the Army (Civil Works); and,
(iii) the Secretary of Agriculture.
The National Congress of American Indians--Resolution #ANC-14-011
TITLE: Supporting and Providing Additional Detail for New Bureau of
Indian Affairs Regional Office to Serve Energy Producing Tribes
WHEREAS, we, the members of the National Congress of American
Indians of the United States, invoking the divine blessing of the
Creator upon our efforts and purposes, in order to preserve for
ourselves and our descendants the inherent sovereign rights of our
Indian nations, rights secured under Indian treaties and agreements
with the United States, and all other rights and benefits to which we
are entitled under the laws and Constitution of the United States, to
enlighten the public toward a better understanding of the Indian
people, to preserve Indian cultural values, and otherwise promote the
health, safety and welfare of the Indian people, do hereby establish
and submit the following resolution; and
WHEREAS, the National Congress of American Indians (NCAI) was
established in 1944 and is the oldest and largest national organization
of American Indian and Alaska Native tribal governments; and
WHEREAS, several Tribes located in the Phoenix Region, the Rocky
Mountain Region, the Great Plains Region and the Southwest Region, as
well as the Alaska Native communities, and are energy producing tribes
or among those tribes with potential for energy production that rely or
might rely in the future on mineral revenue income for infrastructure,
economic development, jobs and income from the development of their
mineral resources; and
WHEREAS, at the 2013 Annual Session of NCAI held at Cox Business
Center from October 13 to 18, 2013 in Tulsa, Oklahoma with a quorum
present, the General Assembly adopted Resolution #TUL-13-012 entitled
``Requesting the Bureau of Indian Affairs Create a New Regional Office
for Energy Producing Tribes;'' and
WHEREAS, the United States Congress is currently considering and
the Department of the Interior (DOI) and the Bureau of Indian Affairs
(BIA) are currently developing a proposal for a new Indian energy
office; and
WHEREAS, it is in the best interest of NCAI to provide the
Congress, DOI and BIA with additional information and detail about the
proposed office to ensure that the office will effectively serve Indian
tribes; and
WHEREAS, NCAI proposes to amend Section 2602(a) of the Energy
Policy Act of 1992 (25 U.S.C. 3502(a)) to create a new Indian Energy
Regulatory Office (Office) that would be centrally located in Denver,
Colorado and utilize and refocus the existing resources and office
space of the Office of Indian Energy and Economic Development's (OIEED)
Division of Indian Energy and Mineral Development; and
WHEREAS, establishing the Office in Denver, Colorado provides
adequate housing and ease of recruiting new employees to a major
metropolitan area, and proximity to other federal agencies involved in
the energy permitting process; and
WHEREAS, the Office would be established within the Secretary's
Office, similar to the Indian Water Rights Office, to ensure that the
Director of the Office has authority over the various agencies
involved; and
WHEREAS, the Office would replace current BIA Regional Office
authorities and responsibilities for energy producing Indian tribes,
and would not result in duplicative review and approval of energy
projects; and
WHEREAS, the Office would provide energy resource assessments and
feasibility studies, technical assistance and training in energy
development proposal review, increase BIA permitting capacity and
permit streamlining, support for permitting expertise within BIA Agency
Offices, improved coordination with other agencies, technical
assistance and training in the oversight and management of energy and
financial resources, and ensure that Indian lands are not managed
according to Federal public land management standards; and
WHEREAS, Indian tribes seeking greater BIA support in the areas of
energy development, oversight, management, proposal review and
financial assistance could elect to be served by this Office; and
WHEREAS, existing BIA Regional Offices would continue to provide
Indian tribes utilizing the new Office with support and oversight for
all non-energy related issues; and
WHEREAS, to coordinate and streamline permitting, the Office would
also include staff from other DOI agencies and offices involved in
energy permitting on Indian lands, including: the Bureau of Land
Management, the Office of Mineral Evaluation, the Office of Natural
Resources Revenue, the Fish and Wildlife Service, the Office of Special
Trustee, the Office of the Solicitor; and
WHEREAS, the establishment of the Office would not increase the
deficit because it would utilize existing Federal resources in Denver,
Colorado and existing funding from each of the agencies and offices
listed above; and
WHEREAS, the Office would enter into agreements with other Federal
agencies to coordinate and streamline permitting, including: the
Environmental Protection Agency, the United States Department of
Agriculture, and the Army Corps of Engineers.
