[Senate Report 113-49]
[From the U.S. Government Publishing Office]
Calendar No. 103
113th Congress Report
SENATE
1st Session 113-49
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HILL CREEK CULTURAL PRESERVATION AND ENERGY DEVELOPMENT
_______
June 27, 2013.--Ordered to be printed
_______
Mr. Wyden, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 27]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 27) to clarify authority granted under
the Act entitled ``Act to define the exterior boundary of the
Uintah and Ouray Indian Reservation in the State of Utah, and
for other purposes,'' having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
Purpose
The purpose of S. 27 is to clarify authority granted under
the Act entitled ``An Act to define the exterior boundary of
the Uintah and Ouray Indian Reservation in the State of Utah.''
Background and Need
The Uintah and Ouray Indian Reservation, located in
northeastern Utah, is the second largest Indian reservation in
the country and the homeland for approximately 20,000 Ute
Indians. Under the Act of March 11, 1948, (62 Stat. 72),
Congress added 510,000 acres of public domain known as the
``Hill Creek Extension'' to the Reservation to protect tribal
grazing rights. In making this addition to the Indian
Reservation, the United States retained the subsurface rights
to lands held in trust for the Tribe, while the State of Utah
retained 38,000 acres of land it previously acquired in a
checkerboard pattern typical in Western states. The State lands
in the Hill Creek Extension are administered by The School and
Institutional Trust Lands Administration (SITLA--a Utah State
agency) for the benefit of Utah public schools and other State
institutions.
In 1955, Congress authorized the State to relinquish its
lands in the Hill Creek Extension to the United States for the
benefit of the Tribe, in exchange for replacement lands that
are mineral in character. The State subsequently sold much of
the surface estate in the Hill Creek Extension to the Tribe,
while retaining 38,000 acres of subsurface minerals and the
right of access to develop them. The State today wants to
relinquish to the United States (for the benefit of the Tribe)
18,000 acres of subsurface rights in the remote, southern
(Grand County) portion of the Hill Creek Extension, in exchange
for 18,000 acres of subsurface rights in the northern (Uintah
County) area of the Extension.
In 2006, SITLA filed an application with the BLM to enter
into the exchange pursuant to the 1948 Hill Creek Act and the
1955 amendments. The BLM has declined to process the
application, claiming the law establishing and amending the
Hill Creek Extension does not permit the State to select
minerals in the northern part of the Extension. Although the
State has come to the opposite legal conclusion, legislation is
necessary to clarify the authority to effectuate the exchange.
Legislative History
S. 27 was introduced by Senators Hatch and Lee on January
22, 2013. The Subcommittee on Public Lands, Forests, and Mining
held a hearing on S. 27 on April 25, 2013. At its business
meeting on May 16, 2013, the Committee ordered the bill
favorably reported. A similar bill, H.R. 356, was introduced by
Representative Bishop in the House of Representatives. That
bill passed the House by a voice vote on May 16, 2013.
In the 112th Congress, a similar bill, H.R. 4027, was
introduced by Representative Matheson in the House of
Representatives. That bill passed the House by a voice vote on
June 18, 2012.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on May 16, 2013, by a voice vote of a
quorum present, recommends that the Senate pass S. 27.
Section-by-Section Analysis
Section 1 contains the short title, the ``Hill Creek
Cultural Preservation and Energy Development Act''.
Section 2 amends ``An Act to define the exterior boundary
of the Uintah and Ouray Indian Reservation in the State of
Utah, and for other purposes'', approved March 11, 1948 (62
Stat. 72), as amended by the Act entitled ``An Act to amend the
Act extending the exterior boundary of the Uintah and Ouray
Indian Reservation in the State of Utah so as to authorize such
State to exchange certain mineral lands for other lands mineral
in character'' approved August 9, 1955, (69 Stat. 544) by
adding a new section 5. The new section authorizes the State of
Utah to relinquish to the United States, for the benefit of the
Ute Indian Tribe of the Uintah and Ouray Reservation, State
school trust or other State-owned subsurface mineral lands in
the southern part of an area of the Reservation known as the
``Hill Creek Extension,'' and to select in lieu of any
relinquished lands, on an acre-for-acre basis, Federal mineral
rights in the northern portion of the Hill Creek extension.
