with Paulina Firozi

Oklahoma's oil industry, already beset by the coronavirus pandemic, now is dealing with the uncertainty stemming from a major Supreme Court decision declaring nearly half of eastern Oklahoma to be Native American land.

With the high court’s ruling, oil and gas drillers in the nation’s fourth largest oil-producing state suddenly find themselves operating within the Muscogee (Creek) Nation and four other tribal reservations.

About a quarter of Oklahoma’s recent oil and gas wells and around 60 percent of its refinery capacity now lie within the territory of five tribes — the Cherokee, Chickasaw, Choctaw, Creek and Seminole — according to the research firm ClearView Energy Partners.

Perhaps more importantly, the network of pipelines pumping crude to and from Cushing, Okla. — a crucial oil terminal for the Keystone XL — spider-web across the redrawn reservation borders.

Instead of dealing with business-friendly regulators from the state, oil producers may soon have to contend with both tribes and the federal government. 

“The reality is that there’s something potentially that could be very detrimental to the oil and gas industry,” said Dewey Bartlett, a former Tulsa mayor who runs Keener Oil & Gas Company, a five-person oil and gas production and exploration firm with most of its wells now in Indian country.

With Americans driving and flying less during the viral outbreak, U.S. oil prices have dropped by a third since the start of the year. Oklahoma’s shale fields, where extraction costs are relatively high, are among the hardest hit during the pandemic. One of the state’s biggest energy firms, the fracking pioneer Chesapeake Energy, has already declared bankruptcy.

The 5-to-4 decision, written by Justice Neil M. Gorsuch and joined by the court’s liberals, ostensibly deals with criminal law for the ancestors of those forced to march the 19th century Trail of Tears into present-day Oklahoma. 

But the majority opinion writers acknowledge the ruling raises big questions over taxation and the enforcement of environmental rules.

Those questions may take years to settle. “In reaching our conclusion about what the law demands of us today, we do not pretend to foretell the future and we proceed well aware of the potential for cost and conflict around jurisdictional boundaries, especially ones that have gone unappreciated for so long,” Gorsuch wrote in McGirt v. Oklahoma. “But it is unclear why pessimism should rule the day.”

One major consequence for oil producers on the reservation may be two layers of taxes — one from the state and another from the tribes.

And the Bureau of Indian Affairs and other federal agencies may end up getting authority to run clean-air programs in new areas and crucially, to renew right of way grants for existing pipelines. Seven major crude oil pipes cross into Creek territory.

State officials are trying to reassure the industry at an already uneasy moment.

In a teleconference organized by the Petroleum Alliance of Oklahoma trade group soon after the July 9 decision, Oklahoma Attorney General Mike Hunter (R) sought to reassure oil producers that their business wouldn’t be upended and the state would keep their interests in mind.

Robert Sullivan Jr., an independent Tulsa-based oil producer who once served as Oklahoma’s energy secretary, took comfort in Hunter’s comments. “Oklahoma has been a very good place to do business,” he said.

He says his big fear now is federal regulation. Complying with federal restrictions to protect an endangered beetle while drilling in Indian country, for example, have held him up for months in the past. 

“One of the things we were concerned about in the McGirt aftermath is that we, being Oklahoma producers, would lose the source of regulation from one place, the Oklahoma Corporation Commission, and start getting regulated by somebody from Washington,” he said.

On Thursday, Hunter and the five tribes came to an agreement for a legislative proposal to Congress that would give the Native American groups the right to collect taxes and grant them some authority over anything deemed to threaten the “welfare” of a tribe — a potential, though not certain, opening for environmental regulations.

The Petroleum Alliance of Oklahoma said it needed to study the agreement more before commenting.

Oklahoma’s Republicans in Congress are eager to pass a version of the proposal from Hunter and the tribes. But congressional Democrats, concerned about climate change, may not be if doing so denies Joe Biden, the party’s presumptive presidential nominee, leverage over the state’s oil and gas activity.

