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US: Exploiting natural resources on tribal lands divides Native Americans

US: Exploiting natural resources on tribal lands divides Native Americans

Native Americans are the surprise stakeholders of the ‘America First’ energy plan. Given the resources they control, some tribes will be willing beneficiaries of President Donald Trump’s decision to unlock federal lands for fossil fuel extraction. However, others, especially the resource-poor, may be a disruptive force, turning mines, wells and pipelines on or near their homelands into a public battleground over the right to consultation.

Approximately 56 million acres of federal lands are Native American-owned, held in trust by the US government for sovereign tribes. As the following map illustrates, just over one quarter of Native American country contains untapped hydrocarbons.Recoverable reserves are significant: the Department of the Interior estimates that up to 21% of US coal reserves, 15% of proven oil reserves, and 11% of proven gas reserves are located on Native American lands.

However, extracting these resources – and building the necessary infrastructure to transport them – requires careful navigation of Native American treaty rights and, especially, the right to consultation.

Native American lands: Overlap with coal, oil and gas reserves

Source: Wood Mackenzie, 2017; EIA, 2011; Verisk Maplecroft, 2017; USGS, 2014

Resource-rich but impoverished tribes divided over the benefits of extraction

Many resource-rich tribes will be keen to extract fossil fuels, and they are the decision-makers with regard to mining or drilling inside their reservations. They have the sovereign authority to negotiate or reject extractive development on their lands, although final permits are issued by the federal Bureau of Indian Affairs (BIA).

Managed effectively, revenues from the sale of natural resources could increase well-being on poor and remote reservations. Coal, oil and gas revenues from Native American lands rose by 47% between 2010 and 2016, reaching USD534 million in 2016. The fracking boom explains much of the increase, with oil revenues nearly tripling from USD134 million in 2010 to USD379 million in 2016.

Native American lands: Coal, oil and gas production

Source: US Census, 2015

Native American lands: Poverty rates and fossil fuel extraction

Source: Wood Mackenzie, 2017; EIA, 2011; Verisk Maplecroft, 2017; USGS, 2014

But, as the figure above illustrates, nine out of 16 reservations with major hydrocarbon resources are battling economic marginalisation, with poverty rates of between 25% and 50%. In many cases, corrupt governance and a shortage of skills, combined with weak support from an under-resourced BIA, make it difficult for tribes to properly benefit from their resources. Projects that are poorly negotiated or managed by tribal governments bring limited advantages to tribal members and risk swelling the voices opposing extraction.

Consequently, diverging opinions about the costs and benefits of extraction divide resource-rich tribes.Despite sitting on an estimated 23 billion tons of coal reserves, and with 45.6% of the population living below the poverty line, the Northern Cheyenne refuse to extract their coal. While their neighbours, the Crow, welcomed the Trump administration’s lifting of the coal-lease moratorium on federal lands, the Northern Cheyenne responded with a lawsuit claiming violation of the right to prior consultation.

Neglecting consultation rights will derail ‘America First’ energy plan

The real battleground appears to be developing not around extraction, but around the construction of energy infrastructure on, or adjacent to, Native American lands – and especially those that are not rich in resources.

Native American lands: Pipelines

Source: Wood Mackenzie, 2017; EIA, 2011; Verisk Maplecroft, 2017; USGS, 2014

In 2016, north-western tribes prevented the development of coal-export ports on the Washington coast and the Columbia River in Oregon, arguing that the ports would harm their treaty-protected fishing rights. Last year saw the long-running Standing Rock Sioux camp of ‘water protectors’ that delayed, but did not stop, the North Dakota Access Pipeline (DAPL). Largely excluded from the Bakken oil windfall benefiting the Fort Berthold reservation further north, the Sioux demanded the right to be consulted on the DAPL route, which crossed sacred sites and water sources outside the reservation.

The Sioux contestation over the DAPL pushed consultation grievances onto the national stage. When energy projects impact Native American treaty rights or lands, but do not necessarily cross those lands, tribes have more limited decision-making powers. Tribes have the right to be consulted, and the authorities must take a ‘consensual’ approach where possible, but there is no requirement for consent. The Trump administration’s decision in March to press ahead with two national pipelines – the DAPL and Keystone XL – regardless of tribal concerns, signalled that national energy policy will be taking precedence over consultation.

But consultation grievances will entangle projects in litigation and deter investors. The Sioux have a pending lawsuit to shut down the DAPL on the grounds that the tribe was not meaningfully consulted. Some investors are fleeing association with violations of free, prior and informed consent (FPIC). In April 2017, three out of 17 banks – ING, BNP Paribas and DNB – divested from the USD2.5-billion loan to build DAPL.

The US is already categorised as medium risk for business and investors in Verisk Maplecroft’s Indigenous Peoples’ Rights Index because protections for indigenous peoples are not adequately enforced. Further deterioration in respect for the FPIC of indigenous peoples will move the country into the high risk category.

#nopipelines may transform into #nofossilfuels

By putting pipelines ahead of consultation, the Trump administration may derail its own plan to open up federal lands for fossil fuel extraction.

Wherever oil pipelines cross water resources, failure to consult impacted Native Americans may stimulate the growth of a cross-national ‘water protector’ movement, led by environmentalists and tribes. Members from over 300 tribes joined the Sioux protest against DAPL. Now back home, water protectors are applying protest skills locally to disrupt pipeline construction in Oklahoma, Texas, Louisiana and Florida.

But it is Keystone XL, which travels south of the Standing Rock Sioux reservation – crossing rivers between four resource-poor reservations in South Dakota – that will become a focal point for protest.

By failing to respect the spirit and letter of consultation rights, the administration may inadvertently raise barriers to the development of fossil fuels or the construction of pipelines on federal, and Native American, lands. Some projects will become mired in litigation, divestment campaigns and protest; investors may be unnerved. And an emerging ‘no pipelines’ movement may also turn its attention to coal, oil or gas extraction on Native American lands.

By: Dr Alexandra Channer, Principal Human Rights Analyst

To discuss this topic with an analyst or to request a Country Risk Report contact info@maplecroft.com
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