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S. HRG. 110–463 

INDIAN ENERGY DEVELOPMENT 

HEARING 

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

MAY 1, 2008 

Printed for the use of the Committee on Indian Affairs 

( 

(II) 

COMMITTEE ON INDIAN AFFAIRS 

BYRON L. DORGAN, North Dakota, Chairman 

LISA MURKOWSKI, Alaska, Vice Chairman 

DANIEL K. INOUYE, Hawaii 

KENT CONRAD, North Dakota 

DANIEL K. AKAKA, Hawaii 

TIM JOHNSON, South Dakota 

MARIA CANTWELL, Washington 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

JOHN MCCAIN, Arizona 

TOM COBURN, M.D., Oklahoma 

JOHN BARRASSO, Wyoming 

PETE V. DOMENICI, New Mexico 

GORDON H. SMITH, Oregon 

RICHARD BURR, North Carolina 

ALLISON C. BINNEY, Majority Staff Director and Chief Counsel 

DAVID A. MULLON JR., Minority Staff Director and Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on May 1, 2008 ................................................................................. 1 

Statement of Senator Dorgan ................................................................................. 1 

Statement of Senator Murkowski ........................................................................... 6 

Statement of Senator Tester ................................................................................... 5 

WITNESSES

Begay, Steven C., General Manager, Dine ́ Power Authority, Navajo Nation ..... 21 

Prepared statement .......................................................................................... 22 

Kitka, Julie, President, Alaska Federation of Natives ......................................... 26 

Prepared statement with attachment ............................................................. 29 

Middleton, Dr. Robert W., Director, Office of Indian Energy and Economic 

Development, Office of the Assistant Secretary, Indian Affairs, U.S. Department of the Interior ............................................................................................. 42 

Prepared statement with attachment ............................................................. 45 

Morello, Steven J., Deputy Assistant Secretary, Intergovernmental and External Affairs; Director, Office of Indian Energy Policy and Programs ................ 67 

Prepared statement .......................................................................................... 69 

Venne, Hon. Carl, Chairman, Crow Nation ........................................................... 12 

Prepared statement .......................................................................................... 14 

Wells, Jr., Hon. Marcus D., Chairman, Three Affiliated Tribes of the Fort 

Berthold Indian Reservation ............................................................................... 7 

Prepared statement .......................................................................................... 10 

APPENDIX

Brown, Elouise, President, Dooda Desert Rock Organization, prepared statement ...................................................................................................................... 82 

Cesspooch, Hon. Curtis R., Chairman, Ute Tribe of the Uintah and Ouray 

Reservation, prepared statement ........................................................................ 79 

Foster, Neal W., Board Member/Vice-President, Sitnasuak Native Corporation, prepared statement ..................................................................................... 81 

Marchand, Hon. Michael E., Chairman, Confederated Tribes of the Colville 

Reservation, prepared statement ........................................................................ 89 

Martin, Karmelita Plains Bull, prepared statement ............................................ 91 

Response to written questions submitted to Steven J. Morello by: 

Hon. Maria Cantwell ........................................................................................ 104 

Hon. Byron L. Dorgan ...................................................................................... 92 

Written questions submitted by Hon. Byron L. Dorgan to Dr. Robert W. 

Middleton .............................................................................................................. 106 

(1) 

INDIAN ENERGY DEVELOPMENT 

THURSDAY, MAY 1, 2008 

U.S. SENATE, COMMITTEE ON INDIAN AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 9:30 a.m. in room 

562, Dirksen Senate Building, Hon. Byron L. Dorgan, Chairman of 

the Committee, presiding. 

OPENING STATEMENT OF HON. BYRON L. DORGAN, 

U.S. SENATOR FROM NORTH DAKOTA 

The CHAIRMAN. We will call the hearing to order. Good morning 

to all of you. This is a hearing of the Indian Affairs Committee of 

the United States Senate. The hearing is on the subject of energy 

development. 

The Committee will conduct an oversight hearing today on Indian energy development. Today’s hearing is in part the result of 

a hearing the Committee held a little more than five years ago. In 

March of 2003, we held a hearing on two bills that eventually became the Indian Tribal Energy Development and Self-Determination Act. This Act was passed by the Congress as Title V of the Energy Policy Act in the year 2005. 

Today’s hearing will examine the level to which that law has 

been implemented. This hearing will also examine the past and the 

present barriers that limit potential development of tribal energy 

resources. We will also evaluate the ability of tribes to fully participate in the energy industry and in energy markets. 

The Committee has noticed an important shift in energy development on Indian reservations. Many Indian tribes are no longer satisfied with Federal leasing programs that promote passive involvement of tribes in developing their energy resources. Instead, tribal 

governments are interested in acquiring the tools needed to actively participate in the energy industry and in energy markets. 

This is important, because it is a shift taking hold at the Federal 

and tribal levels, and in some cases it’s a route that the tribes have 

been on for many, many decades. 

To get a sense of the energy potential on Indian lands, we have 

borrowed some maps from our friends at the Department of Interior and the Department of Energy. I am going to put up chart one. 

This is a map of oil, gas and coal energy potential on Indian lands. 

Reservations are highlighted in yellow on this map and have a high 

production potential. Reservations highlighted in orange have modVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\DOCS\42661.TXT JACK PsN: JACKF
2 

erate potential. As you can see, many of the tribes in the west have 

mineral resources with very high production potential. 

Chart two, second map, is a map of renewable and wind resource 

potential. On this map, all of the areas in pink and purple and red 

are good for wind generation. There is a massive renewable wind 


501m1.eps
3 

potential on reservations in North and South Dakota. This map 

shows you what the Department of Energy says about my home 

State, North Dakota. It says it is the Saudi Arabia of wind. Those 

of us who have grown up there and learned to lean toward the 

northwest most of our life understand what that means. 

The third chart is a map of renewable solar resource potential. 

On this map, the light green area covering the southwestern 

United States shows the greatest solar potential. You will see the 

light green down in the southwest. And the darker green area, 


501m2.eps
4 

which includes many more reservations, is also considered suitable 

for solar power development. I recently toured down in Arizona a 

solar power production area. They are in the process of putting in 

place, I believe it was a 180, maybe 280 megawatt solar application. It is very exciting. Solar energy is something with great potential and our Country, regrettably, has fallen behind in those 

areas. 

All of these maps show the untapped potential for energy and renewable development, especially on Indian reservations. The hard 

part is overcoming the history of energy development on Indian 


501m3.eps
5 

reservations, I say, the neglectful history. For most of this past century, Indian energy development has meant mineral leasing, leases 

where tribal and individual Indian owners of the minerals were not 

provided full opportunities to negotiate in their best interest. Instead, the Federal Government managed these leases through a bureaucracy that often lacked the staff and resources to effectively 

manage their workload. 

Recent laws, Title V of the Energy Act in particular, have begun 

to recognize the authority of tribal governments to negotiate their 

own leases. These laws also recognize that tribes may be interested 

in more than just mineral leasing and may enter into a variety of 

energy agreements or joint ventures. But again, a century of shifting Federal policies has injected so much uncertainty into reservation land and resource status it is difficult for tribes to get to the 

negotiating table to be full partners. 

Other barriers also remain. Uncertainties in existing law discourage potential investors from financing, in some cases, reservation 

projects. Tribes are currently not able to raise bond revenue or receive tax benefits as a result of State and municipal government 

activities that do receive these benefits. Despite the fact that reservation residents look to tribal governments to provide their local 

services, tribal governments ought to have the same opportunity as 

municipal and local governments do with respect to bonding. 

In addition, there are some disincentives to energy development 

on Indian lands, because certain activities are subject to dual taxation. In my view, we have only just begun. With the experience 

of the tribes and the tools of the departments, I hope we can break 

down the remaining barriers that now limit the potential of Indian 

energy development. Unlocking this potential, I believe, will help 

tribes provide for their communities and will serve our national interest in becoming more energy independent. The opportunities are 

so great and the benefits so needed that providing tribes the tools 

they need should be among our top priorities. 

We are now joined in a grand entrance by my colleague from 

Montana, Senator Tester. Senator Tester, I just showed several 

maps that show the very substantial energy potential that exists 

on Indian reservations, particularly in the northern Great Plains, 

Montana, North Dakota and South Dakota, and some other parts 

of the Country as well. I have just described in an opening statement some of the barriers we are going to hear about today. 

Let me call on you, and I appreciate your being here. 

STATEMENT OF HON. JON TESTER, 

U.S. SENATOR FROM MONTANA 

Senator TESTER. Thank you, Mr. Chairman. I appreciate your 

holding this hearing. 

I also appreciate Chairman Carl Venne from the Crow coming 

down to give us his perspective. Carl is somebody I met a number 

of years back and somebody I have a tremendous amount of respect 

for and a tremendous amount of respect for his vision, quite honestly. So thanks for being here, Carl. 

I guess the bottom line is, and just coming in, I will just tell you 

what is on the top of my head. The truth is, I think we need to 

empower Indian Country to be able to become self-sufficient. And 

6 

one of the ways they can become self-sufficient is through development of the resources. They have incredible opportunity, whether 

it is traditional resource development like oil and gas and coal or 

whether it is development of renewable resources and geothermal 

resources and those kinds of renewable resources that are out there 

that are available to many areas and many of the lands that Indian Country rests upon. I look forward to hearing from each and 

every one of you on the panel about your challenges, what you see 

are the major road blocks to be able to develop your natural resources in a way that makes sense for your people. 

Thank you very much, Mr. Chairman. 

The CHAIRMAN. Senator Tester, thank you very much. 

We are joined by the Vice Chair, Senator Murkowski. 

STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

Senator MURKOWSKI. Good morning, Mr. Chairman, and to members of the panel, good morning. A special welcome, of course, to 

my constituent and friend, Julie Kitka, representing the Alaska 

Federation of Natives. 

Mr. Chairman, I want to thank you for holding this very important hearing. We are certainly talking about energy all over the 

Hill today. That reflects the conversations all over the Country. 

People are talking about what is going on with energy and the current environment, the very, very high oil prices, bring real challenges, daunting challenges, both to our urban and rural communities. I think it truly highlights more than ever the importance of 

developing our domestic sources of supply. We certainly up north 

believe that we have enormous potential in ANWR and parts of my 

State. Great potential, great opportunity for our tribes both in 

Alaska and in the lower 48, opportunity to continue to contribute 

to domestic supply and for bringing economic development to the 

communities. 

I am particularly interested in hearing whether Indian tribes 

and Native villages have the tools that they need to tap into this 

enormous potential and whether we here in the Federal Government are doing all that we can to assist in using the tools that we 

have provided in the past. 

We all talk about what is happening back home and the impact 

to our communities. In Alaska I think it is particularly stark in 

terms of the realities that our villages are facing. A few communities are particularly noteworthy in terms of what they are facing 

with their costs, but more importantly how they are partnering to 

deal with the challenges. We have a few communities that have already taken a lead. The Alaska Village Electric Co-Op, which provides electricity to 53 rural communities, is a good example. They 

partner with the Department of Energy and they have installed 

wind turbines that are specifically designed for Arctic climates. 

They have installed these wind turbines in Intuksek Bay and 

Kasegaluk. And these turbines are supplying 25 percent of the electricity needs that we have for these communities. 

This spring, AVEC won the 2007 wind cooperative of the year 

ward from the U.S. DOE’s Wind Powering America program in recognition of its leadership and its success. There are also other exVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 S:\DOCS\42661.TXT JACK PsN: JACKF
7 

amples of future projects in Alaska. Cook Inlet Native Corporation 

is proposing to install a 60 to 100 megawatt wind farm on the land 

that it owns just off of Anchorage there in Fire Island. St. Paul Island Village Corporation formed an electric power company that is 

seriously proposing to install a 300 megawatt hydroelectric development on Chakachownut Lake near Anchorage. We have a host 

of other tribes that have expressed interest in biomass and in geothermal besides the wind projects, the ocean energy projects. But 

we know that many of these projects could very seriously benefit 

from the seed money that Congress thought it was providing, the 

loan guarantees that we thought we had approved through the Energy Policy Act. 

We recognize that we need to do more to help facilitate the development on our Indian lands. We would certainly like to know that 

under Title V, this new Title V, that we are progressing and advancing tribes in a way that will allow them to develop their energy potential. So I look forward to comments from the witnesses 

and panelists here this morning, Mr. Chairman. Thank you. 

The CHAIRMAN. Senator Murkowski, thank you very much. 

I am pleased that the Honorable Marcus Wells., Jr., the Chairman of the Three Affiliated Tribes in North Dakota, has joined us. 

I should say to my two colleagues that the Three Affiliated Tribes 

is right smack in the middle of the most substantial oil play in the 

United States at the moment. The assessment by the U.S. Geological Survey (USGS) in the last two weeks that I announced with 

them shows that the Bakken Shale, which includes Montana and 

North Dakota and a portion of Canada, has the largest assessed recoverable pool of oil that the USGS has ever assessed in the lower 

48 States. So Chairman Wells is the tribal chairman of a tribe that 

is very, very interested in, not for academic purposes, but very interested in this issue because they are in the middle of a very substantial amount of additional oil development. 

Chairman Wells, thank you for coming to Washington to testify. 

And you may proceed. I would say to all four witnesses that your 

entire statements will be made a part of the permanent record and 

we would ask that you summarize. 

STATEMENT OF HON. MARCUS D. WELLS, JR., CHAIRMAN, 

THREE AFFILIATED TRIBES OF THE FORT BERTHOLD 

INDIAN RESERVATION 

Mr. WELLS. Thank you, Chairman Dorgan. My name is Marcus 

Dominick Wells, Jr., Eh-Bah-Dah-Gish, Bald Eagle. I am the elected chairman of the Three Affiliated Tribes of the Fort Berthold Indian Reservation. 

I would like to thank the Chairman and the members of the 

Committee for the opportunity to provide testimony on behalf of 

the tribal business council of the Three Affiliated Tribes, the 

Mandan, Hidatsa and Arikara. The Three Affiliated Tribes have 

been poised at the brink of what could be the largest period of economic development in the history of the tribe. The surge in oil and 

gas exploration in the Bakken Formation has brought the promise 

of significant prosperity to the Fort Berthold Indian Reservation. 

However, even as some of our tribal members are beginning to 

enjoy significant lease bonus payments, many of whom have lived 

8 

in poverty their entire lives, the Tribe and the Fort Berthold mineral owners have been negatively impacted by the current delivery 

of trust responsibility by the Fort Berthold Agency and the Aberdeen Area Office of the Bureau of Indian Affairs. Specifically in 

areas administering the exploration and development of oil and gas 

within the exterior boundaries of the Fort Berthold Indian Reservation. 

The tribal business council negotiated three IMDAs, or modified 

oil and gas leases with Black Rock LLC, JT Energy LLC and Dakota 3 LLC, that were presented for approval to the Bureau of Indian Affairs in calendar years 2005, 2006 and 2007 respectively. 

Collectively, the IMDAs took over three years to receive formal secretarial approval, with the last IMDA receiving its final approval 

in February of this year. 

The mineral owners of the Three Affiliated Tribes have also undergone the leasing process through either private negotiation or in 

two formal oil and gas bid sales held by the Fort Berthold Agency 

in December 2006 and November 2007. However, an unacceptable 

number of those leases still remain to be unapproved and/or processed for payment of lease bonuses and to be moved forward to 

complete the applications for permits to drill. 

The delays in lease approval and other bureaucratic hurdles have 

not only caused untold harm on the tribe and the Fort Berthold 

mineral owners but have utterly frustrated the oil and gas industry 

as to the prospect of actual oil and gas exploration on the Fort 

Berthold Indian Reservation. Representatives of the oil and gas industry have visited and formally met with the tribal business council to express those frustrations and to request our help in moving 

the Fort Berthold and the entire BIA forward on completing their 

duties to the Three Affiliated Tribes and our respective membership. 

The Three Affiliated Tribes have held our own oil and gas industry meetings and listening sessions during the months of April, 

July, September, November and December of 2007, January, February and March of 2008. The purpose of those meetings was to reassure the oil and gas companies that the Three Affiliated Tribes 

were doing everything within our power to support the formal approval of their respective oil and gas leases. This was done for the 

benefit of the entire enrolled membership of the Three Affiliated 

Tribes of the Fort Berthold Indian Reservation that happens to be 

situated on the Bakken Shale Formation of western North Dakota. 

At the heart of this sudden oil boom is the Bakken Formation, 

an oil shale formation located within the Williston Basin. The 

Bakken Formation was the subject of an April 2008 USGS reported 

that stated, ‘‘Using a geology-based assessment methodology, the 

U.S. Geological Survey estimated mean undiscovered volumes of 

3.65 billion barrels of oil, 1.85 trillion cubic feet of associated/dissolved natural gas, and 148 million barrels of natural gas liquids 

in the Bakken Formation of the Williston Basin Province, Montana 

and North Dakota.’’ 

The entire Fort Berthold Reservation lies within the Bakken Formation. While to the north, west and south of the Reservation has 

seen significant development, the BIA failures have left the Tribe, 

9 

the Fort Berthold mineral owners and our entire membership looking out and wondering if we will ever see that type of activity. 

While the Three Affiliated Tribes may be unable to stir any successful response from the Fort Berthold Agency and the Great 

Plains Region, we have begun to do what we can to encourage and 

support oil and gas exploration within the exterior boundaries of 

the Reservation. The tribe and North Dakota Governor John 

Hoeven’s office have been actively negotiating a tribal-State oil and 

gas tax agreement. While a tax agreement provides the oil and gas 

industry with some certainty as to taxes, the Tribe’s share of any 

oil and gas taxes collected will provide a significant source of tax 

revenue to address Federal funding shortfalls related to our 638 

contracts for health care and law enforcement on the reservation. 

Also the surge in oil activity in and around the Reservation has 

created millions of dollars of damage to our already-insufficient 

road system. A system of BIA-constructed roads that were not 

meant to sustain such heavy traffic or weight loads that were already in disrepair before the influx of hundreds of oil and gas 

trucks and tankers. Therefore, I and the tribal business council 

have specifically dedicated a significant amount of the anticipated 

oil and gas tax revenues for the specific tribal needs of health care, 

law enforcement and roads. We are extremely hopeful that the negotiations with Governor Hoeven will conclude with an amicable 

and respectful agreement that can benefit the Three Affiliated 

Tribes and all of North Dakota. 

The Three Affiliated Tribes is also expanding our reach into energy development through our proposed Clean Fuels Oil Refinery 

Project. The U.S. EPA Region 8, in close coordination with the 

Tribe and the BIA, have recently completed the draft Environmental Impact Statement, EIS, and we are in the process of placing it in the Federal Register. However, after two years of planning 

and work, additional administrative hurdles were presented to 

when the Department of Interior’s Solicitor’s office has now stated 

that it will begin its own formal review of the draft EIS. The entire 

EIS project was done under the co-lead of EPA and BIA. We are 

confident that this draft EIS will withstand all legal challenges. 

That is why we are hopeful that our Clean Fuels Refinery Project 

will not suffer the administrative and bureaucratic delays that 

have thus far stymied oil and gas development on the Fort 

Berthold Reservation. 

The Three Affiliated Tribes is also exploring other activities to 

develop our energy resources more effectively. The Tribe is reviewing the possibilities of a Tribal Energy Development Agreement, or 

TERA, to take over the duties of approving tribal leases and rightof-ways; the future development of large scale renewable energy 

projects such as wind farms; and the development of tribal-owned 

and managed energy infrastructure to support oil and gas development, both on and off the reservation. 

In closing, what is most apparent from the recent developments 

on the Fort Berthold Indian Reservation is that our success or failure in the development of our minerals resources lies almost entirely in the hands of the Bureau of Indian Affairs. The utter failure of the BIA to meet a basic duty of its trust responsibility and 

adequately administer the processing of oil and gas leases, includVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 S:\DOCS\42661.TXT JACK PsN: JACKF
10 

ing payments to mineral owners, and to complete its administrative 

responsibilities in the approving of drilling permits leaves the 

Three Affiliated Tribes, the Fort Berthold mineral owners and our 

entire enrolled membership asking why is this happening to us and 

why is it being allowed to continue. 

Due to the significant mistakes, errors in judgment and lack of 

trained staff by the BIA, the Fort Berthold Reservation may very 

well miss out on the economic boom that the rest of North Dakota 

appears to be enjoying. I am hopeful that with my testimony today 

and with significant assistance from this Committee, the Three Affiliated Tribes may be finally given the opportunity to fully develop 

our oil and gas resources for the benefit of the Tribe, our enrolled 

members and all of North Dakota. 

Modzigidaz. Thank you. 

[The prepared statement of Mr. Wells follows:] 

PREPARED STATEMENT OF MARCUS D. WELLS, JR., CHAIRMAN, THREE AFFILIATED

TRIBES OF THE FORT BERTHOLD RESERVATION

My Name is Marcus Dominick Wells, Jr., Eh-Bah-Dah-Gish, (Bald Eagle) I am the 

elected Tribal Chairman of the Three Affiliated Tribes of the Fort Berthold Indian 

Reservation. I would like to thank Chairman Dorgan and the Members of this Committee for the opportunity to provide testimony on behalf of the Tribal Business 

Council of the Three Affiliated Tribes; the Mandan, Hidatsa and the Arikara. 

The Three Affiliated Tribes has been poised at the brink of what could be the 

largest period of economic development in the history of the Tribe. The surge in oil 

and gas exploration in the Bakken Formation has brought the promise of significant 

prosperity to the Fort Berthold Indian Reservation However, even as some of our 

Tribal members are beginning to enjoy significant lease bonus payments, many of 

who have lived in poverty their entire lives, the Tribe and the Fort Berthold mineral 

owners have been negatively impacted by the current delivery of trust responsibility 

by Fort Berthold Agency and the Aberdeen Area Office of the Bureau of Indian Affairs; specifically in the areas of administering the exploration and development of 

oil and gas within the exterior boundaries of the Fort Berthold Indian Reservation. 

The Tribal Business Council negotiated three (3) IMDA’s or Modified Oil and Gas 

Leases with Black Rock, LLC, JT Energy and Dakota 3, LLC that were presented 

for approval to the Bureau of Indian Affairs in Calendar Years 2005, 2006 and 2007 

respectively. Collectively, the IMDAs took over three years to receive formal Secretarial approval, with the last IMDA receiving its final approval in February of this 

year. 

The Mineral Owners of the Three Affiliated Tribes have also undergone the leasing process, through either private negotiation or in two formal Oil and Gas Bid 

Sales held by the Fort Berthold Agency in December 2006 and November 2007. 

However, an unacceptable number of those leases still remain to be approved and/ 

or processed for payment of lease bonuses and to be moved forward to complete the 

Applications for Permits to Drill (APDs). The delays in lease approval and other bureaucratic hurdles have not only caused untold harm on the Tribe and the Fort 

Berthold Mineral Owners but have utterly frustrated the Oil and Gas Industry as 

to the prospect of actual oil and gas exploration on the Fort Berthold Reservation. 

Representatives of the Oil and Gas Industry has visited and formally met with the 

Tribal Business Council to express those frustrations and to request our help in 

moving the Fort Berthold Agency and the entire BIA forward on completing their 

duties to the Three Affiliated Tribes and our respective membership. 

The Three Affiliated Tribes have held our own Oil and Gas Industry meetings and 

listening sessions during the months of April 2007, July 2007, September 2007, November 2007, December 2007, January 2008, February 2008 and March 2008. The 

purpose of those meetings was to reassure the Oil and Gas Companies that the 

Three Affiliated Tribes were doing everything within our power to support the formal approval of their respective oil and gas leases. This was done for the benefit 

of the entire enrolled membership of the Three Affiliated Tribes of the Fort Berthold 

Indian Reservation that happens to be situated on the Bakken Shale Formation of 

Western North Dakota. 

