Indian Energy Development:

Poor Management by BIA Has Hindered Energy Development on Indian Lands

GAO-15-502: Published: Jun 8, 2015. Publicly Released: Jun 15, 2015.

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What GAO Found

Bureau of Indian Affairs' (BIA) management shortcomings and other factors—such as a complex regulatory framework, tribes' limited capital and infrastructure, and varied tribal capacity—have hindered Indian energy development. Specifically, BIA does not have the data it needs to verify ownership of some Indian oil and gas resources, easily identify resources available for lease, or identify where leases are in effect, as called for in Secretarial Order 3215 and internal guidance. BIA also faces staff limitations and 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. These shortcomings can increase costs and project development times, resulting in missed development opportunities, lost revenue, and jeopardized viability of projects. Examples are as follows:

  • 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.

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.

Interior's Office of Indian Energy and Economic Development (IEED) provided grants to build tribal energy development capacity to 25 tribes from 2007 through 2013, but the effectiveness of the grants to move tribes closer to demonstrating that they have the capacity to enter into TERAs is unknown. The Standards for Internal Control in the Federal Government call for agencies to compare actual performance with planned or expected results and to monitor performance; however, IEED has not tracked how, if it all, the grants have eliminated capacity gaps.

Why GAO Did This Study

Indian energy resources hold significant potential for development, but remain largely undeveloped. Interior's BIA reviews and approves leases and other permits required for development. Other Interior components and federal agencies also have roles in this process.

The Energy Policy Act of 2005 provided the opportunity for interested tribes to pursue TERAs—agreements between a tribe and Interior 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. However, no tribe has entered into a TERA.

GAO was asked to review Indian energy development. This report examines (1) factors that have hindered Indian energy development, (2) factors that have deterred tribes from pursuing 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.

What GAO Recommends

GAO 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.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In 2018, BIA made significant progress integrating and deploying data viewing and map creation capabilities into its database for recording and maintaining historical and current data on ownership and leasing of Indian land and mineral resources in the Trust Asset and Accounting Management System (TAAMS). This enhanced capability is intended to help BIA ensure it can verify ownership in a timely manner and identify resources available for development.

    Recommendation: To ensure it can verify ownership in a timely manner and identify resources available for development, the Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to take steps to complete its geographic information system mapping module in the Trust Asset and Accounting Management System.

    Agency Affected: Department of the Interior

  2. Status: Open

    Comments: According to a BIA official, the agency requested each of its 12 regions to review and identify historic survey requests from a data system that has not been fully maintained or consistently used since 2011 to determine if the requests are still valid. A BIA official stated that the agency's next step is to create a new database that will track cadastral survey needs and a reporting mechanism for each BIA region to use when making new survey requests. According to BIA officials, the agency anticipates the new database and reporting mechanism will be deployed by September 30, 2017. As of October 2018, we are following up with Interior to obtain an update on the agency's response to this recommendation.

    Recommendation: To ensure it can verify ownership in a timely manner and identify resources available for development, the Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to work with the Bureau of Land Management to identify cadastral survey needs.

    Agency Affected: Department of the Interior

  3. Status: Open

    Priority recommendation

    Comments: Interior agreed with this recommendation. The agency stated it has taken initial steps to develop a documented process to track its review and response times, and estimates it will have a documented process by December 30, 2018.

    Recommendation: To improve the efficiency and transparency of its review process, the Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to develop a documented process to track its review and response times.

    Agency Affected: Department of the Interior

  4. Status: Open

    Comments: In May 2017, Interior stated that a group of BIA subject matter experts in oil and gas processing have been working to modify Trust Asset and Accounting Management System (TAAMS), incorporating the key identifiers and data fields needed to track and monitor review and response times for oil and gas leases and agreements. BIA is also in the process of evaluating and reviewing the current realty tracking system and TAAMS in order to improve efficiencies and timeliness in processing workloads. Due to the fact that modifications to data systems must be reviewed by multiple entities within the Department, a request for an extension of time will be submitted to the GAO within this quarter. As of October 2018, we are following up with Interior to obtain an update on the agency's response to this recommendation.

    Recommendation: To improve the efficiency and transparency of its review process, the Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to enhance data collection efforts to ensure it has data needed to track its review and response times.

    Agency Affected: Department of the Interior

  5. Status: Closed - Implemented

    Priority recommendation

    Comments: In September 2017, in response to our recommendation, the Department of the Interior's Office of Indian Energy and Economic Development (IEED) added information to its website identifying a mechanism that allows a tribe interested in pursuing a tribal energy resource agreement (TERA) to obtain specific guidance and clarification for TERA regulations. For example, any tribe can request technical assistance through IEED's Division of Energy and Mineral Development (DEMD) to provide guidance regarding the programs, functions, services, and activities that can be included under a TERA. Upon request from a tribe and receipt of the activities that a tribe is interested in performing through a TERA, DEMD will provide technical guidance regarding the proposed activities, and opinions on whether they are inherently federal functions; however, final determination on inherently federal functions would come from Interior's Solicitors Office. This additional notification to tribes about the technical assistance is included as part of a DEMD "Tribal Toolbox" that contains numerous resources intended to help tribes develop and manage energy resources. In addition, IEED is developing a primer document on TERAs that will provide further guidance for tribal officials in an easy to absorb question and answer format. IEED officials stated the primer will be drafted in 2018 and will be available to tribal officials upon completion of Interior's internal review process.

    Recommendation: The Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to provide additional energy development-specific guidance on provisions of TERA regulations that tribes have identified to Interior as unclear.

    Agency Affected: Department of the Interior

  6. Status: Open

    Comments: Interior has taken a number of steps to develop a documented process for evaluating the effectiveness of TEDC grants and we are working with the agency to obtain the needed documentation. As of October 2018, we are following up with Interior to obtain an update on the agency's response to this recommendation.

    Recommendation: To ensure the tribal energy development capacity (TEDC) grant program is effective in moving tribes closer to developing the capacity needed to pursue TERAs, the Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to develop a documented process for evaluating the effectiveness of TEDC grants.

    Agency Affected: Department of the Interior

  7. Status: Closed - Implemented

    Comments: The Office of Indian Energy and Economic Development completed a survey of grant recipients to identify any features of the TEDC program that could limit the effectiveness of the program.

    Recommendation: To ensure the TEDC grant program is effective in moving tribes closer to developing the capacity needed to pursue TERAs, the Secretary of the Interior should direct the Director of the Bureau of Indian Affairs or the Director of the Office of the Indian Energy and Economic Development, as appropriate, to identify features of the TEDC grant program that could limit the effectiveness of the program to help tribes eliminate capacity gaps.

    Agency Affected: Department of the Interior

 

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