CHAPTER 8 THE INDIAN TRIBAL ENERGY DEVELOPMENT AND SELF-DETERMINATION ACT OF 2005: OPPORTUNITIES FOR COOPERATIVE VENTURES

• Jurisdiction: United States

Natural Resources Development in Indian Country
(Nov 2005)
CHAPTER 8
THE INDIAN TRIBAL ENERGY DEVELOPMENT AND SELF-DETERMINATION ACT OF 2005: OPPORTUNITIES FOR COOPERATIVE VENTURES
Scot W. Anderson ¹
Davis Graham & Stubbs LLP
Denver, Colorado

Scot W. Anderson joined Davis Graham & Stubbs in 2000. Since joining DGS, he has worked on the full sweep of issues affecting the coal and oil and gas industries. He has represented clients in administrative proceedings, and in federal and state courts. He has worked on complex transactions for both coal and oil and gas clients, including the formation of new oil and gas joint ventures, the divestiture of coal and oil and gas projects, and the acquisition of leases and reserves for coal and oil and gas clients. He continues to advise clients on the full scope of legal issues affecting the coal industry, and the oil and gas industry. He has extensive experience addressing issues related to mineral development of federal public lands and Indian lands. He continues to work on international energy projects. He also served as an expert witness in a proceeding concerning the sale of coal from Venezuela.

Mr. Anderson is a member of the bars of Colorado and the District of Columbia, as well as the courts of the Ute Indian Tribe of the Uintah and Ouray Reservation. He is an active member of the Rocky Mountain Mineral Law Foundation, the Colorado Mining Association, the International Bar Association, and the Association of International Petroleum Negotiators. He is also a past president of the Denver Chapter of the International Mining Professionals Association.

Education: University of Iowa, J.D., summa cum laude, 1987; University of Colorado, Ph.D., 1989; University of Iowa, M.A., 1982; Augustana College, B.A., cum laude, 1980.

Mr. Anderson began his legal career with the Denver office of Arnold & Porter, working primarily on environmental issues, permitting, and product liability litigation. He joined ARCO Coal Company in 1991. During his tenure with ARCO Coal, he worked on the full range of issues affecting the coal industry. Mr. Anderson moved from ARCO Coal to Guildford England, where he represented ARCO British Limited, and ARCO Europe and North Africa Limited. While in England, he served as the Legal Manager for the Southern Gas Basin of the North Sea.

Title V of the Energy Policy Act of 2005 concerns Indian energy. ² The short title of Title V is "Indian Tribal Energy Development and Self-Determination Act of 2005." ³ Congress, in choosing this short title, expressed the twin goals of Title V: to encourage the efficient development of energy minerals on tribal lands and to promote tribal self-determination, at least in the context of energy development. These two goals are not mutually exclusive, although neither are they co-extensive. The heart of Title V of the Energy Policy Act -- the use of tribal energy resource agreements -- provides a real opportunity to achieve both goals.

The Importance of the Indian Mineral Estate

On March 19, 2003, the Committee on Indian Affairs of the United States Senate held a hearing on the proposed tribal energy legislation. ⁴ In his opening remarks, Senator Ben Nighthorse Campbell, then the Chairman of the Committee, noted the importance of the tribal energy mineral estate: "Indian-owned energy resources are still largely undeveloped: 1.81 million acres are being explored or in production. 15 million more acres of energy resources are undeveloped. There are 90 tribes that own significant energy resources -- both renewable and non-renewable -- and they want to develop them." ⁵ The Department of the Interior, testifying at the same hearing, noted that production from tribal land constituted ten percent of the total federal onshore production of energy minerals. ⁶ In 2001, production from tribal land was 13.1 million barrels of oil, 285 billion cubic feet of gas, and 29.4 million tons of coal. ⁷ Over the past 20 years, Indian lands have contributed 11 percent of United States coal production and onshore oil and gas production. ⁸ The Department of Energy estimated that tribal lands hold 890 million barrels of oil and natural gas liquids, and 5.6 trillion cubic feet of natural gas. ⁹

Title V of the Energy Policy Act

Tribal Energy Resource Agreements

The most significant provision of Title V of the Energy Policy Act is the creation of the opportunity for tribes to enter into a Tribal Energy Resource Agreement ("TERA"). ¹⁰ A TERA is an agreement between a tribe ¹¹ and the United States Department of the Interior. Once a tribe enters into a TERA, it has authority to enter into leases, business agreements and rights-of-way affecting energy development (collectively, a "TERA Agreement") without the review and approval of the Secretary of the Department of the Interior ("Secretary"). If a TERA is properly structured, a mineral developer should gain greater certainty and efficiency in the development of energy resources on tribal lands.