NOW THEREFORE BE IT RESOLVED, that NCAI requests that Congress pass
legislation requiring the Secretary of the Interior to establish and
implement an Indian Energy Regulatory Office as described in this
resolution and as reflected in the attached legislative proposal; and
BE IT FURTHER RESOLVED, that this resolution shall be the policy of
NCAI until it is withdrawn or modified by subsequent resolution.
CERTIFICATION
The foregoing resolution was adopted by the General Assembly at the
2014 Mid-Year Session of the National Congress of American Indians,
held at the Dena'ina Civic & Convention Center, June 8-11, 2014 in
Anchorage, Alaska, with a quorum present.
______
Prepared Statement of Shaun Chapoose, Chairman, Ute Indian Tribe of the
Uintah and Ouray Reservation Business Committee
Introduction
Chairman Barrasso, Vice-Chairman Tester and Members of the
Committee, thank you for the opportunity to testify on the Government
Accountability Office's (GAO) report entitled ``Indian Energy
Development: Poor Management Has Hindered Energy Development on Indian
Lands.'' My name is Shaun Chapoose. I am the Chairman of the Business
Committee for the Ute Indian Tribe of the Uintah and Ouray Reservation.
The Ute Indian Tribe consists of three Ute Bands: the Uintah, the
Whiteriver and the Uncompahgre Bands. Our Reservation is located in
northeastern Utah.
The Tribe appreciates the Chairman's request for GAO's
investigation into issues that hinder Indian energy development. GAO's
report provides an important perspective on an issue that the Committee
has been studying since 2008. The GAO report cites a number of issues
that the Committee and Congress could solve through legislation and
increased budgets that reflect the value of Indian energy resources.
The Tribe agrees with and supports the comments of many of the Senators
who attended the hearing that Congress and the Bureau of Indian Affairs
(BIA) should take action on these issues immediately.
In fact, proposals that would address some of the issues cited in
GAO's report are already before Congress. Senator Barrasso's bill, S.
209, the Indian Tribal Energy Development and Self-Determination Act
Amendments of 2015, would streamline the process for a tribe to obtain
a Tribal Energy Resource Agreement (TERA) to achieve greater tribal
control over energy resources, would provide needed financing
opportunities for Indian energy projects, and would create
opportunities for tribal hydroelectric, biomass and weatherization
projects. In addition, the President's FY 2016 Budget includes a
request for $4.5 million dollars to establish an Indian Energy Service
Center in Denver, Colorado that would streamline and support permitting
work in local BIA offices. The Tribe supports these proposals and asks
Congress to take action to pass these proposals.
In addition to the proposals currently before Congress, much more
is needed to address the fundamental problems revealed in the GAO
report. The GAO report found that the following factors have hindered
Indian energy development:
shortcomings in BIA management of Indian energy development
including a lack of comprehensive data, a lack of staff and a
lack of energy expertise;
an overly complex regulatory framework;
fractionated ownership interests;
a lack of capital and tax credits;
dual taxation of Indian energy resources by state
governments;
lack of tribal capacity to oversee energy development; and,
limited tribal or reservation infrastructure.
GOV'T ACCOUNTABILITY OFFICE, INDIAN ENERGY DEVELOPMENT--POOR
MANAGEMENT BY BIA HAS HINDERED ENERGY DEVELOPMENT ON INDIAN LANDS 18
(June 2015). The Tribe asks that the Committee follow up on GAO's
report and this oversight hearing by considering and reporting to the
Senate floor additional legislation to address all of these issues.
