A tale of two tribes: Utes want to drill as Sioux battle pipeline

ATTN: National, Financial editors

The Southern Ute Indian Tribe of southwestern Colorado has a higher long-term credit rating than Wells Fargo & Co. and more oil and natural-gas wells than it has members.

Welcome to the other side of the tribal land energy conundrum.

While the Standing Rock Sioux have drawn considerable media coverage for their fight against the Dakota Access Pipeline project, the Southern Utes have attracted scant attention for their 15-year push to make it easier to drill on Indian land. Their goal: Extend financial opportunities that have already given them control of 1,600 wells across four states, and helped make them one of the richest tribes in the U.S.

“Without a prolonged effort to take control of our natural resources, the Southern Ute Indian Tribe would not be the economic powerhouse it is today,” Tribal Council Treasurer James Olguin told lawmakers in a congressional hearing last week. “We are the best protectors of our own resources and the best stewards of our own destiny.”

Since 2012, the Southern Ute tribe has spent $1.6 million lobbying Washington to ease energy permits, ensure tribal sovereignty and lighten U.S. Interior Department rules on fracking and methane emissions, according to the Senate’s Lobbying Disclosure Act database. That’s three times more than Pioneer Natural Resources Co., a shale driller with more than $32 billion in market value.

While the Standing Rock Sioux vowed last week to keep fighting the Dakota Access Pipeline after a federal court declined to halt construction, the Southern Utes met with U.S. lawmakers in Santa Fe, New Mexico, to argue for new laws loosening federal control over their drilling operations. They were joined by representatives of the Navajo Nation, the largest U.S. tribe, and the Arctic Slope Regional Corp., owned by Alaska natives.

The three groups called on Congress and the Interior Department to streamline permitting on Indian lands and give tribes more control over energy leasing and environmental reviews.

The argument resonated with some Republican lawmakers.

“Nearly every aspect of energy development on tribal lands is influenced or controlled by the federal government, a policy stemming from old notions that Indian tribes are incapable of or unwilling to manage their resources,” Utah Republican Rob Bishop, chairman of the House Natural Resources Committee, said during the hearing.

For Democrats, environmental concerns outweigh questions about sovereignty. Last year, only 11 Democratic representatives voted in favor of legislation to streamline tribal energy permitting.

The Southern Ute reservation, tucked into Colorado’s San Juan Basin, sits atop one of the most productive coal-bed methane gas fields in the country. The tribe manages energy resources through the Red Willow Production Co. It was founded in 1992 to develop wells on the reservation, and has expanded into the Delaware Basin in Texas, the Green River Basin in Wyoming and the Gulf of Mexico.

The tribe has had a long and complex history with the U.S. government.

A Ute named Yellow Nose was credited with killing General George Custer at the Battle of Little Bighorn in 1876, according to a tribal history. Four years later, following two key battles that left dozens on both sides dead, the tribe’s leader Ouray traveled to Washington for treaty negotiations that cost the Utes tribal land. In 1905, then-chief Buckskin Charley met President Theodore Roosevelt in Washington, and rode in his inaugural parade.

More recent efforts to influence policy have yielded limited success. Congress has passed bills to streamline the permitting process on tribal lands and trim project delays. That’s a positive step, the tribe has said, but it doesn’t address a fundamental problem: the federal government treats tribal lands as public lands, exercising the same level of oversight as over national parks.

“Some of it is historic artifact,” said Eric Henson, a fellow at the Harvard Project on American Indian Economic Development. “It wasn’t that long ago that the non-tribal world viewed tribes as incompetent, incapable, unable to manage their own affairs. So we have this treaty framework where we say ‘We’ll take care of it for them.’”

That puts tribes at a competitive disadvantage, the tribe’s argument goes: Why invest in tribal lands, requiring years of costly environmental review and a lengthy permit process, when you can be in operation elsewhere within weeks?

Colorado typically issues drilling permits within two months of receiving applications, and charges no permit fee. To drill on Southern Ute land, the U.S. Bureau of Land Management charges a $9,500 fee and on average takes seven months to process permits on public lands. In the case of tribes, there may be additional delays related to the Bureau of Indian Affairs’s role in the permitting process.

That’s problematic for development, the Harvard Project’s Henson said. While some tribes have access to considerable oil and gas reserves, few develop them, hindered by a lack of capital and technical experience, or waylaid by the permitting process.

For tribes rich in natural resources, energy production can create the tax base needed to provide crucial services for members.

Olguin emphasized this at last week’s hearing. “Today, the tribe provides health insurance for its tribal members, promises all members a college education and has a campus dotted with state-of-the-art buildings,” he said at the hearing. This is “despite the federal government’s stifling role in Indian energy development.”

Tribal officials say the Obama administration is attuned to Native Americans’ concerns, as evidenced by its response to the controversial Dakota Access pipeline. Shortly after a U.S. district court denied a request to stop construction of the $3.8 billion project, the Obama administration halted work on the contested stretch of land.

But tribe-sanctioned production of fossil fuels remains a quagmire for the administration, which has adopted a strong stance on climate change.

“There’s tension even within the Obama administration on the issue of tribal sovereignty,” said Thomas Shipps, legal counsel to the Southern Ute Indian Tribe. “Especially when exercising that sovereignty involves the development of fossil fuels.”

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Keywords: TRIBAL-DRILLING