At heart of this sudden oil boom is the Bakken Formation, an oil shale formation 

located with the Williston Basin. The Bakken Formation was the subject of a April 

11 

2008 USGS report that stated, ‘‘Using a geology-based assessment methodology, the 

U.S. Geological Survey estimated mean undiscovered volumes of 3.65 billion barrels 

of oil, 1.85 trillion cubic feet of associated/dissolved natural gas, and 148 million barrels of natural gas liquids in the Bakken Formation of the Williston Basin Province, 

Montana and North Dakota.’’ The entire Fort Berthold Reservation lies within the 

Bakken Formation. While to the north, west and south of the Reservation has seen 

significant development, the BIA failures have left the Tribe, the Fort Berthold Mineral Owners and our entire membership looking out and wondering if we will ever 

see that type of activity. 

While the Three Affiliated Tribes may be unable to stir any successful response 

from the Fort Berthold Agency and the Great Plains Region, we have begun to do 

what we can to encourage and support Oil and Gas exploration within the exterior 

boundaries of the Fort Berthold Reservation. The Tribe and North Dakota Governor 

John Hoeven’s Office have been actively negotiating a tribal state oil and gas tax 

agreement. While a tax agreement provides the oil and gas industry with some certainty as to tax rates, the Tribe’s share of any oil and gas taxes collected will provide a significant source of tax revenue to address federal funding shortfalls related 

to our 638 contracts for healthcare and law enforcement on the Reservation. Also, 

the surge in oil activity in and around the Reservation has also created millions of 

dollars of damage to our already insufficient road system, a system of BIA constructed roads that were not meant to sustain such heavy traffic or weight loads 

and that were already in disrepair before the influx of hundreds of oil and gas 

trucks and tankers. Therefore, I and the Tribal Business Council have specifically 

dedicated a significant amount of the anticipated oil and gas tax revenues for the 

specific tribal needs of healthcare, law enforcement and roads. We are extremely 

hopeful that the negotiations with Governor Hoeven will conclude with an amicable 

and respectful agreement that can benefit the Three Affiliated Tribes and all of 

North Dakota. 

The Three Affiliated Tribes is also expanding our reach into the energy development though our proposed Clean Fuels Oil Refinery Project. The U.S. EPA—Region 

8, in close coordination with the Tribe and BIA, have recently completed the draft 

Environmental Impact Statement (EIS) and were in the process of placing it in the 

Federal Register. However, after over two years of planning and work, additional 

administrative hurdles were presented to us when the Department of the Interior 

Solicitor’s Office has now stated that it will begin its own formal review of the draft 

EIS. This entire EIS project was done under the co-lead of EPA and BIA and we 

are confident that this draft EIS will withstand any legal challenge. That is why 

we are hopeful that our Clean Fuels Refinery Project will not suffer the administrative and bureaucratic delays that have thus far stymied oil and gas development 

on the Fort Berthold Reservation. 

The Three Affiliated Tribes is also exploring other activities to develop our energy 

resources more effectively. The Tribe is reviewing the possibilities of a Tribal Energy Development Agreement or TERA to take over the duties of approving tribal 

leases and right-of-ways; the future development of large scale renewable energy 

projects such as wind farms; and the development of tribal owned and managed energy infrastructure to support oil and gas development both on and off reservation. 

In closing, what is most apparent from the recent developments on the Fort 

Berthold Indian Reservation is that our success or failure in the development of our 

mineral resources lies almost completely in the hands of the Bureau of Indian Affairs. The utter failure of the BIA to meet a basic duty of its trust responsibility 

to adequately administer the processing of oil and gas leases including payments 

owed to mineral owners and to complete its administrative responsibilities in the 

approving of drilling permits leaves the Three Affiliated Tribes, the Fort Berthold 

Mineral Owners and our entire enrolled membership asking why is this happening 

to us and why is it being allowed to continue. Due to the significant mistakes, errors 

in judgment and lack of trained staff by the BIA, the Fort Berthold Reservation may 

very well miss out on the economic boom that the rest of the North Dakota appears 

to be enjoying. I am hopeful that with my testimony today and with significant assistance from this Committee, the Three Affiliated Tribes may be finally given the 

opportunity to fully develop our oil and gas resources for the benefit of the Tribe, 

our enrolled members and all of North Dakota. ‘‘Mod-zi-gidaz’’. Thank you. 

The CHAIRMAN. Chairman Wells, thank you very much. 

I must observe that this Committee has been involved in pushing 

the BIA. We have had discussions with Carl Artman on those 

issues and he has indicated to us he is pushing very hard. Now we 

read in the newspapers and hear that the Assistant Secretary for 

12 

Indian Affairs, Mr. Artman, has resigned, which is terrible news, 

in my judgment. The position was vacant for two years, now it has 

been filled for one year, now it is going to be vacant again. The BIA 

is not a well-run organization in any event. I had high hopes that 

Mr. Artman would come in and be very helpful. He has been helpful for us to work with. This is a huge disappointment. 

I understand the point you are making, Chairman Wells. We 

have to get this right. And I will ask some questions about it. First, 

let’s go to the other witnesses. Chairman Venne, thank you for 

being with us and thank you for being a gracious host to me when 

I visited your reservation with Senator Tester last year. You may 

proceed. 

STATEMENT OF HON. CARL VENNE, CHAIRMAN, CROW NATION 

Mr. VENNE. Good morning. On behalf of the Crow Nation, I want 

to thank you, Chairman Dorgan, and the Committee members of 

the Senate Committee on Indian Affairs, for holding an oversight 

hearing on energy development. 

My name is Carl Venne. I am Chairman of the Crow Tribe and 

also Chairman of the largest land-based tribe here in America. 

I usually don’t like to read, so I am just going to tell you from 

my heart what I think. My Tribe has an unemployment rate of 47 

percent. If you look at the last census, we are the fourth poorest 

county in this whole Nation. Our population is about 12,000 Crow 

Indians, about 8,000 live on the reservation. But we do have vast 

resources, especially in coal, we estimate anywhere from 10 billion 

to 19 billion tons of coal. 

We realize what this great Nation faces as energy is becoming 

scarce. But this Committee should know that 20 percent of all energy in the United States is owned by Indians. But we as Indians 

are willing to help and work with the United States, to be a partner with the United States. I no longer just want to do a lease 

under the 1938 Minerals and Mining Act. I want to own the companies. How do I do that? 

I want to have a coal mine. I want to have a coal-to-liquids 

project which can produce 250,000 barrels a day for the next 120 

years. That is how much coal I have. How do I get to that? 

We talk about sequestration. We have, and I have been working 

with the University of Montana to address that problem. But if you 

are talking about oil recovery, especially in the northeastern part 

of Montana and North Dakota, the carbon dioxide that we produce 

could be piped up there to enhance development of the oil recoveries, also. We are also looking into that. It is very important that 

you realize that as this Nation goes along, and I have been looking 

at what is happening with the U.S. Air Force, they are trying to 

put coal-to-liquid to fly their bombers and stuff. We have looked 

into that. 

But I need assistance. With the coal and the projections we are 

doing today, I could provide a third of the Air Force’s energy or fuel 

every year. That would be a tremendous help to our military in securing our Nation. That is very important to me and I hope it is 

important to everybody in this room. 

That is what we are looking at. How do I, as one of the poorest 

counties in this whole Nation, become self-sufficient? By energy deVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 S:\DOCS\42661.TXT JACK PsN: JACKF
13 

velopment. I want to own the companies. I don’t want a simple 

lease. 

If you look at Interior’s Energy Department and Economic Development Department, they have been a tremendous help. Before I 

didn’t know the quality and quantity of all our resources on the 

reservation. Now I know. Now I can plan to move forward. But 

without the Government helping me, or even the State of Montana, 

I would be unable to do this. 

The figures I have been getting, and our annual income is only 

$6,000 to $7,000 a year. But getting into these developments, I 

have a budget of about $22 million, from $22 million to $2.7 billion 

a year, that would secure my Tribe. I wouldn’t need Federal assistance. I wouldn’t need State assistance. You need to give me this 

opportunity. It is very important to my Tribe. 

This would carry generations to generations to generations by 

good investment with your monies, not paying per capitas, by creating good jobs, high-paying jobs. When a college person graduates, 

if we get into this development, they will be starting at $50,000, 

$60,000, $70,000 a year jobs, which is good for all of us. I like to 

brag about how many college students we have. We have over 400 

college students this year. But it is hard to fund them. How do we 

fund them? I will tell you how I fund them. Using tax money from 

the State of Montana, the tobacco tax and the gas tax, putting $2 

million into education to help our young people. 

But it is very hard. I need your support to work with me. How 

do I talk to the Department of Defense, or to the Energy Committee within the Senate? We are willing to do that as Indian 

tribes. If you look at the war today, 70 percent of all our young 

men and women enlist and go to war for this Nation. Look at what 

we gave up as tribes, the land base. I used to own all of Powder 

River Basin, you are talking billions of dollars that have gone by. 

But it is time we get together. It is time, there are problems in 

leasing. I will give you an example. We gave some oil leases out 

in 2005, I finally get approval in 2007 from Interior. That kind of 

stuff, it takes too long to make a business decision in Indian Country. 

Also, BLM is charging $4,000 to punch one hole on an Indian 

reservation. When you go off the reservation, it costs $100 and it 

is approved within three days. That is the kind of help I need. It 

is very important for tribes to progress and get into the fast lane. 

We want to deal directly with industry and Government ourselves. 

I don’t need somebody looking over my shoulder and saying, well, 

you have to do this, this and this. Give us a chance to make our 

own mistakes in what we decide as tribes. We have young, educated people within the tribes that we would be utilizing. We do 

have people with masters, doctorates. It is time to take a look at 

yourself as the Bureau of Indian Affairs, look at your staff. I will 

compare my staff to the agency staff any day on being educated on 

what we want. 

We know where we want to go. Why can’t I provide a third of 

the energy to the U.S. Air Force today? 

Thank you. 

[The prepared statement of Mr. Venne follows:] 

14 

PREPARED STATEMENT OF HON. CARL VENNE, CHAIRMAN, CROW NATION

I. Introduction 

Good morning. On behalf of the Crow Nation, I want to thank Chairman Dorgan 

and the members of the Senate Committee on Indian Affairs for holding this Oversight Hearing on Indian Energy Development. My name is Carl Venne and I am 

the Chairman of the Crow Nation. I appreciate this invitation to provide testimony 

from the Crow Nation’s perspective on energy development, an area central to my 

administration and a topic that has unlimited potential to improve the ongoing substandard socioeconomic conditions of the Crow people and the surrounding communities in southeastern Montana. 

During my administration over the past six years, with the help of many partners 

and allies, we have taken several meaningful steps toward the successful development of our energy resources and look forward to completing, in the next few years, 

projects that will transform my community. My purpose today is to provide a brief 

history of these efforts and to share some of our understanding of what further work 

is necessary for tribal energy development. 

II. Brief Overview of Crow Reservation and Resources 

A. Brief History of Land and Population 

The Crow Nation is a sovereign government located in southeastern Montana. The 

Crow Nation has three formal treaties with the federal government, concluding with 

the Fort Laramie Treaty of May 7, 1868. The Crow Reservation originally encompassed most of Wyoming (including the Powder River Basin) and southeastern Montana. Through a series of treaties, agreements and unilateral federal laws over a 

70 year span, Crow territory was reduced by 92 percent to its current 2.2 million 

acre area. 

In addition to substantial land loss, the remaining tribal land base within the exterior boundary of the Crow Reservation was carved up by the 1920 Crow Allotment 

Act. In 1919, prior to the Allotment Act, there were already 2,453 allotments, consisting of 482,584 acres. By 1935, there were 5,507 allotments, consisting of 

2,054,055 acres (218,136 acres were alienated by 1935). The Big Horn and Pryor 

Mountains were not allotted and still remain reserved for the Crow Nation and its 

citizens. 

A unique provision of the 1920 Act, Section 2, remains a serious problem. According to this provision, the Secretary of the Interior was not to approve a conveyance 

of land to a person, company or corporation who already owned at least 640 acres 

of agricultural or 1,280 acres of grazing land within the Crow Reservation. Further, 

the Secretary of the Interior was not to approve a conveyance of land to a person, 

company or corporation that, with the conveyance, would own more than 1,280 acres 

of agricultural or 1,920 acres of grazing land. A conveyance of Crow land exceeding 

these restrictions was considered void and the grantee was guilty of a misdemeanor, 

punishable by a $5,000 fine and/or 6 months in jail. Federal enforcement of this 

statute has been non-existent, and today, approximately one third of the acreage of 

the Reservation is owned in violation of the 1920 Allotment Act. 

At the same time as the Crow land base was being unilaterally reduced, the number of Crow citizens also dwindled dramatically. In fact, according to the Annual Reports of the Commission of Indian Affairs, the Crow population decreased by 50 percent in 30 years. In 1880, the U.S. Census estimated the Crow population to be approximately 3,400 and in 1910, that number was about 1,700. A number of factors 

caused the rapid population decline: tuberculosis; poor sanitation; crowded living 

conditions; severe weather; and epidemics of other infectious diseases. At that time, 

others arguing for more complete ‘‘opening’’ of the Crow Reservation argued that the 

statistics showed that within a few years the Tribe would be eradicated and would 

have no more need for its lands. Perhaps you can imagine the effects of such rhetoric on people struggling to survive. 

B. Present Land and Population 

As recognized by the U.S. Supreme Court in Montana v. U.S., 450 U.S. 544, 548 

(1981), the statistical land ownership resulting from the above described legal history was: 52 percent Crow allotments; 17 percent Crow Nation trust land; 28 percent non-Indian fee land; 2 percent State of Montana fee land; and 1 percent federal 

government land. According to more recent Bureau of Land Management Reports, 

the land statistics have shifted: 45 percent Crow allotments; 20 percent Crow Nation trust land; and 35 percent non-Indian fee land. In sum, the pattern of surface 

ownership generally is ‘‘checkerboard’’ with interspersed Crow Nation trust and fee 

lands, Crow allotments and non-Indian fee lands. The statistics show limited sucVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 S:\DOCS\42661.TXT JACK PsN: JACKF
15 

cess of the Crow Nation in reacquiring lost lands, but the reality is a much larger 

pattern of continued loss. 

Today, there are about 12,000 enrolled citizens of the Crow Nation, with approximately 8,000 of those residing within the exterior boundaries of the Reservation. 

Our goal is to invite more of our citizens to return home to live and resume tribal 

relations, but we must be able to offer them homes, jobs, and a place to find their 

dreams. Our current unemployment rate is 47 percent. The Crow Nation has always 

emphasized higher education and we currently have more than 400 annual applications for higher education assistance. Because of federal funding limitations and internal budget constraints, however, we can only fund 90 students each year. 

In addition to providing financial support for education, we have a separately 

chartered tribal college (Little Bighorn College, ‘‘LBHC’’) that started operations in 

1981. LBHC has had over 300 graduates. LBHC graduates are employed on and 

around the Crow Reservation in a variety of positions including teachers’ aids, computer technicians, office managers and administrative assistants. At least sixty have 

completed bachelor’s degrees and are pursuing professions in education, social work, 

human services, science, nursing, technology, accounting and business. As we move 

forward in developing our energy resources, our own college can help to provide our 

citizens with training in new fields for new job opportunities. 

C. Minerals, Past and Present 

The Crow Nation has an opportunity to develop tribal resources because a minority of important legislation allowed for the protection of significant amounts of mineral rights by the Tribe. The 1920 Crow Allotment Act reserved all minerals, oil and 

gas on any allotted lands for the benefit of the entire tribe. However, after 50 years, 

unless otherwise ordered by Congress, the minerals would automatically become the 

property of the Crow allottee (or heir). In addition, the Allotment Act also stated 

that any mining leases could not exceed 10 years; but the lessee had a first right 

of renewal. 

In 1968, Congress extended the time period in perpetuity for the minerals to be 

held and reserved for the Crow Nation. Today, the Crow Reservation contains 

2,034,746 acres in subsurface mineral rights. Ownership of the subsurface mineral 

acres is not entirely clear but it is estimated to be owned primarily by the Crow 

Nation, with some allotted and non-Indian fee ownership. The significant natural 

resources within the reservation boundaries are recognized but remain largely untapped. 

The Crow Nation has developed a limited amount of its resources, typically with 

royalty (and some tax) revenue received as the lessor. Even though we had some 

oil and gas development between the 1920s and 1950s, most of our governmental 

revenue is derived from our 35-year relationship with Westmoreland Resources, Inc. 

Over that period, the Apsaalooke mine has produced about 150 millions tons of coal 

and is the largest private employer within the Crow Reservation. 

The Crow Nation has very substantial undeveloped mineral resources. It is estimated that we own 3 percent of the world’s coal resource, exceeding 10 billion tons. 

We have been exploring our oil and gas reserves, and preliminary estimates believe 

them to be significant. In addition, we have large deposits of industrial minerals, 

such as limestone and bentonite. Finally, preliminary data suggests that we have 

class 5/6 wind energy as well as other renewable resources. 

III. My Administration’s Vision on Energy Development 

Given our vast mineral resources, the Crow Nation can, and should, be self-sufficient. My goal is clear. My administration desires to develop our mineral resources 

in an economically sound, environmentally responsible manner that is consistent 

with Crow culture and beliefs. The Crow people are tired of saying that we are resource rich and cash poor. 

My larger vision is to become America’s energy partner and help reduce America’s 

dependence on foreign oil. Over the next 40 years, the World Energy Council predicts that the world will need to double today’s level of energy supply to meet increased demand. Primary energy sources, such as coal, oil and gas, have a finite life 

and the future must have renewable energy, new technology to make existing producers more efficient and environmentally sound, and an overall reduction in people’s per capita use of energy. 

My administration stands ready to meet the global energy challenge and take the 

risks necessary to meet short-term demand. With a substantial Crow coal resource, 

perhaps the Crow government can build the first coal-to-liquids plant in North 

America with capture and storage of carbon. If so, then I can contract with the U.S. 

Air Force to supply clean diesel fuel that will meaningfully reduce carbon emissions 

throughout the world, reduce America’s dependence on foreign oil, and provide a 

16 

safe and secure supply to our national defense—but only if Montana and the federal 

government take that risk with me. 

Below, in section VI, my administration has put forth its best effort and ideas to 

reduce or even eliminate the barriers that still exist to accomplishing my vision, 

with benefits to the Crow Nation, Montana and America. More than anything, I desire to improve the Crow people’s quality of life, create a future with good-paying 

jobs and employment benefits within the Crow Reservation, and provide hope and 

prosperity for the next seven generations of Crow citizens. Our mutual desires are 

within reach. 

IV. Our Experience in Ascertaining Quality and Quantity of Resources 

Since the beginning of my administration as Chairman of the Crow Nation Executive Branch, I have sought to ascertain, identify and evaluate the resources in order 

to effectuate my vision. I appointed an oil and gas committee (‘‘OGC’’) to begin this 

work. For the past 6 years, OGC has worked diligently to enhance the Crow Nation’s reputation as a serious energy partner. 

OGC has also been evaluating options, meeting with numerous energy partners, 

and engaging federal agencies for their regulatory review and approval as well as 

seeking assistance, financial and technical, from federal agencies to ascertain the 

quantity and quality of our resources. As noted earlier, OGC has been solely responsible for attracting and retaining companies that have successfully located oil and 

gas reserves within the Reservation. In addition, OGC cultivated a serious coal partner relationship that very nearly resulted in a transaction for the largest greenfield 

coal mine to be opened in the western United States in the past 40 years. 

During my administration, we have worked with numerous federal agencies in the 

Department of Interior and would like to acknowledge and thank each agency for 

its efforts in assisting us. In particular, we have received help from the Office of 

Indian Energy and Economic Development (OIEED), under the auspices of Mr. Robert Middleton. Especially noteworthy is the consistent assistance we receive from a 

division under Mr. Middleton—the Division of Energy and Mineral Development 

(DEMD), located in Denver, Colorado. DEMD is led by Mr. Stephen Manydeeds. 

DEMD is a group of geotechnical experts that has provided us with professional 

appraisals of our mineral assets, including coal, oil, natural gas, wind energy, and 

limestone. DEMD is staffed by experienced industry-based professionals who provide sound advice and counsel on energy and resource development as well as strategic business-decision making. DEMD’s advice has included business development, 

strategic planning, resource marketing, identification of potential industry partners, 

detailed economic analyses, and assistance with negotiation of complex development 

agreements. 

In addition, the Crow Nation has engaged a variety of private energy consultants 

in the past 18 months to accelerate processes with regard to specific resources, such 

as coal and wind. The consultants were specifically asked to examine identified resources based on their development potential and market opportunities, create a 

preliminary strategic development plan around the leading resource possibilities, 

and identify project opportunities to create jobs and provide long-term sustainable 

revenues. 

With the tribal, federal and private teams, we have had some success (and some 

state assistance as well under Montana Governor Brian Schweitzer and his staff). 

Because development takes time and our budget is limited, we must rely primarily 

on our tribal and federal teams and efficiently utilize outside counsel and private 

consultants where necessary. I strongly believe a mix of experience and perspectives 

on energy development will be crucial to making my vision a reality. 

V. Past and Present Challenges 

A. The Past 

Even though circumstances change, it is important to remember the past and 

causes that have prevented the Crow Nation from realizing its potential. The past 

is revealing. A close examination of federal Indian law, and Crow history in particular, demonstrates a pattern of invariable changes to the legal and political status of tribal governments and their citizens in order for non-Indians and American 

governments to unjustly capture wealth, especially when it comes to the subject of 

energy resources. 

I think the following quote from a Commission of Indian Affairs Report from 1876 

is particularly demonstrative of America’s treatment of Indian resources in general 

and Crow minerals in particular: ‘‘Whenever an Indian reservation has on it good 

land, or timber, or minerals the cupidity of the white man is excited, and a constant 

struggle is inaugurated to dispossess the Indian, in which the avarice and determination of the white men usually prevails.’’ 

17 

1. Railroad Rights-of-Way 

For example, in 1864 (prior to the negotiation of the 1868 Treaty) Congress 

passed an act granting the Northern Pacific Railroad a right of way from Lake Superior all the way to Puget Sound. In the act, Congress ‘‘provided that the United 

States should extinguish as rapidly as may be consistent with public policy and the 

welfare of the Indians the Indian titles to all lands falling under the operation of 

this act.’’ Even though this right of way cut a large swath out of Crow Country, this 

act is not mentioned in the 1868 Treaty. According to a 1940 claims case, the U.S. 

knew that the land the Crow Nation reserved would be affected by this land grant. 

The three railroad acts of 1887, 1888 and 1889 are virtually identical; each unilateral federal act took Crow land for a different railroad. The railroads were the 

Rocky Fork and Cooke City Railway Company, Billings Clark’s Fork and Cooke City 

Railroad Company, and the Big Horn Southern Railroad Company. The unilateral 

agreements promulgated by the U.S. Congress ignore the 1868 Treaty provision requiring approval by a majority of tribal members for any cession of Crow land. The 

requirement of tribal consent was at the discretion of the President. 

The Secretary of the Interior was to ‘‘fix the amount of compensation to be paid 

the Indians for such right of way.’’ According to a 1935 claims case, the following 

compensation was paid for the respective takings: the 1887 taking of 700 acres was 

for $875.64; the 1888 taking of 1,377 acres was for $4,133; and the 1889 taking is 

not mentioned. Each taking weakened the Tribe’s ability to develop its own resources and compensation was only marginally provided, if at all. 

