High Risk: Federal Management Challenges Related to Indian Energy Resources
Published: 2017-02-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Indian tribes and their members hold considerable energy resources and may decide to use these resources to provide economic benefits and improve the well-being of their communities. However, according to a 2014 Interior document, these resources are underdeveloped relative to surrounding non-Indian resources. Development of Indian energy resources is a complex process that may involve federal, tribal, and state agencies. Interior's BIA has primary authority for managing Indian energy development and generally holds final decision-making authority for leases, permits, and other approvals required for development.
GAO's 2017 biennial update to its High Risk List identifies federal management of programs that serve tribes and their members as a new high risk area needing attention by Congress and the executive branch.
This testimony highlights the key findings of three prior GAO reports ( GAO-15-502 , GAO-16-553 , and GAO-17-43 ). It focuses primarily on BIA's management of Indian energy resources and development. For the prior reports, GAO analyzed federal data; reviewed federal, academic, and other literature; and interviewed tribal, federal and industry stakeholders.
section_title: What GAO Found
paragraphs: In three prior reports on Indian energy development, GAO found that the Department of the Interior's (Interior) Bureau of Indian Affairs (BIA) has inefficiently managed Indian energy resources and the development process and thereby limited opportunities for tribes and their members to use those resources to create economic benefits and improve the well-being of their communities. GAO has also reported numerous challenges facing Interior's Bureau of Indian Education and BIA and the Department of Health and Human Services' Indian Health Services in administering education and health care services, which put the health and safety of American Indians served by these programs at risk. For the purposes of this testimony, GAO is focusing on the concerns related to Indian energy.
GAO categorized concerns associated with BIA management of energy resources and the development process into several broad areas, including oversight of BIA activities, collaboration, and BIA workforce planning.
Oversight of BIA activities . In a June 2015 report, GAO found that BIA review and approval is required throughout the development process. However, BIA does not have a documented process or the data needed to track its review and response times—such as data on the date documents are received, the date the review process is considered complete, and the date documents are approved or denied. GAO recommended that BIA develop a documented process to track its review and response times. Interior generally agreed and stated it would try to implement a tracking and monitoring mechanism by the end of fiscal year 2017 for oil and gas leases. Interior did not indicate whether it intends to track and monitor its review of other energy-related documents that must be approved before tribes can develop resources.
Collaboration . In a November 2016 report, GAO found that BIA has taken steps to form an Indian Energy Service Center that is intended to, among other things, help expedite the permitting process associated with Indian energy development. However, BIA did not coordinate with key regulatory agencies, including Interior's Fish and Wildlife Service, the Environmental Protection Agency and the U.S. Army Corps of Engineers. GAO recommended that BIA include other regulatory agencies in the Service Center so that it can act as a single point of contact or lead agency to coordinate and navigate the regulatory process. Interior agreed with our related recommendation and described plans to address it.
BIA workforce planning . In June 2015 and in November 2016, GAO reported concerns associated with BIA's long-standing workforce challenges, such as inadequate staff resources and staff at some offices without the skills needed to effectively review energy-related documents. GAO recommended that BIA assess critical skills and competencies needed to fulfill its responsibilities related to energy development, and that it establish a documented process for assessing BIA's workforce composition at agency offices. Interior agreed with our recommendations and stated it is taking steps to implement them.
section_title: What GAO Recommends
paragraphs: In the past 2 years, GAO issued three reports and made 14 recommendations to BIA to improve its management of Indian energy resources, such as to track its review process, improve collaboration, and conduct workforce planning. BIA agreed with most recommendations and identified some steps it intends to take to implement them.

section_title: Letter
paragraphs: I am pleased to be here today to discuss a new area we added to our  High Risk List this year—Improving Federal Management of Programs  that Serve Tribes and Their Members.
We are adding this high-risk area in response to serious and long- standing problems in federal management of Indian energy resources  and administration of Indian education and health care programs, which  are highlighted in several of our prior reports, along with reports and  testimony from Inspectors General, tribal nations, special commissions,  and others. In particular, we have found that the Department of the  Interior’s Bureau of Indian Affairs (BIA) has inefficiently managed Indian  energy resources and the development process and thereby limited  opportunities for tribes and their members to use those resources to  create economic benefits and improve the well-being of their  communities. In addition, we have found numerous challenges facing  Interior’s Bureau of Indian Education (BIE) and BIA and the Department  of Health and Human Services’ (HHS) Indian Health Services (IHS) in  administering education and health care services, which put the health  and safety of American Indians served by these programs at risk. For the  purposes of this testimony, I will focus on our prior work related to Indian  energy.
