INDIAN ENERGY 

DEVELOPMENT

Interior Could Do 

More to Improve Its 

Process for Approving 

Revenue-Sharing 

Agreements

Report to the Chairman, Committee on 

Indian Affairs, U.S. Senate

June 2016

GAO-16-553

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-553, a report to the

Chairman, Committee on Indian Affairs, 

U.S. Senate

June 2016

INDIAN ENERGY DEVELOPMENT

Interior Could Do More to Improve Its Process 

for Approving Revenue-Sharing Agreements

Why GAO Did This Study

The development of Indian-owned oil 

and gas resources is one of the largest 

revenue generators in Indian country,

and individual Indian mineral owners

may rely on royalty payments from 

such development to pay for living 

expenses. Various offices within 

Interior are responsible for 

management and oversight of oil and 

gas development on Indian lands. In 

some cases, Indian-owned resources 

cannot be developed independently. In 

those cases, BLM reviews a revenuesharing agreement known as a CA, 

and BIA approves it. Prior GAO reports 

identified an extensive backlog of 

Indian CAs awaiting review and 

approval, leading to significant delays 

in the payments of royalties to Indian 

mineral owners.

GAO was asked to review Interior’s 

review and approval process for Indian 

CAs. This report examines Interior’s 

recent guidance intended to streamline 

the review and approval process for 

Indian CAs and the effect this guidance 

may have on the timeliness of the 

process. GAO analyzed agency 

procedures and guidance and

interviewed Interior officials 

responsible for managing the CA 

review and approval process.

What GAO Recommends

GAO recommends that Interior

establish required time frames for the

review and approval of Indian CAs, 

develop a systematic mechanism to 

track these CAs through the review 

process, and assess its actions to 

improve the timeliness of the process. 

Interior concurred with GAO’s 

recommendations and described the 

actions it plans to take in response.

What GAO Found

The Department of the Interior (Interior) recently issued guidance intended to 

streamline the review process and reduce the approval times of oil and gas 

revenue-sharing agreements—called a communitization agreement (CA)—that 

include Indian resources. Under the revised guidance, for example, oil and gas 

operators are to provide simplified, less detailed information in their CA 

applications. In addition, the revised guidance eliminates some duplication in the 

Bureau of Indian Affairs’ (BIA) and the Bureau of Land Management’s (BLM)

review processes.

Potential Time-Saving Steps of the Revised Communitization Agreement Process

It is too early to determine the effect the revised guidance will have on the CA 

process, but Interior will be limited in its ability to assess the results of its actions

for three reasons:

• Interior has established few time frames for the BIA and BLM offices that 

perform key tasks during the review and approval process. None of these 

time frames apply to BIA, which is ultimately responsible for approving an

Indian CA. Standards for Internal Control in the Federal Government states

that management should define objectives to include, among other things, 

time frames for achievement. Without time frames, BIA will be limited in its 

ability to hold offices accountable to ensure a more timely review process.

• BIA has no systematic way to track an Indian CA through the review process. 

A 2014 interagency plan to improve the federal permitting review process 

stated that the ability to track review times is a best practice to improve the 

federal review process. Without a systematic tracking mechanism, BIA will be 

unable to fulfill its monitoring role to ensure that documents move through the 

review process expeditiously.

• Interior’s revised guidance does not include a plan to evaluate whether its 

efforts to streamline the process result in the more timely review of Indian 

CAs, and BIA officials told GAO that they have no plans for such an 

assessment. Standards for Internal Control in the Federal Government states

that management should compare actual performance to expected results 

and analyze significant differences. Without conducting such an assessment, 

Interior will not know if the revised guidance has resulted in the more timely 

payments of royalties to Indian mineral owners. 

View GAO-16-553. For more information, 

contact Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov.
Page i GAO-16-553 Indian Energy Development

Letter 1

Background 5

Interior Has Taken Actions to Streamline the Review and Approval 

Process, but Three Weaknesses Will Effect Its Ability to Assess 

the Results of Its Actions 9

Conclusions 17

Recommendations for Executive Action 17

Agency Comments 18

Appendix I Comments from the Department of the Interior 20

Appendix II GAO Contact and Staff Acknowledgements 22

Figures

Figure 1: Example of Royalty Sharing Based on an Approved 

Communitization Agreement 7

Figure 2: Comparison of the Department of the Interior’s Former 

and Revised Processes for Reviewing Communitization 

Agreements for Indian Energy Development 11

Contents
Page ii GAO-16-553 Indian Energy Development

Abbreviations

APD Application for Permit to Drill

BIA Bureau of Indian Affairs

BLM Bureau of Land Management

CA communitization agreement

IEMSC Indian Energy and Minerals Steering Committee

Interior Department of the Interior

ONRR Office of Natural Resources Revenue

OST Office of the Special Trustee for American Indians

TAAMS Trust Asset and Accounting Management System

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Page 1 GAO-16-553 Indian Energy Development

