Geothermal Exploration on Tribal Lands, Without a Lease

1
Geothermal Exploration on Tribal Lands, Without a
Lease

• Permitting an Exploratory Geothermal Well on the
  Fort Bidwell Indian Reservation
• Anna Carter
• September 28, 2007

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Prior Condition of Drill Site
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Sump at Start of Drilling
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(No Transcript)
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How the Project Came AboutLucky Timing and Lucky
to be in California

• FBIC Economic Development polls in 2000 and 2002
  identified geothermal as a priority.
• Exploration geologist, Joe LaFleur, evaluated
  prospect and formed consultant team.
• 2004 US Department of Energy GRED III cost-shared
  grant funding. Value of data from old
  low-temperature wells used as in-kind match.
• 2005 California Energy Commission GRDA grant
  cost-share funding (DOE as match).

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Regulatory FrameworkTribes are Sovereign Nations

• Federal, state and local agencies have a
  government to government relationship with
  tribes.
• This concept is hard for consultants, state
  agencies and even federal agencies to fully
  grasp.
• Both tribes and the U.S. Bureau of Indian
  Affairs have ongoing internal struggles between
  sovereignty and self-determination and the
  federal governments responsibilities under the
  trust relationship.

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How It Plays Out (Lessons Learned)

• The experience from consultant point of view
• Tribes are (understandably) both protective of
  and resentful of their relationship with BIA.
• Generally, on small reservations, tribes have
  managed housing, health, education, water and
  sewer, but not geothermal resources.
• It helps to review with them how the project
  would be regulated if it were on state or federal
  public lands and what standards/permits would be
  required.

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Determining The Regulatory Path . . . You Dont
Want to be First

• FBICs position was that no permits were required
  and the state has no authority on the
  reservation.
• BIA, because of ongoing litigation, had no
  website and BIA staff no email.
• Tribe declined to voluntarily call in BLM or
  CADOGGR oversight.
• At first, BIA and BLM gave wrong or contradictory
  information about permitting.
• DOE, BLM and BIA have different NEPA rules for
  exploration wells.

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Federal Laws Apply . . . .

• Where no tribal ordinances applicable to a
  proposed action exist, an express federal statute
  allocating governmental authority over specific
  activities may control, and inherent tribal
  authority may be preempted by a comprehensive
  federal regulatory scheme.
• Tribal lands cannot be leased under the
  Geothermal Steam Act but can be leased under the
  Indian Minerals Development Act.
• Under Energy Policy Act of 2005, tribes can
  develop tribal energy resource agreements to
  self-regulate leases and energy projects, with
  BIA approval and monitoring of the plan.

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Federal Tribal Minerals Regulation

• Indian Minerals Development Act (IMDA),
• 25 USC Ch. 23, BIA and BLM Authority
• BIA can provide tribes assistance in lease or JV
  negotiations (if requested by tribe).
• BIA/BLM oversight of operations applies when
  there is a lease or mineral agreement that
  encumbers trust lands.
• Tribe can develop independently if authorized by
  their constitution or charter (or approved Tribal
  Energy Resource Agreement under EPAct 2005).
• Value of BIA and BLM expertise/regulation (tribe
  decides).

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Tribal/Federal Regulation of this Exploration
Drilling

• Tribe was the authorizing entity.
• DOE was the lead agency for NEPA.
• For Clean Air Act, Clean Water Act, and Safe
  Drinking Water Act, EPA is the regulatory agency
  -- not the state agencies.
• EPA has little direct geothermal experience but
  they do have tribal offices and work with tribes
  on an ongoing basis on other issues.

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State Laws Sometimes Apply

• The courts are often the arbiters
• Some employment laws apply (like OSHA)
• State grant contracts can impose specified
  requirements. Under CEC GRDA Grant
• California Environmental Quality Act
• Workers Compensation
• Prevailing Wage (uncertainty remains, but was
  accepted to accommodate the project)
• Drug Free Workplace
• Arbitration and California Courts

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Permitting and Regulatory Authorities

• Tribal Council resolutions, and tribal energy and
  environmental codes, if any.
• NEPA DOE lead. Biological and Cultural
  resource surveys as grant tasks. Biological
  surveys w/ both federal and state ESA lists.
• DOE CatEx for exploration slim hole.
• CEQA CEC lead agency. Drill pad and sump
  already constructed under NEPA. Change to wider
  hole not significant.

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Regulatory Compliance - Continued

• BIA No permitting action for this project.
• U.S. EPA
• CWA Sump lined. No stormwater permit
  required for under one acre.
• CAA Not even close to requiring a permit.
• CDWA Injection permit possible for well
  testing. EPA suggested submittal of a project
  description and a request for determination.
  Left undetermined pending final testing plan.
• In this case, there really were no required
  permits -- but within narrow circumstances.