Leases, Business Agreements, and Rights-of-Way

The leases and business agreements subject to a TERA are leases and business agreements for the purpose of energy resource development on tribal land, including for (i) the exploration and development of energy mineral resources, ¹² (ii) the construction of electric generation, transmission and distribution facilities located on tribal land, and (iii) facilities to process or refine energy resources on tribal land. ¹³ Such agreements would, in most instances, currently require the approval of the Secretary of the Interior. ¹⁴ Under Title V, TERA tribes may enter into such leases and business agreements without Secretarial approval, so long as the term of a business agreement or lease does not exceed 30 years or, in the case of a lease for the production of oil and gas, the term does not exceed ten years and so long thereafter as oil or gas is produced in paying quantities. ¹⁵

Title V also allows a Tribe that has entered into a TERA to grant rights-of-way for pipelines and electric transmission lines or distribution lines without the approval of the Secretary of the Interior. ¹⁶ The term of such rights-of-way is limited to 30 years. ¹⁷ Further, a pipeline approved under a TERA must serve a facility located on tribal land that processes or refines energy resources developed on tribal lands. ¹⁸ Similarly, a right-of-way for an electric transmission or distribution line can be approved under a TERA if it serves an electric generation, transmission or distribution facility located on tribal land. ¹⁹ Given the checkerboard nature of most tribal lands, a narrow construction of these terms could cause this power to have rather limited application. ²⁰

Leases, business agreements and rights-of-way granted under a TERA may be renewed at the discretion of the Tribe. ²¹

The TERA Application Process

An Indian Tribe must apply to the Department of the Interior for a TERA. ²² The Department of Interior is to promulgate regulations implementing the TERA process within one year of the enactment of the Energy Policy Act, which was August 8, 2005. ²³ Tribes may submit their applications on the date on which those regulations are promulgated. ²⁴ The Secretary is to approve or disapprove a TERA within 270 days (or within 60 days for a revision to an existing TERA). ²⁵ A Tribe's application for a TERA is subject to public notice and comment. ²⁶ If the Secretary disapproves a TERA, the Tribe can revise and resubmit the TERA based on actions and changes identified by the Secretary in her disapproval notice. ²⁷

Title V of the Energy Policy Act provides a comprehensive description of the elements of a TERA. At the threshold, a TERA must:

ensure the acquisition of necessary information from the applicant for TERA Agreement;

address the term of the TERA Agreement;

address amendments and renewals;

address the economic return to the Indian tribe under the TERA Agreement;

address technical or other relevant requirements;

ensure compliance with all applicable environmental laws;

identify final approval authority;

provide for public notification of final approvals;

establish a process for consultation with any affected States regarding off-reservation impacts, if any;

describe the remedies for breach of the TERA Agreement;

require each TERA Agreement to include a statement that, if any of its provisions violates an express term or requirement of the TERA pursuant to which the TERA Agreement was executed:

the provision shall be null and void; and

if the Secretary determines the provision to be material, the Secretary may suspend or rescind the TERA Agreement or take other appropriate action that the Secretary determines to be in the best interest of the Indian tribe;

provide that a TERA Agreement will become effective on the date on which a copy of it is delivered to the Secretary;

include citations to tribal laws, regulations, or procedures, if any, that set out tribal remedies that must be exhausted before a petition for review may be submitted to the Secretary;

specify the financial assistance, if any, to be provided by the Secretary to the Indian tribe to assist in implementation of the TERA, including tribal environmental review of individual projects; and

require that the Indian tribe give written notice to the Secretary of:

any breach or other violation by another party of a TERA Agreement; as well as

any activity or occurrence under a TERA Agreement that constitutes a violation of Federal or tribal environmental laws. ²⁸

In addition, after approving a TERA, the Secretary is to review the agreement annually for at least three years. ²⁹ After that three year period, the Secretary and the Tribe may agree to have the Secretary conduct the review every other year. ³⁰ If in the course of such a review, or otherwise upon notice from a Tribe, the Secretary finds "imminent jeopardy to a physical trust asset," the Secretary may take any...