441 G St. N.W.

Washington, DC 20548

June 13, 2016

The Honorable John Barrasso

Chairman

Committee on Indian Affairs

United States Senate

Dear Mr. Chairman:

In fiscal year 2015, the development of Indian-owned oil and gas 

resources generated more than $1 billion in revenue for tribes and 

individual Indian mineral owners, according to the Department of the 

Interior (Interior), making oil and gas resources one of the largest revenue 

generators in Indian country. For some tribes, energy development is the 

foundation of their economy and the primary source of funding for 

education, infrastructure, and other public services. In addition, according 

to a report by Interior, individual Indian oil and gas resource owners may 

rely on revenue from oil and gas development to pay for living expenses, 

such as food, shelter, health care, and education.

The development of Indian oil and gas resources is governed by a 

number of federal laws, such as the Indian Mineral Leasing Act.1 Several 

bureaus and offices within Interior—including the Bureau of Indian Affairs 

(BIA), Bureau of Land Management (BLM), and Office of Natural 

Resources Revenue (ONRR)—have responsibility for implementation of 

these laws and the oversight and management of Indian oil and gas 

development.2 One of the functions that BIA and BLM perform under 

these laws and regulations is to review and approve revenue-sharing 

agreements—called a communitization agreement (CA)—that include 

 1

25 U.S.C. §§ 396a - 396g.

2

Interior also has broader responsibilities for energy development on federal and Indian 

lands; however, the scope of this report is limited to Indian oil and gas resources that are 

held in trust by the United States for individual Indians or Indian tribes.

Letter
Page 2 GAO-16-553 Indian Energy Development

Indian resources.3 To promote conservation and efficient utilization of 

minerals, Interior approves CAs when an Indian lease cannot be 

independently developed and operated in conformity with established well 

spacing rules.4 In these cases, leases are consolidated to form a single 

spacing unit, and a CA is established to identify production allocation for 

the purpose of distributing revenue from oil and gas development in the 

form of royalties based on each mineral owner’s percentage of ownership 

in that unit. Without an approved CA, royalties cannot be distributed to 

individual Indian mineral owners.

In recent years, advances in hydraulic fracturing and horizontal drilling, 

along with favorable economic conditions, resulted in significant increases 

in oil and gas development from shale formations, according to Interior 

and the Department of Energy’s Energy Information Administration.5

Although prices for crude oil and natural gas have since declined, the 

leasing of Indian oil and gas resources continues in some areas of the 

country, as evidenced by ongoing lease sales held by BIA agency 

offices.6 According to a report by Interior, BIA has struggled to keep up 

with the demand for oil and gas leasing, permitting, and drilling. The 

number of CA applications submitted has surpassed BIA’s and BLM’s 

 3

The federal government, tribes, Indian mineral owners, state governments, and private 

landowners can lease land to companies for the development of oil and gas resources. A 

CA may be necessary for royalty allocation when federal or Indian leases are involved that 

cannot be independently developed. For the purpose of this report, we are referring only 

to those CAs that include Indian leases—known as Indian CAs—and therefore must be 

approved by BIA.

4

Spacing rules limit the number and location of wells that may be drilled into a reservoir by 

combining multiple tracts and leases into a single unified block, called a spacing unit, 

which ranges in size. 25 C.F.R. §§ 211.28 and 212.28.

5

Shale is a sedimentary rock that is predominantly composed of consolidated clay-sized 

particles. Hydraulic fracturing involves pumping water, sand, and chemical additives into 

oil and gas wells at high enough pressure to fracture underground rock formations, such 

as shale, and allow oil and gas to flow into the well bore. When combined with horizontal 

drilling, hydraulic fracturing allows operators to fracture the rock formation along the entire 

horizontal portion of a well, increasing the number of pathways through which oil or gas 

can flow.

6

Lease sales are conducted by BIA agency offices on specified tracts under regulations 

promulgated by the Secretary of the Interior. 25 C.F.R. Part 211 (governing tribal lands) 

and 212 (governing allotted lands). Although lease sales are allowed by the regulations for 

leasing of tribal land, according to Interior officials most tribal land is now leased through 

negotiation between the tribe and the prospective lessee.
Page 3 GAO-16-553 Indian Energy Development

ability to review and approve them in some areas of the country, such as 

North Dakota and Oklahoma, causing a severe backlog of work and 

preventing the timely distribution of oil and gas royalties to Indian mineral 

owners. For example, one oil and gas operator told us that during the 

boom period they held almost $7 million in oil and gas royalties in an 

escrow account for Indian mineral owners because BIA and BLM delays 

in processing the CAs prevented ONRR from accepting payments from 

operators for the distribution of royalties to Indian mineral owners.7

BIA has noted that the circumstances that led to the backlog of energyrelated leases and permits are beginning to occur in other states where 

Indian resources are being developed, such as Utah, New Mexico, and 

Montana. Interior officials have also noted that the current downturn in oil 

and gas leasing provides an opportunity to review the regulatory delays 

facing operators when attempting to lease and drill on Indian lands and 

streamline the process to encourage future development.

