American Indian [hereinafter Indian] lands in 2014 were the sources of 1.8 percent of U.S. crude oil, 0.4 percent of the natural gas liquids, and 1.0 percent of the natural gas production. See U.S. Energy Info. Admin., Sales of Fossil Fuels Produced from Federal and Indian Lands FY 2003 through 2014, at 3 tbl.2 (2015). Royalty income from Indian lands producing energy and mineral resources was projected to exceed $1 billion in 2015. Nevertheless, some Indian officials believe onerous restrictions by the Bureau of Land Management (BLM), which regulates oil and gas activities on Indian land, are responsible for the relatively small percentage of U.S. production from Indian lands. Regardless of whether changes in regulations would result in increased production, the existing oil and gas production in the country contributes to air pollution that threatens public health and the environment.
Indian tribes have inherent sovereignty but are considered domestic dependent nations, and the federal government is the trustee. This results in the Environmental Protection Agency (EPA) playing an important role in regulating air pollution in Indian country. There are over 300 Indian reservations in the continental United States covering over 56 million acres. “Indian reservation” as used in this article corresponds to the first prong of the term “Indian country” as defined in 18 U.S.C. § 1151, i.e., “all land within the limits of any Indian reservation.” Tribal jurisdiction is complicated. Tribes have inherent sovereignty over their members and their territory, generally do not have criminal jurisdiction over non-Indians, and generally do not have civil authority over the conduct of nonmembers of the tribe on non-trust land within reservation boundaries, except that tribes may have authority to regulate the conduct of nonmembers who have entered into commercial dealings with the tribe or whose conduct threatens the political integrity, economic security, or health or welfare of the tribe. See generally Cohen’s Handbook of Federal Indian Law § 10.03 (2012 ed). States generally do not have authority to implement environmental protection laws in Indian country. Id. at § 10.02.
Indian tribes have the opportunity to become authorized by the EPA to be treated as states for the purpose of administering the Clean Air Act’s (CAA) programs. 42 U.S.C. §§ 7410(o), 7601(d). Few tribes have accepted this responsibility, however, so primary regulatory authority for air pollution control in Indian country is based on the EPA’s regulations, which include federal implementation plans (FIPs). There are currently 44 FIPs applicable to specific tribes. One FIP has been issued by EPA’s Region 8, but there is none for any tribe in Utah because no Indian reservation is a designated nonattainment area, although this may change in the near future. Even in the absence of a FIP, major sources located within Indian reservations are usually subject to the EPA’s regulations, including national FIPs such as the FIP for New Source Review (NSR) in Indian Country, discussed below.
When the EPA promulgates regulations that have “tribal implications,” it is subject to the requirements of Executive Order 13,175, Consultation and Coordination with Indian Tribal Governments (Nov. 6, 2000), 65 Fed. Reg. 67249 (reprinted following 25 U.S.C. § 450). Pursuant to this executive order and a memorandum from President Obama, 74 Fed. Reg. 57881 (Nov. 9, 2009), the EPA adopted an updated Policy on Consultation and Coordination with Indian Tribes (May 4, 2011). Accordingly, the EPA has put in place mechanisms to ensure that tribes have significant opportunities to participate in the regulatory process even if they have not assumed regulatory jurisdiction.
Areas having better air quality than the national ambient air quality standards (NAAQS) are subject to the CAA’s Prevention of Significant Deterioration (PSD) program. A new major emitting facility or a major modification to a major existing facility must obtain a preconstruction permit that includes the requirement to use the Best Available Control Technology (BACT). If a source’s potential to emit is greater than the major source threshold for one pollutant, then PSD requirements apply to any other regulated pollutants above the level defined as “significant” in the PSD regulations. On July 1, 2011, the EPA finalized a FIP for Indian country that includes two rules for NSR: one for new and modified minor stationary sources and minor modifications at existing major sources throughout Indian country, and another rule for new and modified major sources in areas of Indian country that are designated as not in attainment with the NAAQS. EPA, Review of New Sources and Modifications in Indian Country, 76 Fed. Reg. 38,748, 38,750. The first of these two rules includes a PSD program for sources in Indian country.
