NEW TOWN The chairman of the Three Affiliated Tribes says the U.S. Environmental Protection Agency violated a presidential executive order when it did not consult with tribes before implementing a federal rule requiring oil companies working on the Fort Berthold Reservation to obtain what is called a synthetic minor source permit for oil and gas wells on the reservation.
According to tribal officials, the EPA issued the rule on July 1, effective Aug. 30, requiring oil and gas wells producing on Fort Berthold Reservation and flaring gas to be subject to the federal requirement.
However, an EPA Region 8 spokesman, said the EPA did consult a number of times with tribes and Alaska natives on the Clean Air Act new sources and modifications, but the synthetic minor source permits didn't get a lot of attention.
"This lack of consultation (with tribes) and the loss of jobs and income is unacceptable for our tribe, especially when America is trying to create jobs," said Tex Hall, tribal chairman. Hall said he is asking North Dakota's congressional delegation for its assistance.
Jim Martin with the Region 8 EPA in Denver, said the EPA is always looking for ways to improve consultation with tribes and that they did meet with tribes and Alaska Natives. For whatever reason, he said the issue of the synthetic minor source permit just didn't get much notice.
Hall said the rule would slow production while oil companies apply for the permit.
However, Martin said Region 8 EPA is working on an agreement so drilling will continue on Fort Berthold.
The regulation requires a synthetic minor source permit that oil companies must obtain for every oil and gas well existing and new wells on the reservation.
According to an EPA fact sheet, on June 10, EPA finalized a federal implementation plan to ensure the Clean Air Act permitting requirements are applied consistently to facilities on reservations. The action was done to help newly built or expanding industries protect people's health and the environment. The permits limit air pollutants such as particle pollution and sulfur dioxide that are associated with numerous health effects.
There are different types of permits under the New Source Review program, including the synthetic minor permits, the fact sheet says.
"A synthetic minor permit applies to a source that has the potential to emit pollutants in amounts that are at or above the thresholds for major sources, but has voluntarily accepted emissions limitations so that its potential to emit is less than these thresholds. ... generally, 100 to 250 tons per year are minor sources of emissions," according to the fact sheet.
Tribal officials said they have been in contact with EPA since March 2011 and before about the need for greater tribal consultation regarding EPA's intentions to implement the federal regulations under the Clean Air Act.
In response to tribal concerns, tribal officials said EPA officials at EPA Region 8 in Denver agreed to delay implementing the regulation for 36 months, however, EPA officials announced recently that one section of the rule, the requirement for synthetic permits, would go into effect Aug. 30.
EPA Region 8 is currently proposing an administrative complaint and consent agreement that would phase in the synthetic permit requirement over the next year. That would mean drilling could continue. Without the agreement, there would be a loss.
The Bureau of Indian Affairs completed an Economic Impact Study which said the implementation plan could result in possibly 90 wells not being completed on the Fort Berthold Reservation in the next year and a loss of more than $46 million in royalty revenues in 2011 and 2012.
The tribal business council has passed a resolution asking the EPA to delay the implementation of any synthetic minor source permit requirement until Aug. 30, 2012, to allow for meaningful consultation. The EPA refused, tribal officials said.
The tribal business council has also applied for a grant that would designate the tribes "tribe as state" status and would eventually allow them to regulate energy resources on the reservation.
Lynn Helms, Bismarck, director of the North Dakota Department of Mineral Resources, told members of the Minot Area Chamber of Commerce's Energy Committee Thursday at a meeting in Minot that air permitting is the newest problem facing the oil and gas industry.
"The EPA is looking for any way they can to place hurdles in the path of the oil and gas industry," Helms said.
On top of permits from the Bureau of Indian Affairs, Bureau of Land Management and state, Helms said oil companies working on Fort Berthold would also need the minor source air permit.
"This is really, really serious. It's an enormous deal to Fort Berthold," Helms said. He said if it goes beyond the reservation, it would impact the entire state. "The process is in motion to move it beyond Fort Berthold," he added.
"There's no question that this will slow drilling activity," Helms said.
Helms said a concern right now is the state of North Dakota has delegated authority for air permitting, with the exception of on the tribal lands.
However, he said there's a lawsuit moving on that EPA wants to take back the that authority. "If they're successful in that, then this suddenly applies to every oil well in the state," Helms said.
He said the tribes' application for "tribe as state" status is the same status the North Dakota Health Department has to do its own air-quality regulation and permitting.
He said the best guess is the air permitting would be similar to the impact of the lower oil prices, which is 25 to 30 percent. "We're running 200 rigs today (and) if this was to move off the reservation and started applying to everybody, it could reduce our rig count 50 to 70 rigs," he said.
"EPA needs to be motivated to drop that effort to pull the North Dakota Health Department air program and they also need to be motivated to look at a more efficient process for wells on the reservation," Helms said.
Mylott said EPA plans to do more consultations with the tribes and Alaska natives.