Our past reports have highlighted the importance of Interior’s role in the 

management and oversight of federal and Indian energy resources and 

identified some challenges with the current system. In a May 2014 report, 

we found that BLM was not able to review CAs within required time 

frames, creating delays in the payment of royalties to the federal 

government, tribes, and individual Indian mineral owners.8 In that report, 

we recommended that Interior identify and take necessary steps to 

ensure that CAs are reviewed within required time frames, and Interior 

generally agreed with our recommendation. In addition, in a June 2015 

report, we found that BIA could not ensure that its review process for 

energy-related documents was transparent or that such documents were 

moving forward in a timely manner.9 In that report, we recommended that 

Interior improve its review process by developing a documented process 

to track its review and response times. Interior did not fully concur with 

 7

As described in more detail later in the report, ONRR manages revenues from Indian 

resources, including royalties generated by the production of energy and mineral leases. 

8

GAO, Oil and Gas: Updated Guidance, Increased Coordination, and Comprehensive 

Data Could Improve BLM’s Management and Oversight, GAO-14-238 (Washington, D.C.: 

May 5, 2014).

9

GAO, Indian Energy Development: Poor Management by BIA Has Hindered Energy 

Development on Indian Lands, GAO-15-502 (Washington, D.C.: June 8, 2015).
Page 4 GAO-16-553 Indian Energy Development

our recommendation, but stated in a letter to us in August 2015 that BIA 

would try to implement a tracking and monitoring effort within its system 

of records for oil and gas leasing documents.

In this context, you asked us to examine Interior’s review and approval 

process for CAs that include Indian leases. This report examines the 

actions Interior has taken to improve the timeliness of its review and 

approval of Indian CAs and the results of these actions.

For this review, we examined Interior’s internal policies and guidance

pertaining to the review and approval of Indian CAs, including BLM’s 

Instructional Memorandum, issued on July 17, 2015, and BIA’s National 

Policy Memorandum, issued on August 27, 2015, describing plans for a 

more streamlined process.10 Because these memorandums were issued 

less than a year ago, it is too soon to compare Indian CAs reviewed 

under the revised process with those reviewed under the former process. 

We also examined laws and regulations that pertain to Interior’s role in 

the review and approval of Indian CAs. We interviewed BIA, BLM, ONRR, 

and other Interior officials at the headquarters and field levels who were 

familiar with the former CA review and approval process, as well as the 

proposed changes to this process. We selected officials from BIA and 

BLM field offices from various areas of the country that experienced a 

surge in oil development, which could result in an increase in demand for 

the review and approval of CAs.11 Because this was a nonprobability 

sample, their responses are not generalizable to all BIA and BLM offices 

but provide examples of instances where offices did not review and 

approve an Indian CA in a timely manner and the actions, if any, these 

offices took to resolve the problems.

We conducted this performance audit from June 2015 to June 2016 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

 10Department of the Interior, Bureau of Land Management, Re-engineered 

Communitization Agreement Approval Process, Instruction Memorandum No. 2015-124 

(Washington, D.C.: July 17, 2015). Department of the Interior, Bureau of Indian Affairs, 

Revised Communitization Review Procedures, NPM-TRUS-34 (Washington, D.C.: Aug. 

27, 2015). BIA’s National Policy Memorandum states that it expires on August 27, 2016.

11These officials work in offices that cover areas of Colorado, Montana, New Mexico, 

North Dakota, Oklahoma, Utah, and Wyoming. 
Page 5 GAO-16-553 Indian Energy Development

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Development of Indian energy resources is a complex process that may 

involve a range of stakeholders, including federal agencies, state 

agencies, tribal governments, individual Indian mineral owners, and 

private oil and gas operators. When an operator seeks to develop land 

that includes Indian resources, the operator must identify ownership of 

surface and subsurface resources and acquire a lease for the right to drill 

for oil and gas resources, among other things. BIA maintains these 

surface and mineral ownership records, including lease information. 