In nonattainment areas, NSR requirements are applicable to major new or modified sources, which include the use of the Lowest Achievable Emission Rate (LAER) control technology. Sources subject to NSR must also offset emissions increases by obtaining emissions reductions from other sources. The EPA’s regulations require an applicant to conduct an analysis demonstrating that the benefits of the proposed source significantly outweigh the environmental and social costs of the construction or modification. Because Indian reservations generally don’t have many existing sources, the EPA proposed two options to address the lack of available offsets. Only a few Indian reservations have been designated as nonattainment areas. A much larger number of reservations are located within nonattainment areas designated by states. The EPA lists about 87 tribes with lands located in nonattainment areas. See Area Designations for 2008 Ground–Level Ozone Standards, EPA (Apr. 2012); Area Designations for the 2012 Annual Final Particle (PM2.5) Standard, EPA (2012); Area Designations for 2006 24-Hour PM2.5 Standards—Final Tribal Designations, EPA (Oct. 2009). Such tribes may be subject to a tribe-specific FIP.
The 1990 CAA Amendments created Title V, which mandates an operating permit program for major stationary sources. 42 U.S.C. §§ 7661–7661f. In Indian country the EPA administers the program, although it may delegate this responsibility to a qualified tribe. EPA, Federal Operating Permits Program: Final Rule, 64 Fed. Reg. 8247 (Feb. 9, 1999) (codified in various sections of 40 C.F.R. part 71). Major sources include minor sources located on contiguous or adjacent properties, under common control, and belonging to a single two-digit Standard Industrial Classification (SIC) if their combined emissions exceed the threshold level. Sources of Hazardous Air Pollutants (HAPs) are major based on the aggregate emissions of a stationary source or group of stationary sources within a contiguous area and under common control without reference to the SIC.
Until the EPA approved the Title V Operating Permit for Colorado’s Southern Ute Tribe, no tribe had an EPA-approved Title V permitting program, although the Navajo Nation has delegated authority to implement a federal operating permit program. EPA, Clean Air Act Full Approval of Title V Operating Permits Program; Southern Ute Indian Tribe, 77 Fed. Reg. 15,267 (Mar. 15, 2012). The EPA has issued 46 Title V permits to major sources located on Indian tribal lands in its Regions 2, 5, 6, 8, 9, and 10. Seventeen permits are for facilities in Region 8 covering New Mexico, Wyoming, Colorado, Montana, Utah, and North Dakota. There are no permits in EPA’s other regions.
The EPA’s 2011 Indian country NSR FIP also regulates new and modified minor stationary sources and minor modifications at existing major stationary sources. EPA, Review of New Sources and Modifications in Indian Country, 76 Fed. Reg. 38,748 (July 1, 2011). This FIP incorporates by reference six federal rules dealing with air emissions. The FIP also provides for a case-by-case determination of the maximum achievable control technology (MACT) for sources of HAPs.
Beginning September 2, 2014, any new stationary source that has the potential to emit (PTE) a regulated pollutant in amounts equal to or greater than the minor NSR thresholds (found in Table I of the Rule) must obtain a minor NSR permit before beginning construction. Existing stationary sources (minor or major) must apply for and obtain a minor NSR permit before beginning construction of a physical or operational change that increases the allowable emissions by more than the specified threshold amounts, unless the change triggers the permitting requirements of the more stringent PSD or nonattainment NSR program(s). It should be noted that the EPA expanded its list of activities that are exempted from the minor NSR program. 79 Fed. Reg. 31,035 (May 30, 2014).
The 2011 Indian country NSR FIP established the first synthetic minor source permitting mechanism for major sources in Indian country that agree to permit conditions that limit emissions to assure they stay below the major source trigger. The EPA is developing general permits for some common types of minor sources, but at this time, synthetic minor sources need a site specific permit.
The general permit program is aimed at small, but numerous sources. This program simplifies the permit process by authorizing construction or modification of new or modified minor sources that comply with the regulatory requirements for the source category. The EPA finalized the general permit issuance process as part of the Federal Indian Country Minor NSR rule. On May 1, 2015, the EPA finalized a rule concerning general permits in Indian country for new or modified minor sources in two source categories: hot mix asphalt (HMA) plants; and stone quarrying, crushing, and screening facilities. 80 Fed. Reg. 25,068. The agency also finalized permits by rule for auto body repair and miscellaneous surface coating operations; gasoline dispensing facilities, except in California; and petroleum dry cleaning facilities.
