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[Senate Report 113-49]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 103
113th Congress                                                   Report
                                 SENATE
 1st Session                                                     113-49

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        HILL CREEK CULTURAL PRESERVATION AND ENERGY DEVELOPMENT

                                _______
                                

                 June 27, 2013.--Ordered to be printed

                                _______
                                

    Mr. Wyden, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                          [To accompany S. 27]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 27) to clarify authority granted under 
the Act entitled ``Act to define the exterior boundary of the 
Uintah and Ouray Indian Reservation in the State of Utah, and 
for other purposes,'' having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                Purpose

    The purpose of S. 27 is to clarify authority granted under 
the Act entitled ``An Act to define the exterior boundary of 
the Uintah and Ouray Indian Reservation in the State of Utah.''

                          Background and Need

    The Uintah and Ouray Indian Reservation, located in 
northeastern Utah, is the second largest Indian reservation in 
the country and the homeland for approximately 20,000 Ute 
Indians. Under the Act of March 11, 1948, (62 Stat. 72), 
Congress added 510,000 acres of public domain known as the 
``Hill Creek Extension'' to the Reservation to protect tribal 
grazing rights. In making this addition to the Indian 
Reservation, the United States retained the subsurface rights 
to lands held in trust for the Tribe, while the State of Utah 
retained 38,000 acres of land it previously acquired in a 
checkerboard pattern typical in Western states. The State lands 
in the Hill Creek Extension are administered by The School and 
Institutional Trust Lands Administration (SITLA--a Utah State 
agency) for the benefit of Utah public schools and other State 
institutions.
    In 1955, Congress authorized the State to relinquish its 
lands in the Hill Creek Extension to the United States for the 
benefit of the Tribe, in exchange for replacement lands that 
are mineral in character. The State subsequently sold much of 
the surface estate in the Hill Creek Extension to the Tribe, 
while retaining 38,000 acres of subsurface minerals and the 
right of access to develop them. The State today wants to 
relinquish to the United States (for the benefit of the Tribe) 
18,000 acres of subsurface rights in the remote, southern 
(Grand County) portion of the Hill Creek Extension, in exchange 
for 18,000 acres of subsurface rights in the northern (Uintah 
County) area of the Extension.
    In 2006, SITLA filed an application with the BLM to enter 
into the exchange pursuant to the 1948 Hill Creek Act and the 
1955 amendments. The BLM has declined to process the 
application, claiming the law establishing and amending the 
Hill Creek Extension does not permit the State to select 
minerals in the northern part of the Extension. Although the 
State has come to the opposite legal conclusion, legislation is 
necessary to clarify the authority to effectuate the exchange.

                          Legislative History

    S. 27 was introduced by Senators Hatch and Lee on January 
22, 2013. The Subcommittee on Public Lands, Forests, and Mining 
held a hearing on S. 27 on April 25, 2013. At its business 
meeting on May 16, 2013, the Committee ordered the bill 
favorably reported. A similar bill, H.R. 356, was introduced by 
Representative Bishop in the House of Representatives. That 
bill passed the House by a voice vote on May 16, 2013.
    In the 112th Congress, a similar bill, H.R. 4027, was 
introduced by Representative Matheson in the House of 
Representatives. That bill passed the House by a voice vote on 
June 18, 2012.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on May 16, 2013, by a voice vote of a 
quorum present, recommends that the Senate pass S. 27.

