(Repeating to additional subscribers)
By Ernest Scheyder
NEW TOWN, N.D., Nov. 3 A change in leadership at
an American Indian reservation in North Dakota wouldn't normally
get a whole lot of attention. But come Tuesday, the oil industry
will be watching this dusty area of the state as two reformers
vie to become tribal chairman, an office with outsized power
over the course of the state's booming oil industry.
That's because the reservation's Three Affiliated Tribes of
Mandan, Hidatsa and Arikara (MHA) Nation control roughly a third
of North Dakota's oil output. In the past two years alone,
production on the MHA Nation has jumped 145 percent, cementing
the state's role as the second-largest U.S. oil producer after
The reformers, Damon Williams, the tribal attorney, and Mark
Fox, the tax director, each propose tighter environmental
regulations. They also promise to ensure more money goes
directly to projects that improve life for the 12,000 tribal
members on the 980,000-acre reservation. In other words: this
stands to make things more complicated for the oil industry.
So far, oil companies aren't saying a whole lot about the
leadership change. EOG Resources Inc, the largest oil
producer on the reservation, said its goal is "to maintain good
relationships with tribal members regardless of the election's
outcome." Marathon Oil Co and Exxon Mobil's XTO
Energy declined comment. The North Dakota Petroleum Council, an
industry group, said the candidates each have an "open demeanor
and are willing to sit down with companies, state and federal
agencies" to resolve regulatory questions.
Lynn Helms, head of North Dakota's Department of Mineral
Resources, the state's oil regulator, is blunter: Oil producers
are "deeply concerned," he said, adding: "drilling on the
reservation could be slowed." That's because if the tribes give
stricter scrutiny to environmental issues, more stringent rules
could mean more obstacles for new drilling permits.
The MHA Nation has received more than $1 billion in oil tax
revenue since 2008, but it still struggles to provide basic
services. For example: the tribal capital of New Town has only
one stoplight to direct thousands of tractor-trailers, trucks
and cars that pour through each day.
Said Elgin Crows Breast, a lifelong New Town resident and
historian: "Where is all this money going?"
In addition, a report commissioned by the tribal council
earlier this year asserted that the current tribal chairman, Tex
"Red-Tipped Arrow" Hall, used his position to financially
benefit from the oil boom by arranging supply and service
contracts with the reservation for businesses owned by his
friends. Hall, 58, denies the charges.
Responding to concerns about conflict-of-interest raised by
Williams, a tribal investigation conducted by the Kansas City,
Missouri, office of Dentons law firm earlier this year claimed
that Hall secured service and supply contracts with the
reservation for businesses owned by his business partner, James
Henrikson. Hall arranged for a business owned by Henrikson to
receive a trucking contract, splitting the revenue 50-50, the
Henrikson was indicted in September on federal charges
related to a murder and is in prison pending trial. Neither he
nor his lawyer could be reached for comment about the tribal
Hall, who lost to Williams and Fox in a primary last month,
told Reuters through a spokesman the Dentons report was
"basically useless." While legal jurisdiction can be complex on
tribal land, any theft from an Indian tribal group is a U.S.
federal crime. Tim Purdon, U.S. attorney for North Dakota,
declined to confirm or deny any ongoing investigation.
NEW KIDS IN TOWN
Williams and Fox each said they'll be more financially
transparent and impose, among other things, tighter standards
for spill cleanups. They will also, they said, boost spending on
new roads and drug and alcohol treatment centers.
Technically a sovereign nation within the United States, the
MHA Nation holds vast power over energy operations. Companies
are required to use available local Indian labor and services,
for instance, and go through Indian regulatory vetting processes
above and beyond state and federal agencies.
The tribe's aspiring new leaders will try and clean up the
myriad and messy collection of rules that govern the oil
The MHA Nation's oilfield regulations consists of 21 pages
of resolutions stamped with a tribal mantra: "Sovereignty By The
Barrel." Most of the resolutions gave broad discretion to the
chairman, effectively allowing him to enforce part, all or none
at will. Both Williams, 45, and Fox, 51, said they will end
that. "Industry wants regulation," said Williams, a former
lawyer with the U.S. Environmental Protection Agency.
"Otherwise, how can they follow the rules when it's unclear
what's going on? When things can change on a whim?"
Fox is worried about protecting the environment.
"We've got oil companies in the midst of this gold rush who
are going things they shouldn't be doing," he said.
For example: About 1 million gallons of saltwater, a
byproduct of hydraulic fracturing process, leaked from a broken
pipeline owned by Crestwood Midstream Partners LLC onto the
reservation this past July. Some of the saltwater made its way
to Lake Sakakawea, a water source for the reservation. Crestwood
began to clean up the spill as soon it was discovered. The
company did not respond to a request for comment.
Some caution that tighter environmental rules and more
investments in infrastructure after the election aren't forgone
"My worry is that when this oil boom ends, will the money
have been spent wisely for the people of the reservation?" said
Sebastian Braun, chair of the University of North Dakota's
American Indian Studies department.
Furthermore, oil prices may have a say in events before
anything else. Prices have dropped 25 percent in the past three
months. That roller-coaster could ultimately temper the
reservation's boom before Williams or Fox have a chance to
"The oil money is our buffalo," Williams said. "And one of
these days, the buffalo will move on."
(Reporting by Ernest Scheyder; Editing by Hank Gilman)