The Ute Indian Tribe itself has provided the Committee and members
of Congress more than 32 legislative proposals, many with no cost to
the government, that would address the full range of issues raised in
GAO's report. The GAO report highlights what we have long known,
``Indian energy resources are underdeveloped relative to surrounding
non-Indian resources.'' It is also important to note, that the report
does not just focus on BIA. GAO also cited to the Bureau of Land
Management (BLM), the Fish and Wildlife Service (FWS), the
Environmental Protection Agency (EPA), the National Environmental
Policy Act (NEPA), and the Endangered Species Act (ESA) as a part of
the ``complex regulatory framework'' that limits Indian energy
development. Id. at 15-18.
It has been almost 8 years since former Senator Dorgan called for
reform of the bureaucratic permit approval process for Indian energy.
He reported that a single oil and gas well must navigate a 49-step
process involving at least 4 understaffed federal agencies. Since
Senator Dorgan highlighted these issues there have been numerous
Congressional hearings, testimony and roundtables. There is an
extensive Congressional record and, as seen at this oversight hearing,
there is also much agreement about the need for change.
Ute Indian Tribe's Experience with Energy Development
The Ute Tribe is a major oil and gas producer and knows these
issues all too well. Production of oil and gas began on our Reservation
in the 1940s and has been ongoing for the past 70 years with
significant periods of expansion. The Tribe leases about 400,000 acres
for oil and gas development. We have about 7,000 wells that produce
45,000 barrels of oil a day. We also produce about 900 million cubic
feet of gas per day. And, we have plans for expansion. The Tribe is in
process of opening up an additional 150,000 acres to mineral leases on
our Reservation with an $80 million investment dedicated to
exploration.
The Tribe relies on its oil and gas development as the primary
source of funding for our tribal government and the services we
provide. We use these revenues to govern and provide services on the
second largest reservation in the United States. Our Reservation covers
more than 4.5 million acres and we have about 3,000 members living on
the Reservation. The Tribe is also a major employer and engine for
economic growth in northeastern Utah.
Tribal businesses include a bowling alley, supermarket, gas
stations, feedlot, an information technology company, manufacturing
plant, and Ute Oil Field Water Services, LLC. Our governmental programs
and tribal enterprises employ 450 people, 75 percent of whom are tribal
members. Each year the Tribe generates tens of millions of dollars in
economic activity in northeastern Utah.
The Tribe takes an active role in the development of its resources,
however, despite our progress, the Tribe's ability to fully benefit
from its resources is limited by the federal agencies overseeing oil
and gas development on the Reservation. For example, we need 10 times
as many permits to be approved. Currently, about 48 Applications for
Permits to Drill (APD) are approved each year for oil and gas
operations on the Reservation. We estimate that 450 APDs will be needed
each year as we expand operations.
As the oil and gas companies who operate on the Tribe's Reservation
often tell the Tribe, the federal oil and gas permitting process is the
single biggest risk factor to operations on the Reservation. In order
for the Tribe to continue to grow and expand our economy all of the
issues raised by the GAO report need to be addressed. We request that
the Committee take action beyond the issues addressed in S. 209. We
need legislation that will address all of the agencies involved in the
energy permitting process on Indian lands and will open up energy
programs at the Department of the Energy to Indian tribes.
Addressing BIA's Management of Indian Energy Development
The most promising solution to many of the issues raised by GAO
would be to establish and fund an Indian Energy Regulatory Office that
would overcome management issues, develop comprehensive data, and
provide a home within the Administration for Indian energy staff and
expertise. This Office would address the current lack of focus by
providing a single office responsible for Indian energy permitting. The
Tribe asks that the Committee approve legislation to create an Indian
Energy Regulatory Office that would co-locate staff from all the
agencies involved in one office to coordinate and streamline Indian
energy permitting, and to provide the staff, expertise and resources
needed for energy permitting. This Office could follow the FERC
permitting model cited by GAO at the hearing.