There are several ways in which Indian oil and gas resources can be 

leased. For example, oil and gas resources can be nominated for lease 

by operators, the tribe, or an individual Indian mineral owner. BIA then 

reviews nominated oil and gas resources to determine ownership, and in 

some cases, BLM may assist with identifying ownership of the proposed 

parcels. If the resources are not already leased, BIA may advertise and 

conduct competitive lease sales where operators can bid on nominated 

leases. BIA reviews the bids, identifies the highest bidder, notifies the 

operator whether its bid was accepted, and issues the lease.12

An Indian lease document comprises a primary term and a secondary 

term, both of which are negotiated as part of the lease agreement. The 

primary term is the time frame in which the company has to begin drilling 

or the lease will expire. The length of this term varies, but it usually 

ranges from 2 to 10 years for Indian leases, according to Interior officials. 

The secondary term is established after production begins and remains in 

effect as long as the well is producing in paying quantities. The lease also 

consists of three payment types between the operator and the tribe or 

Indian mineral owner: (1) a onetime bonus payment paid per acre 

 12In other cases, tribes and individual Indians can lease their own oil and gas resources. 

For example, under the Indian Mineral Development Act, subject to BIA approval, a tribe 

may enter into an agreement to develop minerals in which the tribe owns an interest. 25 

U.S.C. §§ 2101-08.

Background
Page 6 GAO-16-553 Indian Energy Development

following lease approval, (2) an annual rental payment for the leased 

land, and (3) ongoing royalty payments for development of the resource.13

If an Indian lease cannot be independently developed in conformity with 

well spacing requirements set by the state and BLM, the operator 

developing an area including Indian mineral interest must request 

approval of a CA from BIA.14 Production from a well located within the CA 

is attributed to the entire area—meaning that all owners share a 

percentage of the royalties based on their percentage of surface 

ownership, regardless of where the well is located. According to BIA’s 

Fluid Mineral Estate Procedural Handbook, communitization serves a 

conservation function by eliminating excessive drilling and minimizing 

surface disturbance, while protecting adjoining properties from drainage 

of their minerals. Figure 1 illustrates a hypothetical example in which 

three leases are included in an approved CA. The example shows how 

royalties are allocated among each lessor.

 13The minimum royalty rate for Indian leases is 16.67 percent. 

14BIA regulations provide that a request for approval of a proposed agreement must be 

filed with BIA at least 90 days prior to the first expiration date of any of the Indian leases in 

the area proposed to be covered by the agreement. 25 C.F.R. §§ 211.28(e) and 

212.28(e).
Page 7 GAO-16-553 Indian Energy Development

Figure 1: Example of Royalty Sharing Based on an Approved Communitization Agreement

A CA must be approved before operators can distribute royalty payments 

for Indian leases to the appropriate mineral owners. BIA, through several 

divisions and its various regional and agency offices, has primary 

authority for managing Indian energy development and has ultimate 

approval authority for Indian CAs. BIA may approve a CA if it determines 

that approval “is advisable and in the best interest of the Indian mineral 
Page 8 GAO-16-553 Indian Energy Development

owner”.

15 However, other offices within Interior also have a role in the 

development and accounting of Indian energy resources in regard to CAs. 

For example, BLM reviews a CA application and recommends to BIA 

whether to approve an Indian CA based on the engineering and technical 

aspects. Operators send royalty payments from the production of Indian 

mineral leases to ONRR. Once the CA is approved by BIA and production 

has been established, payments are made to ONRR, unless otherwise 

provided for by the lease. ONRR transfers royalty payments to the 

appropriate Indian accounts, and the Office of the Special Trustee for 

American Indians (OST) makes the royalty payments to Indian mineral 

owners based on instructions from BIA. An approved CA is effective on 

either the date of first production or the date the CA is approved, 

whichever is earlier. Traditionally, Interior encouraged the operator to

submit an Indian CA before the well was drilled, but it was common for 

operators to wait until the results of the well were known before 

submitting the CA application, according to Interior officials.

In recent years, some offices within Interior have taken actions to address 

the backlog of CAs in their regions. For example, we previously reported 

that in North Dakota the BLM Dickinson field office, BIA Fort Berthold 

agency office, and ONRR created a preliminary CA process in March 

2011 to address the backlog of CAs in their region.16 According to Interior 

officials, the preliminary CA process was used by some BIA and BLM 

offices as an interim step to ensure the timely collection and distribution of 

royalties while operators prepared the required documents for a complete 

CA application. However, in early 2015 Interior’s Office of the Solicitor 

instructed BIA and BLM to cease using this process. The Office of the 

Solicitor determined that preliminary CAs were not legally binding 

because documents used in the process were not formally reviewed, 

approved, and signed by the Secretary of the Interior or the Secretary’s 

designee.

