A once-beleaguered Colorado Indian tribe takes control of its energy destiny and becomes a billion dollar corporation. Have they gone too far?
On March 19, 2008, then-Interior Secretary Dirk Kempthorne opened the Minerals Management Service’s Lease Sale 206 with a big grin. Representatives of 85 oil companies had packed the St. Charles Club Room of the Superdome in New Orleans to vie for a chance to drill millions of acres of sea floor in the Gulf of Mexico. The atmosphere was feverish. Oil was selling at over $100 per barrel, and new technology made it possible to drill in “ultra-deep water” more than a mile below the surface.
The Superdome hadn’t seen this kind of feeding frenzy since Beyoncé kicked off her U.S. tour here a year earlier. High bids totaled more than $3.5 billion, a new record, for more than 600 tracts totaling more than 28 million acres. Fetching a high price that day was Mississippi Canyon block 252. BP was the high bidder, paying $34 million for the right to drill the block with the Deepwater Horizon rig. On April 20 of this year, the well blew out, the rig went up in flames and one of the worst environmental disasters of all times ensued.
Also bidding for block 252 that March was Red Willow Offshore, LLC. There was nothing unusual about that; Red Willow has become a major player in the Gulf of Mexico in recent years, partnering with Noble Energy, Houston Energy and even BP on various deepwater drilling ventures. What is unusual is who’s behind the oil company. Red Willow Offshore is a wholly owned subsidiary of the Southern Ute Indian Tribe, based in a gasfield and ranching town in southwestern Colorado.
Less than a century ago, after they had been squeezed onto a sliver of unremarkable land, a new and foreign way of life thrust upon them, the Southern Utes’ were barely hanging on. Even as late as the 1950s, many tribal members had no running water, not to mention an income. Today, the Southern Utes are a financial powerhouse. The 1,400 or so members of the tribe are, collectively, worth billions. Its energy company is one of the largest gas producers in the nation. Its real-estate branch owns office buildings, apartment buildings and upscale planned developments from Kansas to San Diego.
The tribe didn't make it rich off gambling. Nor is this merely a Beverly Hillbilly-esque tale of helpless Indians getting pushed onto “worthless” land, and through dumb luck stumbling upon one of the hottest natural gas plays in the nation. The saga of Southern Ute success actually goes back 45 years – maybe more – and it’s a story of a tribe’s tenacious, savvy and tactical fight to take control of the means of production of the vast coalbed methane and natural gas deposits that lie under their land. They’ve achieved cultural, environmental and economic self-determination through energy self-determination, something that few have done, Indians or non-Indians alike.
In the process, however, they've also spread their business tentacles far beyond the scope of their reservation, or even their original territory that was taken away more than a century ago. They drill for oil on other Indian reservations, and deep in the Gulf of Mexico. They flex their muscle in the halls of Washington, influencing federal energy policy. It all raises an important question: Where does the tribe stop, and the corporate giant begin?
Tom Shipps’ Durango law office is covered with the detritus of a string of 80-hour workweeks. Piles of paper and supersized three ring binders cover every surface of desk and floor. An occasional ashtray emerges from the debris, and the pungent smell of cigarette smoke permeates everything. Shipps has worked exhaustively for months on finalizing a series of oil and gas deals in faraway places for his number one client, the Southern Ute tribe. Now, he’s finally getting some time off, which partially explains his attire on a warm day this spring. His shock of white hair is untamed, his print shirt hangs loose over stained, worn-out jeans.
Shipps was fresh out of law school when he joined Sam Maynes’ Durango law firm in 1979. He has been the tribe’s legal ramming rod on energy issues for the tribe ever since. His work has made him a nationally recognized expert on Indian energy law and he served on advisory committees to the Minerals Management Service under both the Clinton and Bush administrations. When Southern Ute representatives travel to Washington to talk energy in the halls of Congress, Shipps – cleaned up and wearing a suit – is on hand.
Shipps is not only a major character in the Ute energy story, but he may know it better than anyone alive, and happily regales a reporter with slit-estate arcania and a workaholic’s war stories. But in order to truly understand the energy story, one must delve into the pre-energy history of the tribe, in which two important character traits are revealed. One is the Southern Ute ability to integrate and forge alliances with non-Indians when it serves them well. The other is tenacity and ruthlessness, whether it’s on the field of battle or in a court of law.
When Spaniard colonizers moved northward into what is now the Southwest in the late 1500s, they ran roughshod over the various tribes they encountered. They took over their land, smothered their religion, built Catholic churches in their villages. But when they hit the southern edge of Ute territory, they pretty much stopped. With the spectacular peaks of the San Juan Mountains at its heart, the land was simply too rugged, its inhabitants to fierce, to colonize. When the Spanish attacked any of the seven bands of Utes -- who followed seasonal rounds on a massive chunk of land that blanketed what is now Colorado and parts of neighboring states – the Utes responded in kind. The New Mexican governor once enslaved 80 Utes, probably to send southward to work the silver mines in Mexico. The Utes once forced the utter abandonment of the village of Abiquiu.
