Red tape chokes off drilling on Native American reservations

[January 27, 2017]  By Valerie Volcovici

FORT BERTHOLD, North Dakota (Reuters) - When the U.S. oil boom hit North Dakota a decade ago, wells sprang up quickly on the edges of the Fort Berthold Indian Reservation, an expanse of prairie and rolling hills three times larger than Los Angeles.

Tribe members here, facing a 40 percent unemployment rate and sending their children to 1950s-era school buildings, were eager to tap some of state’s most promising reserves. But layers of federal regulation - applying only to tribal lands - slowed them down for years, frightened away investors and cost them millions of dollars.

"The reservation looked like the hole of a donut," said Marcus Levings, who was chairman of Mandan, Hidatsa and Arikara (MHA) Nation's reservation at the time. "Everything around us was moving, and there was nothing in the middle."

Fort Berthold has since caught up to become one of the state's most productive regions. But the initial delays undermined the MHA Nation’s sense of sovereignty and cost it badly needed revenue - an experience echoed in widespread complaints from other tribes and from energy firms, including some owned by Native Americans.

Now, with U.S. President Donald Trump in office and oil prices rising, their frustration is fueling a renewed push to streamline approvals for drilling and mining on Indian reservations.

Clearing regulatory hurdles for a single project on tribal lands can take as many as 50 steps, compared to a half dozen for oil wells on private property. The process can take three times as long to complete, according to tribal leaders, lawyers specializing in Native American issues, oil company executives and federal regulators.

Officials at the agency overseeing that process - the U.S. Bureau of Indian Affairs (BIA), a division of the Department of Interior - did not respond to repeated requests for comment. A spokesperson for Trump, who campaigned on a promise to slash energy regulation, declined a request for comment.

The stakes are high. Native American reservations cover just 2 percent of the nation's surface, but by some estimates contain as much as a fifth of all U.S. oil and gas reserves, along with vast coal stockpiles.

Some tribes, for environmental or cultural reasons, have shunned the idea of developing these reserves, but many others want to tap the vast wealth beneath their homelands.

A coalition of Native Americans appointed by Trump's team to guide his Indian policy is researching proposals to make energy development easier on tribal lands - including the controversial idea of transferring them to private ownership.

That coalition met privately in Washington last month with tribal representatives and Trump’s team, and the group listed deregulation of energy development on reservations as a high priority, according to a person who attended the meeting.

Representatives of the coalition did not respond to requests for comment.

Congress, now firmly in Republican control after November’s election, also appears poised to act. The Indian affairs committees in the House and Senate are planning to re-introduce legislation this year that would streamline Bureau of Indian Affairs approval processes for tribal energy resource agreements, said Senator John Hoeven, a Republican from North Dakota and the new chair of the Senate Indian affairs committee.

U.S. Representative Raul Grijalva, a Democrat from Arizona, has opposed previous efforts to relax energy regulations on tribal lands, including a 2015 proposal he argues would have undermined public input before project approvals. That could weaken the legal arguments of residents impacted by environmental damage, he said in an interview.

"The regulations are there for the public, including tribal members, to know what the intended and unintended consequences of that project are going to be," he said.

WAIT, WAIT, WAIT

The United States holds title to about 56 million acres of tribal lands, a vestige of the treaties made between 1778 and 1871 to end wars between indigenous Indians and European settlers. The tribes have rights to the land – and the resources under the surface – but they do not own it.

On Fort Berthold and other reservations, energy development requires a uniquely large number of easements and environmental permits, all of which must be approved by multiple federal agencies in a process overseen by the Bureau of Indian Affairs.

A service truck drives past an oil well on the Fort Berthold Indian Reservation in North Dakota, November 1, 2014. REUTERS/Andrew Cullen/File Photo

Former North Dakota Democratic Senator Byron Dorgan - who was in office when the shale boom hit his state - said he understood that regulations can preserve Native American culture by keeping tribal lands environmentally sound and off the real estate market. But he also said he recognized them as a bottleneck.

"It shouldn’t be a reason for holding up development," Dorgan told Reuters in an interview. "If ever there was a place in North Dakota that needed this development most, it is on reservations."

A 2015 report by the nonpartisan Government Accountability Office found that the problems went beyond the processes in law and regulations. Poor management by the Bureau of Indians Affairs has hindered energy development and resulted in lost revenue for tribes, the office concluded.

One tribe, according to the report, saw permit reviews stretching to as long as eight years and missed out on than $95 million in revenues it could have earned from royalties, oil and gas severance taxes and tribal permitting fees. The report also found that BIA offices were understaffed and had failed to keep adequate records.

Dave Williams, CEO of MHA Nation-chartered energy company Missouri River Resources, said his firm has learned how to work around the regulatory process, but called it frustrating. He said he knows most of the employees at the BIA's regional office on the reservation in New Town, and tries to prod them to get things done "with a friendly touch."

"It is discouraging because everything gets bureaucratized - just wait, wait, wait - especially if you’re an oil guy, and most of your life you are on time and get things done," he said.

Deregulation could also benefit private oil drillers including Devon Energy Corp, Occidental Petroleum, BP and others that have sought to develop leases on reservations through deals with tribal governments. Those companies did not respond to requests for comment.

TRIBAL OPPOSITION, SOLIDARITY

A substantial segment of the Native American community continues to oppose energy development on tribal land or would like to see it limited. The Northern Cheyenne in Montana, for example, live atop rich coal reserves but have shunned mining it because they fear it will bring pollution and undermine their way of life.

The Standing Rock Sioux Tribe in North Dakota has galvanized the U.S. environmental movement with its ongoing protests against a pipeline constructed near its reservation. But many tribes that supported the Standing Rock protests were motivated by protecting a tribe's right to govern itself rather than by opposition to fossil fuel development.

Among the tribes backing the protests were the Southern Ute Tribe in Colorado, the Ute Tribe of Utah, the Montana Crow and the Navajo Nation across the Southwest, all of which are pursuing energy development on their own lands.

Tribes are also seeking to curtail what they call unjust taxation of energy projects on tribal lands by states in which their reservations are located.

For many tribal leaders, the desire for more control over drilling projects is as much about self-determination as money.

“We’ve always wanted jurisdiction over our people and our land to the fullest extent possible,” said Jackson Brossy, executive director of the Navajo Nation's Washington office.

Back in Fort Berthold, MHA Nation Councilman Fred Fox said he felt it was time for Washington to hand more responsibility for tribal lands back to the tribes. They should not be managed as U.S.-owned "public lands," he said, but rather as sovereign Native American nations.

"We have ancestors that owned these lands," he said, looking out over a snow-covered settlement in the White Shield section of the reservation. “Let us collect our own taxes. Let us create economic viability for our people. Let us create the regulatory system.”

(Editing by Richard Valdmanis and Brian Thevenot)

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