The section subjects the exchange of subsurface interests
to the following conditions: Paragraph (1) directs the
Secretary of the Interior to reserve an overriding interest in
any minerals subject to leasing under the Mineral Leasing Act,
in any mineral lands conveyed to the State of Utah, delineated
in Public Law 440 (approved March 11, 1948).
Subsection (1) requires the Secretary of the Interior to
reserve an overriding interest in that portion of the mineral
estate comprised of minerals subject to leasing under the
Mineral Leasing Act (30 U.S.C. 171 et seq.) in any mineral
lands conveyed to the State.
Paragraph (2) describes the extent of the overriding
interest, and consists of 50 percent of any bonus bid or other
payment received by the State as consideration for securing a
lease or authorization to develop the minerals. The overriding
interest also includes 50 percent of any rental or other
payments received by the State as consideration for the lease
or authorization to develop the mineral resources, along with a
6.25 percent overriding royalty on the gross proceeds of oil
and gas production under any lease or authorization to develop
the oil and gas resources. Finally, for minerals other than oil
and gas, the overriding interest includes an overriding royalty
on the gross proceeds of production of the minerals, equal to
50 percent of the royalty rate established by the Secretary of
the Interior by regulation as of October 1, 2011.
Paragraphs (3) and (4) direct the State of Utah to reserve,
for the benefit of the State school trust, the extent of the
overriding interest described in paragraph (2) that represents
the State's 50 percent share under the Mineral Leasing Act (30
U.S.C. 181 et seq.).
Paragraph (5) clarifies that neither the United States nor
the State of Utah shall be obligated to lease or otherwise
develop oil and gas resources in which the other party retains
an overriding interest under this section.
Paragraph (6) authorizes the Secretary of the Interior to
enter into cooperative agreements with the State and the tribe
to facilitate the relinquishment and selection of lands to be
conveyed under this section, and the administration of the
reserved overriding interests.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget Office:
S. 27--Hill Creek Cultural Preservation and Energy Development Act
S. 27 would authorize a conveyance of mineral rights within
the Uintah and Ouray Indian Reservation in Utah among the state
of Utah's School and Institutional Trust Land Administration
(SITLA), the federal government, and the Ute Indian Tribe.
SITLA currently owns the subsurface mineral rights to
approximately 18,000 acres in the Hill Creek Extension of the
reservation; however, the surface rights to that land are held
in trust for the Ute Indian Tribe by the federal government.
The legislation would authorize SITLA to relinquish to the Ute
Indian Tribe its subsurface mineral rights in exchange for the
subsurface rights to about 18,000 acres of other land within
the Hill Creek Extension owned by the federal government.
CBO estimates that the legislation would have no
significant impact on the federal budget over the 2014-2023
period. Enacting S. 27 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
S. 27 would authorize a transfer of federally owned
subsurface mineral rights for an equivalent number of acres of
state land. However, the acres transferred may not have the
same value because mineral deposits are not evenly spread
across all areas. To compensate for such a potential imbalance,
S. 27 would preserve a royalty interest in the value of any
subsurface minerals that are developed on the transferred
properties for the state and the federal governments.
S. 27 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
Enacting the bill would benefit the tribe and state.
On May 9, 2013, CBO transmitted a cost estimate for H.R.
356, the Hill Creek Cultural Preservation and Energy
Development Act, as ordered to be reported by the House
Committee on Natural Resources on April 24, 2013. The two bills
are similar, and the CBO cost estimates are the same.
The CBO staff contact for this estimate is Martin von
Gnechten. The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 27.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 27, as ordered reported.
Congressionally Directed Spending
S. 27, as reported, does not contain any congressionally
directed spending items, limited tax benefits, or limited
tariff benefits as defined in rule XLIV of the Standing Rules
of the Senate.