Over time, the Mouache and Capote bands – ancestors of today’s Southern Utes – came to a sort of uneasy but long-lasting agreement with the Spaniards. They often joined with the Spanish to fight mutual enemies like the Navajo or Comanche, and they had such a hankering for Spanish horses that they would kidnap children from other tribes to trade for steeds. Sometimes they’d even barter their own children.
Then, the Americans arrived, hungry for the veins of gold that ran through the rugged San Juans. Between the 1860s and 1890s, the U.S. Government waged a public relations and political campaign – backed up by brute force and treachery -- to systematically squeeze the Ute bands onto relatively tiny, confined reservations. The campaign culminated in 1895, when each member of the Mouache and Capote bands accepted allotments – essentially the equivalent of homesteads -- on a sliver of land. The rest of the “Ute Strip” was opened up to white homesteaders, setting the foundation for today’s reservation: A 75 mile long by 15 mile wide strip of land, checkerboarded with as much private as Indian land, bordered on the south by New Mexico and on the west by the Ute Mountain Ute reservation, which was settled by those who refused the 1895 allotments.
These were not helpless victims. Instead, they fearlessly took on much bigger foes. In 1896, the tribe sued the feds over land lost in an 1880 treaty – they were awarded more than $3 million. In ensuing decades they continued to go to the halls of Washington to get back what was once theirs -- a big case in the 1950s brought the tribe $6 million, their quest for 1868 water rights got the notorious Animas-La Plata project built,[1] and just two years ago, the tribe restored its rights to hunt on 3.7 million acres of public land[2]. “With each encounter,” writes Richard Young in The Ute Indians of Colorado in the 20th Century, “they became more confident in their ability to present their case and to maneuver among the various echelons of the vast and powerful federal government.” Oftentimes, the disparate Ute bands waged these battles as one, but the Southern Utes were by far the most aggressive.
“We were very peaceful,” says Sage Remington, a Southern Ute and self-described rabblerouser who made his name fighting against the Animas-La Plata. “But also very warlike when we had to be.” Still, that alone would not bring the tribe prosperity. Remington was a child on the reservation in the 1950s, and remembers hauling water on foot, sawing ice out of the river, walking seven miles into town to get groceries “and no one would pick us up because the white people didn’t like Indians.”
The period between 1964 and 1968 would turn out to be an auspicious time for Indians and energy development in the Southwest. In 1966 a Utah attorney named John Boyden presented the Hopi Tribal Council with a lease giving Peabody Coal the rights to mine Black Mesa. Boyden was the general counsel for the Hopis at the time, charged with looking out for their interests. It would turn out that Boyden was also on Peabody’s payroll. In the end, the Hopis got cheated out of millions of dollars in royalties in the deal, and the resulting bitterness and conflict persists today.
Even when tribes weren’t getting double-crossed by a two-timing attorney, they were getting a raw deal for their energy resources thanks to bad federal policy and lax oversight. When a company wanted to gouge reservation land for coal, or drill for oil and gas, it would nominate parcels not with the tribe, but with the Department of Interior, which leased the land to the highest bidder. Though tribes had to approve the leases, they were otherwise powerless in the deals, and rarely had the expertise or data to enable them to make good energy decisions. The feds managed, audited and collected royalties on the leases -- at least they were supposed to -- without any input from the respective tribe[3].
At around the same time Black Mesa’s fate was being sealed, the seeds were sown some 200 miles northeast for what would become a completely different paradigm. In 1966, a young Southern Ute named Leonard Burch, who had left home to serve in the Air Force and then work for the Bureau of Indian Affairs, was elected chairman of his tribe. Two years later, the tribe hired Durango attorney Sam Maynes – the son of a Silverton hardrock miner and Durango saloon owners – to be its general counsel. Burch and Maynes were already friends -- they had first met when they played basketball against each other in 7th grade. Burch was known as a “quiet warrior;” Maynes was more like a rabid pit bull with a sense of humor. They would become an indomitable team.
By that time, oil and gas companies had been drilling on the reservation for two decades, shipping oodles of gas off the reservation. The tribe was getting less than $500,000 per year in royalties, a paltry fraction of what the oil companies were making – and far less than the Southern Utes were owed. “It wasn’t a level playing field,” Maynes said in a 2004 radio interview, just months before he died. “The Indians were not realizing the full potential of what they had.”
Those were heady days for fossil fuels of all sorts, especially in Colorado. The energy crisis brought a drilling, strip-mining, oil shale bonanza to the region, and anyone with any kind of energy resources on their land stood to get rich. Thousands of workers moved into the agricultural portions of the state, and threw up the tract homes that make up today’s broken down suburbias of Grand Junction, Durango, Farmington, N.M. The sudden infusion of wealth even spawned a television nighttime soap, Dynasty, based on the foibles of the fictional Colorado oil-rich Carrington family[4]. The Southern Utes – sitting on one of the richest gas fields in the country -- were poised to reap their bounty, simply by sitting back and signing leases. Instead, they turned it all away: In 1974, under the leadership of Burch and the advice of Maynes, the tribal council put a moratorium on all new mineral leases on the reservation. A year later, Burch and the Southern Utes joined 24 other tribal leaders to form the Council of Energy Resource Tribes, modeled after OPEC, to consolidate their political power and affect change in Washington.