Tribal Regulation of Air Quality
The PSD program separates areas that met the NAAQS into three classes that limit atmospheric degradation, with the least deterioration allowed in Class I areas, and the most deterioration allowed in Class III areas. The EPA may approve the redesignation of reservations by Indian tribes to Class I. 42 U.S.C. § 7474(c). The Northern Cheyenne Tribe was the first tribe to do this, and EPA’s approval was upheld. Nance v. EPA, 645 F.2d 701 (9th. Cir. 1981). The EPA has approved at least six such tribal redesignations. Tribes that redesignate their reservations to Class I can make it difficult or even impossible for major emitting sources to locate either inside the reservation’s boundary or outside the boundary if projected emissions exceed the allowed increase. However, redesignation also restricts the tribe’s options for future development.
In the 1990 CAA Amendments, Congress expanded the power of Indian tribes to control air pollution by providing a path for Indian tribes to be treated as states (TAS). 42 U.S.C. §§ 7410(o), 7601(d). In 1998, the EPA promulgated its Tribal Authority Rule (TAR), which sets forth the requirements for a tribe to obtain TAS status. EPA, Indian Tribes: Air Quality Planning and Management; Final Rule, 63 Fed. Reg. 7254 (Feb. 12, 1998) (codified at various sections of 40 C.F.R. parts 9, 35, 49, 50, and 81). The TAR also sets out the requirements that a tribe must meet to implement a tribal implementation plan (TIP), the PSD program, and Title V permitting program. The TAR was upheld in Arizona Public Service Co. v. EPA, 211 F. 3d 1280 (D.C. Cir. 2000), cert. den., 532 U.S. 970 (2001). The EPA provides guidance concerning the procedural steps that must be followed for a tribe to be approved for TAS status for a number of federal environmental statutes, including the CAA. See https://www.epa.gov/tribal/tribal-assumption- federal-laws-treatment-state-tas. As of October 2015 there were 49 tribes that had TAS status for various CAA provisions. Region 8 has nine tribes with TAS approval including the Ute Indian Tribe of the Uintah & Ouray Reservation in Utah. About two-thirds of the TAS tribes are in the West. E-mail from Regina Chappell, Liaison, Office of Air Quality Planning & Standards, EPA, to Sheena M. Christman, Research Assistant, S.J. Quinney Coll. of Law (Oct. 27, 2015, 1:19 PM) (unpublished spreadsheet) (on file with author). TAS status allows tribes to seek primacy to implement the CAA through a TIP or to seek a more limited role by seeking primacy over specific CAA regulatory programs.
The air pollution control functions for which an Indian tribe seeks TAS must “pertain to the management and protection of air resources within the exterior boundaries of the reservation or other areas within the tribe’s jurisdiction.” 42 U.S.C. § 7601(d)(2)(B). In the TAR, the EPA interpreted this statutory language to be a delegation of federal authority to tribes with respect to sources within reservation boundaries, including sources on other than Indian lands. See 63 Fed. Reg. 7254 (Feb. 12, 1998). Based on this interpretation, the TAR provides that a tribe is not required to make a showing that it has inherent sovereignty over such sources. With respect to “other areas within the tribe’s jurisdiction” but not within the reservation’s boundaries, however, the TAR does require the tribe to demonstrate that the regulated activity affects the health or welfare of the tribe and potential impacts on the tribe are serious and substantial, in other words, that the tribe has inherent sovereignty under the second exception to the general proposition in Montana v. United States, 450 U.S. 544 (1981). See 63 Fed. Reg. at 7255.
After TAS approval, the EPA retains criminal enforcement authority over non-Indians. However, the EPA allows tribes to assist it in developing criminal enforcement actions. The TAR also exempts tribes with TAS status from exposure to citizen suits based on CAA section 304, but tribes (or any person) can use the citizen suit provision against sources that are constructed or operated in violation of the CAA or an applicable CAA permit. TAS status allows tribes to petition EPA to impose control requirements on upwind sources that contribute significantly to a violation of an air quality standard in a downwind area. CAA § 126, 42 U.S.C. § 7426; see also CAA § 110(a)(2)(D), 42 U.S.C. § 7410(a)(2)(D).