The Ute Indian Tribe, the Coalition of Large Tribes (COLT), and the
National Congress of American Indians (NCAI) all support establishing
this new Indian Energy Regulatory Office within the Department of the
Interior. The Office would be located in Denver, Colorado and utilize
many existing resources to provide staff and expertise that would
support energy permitting at the local level. The Office would provide
the focus, expertise and resources needed so that Indian tribes can
effectively participate in this important part of the economy and
contribute to the Nation's domestic energy supply.
The Ute Indian Tribe and other tribes are also working with the BIA
on its proposed Indian Energy Service Center. The Service Center is
similar to our proposal, however, the Service Center proposal does not
provide a Director who has all the authority necessary to issue permits
and approve energy development on Indian lands--everything from
permitting oil and gas wells, to environmental review of renewable
energy and transmission projects. Instead, the Service Center relies on
Memorandums of Agreement between the agencies. While we support the
BIA's efforts, legislation is needed to provide the Director of this
Office the authority to reach across agencies to get things done.
We also need legislation to ensure that either the Service Center
or the Office we propose fulfills basic Indian trust principles that
have been lost in the current unorganized Federal system for overseeing
energy development on Indian lands. In particular, our legislative
proposal directs that Indian lands are not public lands. Both Congress
and Interior have been clear on this point in the past, however, over
time, Federal agencies have attempted to apply public land management
standards to Indian lands.
Current examples of treating Indian lands like public lands include
the application of the National Environmental Policy Act (NEPA) to
Indian lands, BLM's attempt to regulate hydraulic fracturing on Indian
lands, and FWS's implementation of the ESA on tribal lands without
considering tribal interests and the Federal government's trust
responsibility. Legislation is needed to affirm the trust status of
Indian lands, ensure Indian lands are managed according to Federal
trust management standards as opposed to public land management
standards, and finally provide the resources needed at Interior and BIA
for the efficient processing of Indian energy permits and approvals.
The Office we are proposing is long overdue. Congress provided
similar authority for federal public lands 10 years ago in Section 365
of the Energy Policy Act of 2005. Section 365 established a number of
Permit Processing Improvement Offices in regions with high oil and gas
permitting activity on federal public lands. These pilot offices were
then made permanent by S. 2440 in the 113th Congress.
The same support should be provided for Indian lands. Particularly
given that the benefits of energy development far exceed the benefits
on Federal lands. Energy development on Indian lands provides jobs,
economic development, revenues for tribal governments, and, if managed
properly, long-term investment reservation infrastructure. Attached to
my testimony are NCAI and COLT resolutions in support of this Office as
well as proposed legislative text.(See attachments printed Mark Fox's
prepared statement)
Addressing Other Factors Hindering Indian Energy Development
A number of other legislative reforms are needed to address the
full range of issues raised in the GAO Report. Many of these are
already before the Committee. In prior Congresses and in response to
requests by former Senator Akaka, Senator Barrasso and, on the House
side, Congressman Young, the Tribe developed 32 legislative proposals
to improve Indian energy permitting, coordination and financing. These
proposals were highlighted in hearings before the Senate Committee on
Indian Affairs and the House Subcommittee on Indian, Insular and Alaska
Native Affairs. To follow up on the GAO report and to finally make a
difference in Indian energy development, the Tribe asks that the
Committee consider and pass a variety of other legislative reforms.
Below we highlight legislative reforms that would address gaps in
the current system, clarify the authority of tribal governments to
oversee energy activities on tribal lands and increase the resources
available to tribes to address all aspects of energy development on
tribal lands. The Tribe has already submitted legislative text to the
Committee for these reforms. These reforms include:
ensuring that Communitization Agreements do not delay
royalty payments;
including tribes in well spacing decisions on Indian lands;
ensuring that EPA's new regulation of minor sources in
Indian Country will not impede energy development;
setting aside a portion of existing energy efficiency
funding for Indian tribes;
setting aside a portion of existing weatherization funding
for Indian tribes;
streamlining environmental reviews on Indian lands by
providing tribes with ``treatment as a sovereign'' status under
the National Environmental Policy Act (NEPA);
clarifying that Indian lands are not public lands and
therefore are not subject to NEPA;
preventing BLM's hydraulic fracturing regulations, designed
for public lands, from applying to Indian lands; and,
supporting the capture and beneficial use of Indian energy
in remote locations through distributed generation and
community transmission on Indian lands.