The Southern Utes used the time bought by the moratorium, and a grant from the feds, to bring in outside experts to paint a detailed picture of the tribe’s undeveloped energy resources as well as its current leases and royalties paid on them. They found that companies were cheating the tribe by undervaluing the gas they were drilling, and that the Department of Interior had been lackadaisical in its audits and collection of royalties. It would turn out to be a far-reaching, nationwide pattern that would be a catalyst for the transformation of federal energy policy[5]. In 1982, Congress passed the Indian Mineral Development Act, empowering tribes to negotiate mineral leases. That same year, the U.S. Supreme Court ruled on the Merrion v. Jicarilla Apache Tribe case, allowing tribes to levy a severance tax on oil and gas produced on their lands.
The Southern Utes’ newfound knowledge merged with federal policy and court rulings, and the tribe rode the wave. It negotiated more favorable leases with outside companies, and enacted a severance tax on gas production, which has brought in some $500 million since. The tribe’s energy department took over the leasing auditing process from the Mineral Management Service, as have a handful of other tribes. Though this costs them more, the millions caught each year in underpayments easily pay for it.
“Burch and his cohorts were just to the finest detail great tacticians and strategists,” says Lester, who joined CERT in 1982, and has been a national leader in Native American economic development since 1969, working for both the feds and in the private sector. “Their motive wasn’t money, although money was important to them. But the money was a means to higher ends. It was about protecting the tribe and developing a foundation and developing a cultural community distinct from surrounding communities.”
When tribes set up governments under the Indian Reorganization Act – a sort of New Deal for Native Americans instituted in the 1930s -- they modeled them on federal, state and local governments. But while every other government can simply tax its citizens to fund its own operation, tribal governments have virtually no tax base to draw from – there’s generally no or little income, property or sales to tax. “Indian poverty’s no mystery,” says Lester. “It’s by design.” It creates an especially desperate atmosphere among tribes, that forces them into what may seem like self-destructive money-raising schemes in order to just keep the tribe afloat. The Goshute Tribe in Utah, for one, continues to fight the Interior Department to this day because it wants to store high-level nuclear waste on its land, and even vied with other tribes for the honor[6].
Similarly risky was the 1992 move, also by Burch, who ended up leading the tribe with Maynes at his side for three decades. As part of the Colorado Ute Indian Water Rights Settlement Agreement, the tribe had received $8 million from the feds. Rather than distribute it to tribal members, or use it to bolster governmental services, the tribe formed its own gas production company, Red Willow. If someone else could get rich drilling their land, they figured, why not them? As obvious as it may sound, it was truly audacious, even revolutionary[7], at the time.
While federal policy had shuffled incrementally toward granting tribes more political sovereignty, the Southern Utes took giant leaps toward realizing what’s known as practical sovereignty. Or, as Stephen Cornell and Joseph Kalt, with the Harvard Project on American Indian Economic Development, write, taking “advantage of the federal self-determination policy … promised by law but denied by federal paternalism and control.” That’s important, they say, because it creates a different model for economic development, one that’s more sustainable, and provides stronger stewardship. “In general,” write Cornell and Kalt, “Indian nations are better decision-makers about their own affairs, resources and futures because they have the largest stake in the outcomes.” They cite a 1994 Harvard study showing that when a timber job moved from federal control to tribal control, productivity increased, and note: “On average, tribes do a better job of managing their forests because these are their forests.” When Red Willow took over 54 gas wells in 1995, it quadrupled the production of the wells within nine months.
Not only that, but the economics of each of those wells changed radically. When an outside company operates a gas well on a reservation, the state and county can impose property and severance taxes on it, and the feds can tax the company’s income. It not only cuts into a company’s profits, but it also leaves less for the tribes to tax. When the tribe takes over a well, it exempts the well from many of the outside taxes, cutting overhead by as much as 30 to 40 percent. “That gave the tribe a huge competitive margin,” says Lester. “Plus, they hired experienced hands to run the company. They really did a good job of recruiting and hiring quality, honest, really good employees so that the core team really could produce what the tribe wanted done.”
Maynes and Shipps were already on board. They were joined by Bob Zahradnik, a one-time petroleum reservoir geologist who had worked with Exxon. He drew up the business plan for Red Willow, and continues to head up the tribe’s energy operations today. And John Jurrius, who was working at the time on the financial side of the oil industry,[8] and brought with him capital from a huge private equity firm, with which the tribe was able to buy up more energy production and distribution companies.
Burch’s vision of an economically self-reliant society seemed to be coming to fruition, only in a lopsided way: By the mid 1990s, nearly all of the tribe’s income came from oil and gas, in spite of the 1993 opening of the Sky Ute Casino. If gas prices slumped or production dropped, the tribe’s financial bounty could evaporate. The settlement in the Amoco case[9] only deepened the fossil fuel dependence. So, at the tribe’s impetus, Jurrius created what has become known as “The Plan.”
