A General Accounting Office report released this month has found that the Bureau of Indian Affairs’ (BIA) management shortcomings and other factors including a complex regulatory framework have hindered Indian energy development.
According to the report, the General Accounting Office (GAO) conducted the report because Indian energy resources hold significant potential for development, but remain largely undeveloped. The GAO’s report examined (1) factors that have hindered Indian energy development, (2) factors that have deterred tribes from pursuing tribal energy resource agreements (TERAs), and (3) the effectiveness of Interior’s efforts to build tribes’ capacity to enter into TERAs.
GAO analyzed federal data; reviewed federal, academic, and other literature; and interviewed tribal, federal and industry stakeholders.
The report notes that for “some federally recognized Indian tribes and their members, energy development already provides economic benefits, including funding for education, infrastructure, and other public services. For example, in 2012, the President of the Jicarilla Apache Nation reported that approximately 90 percent of the tribe’s government operations were funded by oil and gas development. In addition, the Campo Band of Mission Indians of the Kumeyaay Nation leased lands in 2005 to a developer to construct a utility-scale wind farm that consists of 25 2-megawatt (MW) wind turbines.”
The GAO offered the Kumeyaay Wind Facility in California is the only operating utility-scale wind facility on Indian lands—another utility-scale wind project is under construction on Indian lands, and one utility-scale solar project is under construction on Indian lands, according to Interior officials, as of March 2015.
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.
According to the report, the Energy Policy Act of 2005 provided the opportunity for interested tribes to pursue TERAs that allow the tribe to enter into energy leases and agreements without review and approval by Interior. The act also authorizes Interior to provide grants to tribes to develop the capacity needed to enter into a TERA.
“Even with considerable energy resources, according to a 2014 Interior document, Indian energy resources are underdeveloped relative to surrounding non-Indian resources,” reads the report. To date, no tribe has entered into a TERA.
The “shortcomings” are so fundamental that the GAO found that the BIA does not even have the data it needs to verify ownership of some Indian oil and gas resources. It cannot “easily identify resources available for lease, or identify where leases are in effect, as called for in Secretarial Order 3215 and internal guidance.”
“Several factors have deterred tribes from seeking tribal energy resource agreements (TERA). These factors include uncertainty about some TERA regulations, costs associated with assuming activities historically conducted by federal agencies, and a complex application process. For instance, one tribe asked the Department of the Interior (Interior) for additional guidance on the activities that would be considered inherently federal functions—a provision included in Interior’s regulations implementing TERA. Interior officials told GAO that the agency has no plans to provide additional clarification.
On top of having limited staff, the BIA “does not have a documented process or the data needed to track its review and response times, as called for in implementation guidance for Executive Order 13604, and therefore it cannot ensure transparency in its review of energy-related documents.”
Findings include:
• Missed development opportunities: According to a tribal official, BIA took 18 months to review a wind lease. According to the developer of the project, the review time caused the project to be delayed and resulted in the project losing an interconnection agreement with the local utility. Without this agreement, the project has not been able to move forward, resulting in a loss of revenue for the tribe.
• Lost revenue: According to a tribal official, 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.
• Jeopardized viability of projects: One lease for a proposed utility-scale wind project took BIA more than 3 years to review and approve. According to a tribal official, the long review time has contributed to uncertainty about the continued viability of the project because data used to support the economic feasibility and environmental impact of the project became too old to accurately reflect current conditions.
The GAO report recommends “that Interior take steps to address data limitations, track its review process, provide clarifying guidance, and evaluate the effectiveness of grants. Interior generally agreed with most but not all of the recommendations because it is taking other actions to address some data limitations. GAO continues to believe that its recommendations are valid.”