2. Yellowtail Dam and Hydropower 

One of the primary opportunities for the Tribe to develop its energy resources was 

taken from it when the United States chose to develop the resource for itself. The 

Bureau of Reclamation’s Yellowtail Dam on the Big Horn River within the Crow 

Reservation was authorized as part of the Pick-Sloan Missouri Basin Project by the 

Flood Control Act of 1944. The value of this site was no secret; in fact, the 1920 

Crow Allotment Act, Section 10, had guaranteed that unallotted lands within the 

Crow Reservation that were chiefly valuable for the development of water power 

would be reserved from allotment or other disposition under that act, for the benefit 

of the Crow Tribe of Indians. 

This guarantee, for which Tribal members and their supporters worked tremendously hard, was ignored. On October 19, 1949, an Opinion by the Assistant Solicitor of the Department of the Interior even held that there was no authorization for 

forced acquisition of the land needed for the construction of Yellowtail Dam. However, a Solicitor’s Opinion of February 3, 1954, found that existing reclamation laws 

did grant that authority. 

In 1958, the United States condemned Crow Reservation land for building 

Yellowtail Dam and then argued that no compensation to the Tribe for the land’s 

water power value was necessary. In contrast, the Flathead Indians and Warm 

Springs Indians received full power-site value for tribal lands used to build Kerr 

Dam and Pelton Dam under the Federal Power Act. In U.S. v. 5,677.95 Acres of 

Land, More or Less, of Crow Reservation, State of Mont., 162 F. Supp. 108 (D. Mont. 

1958), the court found that Congress intended for Yellowtail Dam land to be condemned but the Tribe was entitled to compensation based on the land’s water power 

value. 

Yellowtail Dam became operational in 1966. The dam generates over a half billion 

kilowatt hours of power per year, even during drought conditions. To date, the 

power generation revenues have exceeded $600 million dollars. Although the Crow 

Nation did receive a couple of million dollars for the land takings to create 

Yellowtail Dam, the Crow Nation did not receive, nor has it ever received, a payment for the ongoing revenue from power generation. 

3. Land 

Most of the land loss within Crow territory is the result of non-Indian ownership 

of large tracts of land in violation of the Crow Allotment Act, Section 2, which aimed 

to protect the Crow land base by placing limitations on the sizes of parcels that 

could be owned by individuals and corporations. These violations have led to clouded 

title for most landowners within the Reservation. More than 800,000 acres of land 

within the Reservation (over a third of the total acreage) was already in fee status 

by the year 2000; approximately 600,000 acres of fee land continue to be owned in 

violation of Section 2. 

In addition, the Crow Indian Reservation land base has been decimated by 

fractionated ownership of various allotments. The Department of the Interior estimates that over 10 percent of all fractionated lands within Indian country are actually within the Crow Reservation. By meaningfully addressing the fractionation 

18 

issue at Crow, we would be making a significant impact on the national problem 

The Crow have numerous parcels of allotted lands that have more than 10 owners 

and sometimes more than 100 owners. 

Some federal laws address consent provisions, but this issue (and clouded title, 

discussed above) is very problematic for energy development. The consent provisions 

that exist are difficult to adhere to, and numerous misstatements of the law can be 

found in any set of transactions. Owners of fractionated interests, minority owners 

in particular, have great difficulty in having their voices heard or in being fairly 

compensated for their interests. In general, business partners are reluctant to submit to land tenure systems they cannot understand. 

B. Present 

1. Practical Issues 

Despite the fact that the Crow Nation has substantial resources, numerous practical problems arise from the previously described history. The OGC and our energy 

partners, actual and potential, have experienced, and continue to experience, systematic problems in trying to create energy development. As demonstrated by the 

Cobell litigation, the Bureau of Indian Affairs (BIA) has a variety of issues that consistently create barriers and delays to resource development. 

For example, the OGC created and the Crow legislature approved an oil and gas 

lease in January of 2005, but development did not begin until September 2007 because of an extremely slow BIA approval process. Within the approval process of 

that lease, an inventory of net mineral acres for the Crow Reservation was reported 

as 94,000 acres. However, after OGC and the energy partner reexamined the statistics with land information, an additional 50,000 net mineral acres was discovered 

for the Crow Nation (the 50,000 net mineral acres is worth $250,000). An error of 

this magnitude would be simply unacceptable in many contexts, but in our experience it is not surprising and is far from unique. 

BIA records for surface and mineral ownership are erroneous, missing and out of 

date. These problems cause significant delay with preparation of environmental documents and overall land records necessary for business transactions. It is extremely 

difficult to compete with off-reservation development because of these problems. 

Many companies view this, in addition to all other problems, as another prohibitive 

cost of doing business within the Crow Reservation. 

In a similar example, recently with a separate lease, OGC and an energy partner 

discovered another error in records. The Bureau of Land Management had turned 

over abandoned gas wells to the surface owner. However, upon review, it was discovered that the minerals actually belonged not to the surface owners but to the 

Crow Nation. It is hard to imagine this type of scenario occurring regularly with 

other governments and their energy partners without serious efforts to change the 

status quo in government regulation. 

Finally, the Department of the Interior, and in specific the BIA, lacks necessary 

resources for even routine governmental regulatory functions. For example, the BIA 

area office in Billings, Montana, has one primary individual to work on environmental issues for eight (8) different Indian nations. If multiple tribes are exploring 

their resources and/or seeking approval of resource transactions (joint ventures, 

leases, etc.), it simply takes additional time to obtain approval—even with the best 

efforts of particular employees within the BIA. 

2. Jurisdiction and Tax Issues 

In an important civil jurisdiction case, Montana v. U.S., 450 U.S. 544 (1981), the 

U.S. Supreme Court held that title to the bed of Big Horn River passed to Montana 

upon its admission to the Union, and did not vest in the Crow Nation. In addition, 

and very important to energy resource development, the Court held that the Crow 

Nation did not have presumptive civil jurisdiction over non-Indians on non-Indian 

fee land unless they met one of two specified exceptions. Both exceptions have proven elusive, if not impossible, to satisfy in the years since the decision. 

Further, in Strate v. A–1 Contractors, 520 U.S. 438 (1997), the U.S. Supreme 

Court held that a public right-of-way across Indian land was equivalent to non-Indian fee land and thus not subject to tribal jurisdiction. Although it is true that an 

Indian nation can contract around Montana and Strate, the Crow Nation still encounters substantial difficulties when it tries to address pockets of fee land within 

its boundaries for exploration activities, surface access and right-of-way agreements. 

Moreover, companies with rights-of-way across Indian country protested or simply 

stopped paying taxes to Indian nations, correspondingly reducing tribal governmental revenues and services. 

Moreover, this overall jurisdictional framework adds increased government regulatory authority over any given energy resource transaction (e.g., state, county and 

19 

city)—another disincentive to doing business in Indian country. Therefore, at Crow 

and elsewhere in Indian country, energy partners must pay many additional costs 

and tribal governments must promise to protect the project by freezing future legislation and must agree to apply tribal taxes over the term of the project so that it 

does not exceed state taxes immediately off of the reservation to alleviate obstacles 

and level the development playing field. 

In addition to Montana and Strate, the U.S. Supreme Court has further weakened 

the power of Indian nations to work toward economic self-sufficiency through a series of Indian tax decisions in the past 30 years—almost invariably increasing state 

tax authority to the detriment of tribal tax authority. In Indian country today, with 

relatively small geographic areas comprising some of the most impoverished communities in the United States, energy resources are potentially subject to five concurrent government taxes (federal, tribal, state, county and city). Energy partners and 

investors simply do not want to do business where there is substantial uncertainty 

and risk of triple or quadruple taxation. 

3. Recent Legislation 

With our partners and allies, we have spent valuable time protecting our rights 

to develop our energy resources. In 2006, we participated in numerous discussions 

related to Section 1813 of the 2005 Energy Policy Act, Energy Rights-of-Way Study. 

Like several other Indian nations, we argued that we should be able to negotiate 

our own energy rights-of-way agreements with our business partners, rather than 

have another federal law dictate those terms. Given our long history of battles over 

energy resources, I hope that legal and political decision-makers will appreciate our 

past and realize that we fight, forever, for our right to make decisions and develop 

our own resources, rather than see outsiders benefit from our energy wealth. 

More recently, we have been seeking support to protest the unfair standards with 

drilling permit fees (Application for Permit to Drill, ‘‘APD’’) by the BLM for energy 

development requests in Indian country required by the Fiscal Year 2008 Consolidated Appropriations Act. Montana Governor Brian Schweitzer (and Senator Max 

Baucus) wrote letters to inquire why Secretary of the Interior Kempthorne was applying a prohibitive $4,000 filing fee for APDs involving Indian mineral resources. 

Mr. Stephen Allard, an Assistant Secretary for Land and Minerals Management, 

recently responded in a letter dated April 14, 2008, that the fee was not discretionary and it was necessary to offset a lack of federal appropriation to process the 

applications. In contrast, a company must pay $100 to the Montana Board of Oil 

and Gas for a drilling permit immediately off of the Crow Reservation and have the 

permit within three days. This discrepancy chills Indian mineral development and 

is the latest example of another unnecessary bureaucratic hurdle that slows, if not 

precludes, new investment in energy development in Indian country. 

VI. Recommendations 

A. DEMD 

In sum, DEMD has been invaluable (as well as Crow OCG) and we would not be 

in a favorable position to engage in large scale industrial development without 

DEMD’s assistance. I once again want to express our sincere thanks to Mr. Middleton and Mr. Manydeeds. However, we would suggest that DEMD continue to receive your support, financial and otherwise, in order to assist the Crow Nation and 

other Indian nations to develop their energy resources (or if they have the financial 

capacity, assistance with participation in the overall energy market) and become 

self-sufficient. 

B. Federal Water Legislation 

My administration also views our federal legislation ratifying Crow (and non-Indian) water rights as central to any and all energy development within the Reservation. Within the short term, the Crow Nation will submit federal legislation to ratify 

its Water Compact with the State of Montana and to finalize a federal settlement 

of its water claims. The Compact was approved by the Montana Legislature in 1999. 

For any large scale energy development, our energy partners need certainty and 

predictability to be able to use water for development without fear of litigation or 

uncertainties. 

As important, upon ratification of the Compact by the United States and by the 

Crow people, the Crow Nation will assume the administration of its water right on 

the Reservation. The federal financial contribution to the settlement will provide 

funds for the development of sorely needed water systems on the Reservation (primarily safe, clean drinking water throughout the Reservation) as well as the repair 

of the Crow Federal Irrigation Project. The Tribe’s largest single protected right 

under the Compact is 500,000 acre-feet per year from the Bighorn River, subject to 

20 

numerous limitations to protect existing users, both Tribal and state, as of 1999, 

and to protecting the in-stream flow of the famous and sacred Big Horn River. 

C. Crow Land Restoration Act 

Another extremely vital piece of legislation to support in the development of our 

energy resources concerns the strengthening of the tribal land base, previously 

weakened by allotment, fractionation, and other historic processes. Today, our approach is to respect reliance interests and reduce fractionation by repurchasing land 

from willing buyers. Senate Bill Number 1080, the Crow Tribe Land Restoration 

Act, was introduced by Senator Max Baucus on April 10, 2007. It would authorize 

the Secretary of the Interior to develop a program to help the Crow Nation acquire 

and manage land and interests in land on the Crow Reservation, with purchases 

funded through a loan to the Nation of up to $380,000,000. 

D. Tax 

We also ask for continued interest and efforts on Indian tax legislation, including 

long-term renewals of the following: (i) tax credit on Indian coal from the 2005 Energy Policy Act; (ii) accelerated depreciation in Indian country, excluding gaming, 

provisions of the Internal Revenue Code (IRC); (iii) an enlarged scope of Indian employment tax credit for private employers on Indian reservations; and (iv) treating 

tribes as states in all aspects under the essential governmental function test in existing sections of the IRC. 

Similarly, it is necessary for a federal legislative clarification that the tax base 

in Indian country, existing and future, is subject to the sole tax authority of Indian 

nations on the local level (pre-empting state and local tax authority) for funding to 

provide tribal governmental services. Multiple governmental taxes in some of the 

poorest counties in America are unjust and are a core problem for energy development in Indian country. It is my opinion that treating tribes as states for all tax 

purposes will begin to ease the tax and regulatory burdens on energy partners seeking to assist Indian nations to become the primary governing entity, and an energy 

partner with the states and federal government, in Indian country. 

Conclusion 

We definitely could use your assistance in setting the foundation to make our vision a reality. 

We have been very busy in working to develop our energy resources and to remove obstacles to successful development. We hope to be a worthwhile model for 

other tribes, and to live in the near future in a time when our own resources, in 

our own hands, provide everything necessary for the health, hopes and future of our 

people. 

It is critical that Congress act to protect Indian nations’ natural resources and secure Indian nations as the primary governing entity over their own homelands. Not 

only will this work be important in its own right, but it will have numerous benefits 

for the local communities and federal government as well. The Crow Nation has 

been an ally of the United States all through its history. 

Today, the Crow Nation desires to develop its vast natural resources not only for 

itself, but to once again help the United States with a new goal—achieving energy 

independence, securing a domestic supply of valuable energy, and separating itself 

from its dependence on foreign oil. The Crow Nation, as many Indian nations, are 

veterans of the United States Armed Forces and we have a special understanding 

and respect for what it could mean to our sons and daughters in coming years if 

all of our energy needs were met here at home. 

It is time for the Crow Nation to become an energy partner. However, my vision 

can only become a reality with your (and local government) assistance. I strongly 

feel that the vision starts today, with your help and assistance. Mr. Chairman and 

Committee members, thank you again for the opportunity to testify on Indian Energy before you today. I would be happy to answer any questions. 

The CHAIRMAN. Chairman Venne, thank you very much. We appreciate your being with us today. 

Next we will hear from Steven Began. He is the General Manager of the Dine ́ Power Authority at the Navajo Nation, Window 

Rock, Arizona. Mr. Begay, thank you for being with us. We appreciate your being here. You may proceed. 

21 

STATEMENT OF STEVEN C. BEGAY, GENERAL MANAGER, DINE ́

POWER AUTHORITY, NAVAJO NATION 

Mr. BEGAY. Thank you, Mr. Chairman. I am the General Manager of the Dine ́ Power Authority, a Navajo Nation entity responsible for utility-scale power generation and transmission and development on Navajo lands. Thank you for this opportunity to provide 

testimony on the energy development efforts of the Navajo Nation 

and the lessons that we have learned. 

DPA has three major projects under development. Under the private partners, we are close to commencing construction on nearly 

$4 billion worth of energy projects. DPA’s first major project is the 

Navajo Transmission Project, the NTP, a 469-mile high voltage 

transmission line connecting the generation-rich Four Corners region of the desert southwest with the growing load demand in 

States such as Arizona, Nevada and California. This permitted 

project is the only high-voltage transmission system of its size and 

length that is ready for construction in the United States today. 

DPA’s second major project is the Desert Rock Energy Project, a 

$4.3 billion mine-mouth, coal-fired power plant. Desert Rock would 

have the lowest regulated emissions of any pulverized coal plant in 

the United States. Desert Rock is absolutely critical to the economic future of the Navajo Nation, one of the most impoverished 

areas of the United States, and will create many jobs and generate 

approximately $1.5 billion to the Navajo treasury in the first 30 

years of operation. 

Regrettably, Desert Rock’s air permit is being delayed by the 

U.S. Environmental Protection Agency. Until the EPA issues that 

air permit, it will not be possible to complete negotiations to finance the project. 

DPA’s third project is the Dine ́ Wind Project, one of the largest 

wind generation systems under development in the U.S. today. The 

Dine ́ Wind Project will provide up to 500 megawatts of wind power. 

The wind project will balance the Nation’s baseload energy portfolio and can utilize the Navajo Transmission Project. 

In developing these large projects, we have learned several valuable lessons. Large-scale energy projects are extremely complicated 

and expensive and take a long time to develop, even under optimal 

conditions. Second, building tribal capability and capacity is critically important but takes time and money. These projects are capital-intensive. Although the Navajo Nation put approximately $20 

million into the projects described above, Federal funding and incentives remain critically important to their advancement. 

When it comes to financing, our largest challenges, our biggest 

challenges have not been the traditional barriers of dealing with a 

lack of collateral or dispute resolution, but rather, the lengthy 

delays in the Federal permitting process, putting us at a cost disadvantage and time to non-Indian developers. Concern regarding 

global warming has affected our coal plant plans. Fortunately, 

Desert Rock’s ultra-supercritical boiler design will reduce carbon 

emission over typical coal plants by approximately 20 percent. 

Moreover, the Desert Rock site is unusually well suited for testing 

large-scale carbon capture and sequestration technologies as it sits 

atop a geological structure deemed perfect for carbon storage. 

22 

Congress should aggressively finance carbon capture and sequestration demonstration projects. Should Congress do so, Desert Rock 

is uniquely positioned to be a first mover in this area. Consistent 

with the Federal trust responsibility, Federal agencies can do more 

to help. For example, DPA has been frustrated with the delay at 

the EPA in issuing an air permit for Desert Rock. We consider the 

delay to be unacceptable on the merits and in violation of the trust 

responsibility. 

Congress can support tribal efforts with more aggressive economic and tax-related legislation, including long-term renewal of 

Excel-rated depreciation credit for businesses locating on Indian 

reservations and the Indian worker tax credit. Congress should 

also pass legislation to make it easy for tribes to transfer any tax 

benefits they may receive for energy production to their private 

partners. Congress needs to provide priority transmission access to 

tribal energy projects. Congress should create and expand preference contracts for purchase of tribal energy. A tribal renewable 

portfolio standard would give tribal energy projects greater access 

to long-term purchase power contracts. 

Thank you again for this opportunity to testify. A more detailed 

testimony has been submitted to the Committee. My colleagues and 

I are available to answer any questions the Committee may have. 

Thank you. 

[The prepared statement of Mr. Begay follows:] 

PREPARED STATEMENT OF STEVEN C. BEGAY, GENERAL MANAGER, DINE ́ POWER

AUTHORITY, NAVAJO NATION

Chairman Dorgan, Vice Chairman Murkowski and members of the Senate Committee on Indian Affairs, thank you for this opportunity to provide testimony on the 

energy development efforts of the Navajo Nation and on lessons that we have 

learned. 

I am the general manager of the Dine ́ Power Authority, also known as DPA. DPA 

is the Navajo Nation entity responsible for utility-scale power generation and transmission development on Navajo lands. Our mission is a reflection of the Navajo Nation’s sovereignty over its land and resources. DPA is the oldest tribal energy enterprise in the U.S. today dedicated to wholesale energy development, including fossil 

fuel and renewable energy. The purpose of DPA’s energy projects are to benefit the 

Navajo people, and promote economic development on the Navajo Nation. I would 

like to describe a few key points about three major projects that DPA is developing, 

share our experiences and thoughts on problems facing tribal energy, and offer some 

solutions to those problems. 

DPA’s first major project is the Navajo Transmission Project (NTP), a 469-mile 

high voltage transmission line connecting the generation-rich Four Corners region 

of the desert southwest with the growing load demand in states such as Arizona, 

Nevada and California. This permitted project is the only high-voltage system of its 

size and length that is ready for construction in the United States today. Once built, 

the Navajo Transmission Project will eliminate a major gap in the Southwestern 

high-voltage transmission grid, a long-term goal of the Federal Energy Regulatory 

Commission, regional utilities and consumers. The NTP serves a variety of purposes, including increased stability and reliability in the event of outages and impacts to power plants and transmission lines; relieving constraint on existing, aging 

transmission systems in the region, and facilitating new generation from both renewable and fossil-fuel-based sources. Navajo coal is an essential component to providing reliable baseload power that will assure that resources become available to 

make transmission affordable and available to regional renewable projects that on 

their own cannot finance significant transmission line development. This brings me 

to DPA’s next major project. 

DPA’s second major project is the Desert Rock Energy Project, a $3.4 billion minemouth, coal-fired power plant that would generate up to 1,500 MW located on the 

Navajo Nation in the Four Corners Area of New Mexico. Desert Rock would have 

the lowest regulated emissions of any pulverized coal-fired plant in the United 

23 

States. This project, which would create thousands of jobs during its four-year construction phase, 200 permanent, family-wage jobs in the power plant and another 

200 well paying jobs in the adjacent Navajo Mine during its lifespan, is absolutely 

critical to the economic future of the Navajo Nation, one of the most impoverished 

areas of the United States, with 50 percent unemployment. The project would generate approximately $50 million per year in the first year of operation and increase 

each year after that, resulting in $1.5 billion to the Navajo treasury in its first 30 

years of operation. 

The major permitting processes, including the federal Environmental Impact 

Statement (EIS) process and the federal Clean Air Act construction permit (PSD) 

process are nearing completion for the Desert Rock Project. The Final EIS is expected within the next few months, but the air permit is being delayed by the U.S. 

Environmental Protection Agency (EPA). The EPA deemed Desert Rock’s air permit 

application complete four years ago in 2004, and pursuant to the Clean Air Act, the 

agency was required to issue a decision on the permit within 18 months. Despite 

significant additional studies to ensure compliance with Clean Air Act requirements, 

a lengthy and twice-extended public review and comment process, EPA has still not 

issued its decision on the air permit. 

Until the PSD permit has been issued, it will not be possible to complete negotiations on power purchase agreements or make progress on obtaining financing for the 

project. Further delay costs the Navajo Nation approximately $5 million of desperately needed dollars every month. 

DPA’s third major project is the Dine ́ Wind Project, one of the largest wind generation systems under development in the U.S. today. After a nationwide search and 

two years of discussions with different developers, reviewing a variety of technologies and with guidance and assistance from the U.S. Department of Energy and 

Sandia National Laboratories, DPA entered into detailed discussions with a short 

list of qualified wind developers. In 2006 DPA began a joint venture with Citizens 

Energy Corporation and Citizens Wind because of Citizens’ strong commitment to 

working with Native communities, a proven track record to return significant profits 

from their operations back to low income citizens of Native communities, a willingness to provide a carried interest to the tribal energy enterprise for their development efforts, and a significant equity ownership opportunity (50 percent) offered to 

the tribe in the project. 

After conducting significant due diligence, DPA negotiated and entered into an 

agreement with Citizens in July, 2006 that began a joint venture of the tribal enterprise and the non-profit energy corporation to conduct feasibility studies, negotiate 

project development agreements and pursue preliminary discussions with local 

Chapters. From 2006 through 2007, Citizens and DPA collected wind data, evaluated transmission capacity, held meetings and conducted discussions with Navajo 

officials and local residents. On March 12, 2008, President Joe Shirley, Jr., Vice 

President Ben Shelley, members of the Navajo Hopi Land Commission, DPA General Manager Steven Begay and other Navajo and DPA representatives meet at the 

Navajo Nation Washington Office to execute an Agreement in Principle to move forward with development. 

The Dine ́ Wind Project will provide 500 MW of wind power at full buildout, with 

approximately 200 MW in phase one located in the Grey Mountain area of the Navajo Nation. Phase one alone could produce revenue of over $3–5 million per year 

for Navajo, with additional revenues to DPA & Nation through Project Equity Ownership. It would also create 100–200 jobs during construction and 10–20 permanent 

jobs, while building a Navajo skill and knowledge base through job training. A percentage of the profits would be provided for local economic development and assistance. 

DPA is in active discussions with energy companies, developers and others for a 

variety of other projects, including solar, coal gasification, distributed generation 

and other technologies and applications. DPA’s projects have introduced the Navajo 

Nation, and tribes across the country, to new ways of doing business with the nontribal world, and these projects have generated significant interest in improving the 

quality of life across the Navajo Nation. But getting this far has not been easy. Tribal energy development faces a number of significant hurdles; some that are shared 

with non-tribal entities, and some that are more acutely felt by native communities. 

Some of the valuable lessons we have learned over the last decade include the following: 

• Expectations need to be set correctly. Large scale energy projects are extremely 

complicated, expensive and take a long time to develop even under optimal conditions. 

24 

• Building tribal capability takes time and money. DPA has built up its capability 

to be full-fledged partners with private industry over many years. 

