	Shortcomings in BIA’s Management and a Variety of Other Factors Have Hindered Indian Energy Development

Factors, such as shortcomings in BIA’s management and additional  factors generally outside of BIA’s management responsibilities—such as  a complex regulatory framework, tribes’ limited capital and infrastructure,  and varied tribal capacity—have hindered Indian energy development. First, BIA does not have the data it needs to verify ownership of some oil  and gas resources, easily identify resources available for lease, or easily  identify where leases are in effect, inconsistent with Interior’s Secretarial  Order 3215, which calls for the agency to maintain a system of records  that identifies the location and value of Indian resources and allows for  resource owners to obtain information regarding their assets in a timely  manner. In its written comments on our report,  Interior did not concur with our recommendation. However, in an August  2015 letter to GAO after the report was issued, Interior stated that it  agrees this is an urgent need and reported it has taken steps to enter into  an agreement with BLM to identify survey-related products and services  needed to identify and address realty and boundary issues. To improve BIA’s efforts to verify ownership in a timely manner and  identify resources available for development, we recommended in our  June 2015 report that Interior direct BIA to take steps to complete GIS  mapping capabilities. Interior stated in its August 2015 letter to GAO that a  national dataset composed of all Indian land tracts and boundaries with  visualization functionality is expected to be completed within 4 years,  depending on budget and resource availability. Second, BIA’s review and approval is required throughout the  development process, including the approval of leases, ROW  agreements, and appraisals, but BIA does not have a documented  process or the data needed to track its review and response times. Specifically, in 2014, the Acting  Chairman for the Southern Ute Indian Tribe testified before this  committee that 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. To address this shortcoming, we recommended in our June 2015 report  that Interior direct BIA to develop a documented process to track its  review and response times and enhance data collection efforts to ensure  that the agency has the data needed to track its review and response  times. In its August 2015 letter to GAO,  Interior stated it will try to implement a tracking and monitoring effort by  the end of fiscal year 2017 for oil and gas leases on Indian lands. The  agency did not indicate if it intends to improve the transparency of its  review and approval process for other energy-related documents, such as  ROW agreements and surface leases—some of which were under review  for multiple years. Third, some BIA regional and agency offices do not have staff with the  skills needed to effectively evaluate energy-related documents or  adequate staff resources, according to a few stakeholders we interviewed  and some of the literature we reviewed. According to stakeholders we interviewed and literature we reviewed,  additional factors, generally outside of BIA’s management responsibilities,  have also hindered Indian energy development, including a complex regulatory framework consisting of multiple jurisdictions  that can involve significantly more steps than the development of  private and state resources, increase development costs, and add to  the timeline for development;  fractionated, or highly divided, land and mineral ownership interests;  tribes’ limited access to initial capital to start projects and limited  opportunities to take advantage of federal tax credits; dual taxation of resources by states and tribes that does not occur on  private, state, or federally owned resources; perceived or real concerns about the political stability and capacity of  some tribal governments; and  limited access to infrastructure, such as transmission lines needed to  carry power generated from renewable sources to market and  transportation linkages to transport oil and gas resources to  processing facilities. According to officials from one tribe we interviewed, the tribe has  repeatedly asked Interior for additional guidance on the activities that  would be considered inherently federal functions under the regulations. According to the tribal officials, without additional guidance on inherently  federal functions, tribes considering a TERA do not know what activities  the tribe would be assuming or what efforts may be necessary to build the  capacity needed to assume those activities. We recommended in our June 2015 report that Interior provide additional  energy development-specific guidance on provisions of TERA regulations  that tribes have identified as unclear. Interior agreed with the  recommendation and stated it is considering further guidance but did not  provide additional details regarding issuance of the guidance. In addition, the costs associated with assuming activities currently  conducted by federal agencies and a complex application process were  identified by literature we reviewed and stakeholders we interviewed as  other factors that have deterred any tribe from entering into a TERA with  Interior.
Why GAO Did This Study

Indian energy resources hold significant potential for development, but according to a 2014 Interior document, these resources are underdeveloped relative to surrounding non-Indian resources. Development of Indian energy resources is a complex process that may involve federal, tribal, and state agencies. Interior's BIA has primary authority for managing Indian energy development and generally holds final decision-making authority for leases and other permits required for development.
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. However, no tribe has entered into a TERA.
This testimony highlights the key findings of GAO's June 2015 report (GAO-15-502). It focuses on factors that have (1) hindered Indian energy development and (2) deterred tribes from pursuing TERAs. For the June 2015 report, GAO analyzed federal data; reviewed federal, academic, and other literature; and interviewed tribal, federal and industry stakeholders.

What GAO Found

In its June 2015 report, GAO found that Bureau of Indian Affairs' (BIA) management shortcomings and other factors—such as a complex regulatory framework, limited capital and infrastructure, and varied tribal capacity—have hindered Indian energy development. Specifically, BIA's management has the following shortcomings:
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. GAO recommended that Interior direct BIA to identify land survey needs and enhance mapping capabilities. In response, Interior stated it will develop a data collection tool to identify the extent of the survey needs in fiscal year 2016, and enhance mapping capabilities by developing a national dataset composed of all Indian land tracts and boundaries in the next 4 years.
BIA's review and approval is required throughout the development process, but 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. According to a tribal official, BIA's review of some of its energy-related documents, which can include leases, right-of-way agreements, and appraisals, 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. GAO recommended that Interior direct BIA to develop a documented process to track its review and response times. In response, Interior stated it will try to implement a tracking and monitoring mechanism by the end of fiscal year 2017 for oil and gas leases. However, it did not indicate whether it intends to track and monitor the review of other energy-related documents that must be approved before development can occur. Without comprehensive tracking and monitoring of its review process, it cannot ensure that documents are moving forward in a timely manner, and lengthy review times may continue to contribute to lost revenue and missed development opportunities.
Some BIA regional and agency offices do not have staff with the skills needed to effectively evaluate energy-related documents or adequate staff resources. GAO is conducting ongoing work on this issue.
GAO also found in its June 2015 report that a variety of 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 Interior for additional guidance on the activities that would be considered inherently federal functions—a provision included in Interior's regulations implementing TERA. Interior did not provide the clarification requested. Therefore, the tribe had no way of knowing what efforts may be necessary to build the capacity needed to assume those activities. GAO recommended that Interior provide clarifying guidance. In response, Interior officials stated that the agency is considering further guidance, but it did not provide a timeframe for issuance.

What GAO Recommends

In its June 2015 report, GAO recommended that Interior take steps to address data limitations, track its review process, and provide clarifying guidance. In an August 2015 letter to GAO after the issuance of the report, Interior generally agreed with the recommendations and identified some steps it intends to take to implement them.