Feds clear backlog of tribal oil royalty payments

By James MacPherson
Bismarck, North Dakota (AP) October 2010

Congressional pressure has forced a federal agency to clear a big backlog of oil royalty payments to the Three Affiliated Tribes and its members on the Fort Berthold Indian Reservation in western North Dakota, Sen. Byron Dorgan said.

But the Bureau of Land Management says it will need a dozen new government employees to keep pace with paperwork created by the booming oil activity on tribal land in North Dakota.

Dorgan, D-N.D., said about $5 million in tardy oil royalty payments and interest earned on them are being distributed this month to the tribe and hundreds of its members.

Dorgan, chairman of the Senate’s Indian Affairs Committee, had accused federal officials of dragging their feet in processing so-called communitization agreements that pool mineral interests for oil and gas production on American Indian land.

The senator said some of the royalty payments languished for more than a year because of “bureaucratic processing delays.”

Three Affiliated Tribes Chairman Marcus Levings said the delays caused frustration on the reservation, located in the heart of the prolific Bakken formation.

“All of this drilling is great but not if royalties can’t be given to tribal members and the tribe,” Levings said. “We got the message to the senator and he said he was going to take care of it and he did.”

Dorgan said he pressed the Interior Department for months to process the payments, which were being held in escrow by oil companies. The Interior Department’s Bureau of Indian Affairs and Bureau of Land Management manage oil and gas activities on tribal land.

“They’ve got to be prepared to process paperwork and make sure people get their money,” Dorgan said. “They just were not on top of this and prodding has forced them to change their procedures.”

Lonny Bagley, a manager for the Bureau of Land Management in Dickinson, said the agency had to shuffle staff to clear the backlogged royalty payments from the communitization agreements, which can represent up to 100 mineral owners in an area where an oil well is drilled.

Bagley said verifying the mineral owners is time-consuming and taxed the bureau’s staff. The agency has asked for 12 new employees to handle the increased workload due to oil drilling on tribal land.

“We’ve submitted a workload analysis for additional staff,” Bagley said. The request is pending.

The communitization agreements are separate from royalties paid from oil production on land owned solely by the tribe or by an individual on the reservation.

Levings has said lease payments of more than $179 million have been paid to the tribe and its members since the oil boom began on the reservation less than two years ago. Millions of dollars more in royalties and tax revenue are being added to tribal coffers.

Levings said the tribe will use its money to pay off debt, and bankroll such things as roads, health care and law enforcement.

The Fort Berthold Reservation contains portions of six counties, covering more than 1,500 square miles. About 4,500 of the approximately 12,000 tribal members live on the reservation, tribal officials say.