Through these legislative reforms, the Committee could address more
of the issues raised in the GAO report and further unlock the potential
of Indian energy development.
Delayed Royalties Due to Communitization Agreements. The Secretary
of the Interior has delegated the approval of oil and gas Communization
Agreements to BLM. Instead of creating new unneeded regulatory
responsibilities, like its hydraulic fracturing rule, BLM should
fulfill its current obligations to timely review and approve
Communitization Agreements. The Committee should require
Communitization Agreements to be submitted at the time an Application
for Permit to Drill is filed. This is possible when the oil and gas
resource is well known. When this is not feasible, BLM should require
that royalty payments from producing wells be paid within 30 days from
the first month of production into an interest earning escrow account.
Under current law, royalties are due within 30 days of the first
month of production. However, without any authority, BLM has allowed
royalty payments to be delayed for months and years pending the
approval of Communitization Agreements. This violation of the law
cannot be allowed to continue. The Tribe asks that the Committee
consider and approve legislation to address BLM's delays in payments of
oil and gas royalties due to approval of Communitization Agreements.
Inclusion of Tribes in Well Spacing Decisions. Instead of treating
Indian lands like public lands, BLM should commit staff resources to
actually regulating well spacing on Indian lands and involving Indian
tribes in oil and gas well spacing decisions. Currently, BLM defers the
ability to determine well spacing on Indian lands to state well spacing
forums and practices. Although BLM ultimately approves the oil and gas
well spacing that was originally proposed in state forums, BLM should
defer to and directly consult with Indian tribes in spacing
determinations on Indian lands. BLM's current practice ignores its
Federal authority, its trust responsibility to Indian tribes, and takes
away any benefits that a tribe could have received by determining its
own well spacing on its reservation lands.
The Tribe asks that the Committee consider and approve legislation
that would direct BLM to enter into oil and gas well spacing agreements
with Indian tribes. These agreements would provide tribes every
opportunity to participate in and ultimately determine spacing units on
its reservation. The opportunity to participate in well spacing
decisions and ultimately determine well spacing on Indian lands would
involve tribes in an important aspect of regulating oil and gas
development.
Minor Source Regulation in Indian Country. Require EPA to delay
implementation of its new synthetic minor source rule for two years to
ensure appropriate staffing is in place to administer any new
permitting requirements.
Energy Efficiency Reforms. Despite a longstanding state energy
efficiency program, there is no ongoing program to support tribal
energy efficiency efforts. Tribal governments have the same energy
efficiency needs as state governments. The Tribe asks the Committee to
direct the Department of Energy to allocate not less than 5 percent of
existing state energy efficiency funding to establish a grant program
for Indian tribes interested in conducting energy efficiency
activities.
A tribal energy efficiency program could be modeled after the
successful Energy Efficiency Block Grant (EEBG) program. Despite its
success, the EEBG program was only funded one time--under the American
Reinvestment and Recovery Act of 2009. To ensure an ongoing source of
funding for tribal energy efficiency efforts, tribes should be provided
a portion of the funding for state energy efficiency efforts. This
program could lower tribal governmental energy costs and ultimately
lower the Federal funding used by tribes to administer Federal programs
at the local level.
Weatherization Reforms. The Tribe asks that the Department of
Energy's weatherization program be reformed consistent with the Federal
Government's trust responsibility and to recognize the weatherization
needs of Indian tribes. Under current law, the Department of Energy
requires Indian tribes to obtain Federal funding through state
governmental and non-profit entities administering weatherization
programs. Tribes can only receive direct funding from the Department of
Energy if a tribe can prove that it is not receiving funding that is
equal to what the state is providing its non-Indian population.