In addition, Interior officials said that they signed a contract with Lockheed 

Martin in October 2011 that included providing technical assistance and 

additional staff to help expedite the processing and approval of CA 

packages at the BIA Fort Berthold agency office. We previously reported 

 1525 C.F.R. §§ 211.28(a) and 212.28(a).

16GAO-14-238. 
Page 9 GAO-16-553 Indian Energy Development

that some BIA offices did not have adequate staff resources or staff with 

the skills needed to effectively evaluate energy-related documents, 

including the large number of CAs.17 According to Interior officials, the 

additional staff and technical resources that the Lockheed Martin contract 

provided allowed the office to review and approve more CAs than it 

otherwise could have. However, Interior officials told us that because the 

contract is scheduled to end in September 2016, some of these functions 

will subsequently be administered directly by Interior’s recently 

established Indian Energy Service Center.18 As of March 2016, according 

to Interior officials, the Service Center has some funding available for 

fiscal year 2016 and is in the process of hiring a director, identifying 

overall staffing needs, and defining its roles and responsibilities. We are 

examining the roles and responsibilities of the Indian Energy Service 

Center in a separate ongoing review.

In the summer of 2015, BIA and BLM issued guidance in an effort to 

streamline the CA review and approval process and address the backlog 

of Indian CAs awaiting review and approval. The guidance seeks to 

shorten the time required to review and approve a CA by, among other 

things, reducing paperwork, eliminating duplicative reviews, and 

expediting the review of key information early in the process. However, 

Interior does not have plans to set time frames for CA reviews, 

systematically collect data on review times, or assess the effect of its 

revised guidance. As a result, Interior will be unable to determine whether 

the resulting actions have had a positive effect on the CA review and 

approval process.

In 2015, BIA and BLM worked collaboratively to develop guidance 

intended to streamline the CA review and approval process and help 

address the current backlog of Indian CAs awaiting approval. Specifically, 

in July 2015, BLM issued guidance that called for the CA approval 

process to be streamlined to ensure the more timely payment of royalties 

 17GAO-15-502.

18On October 10, 2015, the BIA, BLM, ONRR, and OST signed a memorandum of 

understanding to establish the Indian Energy Service Center to expedite Indian oil and gas 

activities, among other things.

Interior Has Taken 

Actions to Streamline 

the Review and 

Approval Process, but 

Three Weaknesses 

Will Effect Its Ability to 

Assess the Results of 

Its Actions

BIA and BLM Issued 

Guidance Intended to 

Streamline the CA Review 

and Approval Process
Page 10 GAO-16-553 Indian Energy Development

to Indian mineral owners.19 Approximately one month later, BIA issued 

corresponding guidance to ensure the timely review, adjudication, and 

approval of Indian CAs.20

The guidance for both BIA and BLM, which we refer to in this report as 

the revised guidance, was developed through a collaboration between 

BLM, BIA, ONRR, and OST senior officials who attend biannual meetings 

of the Indian Energy and Minerals Steering Committee (IEMSC).21

According to Interior officials, the revised guidance incorporates best 

practices of individual offices and standardizes the CA review and 

approval process to better ensure consistency of approval methods in

offices across the country. The guidance also helps to clarify and 

delineate the responsibilities of BIA, BLM, and the operators.

Based on our review of Interior’s former and revised guidance and 

supporting documents, the revised process includes approximately the 

same number of steps as the former process. However, as shown in 

figure 2, the revised process includes various steps designed to reduce 

paperwork, eliminate duplicative reviews, and expedite the review of key 

information early in the process, which, according to the guidance, should 

dramatically reduce CA adjudication and processing times.

 19Department of the Interior, Bureau of Land Management, Re-engineered 

Communitization Agreement Approval Process.

20Department of the Interior, Bureau of Indian Affairs, Revised Communitization Review 

Procedures.

21The IEMSC is a committee within Interior that includes senior managers and staff with a 

focus on Indian trust energy and mineral policies and issues. According to Interior officials, 

beginning in 2014 the IEMSC held meetings to discuss the increased workload and 

emerging complexity of CAs because of the boom in oil and gas drilling activity.
Page 11 GAO-16-553 Indian Energy Development

Figure 2: Comparison of the Department of the Interior’s Former and Revised Processes for Reviewing Communitization 

Agreements for Indian Energy Development
Page 12 GAO-16-553 Indian Energy Development

Specifically, Interior took the following actions in an effort to streamline 

the CA process:

• Reducing paperwork: The new guidance reduces and simplifies the 

information required to be submitted to BIA and BLM as part of a the 

CA package by, among other things, allowing operators to combine all 

nonfederal and non-Indian ownership interests, such as private and 

state interests, into a single entry representing total acreage. As a 

result, information such as the individual lease date, lease term, and 

lessor is no longer required by BIA and BLM. According to the revised 

guidance, BLM now verifies the total acreage and land description of 

the proposed CA. One operator told us that this change will 

significantly reduce the amount of paperwork submitted to BIA and 

BLM for review. For example, according to the operator, BIA and BLM 

used to review CAs with attachments numbering approximately 400 

pages of lease information, often in hardcopy; in contrast, the 

attachments may now be as few as 10 pages of lease information. In 

addition, the revised guidance states that BIA and BLM should 

already have the necessary information for Indian and federal leases. 