One of the major handicaps of tribal economic development, says Jurrius, is the fact that the tribal corporation is managed by a government entity with frequent elections and resulting turnover. That creates the type of instability that is anathema to corporations, and to capitalists who may want to partner with or invest in a tribe. Jurrius set out to build a financial structure that provided corporate-like continuity, even as tribal councils came and went. The council retains ultimate decision-making power, but micro-management is kept to a minimum. “It was a very sophisticated plan,” says Jurrius, “but it became a road map from which they could make great decisions.”
The plan divides the finances into two branches: The Permanent Fund and the Growth Fund. The Permanent Fund invests energy royalties and profits from the casino into securities, which fund government and social services. Everything else goes into the Growth Fund, which in turn invests the money into what is now a myriad of companies in the energy, real estate and private equity sectors. That fund then distributes dividends to tribal members between the ages of 26 and 59, and pays retirement benefits to those over 60. The numbers vary (and of course the tribe isn’t sharing), but a seventy-something year old tribal member told me that his distributions last year totaled $77,500.
“They’ve converted a non-renewable resource into a renewable financial resource because of the way they are investing and because of their strategy,” says Lester. “If they stick with their principles, those funds will grow more rapidly than their population and inflation, keeping them on a steady rock of financial security.”
As recently as the 1920s, the Southern Utes faced an existential crisis – their culture was in tatters, the little land they had left was vanishing under their feet and many of the 300 tribal members that remained were in such poverty that they were reduced to begging food off the Anglos that had settled their former land. Then it took on the federal government, it took on a colonial system of resource exploitation that had been in place for centuries, it took on oil industry giants. And it won. “The Southern Ute doesn’t need the Bureau of Indian Affairs or the Department of Interior anymore,” says Jurrius. “The student is the master now. They are the model.”
With its three-story wall of mirrored, curved glass and steel, the building looks like something you might see in a business parks outside of Denver, Phoenix, or San Jose; one of those enigmatic structures with their shiny façades and nonsensical business names. The building, in some ways, is a corporate headquarters. But this is no Denver. It’s even a good 25 miles away from Durango, with its tourist-oriented sheen, its recreation economy, overpriced homes and a surplus of doctors, lawyers and raft guides. This is Ignacio, a town of 800, nestled among the irrigated pastureland, piñon, juniper and sage of the high desert of southwestern Colorado.
About half the residents here are Hispanic, the rest divided almost evenly between Native Americans and whites. Twenty percent of residents live below the poverty line. The town feels a bit beaten down, with a working class tinge, a place where big white pickup trucks equipped with gasfield accoutrements jam the main drag, and an espresso is tough to find. Pumpjacks do their slow, tireless grind in the hayfields between trailers and farmhouses on the fringes of town. On the north end of town, the Southern Ute tribe’s administrative and financial complex – including the Growth Fund building -- rises from another field creating a sharp contrast to the surroundings.
This is the nerve center for the tribe’s ever-growing financial empire. The energy arm has reached out into at least eight other states. The real estate branch owns or invests in developments and buildings in Denver and its suburbs, the San Diego suburb of Oceanside, Kansas, Houston and Albuquerque. The tribe even has GF Private Equity, whose portfolio includes everything from biotech ventures to defense contractors. Depending on who you ask and when, the tribe’s net worth is somewhere between $3.5 billion and $14 billion, and it has a AAA credit rating, something very few nations have. The tribe has thus not only reversed its status as second-class citizens in Ignacio and the surrounding county, but has also become an oasis of prosperity in ways that go beyond mere money[10].
The tribe has its own environmental standards that are as strong as or stronger than state or federal regs, and it is on the brink of getting EPA approval for its sovereign air quality code, the first of its kind in the U.S. The tribe has put some parts of the reservation off-limits to all drilling, and partnered with Solix biofuels to create an algae-to-biofuel facility on the reservation. It took control of the tribal medical clinic in order to offer better care, built a state-of-the-art recreation center, and has a groundbreaking Ute language program in its school. The Southern Ute Community Action Program runs alcohol and substance abuse treatment centers, a senior center, and job training programs. And every tribal member has the option of taking a full-ride college scholarship from the tribe. Meanwhile, the tribe continues to follow older traditions such as the Bear and Sun Dances, which draw huge crowds each summer. “Ultimately,” says Lester, “they want a community in which they can live lives that give them meaning as Southern Utes. It’s not the money that they earn, it’s the value that they see their lives giving.”
A small group of rebels, while generally happy with the benefits brought by wealth, is not pleased by the direction “the Plan” is taking the tribe. This spring, the group launched an effort to recall the entire tribal council. James Jefferson and Orville Hood[11], both tribal elders[12], are leading the dissent. Sage Remington, also a longtime tribal gadfly, offers philosophical support but hasn’t been heavily involved in the latest effort.