Currently, out of 566 federally recognized tribes, only two tribes and
one tribal organization receive direct weatherization funding from
Department of Energy. As a result, tribes are effectively excluded from
the Federal Government's weatherization program.
Weatherization funding does not benefit tribal homes for a number
of other reasons. In particular, Indian tribes lack energy auditors to
assess the weatherization needs of Indian homes. The Department of
Energy's weatherization program must be reformed to provide direct
funding to tribal governments, provide training for energy auditors in
Indian Country and to reflect the unique weatherization needs of tribal
homes. These reforms are needed to get weatherization funding to those
who need it most. While the Tribe appreciates the weatherization
changes included in Senator Barrasso's bill, S. 209, much more is
needed.
Environmental Review of Energy Project on Indian Lands. As the GAO
report concludes, the environmental review of energy projects on Indian
land is more extensive than on comparable private lands. This extensive
review acts as a disincentive to development on Indian lands
particularly given the understaffed Federal agencies overseeing Indian
energy development. Similar to the Clean Water Act, Clean Air Act and
others, the Committee could amend the National Environmental Policy Act
(NEPA) to include treatment as a sovereign (TAS) provisions. The new
provision would allow a tribe to submit an application to the Council
on Environmental Quality and once approved, federal authority for
completing environmental reviews would be delegated to tribal
governments.
Clarify that Indian Lands are not Public Lands Subject to NEPA. The
10th Circuit Court of Appeals, in Davis v. Morton, 469 F.2d 593 (1972),
equated Indian trust land to public lands and thus treats leases on
Indian trust land as a major federal action subject to NEPA. The Court
stated that exempting Indian lands from NEPA ``would preclude all
federal lands from NEPA jurisdiction, something clearly not intended by
Congress in passing the Act.'' Davis supports a sweeping interpretation
of NEPA's application in Indian country and questions the fundamental
differences between Indian lands and public lands. The Tribe asks that
he Committee clarify that Indian lands are not ``public lands'' held in
trust for the people of the United States. Indian lands are held in
trust or restricted status for the use and benefit of the Indian tribes
and its members. All other ``federal lands'' would still be subject to
NEPA.
BLM Hydraulic Fracturing Regulations. BLM's hydraulic fracturing
regulations are based on public policy standards set out in the Federal
Land Policy and Management Act standards. Not trust standards used to
manage Indian lands. The Committee should approve legislation prevents
BLM from regulating hydraulic fracturing on Indian Lands. For example,
the Committee could including language that ``prohibits any Department
of the Interior rule regarding hydraulic fracturing, used in oil and
gas development or production, from having any effect on land held in
trust or restricted status for Indians, except with the express consent
of its Indian beneficiaries.''
Distributed Generation and Community Transmission. The Tribe also
asks that the Committee support new and emerging ways for tribes to
beneficially use our energy resources and provide energy security for
our communities. We need a new approach to capture and not waste
valuable resources that are too far from existing transmission
networks. The Tribe asks that the Committee direct the Department of
Energy to conduct no fewer than 10 distributed energy demonstration
projects to increase the energy resources available to Indian and
Alaska Native homes, communities, and government buildings. Priority
should be given to projects that utilize local resources, and reduce or
stabilize energy costs.
Conclusion
The GAO report highlights the need for accountability and reform in
Indian energy permitting. The GAO report concluded that, ``The
development of Indian energy resources has the potential to provide
significant benefits to Indian tribes, tribal members, and the Nation
through both tribal economic development opportunities and by
contributing to the Nation's energy production.'' Id. at 35. However,
GAO found that a number of factors, including poor management by BIA,
limits the ability of Tribes to developer their resources. Id. GAO
recommended that, ``Federal policy calls for providing enhanced self-
determination and economic development opportunities for Indian tribes
by promoting tribal oversight and management of energy resource
development on tribal lands.'' Id. at 36.