As you know, the United States has recognized the sovereign status of  tribes since its formation and currently recognizes 567 Indian tribes as  distinct, independent political communities that possess certain powers of  sovereignty and self-government. Some tribes and their members hold  abundant energy resources and have decided to develop these resources  to meet the needs of their community, in part because energy  development provides opportunities to improve poor living conditions,  decrease high levels of poverty, and fund public services for tribal  members. While tribes and their members determine how to use their  energy resources, if the resources are held in trust or restricted status,  BIA—through its 12 regional offices, 85 agency offices, and other  supporting offices—generally must review and approve leases, permits,  and other documents required for development. BIA’s management of  Indian energy resources and oversight of development is to be conducted  pursuant to federal law, in a manner that is consistent with the federal  government’s fiduciary trust responsibility to federally recognized Indian  tribes and their members.
In 2016, Congress found in the Indian Trust Asset Reform Act that  “through treaties, statutes, and historical relations with Indian tribes, the  United States has undertaken a unique trust responsibility to protect and  support Indian tribes and Indians.” As further stated in that act, the  fiduciary responsibilities of the United States to Indians arise in part from  commitments made in treaties and agreements, under which Indians  surrendered claims to vast tracts of land, and this history of federal-tribal  relations and understandings has benefitted the people of the United  States and established “enduring and enforceable ederal obligations to  which the national honor has been committed.” Through improvements to  federal management of programs that serve tribes and their members,  agencies can improve the efficiency of federal programs under which  services are provided to tribes and their members. This would be  consistent with the expressed view of Congress as to the federal  government’s trust responsibilities, and strengthen confidence in the  performance and accountability of our federal government.
In this context, my testimony today primarily discusses the findings from  three of our prior reports on Indian energy development. Accordingly,  this testimony identifies our findings about federal management of  programs that serve tribes and their members concerning management  and oversight of Indian energy resources and development. In addition, I  will highlight several key actions that we recommended in those reports  that federal agencies can take to help overcome challenges associated  with the management of Indian energy resources.
This testimony draws on findings from reports issued from June 2015  through November 2016. To conduct our prior work, we reviewed relevant  laws, regulations, and policies; reviewed and analyzed federal data; and  interviewed tribal, federal, and industry officials, among others. More  detailed information on our scope and methodology can be found in each  of the three reports.
We conducted the work on which this testimony is based in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain 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.
subsections: section_title: Management and Oversight of Indian Energy Resources and Development
paragraphs: In our prior work, we identified concerns associated with BIA  management of energy resources and categorized them into five broad  areas: (1) oversight of BIA activities; (2) collaboration and communication;  (3) BIA workforce planning; (4) technology; and (5) BIA’s data. In the past  2 years, we issued three reports on Indian energy resources and  development in which we made 14 recommendations to BIA. BIA agreed  with most of these recommendations, and has identified steps it will take  to address some of the recommendations.
subsections: section_title: Oversight of BIA Activities
paragraphs: In a June 2015 report, we found that BIA review and approval is required  throughout the development process, including the approval of leases,  right-of-way (ROW) agreements, and appraisals.  However, BIA does not  have a documented process or the data needed to track its review and  response times—such as data on the date documents are received, the  date the review process is considered complete by the agency, and the  date documents are approved or denied. However, a few stakeholders  we interviewed and some literature we reviewed suggested that BIA’s  review and approval process can be lengthy and increase development  costs and project development times, resulting in missed development  opportunities, lost revenue, and jeopardized viability of projects.
For example, in 2014, the Acting Chairman for the Southern Ute Indian  Tribe reported that BIA’s review of some of its energy-related documents  took as long as 8 years. Specifically, as of April 30, 2014, the tribe had  been waiting for at least 5 years for BIA to review 81 pipeline ROW  agreements—11 of these 81 ROW agreements had been under review  for 8 years. According to the tribal official, had these ROW agreements  been approved in a timely manner, the tribe would have received revenue  through various sources, including tribal permitting fees, oil and gas  severance taxes, and royalties. The tribal official noted that, during the  period of delay, prices for natural gas rose to an historic high but had  since declined. Therefore, the official reported that much of the estimated  $95 million in lost revenue would never be recovered by the tribe.
