By Janice M. Schneider, Tommy P. Beaudreau, Stacey L. VanBelleghem, and Nikki Buffa

Stakeholders interested in energy development on US tribal lands will welcome recent Department of Interior (DOI) efforts that identify a key burden to energy development on these lands — as well as the Bureau of Indian Affairs’ (BIA’s) plans to address it. DOI issued the Review of the Department of the Interior Actions that Potentially Burden Domestic Energy report (DOI Burden Report) in response to Executive Order (EO) 13783, Promoting Energy Independence and Economic Growth, which required agencies to evaluate and report on all existing agency actions that “potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” (For more on the DOI Burden Report, please see this November 2017 Latham & Watkins Client Alert.)

The BIA, a federal agency within DOI, is charged with managing trust assets of American Indians, Indian tribes, and Alaska Natives. As BIA noted in the DOI Burden Report, royalty income from energy production on tribal lands totaled US$534 million in 2016 and constitutes the largest source of revenue generated from tribal trust lands. BIA identified its existing regulations governing Tribal Energy Resource Agreements (TERAs) as a policy that potentially burdens domestic energy.

TERAs were authorized by Section 503 of the Energy Policy Act of 2005 to promote tribal self-determination and autonomy over (and reduce BIA approval of) energy development on US tribal land. Upon approval by BIA, TERAs allow tribes to enter into leases, business agreements, and rights-of-way for energy development on tribal lands without requiring BIA approval for each instrument. In 2008, BIA promulgated regulations implementing the TERA provisions.

Despite these policy changes, TERAs are not yet being used in Indian Country as a tool for energy development on tribal lands. Tribes have pointed to ambiguity in the BIA implementing regulations as a factor that has hampered tribal interest in using TERAs. Specifically, the implementing regulations allow tribes to undertake certain activities normally carried out by DOI, “except for inherently Federal functions” that the regulations do not define.

This uncertainty was previously identified as an obstacle in a 2015 Government Accountability Act (GAO) report critiquing BIA management of energy development on tribal lands. GAO recommended that BIA develop guidance to address a number of questions tribal officials have raised. Therefore, to promote the use of TERAs and enhance domestic energy development on tribal lands, BIA reports that it is working with lawyers in the DOI Office of the Solicitor to prepare guidance clarifying BIA’s interpretation of “inherently Federal functions.” As of early December, DOI has not yet released the guidance.

Concurrent with BIA’s efforts, Congress has also advanced a measure to provide technical assistance to tribes and otherwise support tribal efforts to pursue energy projects on tribal lands. On November 30, 2017, the Senate passed the Indian Tribal Energy Development and Self-Determination Act Amendments of 2017 (Senate Bill 245). This measure would provide additional support and direction in implementing Title V of the Energy Policy Act of 2005, which authorizes TERAs. The Senate-passed bill has been referred to House committee for consideration.

These recent developments in both Congress and the DOI suggest that the federal government will focus on revamping this tool for energy development on US tribal lands.