• These projects are capital-intensive. Although the Navajo Nation put about $12 

million in tribal funds into the projects described above, Federal funding, tax 

incentives and prioritization for tribal energy projects remain critically important to their advancement and will continue to be important for such projects 

on tribal lands in the future. 

• It takes time to find a private industry partner willing to build on Indian lands. 

This is especially difficult when tribes require, as DPA did, that the private 

partner be willing to push the environmental standards to a new high, and in 

DPA’s case, be willing to add technologies that would reduce water use. DPA 

was fortunate to find such a partner in Sithe Global Power LLC for Desert Rock 

and Citizens Energy Corporation for our wind projects. 

Without a doubt, the benefits from tribal energy development far outweigh the 

burdens of achieving a successful project, but there are ways to level the playing 

field so the hurdle is no higher on one side of the reservation boundary. The following are a few attainable solutions that Congress and the federal government can 

consider to address these issues: 

Addressing Carbon Emissions While Providing Reliable Baseload Power. Because 

approximately 50 percent of electricity generated in the U.S. today comes from coal, 

coal-fired generation must confront the challenge of reducing carbon emissions and 

their impact on global warming. New coal plants are meeting this challenge through 

high-efficiency combustion, smart emission reduction technology and forward-thinking design which allows for carbon capture and sequestration (CCS). Desert Rock’s 

ultra supercritical boiler design and resulting combustion efficiencies will reduce 

carbon emission over typical coal plants by approximately 20 percent. In addition, 

proven, existing emission control technologies are combined to maximize reduction 

of pollutants, including a plant design with dedicated space for future emission control expansion and addition of CCS technologies. Notably, the Desert Rock site is 

unusually well suited for testing large-scale carbon capture and sequestration technologies: 

• Approximately one mile below Desert Rock are two thick saline aquifers, which 

can hold carbon as carbonic acid, capped by a 1,000’ shale layer, and separated 

by a limestone layer. 

• Two studies confirm the feasibility of this formation as a primary target for 

CO2 capture. 

• There are several suitable depleted oil and gas domes for CO2 storage available 

within 7–51 miles from Desert Rock. 

• There are also several CO2 pipelines that pass within relatively close proximity 

to the plant site, allowing for sale of CO2 for enhanced oil and gas recovery. 

However, for any major CCS project to go forward at Desert Rock, or anywhere 

in the country, there are several significant challenges that must be addressed related to cost, equipment guarantees, liability and permitting. Only the Federal government is in a position to address these issues. DPA has consulted academic institutions, government agencies, government funded laboratories, private engineering 

firms, financial analysts, lenders, investors and technology vendors to discuss what 

efforts are needed to make CCS viable on large-scale power plants. A strong consensus among these and other key players that federal incentives such as transferable tax credits and CSS pilot projects on new, high-efficiency coal plants present 

some of the best opportunities in the U.S. to address carbon issues and still provide 

high quality, reliable, and affordable baseload energy from coal-fired power plants 

to consumers in the short term. Desert Rock is uniquely positioned to be a ‘‘First 

Mover’’ on such a major CCS demonstration project. The addition of CCS to the new 

generation of clean coal plants that is represented by Desert Rock stands to bring 

the highest return on this ‘‘environmental investment’’ as opposed to retrofitting 

older, less efficient coal plants. 

Overcoming Financing and Investment Obstacles. Historically, significant obstacles to obtaining financing and attracting investment in tribal energy projects have 

included the sufficiency of collateral (especially since most tribal lands in the 48 contiguous states are in trust status and only the mortgage interest on a lease of trust 

lands is usable as collateral), the problem of dual taxation (overlapping state and 

tribal taxes), attracting investors with tax credit appetite, delay and cost in obtaining federal permits and approvals, and the constant challenge of remaining competitive with non-tribal projects in securing long-term power purchase agreements in 

the face of more complicated and lengthy transaction and development periods. 

25 

While DPA has negotiated innovative and low-risk business models in its current 

project agreements that will help facilitate investment, project finance and maximize tribal equity positions, the time and cost involved in reaching these agreements has been significant. For tribal projects to succeed, the time needed to obtain 

permits and the development costs must be comparable to non-tribal projects. 

In addition to the two suggestions above, I urge this Committee and Congress to 

also consider the following: 

• Consistent with the Federal trust responsibility, Federal agencies can do more 

to help. DPA has been frustrated with the delay at the EPA in issuing an air 

permit for Desert Rock. We consider the delay to be unacceptable on the merits 

and in violation of the trust responsibility between the federal government and 

Indian nations. All Federal agencies should acknowledge their trust responsibility to tribes and should dedicate the necessary resources to ensure that 

delays in the Federal portion of the development process do not retard overall 

project development. 

• The Congress can support tribal efforts with more aggressive economic and taxrelated legislation. For instance, Congress should renew, on a long-term basis, 

the accelerated depreciation credit for businesses locating on Indian reservations, as well as the Indian worker tax credit. These provisions were part of the 

package of incentives DPA used to attract large scale capital investment to the 

Navajo Nation, but are set to retire at the end of this year. Congress should 

also pass legislation to make it easy for tribe’s to transfer any tax benefits they 

may receive for energy production, but cannot use because of their tax status, 

to their private partners (e.g., H.R. 1954). 

• Congress needs to more aggressively finance carbon capture and sequestration 

demonstration projects. These projects are essential to demonstrate that it is 

possible to capture carbon emissions from coal-fired power plants, thereby assuring the viability of America’s cheapest and most abundant source of energy. 

Desert Rock is perfectly situated to be one of these projects and is something 

that the project developers would be very interested in pursuing. 

• Congress needs to provide priority transmission access to tribal energy projects. 

Consistent with the outcome of the federal right-of-way studies undertaken pursuant to the 2005 Energy Policy Act, Congress should take the next step and 

provide incentives for tribes to gain priority access to high-voltage transmission 

systems for tribal energy projects, and in certain cases, support the development of new transmission projects on tribal trust lands. A number of mechanisms could be employed to achieve this objective, with the result of increasing 

the domestic energy supply, improving tribal economies and strengthening our 

national transmission system. 

• Congress should create and expand preference contracts for purchase of tribal energy. Federal agencies, in particular defense agencies and others with large energy demands, need a steady supply of low cost, high-quality reliable power. 

Tribal energy projects can meet that demand. A ‘‘tribal renewable portfolio 

standard’’ for these agencies, and for other recipients of significant federal assistance, would help build domestic energy capacity and give tribal energy 

projects greater access to long-term power purchase contracts. We ask Congress 

to begin a national discussion with federally recognized tribes to explore how 

tribes can meet the energy needs of the Federal Government. 

Conclusion. After a total investment of nearly $30 million, DPA and its private 

partners are close to commencing construction on nearly $4 billion worth of energy 

development projects. However, Federal support and involvement remains vitally 

important and has only been partially forthcoming. I hope these comments are useful to the Committee in understanding the real-life issues tribes must face in developing significant energy projects. Thank you, again, for this opportunity to testify. 

The CHAIRMAN. Mr. Begay, thank you very much for being with 

us. 

Finally, we will hear our witness from Alaska, Ms. Julie Kitka, 

who is the President of the Alaska Federation of Natives, in Anchorage, Alaska. Ms. Kitka, you may proceed and we appreciate 

very much your being with us today. 

26 

STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA 

FEDERATION OF NATIVES 

Ms. Kitka. Thank you, Mr. Chairman, Madam Vice Chairman, 

members of the Committee, ladies and gentlemen. 

Before I begin my testimony, I would like to ask our eighth grade 

class from Nome, Alaska, that is observing the hearing, if they 

could stand up and the Committee could welcome them. That is a 

long way from home. 

This was not planned, I came in the room and here they were. 

[Laughter.] 

The CHAIRMAN. We certainly welcome the eighth grade class 

from Nome, Alaska. How many miles are we from Nome, Alaska, 

sitting here in Washington, D.C.? Does anybody know? Four thousand five hundred miles. Perhaps Senator Murkowski wishes to 

welcome her constituents as well. 

Senator MURKOWSKI. It is a long way to go to school, isn’t it, 

kids? 

[Laughter.] 

Senator MURKOWSKI. We welcome you and I am delighted you 

got an opportunity to be here as part of this hearing, focusing on 

an issue to those of us back home that is exceptionally important. 

I hope it is a productive day and a good visit here. Welcome to the 

Committee. 

The CHAIRMAN. Thank you very much for being here. 

Ms. Kitka. Thank you. 

Again, my name is Julie Kitka, the President of the Alaska Federation of Natives. We are honored to be presenting testimony 

today. We would ask that the hearing record be kept open to allow 

our tribes and corporations to provide additional detailed information. 

Alaska, which is our homeland, is an incredibly large land mass. 

It is two and a half times the size of Texas and has vast energy 

resources which are largely untapped and undeveloped. Alaska Natives, as the largest private landowners in the State, are committed 

to working with the State and the Federal Government and other 

private sector partners to help meet the energy needs of this Country. 

Just for example, our land holdings are a little bit over half of 

all the Native lands in the Country. We know that our Country 

needs to become more energy self-sufficient and less dependent on 

potentially unstable foreign sources. We are also aware that global 

competition for energy resources, especially from China and India, 

and many other rapidly developing countries, impacts our lives 

today and our future. Even news of oil finds in Brazil travels north 

to Alaska, as we learn that they may have discovered as many as 

33 billion barrels of oil, which would make it the largest field every 

found. We know if further explorations confirmed this, we again 

will be all affected and U.S. national policy will change dramatically because of that. 

So we feel it is very timely to get very serious about what this 

Committee is looking at to both help our Indian communities and 

our Country. We are strong supporters of the development of alternative energy sources as an important avenue to add to our Country’s energy sources. We offer our tribal communities in Alaska, in 

27 

all their vastness, to be considered part of national demonstration 

projects on alternative energy technologies and as a proving ground 

to show how Alaska Native people and their institutions have the 

experience, the capital and the community relationships that will 

be necessary to effectively implement workable solutions to the developing energy crisis. 

Our Alaska Native corporations in particular have shown their 

ability to pull together both large and small projects and deliver results on time. Our recommendations are broad and expansive, including national State-wide and local considerations. We urge your 

consideration. 

I wanted to respond to Tribal Chairman Venne’s comments about 

their desire to have greater self-sufficiency and greater involvement in owning companies that do their business and how they can 

do that. I want to suggest the Committee’s consideration of the 

mentorship protege program that the SBA, Small Business Administration, has a way to partner up different Native tribes with 

other companies that have experience. We know in Alaska, one of 

the hats I wear is as Director of Chugach Alaska Corporation. We 

had a lot of lessons that we learned in trying to develop our coal 

resources and major mistakes that we made in doing it and how 

to do it right. I think maybe that mentorship protege program, if 

it is applied also to energy, might be a way to partner up tribes 

and their desires to be more in charge of their resources with other 

tribes and Native organizations that can assist. 

Again, Alaska is so diverse, I would like to focus our testimony 

primarily on the potential to make our local communities more selfsufficient in energy and capable to deal with rapid climate change 

and all its uncertainties. We are not going to get any closer to some 

of the rapid climate changes that are happening in the United 

States than the Arctic and what we see and what we are being told 

by scientists and others. So alternative energy resources, abilities 

to build our communities’ capacity to deal with rapid change and 

uncertainty is very important. 

Because there is no one size that fits all in alternative energy resources for our communities, and because in Alaska, there is virtually unlimited potential of what can be done, we would like to invite and encourage the Committee to hold hearings in Alaska this 

summer that can focus on the potential for development of energy 

resources on Native-owned lands as well as what can be done to 

reduce the high cost of energy in our rural communities. 

On behalf of our membership and our tribes and our corporations, we sincerely hope that the Committee can find time to do 

that. We have a lot of people that are working and spending time 

on these important issues and a lot of people who couldn’t travel 

back here that would like to testify. We really think that would be 

productive to your consideration of these important issues. 

Again, the undeveloped energy resources most often discussed for 

rural Alaska are small hydropower, using rivers to provide power 

to small communities and serving as America’s experimental back 

yard for rural America: solar energy, sea wave action, biomass 

usage, coal, methane, geothermal energy. Each brings both its 

problems and barriers. Many alternative energy ideas look fascinating on paper but actually getting them up and operating in 

28 

the lives of real people can be very complex and frustrating. We are 

committed to trying to make these alternative energy models work 

and offer our assistance and our membership’s assistance in demonstrating and getting some of these things off the ground. 

For example, wind. Alaska has world-class wind energy resources, especially along the coastal and western regions of our 

State. There are 31 rural Alaska communities that already have 

good opportunities for wind generation and 17 more that are potentially attractive. I mention Cook Inlet Region Inc. (an ANCSA Corporation) and their Fire Island project as a prime example of a 

wind farm that could step up a lot faster if there were regulations 

that were published to the recent Energy Bills that were enacted 

by Congress but have not yet been implemented. In fact, we urge 

the Committee to ask the Administration to expedite those regulations and get that on track and fully implemented. 

Also hydro, solar, ocean wave action, Alaska has over 34,000 

miles of coastline, making it one of the best ocean energy resources 

in the world. I could go on, but I want to—— 

The CHAIRMAN. I’ll have to ask you to summarize. We have six 

witnesses. So if you would just summarize for us, I would appreciate that. 

Ms. Kitka. The last thing I wanted to bring to your attention, obviously we have a number of concrete recommendations we would 

urge your consideration. But I would be also remiss if I failed to 

alert this Committee and the Congress to the fact that right now, 

there is a full-blown economic crisis of energy costs in rural Alaska’s villages. These high energy costs are stripping finances, 

money, cash, out of our families and our communities and threatening to roll back the tremendous progress that has been made 

over the last 30 years in reducing poverty in our villages. 

It is an energy cost crisis. It is not a lack of fuel, it is the high 

cost. Again, the seriousness of it is, we (federal, state governments, 

and Native people) have for the last 30 years been able to reduce 

poverty from 60 some percent down to 20 percent. Without immediate help we are going to be seeing those poverty rates increase. 

We ask for some immediate help on bringing down the costs of energy and focusing on our very remote communities and their impacts. 

To give you an example, it is not just having hard times heating 

our homes in this extreme cold weather climate, but it is also putting food on the table, since so many of our people depending on 

hunting and fishing over the summer and winter time to put food 

on the table. The high cost of energy is going to reduce the ability 

of people to have access to fish and game and reduce our ability 

to put food on their tables. We are very, very concerned about that. 

We urge the Committee to ask our State government to do everything in their power to mitigate the problems that are on the 

ground right now. We are hearing calls asking for Federal declarations of disaster due to the potential concerns that people have on 

how they are going to put food on the table for this coming year 

because of those high costs. 

Again, in our testimony we have greater details. But it is a very, 

very serious problem and we urge the Committee’s attention and 

ask for their assistance. 

29 

[The prepared statement of Ms. Kitka follows:] 

PREPARED STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA FEDERATION OF NATIVES

Mr. Chairman, Members of the Committee, Ladies and Gentlemen: 

For the record, my name is Julie Kitka; and I serve as President of the Alaska 

Federation of Natives. AFN is a statewide Native organization whose membership 

includes over 200 villages and tribes, 13 regional Native corporations and 12 regional non-profit tribal consortia that contract and run federal and state programs. 

Thank you for inviting AFN to provide testimony today. I ask that the hearing 

record be kept open for a period of time to allow our tribes and corporations, and 

interested individuals to provide additional written comments. 

Alaska, which is our homeland, is an incredibly large land mass: it is two and 

half times the size of Texas, and has vast energy resources that are largely untapped and undeveloped. Alaska Natives, as the largest private landowners in the 

state are committed to working together with the state and federal governments, 

and other private sector partners, to help meet the energy needs of this country. 

We know that our country needs to become more energy self-sufficient, and less dependent on potentially unstable foreign sources. We are also aware that global competition for energy resources, especially from China and India, and many other rapidly developing countries impact our lives today and our future. Even news of oil 

finds near the Tupi field in Brazil travels north to Alaska, as we learn they may 

have discovered as much as 33 billion barrels, which would make it the third largest 

field ever found. We know if further explorations confirms this–we all will be affected in many ways. So it’s time to get very serious about what we can do to help 

both our own communities and our country. 

We are strong supporters of the development of alternative energy sources as an 

important avenue to add to our country’s energy resources. We offer our tribal communities, in their vastness, to be considered part of national demonstration projects 

on alternative energy technologies and as a proving ground to show how Alaska Native people, and their institutions have the experience, the capital, and the community relationships that will be necessary to effectively implement workable solutions 

to the developing energy crisis. Our Alaska Native corporations in particular have 

shown their ability to pull together both large and small projects, and deliver results 

on time. Our recommendations following this testimony will include national, statewide and local considerations. 

Let me now focus on energy development which has the potential to make our 

local communities more self-sufficient in energy and capable to deal with rapid climate change and all its uncertainties. 

Alaska is so large and diverse that one village’s alternative resources may not be 

available elsewhere. Some areas have strong wind for electrical generation; but in 

other locations, there is no such thing. Thus, there is no ‘‘one-size-fits-all’’ solution 

for rural Alaska, making local solutions more specific and expensive. Because of the 

vastness of our State and it’s virtually unlimited potential, we would like to encourage the Committee to hold hearings in Alaska focused on the potential for development of energy resources on Native owned lands, as well as on what can be done 

to reduce the high cost of energy in our rural communities. 

The undeveloped energy resources most often discussed for rural Alaska are small 

hydro power (using rivers to provide power to small communities and serving as 

America’s ‘‘experimental backyard’’ for rural America), solar energy, sea wave action, biomass usage, coal, methane and geothermal energy; and each brings its own 

problems and barriers. Many alternative energy ideas look fascinating on paper, but 

actually getting them up and operating in the lives of real people can be very complex and frustrating. 

WIND: Alaska has world-class wind energy resources, especially along the coastal 

and western regions of our State. There are 31 rural Alaskan communities that already have good opportunities for wind generation—and 17 more that are ‘‘potentially attractive.’’ There are at least seven projects currently operational with another eight in the planning stages. The potential is obvious in locations like 

Kotzebue, Upper Cook Inlet, the Lake and Peninsula area. Barriers to harnessing 

wind power include high development costs, the need for trained maintenance, problems of land ownership and licensing, and the absence of public incentives to wind 

developers. 

HYDRO: Existing hydro generation produces nearly 25 percent of the state’s electricity. But Alaska also has almost 45 billion watts of large and small hydro potential, more than any other state. Hydro also brings its problems, especially regarding 

environmental damage; but eight billion watts of the state’s potential is in small 

30 

projects that produce less than one million watts—and which don’t require dam construction. 

SOLAR: Summer in Alaska produces a huge amount of sunlight; but winter darkness is the time of greatest energy demand. Large-scale solar projects do not presently have a great potential; but in some places, small projects are possible. This 

also requires the homeowner or community to make up-front capital investments, 

largely without public incentives from the state or federal governments. 

OCEAN WAVE ACTION: Alaska has over 34,000 miles of coastline, making it one 

of the best ocean energy resources in the world. The total wave potential, just on 

Alaska’s southern coast, could produce almost 300 times the electricity used in the 

entire state each year. But the significant barrier to wave development is often the 

distance between the resource and the demand, requiring costly transmission infrastructure. 

GEOTHERMAL: A recent study points out four potential geothermal areas in 

Alaska: interior hot springs, southeast hot springs, the Wrangell Mountains, and a 

combination of the Alaska Peninsula and the Aleutian Chain. The value of geothermal power is magnified by the fact that it can produce both heat and electricity. 

But problems include accessibility to volcanic areas, transmission distances and possible environmental damage. 

BIOMASS: Alaska has a great amount of wood, wood waste and sawdust for potential use in space heating and electrical generation; and a few villages have begun 

to talk of making wood pellets from plentiful willow brush. Alaska’s fish processing 

plants produce about eight million gallons of fish oil each year. With some chemical 

changes, this oil can be mixed (50–50) with diesel for generation. Community waste 

disposal produces 650,000 tons of garbage in Alaska each year; but again, design 

and capital costs are expensive and need public incentives. 

COAL: Coal is abundant in Alaska, but has higher CO2 emissions than other energy sources. However, coal can be used to produce synthetic ‘‘natural’’ gas with and 

without carbon capture. The problem is that these gasification technologies are expensive and still under development. Finally, coal-bed methane has been identified 

in the Susitna Basin, but its economic potential has not been established. Coal-bed 

methane may also exist in specific locations close to some remote communities. 

Many of our villages in rural Alaska are actively working to develop a wide array 

of alternative energy projects. They see not only the potential for reducing the cost 

of energy, but also the tremendous manufacturing and sales and service components–wind and solar will need tailored products and service; alternative building 

materials, plans and supplies for hybrid homes and facilities that are now being developed and manufactured abroad, could be done in Alaska. 

It is critical for the continued viability of Alaska Native villages that dependence 

on petroleum be reduced, that local power generation and space heat shift to alternative energy sources, and that conservation methods be widely adopted. When provided with innovative energy solutions, our tribal communities are embracing them. 

But I would be remiss, Mr. Chairman, if I failed to alert Congress to the fact that 

right now there is a full-blown economic crisis of energy costs in rural Alaska’s 230+ 

Native villages. Unbelievable energy costs threaten the very survival of remote communities. While all Americans suffer from rising costs of gasoline, home heat and 

electricity, rural Alaska is in a category all by itself. The increase in energy costs 

that communities are struggling with threatens to erase the past several decades 

of progress in reducing poverty. Whatever cash income many families have, just disappears into home heat and electricity. The ability for some of our people to even 

put food on the table will be affected by both the shortage and high cost of fuel. 

And we all know that these energy costs are expected to remain elevated. 

Native families in villages put together a combination of household cash income 

and subsistence foods each year; and the largest drain on the household’s meager 

cash is the cost of residential space heat in an extremely cold winter climate. Most 

homes—especially those without access to firewood—are heated by oil-burning furnaces and stoves. The original cost of such oil, plus the transportation surcharge to 

get it into villages, create the highest heating costs in the U.S. 

Typically, oil is barged from Seattle to villages that have bulk fuel storage facilities, but some families have to haul oil from larger communities by boat. Nearly 

every winter, the normal water-based transportation system will break down for 

particular villages, due to weather or difficulty arranging bulk fuel purchases, and 

the village may be forced to fly in winter fuel supplies at even more exorbitant costs. 

A January, 2008 survey of fuel oil prices in 195 villages and regional centers 

found prices as high as $9.00 per gallon. More recently, the cost of oil in the village 

of Nikolski reached above $11 per gallon. In December, January and February, the 

average village house can easily use four or more 55-gallon drums of oil for heating. 

In Arctic village, this means $1,980 or more for a single household per month; in 

31 

Hughes, it requires $1,650; and in Illiamna, it takes $1,375. [We also include a 

snapshot of 22 villages, taken this week, to update these data.] I must add that 

space heat is critical to village businesses and public facilities as well. Some school 

districts are now having to cut into their instructional budgets in order heat and 

light their village buildings. 

Electricity in villages, which is mainly produced by community diesel generators, 

receives a state-sponsored subsidy that covers about 30 percent of the homeowner’s 

costs; but monthly household kilowatt/hour charges in the bush are between three 

and seven times what the Anchorage homeowner pays per kilowatt/hour. 

The third use of energy in Native villages is for transportation, usually gasoline 

for snow machines, outboard motors and all-terrain vehicles. Machinery is necessary 

for subsistence food-gathering, which has to be capitalized with cash for storebought equipment and energy. With gasoline prices between $5.00 and $7.50 per 

gallon in most villages, some Native families will either be unable to go to fish camp 

to get next winter’s food supply or will be able to do this only sporadically. 