In another example from our June 2015 report, one lease for a proposed  utility-scale wind project took BIA more than 3 years to review and  approve and according to a tribal official, the lease was only reviewed and  approved after multiple calls and letters from the tribe to BIA  headquarters. According to a tribal official, the long review time  contributed to uncertainty about the continued viability of the project  because data used to support the economic feasibility and environmental  impact of the project became too old to accurately reflect current  conditions.
We recommended in our June 2015 report that Interior direct BIA to  develop a documented process to track its review and response times.  Interior agreed with the recommendation and stated it would try to  implement a tracking and monitoring mechanism by the end of fiscal year  2017 for oil and gas leases. However, Interior did not indicate whether it  intends to track and monitor its review of other energy-related documents  that must be approved before tribes can develop resources. Without  comprehensively tracking and monitoring its review process, BIA cannot  ensure that documents are moving forward in a timely manner, and  lengthy review times may continue to contribute to lost revenue and  missed development opportunities for Indian tribes.
Further, in a June 2016 report, we found that BIA took steps to improve  its process for reviewing revenue-sharing agreements but still had not  established a systematic mechanism for monitoring or tracking. We  recommended, among other things, that BIA develop a systematic  mechanism for tracking these agreements through the review and  approval process. Interior concurred with this recommendation and stated  that BIA would develop such a mechanism and in the meantime would  use a centralized tracking spreadsheet.
section_title: Collaboration and Communication
paragraphs: In June 2015, we reported that the added complexity of the federal  process, which can include multiple regulatory agencies, prevents many  developers from pursuing Indian energy resources for development. In a  November 2016 report, we reported that Interior has recognized the need  for collaboration in the regulatory process and described the creation of  the Indian Energy Service Center as a center point of collaboration for  permitting that will break down barriers between federal agencies. We  found that BIA had taken steps to form an Indian Energy Service Center  that was intended to, among other things, help expedite the permitting  process associated with Indian energy development. We reported that the  Service Center had the potential to increase collaboration between BIA  and BLM on some permitting requirements associated with oil and gas  development. However, we found that BIA did not coordinate with other  key regulatory agencies, including Interior’s Fish and Wildlife Service, the  U.S. Army Corps of Engineers, and the Environmental Protection Agency.  As a result, the Service Center was neither established as the central  point for collaborating with all federal regulatory partners generally  involved in energy development, nor did it serve as a single point of  contact for permitting requirements. Without serving in these capacities,  the Service Center was limited in its ability to improve efficiencies in the  federal regulatory process. We also found that in forming the Service  Center, BIA did not involve key stakeholders, such as the Department of  Energy (DOE)—an agency with significant energy expertise—and BIA  employees from agency offices. By not involving key stakeholders, BIA  was missing an opportunity to incorporate their expertise into its efforts.
We recommended that BIA include other regulatory agencies in the  Service Center so that it can act as a single point of contact or a lead  agency to coordinate and navigate the regulatory process. We also  recommended that BIA establish formal agreements with key  stakeholders, such as DOE, that identify the advisory or support role of  the office, and establish a process for seeking and obtaining input from  key stakeholders, such as BIA employees, on the Service Center’s  activities. Interior agreed with our recommendations and described its  plans to address them.
In addition, in 2005, Congress provided an option for tribes to enter into  an agreement with the Secretary of the Interior that allows the tribe, at  their discretion, to enter into leases, business agreements, and ROW  agreements for energy resource development on tribal lands without  review and approval by the Secretary. However, in our June 2015 report,  we found that uncertainties about Interior’s regulations for implementing  this option have contributed to deter tribes from pursuing such  agreements. We recommended that Interior provide clarifying guidance.  In August 2015, Interior stated the department was considering further  guidance. As of December 2016, however Interior had not provided  additional guidance.