According to officials, BIA and BLM used to verify the signatures of all 

interest owners that were party to the CA but did not have the staff to 

accomplish this task in a timely manner. The revised guidance allows 

operators to self-certify that they have collected the necessary 

signatures, including signatures from private and state interests, 

which, according to officials, further decreases the amount of 

information federal officials are responsible for reviewing and places 

the burden on operators to collect such information.22 The reduction in 

paperwork submitted is expected to reduce the workload for both BIA 

and BLM offices.

• Eliminating duplicative reviews: According to several BLM officials, 

BLM’s technical review of an Indian CA traditionally involved the 

adjudication of federal, Indian, state and private interests, which 

required the individual verification of acreage, ownership, and 

operating rights, resulting in lengthy reviews of the CA package. After 

BLM’s technical review, according to officials, BIA would adjudicate 

ownership of the same Indian leases, duplicating BLM’s efforts and 

 22An Indian lease generally includes an agreement clause by which the mineral owner 

accepts future pooling and unitization, if approved by the Secretary of the Interior, when 

the lease is signed. See also 25 C.F.R. § 211.28(b).
Page 13 GAO-16-553 Indian Energy Development

the review time. However, under the revised process, BIA is to 

adjudicate only Indian interests and BLM is to adjudicate only federal 

interests within the proposed CA. The revised guidance places 

responsibility for adjudication with the agency that has the expertise to 

verify the necessary information. For example, the new guidance 

makes BIA responsible for information it currently maintains and is 

independently knowledgeable of, such as lease records for Indian 

interests. While it is too soon to determine the extent to which 

reducing duplication of effort will reduce the time needed to review 

and approve Indian CAs, the new guidance appears to more clearly 

define the separate roles of BIA, BLM, and the operators in the CA 

process.

• Expediting the review: Several BIA and BLM officials noted that 

under the former process, operators often submitted proposed CAs in 

an incomplete form or to the wrong office, which ultimately led to 

review and approval delays. Under the revised process, operators 

must submit the proposed CA directly to the BIA Regional Director or 

Superintendent of the Agency with jurisdiction over the lands included 

in the CA. BIA has noted that an operator’s failure to file an Indian CA 

with the appropriate BIA office puts the company at risk of not 

complying with regulation and not having an approved CA in place 

before expiration of the Indian lease(s).23 In addition, according to the 

revised guidance, BIA is now tasked with performing a “quick review”

early in the process to determine if there are problems with the 

information provided by the operator that could ultimately delay CA 

approval. The revised guidance notes that BIA will take the lead in 

documenting potential errors in the proposed package, such as 

potential acreage errors that could affect royalty payments, and if 

necessary, will quickly notify BLM and the operator. The guidance 

also notes that this is an important step considering the length of time 

it takes for CAs to be adjudicated and recommended for approval. 

Again, it is too soon to determine the extent to which the earlier 

submission of a complete CA by the operator to the appropriate BIA 

office may help ensure the timely review of an Indian CA and 

ultimately the more timely payment of royalties to Indian mineral 

owners.

 2325 C.F.R. §§ 211.28(e) and 212.28(e).
Page 14 GAO-16-553 Indian Energy Development

The revised guidance also includes BIA’s and BLM’s new goals for 

streamlining the CA review process. BIA’s guidance states that its goal is 

to address, devise, and implement a solution when there are problems 

with a CA before the well is completed and any royalty payments are 

made. Similarly, BLM’s guidance states that its goal is to have an 

approved CA in place before the date of first production in order to allow 

the operator to pay royalties to the mineral owner from the start of 

production.24 According to Interior officials, under the former process, CAs 

were sometimes approved years after production began, leading to 

accounting challenges to recoup and distribute royalties to Indian mineral 

owners at a later date. It is Interior’s goal, as noted in the revised 

guidance, to identify and address any problems that may exist with an 

Indian CA early in the review process to help ensure the more timely 

approval of the CA, ideally before oil and gas development begins.

BIA and BLM developed the revised guidance with the intent to expedite 

the review and approval of CAs and ensure the more timely payment of 

royalties to Indian mineral owners, but Interior has established few time 

frames for the BIA and BLM offices that perform tasks during the review 

and approval process and BIA has no mechanism in place to track Indian 

CAs. In addition, the revised guidance does not include plans to assess 

whether its efforts to streamline the CA review and approval process 

result in the more timely review of Indian CAs.