In April, I met with Jefferson in the Aspen Room, a restaurant flanked by a five-story wall of glass in the Sky Ute Casino complex[13] that rises extravagantly out of a field near the Growth Fund building. Jefferson wears a baseball cap over thinning white hair, and speaks little and softly. He does not offer many specific grievances he has with the tribal council, but says that, generally, the tribal council is being “taken for a ride” by its white managers and advisors[14], especially Zahradnik and Shipps. Hood and Remington – also elders, but loquacious – offer more specifics. For both economic and environmental reasons, they believe the off-reservation energy exploration, especially in the Gulf of Mexico, are folly, especially in light of the BP disaster. Hood, basing his claims on information provided by a former employee of the tribe’s financial branch, alleges that $1 billion in off-reservation energy exploration ventures had generally been a bust, losing $573 million between 2002 and 2008.
Especially problematic, say the critics, is the veil of secrecy the tribe has operated under. “Theoretically, were all supposed to be stockholders in all of this,” says Remington. “But we’re not. We reap financial benefits, but that’s about it. Our finances are like a Swiss bank account. We don’t know what’s going on.” Nor does the press. Over the course of the weeks spent reporting this story, I made repeated attempts to get an interview with either a tribal council member or a high-level employee. The response was a terse letter, letting me know that the tribe had “decided not to participate at this time.” Other reporters on the Ute beat get the “no comment” treatment often, especially in recent months, and tribes are generally not subject to open records laws or the Freedom of Information Act. “We still feel like we’re walking on a very narrow road, and there’s a lot of reluctance to allow the outside world to look at us,” says Lester, of CERT. “Sometimes, the Southern Utes are reluctant to talk to me. And I respect that… their right to control that dialogue.” Remington isn’t so charitable: “They are very secretive. They never give out interviews. No one can speak logically or reasonably to the press, because they might commit a faux pas or something and perhaps give out the wrong information.”
Both Lester and off-the-record sources from within the tribal administration blame the lack of openness on what they call bad press in the past. When the outside press covers the Southern Utes, it tends to emphasize the various pitfalls of wealth, including political infighting. The implication is clear: The savages just can’t handle all that money any better than they can handle their liquor. What they fail to take into account is the fact that all the problems they associate with the newfound wealth – crime, drugs, alcohol, greed, loss of culture, corruption and political battles – existed before the money started pouring in, perhaps to a greater extent. Not only that, but all of the recalls, bitter politics, accusations of manipulation and the like mirror that of many a small town, whether it’s wealthy or not[15].
“When a tribe begins to see economic success, its members quickly demand accountability, a democratic institution not seen in today’s business climate (nor, it appears, in today’s democracy), and readily criticized by the business experts…” writes Matthew Fletcher, Director of the Michigan State University Indigenous Law Center, in his In Pursuit of Tribal Economic Development as a Substitute for Reservation Tax Revenue. “Such reportage evidences the focus of business papers on the limitations of tribal governments qua business owners because of their status as tribal governments qua governments.”
On April 22, the Senate Indian Affairs Committee held a hearing to discuss the draft Indian Energy Promotion and Parity Act, which will presumably make it easier for anyone – outside corporations or the tribes – to develop renewable and non-renewable energy on tribal lands[16]. Southern Ute Tribal Chairman Matthew Box was there to provide input. He wore long braids in his black hair, streaked by grey, and a suit with an oversized bolo tie with a colorful beaded buffalo on it. Tom Shipps sat right behind him, almost shadowing him.
The overall tone of the hearing was more significant than what was said – it became clear that the Indians, the Utes more than anyone, were in charge of the agenda. From the beginning of the drafting of the bill, tribes have had a great deal of input. And during the hearing, Box told the senators that his lawyers would help them get this thing introduced. The senators expressed admiration – maybe a bit of incredulousness – at the Southern Ute’s success, “without the help of the BIA.”
Just a few generations ago, the lawmakers’ institutional ancestors debated the “Ute Question,” as it was called, the answer of which would decide its and other tribes’ fates. Now, those same tribes hold the future of the nation’s energy independence in their hands. Seeing Box assert his influence before the nation’s lawmakers is to see the embodiment of justice; it is to see 200 years of oppression finally overcome, if not erased or healed.
If we could just end the story here, we might feel pretty good about things, left with this utopian vision of the oppressed rebounding and taking control of their own destiny. Other tribes would follow the Southern Ute model, and throw off the yokes of colonial resource extraction and rid themselves of the plague of poverty that has bedeviled them since the U.S. government did their best to terminate them. Extend the model out a bit and maybe even counties and states could follow the tribal model. After all, it’s not just tribes who are subject to the passive paradigm of resource extraction, their hands tied while outsiders come in and gouge them of their natural riches, it’s nearly every state in the West and beyond. “Otherwise,” says Lester. “West Virginia would be a prosperous state.”
Yet if one alters his perspective just slightly, the image of Box is transmogrified from one of tribal leader to that of chairman of a board of a corporation whose ventures reach further and further afield while it amasses more and more wealth.
Which brings up the question of how to categorize the Southern Utes’ many businesses: as arms of government, or as corporations – an important distinction. They are ultimately owned and run by the government (making it fair to label them as socialist, in fact). On the other hand, the tribe’s bevy of limited liability corporations can behave like any other multi-tentacled, capitalist conglomerate, investing in potentially lucrative but risky schemes in far off places. Fletcher, the MSU law professor, says that even in this case the distinction remains: The tribal companies’ money goes through the government, while a private corporation’s goes to profit-hungry stockholders: “The perception I’m trying to avoid is that the tribes are any old private enterprise and for-profit machine,” says Fletcher. Which makes the Southern Ute financial empire a government, not a corporation.