A tribe with TAS status may develop a TIP subject to the EPA’s approval. A TIP allows tribes to address specific air quality needs within the capability of the tribe to manage. In 2014, most tribes with TAS status were administering one or more parts of the CAA for the EPA, but only three tribes were approved to implement TIPs, and one tribe had an approved Title V operating permit program. See EPA, Plan EJ 2014: Legal Tools, at 20 (2011); EPA, Basic Information about Tribal Air, available at www.epa.gov/tribal-air/basic-information- about-tribal-air. The three tribes with TIP authority are the Mohegan Tribe of Connecticut, the Saint Regis Mohawk Tribe, and the Gila River Indian Community. See Vanessa Baehr-Jones & Christina Cheung, An Exercise of Sovereignty: Attaining Attainment for Indian Tribes Under the Clean Air Act, 34 U. Cal. Davis 189, 207 (2011).
As an alternative to developing a TIP, a tribe, with or without TAS status, may seek to have federal air pollution programs delegated to it for implementation. See EPA, Review of New Sources and Modifications in Indian Country, 76 Fed. Reg. 38,748, 38,779 (July 1, 2011). Tribes only need to show that their laws provide adequate authority to perform the delegated activities, thereby avoiding the expense and time required to meet the requirements for a TIP.
Oil and Gas Regulation in Indian Country
Extraction of mineral resources from Indian trust or restricted lands has long been the subject of federal legislation. See Cohen’s Handbook of Federal Indian Law § 17.03 (2012 ed.). The Mineral Leasing Act of 1938 provides for Indian lands to be leased for mineral development for 10 years, or longer, with the consent of the Secretary of the Interior. 25 U.S.C. §§ 396a-396g. The Indian Mineral Development Act of 1982 allows tribes to enter into mineral development agreements subject to the approval of the Secretary of the Interior. 25 U.S.C. §§ 2101-2108. The Energy Policy Act of 2005 includes the Indian Tribal Energy Development and Self-Determination Act. 25 U.S.C. §§ 3501–3506. This Act allows a tribe to enter into a tribal energy resource agreement (TERA) with the Department of the Interior if the tribe demonstrates its capacity to regulate the development of tribal resources. However, as of 2015, there were no TERAs in existence due to factors such as the complexity of the TERA process, the high costs imposed on applicants by the Department of the Interior, and the problems created by split ownership of the surface and subsurface estates. Oil and gas operations on Indian lands require an application for a permit to drill to be submitted and approved by the BLM, which administers the onshore development of oil and gas operations on federal lands and Indian lands. 25 U.S.C. § 396d; 43 C.F.R. § 3162.
The EPA’s regulations applicable to oil and gas operations include volatile organic compounds (VOC) controls on storage tanks, standards for reciprocating internal combustion engines used at oil and gas operations, and the new source performance standards (NSPS)/HAP regulation for the crude oil and natural gas production and onshore natural gas processing plant source category. See EPA, Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews; Final Rule, 77 Fed. Reg. 49,490 (Aug. 16, 2012) (codified at various sections of 40 C.F.R. parts 60 and 63). The NSPS apply to well completions during the flowback period following hydraulic fracturing operations at newly drilled and fractured wells, as well as completions conducted following refracturing operations. The NSPS sets performance standards that include limits on VOC emissions from gas wells, compressors, pneumatic controllers, storage vessels and leaking components at natural gas processing plants, as well as sulfur dioxide (SO2) emissions from processing plants. The rule regulates wells drilled principally for production of natural gas, but it does not regulate wells drilled principally for the production of crude oil. The regulation also limits HAP emissions from major sources in the oil and natural gas production source category and the natural gas transmission and storage source category and establishes MACT standards for specified emission sources in the oil and gas industry.
Executive Order 13,175 sets some limits on the authority of any agency, including the EPA, to issue a regulation that has tribal implications, if it imposes substantial direct compliance costs and is not required by statute. The order says that, in such a case, either the federal government must provide the funds necessary to pay the direct compliance costs incurred by tribal governments, or the agency must consult with tribal officials early in the process of developing the proposed regulation and develop a tribal summary impact statement. In the matter of the oil and gas NSPS/HAP rule, the EPA simply avoided this limit on its rulemaking power by concluding that the regulation would not have tribal implications because it doesn’t impose a significant cost on the tribal government. See 77 Fed. Reg. at 49539.
