Fracking on Indian reservations

fracking on indian reservationYes, there is beauty here…but there is also oil. (NYTimes)

It’s their land. They live there. Nobody has more interest in striking an appropriate balance between industry/commerce and prudent regulatory protections than they do. Historically, the reservations in North Dakota have been epicenters of poverty. It’s not hard to imagine why they wouldn’t want to see industry, and the jobs that come with it, regulated away. (SayAnythingBlog)

Oil and gas riches on the reservations

The Bureau of Land Management’s current proposals to regulate fracking on public lands have sparked outcry and fervent debate in yet another sphere: American Indian reservations. Collectively, the reservations contain about 3% of the nation’s oil and gas deposits, or 25 billion cubic feet of as-of-yet undeveloped natural gas reserves. Tribes are split on the issue – emerging news stories highlight the polarizing aspect of oil & gas development on pristine tribal lands. Some of the stories seem to contain the very stuff of cinema. A lawsuit in North Dakota involving interlinked companies and a casino buff has unfurled the parties’ successful attempt to purchase drilling rights to 42,500 acres of land by engineering a series of smaller deals with individuals and families, and later selling these drilling rights for millions of dollars to spectators from without. Corruption was indicted on the part of the local tribal development council and other tribal leaders involved in approving the scheme. On the other hand, in the same reservation of Fort Berthold, North Dakota, the Three Affiliated Tribes have earned $182 million in oil and gas royalties for a community that was previously marred with economic hardship. Jobs have sprung up from the need for food vendors and hotels while individual landowners earn as much as 18% in royalties from lease agreements with drillers.

Indian land and energy policies

The repercussions of Federal Indian Policy over the past two centuries are still deeply sensitive; during the “Termination” policy era of 1954-1970, Congress ended the protected trust status of all Indian-owned lands, initiated 60 termination proceedings, and subsequently relinquished 3 million acres of tribal land. Nixon ended the policy in 1970 and tribes regained control to determine the extent of  resource development on their lands with technical assistance from the federal government. In effect, tribes were allowed to lease their land or enter into joint ventures and energy agreements with companies, provided that consent was given by the Department of the Interior (DOI). Greater self-determination in resource development and land use was inscribed in the Indian Mineral Development Act of 1982.

Prior to that period, in the late 1800s under the Dawes Act, the federal government’s intent was to assimilate Indian communities into farming localities and so did not allow them to lease or sell their land. Though this was reversed in the Land Lease Amendment of 1890, throughout the 20th century and right up until a few years ago, individuals and companies were discouraged from trying to develop Indian land since it was difficult for prospective investors to locate landowners and obtain consent to lease from both multiple owners and the federal government. Previously, it was required that the DOI and Bureau of Indian Affairs be involved in approving any developments; in fact, it was the federal government that decided whether or not new developments were beneficial to tribal communities. The latest legislation has aimed to clear up any bureaucratic red tape and so render energy development projects less arduous: as of 2011, the BLM agreed not to extract fees from oil & gas companies working on reservations and to automatically approve projects that were not acted on by the Interior Department within 270 days. This was called the Indian Tribal Energy and Self-Determination Act, passed in 2005 and amended in 2011. The economic significance of giving tribes more authority in determining how they use their land, allowing them to lease it to non-tribal oil & gas or other mineral interests, combined with the shale gas boom, has not gone unnoticed:

Today it’s estimated that the three tribes and individual Native American landholders are receiving some $50 to $80 million a year from the drilling leases and royalties, compared with revenues of about $5 million a year before the boom began in about 2006. (ProPublica)

Regulatory angst

As one can imagine, with money flowing in from oil & gas where reservations have been historically notorious for poverty, alcoholism, and gambling, profiting landowners do not want to see a reverse in their autonomy over fracking projects and regulations.  The economic boon tribal members receive in various forms from fracking could be thwarted if drillers decide to move their rigs to private or state-owned lands, where there are less regulations and restrictions. Now, in ongoing regulatory debates, the BLM  intends to include tribal lands under the umbrella of the updated fracking regulations imposed over all federally owned lands. Moreover, the BLM may reinstall its authority as a necessary intermediate in approving deals between tribes and drilling companies. Should Indian lands be subject to a similar degree of protection and regulation as federal lands? Many tribes have vehemently replied, “no!” While popular arguments against fracking are usually framed in terms of environmental and health impacts that are hard to assess or are yet to be known, Tex Hall, a chairmen of the Three Affiliated Tribes leadership council, approaches the lack of definitive research in the opposite way:

Without proof that these rules are necessary to protect against an identified threat to the environment, deep well fracking on the reservation should be exempt from the additional regulatory burdens that the proposed BLM regulations would impose.

Risks of oil & gas drilling on reservations

On the other hand, because reservation lands are still held in trust by the federal government, the DOI is charged with ensuring that the development of oil and gas on tribal lands is made in the best interest of Native Americans and the preservation of what little of their lands remain. In defense of the BLM, officials have cited several risks to reservations associated with a lack of baseline federal safeguards for fracking:

  1. Royalties: current arrangements may disproportionately benefit some landowners and leave others out.
  2. If there are no regulations across the board, states and reservations may compete in a “race to the bottom” to deregulate and compete for oil & gas projects. Having a regulatory framework would better even the playing field.
  3. Corruption on the part of certain landowners and tribal leaders could initiate “land grabs”. Federal oversight of drilling leases on reservations may help prevent this.
  4. An unregulated shale gas rush could potentially ruin wilderness areas and wildlife habitats in reservations, especially as some of these reservations sit on the edge of national parks.
  5. Tribal authorities and landowners may lack the assistance and technical knowledge to navigate oil & gas proposals and may consequently sell their land too cheap and not receive adequate royalty payments.

 New fracking regulations opposed by tribes

Many tribes have requested that Indian lands not be grouped with public lands in the new fracking regulations proposed by the BLM. 1 million of the 1.5 million acres of the Blackfeet Indian Reservation in Montana are now leased to oil companies and the tribe maintains that fracking is the new lifeline for their local economy as tourism and gambling wane. In another vein, a tribe on the Turtle Mountain Indian Reservation has, on their own, banned fracking altogether. Taken together, Native American reservation lands today amount to 56 million acres. Oil and gas production is consuming some of that acreage, particularly in the Blackfeet and Crow nations in Montana, the Ute Nation in Utah, the Southern Utes in Colorado and some Alaska Native tribes. Where tribal law and state laws have reigned supreme over oil & gas leases and energy development, the federal government is attempting to take some of that control back as public concerns mount over hydraulic fracturing technology. Debates between disgruntled Native American tribes and the federal governments parallels the same concerns between state governments and the federal government over the issue of what administrative level can best and most efficiently regulate fracking while creating economic benefits for local and regional economies.

See the Bloomberg Businessweek photo slideshow called “Oil on the Fort Berhold Indian Reservation”, which aptly demonstrates the possibilities and controversies of fracking on Native American lands.

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