Executive Communications
The testimony provided by Bureau of Land Management at the
April 25, 2013, Subcommittee on Public Lands, Forests, and
Mining hearing on S. 27 follows:
Statement of Jamie Connell, Acting Deputy Director, Bureau of Land
Management, Department of the Interior
Thank you for inviting the Department of the Interior to
testify on S. 27, the Hill Creek Cultural Preservation and
Energy Development Act. The Department supports the goals of S.
27, and we could support the bill if amended as discussed
below. The Department recognizes that we have a unique trust
responsibility to the Ute Tribe; and therefore we are committed
to finding an equitable solution.
background
In 1948, Congress, through P.L. 80-440, extended the
boundary of the Uintah and Ouray Reservation by approximately
900 square miles to include what is generally known as the
``Hill Creek Extension.'' The Act transferred the Federal
surface estate to the Tribe, while the mineral estate in those
parts of the area affected by then existing withdrawals was
reserved to the Federal government. Furthermore, that Act as
amended in 1955 (P.L. 84-263), authorized the State of Utah to
relinquish state sections for the benefit of the Tribe and
subsequently select Federal lands (including the mineral
interest in land) of equal value outside of the Hill Creek
Extension area.
The State of Utah's School and Institutional Trust Land
Administration (SITLA) holds the mineral interest in about 28
square miles (approximately 18,000 acres) within the southern
portion of the Hill Creek Extension in Grand County, while the
surface ownership is held in trust for the Tribe. The Tribe
would like to obtain the mineral estate underlying tribal lands
in the Grand County portion of the Hill Creek Extension in
order to prevent development on lands that have special
significance to the Tribe. However, the Tribe does not object
to development of other mineral estate, retained by the Federal
government, within the Hill Creek Extension in Uintah County.
SITLA proposed to relinquish their mineral estate within
the Hill Creek Extension in Grand County in exchange for
similar acreage of Federal mineral estate in Uintah County,
also within the Hill Creek Extension. However, the 1955 law
specified that the selection by the state should take place
``outside of the area hereby withdrawn,'' and therefore outside
of the Hill Creek Extension.
s. 27
S. 27 proposes to amend the 1948 and 1955 Acts to permit
relinquishment of mineral estate in exchange for similar
acreage of Federal mineral estate within the Hill Creek
Extension. The legislation further provides that the
transaction should be on an acre-for-acre basis and establishes
a limited overriding interest for both the United States and
SITLA in the lands exchanged.
The Department has no objection to allowing for the
selection by SITLA of mineral estate within the Hill Creek
Extension and supports that provision of the legislation.
However, the 1948 and 1955 laws as well as FLPMA require that
these transfers be of equal value. The per-acre value of
mineral estate can vary dramatically from one acre to another,
and this area of Utah has significant oil and gas resources.
The legislation proposes to address any difference in
parcel value by reserving for each conveying party a financial
interest in the mineral estate being transferred. However, as
written, the overriding interest fails to acknowledge the
potential change in value of the federal minerals. The royalty
rate specified for the financial interest is the royalty rate
in effect today, and fails to account for the possibility of a
changed royalty rate in the future. We believe that the
overriding interest should be based on the Federal royalty rate
at the time the lease or permit is issued. The Department would
also like the opportunity to work on other technical amendments
with the Sponsor and the Committee.