What does this mean for the future of Native villages? The combination of cold 

and hunger will inevitably force many Native families out of their traditional communities and into poor, crowded housing in Alaska’s urban areas and/or regional 

centers. The social and economic problems that such a dislocation creates in people 

are enormous; and this adds to the burdens on the urban public sector. The ruralto-urban migration pattern in Alaska is already well along–and will become more 

obvious in the 2010 Census. 

So what can we do to deal with the immediate energy crisis in rural Alaska, and 

how can the Federal Government play a key role in addressing the problem? We 

believe a multi-faceted approach much be taken—one that provides greater economic opportunities for Native tribes and corporations to develop energy resources 

and one that drives down local costs of energy. Here are some practical ideas, as 

a starting place: 

Congress should urge the Department of Interior to publish regulations on an expedited basis to implement the programs authorized by the Indian Tribal Energy Development and Self-Determination Act, Title V of the Energy Policy Act of 2005, and 

Congress should fully fund their implementation. The Indian Tribal Energy Development and Self-Determination Act authorizes a variety of financial, technical, environmental and other programs that are intended to empower tribes and Alaska Native Corporations to develop energy resources. It authorizes the Department of Interior’s Office of Indian Energy Policy and Programs to reduce energy costs, enhance 

tribal energy infrastructure and improve delivery of electricity to tribal communities. It also authorizes a multi-billion loan guarantee program, as well as other 

assistance to encourage development of renewable and non-renewable resources by 

tribes and tribal organizations. We have projects that are being held up because of 

the delay in the publication of regulations implementing this legislation. An important consideration for Alaska in the regulations is the inclusion of the Native corporations, who are crucial stakeholders. The Native corporations hold our land and 

resources, and must be included in any program affecting our land base. 

The congressionally created Denali Commission has requested Letters of Interest 

on developing small-scale alternative/renewable energy and energy efficiency 

projects in Alaska, with a budget of only $5 million. The Commission has received 

far more proposals that it has funds to support. Congress should increase funding 

to the Denali Commission for developing alternative/renewable energy projects. (Attached for the record is a matrix of the types of ideas and projects being proposed. 

This is included to give you a sense of the strong interest and the range of ideas.) 

State and federal strategies should be developed to provide economic incentives to 

conserve energy (including tax credits, low interest loans, rebates and grants to 

weatherize homes, and grants to purchase more efficient heating systems, wind generators, solar panels, and other technologies. 

Congress should increase the supply of energy by encouraging exploration and development of private, state and federal uplands, both onshore and off- shore. This 

can be done by providing incentives, such as OCS revenue sharing for Alaska’s coastal communities, as has been done for Florida, Louisiana and Texas. If our communities could count on sharing some of the revenue from off-shore leasing for their 

own critical infrastructure and other needs, there would be greater local support for 

exploration and development in off-shore areas. AFN strongly supports the right of 

self-determination for our Native communities and urges that leases which have generated a lack of widespread community support be revisited and discussions opened 

up with affected communities to address their concerns. 

Congress should work closely with the State to ensure that in development of a 

Natural Gas Pipeline in Alaska, our communities have access to the natural gas 

that will pass through that pipeline through spur connections and pipe; and that 

32 

ownership, partnership, and contracting opportunities for Alaska Native tribes and 

corporations be part of the development. Serious training funds should be appropriated for workforce development to ensure broad Native participation in the 

projects. If the Committee is interested, we could submit much more detailed information and recommendations on the natural gas project. 

Congress should provide additional funding for the Low-Income Home Energy Assistance Program (LIHEAP) in Alaska–and should urge the State to add its own appropriations for this excellent program. This country should be concerned when its 

poorest citizens are left to rely on the generosity of companies like Citco to meet 

their basic energy needs. 

Congress should urge, and provide incentives for, states to develop their own comprehensive energy plans, with effective processes for local input. Despite all the 

data-gathering on the severity of today’s crisis, the State of Alaska has been singularly reluctant to plan long-term for the energy needs of all Alaskans. This is perhaps the most critical step of all, since it can open the door to more specific solutions at the regional and community levels. 

Congress should create real opportunities for alternative energy projects, at least 

one major demonstration project within each Native region in Alaska. And further 

projects should be structured to encourage Native to Native partnerships, both within Alaska and with Native American tribal partners. There is much sharing of information and experience which can take place, and greater inter-tribal collaborations 

are to be encouraged. 

Congress should fully fund and implement the Energy Independence and Security 

Act of 2007, which was authorized last year. That bill includes a host of provisions 

to further renewable energy development, including a Renewable Energy Deployment Grant Program that would provide federal grants for up to 50 percent of the 

cost of building a wide variety of renewable electricity projects, including wind, geothermal, ocean, biomass, solar, landfill gas and hydroelectric projects in Alaska. It 

provides for a federal grant program specifically to help with construction of geothermal energy projects in areas of high electricity costs like rural Alaska. 

Congress and the State should provide homeowners with incentives to shift to supplemental alternative energy, including a weatherization programs, rebates for installation of energy saving changes. 

Congress should enact and fund S. 2232, the Native American Challenge Demonstration Project Act, creating a total of five pilot projects in remote, predominately 

Native American areas modeled after lessons learned from the US experience in 

providing foreign aid to the developing world. The project would use a compacting 

model to channel significant development funds to implement locally designed economic development strategies, including energy strategies. The objectives would be 

to enhance the long-term job creation and revenue generation potential of Native 

economies by creating investment-favorable climates and increasing Native productivity. 

In order to supplement this brief outline of major energy opportunities in Alaska, 

I will provide the Committee with a number of professional studies on rural energy 

potentials. 

Finally, Mr. Chairman, I am hoping that the Committee will be able to hold energy hearings in Alaska this summer; and I recommend that they be held in regional centers (like Kodiak, Dillingham, Bethel, Nome, Kotzebue, Barrow and in 

southeast), rather than confining them to Anchorage or Fairbanks. 

33 

Attachment 


501k1.eps
34 


501k2.eps
35 

The CHAIRMAN. Thank you very much for your testimony, Ms. 

Kitka. 

Mr. Wells, let me ask, I have just received some information, 

there are 745 leases approved for the Three Affiliated Tribes and 

70 pending approval. Does that sound right to you? 

Mr. WELLS. What we had in the initial bid advertisement for November 2007 is 938 bids, 145,000 allotted acres and 54 million on 

bonus payments. The report we had from Assistant Secretary 


501k3.eps
36 

Artman was 541 of the leases were approved and that 13 million 

in bonuses were distributed. 

The CHAIRMAN. The reason I am asking the question about numbers is, your testimony suggests that the BIA has been essentially 

delinquent or has interminably delayed the approval of leases. 

Mr. WELLS. Yes. 

The CHAIRMAN. What is the number of leases that have been delayed? 

Mr. WELLS. For the information we have in front of us that was 

responded to by Secretary Artman, we are probably only a quarter 

of the way through. 

The CHAIRMAN. The Secretary sent some additional resources 

out, did he not? 

Mr. WELLS. He has some details in from different area offices. 

But we still have some major problems with the timeliness of 

these. Adam Twenty Mandan called on me yesterday, knowing full 

well I was going to be here today, Chairman Dorgan. He is a 

former veteran of the U.S. Army, former council member and now 

70 years of age, who wanted to express that he is still waiting, 

after three years of signing his lease, that it is too long. 

The CHAIRMAN. Yes. We are working with the BIA, this should 

not be—I assume, is part of the delay the fractionalization of this 

land? 

Mr. WELLS. I believe in 1997 that might have been remedied by 

having the requirement that was very strict to lease a piece of mineral acreage on Fort Berthold that used to be 100 percent signature 

criteria of the Indian owners of the minerals. Today it is 51 percent. That has made a lot of the problems of delay and not getting 

a lease approved possible. But the issues now is a bid sale was held 

in December 2006 and in November of 2007, those same high bidders of the oil and gas industry are getting the rug pulled out from 

underneath them from other oil and gas companies, offering a dollar more bonus, for instance. 

The CHAIRMAN. And if the same is completed, let me ask, are 

companies that are getting the leases, are being awarded the 

leases, are they moving quickly to develop the minerals? 

Mr. WELLS. The second problem they are running into is the approval of the drilling permit? 

The CHAIRMAN. By EPA? 

Mr. WELLS. The BLM and the BIA. 

The CHAIRMAN. Okay. 

Mr. WELLS. This Black Rock Resources Agreement was passed by 

the full business council in January of 2005. They have finally been 

able to split a well in April of 2008. That took three years and two 

months. 

The CHAIRMAN. I understand your frustration about this. You 

have minerals, you have potential new wealth for a tribe that desperately needs it and then you have these interminable delays by 

Federal agencies. We are going to try to follow this through with 

the BIA, the BLM, the EPA. There are some EPA issues as well. 

These areas are in such desperate need of economic development. 

Mr. WELLS. Yes. 

The CHAIRMAN. Here we have an opportunity for economic development that is very substantial. And instead of being helpful, the 

37 

Federal agencies are going into their typical shell game, and that 

is, things get subsumed in interminable delays. That is just not fair 

and it is not right and it is going to retard economic development. 

Chairman Venne and Mr. Begay also talked about the need this 

year to extend the tax incentives that exist on reservations for certain Indian economic activities. And we have legislation by Senator 

Baucus and Senator Grassley to do that. I also think it is important that we extend them for more than one year. To extend these 

things short-term doesn’t give developers an opportunity to look at 

three and five-year plans for developing economic plans on reservations. So all of these are areas that we need to be attentive to. 

Again, I say to all four of you, I share your frustrations here. Because the purpose of this hearing is to try to understand more 

clearly what are the difficulties, what are the barriers that are 

being put up and how do we try to address through these Federal 

agencies those barriers. 

Senator Murkowski? 

Senator MURKOWSKI. Thank you, Mr. Chairman. You point out 

not only does this provide for a level of much-needed economic development in an area that so desperately needs it, it is just patently clear that in this Country we have to figure out how we do 

more for ourself rather than relying on foreign countries for our energy sources. So if we can produce it through the oil there, through 

the Three Affiliated Tribes, if we can do it through the coal that 

is available through the alternatives that we know are available 

throughout all of Indian Country and up in Alaska, we know we 

can do more for ourselves. 

So yes, it is an incredible boon for economic development. But it 

is also providing for this Nation’s energy needs in a way that is 

substantial. 

Ms. Kitka, I want to follow on your comments about the dire situation up north. In reading through this morning’s press clips from 

back home, there is an article from the Fairbanks Daily News 

Miner, Fairbanks is our second largest city in the State, and the 

mayor of the borough there is requesting for a state of emergency 

from the State because of the high cost of energy within the city. 

Not that we count on our newspapers to always get the facts correct, but it provides in this morning’s article that the average income for Fairbanks residents is about $27,000 a year. The average 

household is spending about $6,000 a year on fuel alone. 

That is on the road system, that is in our second largest community. And in our villages, I was talking with somebody just a couple 

of days ago, Al Akakit, he is paying over $7 a gallon for their fuel. 

So when you have to put fuel in the snow machine or the fourwheeler to go out hunting or put it in the boat to go out hunting 

or fishing, it makes it extremely difficult, not to mention what it 

costs to power communities that receive their power through diesel 

generation. 

So it is very real and it is very, very scary for a lot of Alaskans, 

many, many around our State. 

I wanted to ask Chairman Wells, you have mentioned that you 

have these overlapping layers in dealing with the bureaucracy. 

There was a House bill that was introduced several years ago that 

would have authorized the appointment of a Federal coordinator to 

38 

kind of take all these decision-makers at the Federal, State and the 

tribal levels to facilitate an approval process. Do you think that 

something like this would help in your specific situation there at 

the Fort Berthold Reservation? 

Mr. WELLS. Vice Chairman Murkowski, what I believe needed to 

have happen would be to prepare this current stuff. The last boon 

we had was in the late 1980s and early 1990s. It sort of died out 

toward thereabout in Fort Berthold, oil and gas exploration. Since 

then, a lot of the personnel have retired. 

I have to commend Mike Black, he is the acting area director for 

Bureau of Indian Affairs, in helping Fort Berthold. He has met 

with us time and time again. Outgoing Assistant Secretary Artman 

also has met with us twice on this issue. He is looking at getting 

a line item budget for nine staff to come to Fort Berthold. But it 

hasn’t been approved yet. 

I support that proposal 110 percent. But if it doesn’t get approved, then we are still doing temporary details in this major time 

of frustration for our tribal members. On Fort Berthold, when 

things don’t go right, the tribal business council and the chairman 

get the brunt of the blame, criticism. Even though it is the Bureau 

of Indian Affairs, they are left scot-free. We are the ones who are 

catching the criticism. That is why we are here. 

Senator MURKOWSKI. We clearly hear the frustration. Mr. Begay, 

I want to commend the Navajo Nation for pursuing the Dine ́ Wind 

project and the transmission project. In your testimony, you’ve detailed several areas where you think that we can make some 

changes that would be helpful. You mentioned priority transmission access, somehow or other that Congress could employ some 

incentives to tribes to gain the priority access. 

Can you elaborate a little bit more on how we might be able to 

facilitate that? 

Mr. BEGAY. Regarding transmission access, the Navajo Transmission Project is a 500 kV, it is a high-voltage line that will carry 

power from Four Corners west and it will be used also as an economic opportunity to open up for Desert Rock. I think the key incentives there are the accelerated depreciation and with the renewable, whether it is wind or solar, I think there are production tax 

credits, the worker tax credits, I think those are the three that I 

mentioned. 

Senator MURKOWSKI. The tax incentives. 

Mr. BEGAY. Yes, to continue so we can take advantage of them. 

Senator MURKOWSKI. Julie, you mentioned several of the bigger 

projects that are out there, the wind farm there on Fire Island. We 

know that we have some enormous potential. But we also know 

that there are some smaller-scale renewable energy projects that 

hold great promise. There are several sites on the Yukon River, on 

the Kuskokwim River, on the Koyakuk, where employing some pilots to gain energy from the river currents there, we are looking 

at how we might be able to trap the methane gases that are out 

on the tundra. We have wonderful geothermal potential we are 

looking at out in the Naknik area up in Nome, outside of Pilgrim 

Hot Springs there. 

But we all know that these are projects that are going to be 

years in delivering renewable and hopefully more affordable 

39 

sources. You have asked us for assistance in the short term. Outside of conservation, which of course is something that we need to 

better in this Country, but outside of conservation, what is your 

suggestion for the first thing that we could do to make an impact 

for the local, remote communities where we could see a difference 

in prices? 

Ms. Kitka. I think what you are talking about is a shortage of 

cash and families that don’t have much cash. I think the first thing 

you ought to do is you ought to increase the money that goes to 

Small and Needy Tribes program, and the Tribal Priority Allocation program in the Department of Interior and get additional flexible resources out to the tribes that are the smallest and have the 

highest rates of poverty and need. Getting that additional cash 

flowing in those communities by the tribes that they can help fill 

the gap, they know their community members, they know who is 

having the hardest time, they know which families are supporting 

larger groups of people on that. Get some immediate additional resources into them so that there is more cash flowing in the communities. 

Again, I think the biggest thing the Congress can do is change 

the whole investment climate for energy resources. Unless the investment climate is incentivized for people to invest in these alternative energies at the smallest community levels, people are going 

to look for other economic opportunities where they can get greater 

returns, and so additional tax credits, grant programs, the whole 

thing, that is crucially important. 

But we also need more cash into the communities immediately 

before the hunting and fishing seasons are over, so that people can 

get out there and get their food for the winter. 

Senator MURKOWSKI. Thank you. I appreciate it, Mr. Chairman. 

The CHAIRMAN. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. I have a couple of 

questions. 

This is for Chairman Wells to start out. From where I sit, the 

delays in leasing approval would be easy to put on manpower deficiencies, is that what you see it as, or is it something more than 

that? 

Mr. WELLS. I believe so. Being a former realty specialist with the 

Bureau of Indian Affairs, in the 1980s, the retirement process within the system and then the new oil and gas exploration was brand 

new. Those royalty specialists didn’t experience that out at Fort 

Berthold for 20 years. And just the processes, the problem I had 

though, was it doesn’t matter. That is not an excuse. Same CFR, 

same job description, same full-time employee, they should have 

been prepared to cover the onslaught of business that came in the 

door. 

Senator TESTER. No doubt about that. 

Chairman Venne, could you tell me what the BLM does to get 

$4,000? You said it costs $4,000 to punch a hole in Indian Country 

and $100 off the reservation. What does the BLM do for the 

$4,000? 

Mr. VENNE. The $4,000 is to cover their administrative costs for 

the process of the paperwork. That is all it is. The law says BLM 

should collect that amount of money on public lands. I don’t think 

40 

tribes are public lands, and that is where we differ. But I think the 

law should be changed. 

Senator TESTER. We have a piece of legislation called the Crow 

Indian Restoration Act, I believe that is it, the Crow Tribe Restoration Act. How important is that? How important is the passage of 

that piece of legislation to your energy development? 

Mr. VENNE. Well, if you look at the problems in Interior, the 

three major problems, in order to get my tribe to become self-sufficient, first is to pass our water rights settlement with the Federal 

Government. The other is to take care of the fractionated interests 

with the Crow Land Restoration Act. Otherwise you have hundreds 

and sometimes thousands of people sign off on a simple lease. Plus 

the fact that the Bureau is going to be paying more and more and 

more, if the fractionated interest in Indian Country is not taken 

care of. 

So to take care of that, what do they do? They turn around and 

not fund the ALCOV [phonetically] for next year? If Cobell was 

passed that would make a big difference. But I didn’t want to wait 

around, that is why I submitted this bill to be passed. 

Another thing is, put forward legislation to teach, to treat tribes 

as States for tax purposes and clarify Indian nations as the taxing 

authority in Indian Country. That is very important to us. We 

talked about extending tax credits for one year. If you are going 

into a coal mine or a power plant, it takes five to eight years to 

really get your foot on the ground. That is not enough time. You 

might want to do a ten year, but that is still only two years you 

have the credit. I would prefer somewhere, 15, at least 20 years, 

for tax credits. And that is very important also. 

But in order for my tribe to become self-sufficient, I need Crow 

Land Restoration Act passed, and I also need my water compact 

ratified by the Congress. 

Senator TESTER. Thank you. 

Mr. Begay, you talked about Indian Energy RPS which is an interesting thought. Most of what you talked about that you are 

doing, it hasn’t happened yet, right ? The power line is still int eh 

planning, correct? 

Mr. BEGAY. Yes. We have the EIS and we have revised a RCRA 

decision coming from BLM. So it is ready for construction. 

Senator TESTER. What has the interest been in buying the power 

that you are proposing at this point in time, or had you got to that 

point? 

Mr. BEGAY. The power to—— 

Senator TESTER. The electrical energy. 

Mr. BEGAY. The electrical energy to put on the line? There is tremendous demand for that power. 

Senator TESTER. All right. In Montana we have some problems 

with transmission. President Kitka, where are you in Alaska? 

When it comes to renewable energy in particular, we have some 

problems with transmission, getting remote areas to a place where 

you can distribute the juice. Do you guys, how are you guys set up 

for transmission when it comes to development of any kind of energy, but particularly wind energy? 

Ms. Kitka. I would like to give a written response back, because 

it varies depending on different parts of the State. As I described, 

41 

the land mass is so big that we have different circumstances. We 

do have one Federal-State partnership called the Denali Commission and we do some work on inter-ties. So we will be glad to provide some written comments. 

Senator TESTER. Sure. 

I am interested more globally where you guys are, because I 

know some of the States we have our best wind opportunity, transmission is a real problem. I know that is the case where we are. 

With that, I just want to thank everybody for testifying today. 

Chairman Venne? 

Mr. VENNE. One suggestion I do have, we have Federal interstate 

highways throughout our State. We always have a problem getting 

right of ways, energy corridors. Right in the middle of the interstate could be turned into the right of way for your oil and gas or 

anything else. You might want to think about that. 

Senator TESTER. That is a good point, distribution is a challenge. 

Thank you. 

Thank you all for being here. 

The CHAIRMAN. Senator Tester, thank you very much. I think 

what I am going to do is suggest to the Vice Chairman, we will talk 

about it, but what I would like to do is have a couple of our Committee staff make a couple of trips and sit down in some roundtable 

discussions in a couple of tribal areas to try to understand with the 

BIA, with the BLM and others and tribal members what is happening here, what can we do to streamline the process, where are 

the road blocks, what kinds of things can we do to see if we can 

move this along. I am talking now specifically about energy development, where permits are needed and where the BIA is critical in 

terms of timing. 

Chairman Wells? 

Mr. WELLS. Chairman Dorgan and Committee, I just have to say 

this. If you came to Fort Berthold and drove from the south, from 

the west, from the north into my reservation, you are going to see 

a glow like you are driving into Williston, Minot, Dickinson, Bismarck. The glow is off the reservation of drilling rights, north of 

Parshall, west of New Town, south of Mandaree. Only one well 

today is on my reservation when we should be enjoying the same 

type of expedited oil and gas development that the State of North 

Dakota is providing to the fee property. 

But when you come into the trust property, this is all I have, 

after three long years of approving, with the tribe and the mineral 

owners leases, the Bureau’s approval is what is holding up production, Senator. 

The CHAIRMAN. I appreciate that. I will work with Senator Murkowski and Senator Tester. We will see if we can put together, I 

want our staff to go out and sit down, do some roundtable discussions, try to figure out, where are the roadblocks here and how do 

we eliminate these roadblocks. Because it is unfair, if we have special roadblocks that exist on Indian reservations because the BIA 

is not moving or some other agency is not moving and you are required to get those permits and get the approvals before you can 

proceed. 

We appreciate very much the testimony of the four of you today. 

We have obviously heard from other tribes as well, but this will be 

42 

a catalyst to try to have this Committee be more aggressive in 

working with these Federal agencies. We appreciate all four of you 

being here. 

I will next call the other panel to the witness table. The second 

panel that will be with us today is Dr. Robert Middleton, Director 

of the Office of Indian Energy and Economic Development, the Office of the Assistant Secretary at the Department of the Interior. 

Mr. Steven Morello, Deputy Assistant Secretary, Intergovernmental and External Affairs, the Director of the Office of Indian 

Energy Policy and Programs, in the U.S. Department of Energy. 

Dr. Middleton and Mr. Morello, thank you both for being with us. 

You heard some of the testimony that has been given this morning. 

We hope that in your testimony you might be able to respond to 

some of that as well as provide the testimony that you have arrived 

with. 

Let me start with you, Dr. Middleton. You are the Director of the 

Office of Indian Energy and Economic Development in the Office of 

the Assistant Secretary. Why don’t you proceed? Your entire statement will be made a part of the record, I say that to both of you, 

and you may summarize. You may proceed. 

STATEMENT OF DR. ROBERT W. MIDDLETON, DIRECTOR, 

OFFICE OF INDIAN ENERGY AND ECONOMIC DEVELOPMENT, 

OFFICE OF THE ASSISTANT SECRETARY, INDIAN AFFAIRS, 

U.S. DEPARTMENT OF THE INTERIOR 

Mr. Middleton. Thank you, Mr. Chairman. Good morning, Mr. 

Chairman, Vice Chairman Murkowski and Senator Tester. My 

name is Bob Middleton, Director of the Office of Indian Energy and 

Economic Development. 

Thank you for the opportunity to present testimony today concerning potential economic development opportunities available for 

American Indian and Alaska Native communities through energy 

resource development. The Department believes that responsible 

development of tribal energy resources is critical to the economic 

viability of many American Indian tribes and to the sustainability 

of many Alaska Native villages. Energy development represents a 

near-term solution for many tribes to promote social and economic 

development, small business and job creation, and to the advantage 

of their tribal members. 

The U.S. Department of Interior assists tribes and Indian individuals in managing approximately 56 million acres of land 

throughout Indian Country. In consultation with tribes, the Department has assisted in the exploration and development of 2.1 

million acres of these lands, and with the potential of developing 

another 15 million acres for potential energy and mineral resources. 

