Complaints about Osage oil rules receive support from senators

Mike ErwinJournal-Capital

New oil and gas regulations from the Bureau of Indian Affairs could put the Osage Nation “out of business” by increasing production expenses on tribal land in Osage County, Oklahoma’s Senators recently told the head of the U.S. Department of the Interior.

Regulations announced by the BIA on May 11 — and which were scheduled take effect June 10 — would significantly increase the costs of oil production, Sen. Jim Inhofe and Sen. James Lankford said in a letter sent to Interior Secretary Sally Jewell.

Federal lawsuits filed by the Osage Producers Association and the tribe’s Osage Minerals Council blocked implementation of the revised regulations until an Aug. 10 hearing is held in U.S. District Court at Tulsa.

Lankford and Inhofe praised the decision to delay the starting date for the regulations while expressing agreement with many of the complaints made by the two petitions. Among the concerns cited are expensive equipment updates that would require producers to pay $5 more per barrel in royalties than what they would pay elsewhere and vastly increased bond amounts that would be imposed upon the producers .

The letter described the Pawhuska-based tribe as unique in Oklahoma because “it retained a substantial mineral estate following statehood.”

“Production in Osage County has reached nearly 500,000 bbl/month in recent years, generating millions of dollars in revenue for the tribe’s head-right owners,” the July 9 letter stated.

The Senators commented on a possible need for revising the previous regulatory rule.

“The new regulations that were recently finalized will not solve any of these problems,” the Inhofe/Lankford letter stated. “In fact, it is our view that they will actually make the problems worse.”

Inhofe and Lankford said the BIA had taken some steps after hearing from the federal lawmakers’ offices, while adding that “the farther these actions are behind us, the more they appear to be window dressing, rather than a good faith effort to fix the many existing problems.”

“We believe it is imperative, particularly in light of your fiduciary duty to the (Osage Minerals Council), that you further suspend any plans to implement or enforce the regulations,” said the Senators, who also asked Jewell to “meet with us and other relevant stakeholders to craft a solution that is legitimately workable.”

The letter also addressed complaints related to the BIA’s oversight of tribal energy and mineral resources, including that the DOI agency does not have data it needs to verify ownership of some Indian oil and gas resources, or to easily identify resources available for a lease, or to identify where leases are in effect, the Government Accountability Office had stated in a June report.