Standards for Internal Control in the Federal Government states that 

management should define objectives to include what is to be achieved, 

who is to achieve it, how it will be achieved, and the time frames for 

achievement.25 However, no statute, regulation, or internal procedures 

specify a time frame by which BIA, as the approving office for an Indian 

 24According to BLM’s revised guidance, BLM will work with industry to encourage the 

operator to submit a CA to the appropriate agency at the same time the operator submits 

an Application for Permit to Drill (APD) or at least 90 days before the anticipated date of 

first production. The guidance states that BLM may require timely submission of a CA as a 

condition of approval for the APD. An operator that has obtained a lease for federal or 

Indian minerals must submit an APD to BLM for approval prior to drilling. 43 C.F.R. § 

3162.3-1(c). 

25GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014).

Interior Will Not Be Able to 

Fully Assess the Results 

of Its Recent Actions to 

Streamline the CA 

Process without Required 

Time Frames and a 

Systematic Tracking 

Mechanism
Page 15 GAO-16-553 Indian Energy Development

CA, is required to review or approve an Indian CA. In contrast, according 

to statute, BLM is to review CAs and issue determinations of allocation 

within 120 days of a request.26 Interior’s standard operating procedures 

that govern energy development of federal and Indian resources note that 

BLM is to review and recommend whether to approve an Indian CA within 

30 days of BIA’s request; again, these procedures do not include a time 

frame for BIA’s role in the review and approval of an Indian CA.27 Many 

Interior officials we spoke with stated that some BLM offices treat the 30-

day time frame as a suggestion rather than a requirement and said that 

offices within their regions rarely meet the time frame because of 

overwhelming workloads and staffing shortages, which is consistent with 

the findings in our May 2014 report.28 Senior BIA officials told us that 

establishing time frames for BIA could help ensure a more transparent 

and efficient Indian CA review and approval process. Without required 

time frames, Interior is limited in its ability to ensure that BIA and BLM 

reviews of Indian CAs help the agency meet its objective to provide for a 

more timely CA review and approval process.

In addition, according to the revised guidance, it is BIA’s responsibility to 

monitor the review and approval times for Indian CAs; however, BIA 

currently has no systematic mechanism in place to track an Indian CA 

through the review and approval process and the revised guidance did 

not establish such a mechanism. BIA officials in some field offices told us 

that they maintain an informal tracking document, typically a spreadsheet, 

to track the CAs their office is reviewing; however, this document is 

usually not accessible by officials outside their field office, including 

coordinating agency officials and headquarters staff. An interagency plan 

created in May 2014 in response to Executive Order 13604 notes that the 

ability to track and monitor the review of permits and applications is a best 

 2630 U.S.C. § 1721(l). This requirement does not apply to Indian CAs. Federal Oil and Gas 

Royalty Simplification and Fairness Act of 1996, Pub. L. No. 104-185, § 9 (1996), 

amending the Federal Oil and Gas Royalty Management Act of 1982.

27Department of the Interior, Onshore Energy and Mineral Lease Management 

Interagency Standard Operating Procedures (Oct. 1, 2013). 

28GAO-14-238. This report focused on BLM’s management of federal and Indian oil and 

gas resources, therefore it did not specifically address BIA time frames.
Page 16 GAO-16-553 Indian Energy Development

practice to improve the federal review process.29 In our June 2015 report, 

we found that BIA did not have a process to track its review and response 

times for energy-related documents, including CAs.30 In our report, we 

recommended that, to improve the efficiency and transparency of its 

review process, BIA should develop a documented process to track its 

review and response times.31 Interior did not fully concur with our 

recommendation, but in an August 2015 letter to us noted that BIA 

intends to enhance its national database—the Trust Asset and 

Accounting Management System (TAAMS)—by improving the tracking 

and monitoring of oil and gas leasing documents by the end of fiscal year 

2017. According to officials, BIA does not currently enter CAs into TAAMS 

until after the CAs are approved because the system is not used to track 

oil and gas documents through the review process.32 BIA officials told us 

that a subject matter expert group was formed in July 2015 to evaluate 

the need for system updates to TAAMS, but that the group has no 

specific plans to include recommendations associated with the tracking of 

Indian CAs. The revised guidance does not explain how BIA will monitor 

the review and approval times of Indian CAs without information on the 

length of time BIA and BLM offices are taking to review and approve 

these CAs. Without a systematic tracking mechanism to collect 

information that is accessible by coordinating officials and headquarters 

staff, Interior will be unable to fulfill its objective to ensure that Indian CAs 

are being reviewed and approved in a timely manner.

In addition, although the revised guidance states that the proposed 

actions should “dramatically reduce” adjudication and processing times to 

ensure the more timely review and approval of CAs, it does not include a 

plan to assess the process to determine if Interior has met this policy 

objective. A senior BIA official confirmed that the agency has no plans to 

track the results and assess the time-saving elements included in the 

 29An interagency steering committee was developed in response to Executive Order 

13604, which calls for agencies to improve federal permitting and review processes. In 

2014, the Steering Committee released the Implementation Plan for the Presidential 

Memorandum on Modernizing Infrastructure Permitting. 