Also, the Department was given responsibility for promulgating 

and implementing the regulations for Tribal Energy Resource 

Agreements, as authorized under Title V of the Energy Policy Act 

of 2005. These regulations were published in final form on March 

10, 2008 and became effective on April 9, 2008. Use of these TERAs 

could provide significant flexibility for tribes that choose to develop 

their energy resources for economic purposes. 

43 

Since the passage of the Energy Policy Act of 2005, my office, the 

Office of Indian Energy and Economic Development, has been 

working diligently to promulgate the regulations and implement its 

provisions. We work closely with tribes and tribal representatives 

to ensure all the provisions could be developed into a process that 

would be workable and effective for all parties. While it is too early 

to see what the total effect of the regulations will have on Indian 

Country, we believe that a TERA will be a significant tool for tribes 

that would like to have more control over energy development decisions on tribal trust lands. 

Several tribes have expressed interest in pursuing a TERA and 

just this week, on Tuesday, we held a national meeting in Denver 

to discuss the regulations that have been put into place, our expectations for a Tribal Energy Resource Agreement to be presented by 

the tribes and the process with which we will then process these 

applications to the Secretary to take on a decision-making responsibility for energy development on tribal trust lands. 

A TERA really provides an alternative to those tribes that seek 

to use their energy resources to build tribal economies. At the same 

time, it enhances their self-governing capability to control the pace 

and extent of development. While tribes have successfully used the 

provisions of the Indian Mineral Leasing Act as well as the Indian 

Mineral Development Act, these mechanisms and processes are not 

fully consistent with self-determination and self-governance, because the Secretary is still required to evaluate and approve each 

energy development project negotiated between a tribe and a third 

party. A TERA would authorize tribes to take on this decision-making responsibility. 

There are also two other provisions of Title V that my office is 

implementing. First, we are soliciting proposals for capacity-building grants that will allow tribes to build their internal skills needed to regulate, evaluate and monitor their energy development activities. I wish I could say that my office was efficient enough to 

have planned this, but in fact, that announcement is being published in the Federal Register today. We are making available $1 

million to tribes to be able to train their tribal members to be able 

to start taking on the responsibilities of these management decisions. 

This is only the second year for this type of funding. Last year 

we were able to issue $400,000 in grants to several tribes. Over 

time, these technical assistance grants will allow many interested 

tribes to develop the capacity to maximize the benefits of entering 

into a TERA with the Secretary. 

Second, we are developing a web-based clearinghouse of environmental information. This will be available to all tribes whether 

they enter into a TERA agreement or not. The intent of this clearinghouse would be to allow easy access to environmental reviews, 

environmental impact statements and other documents pertinent to 

energy resource development. We will also be developing individual 

environmental analysis modules specific to energy projects such as 

wind, geothermal, oil, gas, coal. 

The web portal will also provide tribes access to experts on environmental analysis, energy development and natural resource protection. As the program matures, it will be an invaluable opporVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00047 Fmt 6633 Sfmt 6601 S:\DOCS\42661.TXT JACK PsN: JACKF
44 

tunity for tribes to grow their own energy, environmental and management experts and to self-manage energy development under 

tribal trust lands. This will allow tribes to capture significantly 

more of the value chain that results from energy development on 

reservations. 

As you pointed out, Mr. Chairman, energy development provides 

some significant economic opportunities on Indian land. In 2007, 

energy and mineral resources generated $475 million in royalty 

revenue paid to Indian individuals and tribes. Since 2002, the annual income from energy and mineral production increased by more 

than 113 percent. This trend is expected to continue for the foreseeable future. 

However, economic potential of future energy and mineral resources in Indian land has enormous possibilities. We estimate the 

lands contain over 5 billion barrels of oil, 37 trillion cubic feet of 

natural gas and 53 billion tons of coal that are technically recoverable with current technologies. 

In addition, the potential for renewable energy resource development is high. Many tribal lands are well situated to take advantage of a range of renewable energy resources. However, just because an area has a significant solar, wind, biomass or geothermal 

resource does not always mean that the resource development is 

economically viable. 

As Julie Kitka also mentioned, Alaska has a unique energy situation. While rising energy costs certainly present problems for those 

of us who live in the lower 48, the consequences of Alaska Native 

communities, which are mostly rural, are alarming. Energy crisis 

impacts rural Alaska on both the individual and community level. 

When communities spend more on fuel, they spend less on key 

services. Many residents of rural Alaska often have to make decisions regarding heating their homes, putting fuel in their vehicles 

and feeding their families. Presented with these options and in the 

face of the current upward trend of energy prices, it has been reported that many rural residents are abandoning traditional lifestyles for more urban settings, thus devastating these longstanding, vibrant rural communities. 

In closing, I would like to say that energy development on tribal 

lands is not a new industry. Certainly, some tribes have a long history of working cooperatively with industry to use natural resource 

development as a stimulus for the economies. However, with the 

current high demand for both traditional and renewable energy 

sources and technologies, Native American communities are wellsituated to use their natural resources to enhance local economies 

and help meet the U.S. need for energy. 

In addition, Native American communities and Alaska stand to 

benefit greatly from development of alternative energy sources as 

a hedge against ever-rising crude oil and natural gas prices. The 

Department believes that development of energy and mineral resources on Indian lands can help foster strong Indian communities 

with sustainable economic development by promoting and supporting the creation of jobs, capital investment, Indian-owned business and a trained workforce. 

Thank you for the opportunity to present before the Committee 

and I will be prepared to take questions. 

45 

[The prepared statement of Mr. Middleton follows:] 

PREPARED STATEMENT OF DR. ROBERT W. MIDDLETON, DIRECTOR, OFFICE OF INDIAN

ENERGY AND ECONOMIC DEVELOPMENT, OFFICE OF THE ASSISTANT SECRETARY, 

INDIAN AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR

Good morning, Mr. Chairman and Members of the Committee. My name is Bob 

Middleton, and I am Director of the Office of Indian Energy and Economic Development (IEED) at the Department of the Interior. Thank you for the opportunity to 

present testimony today concerning the potential economic development opportunities available for American Indian and Alaska Native communities through energy 

resource development. 

The Department believes that responsible development of tribal energy resources 

is critical to the economic viability of many American Indian tribes, and to the sustainability of many Alaska Native villages. Energy and mineral development represents a near-term solution for many tribes to promote economic development, 

small business, and job creation for their tribal members. 

Overview 

The U.S. Department of the Interior holds in trust, and assists tribes and Indian 

individuals in managing, approximately 56 million acres of land throughout Indian 

Country. In consultation with tribes, the Department has assisted tribes and 

allottees in the exploration and development of 2.1 million acres of active and 15 

million acres of potential energy and mineral resources. This activity includes collection of exploratory data and identification of energy resources, funding of and assisting in feasibility studies, market analyses and other resource development initiatives, as well as overseeing leases and agreements for oil, natural gas, coal and industrial mineral deposits located on Indian lands. 

The Department is responsible for developing, implementing and reviewing bureau-wide policies, plans, processes, environmental impact studies, industry leasing 

and development activities, and other functions related to development and production of energy and mineral resources on Indian lands. We provide advice and data 

concerning geotechnical, economic, and land-use issues to Tribes and Indian landowners who are seeking to manage and develop their energy and mineral resources. 

We also provide assistance in negotiating beneficial working agreements with developers, and guidance through the often complex and time-consuming regulatory approval process. 

Also, the Department was given the responsibility for promulgating and implementing the regulations for Tribal Energy Resource Agreements (TERA), as authorized under Title V of the Energy Policy Act of 2005. These regulations were published in final form on March 10, 2008 and became effective on April 9, 2008. Use 

of these TERAs could provide significant flexibility for tribes that choose to develop 

their energy resources for economic purposes. 

Implementation of Title V 

Since the passage of the Energy Policy Act of 2005, and the included Title V, titled the Indian Tribal Energy Development and Self-Determination Act of 2005, 

IEED has been working diligently to promulgate regulations to implement its provisions. We worked closely with tribes and tribal representatives to assure all of the 

provisions could be developed into a process that would be workable and effective 

for all parties. As I mentioned these regulations became final less than 1 month ago 

on April 9, 2008. 

While it is too early to see what total effect these regulations will have in Indian 

country, we believe that a TERA will be a significant tool for tribes that would like 

to have more control over energy development decisions on tribal trust land. Several 

tribes have expressed interest in pursuing a TERA with the Department and on 

April 29, 2008, we held a national meeting in Denver with tribes that were interested in learning more about the final regulations and TERA development procedures. We provided tribes and the public with an overview of the TERA regulations 

that explained the processes and requirements for applying for and obtaining approval for a TERA and subsequent requirements for future monitoring and review 

of a tribe’s activities under a TERA. 

There are several tribes that are already major players in domestic energy markets, and we assume would take advantage of the additional flexibility of a TERA. 

In addition, there are many tribes that have less expertise in the energy development area but have significant energy resources and have indicated a desire to manage energy development projects on their tribal trust lands. 

46 

A TERA provides an alternative to those tribes that seek to use their energy resources to build their tribal economies and at the same time enhance their self-governing capability to control the pace and extent of development. 

A TERA is an agreement between an Indian tribe and the Secretary of the Interior. Some of the concepts important to tribes included in Title V are: 

• It is a transfer of authority, giving a tribe discretion to evaluate and manage 

energy-related business agreements or leases, or grant rights-of-way for pipelines, electric transmission and distribution lines without the Secretary’s further review and approval. 

• It only governs leases, business agreements, and rights-of-way related to energy 

resource development on tribal trust land. 

• It provides enhanced self-determination and economic development opportunities for tribes by promoting tribal oversight and management of energy resource 

development on tribal land and providing Indian tribes an alternative to the Indian Mineral Development Act and the Indian Mineral Leasing Act. 

• A TERA may include renewable and non-renewable energy resources. 

• It may include all or part of a tribe’s land that is restricted from alienation and 

some or all of the potential energy resources. 

• Tribes may also assume related administrative and regulatory activities. 

• A TERA can be amended to assume additional activities or to reduce the scope 

of the TERA. 

• It may also include existing leases, business agreements, and rights-of-way that 

fall within the scope of the TERA. 

While tribes have successfully used the provisions of the Indian Mineral Development Act and the Indian Mineral Leasing Act and the Department has implemented 

their regulatory responsibilities with a nod toward providing the maximum flexibility possible to tribes, these mechanisms and processes are not fully consistent 

with the self-determination and self-governance philosophy because, regardless of 

the level of technical, administrative or regulatory expertise of the tribe or its business partners, the Secretary is still required to evaluate and approve each energy 

development project negotiated between a tribe and a third party. A TERA would 

authorize tribes to take on this decision-making responsibility. 

There are also two other provisions of Title V that IEED is implementing. First, 

we are soliciting proposals for capacity building grants that will allow tribes to build 

their internal skills needed to regulate, evaluate, and monitor their energy development activities. A Federal Register notice will be published this month announcing 

the availability of approximately $1 million in grants that will be available to tribes 

for this effort. This is only the second year of this type of funding. Last year we 

were able to issue $400,000 in grants to several tribes. Over time, these technical 

assistance grants will allow many interested tribes to develop the capacity to maximize the benefits of entering into a TERA with the Secretary. 

Second, we are developing a third-party web-based clearinghouse of environmental information that will be available to all tribes whether they have a TERA 

or not. The intent of this clearinghouse would be to allow easy access to environmental reviews, Environmental Impact Statements, Environmental Assessments, 

and other documents pertinent to energy resource development. We will also be developing individual environmental analysis modules specific to various energy 

project developments such as wind, oil and natural gas, coal, transmission, and electrical generation. The web portal will also provide tribes access to experts on environmental analysis, energy development, and natural resource protection who will 

be available to provide technical assistance to individual tribes. 

As this program matures, it will be an invaluable opportunity for tribes to grow 

their own energy, environmental, and management experts to self-manage energy 

development on their tribal trust land. This will also allow tribes to capture significantly more of the value chain that results from energy development on reservations. 

Energy Production and Income 

Oil and natural gas production in Indian Country has been significant and has 

even greater future potential. 

To date, more than 2 million acres of Indian lands have already been leased for 

oil and natural gas development. These lands account for about 10 percent of the 

oil and natural gas production from federally regulated onshore acreage. Based upon 

the latest data available from the Minerals Management Service, production of energy mineral resources generated $475 million in royalty revenue paid to Indian inVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00050 Fmt 6633 Sfmt 6621 S:\DOCS\42661.TXT JACK PsN: JACKF
47 

dividuals and tribes in 2007. Since 2002, annual income from energy mineral production increased by more than 113 percent and this trend is expected to continue 

for the foreseeable future. 

However, the economic potential of future energy and mineral resources in Indian 

land has enormous possibilities. We estimate that an additional 15 million acres of 

undeveloped energy and mineral resources may exist on individual Indian and tribal 

lands, which if fully developed could result in billions of dollars in revenue for those 

tribes and individual Indian landowners over the period of production. Drawing 

from the results of various studies done over the years, we estimate that these lands 

contain over 5 billion barrels of oil, 37 trillion cubic feet of natural gas, and 53 billion tons of coal that are technically recoverable with current technologies. 

As tribes and development companies create more sophisticated energy and mineral development agreements under the Indian Mineral Development Act, comprehensive energy and mineral information is required to understand, evaluate and 

negotiate these agreements. By having a more thorough understanding of the geotechnical data and economic information, tribes can confidently enter into complex 

agreements knowing they have a sound economic and business arrangement. In addition, if a tribe wants to take advantage of the opportunity to develop Tribal Energy Resource Agreements with the Department, we must ensure that the tribe has 

identified resources and land title information, and the technical and administrative 

capability to develop those resources. 

Although historically energy production on Indian lands meant production from 

oil, natural gas, and coal, there is also significant potential for renewable resource 

development. 

Renewable Resource Development 

The potential for renewable energy resource development in Indian Country is 

high. However, although many of these renewable energy resources are becoming 

more desirable to tribes, the amount of production from renewable resources has 

been limited by some external factors. 

Many Tribal lands located contiguous with the lower 48 States are well situated 

to take advantage of a range of renewable energy resources. However, just because 

an area has a significant solar, wind, biomass, or geothermal resource does not always mean that resource development—even with tax incentives or renewable energy portfolios—is economically viable. Other factors such as location of existing 

transmission lines and power generation stations, and distance to population centers affect the development prospects of these resources. 

Many Indian lands evidence some form of biomass energy potential, from woody 

biomass from forestlands, and bio-diesel and ethanol production from agricultural 

and silviculture waste, to the growing and use of energy crops. We have identified 

118 reservations with a high potential for biomass production. In addition, tribes in 

Nevada, California, Oregon, North Dakota, and South Dakota, and Pueblos in New 

Mexico also have potential to tap geothermal energy resources and most of the Indian lands in the Southwest and Western United States present opportunities for 

solar energy development. We are working with several tribes to identify available 

renewable energy resources. 

I would like to use one of the most talked about and visible renewable energy resources–wind–as an example of how the Department is taking a proactive approach 

to assisting Tribes regarding these types of projects. 

Indian Country encompasses some of the premier wind regimes in the U.S. Based 

upon recent site-specific calculations by IEED, for every 1 percent of acreage of tribal land within these wind regimes that are ultimately developed, an estimated 5.35 

billion kWh per year, on average, may be generated using current technology. (Total 

U.S. electric generation from all sources in 2004 was 3,853 billion kWh). 

We analyzed all the trust lands according to measurable factors affecting the economics that would determine a tribe’s ability to build a utility scale wind farm. This 

screening process criteria included, but was not limited to, a wind resource of class 

three or higher, a land base with the potential for at least 50 MW (assuming 50 

acres/MW or 2,500 acres), distance to transmission lines, road access, and whether 

the Reservation/Trust Land is in a state with a Renewable Portfolio Standard that 

has not yet been met. There are currently 77 Reservations that meet these criteria. 

Of the 77 Reservations, there are about 23 million acres with class three or higher 

wind potential. Although not all of this acreage will be developed, it does represent 

significant renewable energy potential in Indian Country. 

Based on this analysis we intend to develop an Indian Land Wind Atlas. The purpose of the Wind Atlas is to attract potential investors and developers for commercial-scale wind development projects on Indian lands. IEED will create a map for 

each Reservation that features publicly available wind data, transmission lines, and 

48 

a digital elevation model, along with some general information about the tribe(s) as 

well as contact information. The Wind Atlas will serve as a marketing tool that can 

be displayed at conferences. Each of the 77 Reservations will be offered the opportunity to be included in the Indian Land Wind Atlas. 

In addition, IEED has already provided direct assistance to 25 tribes through 

funding or staff time with their wind projects. Currently seven Tribes are in the 

final stages of pursuing wind farm development, and a few others have been collecting data from anemometer towers and are close to approaching wind developers. 

The Blackfeet Reservation in Montana is currently in negotiations with a developer 

to pursue a wind farm. In South Dakota, we supported the efforts of Rosebud Sioux 

Reservation to construct a single 750 kilowatt turbine which is currently in operation. We are also providing economic analyses and technical assistance as they pursue a 30 MW wind farm. 

However, not all wind development is large-scale or intended for offsite use. IEED 

is providing support for construction of a 65 KW wind turbine at Pine Ridge Reservation to help provide power to the KILI radio station. I believe that more of these 

local, distributed generating opportunities need to be identified and supported. 

These are opportunities to decrease existing high-cost energy requirements while 

supporting the use of renewable energy. 

Energy and Mineral Development Program 

In the last 25 years, Congress, through the Department of the Interior, has funded about $83 million in projects to assess and help develop energy and mineral resources information on Indian Trust lands. IEED is now at the stage of working 

with tribes and providing them the technical assistance they need to move to the 

development and job-creation phase. We are further defining these resources by the 

use of detailed exploration, market studies, business plans, economic analysis, and 

lease negotiation that reflect the tribes economic, environmental and social needs. 

This is more proactive and useful to tribes to help them proceed with development 

and realization of economic benefits from their energy and mineral resources. 

Today, our major objective is sustainable resource development focusing on Indian 

employment and income to the Indian Mineral Owner. This goes further than resource assessment which is the identification of the quantity and quality of mineral 

resources. Our focus on resource development (vs. resource assessment) is far more 

proactive and useful to tribes as they can proceed to an informed decision-making 

process for their resources that provides a springboard to the development and realization of the potential economic benefits. 

We are providing tribes with access to state-of-the-art knowledge and geo-scientific based modern analysis of their energy and mineral resources to allow them 

to perform the following critical functions: 

a) strategic planning, 

b) formulation of economic and energy policies, 

c) evaluation of lands in the purview of the Federal Government, 

d) development of sound environmental policies, and 

e) negotiation of sound Indian Mineral Development Act (IMDA) agreements 

with energy and mineral industry developers. 

IEED also has accumulated a significant repository of industry-confidential exploration data (e.g., seismic data, well data). We have been actively providing technical 

assistance to various tribes by purchasing, reprocessing and interpreting thousands 

of miles of 2D seismic data as well as hundreds of square miles of 3D data. These 

studies have identified numerous prospects, some of which are essentially ready to 

drill. Some of the prospects still require additional data collection and evaluation 

to more accurately identify exploratory and development targets. These evaluations 

yield prospects that enhance the marketability of Indian lands and results in better 

economic terms of an agreement. 

During the boom era of the late seventies and early eighties, there was a considerable amount of acquisition of 2D seismic data acquisition on certain reservations, 

such as Wind River, Fort Berthold and Jicarilla. As needed, we purchase seismic 

data on tribal land using program funds. However because of changes in the petroleum industry over the last two decades, ownership rights to seismic data have 

passed to ‘‘seismic data brokers’’ who license data for use only. Therefore although 

the data is from Trust land, in most cases neither we nor the tribe have ownership 

of the data under this arrangement. 

Based on the limited amount of seismic exploration on Indian lands discussed previously, most reservations in the western U.S. are lightly explored, especially with 

the newer technology 3D seismic data. However, many reservations are situated in 

sedimentary basins with proven oil and natural gas potential. Reservations are also 

49 

currently surrounded by considerable industry activity, and therefore the probability 

is high that the oil and natural gas reserves that private industry is discovering just 

over the reservation boundary on Federal, State, or private, land will also be 

present on Indian lands. 

Alaska Energy Situation 

Alaska Native villages have a unique energy situation. While rising energy costs 

certainly present problems for those of us who live in the lower 48, the consequences 

for Alaska Native communities, which are mostly rural, are alarming. The energy 

crisis impacts rural Alaska on both the individual and community level: when communities spend more on fuel, they spend less on key services. Many residents of 

rural Alaska often have to make difficult decisions regarding heating their homes, 

putting fuel in their vehicles, and feeding their families. Presented with these options, and in the face of the current upward trend of energy prices, it has been reported that many rural residents are abandoning traditional lifestyles for more 

urban settings thus devastating these longstanding vibrant rural communities. 

Diesel fuel driven generators provide a majority of electricity in rural Alaska, especially on the Aleutian Islands where power transmission lines are non-existent. 

Because nearly all rural native villages generate their electricity locally using diesel 

generators, it is a balancing act each year for these communities. Diesel in Alaska 

is expensive at any time, with reported prices of around $9 per gallon. Estimating 

how many gallons of diesel need to be stockpiled when it can be transported less 

expensively during the warmer months is an important decision. Order too much 

and a village has spent money it may need for other goods and services. But, order 

too little, and it quickly becomes very expensive to have diesel transported to the 

bush during the winter months, again spending money that may be needed for other 

things. 

The Institute of Social and Economic Research (ISER) at the University of Alaska 

Anchorage issued a report which estimates that rural households face utility costs 

that are 50 percent higher than in 2000. Specifically, according to ISER, for a gallon 

of diesel fuel, prices have gone up 83 percent in rural communities from 2000 to 

2006. 

IEED has been approached by numerous communities for support on geothermal 

projects. The State of Alaska has completed preliminary surface geology mapping 

at many of these communities and documented the geothermal resources that are 

present. We have supported the communities of Unalaska and Adak on the Aleutian 

Islands. Both communities are currently generating their electricity using diesel 

fuel. 

Geothermal prospecting basically involves finding an underground fracture system 

or swarm that can provide sufficient quantities of heat, steam and water. These 

three components are necessary for a successful project. To find a fracture system, 

and to significantly increase the success of the project, shallow seismic refraction 

studies are often done to locate the well and identify a drilling depth. 

Unalaska has nearby thermal vents spewing steam and would be an ideal candidate for potential steam generation. This summer, the community is barging a 

drilling rig into the area to drill a municipal water supply well. This rig could be 

also be utilized to drill geothermal wells in the region. The mobilization costs for 

bringing in equipment are extremely high so it would be prudent to drill multiple 

holes while the rig is available. Unalaska currently is the home to an active fishing 

fleet and cannery. 

Our second project area is on Adak Island, which formerly housed a large Department of Defense facility. The island’s electrical generation facilities are powered by 

inefficient diesel powered generators to supply the electric needs of the 70 residents. 

There is a part-time cannery operation on the island supported by a small fishing 

fleet. In addition, the military left a 2.8 million gallon fuel supply tank that could 

potentially be used to fuel ships in the area and provide some job potential. The 

addition of geothermal generation would greatly reduce energy costs in the area. 

Numerous steam vents line the coast in the harbor near Adak. In addition, they 

have an extensive power line grid. 

At both of these communities, IEED proposes acquiring and processing seismic 

data in an effort to locate the ideal site for a rig to drill an exploration borehole 

to help identify the optimal site for a future power generation facility. 

We are also assessing potential wind projects that would enhance energy reliability for some villages. We are currently doing an assessment on the Pribilof Islands to determine the feasibility of developing a hybrid wind energy system. 