                      Section-by-Section Analysis

    Section 1 contains the short title, the ``Hill Creek 
Cultural Preservation and Energy Development Act''.
    Section 2 amends ``An Act to define the exterior boundary 
of the Uintah and Ouray Indian Reservation in the State of 
Utah, and for other purposes'', approved March 11, 1948 (62 
Stat. 72), as amended by the Act entitled ``An Act to amend the 
Act extending the exterior boundary of the Uintah and Ouray 
Indian Reservation in the State of Utah so as to authorize such 
State to exchange certain mineral lands for other lands mineral 
in character'' approved August 9, 1955, (69 Stat. 544) by 
adding a new section 5. The new section authorizes the State of 
Utah to relinquish to the United States, for the benefit of the 
Ute Indian Tribe of the Uintah and Ouray Reservation, State 
school trust or other State-owned subsurface mineral lands in 
the southern part of an area of the Reservation known as the 
``Hill Creek Extension,'' and to select in lieu of any 
relinquished lands, on an acre-for-acre basis, Federal mineral 
rights in the northern portion of the Hill Creek extension.
    The section subjects the exchange of subsurface interests 
to the following conditions: Paragraph (1) directs the 
Secretary of the Interior to reserve an overriding interest in 
any minerals subject to leasing under the Mineral Leasing Act, 
in any mineral lands conveyed to the State of Utah, delineated 
in Public Law 440 (approved March 11, 1948).
    Subsection (1) requires the Secretary of the Interior to 
reserve an overriding interest in that portion of the mineral 
estate comprised of minerals subject to leasing under the 
Mineral Leasing Act (30 U.S.C. 171 et seq.) in any mineral 
lands conveyed to the State.
    Paragraph (2) describes the extent of the overriding 
interest, and consists of 50 percent of any bonus bid or other 
payment received by the State as consideration for securing a 
lease or authorization to develop the minerals. The overriding 
interest also includes 50 percent of any rental or other 
payments received by the State as consideration for the lease 
or authorization to develop the mineral resources, along with a 
6.25 percent overriding royalty on the gross proceeds of oil 
and gas production under any lease or authorization to develop 
the oil and gas resources. Finally, for minerals other than oil 
and gas, the overriding interest includes an overriding royalty 
on the gross proceeds of production of the minerals, equal to 
50 percent of the royalty rate established by the Secretary of 
the Interior by regulation as of October 1, 2011.
    Paragraphs (3) and (4) direct the State of Utah to reserve, 
for the benefit of the State school trust, the extent of the 
overriding interest described in paragraph (2) that represents 
the State's 50 percent share under the Mineral Leasing Act (30 
U.S.C. 181 et seq.).
    Paragraph (5) clarifies that neither the United States nor 
the State of Utah shall be obligated to lease or otherwise 
develop oil and gas resources in which the other party retains 
an overriding interest under this section.
    Paragraph (6) authorizes the Secretary of the Interior to 
enter into cooperative agreements with the State and the tribe 
to facilitate the relinquishment and selection of lands to be 
conveyed under this section, and the administration of the 
reserved overriding interests.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 27--Hill Creek Cultural Preservation and Energy Development Act

    S. 27 would authorize a conveyance of mineral rights within 
the Uintah and Ouray Indian Reservation in Utah among the state 
of Utah's School and Institutional Trust Land Administration 
(SITLA), the federal government, and the Ute Indian Tribe. 
SITLA currently owns the subsurface mineral rights to 
approximately 18,000 acres in the Hill Creek Extension of the 
reservation; however, the surface rights to that land are held 
in trust for the Ute Indian Tribe by the federal government. 
The legislation would authorize SITLA to relinquish to the Ute 
Indian Tribe its subsurface mineral rights in exchange for the 
subsurface rights to about 18,000 acres of other land within 
the Hill Creek Extension owned by the federal government.
    CBO estimates that the legislation would have no 
significant impact on the federal budget over the 2014-2023 
period. Enacting S. 27 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 27 would authorize a transfer of federally owned 
subsurface mineral rights for an equivalent number of acres of 
state land. However, the acres transferred may not have the 
same value because mineral deposits are not evenly spread 
across all areas. To compensate for such a potential imbalance, 
S. 27 would preserve a royalty interest in the value of any 
subsurface minerals that are developed on the transferred 
properties for the state and the federal governments.
    S. 27 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act. 
Enacting the bill would benefit the tribe and state.
    On May 9, 2013, CBO transmitted a cost estimate for H.R. 
356, the Hill Creek Cultural Preservation and Energy 
Development Act, as ordered to be reported by the House 
Committee on Natural Resources on April 24, 2013. The two bills 
are similar, and the CBO cost estimates are the same.
    The CBO staff contact for this estimate is Martin von 
Gnechten. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 27.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 27, as ordered reported.

                   Congressionally Directed Spending

    S. 27, as reported, does not contain any congressionally 
directed spending items, limited tax benefits, or limited 
tariff benefits as defined in rule XLIV of the Standing Rules 
of the Senate.