The Tribe asks that the Committee take action to improve the
agencies and laws that we must work with to develop our energy
resources. There was agreement at the hearing that action is needed
now. Thank you for the opportunity to provide this testimony.
______
Response to Written Questions Submitted by Hon. Steve Daines to
Lawrence S. Roberts
Mr. Roberts, as I expressed at the hearing, the tribal trust
relationship must be upheld appropriately and meaningful consultation
with tribes must take place between the Bureau of Indian Affairs and
tribes regarding energy projects and also as federal agencies issue
regulations that affect them. The Hydraulic Fracturing rule, which we
discussed, is a perfect example. You responded describing the Indian
Energy Service Center as an aid to the current inadequacy in tribal
consultation.
Question. Among the vast hurdles to energy development in Indian
Country, I have heard from some tribes that BIA personnel is a
particular stumbling block to getting approval for energy projects.
Whether it's an expertise or a bandwidth issue, staffing challenges are
a consistent theme. Regardless, most tribes seem to prefer to have BIA
personnel focused on energy development on the ground in regional and
field offices. Especially because this Center would require
appropriations from Congress and would be located in Denver, CO, far
away from Montana Indian Country, can you explain what specific results
would be achieved in Montana Indian Country? Have you established goals
for the energy project review process, such as improving timelines for
review, measuring cost and staff hours saved, and determining how
tribal consultation would be improved amongst other federal agencies?
Answer. The mission of the Indian Energy Service Center (IESC) is
to provide a wide suite of support services to the Bureau of Indian
Affairs (BIA) Agencies and Regional Offices; Bureau of Land Management
(BLM) Field Offices and State Offices; Office of the Special Trustee
for American Indians (OST) Fiduciary Trust Officers and Regional Trust
Administrators; and the Office of Natural Resources Revenue (ONRR) for
purposes of expediting the leasing, permitting, developing, and
reporting for oil and gas development on Indian trust lands.
Fundamental to this effort is responsiveness to trust mineral estate
owners (tribal and allotted) and coordination between Federal agencies.
In support of this mission the IESC would:
Serve as a processing center for expediting nationwide trust
functions where this service is more efficiently provided by an
offsite work team in support of agencies and field, regional
and state offices.
Provide direct support, technical advice and contractual
services to:
--Help formulate and develop consistent policy, rules, regulations,
and business processes;
--Identify and assist with implementation of best practices for
deployment throughout the appropriate bureau or office;
--Develop statements (scope of work) and funding for contracts to
provide direct services in support of energy development.
--Address impediments restricting the timely development of energy
resources.
Consult, coordinate, and collaborate to promote resource
sharing between Interior Bureaus, tribes and Indian land owners
in the resolution of issues that impede energy development.
Serve as a center point for collaboration with other Federal
bureaus for expediting energy development.
Support tribal consultation on energy development for BIA,
BLM, ONRR, and OST.
Provide a program assessment and evaluation of existing
program operations.
Conduct training of Interior employees that have a role in
energy programs.
As capacity is built, the IESC will perform work for which it has
developed expertise in support of the Department's energy and mineral
development responsibilities. The IESC work will be prioritized with
input from the affected bureau or agencies and adjusted as IESC builds
capacity.
The IESC has requested each of the BIA Regional Offices to identify
their needs to help expedite energy development and leasing activities.
The BIA Rocky Mountain regional office specifically requested training,
records management, data entry and examination, field work for
abandoned well reclamation, and responding to Indian mineral owner
inquiries. IESC support in these areas will allow for the BIA Region
and agencies to focus on the day to day energy development activity on
reservations. In addition, there were perceived benefits to co-locating
the IESC with the existing Office of Indian Energy and Economic
Development's Division of Energy and Minerals Development, which has
been taking the lead for Indian Affairs in the past several years to
fill the gap for Indian energy.
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