50 

Summary 

In closing, energy development on tribal lands is not a new industry. Certainly 

some tribes have a long history working cooperatively with industry to use natural 

resource development as a stimulus for their economies. However, with the current 

high demand for both traditional and renewable energy sources and technologies 

Native American communities contiguous with the lower 48 States are well situated 

to use their natural resources to enhance their local economies and meet the U.S. 

needs for energy. In addition, Native American communities in Alaska stand to benefit greatly from the development of alternative energy sources as a hedge against 

ever-rising crude oil and natural gas prices. 

The Department believes that development of Indian energy and mineral resources can help foster strong Indian communities with sustainable economic development by promoting and supporting the creation of jobs, capital investment, Indian-owned businesses, and a trained workforce. 

51 

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The CHAIRMAN. Dr. Middleton, thank you very much. 

Next we will hear from Mr. Steven Morello, Deputy Assistant 

Secretary, Intergovernmental and External Affairs and Director, 

Office of Indian Energy Policy and Programs. 

STATEMENT OF STEVEN J. MORELLO, DEPUTY ASSISTANT 

SECRETARY, INTERGOVERNMENTAL AND EXTERNAL 

AFFAIRS; DIRECTOR, OFFICE OF INDIAN ENERGY POLICY 

AND PROGRAMS 

Mr. Morello. Good morning, Mr. Chairman, Madam Vice Chairman, Senator Tester. I am Steve Morello, the Deputy Assistant 

Secretary for Intergovernmental and External Affairs at the Department of Energy. I also carry the title of Director of the Office 

of Indian Energy Policy and Programs, and I am also a very proud 

member of the Sault Ste. Marie Tribe of Chippewa Indians. 

I would like to thank you for the opportunity to discuss the Department of Energy’s implementation of the tribal provisions of the 

Energy Policy Act of 2005 this morning. The Department has long 

recognized the important role that American Indian, Alaska Native 

and Native Hawaiians play in the deployment of environmentally 

sound energy technology and renewable energy production. We look 

forward to continued successful relationships with tribal governments as we work together to meet the growing demand for affordable, clean, and reliable energy. 

The Department of Energy has taken several steps to implement 

the tribal provisions of Title V of the Energy Policy Act of 2005. 

In September 2007, Secretary Bodman named me to be the first director of that office. The office is part of the Office of Congressional 

and Intergovernmental Affairs. In addition, the Department has requested other funding that supports pre-existing tribal programs 


501r17.eps
68 

that continue the important mission of promoting opportunities for 

tribes to participate in the work of the Department of Energy’s program offices. 

One tribal energy assistance program at the Department is the 

Tribal Energy Program within the Office of Energy Efficiency and 

Renewable Energy. This program offers financial and technical assistance to tribes through government to government partnerships 

that enable tribal leaders to power Indian reservations with clean, 

renewable energy, enhance education and training for tribal nations on various energy options and improve local tribal economies 

and the environment. 

To support this mission, DOE has issued two funding opportunity announcements for the deployment of renewable energy and 

energy efficiency in Indian Country. The hope is through the resulting projects, DOE’s investment of $4.5 million in Fiscal Year 

2008 will reduce tribes’ use of fossil fuel and enable economic development within these Native communities. 

In Fiscal Year 2009, the EERE tribal program will continue critical energy assessment and technical assistance activities. Also, the 

activities will include ongoing project/program management, training, internships, and technical assistance through the DOE laboratories. 

Another initiative is the Tribal Electrification study to support 

tribal acquisitions of energy as contemplated by Title V. DOE is 

commissioning this study in the Office of Electricity Delivery and 

Energy Reliability. This study is being conducted by the Chickasaw 

Nation with the goal of determining where the greatest needs for 

electrification exist on the reservation. Upon completion of the 

study, it will provide a road map of the next steps in this important 

matter. 

Section 503 of the Energy Policy Act, which added new provisions 

to Title XXVI of the Energy Policy Act of 1992, mandated a report 

on ‘‘the use of Indian tribes of Federal power allocations of the 

Power Marketing Administration.’’ This report was submitted to 

Congress in December of 2007. 

Another provision of interest to tribal governments is the tribal 

loan guarantee authorized under Title V of the Energy Policy Act. 

While DOE is not implementing Title V loan guarantees specifically at this time, tribal governments and entities are permitted to 

participate in the Title XVII solicitations issued by the Department’s Loan Guarantee Office. The Title XVII program is designed 

for projects that employ advanced technologies that avoid, reduce 

or sequester air pollutants and man-made emissions of greenhouse 

gases. 

Under the Consolidated Appropriations Act of 2008, DOE has authority until September 30, 2009, to issue loan guarantees for 

qualified projects. 

Since I have come to office, I have tried to look for ways to involve tribes in programs that we have at the Department of Energy. One such program is the Department’s Solar Decathlon, 

which was held in Washington, D.C. last fall. This event drew over 

100,000 people to the National Mall, where zero-emissions solar 

powered homes showcased the ingenuity of college students who incorporated energy efficient measures and available technology. My 

69 

office hosted a delegation of tribal leaders, tribal colleges and universities, administrators and Federal agency personnel. Together, 

we toured the homes. We were able to highlight available clean energy technologies and demonstrate the energy-saving potential and 

economic development opportunities. Some day, I hope to see a 

tribal college or university exhibiting one of their products on the 

Mall at this event. 

Finally, my office supports an important initiative, which was 

started by the White House Indian Affairs Executive Working 

Group. Working with several Federal agencies, we created an ‘‘Indian 101’’ online training program to educate Federal Government 

employees on the unique status of Indian tribes and how their historical relationship with the Federal Government affects Government programs, responsibilities and initiatives. My office aims to 

promote this training for DOE employees at headquarters and 

across the complex as well as at other Federal agencies. 

This concludes my prepared statement. I would be pleased to answer any questions the Committee may have. 

[The prepared statement of Mr. Morello follows:] 

PREPARED STATEMENT OF STEVEN J. MORELLO, DEPUTY ASSISTANT SECRETARY, INTERGOVERNMENTAL AND EXTERNAL AFFAIRS; DIRECTOR, OFFICE OF INDIAN

ENERGY POLICY AND PROGRAMS

Chairman Dorgan, Vice Chairman Murkowski, and Members of the Committee, 

I am Steve Morello, Deputy Assistant Secretary for Intergovernmental and External 

Affairs, Director of the Office of Indian Energy Policy and Programs, and a proud 

citizen of the Sault Ste Marie Tribe of Chippewa Indians. I would like to thank you 

for the opportunity to discuss the Department of Energy’s implementation of the 

tribal provisions in the Energy Policy Act of 2005. 

The Department has long recognized the important role that American Indian and 

Alaskan and Hawaiian Natives play in the development of environmentally sound 

energy technology and renewable energy production. We look forward to continued 

successful relationships with tribal governments as we work together to meet the 

growing demand for affordable, clean and reliable energy. 

The Department of Energy has taken several steps to implement the tribal provisions of Title V of the Energy Policy Act of 2005 (EPACT). In September 2007, Secretary Bodman named me to be the first Director of the Office of Indian Energy Policy and Programs. This Office was created in Title V of EPACT, Pub. L. 109–58, 

August 5, 2005. 

The Office is part of the Office of Congressional and Intergovernmental Affairs. 

In addition, the Department has requested other funding that supports preexisting 

tribal programs that continue the important mission of promoting opportunities for 

tribes to participate in the work of DOE’s program offices. 

One tribal energy assistance program at the Department is the Tribal Energy Program within the Office of Energy Efficiency and Renewable Energy (EERE). This 

Program offers financial and technical assistance to tribes through government-togovernment partnerships that enable tribal leaders to power Indian reservations 

with clean, renewable energy; enhance education and training for tribal nations on 

various energy options; and improve local tribal economies and the environment. 

To support this mission, DOE has issued two funding opportunity announcements 

for the deployment of renewable energy and energy efficiency in Indian Country. 

The hope is through the resulting projects DOE’s investment of $4.5 million in FY 

2008 will reduce tribes’ use of fossil fuel and enable economic development within 

these Native communities. 

In FY 2009 the EERE tribal program will continue critical energy assessment and 

technical assistance activities. Also, the activities will include ongoing project/program management, training, internships, and technical assistance through DOE 

laboratories. 

Another initiative is a Tribal Electrification study to support tribal acquisitions 

of energy, as contemplated by Title V. DOE is commissioning this study in the Office of Electricity Delivery and Energy Reliability. This study is being conducted by 

the Chickasaw Nation with the goal of determining where the greatest needs for 

70 

electrification exist on the reservation. Upon completion of this study, it will provide 

a road map of next steps in this important matter. 

Section 503 of EPACT, which added new provisions to Title XXVI of the Energy 

Policy Act of 1992, mandated a report on ‘‘the use by Indian tribes of Federal power 

allocations of the power marketing administration (or power sold by the Southwestern Power Administration) to or for the benefit of Indian tribes in a service area 

of the power marketing administration.’’ (EPACT used the singular ‘‘power marketing administration’’ although there are four such administrations.) This report 

was submitted to Congress in December 2007. 

Another provision of interest to tribal governments is the tribal loan guarantees 

authorized under Title V of EPACT. While DOE isn’t implementing Title V loan 

guarantees at this time, tribal governments and entities are permitted to participate 

in Title XVII solicitations issued by the Department’s Loan Guarantee Office. The 

Title XVII program is designed for projects that employ advanced technologies that 

avoid, reduce, or sequester air pollutants or anthropogenic (manmade) emissions of 

greenhouse gases. Under the Consolidated Appropriations Act for 2008, DOE has 

authority until September 30, 2009 to issue loan guarantees for qualified projects 

such as Uranium Enrichment, Coal Based Power, Advanced Coal Gasification, Renewables, and Electricity Delivery. It is anticipated that future solicitations will be 

forthcoming in the near future announcing the availability and methods of applying 

for loan guarantees. 

Last month, DOE announced plans to issue solicitations this summer for up to 

$38.5 billion for the most promising nuclear projects; efficiency, renewable energy 

and electricity infrastructure projects; and advanced fossil energy projects that 

avoid, reduce or sequester greenhouse gas emissions. This will mark the second and 

third rounds of solicitations for DOE’s Loan Guarantee program, which encourages 

the development of advanced energy technologies and is an important step in spurring investment in clean energy projects. 

In my time as Director, I have focused on working with tribal governments and 

entities to create appropriate partnerships in energy development, and have traveled extensively throughout Indian country to do so. 

An example occurred last fall during the Department’s Solar Decathlon in Washington, DC. This event drew over 100,000 people to the National Mall where zeroemissions solar powered homes showcased the ingenuity of college students who incorporated energy efficient measures and available technology. My office hosted a 

delegation of tribal leaders, Tribal College and Universities’ (TCUs) administrators, 

and federal agency personnel, and together we toured the homes. We were able to 

highlight available clean energy technologies and demonstrate the energy saving potential and economic development opportunities. We hope that a TCU will compete 

for selection as a future Solar Decathlon team. 

My office has not only reached out to Indian Country and others, but we have 

worked internally as well through the DOE senior-level Tribal Steering Committee. 

The committee meets monthly to coordinate between and among the program offices 

about tribal energy issues that affect DOE. Through this committee, we can harness 

the resources of various program offices and successfully collaborate on issues of importance to Indian Country. As Director, I chair these meetings, and I find this 

group to be an important component in maximizing opportunities for the Indian 

Country. 

Additionally, my office supports an important initiative started by the White 

House Indian Affairs Executive Working Group. Working with several federal agencies, we created an ‘‘Indian 101’’ online training program to educate Federal Government employees on the unique status of Indian tribes, and how their historical relationship with the federal government affects government programs, responsibilities, 

and initiatives. My office aims to promote this training for DOE employees at headquarters and across the complex as well as at other federal agencies. 

We are confident that our current and future activities with tribes will assist us 

in delivering a balanced and diverse portfolio of solutions to address the urgent energy and environmental challenges facing our country today. We hope that more 

tribes will become our partners in accelerating the development of clean and renewable energy technologies to dramatically increase the amount of clean energy produced in the United States. 

This concludes my prepared statement and I would be pleased to answer any 

questions the Committee may have. 

The CHAIRMAN. Mr. Morello, thank you very much. 

I understand that Senator Murkowski has to be at the Energy 

Committee. Did you wish to make a comment, Senator Murkowski? 

71 

Senator MURKOWSKI. Thank you, Mr. Chairman, and thank you, 

gentlemen, for your testimony here this morning. Mr. Middleton, 

thank you for acknowledging that in Alaska, our situation is a little 

bit different with our Alaska Natives and the challenges we face. 

We recognize that across the Country energy issues are a challenge 

to families. But our situation with so many of our Alaska Natives 

in their villages is even further complicated. So I appreciate your 

recognition of that. 

Mr. Morello, I appreciate your visit to the State and the opportunity to see what we experience. I guess I would leave you with 

this, in your capacity as the Director of the Office of Indian Energy 

Policy. You have mentioned the loan guarantee program, other financial assistance programs that we have authorized through the 

Congress in the 2005 Energy Policy Act. 

I believe that if we were to do right by those and provide for the 

funding, we would see more tribes stepping up to help this Country 

develop their energy sources. I do hope that we can do more than 

just provide for the authorization, that we can take that next significant step, which is to provide for that level of funding in Title 

V. I would hope that you would advocate the funding of these very 

critical programs when you discuss with Secretary Bodman. 

It is one thing for us to say we are going to put them into law, 

it is another thing for us to put the muscle behind the action that 

we have made. So you hear the frustration and the concern coming 

from the tribes. They need some assistance, whether it is the technical assistance, whether it is the financial assistance. So if we do 

our job here in Congress, it is not just the authorization, it is making sure that we put the money behind it. So I would hope that 

you would take that message back. 

Mr. Morello. Yes, ma’am. 

Senator MURKOWSKI. With that, Mr. Chairman, I appreciate the 

accommodation and I am sorry that I must excuse myself. 

The CHAIRMAN. Let me ask a couple of questions, then I will turn 

to Senator Tester. I am trying to understand the testimony that 

both of you have offered. And you represent the energy function for 

Native Americans, for tribes, that we have established in the Bureau of Indian Affairs and the Department of Energy. I am trying 

to reconcile what you have told me relative to what the tribal leaders and others have said to us and how this addresses their problems. 

Dr. Middleton, the Tribal Energy Resource Agreements, I think 

these can be unbelievably important to tribes. But the DOI’s final 

regulations for the TERA program state the Secretary will not 

allow tribes to take over ‘‘inherently Federal functions.’’ This 

phrase is not explained in the regulations at all that I am aware 

of. Despite comments from Indian tribes, the final regulations do 

not define or list what is ‘‘inherent Federal functions.’’ 

How does a tribe proceed without understanding how this Administration or some future administration will determine what is 

an inherently Federal function? 

Mr. Middleton. Yes, Mr. Chairman. From the perspective of my 

office, we believe there are certain inherent Federal functions that 

the Secretary’s office needs to retain, such as putting a liability on 

the Federal Government. In other words, if in cases of where tribes 

72 

may want to take over the collection of royalties from development 

on trust tribal lands, at some point there may be a need to do an 

order to pay. This is typically a function that the Minerals Management Service performs. We believe it still needs to be retained in 

the Secretary’s office, to have that order to pay presented to a company from the Federal Government, who has the fiduciary trust responsibility still under Title V of the Energy Bill. 

Title V, of course, explicitly says that the trust responsibility 

shall remain with the Federal Government. Therefore, we believe 

that certain functions like that probably need to be retained by the 

Federal Government. 

However, we are very open and I have been directed by the highest levels of the Department to be as flexible as we can to turn over 

responsibilities for managing these energy resources on trust tribal 

lands to the tribes. 

The CHAIRMAN. Would it not be wise to outline what does this 

mean in the regulation itself? In the rulemaking process, you want 

to try to clarify, not confuse. If I were a tribal chairman trying to 

figure out what this means, it means nothing except a phrase and 

how someone at some point will interpret that phrase, which can 

either make this TERA workable or make it largely meaningless. 

Why is this not defined anywhere? 

Mr. Middleton. Mr. Chairman, we fully understand those concerns that have been raised. We have been in long-term discussions 

with tribes and representatives of tribes to try and delineate what 

these inherently Federal functions would be. To be honest, we 

haven’t quite come to completion on our internal thought processes 

on that yet. We are in discussions with the Solicitor’s office to try 

and determine what those functions would be. 

But we thought it would be beneficial to make sure we at least 

got the regulations published as we were then continuing to clarify 

what inherently Federal functions are, rather than holding up the 

regulations themselves. But we do intend on trying to provide some 

clarification in the future. 

The CHAIRMAN. You indicated you had been in long-term discussions, which always offers warning bells for me. If they have been 

long-term so far, this Act was passed three years ago. If they have 

been in discussions now for some while and you don’t have it yet 

resolved, when will it be resolved, do you think? 

Mr. Middleton. At this stage, Mr. Chairman, I am unable to give 

you an exact date. But I would like to be able to respond to that 

in writing and see if we can come up with an exact date. 

The CHAIRMAN. Yes. Now, Mr. Middleton, you are the Office of 

Indian Energy and Economic Development. You heard the testimony, and I understand you are not involved in the issue of approving leases and so on. Yet, the title of your job is to try to make 

these things work. So your response to Chairman Wells, for example? How do you respond to what he is saying is happening on his 

reservation? Because that is your agency, it seems to me. 

Mr. Middleton. That is correct. We do provide a lot of technical 

assistance. To be honest, as Chairman Wells pointed out, there has 

been an erosion of technical capability for energy and mineral development in BIA as well as Indian Affairs in general. We are tryVerDate Aug 31 2005 07:51 Aug 19, 2008 Jkt 042661 PO 00000 Frm 00076 Fmt 6633 Sfmt 6601 S:\DOCS\42661.TXT JACK PsN: JACKF
73 

ing to rectify this situation. As I am able to, I am bringing on staff 

to be able to provide technical assistance. 

Once Secretary Artman realized that there in fact was a delay 

in processing these leases in Fort Berthold, he did immediately pull 

together resources from the Office of Trust Services as well as my 

office out in Denver, as well as some of the local and regional offices folks, to take them up to the agency and start processing 

leases. 

At the same time, it is not simply a paperwork exercise either. 

There is a fiduciary responsibility inherent there, so there has to 

be some due diligence and processing leases. I know that people are 

working diligently on this. The delay is not an intended delay but 

simply was a manpower and technical capability shortage that 

hopefully has been rectified. We will be quickly working on issuing 

the remainder of the leases. 

The CHAIRMAN. Is there a plan underway at this point? You say 

hopefully rectified. We want to determine whether it is rectified. Is 

there a plan underway to marshal resources so that we don’t have 

a tribe out there that wants to be engaged in development but can’t 

get leases approved because it goes through a bureaucratic funnel, 

the end of which is plugged? 

Mr. Middleton. Definitely. At least for Fort Berthold, there is a 

plan in place. There are people on the ground actually processing 

leases at this time. I believe from the experience that we have had 

at Fort Berthold, we would be prepared in other areas of Indian 

Country as we may experience some boons in energy and mineral 

development. 

The CHAIRMAN. Chairman Wells is here, so I don’t mean this just 

to represent Fort Berthold, it is a problem for them right now, because they are right smack in the middle of the most aggressive 

oil activity in America. It applies also over to Montana. But this 

issue is an issue that we want to understand as it represents other 

tribal challenges as well. 

So I am going to ask that there be a roundtable discussion in a 

couple of places in the Country here, so that we can have our staff 

go out and understand who is doing what, or who is not doing 

what, even more importantly. You know and I know, having 

watched this and participated in the Federal Government for some 

while, that sometimes to subsume something in a Federal agency 

means you will never, ever see it again, because people will study 

it to death. I really worry about Federal agencies not performing. 

The BIA, I must tell you, does not have a great reputation in performing, and for lots of reasons. As I indicated earlier, I am very 

distressed that we are losing the Assistant Secretary now, he has 

been there a year, it was vacant two years, probably vacant another year and a half. It is unbelievable to me. 

So I want to have our staff work closely with you, Mr. Middleton, 

because we need to address these issues. Your title is Director of 

the Office of Indian Energy and Economic Development. So whether you are involved in leasing or not, the fact is, that umbrella includes all those activities for me. I appreciate your coming and testifying. 

I want to ask Mr. Morello a couple of questions. We passed the 

Indian Tribal Energy Development and Self-Determination Act in 

74 

2005. It took the Department of Energy until almost the end of 

2007 to appoint a director. That was because, I think, the House 

Appropriations Subcommittee for Energy and Water included report language that directed the Department of Energy to hire a director. So that was a two-year delay. 

It also says, Mr. Morello, that the Director is empowered to establish programs to assist tribes in meeting energy education, research development, planning and management needs, to develop 

a program to support and implement research projects, tribes with 

opportunities to participate in carbon sequestration and so on. It 

appears to me from what I hear from you that you are coordinating 

a lot of things, but your blueprint and your opportunity in this law 

is much greater than that, than just being a coordinator. 

My understanding is that the request for funding is just to cover 

payroll, travel and overhead. Do you have grant requests, do you 

have funding for grants and other opportunities that you are going 

to reach out to tribes with? 

Mr. Morello. Mr. Chairman, there are a number of grant opportunities in the Department of Energy. But they are dispersed 

throughout the program offices. The reason that I haven’t requested any funding specific to my office at this time is because the 

office has very specific duties set out in the statute. They are very 

large responsibilities, very large duties. It is a couple of things 

going on here. 

The first thing is, I happen to believe that most of the wisdom 

for doing this job the right way resides not necessarily in the Forrestal Building but in Indian Country. So I wanted to spend a significant amount of time traveling in Indian Country, listening to 

the wisdom of the tribes with regard to what they need, how they 

would like to see this handled and what are their expectations, 

what are their hopes and their dreams, what energy resources do 

they have, how do they want to develop them. 

So I have traveled extensively and I have listened and I have 

heard a number of things, I have met three of the four panelists 

this morning in my travels before I came here. 

The second part of that is that there are approximately 40 different people throughout the Department of Energy which touch 

Indian Country in one way or another. So before I go in like a bull 

in a china closet and say, I am the Director and I want this one 

and I want that one and make it look like I am just a power grabber, I wanted to do it in a deliberate way to understand what the 

needs are in Indian Country and then to go back and talk to the 

Secretary and the various unders and assistant secretaries and 

say, this is why I have found. You asked me initially how we 

should organize this. Now, after I have been at it for a year or so, 

this is what the real issues are and this is my recommendation. 

The CHAIRMAN. Mr. Morello, I understand that. But I think 

again, because there was a vacancy for two years, and so now it 

is three years after the law was passed and you are still doing an 

inventory, and I don’t criticize you for trying to go out and being 

involved in understanding the needs, it is an important thing to do, 

but I think we also need to understand what specific program opportunities, what specific tools and techniques are going to be used 

to really reach out and help tribes. 

75 

I have to be at Senator Reid’s office at 11:15 for a very important 

energy meeting, in fact. So I am going to depart. I am going to submit questions to both of you, and Senator Tester, if you will take 

this chair, Senator Tester has agreed to complete the hearing as 

Chair, and I know he has questions as well on behalf of what is 

happening in Montana. In many ways, we have very similar circumstances, because it is one field, the Bakken Shale field. Both 

of us are very interested, not just for our part of the Country, but 

for Indian economic and energy development across the Country. 

Senator Tester, thank you very much. I regret that I do have to 

leave, but I am going to be submitting questions to both of you. 

Mr. Middleton. Thank you, Mr. Chairman. 

Senator TESTER. [Presiding] Thank you, Chairman Dorgan. I appreciate once again holding this hearing, and I appreciate the panelists. 