section_title: BIA Workforce Planning
paragraphs: In our June 2015 report, we found that BIA’s long-standing workforce  challenges, such as inadequate staff resources and staff at some offices  without the skills needed to effectively review energy-related documents,  were factors hindering Indian energy development. Further, in  November 2016, we found that some BIA offices had high vacancy rates  for key energy development positions, and some offices reported not  having staff with key skills to review energy-related documents. For  example, BIA agency officials in an area where tribes are considering  developing wind farms told us that they would not feel comfortable  approving proposed wind leases because their staff do not have the  expertise to review such proposals. Consequently, these officials told us  that they would send a proposed wind lease to higher ranking officials in  the regional office for review. Similarly, an official from the regional office  stated that they do not have the required expertise and would forward  such a proposal to senior officials in Interior’s Office of the Solicitor. The  Director of BIA told us that BIA agency offices generally do not have the  expertise to help tribes with solar and wind development because it is  rare that such skills are needed.
Through the Indian Energy Service Center, BIA plans to hire numerous  new staff over the next 2 years, which could resolve some of the long- standing workforce challenges that have hindered Indian energy  development in the past. However, BIA is hiring new staff without  incorporating effective workforce planning principles. Specifically, BIA has  not assessed key skills needed to fulfill its responsibilities related to  energy development or identified skill gaps, and does not have a  documented process to provide reasonable assurance its workforce  composition at agency offices is consistent with its mission, goals, and  tribal priorities. As a result, BIA cannot provide reasonable assurance it  has the right people in place with the right skills to effectively meet its  responsibilities or whether new staff will fill skill gaps.
We recommended in our November 2016 report that BIA assess critical  skills and competencies needed to fulfill its responsibilities related to  energy development and identify potential gaps. We also recommended  BIA establish a documented process for assessing BIA’s workforce  composition at agency offices taking into account BIA’s mission, goals,  and tribal priorities. Interior agreed with our recommendations and stated  it was taking steps to implement them.
section_title: Technology
paragraphs: In June 2015, we found that BIA did not have the necessary geographic  information system (GIS) mapping data for identifying who owns and uses  resources, such as existing leases. Interior guidance states that efficient  management of oil and gas resources relies, in part, on GIS mapping  technology because it allows managers to easily identify resources  available for lease and where leases are in effect. According to a BIA  official, without GIS data, the process of identifying transactions, such as  leases and access agreements for Indian land and resources, can take  significant time and staff resources to search paper records stored in  multiple locations.
We recommended BIA should take steps to improve its GIS capabilities to  ensure it can verify ownership in a timely manner. Interior stated it will  enhance mapping capabilities by developing a national dataset composed  of all Indian land tracts and boundaries in the next 4 years.
section_title: Incomplete and Inaccurate Data
paragraphs: In June 2015, we found that BIA did not have the data it needs to verify  who owns some Indian oil and gas resources or identify where leases are  in effect. In some cases, BIA cannot verify ownership because federal  cadastral surveys—the means by which land is defined, divided, traced,  and recorded—cannot be found or are outdated. The ability to account for  Indian resources would assist BIA in fulfilling its responsibilities, and  determining ownership is a necessary step for BIA to approve leases and  other energy-related documents.
We recommended that BIA identify land survey needs. Interior agreed  with the recommendation and stated it will develop a data collection tool  to identify the extent of its survey needs in fiscal year 2016. As of  December 2016, Interior had not provided information on the status of its  efforts to develop a data collection tool.
In conclusion, our reviews have identified a number of areas in which BIA  could improve its management of Indian energy resources. Interior has  stated that it intends to take some steps to implement our  recommendations, and we will continue to monitor its efforts. We look  forward to continuing to work with this committee in overseeing BIA, BIE,  and IHS to ensure that they are operating in the most effective and  efficient manner, consistent with the federal government’s trust  responsibilities, and working toward improving service to tribes and their  members.
Chairman Farenthold, Ranking Member Plaskett, and Members of the  Committee, this concludes my prepared statement. I would be pleased to  answer any questions that you may have at this time.
section_title: GAO Contacts and Staff Acknowledgement
paragraphs: If you or your staff members have any questions about this testimony,  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 testimony. Christine Kehr (Assistant  Director), Richard Burkard, Jay Spaan, and Kiki Theodoropoulos made  key contributions to this testimony.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.