30GAO-15-502.

31GAO-15-502.

32TAAMS stores historical and current data on ownership and leasing of Indian land and 

minerals.
Page 17 GAO-16-553 Indian Energy Development

revised CA process. Instead, according to this official, BIA’s current focus 

is to work through the existing backlog of Indian CAs and complete the 

review and approval of these applications. However, Standards for 

Internal Controls in the Federal Government states that management 

should compare actual performance to expected results and analyze 

significant differences. Without a plan to assess the effect of its revised 

guidance on the Indian CA review and approval process, Interior will not 

be able to compare actual performance against the objective of a more 

timely process, which may also prevent it from identifying further 

improvements, if needed, to the process in the future.

BIA and BLM issued revised guidance in an effort to streamline the 

review and approval process for Indian CAs. However, a number of 

factors will limit BIA’s ability to ensure that the resulting actions have had 

a positive effect on the process and lead to the more timely review and 

approval of Indian CAs. Specifically, as Interior has not established 

required time frames by which an Indian CA should be reviewed and 

approved, BIA will be limited in its ability to hold offices accountable to 

ensure that Indian CAs are reviewed and approved in a timely manner. In 

addition, because BIA does not have a systematic mechanism to track an 

Indian CA through the process, it will be unable to fulfill its monitoring role 

to ensure that CAs are reviewed and approved in a timely manner. 

Finally, because Interior does not have a plan to assess the results of its 

revised guidance on the Indian CA process, the agency will be unable to 

determine whether it has achieved its policy objectives, such as 

decreasing the time needed to review and approve Indian CAs, designed 

to result in the more timely disbursement of royalties to Indian mineral 

owners. Without the ability to assess the effect of its revised guidance on 

the Indian CA review and approval process, Interior may not have enough 

information to make further improvements, if needed, to the process.

We recommend that the Secretary of the Interior direct the Director of the 

Bureau of Indian Affairs and, as appropriate, the Director of the Bureau of 

Land Management to take the following three actions:

• Establish required time frames for the review and approval of Indian 

CAs to ensure a more timely CA process.

• Develop a systematic mechanism for tracking Indian CAs through the 

review and approval process to determine, among other things, 

Conclusions

Recommendations for 

Executive Action
Page 18 GAO-16-553 Indian Energy Development

whether the revised CA process meets newly established time 

frames.

• Assess whether the revised CA process is achieving its objective to 

improve the timeliness of the review and approval of Indian CAs, and 

if not, make changes as appropriate.

We provided Interior with a draft of this report for review and comment. In 

its written comments, reproduced in appendix I, Interior concurred with 

our recommendations. In response to our recommendation about

establishing required time frames for the review and approval of Indian 

CAs, Interior stated that BIA will issue a National Policy Memorandum 

that establishes such time frames. In response to our recommendation 

about developing a systematic mechanism for tracking Indian CAs, 

Interior stated that BIA will develop such a mechanism in TAAMS, and 

until that modification is made, BIA and BLM will use a centralized 

tracking spreadsheet. Finally, in response to our recommendation about 

assessing the revised CA process, Interior stated that both BIA and BLM 

will use the tracking spreadsheet, and, upon completion, the enhanced 

TAAMS, to monitor and assess the results of the efforts to streamline the 

process, and establish a process for review of the collected data to 

identify and implement any necessary process modifications. 

As agreed upon with your office, unless you publicly announce the 

contents of this report earlier, we plan no further distribution until 30 days 

from the report date. At that time, we will send copies to the appropriate 

congressional committees, the Secretary of the Interior, and other 

interested parties. In addition, the report will be available at no charge on 

the GAO website at http://www.gao.gov. 

Agency Comments
Page 19 GAO-16-553 Indian Energy Development

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. Key contributors to this report are listed in 

appendix II.

Sincerely yours,

Frank Rusco

Director, Natural Resources and Environment
Appendix I: Comments from the Department of 

the Interior

Page 20 GAO-16-553 Indian Energy Development

Appendix I: Comments from the Department 

of the Interior
Appendix I: Comments from the Department of 

the Interior

Page 21 GAO-16-553 Indian Energy Development
Appendix II: GAO Contact and Staff 

Acknowledgements

Page 22 GAO-16-553 Indian Energy Development

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

In addition to the contact named above, Christine Kehr (Assistant 

Director), Patrick Bernard, Richard Burkard, Patricia Chen, Cindy Gilbert, 

Alison O’Neill, Dan C. Royer, Jay Spaan, and Amy Ward-Meier made key 

contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgements

GAO Contact

Staff 

Acknowledgments

(361653)
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