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Concerns Raised by Tribe

• Protecting sovereignty paramount (concern over
  state authority)
• Consultants just doing it for the money (concern
  that well would only be for research and might
  not be useful to tribe)
• Are consultants ethical/competent
• Will granting agencies own the well or have a
  claim on the resource (no)
• Must tribe pay back grants (no)
• Liability (injury or death of workers)

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Concerns for Consultants/Contractors

• Turnover in governance (Tribal Council and staff)
  and repeated briefings increase
  administrative/travel costs and uncertainty.
• Will you get paid timely. Might not be able to
  sue a tribe unless they waive immunity.
• Regulatory uncertainty Without a lease, you
  need to create a regulatory framework and
  contractual responsibility for compliance with
  grant terms and regulatory standards.

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Future Tribal Decisions

• Assuming a successful well capable of power
  production or direct uses and an intention to
  proceed, the Tribe must determine
• Create Tribal Energy Resource Agreement w/ BIA or
  operate under BIA/BLM oversight under IMDA
• Continue with, or create new consultant team
• Self-develop or lease or partner with a developer
• Pursue as Tribe or Tribal Enterprise Corporation
• Form a utility
• Tax and finance consequences of each
• Regulatory consequences of each

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Should Tribes Use Consultants to Explore? Or
Lease/Partner/JV With Developers?

• Using Consultants
• Tribes take early exploration risk, retain
  greater ownership/control and all potential
  revenues.
• Tribes have access to loans/grants.
• BIA can help if tribe requests help.
• Leasing/Joint Venturing with Private Developer
• Easier, less responsibility, and BIA/BLM
  oversight.
• Private partner tax benefits can increase total
  project revenues.
• With a lease, royalty to tribe is small
  percentage of
• revenue -- much more with a joint venture.

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Recommendations to Consultants and/or Developers

• Authorizations/contracts should be signed by
  Council Chair or Tribal Administrator, and always
  supported by a Council resolution.
• Budget more than usual for interaction with the
  tribe for joint project and budget administration
  (and also as the regulatory/permitting agency) .
• Be prepared to educate the agencies and the tribe
  as to the regulatory framework.
• Make sure project operations are well insured.
• Be flexible and comfortable with uncertainty.

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More Recommendations and Reminders to
Consultants/Developers

• Budget for tribal administrative costs, for
• development of contracts, and for legal
• counsel to tribe on project/contract issues.
• Protect tribal interests, as well as your own.
• Support tribes in protecting their sovereignty
  whenever you can -- the courts are constantly
  chipping away at it.
• Develop/maintain trust, but dont rely on it.
• Create technical standards for the project.
• The tribe makes final decisions.

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Recommendations to Agencies

• DOE, BLM, BIA (and USFS) Coordinate NEPA
  guidance, especially Categorical Exclusions,
  among all agencies for same operations.
• Tribes need assistance analyzing the costs and
  benefits of no lease, lease, or private
  partner/JV and the finance, and tax issues
  related to the business entity they use in each
  approach, a tribe, tribal enterprise corporation,
  or a utility.
• CEC Determine which state rules apply on tribal
  lands generally -- not project by project -- and
  espec. clarify applicability of prevailing wage.

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Recommendations to Tribes

• Create a clear tribal point of contact with the
  time for, interest in, budget for, and commitment
  to the project.
• Require regular reports to the Tribal Council.
• Communicate progress to tribal members regularly,
  including responses to questions and rumors.
• Understand that projects can be delayed and
  maintain tribal commitment to a geothermal
  project over the long term.

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Project Funded by

• Fort Bidwell Paiute Indian Community
• (with many Non-Grant hours contributed by
• the Tribal Councils, Staff and Tribal Members)
• US Department of Energy Geothermal Program, GRED
  III grant to FBIC
• Jay Nathwani and Erik Hass, Contract Managers
• California Energy Commission GRDA grant to FBIC.
• Bill Glassley and Pablo Gutierrez, Commission
  Project Managers

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With Additional Non-Grant DOE-Funded
Contributions by

• Lawrence Berkeley National Lab
• Mack Kennedy
• Mike Hoversten
• Thijs Van Soest
• Sandia National Lab
• Allan Sattler
• Energy and Geoscience Institute, UURI
• Joe Moore

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And . . . .

• Many Voluntarily Contributed Hours by the
  Consultant Team
• Joe LaFleur
• Karen Moore
• Anna Carter
• Ben Barker
• Paul Brophy
• Louis Capuano

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Venue

• This presentation was made at the Geothermal
  Resources Council Annual Meeting pre-meeting
  workshop entitled
• Land, Lease and Unit Legal Issues
• Anna Carter and Susan Petty, Co-Chairs.
• September 28 and 29, 2007, Sparks, NV.
• Annacartr_at_aol.com