It’s an important distinction for a number of reasons. The first has to do with tribal sovereignty and sovereign immunity: If the Utes’ many companies are considered corporate rather than governmental in nature, they are less likely to be imbued with the tribe’s sovereignty. Though the tribe waives its immunity on a limited basis in order to enter into contracts with other businesses, it’s not about to let its sovereignty be weakened in any way. It’s a tricky realm to dive into: In 2005, the state of Colorado went after a payday loan organization operating in the state after consumers complained. The company, which was owned by Oklahoma tribes, tried to avoid prosecution by invoking sovereign immunity. The case is still in the courts. Taken to a speculative and perhaps unfair extreme, it begs the question of how sovereign immunity[17] might play out if, say, one of Red Willow’s offshore rigs were to explode and spew oil into the Gulf[18].
“That really is the crux of the issue,” says Joswick, the former county commissioner turned oil and gas watchdog, who had to deal with these “sticky issues” when the tribe’s company took over gas wells on non-Indian land[19]. “I would just toss this out: It is from sovereignty that everything else flows. And sovereignty is very difficult to define, because it continues to change as assertions are made as to what it is.”
The corporate/government distinction also can affect the way outsiders consider and react to the tribe’s actions. If Box is a considered as a corporate CEO, then his lobbying – on which the tribe spends anywhere from $150,000 to nearly $400,000 per year – his holding court in the halls of Congress, and his tribe’s federal tax exemption suddenly look a bit more cynical. Instead of being means toward tribal economic development, the tribe’s off-reservation ventures, particularly energy-related ones, begin to look like the old paradigm of corporate resource exploitation.
Last year the tribe’s Red Willow Great Plains company leased nearly 18,000 acres of on the Fort Berthold reservation, thus joining the rush there on the huge Bakken oil play. Kandi Mossett, an organizer with the Indigenous Environmental Network and member of the three affiliated tribes of Fort Berthold, says the onslaught of drilling rigs there has been catastrophic, and was sped up with the help of Sen. Dorgan’s one stop oil shop, which streamlines tribal energy development and which would be expanded nationwide under his new bill. And the Southern Utes – along with CERT as a whole – gave explicit support to the Ruby Pipeline, a 675-mile El Paso Energy project that will stretch from Wyoming to Oregon. That’s despite the fact that several Nevada tribes – particularly the Summit Lake Paiute tribe -- oppose the pipeline, saying it will wreck lands that are sacred to them (not to mention oodles of sage grouse habitat). The project received federal approval in April.
Sarah Krakoff, a Colorado University law professor who specializes in Indian law and has written about the nexus of environmental justice and tribal sovereignty, however, warns us not to go too far with the corporate comparison. “If we were moving toward the day that we could critique Indian governments the same way that we critique other entities, that would be a good thing. It would mean we’ve removed some barriers to equality,” she says. But we’re really not there yet, despite the Southern Ute success. “Our history makes things very complicated in this country.”
Indeed. And because of that history, the vision of Box as corporate giant is not complete. His tribe’s fight is not yet over. Federal policy remains paternalistic, and sometimes directly at odds with tribal self-determination. Today’s Supreme Court is openly hostile to Indian rights. And the overriding American vision of what Indians and their culture are and should be is in direct contrast to what the Southern Utes have shown themselves to be. No matter how wealthy the tribe becomes, we still can’t divorce their current iteration from what came before. And that requires a delicate balancing act, one in which we consider the tribe as both corporation and government, and one in which we deal with the complex nature of tribal sovereignty and its relationship to environmental justice.
It’s a balancing act that we may be forced to reckon with more and more as tribes build wind farms, install fields of solar panels, start drilling companies and build refineries. If they build them, that is. It’s not yet clear that the Ute model can be duplicated, that other tribes have what it takes to take control of their resources. Even Lester has his doubts. “There’s no investment in tribal capacity building right now,” he says. “Everyone is just looking for a project. Everyone wants to harvest, but no one’s planting, and then they wonder why the harvest is so slim.”
And Jurrius, the financial advisor who has based his career on helping tribes take ownership of their resources says, “The tribe itself is often the biggest hurdle to overcome. You have to allow yourself to succeed. If you let political infighting get in the way of commerce, it will be the downfall of commerce.” He pauses for a moment, then adds, “I’m not sure the Indians are as strong as the parasites that have made a living off of them for a long time. Most tribes focus on the travesties of yesterday. I tell them to focus on the opportunities of today and tomorrow.”
The Southern Utes, for one, have been doing just that; and, up until the BP spill, at least, and all of the resulting fallout, they saw opportunity in the Gulf of Mexico, where they hold rights to drill nearly 50,000 acres, some of it in ultra-deep waters. On March 17, the same day I sat in Shipps’s office, Red Willow Offshore was one of the bidders at another offshore auction – Lease Sale 213 -- in Louisiana. This time, they won, paying $3.8 million for right to drill 3,857 acres in 3 blocks in the now oil-soaked gulf.
