Although a plethora of questions still remain, the Osage Minerals Council has a little more guidance as to what a potential TERA could look like.
As part of the Oct. 21 Osage Minerals Council meeting, TERA consultant Jim Trumbly briefed the council about an Oct. 6 meeting with officials from the Department of Interior about some of the nuts and bolts of entering into a Tribal Energy Resource Agreement.
First approved in 2005, a TERA between a tribe and the Department of Interior allows a tribe to review, approve and manage leases, business agreements and rights of way for energy development on tribal land without having to go through the Secretary of Interior every step of the way.
As updated in December, the TERA regulations lay out parameters for tribes to pursue self-governance agreements for some of the services associated with energy development, including oil and gas drilling.
For more than a year, the council has been considering pursuing such an agreement with the federal government in an effort to boost petroleum production in Osage County and by extension, headright check amounts. However, questions have persisted about the scope and breadth of such an agreement, including exactly what services the tribe could take on.
For example, if a TERA is signed, the Department of Interior would still be responsible for coordinating with the tribe regarding maintenance of real estate records and title status information needed to evaluate property for potential projects or right of way leases.
Among the dozen tasks deemed as “inherently federal functions” at the Oct. 6 meeting, and off the table for consideration in a TERA, are accounting and collection of mineral estate revenues, overseeing compliance with the Endangered Species Act or the federal Freedom of Information Act, gross production tax payments and issuing headright payments.
That leaves the possibility of the minerals council taking on pre-leasing; leasing; production oversight; lease compliance and enforcement or permitting and operations.
Some questions still remain, including several tied to money. A request is pending for specific funding levels that the federal government can provide to assume any or all of the functions deemed TERA-eligible. Additionally, conversations have not begun yet with the Osage Nation’s Department of Human Resources to ascertain the space and equipment costs or market salary rates for any of the positions associated with such a move.
“The major thing that was an inherent federal function was related to the revenues,” Trumbly said. “Regardless of TERA or how it went into place, any Osage organization however it gets structured would be unable to collect revenue distributions, disputes or anything related to revenue.”