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[House Report 112-509]
[From the U.S. Government Publishing Office]

112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-509

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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, AND FOR OTHER PURPOSES''

                                _______
                                

  May 31, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hastings of Washington, from the Committee on Natural Resources, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4027]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 4027) 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, and for 
other purposes'', having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                          Purpose of the Bill

    The purpose of H.R. 4027 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, and for other purposes''.

                  Background and Need for Legislation

    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, the 
``Hill Creek Act'') 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 
SITLA for the benefit of K-12 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 of subsurface minerals and the right of 
ingress and egress to develop them. The State today wants to 
relinquish to the United States (for the benefit of the Tribe) 
18,000 acres of subsurface in the remote, southern (Grand 
County) portion of the Hill Creek Extension, in exchange for 
18,000 acres of subsurface in the northern (Uintah County) area 
of the Extension.
    In 2006, SITLA filed an application with the BLM to perform 
the exchange pursuant to the 1948 Hill Creek Act and the 1955 
amendments. The BLM has refused to process the application, 
claiming the vague law establishing and amending the Hill Creek 
Extension does not permit the State to select minerals in the 
northern part of the Extension. Though the State has come to 
the opposite legal conclusion, legislation is necessary to 
effectuate the exchange. The land exchange authorized by H.R. 
4027 will increase energy production and job opportunities, 
benefiting the State's public schools, the Tribe, and the 
nation. It will also enable the Tribe to consolidate split 
estates in ecologically sensitive and tribally sacred areas.
    H.R. 4027 amends the 1948 Hill Creek Act to authorize an 
acre-for-acre exchange of subsurface mineral lands within the 
Hill Creek Extension between the State of Utah and the United 
States (on behalf of the Ute Tribe). The State-relinquished 
subsurface estate in the sensitive southern area will be held 
in trust for the Tribe, while the State-acquired subsurface in 
the northern area will be leased for oil and gas development.
    To resolve concerns over the relative values of the 
exchange, H.R. 4027 reserves to the federal government and the 
State of Utah identical overriding financial interests in each 
other's exchanged lands. Specifically, the bill reserves to the 
federal government 50 percent of bonus bids and rentals from 
leasing of the mineral resources obtained by the State under 
this bill, a 6.25 percent overriding royalty on the gross 
proceeds of oil and gas production, and a 50 percent overriding 
royalty on the gross proceeds of production of 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. The State obtains equal overriding 
financial interests in that portion of the mineral estate it 
relinquishes to the United States for the benefit of the Tribe. 
The overriding interest of each party automatically terminates 
after 30 years. Neither the U.S. nor the State is obligated to 
lease its lands based on the overriding interests set forth in 
this bill.
    The lands subject to the exchange authorized by the bill 
are considered prospective, mostly for natural gas. The Tribe 
is actively engaged in oil and gas leasing on its Reservation.
    On March 20, 2012, the Subcommittee on Indian and Alaska 
Native Affairs held a hearing on H.R. 4027. Witnesses included 
an official with the BLM, the Chairwoman of the Ute Tribe, the 
Director of SITLA, and the Director of Wilderness Policy for 
the Wilderness Society.
    The Tribe, SITLA, and the Wilderness Society testified in 
support of H.R. 4027. The BLM testified in support of the goals 
of the bill, but in opposition to it as written. The 
Administration was concerned with the bill's termination of the 
overriding financial interests after 30 years without an 
obligation to lease. It also wanted authority to raise the 
federal royalty rate for oil and gas produced on the State's 
leases. Finally, it pointed out that current federal policy is 
for land exchanges with the United States to be of equal value.
    The Committee concurs in the Tribe's and SITLA's view that 
H.R. 4027 provides an exchange that is fair to all parties, 
including the public. The only alternative to address the 
legitimate concerns of SITLA and the Tribe is to perform 
impractical, dilatory, and costly appraisals that could 
frustrate the land exchange, much like such appraisals 
frustrated certain goals of the Utah Recreational Land Exchange 
Act of 2009 (Public Law 111-53). As explained by the State, the 
termination of the overriding federal interest will ``avoid 
burdening each party with a perpetual accounting obligation 
with respect to lands owned by the other.'' Moreover, allowing 
the federal government to unilaterally raise the royalty rate 
on proceeds from State-leased oil and gas production would 
unfairly reduce the State's benefits.

                            Committee Action

    H.R. 4027 was introduced on February 14, 2012, by 
Congressman Jim Matheson (D-UT). The bill was referred to the 
Committee on Natural Resources, and within the Committee to the 
Subcommittee on Indian and Alaska Native Affairs and the 
Subcommittee on Energy and Mineral Resources. On March 20, 
2012, the Subcommittee on Indian and Alaska Native Affairs held 
a hearing on the bill. On April 25, 2012, the Full Natural 
Resources Committee met to consider the bill. The Subcommittee 
on Indian and Alaska Native Affairs and the Subcommittee on 
Energy and Mineral Resources were discharged by unanimous 
consent. No amendments were offered to the bill and the bill 
was adopted and ordered favorably reported to the House of 
Representatives by unanimous consent.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(2)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
403 of the Congressional Budget Act of 1974, the Committee has 
received the following cost estimate for this bill from the 
Director of the Congressional Budget Office:

H.R. 4027--A bill to clarify authority granted under the act entitled 
        ``An act to define the exterior boundary of the Uintah and 
        Ouray Reservation in the state of Utah, and for other 
        purposes''

    H.R. 4027 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 2013-2022 
period. Enacting H.R. 4027 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    H.R. 4027 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, 
H.R. 4027 would preserve the federal government's existing 
financial rights to the value of any subsurface minerals that 
are developed on all properties for the next 30 years. 
Therefore, CBO estimates that enacting the legislation would 
have no impact on direct spending or revenues over the 2013-
2022 period.
    H.R. 4027 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act. 
Enacting the bill would benefit the tribe and state.
    The CBO staff contact for this estimate is Martin von 
Gnechten. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.
    2. Section 308(a) of Congressional Budget Act. As required 
by clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives and section 308(a) of the Congressional Budget 
Act of 1974, this bill does not contain any new budget 
authority, spending authority, credit authority, or an increase 
or decrease in revenues or tax expenditures. CBO estimates that 
the legislation would have no significant impact on the federal 
budget over the 2013-2022 period.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill 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, 
and for other purposes''.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                         ACT OF MARCH 11, 1948

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

           *       *       *       *       *       *       *

  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.
          (7) Termination.--The overriding interest reserved by 
        the Secretary of the Interior under paragraph (1), and 
        the overriding interest reserved by the State under 
        paragraph (3), shall automatically terminate 30 years 
        after the date of enactment of this section.

                                  
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