You fellows were both here to hear the first panel. You heard 

their testimony. Do you feel a sense of urgency in the jobs you guys 

hold to help move this along? Or do you see it as much more working through the bureaucracy and structure? Do you understand 

what I am saying? Do you feel a sense of urgency to move this forward? 

Mr. Middleton. Most definitely, Senator Tester. As a matter of 

fact, my office was specifically formed by Secretarial order in 2005. 

Because the Secretary of Interior, Secretary Norton at that time, 

understood that energy development and economic development in 

Indian Country was crucial to continued success. Since that time, 

I think we have established a very good track record with my office 

on working in Indian Country, both on energy and economic development. We are providing workforce training, guaranteed loan programs, business development, energy and mineral development and 

now implementation of Title V of the Energy Bill. 

So we definitely have that sense of urgency and we are working 

hard on it. 

Senator TESTER. Mr. Morello? 

Mr. Morello. Senator, when I came to this job, I had to decide 

if I would stay in Washington and work through the organizational 

issues, or if I would go out into Indian Country, find out what the 

real issues are try and figure out how to do business so that we 

could get renewable and sustainable energy projects off the ground. 

I decided to go out into Indian Country, find out what the issues 

were and work very hard at getting those projects put together. 

I had the opportunity to address the Crow Nation when they 

were in town for their UCC signing ceremony, over in the Indian 

Treaty Room. One of the points that I make whenever I address 

Indian nations and I made on that particular day is that it is very 

important for tribes to understand that when they do these deals, 

particularly with regard to renewable energy, they take a significant equity position in the deal and not just become lessors of their 

land. 

That message obviously is taking hold in Indian Country and it 

is a message that resonates. When the tribes understand that they 

can take ownership, this is their land and these are their projects, 

they are much more likely to want to proceed with the project and 

get the project out of the ground. 

76 

Two other things that we have done in understanding this urgency is, we took $4.5 million, which was available generally for 

studies, feasibility studies and what-not, under the guidance of Secretary Karsner, we have put out two bids on the street right now, 

which are currently open for the tribes to respond to, $2 million for 

the lower 48 tribes and $2.5 million for Alaska for the purposes of 

actually getting projects out of the ground. This is not further studies, these are tribes that have already done studies that are on the 

verge of starting a project and just need the seed money to get 

projects started. 

So that is an opportunity that we made available to tribes in a 

fairly quick fashion. 

Senator TESTER. Okay. How do you explain—we have all day, by 

the way, I don’t have a meeting with Senator Reid, 

[Laughter.] 

Senator TESTER. How do you explain the fact that Chairman 

Wells talked about, when you derive on his reservation, there are 

lights all around it and there is one well in the middle of it? 

Mr. Middleton. Actually, historically, a lot of production has 

taken place on fee land, on public lands, surrounding reservations, 

State land as well. However, for various reasons, moving in and 

working on reservations just hasn’t occurred at the same pace. We 

are trying to rectify these situations by marketing the resource 

availability, determining what those resources are so that companies understand what the risks would be coming in on Indian land 

to develop these resources. We think we are making significant 

headway now. 

Senator TESTER. You have a field that has 3.65 billion barrels of 

oil that is being developed all the way around. What is the problem? 

Mr. Middleton. In many cases, the tribes themselves have to 

make a determination amongst their members whether they in fact 

want to develop these resources. Part of the delay has been in 

tribes working with the—— 

Senator TESTER. Do they need to put a resolution together to the 

BIA? What I heard today was these guys want to develop the resources. They can’t get it done because of leasing or whatever. And 

then you had mentioned in an earlier question that there has been 

an erosion of technical assistance in the Department. At a time 

when we are in a war with Iraq, which I would argue is to get oil, 

we are eroding our own technical assistance in Indian Country to 

be able to get oil domestically. It doesn’t make any sense. 

Mr. Middleton. Senator Tester, you are correct. Back when there 

was the original oil boom in the late 1980s, there was quite a bit 

of technical assistance available in Indian Affairs, petroleum engineers, petroleum geologist, geophysicists, mining engineers. But 

over time, the need for those technical staff decreased somewhat. 

So when people retired, they weren’t filled, they were filled with 

other skills that were needed. 

However, we have been increasing our technical assistance over 

the last few years. From the inception of my office, which as I mentioned, was done by Secretarial order, we are attempting to rebuild 

at a time when it is needed all of these technical skills that are 

77 

available for oil and gas development, as well as renewable energy 

development. 

Senator TESTER. Okay. We have to do better. 

Mr. Morello, are you working with any tribes in Montana? 

Mr. Morello. I have received invitations to visit the tribes in 

Montana. I am planning to go there this summer. I have an invitation from the Crow Nation, from the Blackfoot Nation and I am 

looking very much forward to going there. 

Senator TESTER. Okay. I look forward to your being there also, 

and I am sure that the individual tribes you are going to represent 

do, too. 

As Chairman Venne pointed out in his particular area, he lives 

in the fourth poorest county in the Nation. I don’t want to lecture 

anybody about anything, to be honest with you. But I look forward 

to you going out to Crow Country or the Blackfeet or any of them, 

Fort Belknap, I don’t care, any of them, and looking around and 

seeing what is going on. 

Because the truth is that there is a sense of urgency. There is 

a sense of urgency in Indian Country and there is a sense of urgency from my perspective and I know Senator Dorgan and Senator Murkowski’s perspective also. Because we have to get some 

things done here. These folks don’t want to be dependent on the 

Federal Government. They want to be self-determining. They want 

to be able to set their own agenda, and this is the opportunity, 

$120 a barrel oil is an incredible opportunity. The fact that we 

have coal reserves in Montana, the best in the Nation, is an incredible opportunity for this State. 

All I ask you to do is this. And I am not implying this is the case, 

but all I am asking you to do is, both of you, you are in a position 

where you can make a difference, and a difference for the right reasons. You have people on the ground that want to make a difference for their people. All I ask you to do is, if the people above 

you are saying, whoa, whoa, whoa, we don’t want you to proceed 

here, slow-walk the leases or whatever, I hope you ferret them out 

and bring them to the transparency of the public eye. Because I 

don’t think the people in this Country would buy it. I don’t think 

they would accept it for an excuse. 

So I wish you the very best in your positions. I want to tell you, 

I think they are very, very important positions. And I think that, 

I haven’t seen the kind of energy development that Mr. Begay 

talked about, what they are planning in the southern part of this 

Country. I applaud those efforts. 

But we need to not give them, but give them the opportunity. 

Mr. Morello. I understand that. 

Senator TESTER. If we give them the opportunity, they will maximize it and they will run with it and things will happen. And it 

will make this Country stronger all the way around. It will make 

Indian Country absolutely stronger. But it will make the whole 

Country stronger, too, so everybody benefits. 

I don’t mean to lecture anybody. I just appreciate your being 

here. There is a tremendous opportunity here, there is a tremendous challenge and with that challenge comes success if we approach it from the right direction. I think, I want to tell you, the 

people that I know that are on the ground are working hard and 

78 

they are trying to make it happen. As Chairman Venne said, we 

want to know how to own our own company, well, let’s figure out 

how to make it happen, because they will make it a success if we 

allow them the opportunity. 

Thank you very much. With that, we will adjourn. 

[Whereupon, at 11:25 a.m., the Committee was adjourned.] 

(79) 

A P P E N D I X 

PREPARED STATEMENT OF HON. CURTIS R. CESSPOOCH, CHAIRMAN, UTE TRIBE OF

THE UINTAH AND OURAY RESERVATION

Introduction 

My name is Curtis R. Cesspooch and I am the Chairman of the Ute Indian Tribe 

(Ute Tribe) of the Uintah and Ouray Reservation located in northeastern Utah. Our 

headquarters are located in Ft. Duchesne, Utah. On behalf of the Ute Tribe, I want 

to thank Chairman Dorgan and Vice Chairman Murkowski for holding this important hearing on Indian energy development and affording me the opportunity to contribute this statement for the record. 

I would also like to commend the Chairman and Vice Chairman for their hard 

work and dedication on important matters such as the reauthorization of the Indian 

Health Care Improvement Act and the reauthorization of the Native American Housing Assistance and Self Determination Act. My Tribe and Tribes across the country 

very much appreciate your efforts to get these bills enacted this year. 

Background and History of the Tribe 

The Uintah and Ouray Reservation is the second largest Indian reservation in the 

United States, totaling 4.5 million acres. The Tribe has 3,157 tribal members and 

its government is an effective provider of services though 60 separate tribal departments ranging from land, fish and wildlife management; housing; education; emergency medical services; public safety; and energy and minerals management. 

My Tribe has come a long way in developing a stable economy and a tribal government with sound management practices. As settlers migrated west and began to 

populate the Ute tribal areas, the United States government created the Uintah 

Valley Reservation in 1861 and removed the Ute Indian bands from their homelands 

to the barren lands of the Uintah basin. Starvation and disease significantly reduced our numbers yet the Tribe endured. 

Using revenues from its energy resources, my Tribe has become a major employer 

and engine for economic growth in eastern Utah with a diverse array of tribal businesses including a bowling alley, a super market, gas stations, a tribal feedlot, an 

information technology company, a manufacturing plant, and an oil and gas development company. Our governmental programs and tribal enterprises employ 450 

people, 75 percent of whom are members of the Tribe. Each year the Ute Tribe contributes millions of dollars to the surrounding towns and communities. 

Because Utah state law completely prohibits gaming of any sort, the Tribes in 

Utah may not legally conduct gaming activities on their lands. As a result, the Ute 

Tribe’s primary source of income comes from oil and gas development. The Ute 

Tribe has an interest in Ute Energy LLC which is pursuing oil and natural gas development on 300,000 acres of our reservation. The Tribe now averages a daily production of 1,000 barrels of oil per day and is in the process of opening an additional 

150,000 acres of mineral leases on the reservation with invested $80 million in exploration. 

Energy Development and Improved Tribal Economies 

There are three reasons this Committee and the Congress should focus on energy 

development in order to strengthen Indian economies and improve the standards of 

living of Indian people. These are (1) the economic potential of Indian energy; (2) 

a very favorable market for energy prices; and (3) the new Indian energy law passed 

in 2005 and now being implemented. 

In terms of the economic potential of Indian energy, geography alone suggests 

that Indian Tribes have at their disposal huge stores of renewable and non-renewable energy and resources. Close to 20 Indian Tribes are regarded by the Department of Interior to have ‘‘High Potential’’ for hydrocarbon development. These same 

estimates show enormous potential of Indian energy—both renewable and non-renewable—to generate significant revenues to Tribes and job opportunities to their 

members. 

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With the enactment in 2005 of the Indian Tribal Energy Development and Self 

Determination Act Indian Tribes now have available a tribal-centric and pro-development energy law to aggressively develop their energy resources. Significantly, the 

new law emphasizes tribal decision-making and does not discriminate against any 

variety of energy resource an Indian Tribe might choose to develop. 

Last, the market conditions could not be more favorable. Current projections 

based on estimates conducted by the U.S. Government in 2001 suggest hundreds of 

billions in revenues from renewable energy sources alone. See ‘‘Oil, Gas and Coal 

Resources on Indian Lands’’, Division of Energy Mineral Resources Management, 

U.S. Department of the Interior, Bureau of Indian Affairs, 2001. 

The Ute Tribe’s Experience With Energy Development 

Like all Indian Tribes, my Tribe has also survived the wide swings in federal Indian policy from termination and assimilation to the present policy of Indian selfdetermination. Under Indian self-determination the Tribe has thrived and is improving its members’ lives by responsibly developing its energy resources such as 

oil and gas, tar sands, and oil shale. 

In 2005 this Committee was instrumental in drafting and shepherding through 

Congress legislation that the President signed into law. This law is the Indian Tribal Energy Development and Self-Determination Act (Pub.L. 109–58) and I am happy 

to say that my Tribe played a significant role in developing the legislation as well 

as the recently-issued Final Rule to implement the Act. 

Together with the enormous energy reserves in Indian communities and robust 

prices for energy, the new Indian energy law will assist those Indian tribes that are 

willing and able to become energy producers on regional and national scales. 

A Final Rule to implement the key provisions of the Act was recently issued by 

the Department of the Interior’s Office of Indian Energy and Economic Development 

(OIEED). This Final Rule, together with capacity building grants and other assistance forthcoming from the OIEED, will set the stage for an ‘‘energy takeoff’’ in Indian communities that has never been witnessed before. The centerpiece of the new 

Act is authority to the Secretary of Interior to review and approve ‘‘Tribal Energy 

Resource Agreements’’ (‘‘TERAs’’) submitted by Tribes that will, in turn, enable the 

Tribes to negotiate energy leases, business agreements, and rights-of-way without 

the step of securing the approval of the Secretary. Participation in energy development through a TERA is entirely left to the discretion of the Tribe and if it wishes 

it may continue to operate under pre-2005 laws that require the Secretary to review 

and approve energy-related leases, business agreements, and rights-of-way between 

a Tribe and its private sector partner. 

In Fiscal Year 2008, Congress appropriated funding for the OIEED and its counterpart in the Department of Energy—the Office of Indian Energy Policy and Programs (OIEPP)—to begin implementation of the new Act. Again this year, Congress 

appears prepared to appropriate even greater levels of funding for the operation of 

these two offices. While private capital is more appropriate for the actual development of the energy projects, Federal funding is appropriate in this instance because 

there are very specific Federal functions involved, such as the review by the Secretary of TERAs submitted by a Tribe, that cannot be legally delegated to the Tribe 

or any other entity. 

Tax Incentives and Indian Energy Development 

In 1993, Congress amended the Internal Revenue Code to add two incentives to 

attract and retain capital investment and jobs to Indian reservations. These incentives are an accelerated depreciation provision that allows Federal taxpayers (i.e. 

private entities) to achieve faster write-offs for equipment and infrastructure placed 

in service on Indian reservations, and a wage a health credit against income to 

those same taxpayers that hire qualified Indians on Indian reservations. 

The incentives were authorized for a period of 10 years (1993–2003) and since 

2003 Congress has chosen to re-authorize them in one year increments as part of 

what has become an annual ‘‘tax extenders’’ bill. 

There are difficulties presented to business planners with these one-year extensions. Were the incentives to be extended over a significant period, e.g. 20–25 years, 

investors would be encouraged to invest in ventures on Indian land and hire Indians 

as employees. Because it requires significant equipment and related infrastructure, 

energy development is particularly susceptible to these incentives. In fact, in its 

March 11, 2005, analysis of the accelerated depreciation provision, the Joint Committee on Taxation stated that 

‘‘[t]he shorter recover periods can have the effect of substantially decreasing the 

tax liability of a business. However, the degree of benefit for each business varies based on the particular nature and situation of the business. For businesses 

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engaged in activities that rely heavily on large depreciable assets, such as those 

involved in power generation, the shorter recovery periods could be very attractive.’’ See ‘‘Description and Analysis of Certain Federal Tax Provisions Expiring 

in 2005 and 2006.’’ (March 11, 2005, JCX–12–05). 

Conclusion 

There are good reasons why this Committee should continue to focus on energy 

issues as it has done in the past. The new Indian energy law stresses tribal decision-making, tribal authority and non-discrimination in terms of renewable versus 

non-renewable development. In my mind that is the appropriate recipe for strengthening tribal governments and tribal economies and improving the standard of living 

of tribal members. 

Thank you again for the opportunity to share my thoughts with the Committee. 

PREPARED STATEMENT OF NEAL W. FOSTER, BOARD MEMBER/VICE-PRESIDENT, 

SITNASUAK NATIVE CORPORATION

On behalf of the Sitnasuak Native Corporation in Nome, Alaska please distribute 

this written statement regarding energy development to all Committee Members. 

For the record my name is Neal W. Foster, and I am a board member and also vicepresident of the corporation. Currently, we are working in partnership with our regional corporation—Bering Straits Native Corporation—to develop a wind farm on 

our native lands. 

On May 1, 2008 Julie Kitka (President of the Alaska Federation of Natives) testified before you on ‘‘Regaining Self-Determination Over Reservation Resources’’ at a 

oversight hearing on Indian Energy Development. Please consider this statement as 

support for the testimony and the recommendations given by Ms. Kitka. 

In particular we would like to emphasize the need for economic incentives. The 

wind farm that Sitnasuak intends to have constructed by the fall of this year will 

have eighteen wind turbines. The key to making the project feasible was through 

federal tax credits and the ability to depreciate 50 percent of the project. However, 

these two incentives are set to expire this year. This makes it difficult to justify further investment to expand the wind farm in the future. 

Ms. Kitka recommends that the Committee hold energy hearings in regional centers in Alaska this summer, and Sitnasuak supports this recommendation. 

If you have any questions please feel free to contact me. Thank you. 

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PREPARED STATEMENT OF ELOUISE BROWN, PRESIDENT, DOODA DESERT ROCK

ORGANIZATION


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PREPARED STATEMENT OF HON. MICHAEL E. MARCHAND, CHAIRMAN, CONFEDERATED

TRIBES OF THE COLVILLE RESERVATION

On behalf of the Confederated Tribes of the Colville Reservation (‘‘Colville Tribe’’ 

or the ‘‘Tribe’’), I appreciate the opportunity to provide to the Committee on Indian 

Affairs this statement on Indian energy development, a topic of great interest to the 

Tribe. The Colville Tribe is hopeful that Title V of the Energy Policy Act of 2005 

will soon be fully implemented and adequately funded to ensure that Indian tribes 

have sufficient support in developing their energy resources. 

Before discussing Title V, I would like to take this opportunity to provide some 

brief background on the Colville Tribe. Although now considered a single Indian 

tribe, the Confederated Tribes of the Colville Reservation is, as the name states, a 

confederation of twelve smaller aboriginal tribes and bands from all across eastern 

Washington State. The Colville Reservation encompasses approximately 1.4 million 

acres and is located in north central Washington State. The Colville Tribe has more 

than 9,300 enrolled members, making it one of the largest Indian tribes in the Pacific Northwest. About half of the Tribe’s members live on or near the Colville Reservation. 

The Office of Indian Energy and Economic Development 

As the Committee is aware, the Bureau of Indian Affairs’ Indian energy programs 

are administered by the Office of Indian Energy and Economic Development (IEED). 

The Colville Tribe can attest from its productive experience with the IEED in recent 

years that the IEED brings much needed technical assistance and capacity building 

to Indian country and enables Indian tribes to maximize, leverage, and develop energy resources on tribal lands. 

The IEED provides Indian tribes with grants to assess energy resources on tribal 

lands, build capacity, conduct feasibility studies, and for other purposes. Since 2005, 

the Colville Tribe has received grants and technical assistance from the IEED that 

have allowed the Tribe to begin planning and development of a new cogeneration 

facility on the Colville Reservation that will utilize woody biomass and other renewable materials. The facility, which is still in the planning stages, would be a 16– 

20 megawatt cogeneration plant at Colville Indian Power & Veneer, the Tribe’s plywood and power plant in Omak, Washington. The existing power plant, which is 70 

years old, was designed to produce only steam for the plywood portion of the plant. 

The current plant can produce only 8–9 MW because of the limitations of the cooling 

tower. 

The Colville Reservation has an unemployment rate of nearly 28 percent, whereas 

the unemployment rate for Okanogan County is more than 13 percent. Once completed, a project of this size would create approximately 50 full-time jobs. The 15 


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jobs that would be created at the facility would benefit Okanogan County and the 

35 secondary jobs that would be created supplying the woody biomass would benefit 

both Okanogan and Ferry Counties. In addition to the IEED grant that has 

furthered this project, the Colville Tribe has received substantial technical assistance from the IEED, particularly from the IEED staff in the Denver office. 

Another program administered by the IEED is the Tribal Energy Resource Agreement (TERA) program. Authorized under Title V, TERAs are agreements between 

Indian tribes and the Secretary of the Interior that are intended to maximize tribal 

oversight and management of energy resource development. Once the IEED determines that a tribe possesses the requisite management capacity and approves a 

TERA, the tribe can then engage in a variety of energy development activities under 

an entirely new, flexible mechanism for entering into energy-related business agreements with third parties. The BIA published its final rule implementing the TERA 

program on March 10, 2008, and numerous applications are expected. Again, the 

Tribe is hopeful that the IEED will be provided sufficient resources and support to 

allow Indian country to fully utilize this unique tool. 

The Office of Indian Energy Policy and Programs 

As the Committee is aware, Title V authorizes a number of new programs and 

initiatives in the Department of Energy (DOE). Among these programs are the establishment of an Office of Indian Energy Policy and Programs (OIEPP), a grant 

and technical assistance program, and a guaranteed loan program. The Colville 

Tribe is encouraged that DOE hired a Director for the OIEPP in September 2007. 

The Tribe is concerned, however, that since enactment of Title V in 2005, DOE has 

not requested funding for the OIEEP or any of the other Indian-specific programs 

authorized by the Title V and has not otherwise taken any steps to implement those 

programs. 

The Colville Tribe looks forward to working with the Committee and the respective appropriations committees to ensure that the IEED and the Indian energy programs at DOE have the tools and resources they need to fully realize the potential 

of Title V. 

Thank you for the opportunity to provide this statement and for your consideration of these issues. 

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RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. BYRON L. DORGAN TO

STEVEN J. MORELLO


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RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. MARIA CANTWELL TO

STEVEN J. MORELLO


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* Response to written questions was not available at the time this hearing went to press. 

WRITTEN QUESTIONS SUBMITTED BY HON. BYRON L. DORGAN TO DR. ROBERT W. 

MIDDLETON * 

Question 1. I understand that the Department of Interior’s (DOI) Minerals Management Service (MMS) is forming a committee to consider recommendations for revising the rule governing valuation of oil produced on Indian lands. I further understand that the proposed rule changes are to bring added certainty to oil valuations. 

Will DOI’s Indian Energy and Economic Development office or the Bureau of Indian 

Affairs (BIA) be involved in that rule change? How will you or the BIA be involved? 

What factors make MMS uncertain about its existing oil valuations? 

Question 2. Does the DOI use a standard form for tribal or individual Indian mineral leases? Can a tribe or individual Indian include provisions in a lease that require mineral production within a certain period of time? Can a tribe or individual 

Indian develop their own lease? 

Question 3. DOI’s final regulations for developing a Tribal Energy Resource Agreement leaves the phrase ‘‘inherently federal function’’ undefined. Has this phrase 

been clarified? If so, how? If not, please explain the process DOI has been using or 

will use to clarify this phrase. Please also state when you anticipate clarifying this 

phrase and in what form that clarification will be provided. 

Question 4. We continue to be advised of delays in the Bureau of Indian Affair’s 

(BIA) approval of energy related lease documents. I understand that your office has 

a number of energy experts on staff. Can the expertise in your office be used to train 

or assist BIA staff who review and approve energy lease documents? 

Question 5. I understand that the Energy and Mineral Development Program 

Grants issued by your office have been very successful for tribes to gain expertise 

and start mineral development. I further understand that these grants are competitively awarded based on available funding and that competition for these grants is 

significant. How many tribes apply to this program and how large are the awarded 

grants? Do you have applications that are denied? Why are applications denied? 

How many applications are denied per year due to lack of funding? 


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Question 6. In your testimony, you commented that the Secretary of Indian Affairs 

had recently committed additional staff resources to review and approve mineral 

leases on the Fort Berthold Reservation. Since your testimony we have been informed that the additional staff committed to this effort have served the time permitted under their ‘‘job details’’ and are no longer working on leases at the Fort 

Berthold Reservation. What are the past and present BIA staffing levels for approving leases on the Fort Berthold Reservation? In this information, without naming 

the staff directly, please include the titles or positions for each staff person involved 

in the lease approval process. Please briefly describe the steps a typical lease takes 

from an initial advertisement of an auction to final approval—not including environmental reviews of an application to drill. In the lease approval steps you describe, 

what staff positions are involved in each step and how many staff are currently 

available at Fort Berthold to perform these functions? 

Æ