The Creek Nation cautions no final decisions have been made about what they will ask of Congress.

But the Oklahoma tribes have asserted their rights over natural resources before.

“There’s a lot of work to be done before we know what that looks like,” tribal spokesman Jason Salsman said.

In 2011, the Chickasaw and Choctaw sued Oklahoma City for withdrawing water from Sardis Lake. They settled out of court.

Even if President Trump wins a second term, environmentalists are increasingly joining with Native American groups to protest and sue to stop pipeline projects — most notably Dakota Access pipeline in North Dakota.

Ultimately, all that uncertainty weighs heavily on oil producers and their financial backers when making decisions about where to drill next.

“There would be that overlying concern that would be in addition to the investment itself in an industry that is somewhat risky already,” Bartlett said.

Power plays

Democrats are eager to reverse Trump’s deregulatory agenda if they take control of Congress and the White House. 

Biden insisted in a recent speech that his administration would “reverse Trump’s rollbacks of 100 public health and environmental rules and then forge a path to greater ambition.” 

Under the obscure Congressional Review Act, which the Trump administration used to undo 14 Obama-era rules in 16 weeks, “any regulation finalized within 60 legislative days of the end of a presidential term can be overturned with a simple congressional vote — not subject to filibuster or any other Senate rules that could slow it down,” the New York Times reports

The Times adds: “Hundreds of regulatory rollbacks and new, conservative rules did beat that deadline, but several major initiatives did not. On Wednesday, the administration completed a regulation that unilaterally weakened the cornerstone National Environmental Policy Act, limiting public review of federal infrastructure projects to speed up the permitting of freeways, power plants and pipelines, and relieving infrastructure planners of even considering climate change in their assessments.” 

If Democrats regain control in Washington, they could “swiftly wipe those changes out.” 

A federal judge dismissed the Trump administration’s lawsuit challenging California’s cap-and-trade initiative. 

“The decision marks the latest chapter in the court battles between the Trump administration and the state over a multitude of issues, including the environment and immigration. The two sides have spent much of the past two years in particular fighting over California’s efforts to rein in greenhouse gases,” the Sacramento Bee reports. “Friday’s decision stems from the White House’s lawsuit over California’s cap-and-trade initiative — in particular the state’s decision in 2014 to link its program with a comparable cap-and-trade market operating in the Canadian province of Quebec. The alliance allows companies in both states to sell carbon credits to each other and, California officials say, broadens the market for credits and strengthens the overall program.” 

Democrats say an Interior Department analysis did not properly assess impact of Arctic National Wildlife Refuge oil development on polar bears. 

A letter to the agency led by Rep. Jared Huffman (D-Calif.) points to an environmental impact review of plans to drill in the Alaska refuge, the Hill reports.

The review “makes the unsupportable conclusion that industrializing the entire Coastal Plain—including the most important terrestrial denning habitat for among the most imperiled polar bear population on the planet—will not jeopardize the survival and recovery of the species,” the letter reads. “This fundamentally flawed analysis ignores the overwhelming scientific evidence that identifies devastating impacts to polar bears from oil and gas activities.” 

The department responded to the letter, referring to the 2017 tax legislation that enabled ANWR drilling. 

“Representative Huffman and the other Democrat members who signed this erroneous letter apparently don’t understand that the Tax Cuts and Jobs Act enacted in 2017 requires an oil and gas leasing program in the Coastal Plain,” the department said, per the Hill. “It would serve them well to have a better, basic understanding of the laws under the jurisdiction of the Committee.”

Coronavirus fallout

The pandemic has stymied a billion-dollar wildlife tourism industry. 

The travel restrictions driven by the pandemic has had an impact on the industry that “employs millions and underpins a symbiotic human-wildlife ecosystem — the private conservancy — that is essential to wildlife conservation in many African countries,” Max Bearak reports in this dispatch from Maasai Mara, Kenya.