On September 18, 2015, the EPA proposed amendments to the NSPS for the oil and gas sources category to expand VOC emission limits to include processing, transmission, and storage. See EPA, Oil and Natural Gas Sector: Emission Standards for New and Modified Sources, 80 Fed. Reg. 56,593. The EPA is proposing to regulate methane, a potent greenhouse gas, from sources now regulated for VOC emissions. More stringent requirements imposed by tribes can be used to demonstrate compliance with the federal rule. Facilities that will be subject to the proposed EPA standards may also be subject to current or future requirements of the Department of Interior’s BLM covering the production of natural gas on federal lands. The proposed amendments do not change requirements covered by the existing standards. The NSPS amendments use operation or work practice standards to control most emission sources because the EPA believes numerical standards are not feasible.
The proposed regulation applies to: (1) oil and natural gas production, (2) natural gas processing, (3) natural gas transmission and storage, and (4) natural gas distribution. The oil sector regulations cover operations from the well to the point of custody transfer to an oil pipeline or other means of transportation to a petroleum refinery. For natural gas, the sector includes all operations from the well to the final end user. The proposed regulation targets wells and all related processes used in the extraction, production, recovery, lifting, stabilization, and separation or treatment of oil and/or natural gas (including condensate). Production sites include not only the sites where the wells themselves are located, but also include centralized gas and liquid gathering facilities where oil, condensate, produced water, and natural gas from several wells may be separated, stored, and treated. The production segment also includes smaller diameter, gathering pipelines and related components that collect and transport the oil, natural gas, and other materials and wastes from the wells or well pads.
The EPA, on September 18, 2015, also proposed a FIP that will apply to new true minor sources and to minor modifications at true minor sources in the production segment of the oil and natural gas industry located under a tribe’s jurisdiction. See EPA, Review of New Sources and Modifications in Indian Country: Federal Implementation Plan for Managing Air Emissions from True Minor Sources Engaged in Oil and Natural Gas Production in Indian Country, 80 Fed. Reg. 56,554. The Indian Country Minor NSR rule would be amended to require compliance with this FIP unless the source obtains a source-specific permit or complies with a reservation-specific requirement. Pollutants emitted from new and modified minor sources and minor modifications of major sources in areas covered by the Federal Indian Country Minor NSR rule include VOC, nitrogen oxides (NOX), SO2, particulate matter (PM), PM10 (PM≤10 microns), PM2.5 (PM≤2.5 microns), Hydrogen sulfide (H2S), carbon monoxide (CO), and various sulfur compounds. H2S and SO2 are emitted from production and processing operations that handle and treat sour gas. In addition to air emission control requirements, the EPA expects true minor sources to assess their impacts on threatened and endangered species and historic properties.
Approval of the federal land managers is required by the FIP prior to an oil and natural gas owner/operator beginning construction. A permit to drill in Indian country normally is a prerequisite to begin operations. Under this review process, the BLM is typically responsible for authorizing mineral rights, and the Bureau of Indian Affairs authorizes surface activities. This authorization includes review under the National Environmental Policy Act. These government actions also trigger the need to comply with the Endangered Species Act and the National Historic Preservation Act. BLM released its final rule concerning hydraulic fracturing activities on Indian lands at 80 Fed. Reg. 16,128 (Mar. 26, 2015); corrected at 80 Fed. Reg. 16,577 (Mar. 30, 2015). This rule updates a regulatory program that has existed for many years. Most of the rule is aimed at protecting land, water, and wildlife from the adverse impacts of fracking, but compliance with the CAA is also required.