conclusion
Thank you for the opportunity to testify. The Department
would welcome the opportunity to resolve these issues for the
benefit of the Ute Indian Tribe and protect land that has
special significance in a manner that also protects the
fiduciary interest of the Federal government.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 27 as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
ACT OF MARCH 11, 1948
(62 Stat. 72, chapter 108, as amended by Act of August 9, 1955, 69
Stat. 544, chapter 623)
AN ACT To define the exterior boundary of the Uintah and Ouray Indian
Reservation in the State of Utah, and for other purposes
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That the
exterior boundary of the Uintah and Ouray Reservation in Grand
and Uintah Counties, in the State of Utah, for the benefit of
the Ute Indian Tribe of the Uintah and Ouray Reservation is
hereby extended to include the following area:
* * * * * * *
Sec. 4. In any suit now pending or hereafter brought
against the United States by the Ute Indian Tribe of the Uintah
and Ouray Reservation, or by any one or more of the separate
bands comprising said Ute Indian Tribe of the Uintah and Ouray
Reservation, in the Court of Claims, the Indian Claims
Commission or before any other tribunal, the United States may
claim, as an offset against any judgment recovered therein, the
fair market value as of the date of this Act of any interest in
public lands conveyed by section 1 hereof, and any improvements
thereon, and the fair market value as of the date of the
transfer of title of the lands and improvements which may be
relinquished by the State of Utah to the United States under
section 3 of this Act. The validity and amount of any such
claim shall be determined by the court, commission, or tribunal
in conformity with the provisions of section 2 of the Act of
August 13, 1946 (60 Stat. 1049, 1050).
Sec. 5. In order to further clarify authorizations under
this Act, the State of Utah is hereby authorized to relinquish
to the United States, for the benefit of the Ute Indian Tribe
of the Uintah and Ouray Reservation, State school trust or
other State-owned subsurface mineral lands located beneath the
surface estate delineated in Public Law 440 (approved March 11,
1948) and south of the border between Grand County, Utah, and
Uintah County, Utah, and select in lieu of such relinquished
lands, on an acre-for-acre basis, any subsurface mineral lands
of the United States located beneath the surface estate
delineated in Public Law 440 (approved March 11, 1948) and
north of the border between Grand County, Utah, and Uintah
County, Utah, subject to the following conditions:
(1) Reservation by united states.--The Secretary of
the Interior shall reserve an overriding interest in
that portion of the mineral estate comprised of
minerals subject to leasing under the Mineral Leasing
Act (30 U.S.C. 171 et seq.) in any mineral lands
conveyed to the State.
(2) Extent of overriding interest.--The overriding
interest reserved by the United States under paragraph
(1) shall consist of--
(A) 50 percent of any bonus bid or other
payment received by the State as consideration
for securing any lease or authorization to
develop such mineral resources;
(B) 50 percent of any rental or other
payments received by the State as consideration
for the lease or authorization to develop such
mineral resources;
(C) a 6.25 percent overriding royalty on the
gross proceeds of oil and gas production under
any lease or authorization to develop such oil
and gas resources; and
(D) an overriding royalty on the gross
proceeds of production of such minerals other
than oil and gas, equal to 50 percent of the
royalty rate established by the Secretary of
the Interior by regulation as of October 1,
2011.
(3) Reservation by state of utah.--The State of Utah
shall reserve, for the benefit of its State school
trust, an overriding interest in that portion of the
mineral estate comprised of minerals subject to leasing
under the Mineral Leasing Act (30 U.S.C. 181 et seq.)
in any mineral lands relinquished by the State to the
United States.
(4) Extent of overriding interest.--The overriding
interest reserved by the State under paragraph (3)
shall consist of--
(A) 50 percent of any bonus bid or other
payment received by the United States as
consideration for securing any lease or
authorization to develop such mineral resources
on the relinquished lands;
(B) 50 percent of any rental or other
payments received by the United States as
consideration for the lease or authorization to
develop such mineral resources;
(C) a 6.25 percent overriding royalty on the
gross proceeds of oil and gas production under
any lease or authorization to develop such oil
and gas resources; and
(D) an overriding royalty on the gross
proceeds of production of such minerals other
than oil and gas, equal to 50 percent of the
royalty rate established by the Secretary of
the Interior by regulation as of October 1,
2011.
(5) No obligation to lease.--Neither the United
States nor the State shall be obligated to lease or
otherwise develop oil and gas resources in which the
other party retains an overriding interest under this
section.
(6) Cooperative agreements.--The Secretary of the
Interior is authorized to enter into cooperative
agreements with the State and the Ute Indian Tribe of
the Uintah and Ouray Reservation to facilitate the
relinquishment and selection of lands to be conveyed
under this section, and the administration of the
overriding interests reserved hereunder.'.