“Conservancies constitute more than 11 percent of Kenya’s land, more than national parks. The model is simple: Community shareholders, mostly cattle herders, receive tourism revenue from wildlife safaris as compensation for lost grazing land, and salaried jobs proliferate at new hotels and for rangers. Wildlife becomes more valuable alive than dead, disincentivizing poaching,” he adds. “Now, with tourism revenue nearly zeroed out, most workers at Kenya’s 167 community-owned conservancies are furloughed, and payouts to nearly 1 million shareholders have been reduced or suspended entirely. Communities are considering a return to grazing, jeopardizing decades of wildlife conservation efforts across the continent’s vast grasslands.” 

An analysis of the sewage at Yosemite revealed the presence of the novel coronavirus. 

Officials last week tested feces at two wastewater treatment plants serving the national park, the San Francisco Chronicle reports, adding that dozens in Yosemite Valley are thought to be infected. 

“With the pandemic surging across the country, more and more communities are keeping watch for the virus in wastewater,” per the report. “…Scientists hope that human excrement can similarly help guide health policy today, telling them where the novel coronavirus emerges, what areas should receive medical supplies or be locked down, and when it may be safe to reopen communities, their schools, stores and businesses.” 

New research points to a link between air pollution concentrations and coronavirus death rates. 

The American University paper revealed there has been an increase in soot and ozone in areas with more industrial facilities since the Environmental Protection Agency froze pollution enforcement in March, E&E News reports. The counties with higher soot and ozone levels had a 19 percent increase in daily death rates from late March through most of May, and an almost 38 percent increase in total covid-19 cases. 

“The possible tie between air pollution exposure and vulnerability to COVID-19 — and whether Black and Latino communities are disproportionately affected — has been a subject of intense interest in scientific and public health circles since the pandemic erupted,” per E&E News. “It's also a sensitive topic for EPA officials, who maintain they have done nothing to worsen air quality.” 

Pacific Gas & Electric is making numerous changes ahead of the next fire season. 

The utility is working on trimming trees, installing cameras, setting up weather stations and making improvements to an electrical grid across parts of Northern and Central California in an effort to reduce fire risk, the New York Times reports. The efforts follow PG&E’s exit from bankruptcy earlier this month after it resolved about $30 billion in wildfire-related liabilities. 

“All told, the company has committed to spending $9.5 billion from 2020 to 2022 on its wildfire mitigation plan, according to state regulators,” per the report. “If that seems like a lot, it’s because of the extent of PG&E’s operations in areas that the state deems to be at high-risk for wildfires — areas where the utility has enough power lines to more than wrap around the Earth. Contact between a live power line and a dying tree could set off the next Camp Fire, the 2018 blaze started by PG&E equipment that killed scores and destroyed the town of Paradise. There is so much work to be done that the company’s recently departed chief executive said last year that it could take as long as 10 years.” 

If the utility’s equipment leads to another fire, it “could throw PG&E into economic turmoil and renew calls by its many critics for California lawmakers to break it up or turn it into a government-run or customer-owned utility. A big fire would also test the capacity of a new $20 billion state fund to help utilities cover the cost of fires caused by their equipment.” 

Oil check

Carmakers are looking to move forward with electric vehicle development even after pandemic-fueled setbacks. 

Manufacturers including General Motors and Volkswagen are facing pressure from investors to meet their electric vehicle plans, as well as pressure to address governmental restrictions on car pollution and the need to catch up to Tesla, the Wall Street Journal reports.

“While there have been some delays and cancellations tied to the health crisis, executives say that longer-term trends make continued investment in this technology a necessity and that the influx will help reduce their more-than-a-century-long reliance on selling gasoline-powered vehicles,” per the report. “… The Covid-19 pandemic has made the economics tougher for consumers considering switching to electric, analysts say, and rollouts of such models are now a harder sell than they were than six months ago.”