Air Pollution Control in Utah’s Indian Country
There are six federally recognized Indian tribes in Utah as well as a small band of the Ute Mountain Ute Tribe (whose reservation is in Colorado and New Mexico). Only two of the tribes have significant emissions of air pollutants: the Navajo Nation and the Northern Ute Tribe. The Navajo Nation is the largest Indian reservation in the United States, with over 17 million acres in Arizona, New Mexico, and Utah. The tribe has over 250,000 members, of whom 7,000 live in Utah. The Navajo Nation obtained TAS status under the CAA in 2004. The Nation enacted a comprehensive Air Pollution Prevention and Control Act in 2004. The Nation has been delegated the authority to administer the Title V operating permit program, and it has issued 14 permits. See Jill Elise Grant, The Navajo Nation EPA’s Experience with “Treatment as a State” and Primacy, 21:3 Nat. Resources & Env’t 9 (Winter 2007).
In 1933, Congress enlarged the Navajo Reservation by adding the Aneth Extension located in southeast Utah. In 1956, oil was discovered in the Aneth field and 577 wells have since been drilled. The field has three units operated by Resolute Energy Corporation, which owns the controlling interest in the field. In 1993, the Navajo Nation Oil and Gas Co., Inc., was created, and in 1998, it became a federally chartered corporation pursuant to the Indian Reorganization Act. 25 U.S.C. § 477. In 2012, the corporation purchased a 10 percent interest in Resolute’s Greater Aneth Field. One of the units, the McElmo Creek Unit, has a PSD permit pending at EPA’s Region 9.
The Navajo Nation issued an operating permit to the Resolute Natural Resources Company on July 30, 2007, which expired July 30, 2012. Resolute submitted a timely permit renewal application and is allowed to continue to operate under their existing permit. Resolute expects that they will need to modify their operations in order to comply with the EPA’s recent regulations.
The Northern Ute Tribe resides on the Uintah and Ouray Reservation located in the Uinta Basin in northeastern Utah. The Uinta Basin is the center of the state’s oil and gas industry, where approximately three-quarters of the gas production and half of the oil production is from wells located in Indian country. The Uintah and Ouray Reservation’s boundaries enclose 4.5 million acres in Utah, making it the second-largest Indian reservation in the United States. There are 2,970 Ute Indians, with over one-half of the members living on 1.3 million acres within the reservation. The Ute Indian Tribe has TAS status, although the EPA issues the operating permits. Ten operating permits have been issued, nearly all of which are for compressor stations. In 2014, the Ute Indian tribe announced a plan to build a 1,000 megawatt natural gas-fired electric generating plant on the reservation to utilize the available fuel.
The Ute Indian Tribe leases about 400,000 acres for oil and gas development from about 7,000 wells that produce 45,000 barrels of oil and 900 million cubic feet of gas per day. These wells are regulated by the BLM pursuant to the Indian Mineral Leasing Act, but regulation is uniform for all federal and Indian lands. This means that drilling permits are subject to BLM’s 49-step process and a fee for each well of $6,500 or more. For this reason, some Utes believe much of the growth in oil and gas production in Utah has occurred on state or private lands.
For the Uintah and Ouray Reservation, there are no PSD permits for oil and gas industry sources, despite the reservation’s importance in the production of this energy resource. Because the basin has not yet been designated nonattainment for ozone, there are no nonattainment NSR permit requirements. There is only one synthetic minor source—a gas processing plant. There are no general permits. Nine operating permits exist for the gas industry; eight are for compressor stations. During inversion conditions in the winter of 2013–2014, the eight-hour ozone standard of 75 parts per billion (ppb) was exceeded at 12 of 18 monitoring locations in the Uinta Basin. The ozone standard is now 70 ppb. Thus, the Basin is likely to be designated an ozone nonattainment area. This will mean more stringent air pollution controls must be implemented.
Environmental law applicable to Indian lands is similar to the laws applicable throughout the nation, but with significant differences. States play a very limited role concerning sources in Indian lands. The EPA has the major responsibility for controlling air pollution, but its efforts to date have been inadequate. The CAA provides that tribes may become authorized to regulate air pollution, but only a few tribes, such as the Navajo Nation, have utilized this power. Voluminous federal regulations are aimed primarily at new sources, while existing sources have much less oversight, although this may be changing. The CAA requirements aimed at major sources are of limited applicability because the oil and gas industry minimizes the sources subject to the requirements. To date, environmental protection from oil and gas operations in Indian country has been minimal. However, more stringent environmental regulatory efforts will face opposition from those concerned with jobs and economic development.