[1] This spring, a huge pumping plant began sucking murky water out of the Animas River, sending it hundreds of feet uphill to Ridges Basin and to the brand new Lake Nighthorse. Originally conceived as a way to move water from the abundant Animas River west to the agricultural lands of the “Dryside,” the project ultimately became almost solely a vehicle for satisfying Ute Mountain Ute and Southern Ute water rights. The Southern Utes get 33,050 acre-feet of the reservoir’s water. Opponents of the project wanted to save the river – and some money – by paying the tribes off to settle the contested water rights; the Southern Utes would have none of it. They wanted a reservoir, and the long-term economic benefits it could provide – they can sell the water to others, use it to build a coal power plant or water new development. As the fight reached its end game, white opponents, in order to avert the dam, argued that the tribe never had rights to the water in the first place. Not only did the tactic fail, but it also rubbed Ute opponents of the project the wrong way.
[2] Justice just takes time. In 1874, the Brunot Treaty handed over some 4 million acres of Ute territory, consisting of mineral-rich alpine terrain, mountain meadows, ponderosa-covered foothills and fertile, moist valleys, to the federal government. The treaty gave the Utes the right to hunt the land, which today encompasses the San Juan Mountains and Weminuche Wilderness, “so long as the game lasts and the Indians are at peace with the white people.” It took 134 years, but in 2008 the promise was finally realized. Hunting is regulated by the tribe’s wildlife department, but still strikes some non-Indians as unfair, especially since the tribe has abundant game on its own lands and because the Utes get to hunt coveted, rare game, such as bighorn sheep, moose and mountain goats on National Forest and BLM land.
[3] [3]. An egregious example of how this can go wrong also occurred at Black Mesa. Two years before the Hopi debacle, the Secretary of Interior signed off on just such a lease agreement between Peabody and the Navajo Nation. By the time the 20-year lease was up for renegotiation in 1984, the tribe was getting just a 2 percent royalty, while mining companies paid a minimum of 12.5 percent on all other federal land. Incredibly, during the renegotiation, the feds again acted in the mining company’s, not the tribe’s, interest, robbing the Navajo Nation of an estimated $600 million.
[4] Which the author admits to having watched regularly as a pre-teen, thus forever distorting his view of his own home state and lots of other things.
[5] In 1982, the Linowes Commission report found that Indians and the taxpayers were getting ripped off nationwide by mining and oil corporations, with the help from Interior, which was so slack in its duties that its staff often left royalty checks in drawers, un-cashed, and never reaching the proper recipients. In response, Congress passed the Federal Oil and Gas Royalty Act in 1983 and created the Mineral Management Service to provide better oversight of royalty collections (which, as anyone who follows the news these days knows, didn’t exactly solve all the problems).
[6] Our first impulse is to see this as a classic case of environmental injustice; of a tribe, powerless to help itself, getting crapped upon by the “Man.” In fact, it’s an extraordinarily complicated case, which may have arisen from a legacy of environmental racism towards the Goshutes, but does not fit into the usual profile of environmental injustice. If one tries to stop the tribe from taking the waste, he risks perpetrating another type of injustice: Smothering tribal sovereignty. In an understatement, Noriko Ishiyama and Kimberly Tallbear, in a 2001 paper, write: “The issue of tribal sovereignty has very much confused discussions of environmental justice in Utah.”
[7] Think about it for a minute. When a foreign country – a Bolivia say, or a Venezuela – does something like this, we call it nationalization. And it’s a big deal, causing the free-marketeers to fret about Marxists, and the CEOs of the corporations that had been exploiting the respective nation’s riches to weep into their diminishing profit margins. But in theory, at least, it also gives the nation additional economic self-determination, which leads to social and political self-determination. Interestingly, U.S. progressive activists applaud nations that take this step, but are typically more ambivalent when tribes do the same.
[8] Through a thick, Texas accent, Jurrius, who has spent the last decade of his career working with Native Americans on energy issues, told me: “When I got out of high school, I couldn’t spell native American. When I got out of college, I couldn’t point to a reservation. I couldn’t envision the journey I was about to take.” It should be noted that even as it has led tribes to prosperity, Jurrius’s journey has also led him to a bonanza: He received a $62,500 per month from the Northern Utes, plus $1 million for every $10 million he earned for the tribe, according to a Salt Lake Tribune report.