                        Executive Communications

    The testimony provided by Bureau of Land Management at the 
April 25, 2013, Subcommittee on Public Lands, Forests, and 
Mining hearing on S. 27 follows:

  Statement of Jamie Connell, Acting Deputy Director, Bureau of Land 
                 Management, Department of the Interior

    Thank you for inviting the Department of the Interior to 
testify on S. 27, the Hill Creek Cultural Preservation and 
Energy Development Act. The Department supports the goals of S. 
27, and we could support the bill if amended as discussed 
below. The Department recognizes that we have a unique trust 
responsibility to the Ute Tribe; and therefore we are committed 
to finding an equitable solution.

                               background

    In 1948, Congress, through P.L. 80-440, extended the 
boundary of the Uintah and Ouray Reservation by approximately 
900 square miles to include what is generally known as the 
``Hill Creek Extension.'' The Act transferred the Federal 
surface estate to the Tribe, while the mineral estate in those 
parts of the area affected by then existing withdrawals was 
reserved to the Federal government. Furthermore, that Act as 
amended in 1955 (P.L. 84-263), authorized the State of Utah to 
relinquish state sections for the benefit of the Tribe and 
subsequently select Federal lands (including the mineral 
interest in land) of equal value outside of the Hill Creek 
Extension area.
    The State of Utah's School and Institutional Trust Land 
Administration (SITLA) holds the mineral interest in about 28 
square miles (approximately 18,000 acres) within the southern 
portion of the Hill Creek Extension in Grand County, while the 
surface ownership is held in trust for the Tribe. The Tribe 
would like to obtain the mineral estate underlying tribal lands 
in the Grand County portion of the Hill Creek Extension in 
order to prevent development on lands that have special 
significance to the Tribe. However, the Tribe does not object 
to development of other mineral estate, retained by the Federal 
government, within the Hill Creek Extension in Uintah County.
    SITLA proposed to relinquish their mineral estate within 
the Hill Creek Extension in Grand County in exchange for 
similar acreage of Federal mineral estate in Uintah County, 
also within the Hill Creek Extension. However, the 1955 law 
specified that the selection by the state should take place 
``outside of the area hereby withdrawn,'' and therefore outside 
of the Hill Creek Extension.

                                 s. 27

    S. 27 proposes to amend the 1948 and 1955 Acts to permit 
relinquishment of mineral estate in exchange for similar 
acreage of Federal mineral estate within the Hill Creek 
Extension. The legislation further provides that the 
transaction should be on an acre-for-acre basis and establishes 
a limited overriding interest for both the United States and 
SITLA in the lands exchanged.
    The Department has no objection to allowing for the 
selection by SITLA of mineral estate within the Hill Creek 
Extension and supports that provision of the legislation. 
However, the 1948 and 1955 laws as well as FLPMA require that 
these transfers be of equal value. The per-acre value of 
mineral estate can vary dramatically from one acre to another, 
and this area of Utah has significant oil and gas resources.
    The legislation proposes to address any difference in 
parcel value by reserving for each conveying party a financial 
interest in the mineral estate being transferred. However, as 
written, the overriding interest fails to acknowledge the 
potential change in value of the federal minerals. The royalty 
rate specified for the financial interest is the royalty rate 
in effect today, and fails to account for the possibility of a 
changed royalty rate in the future. We believe that the 
overriding interest should be based on the Federal royalty rate 
at the time the lease or permit is issued. The Department would 
also like the opportunity to work on other technical amendments 
with the Sponsor and the Committee.

                               conclusion

    Thank you for the opportunity to testify. The Department 
would welcome the opportunity to resolve these issues for the 
benefit of the Ute Indian Tribe and protect land that has 
special significance in a manner that also protects the 
fiduciary interest of the Federal government.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 27 as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                         ACT OF MARCH 11, 1948

  (62 Stat. 72, chapter 108, as amended by Act of August 9, 1955, 69 
                        Stat. 544, chapter 623)

 AN ACT To define the exterior boundary of the Uintah and Ouray Indian 
        Reservation in the State of Utah, and for other purposes

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That the 
exterior boundary of the Uintah and Ouray Reservation in Grand 
and Uintah Counties, in the State of Utah, for the benefit of 
the Ute Indian Tribe of the Uintah and Ouray Reservation is 
hereby extended to include the following area:

           *       *       *       *       *       *       *

    Sec. 4. In any suit now pending or hereafter brought 
against the United States by the Ute Indian Tribe of the Uintah 
and Ouray Reservation, or by any one or more of the separate 
bands comprising said Ute Indian Tribe of the Uintah and Ouray 
Reservation, in the Court of Claims, the Indian Claims 
Commission or before any other tribunal, the United States may 
claim, as an offset against any judgment recovered therein, the 
fair market value as of the date of this Act of any interest in 
public lands conveyed by section 1 hereof, and any improvements 
thereon, and the fair market value as of the date of the 
transfer of title of the lands and improvements which may be 
relinquished by the State of Utah to the United States under 
section 3 of this Act. The validity and amount of any such 
claim shall be determined by the court, commission, or tribunal 
in conformity with the provisions of section 2 of the Act of 
August 13, 1946 (60 Stat. 1049, 1050).
    Sec. 5. In order to further clarify authorizations under 
this Act, the State of Utah is hereby authorized to relinquish 
to the United States, for the benefit of the Ute Indian Tribe 
of the Uintah and Ouray Reservation, State school trust or 
other State-owned subsurface mineral lands located beneath the 
surface estate delineated in Public Law 440 (approved March 11, 
1948) and south of the border between Grand County, Utah, and 
Uintah County, Utah, and select in lieu of such relinquished 
lands, on an acre-for-acre basis, any subsurface mineral lands 
of the United States located beneath the surface estate 
delineated in Public Law 440 (approved March 11, 1948) and 
north of the border between Grand County, Utah, and Uintah 
County, Utah, subject to the following conditions:
          (1) Reservation by united states.--The Secretary of 
        the Interior shall reserve an overriding interest in 
        that portion of the mineral estate comprised of 
        minerals subject to leasing under the Mineral Leasing 
        Act (30 U.S.C. 171 et seq.) in any mineral lands 
        conveyed to the State.
          (2) Extent of overriding interest.--The overriding 
        interest reserved by the United States under paragraph 
        (1) shall consist of--
                  (A) 50 percent of any bonus bid or other 
                payment received by the State as consideration 
                for securing any lease or authorization to 
                develop such mineral resources;
                  (B) 50 percent of any rental or other 
                payments received by the State as consideration 
                for the lease or authorization to develop such 
                mineral resources;
                  (C) a 6.25 percent overriding royalty on the 
                gross proceeds of oil and gas production under 
                any lease or authorization to develop such oil 
                and gas resources; and
                  (D) an overriding royalty on the gross 
                proceeds of production of such minerals other 
                than oil and gas, equal to 50 percent of the 
                royalty rate established by the Secretary of 
                the Interior by regulation as of October 1, 
                2011.
          (3) Reservation by state of utah.--The State of Utah 
        shall reserve, for the benefit of its State school 
        trust, an overriding interest in that portion of the 
        mineral estate comprised of minerals subject to leasing 
        under the Mineral Leasing Act (30 U.S.C. 181 et seq.) 
        in any mineral lands relinquished by the State to the 
        United States.
          (4) Extent of overriding interest.--The overriding 
        interest reserved by the State under paragraph (3) 
        shall consist of--
                  (A) 50 percent of any bonus bid or other 
                payment received by the United States as 
                consideration for securing any lease or 
                authorization to develop such mineral resources 
                on the relinquished lands;
                  (B) 50 percent of any rental or other 
                payments received by the United States as 
                consideration for the lease or authorization to 
                develop such mineral resources;
                  (C) a 6.25 percent overriding royalty on the 
                gross proceeds of oil and gas production under 
                any lease or authorization to develop such oil 
                and gas resources; and
                  (D) an overriding royalty on the gross 
                proceeds of production of such minerals other 
                than oil and gas, equal to 50 percent of the 
                royalty rate established by the Secretary of 
                the Interior by regulation as of October 1, 
                2011.
          (5) No obligation to lease.--Neither the United 
        States nor the State shall be obligated to lease or 
        otherwise develop oil and gas resources in which the 
        other party retains an overriding interest under this 
        section.
          (6) Cooperative agreements.--The Secretary of the 
        Interior is authorized to enter into cooperative 
        agreements with the State and the Ute Indian Tribe of 
        the Uintah and Ouray Reservation to facilitate the 
        relinquishment and selection of lands to be conveyed 
        under this section, and the administration of the 
        overriding interests reserved hereunder.'.

                                  
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