[9] In the 1990s, the Southern Utes – with Shipps at the legal helm – went after Amoco over ownership of coalbed methane locked up in a massive coal deposit owned by the tribe. In the landmark case, Shipps argued that the coalbed methane was – like chips in a chocolate chip cookie – an inextricable part of the coal, meaning that the Southern Utes owned the methane in question, and were entitled to $1 billion in back payments from Amoco. Amoco argued that the owners of the oil and gas rights owned the methane. Shipps would ultimately lose in a 7-1 Supreme Court decision. But the tribe won, too. Just before the Supreme Court agreed to hear the case, Amoco (by this time part of BP) and its co-defendants settled. The Utes got a 32 percent stake – with an estimated value of half-a-billion dollars or more -- in all of the coalbed methane deposits in question
[10] That influence has bled through reservation boundaries into the surrounding county. The most obvious example is Three Springs, a tribally-developed new urban community between the reservation boundaries and Durango. The tribe bought the land a decade ago, donated a chunk to the Durango hospital, which had outgrown its downtown facility. The hospital in turn gave the town of Durango a reason to annex the property, and provided an anchor for and added value to the tribe’s development, which will someday have 2,200 units and will shape the way Durango grows. “They were really smart how they went about that,” says Josh Joswick, who served as a La Plata County Commissioner during the 1990s, when the tribe was rising to prominence. “We realized early on that the biggest influence is going to come from the tribe. They are going to change the face of this county… their actions will.” This marks a major reversal of the Utes’ former role in Durango, which is not often though of as a reservation border town but is. there has always been an undercurrent of racism toward the respective tribe. With the Southern Utes, say sources within the tribe, that racism has evolved. Used to be, shopkeepers would follow Utes around in stores, to make sure they didn’t steal anything. Now, they court them as upper crust consumers because of their status as “millionaires.” But they are millionaires on paper only, and as a slogan on a t-shirt worn by at least one tribal member notes: “I’m a millionaire. I just can’t prove it.”
[11] Hood’s one-half Navajo, and one-quarter Southern Ute – enough to qualify him to be a tribal member (he grew up on the Southern Ute reservation, where his mom was a nurse). A lot of Southern Utes are of mixed ethnicity and race[11] -- Hispanic, Navajo and Anglo. Hundreds of current tribal members are even part African-American, descended from John Taylor, a black soldier who married Kitty Cloud[11], a Ute, in the late 1800s. This integration should not be confused with assimilation. To the contrary, the Southern Utes are known for tenaciously holding onto their culture, even as they welcomed outsiders in, and many credit their cultural roots for their success. “There’s this whole mental process of how we make money, and it is old as time in terms of our history,” says Remington. “It is a part of who we are. There is a great deal of pride in being Southern Ute.”
[12] “We are the educated Indians,” says Orville Hood, a statement echoed by both Remington and Jefferson. All three grew up on the reservation, then went off to college – Jefferson got his PhD in history from the University of Arizona and taught school; Hood attended but didn’t graduate from UCLA law school before working for the BIA for 30 years; Remington, who is gay and was “listening to opera at age 10” went to UC Berkeley and became a community organizer amongst the Chicano, black and Indian communities in Denver before returning to the reservation to battle Animas-La Plata.
[13] There’s a general misconception around here that the Southern Utes got rich off of gambling, just as there’s a myth that just about all tribes are awash in gaming cash. That’s not the case. It’s true the nation’s 405 tribal gaming operations collectively bring in more than $26 billion annually (compare that to just $400 million brought in by tribes from energy royalties). But it’s important to remember that only a fraction of those casinos – namely the ones near major metropolitan centers -- pull in serious revenues individually. Rural casinos like the Sky Ute earn relatively piddly amounts. Red Willow’s yearly revenues are at least ten times that of the Sky Ute’s. The tribe has put money into gambling, though. The casino complex’s construction budget was around $175 million, and it includes a 24-lane bowling alley and a 124-room hotel.
[14] Similar allegations dogged the Burch/Maynes team – in 1993, a political opponent of Burch said Maynes had, “pulled our present Chairman’s strings for many years.” Critics within the tribe distrusted Jurrius, too, saying he was making decisions that the tribal council should have been making. After he left and went on to help the Northern Utes create their own energy company, that tribe kicked him off the Reservation and sued him (they settled out of court).
[15] “Despite all of our differences, I see a great future for the tribal membership, because we are educating our young people, sending people to college to get PhDs,” says Remington. “We reap a lot of benefits, but that doesn’t mean we have to be compliant. We have to question authority. We are Utes, not Anglos.”
[16] That could open the door to drilling and mining the 5 billion barrels of oil, 37 trillion cubic feet of natural gas, and 53 billion tons of coal that the Department of Interior estimates is stored in undeveloped Indian lands. And it could mean more development of solar, wind and geothermal; Indian land holds an estimated 10 percent of all renewable potential in the U.S.
[17] Tribal law experts generally see the current Supreme Court as being very hostile to Indian sovereignty. The exception is sovereign immunity from lawsuits, which the court has consistently upheld, probably because states also have sovereign immunity, and the current court is pro state rights.
[18] Sarah Krakoff, a Colorado University law professor specializing in Indian and natural resource law, says that Red Willow could, hypothetically, avoid some accountability in that case. But then, she points out, non-tribal corporations have plenty of their own methods for shirking responsibility. For example, Transocean, the owner of the Deepwater Horizon rig that exploded in the Gulf of Mexico, flagged the rig under the Marshall Islands in order to reduce its tax burden.
[19] Extremely sticky, in fact, because whenever the tribe bought a well, the county was in jeopardy of losing its ability to tax the well, which meant a huge loss of revenue. Ultimately, the tribe entered into an in-lieu-of-taxes compact with county and state to ease the pain of lost taxes.
