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How Oil Drilling Threatens Theodore Roosevelt National Park

The Bakken oil boom in North Dakota has brought much-needed jobs and economic development to the region. But the fast pace of the drilling has caused many problems, including industrial-scale impacts on Theodore Roosevelt National Park and the land surrounding it.

"A Boom With No Boundaries" explores how one of America's 59 national parks is already being affected by the pollution, traffic, and noise associated with oil and gas drilling.

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North Dakota Governor Signs Abortion Bills

Gov. Jack Dalrymple signed three anti-abortion bills into law Tuesday morning, giving final approval to the strictest abortion laws in the nation and setting the stage for a potentially high-profile and expensive court challenge.

The signing of the three bills, which would outlaw nearly all abortions in North Dakota, was announced in an emailed statement. Dalrymple was in Dickinson participating in the groundbreaking ceremony for a new refinery at the time the statement was released.

Signed into law were House Bill 1305, House Bill 1456 and Senate Bill 2305.

Pending legal challenges, the laws would go into effect Aug. 1.

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Land Grab Cheats North Dakota Tribes Out of $1 Billion, Suits Allege

by Abrahm Lustgarten

Native Americans on an oil-rich North Dakota reservation have been cheated out of more than $1 billion by schemes to buy drilling rights for lowball prices, a flurry of recent lawsuits assert. And, the suits claim, the federal government facilitated the alleged swindle by failing in its legal obligation to ensure the tribes got a fair deal.

Fort Berthold in North Dakota (Abrahm Lustgarten/ProPublica)

Fort Berthold in North Dakota (Abrahm Lustgarten/ProPublica)

This is a story as old as America itself, given a new twist by fracking and the boom that technology has sparked in North Dakota oil country. Since the late 1800s, the U.S. government has appropriated much of the original tribal lands associated with the Fort Berthold reservation in North Dakota for railroads and white homesteaders. A devastating blow was delivered when the Army Corps of Engineers dammed the Missouri River in 1953, flooding more than 150,000 acres at the heart of the remaining reservation. Members of the Three Affiliated Tribes — the Mandan, Hidatsa and Arikara — were forced out of the fertile valley and up into the arid and barren surrounding hills, where they live now.

But that last-resort land turns out to hold a wealth of oil, because it sits on the Bakken Shale, widely believed to be one of the world's largest deposits of crude. Until recently, that oil was difficult to extract, but hydraulic fracturing, combined with the ability to drill a well sideways underground, can tap it. The result, according to several senior tribal members and lawsuits filed last November and early this year in federal and state courts, has been a land grab involving everyone from tribal leaders accused of enriching themselves at the expense of their people, to oil speculators, to a New York hedge fund, to the federal government's Bureau of Indian Affairs.

The rush to get access to oil on tribal lands is part of the oil industry's larger push to secure drilling rights across the United States. Recent estimates show that the U.S. contains vast quantities of oil and gas. As fracking has opened new fields to drilling, and the U.S. has striven to get more of its energy from within its borders, leases from Louisiana to Pennsylvania have been gobbled up. Now the pressure is increasing on one of the last sizeable holdouts — lands owned by Native Americans.

A review of tribal and federal records as well as lawsuit documents reveals a dizzying array of lowball, non-competitive deals brokered by numerous companies, often entwined with the tribal council and with individual landholders on the reservation. But at heart the alleged practices are simple: Tribal leaders and outsiders set up companies to buy drilling rights cheap and flip them later for spectacular profits — in one case earning as much as a 200-fold return in just four years.

"Hundreds of millions of dollars were lost," said Tex Hall, the current chairman of the Three Affiliated Tribes, in an interview. "It's just a huge loss and we'll never get it back."

At the center of that particular alleged scheme, according to one of the suits, was Spencer Wilkinson, Jr., longtime manager of 4 Bears Casino, a time-worn warehouse of slot machines, swirling cigarette smoke and stained carpets that serves as the reservation's entertainment nexus and its financial hub. Wilkinson also sat on the board of the tribe's development corporation, where he was charged with finding new opportunities to enhance the economy of the reservation.

According to interviews with tribal members, former employees of the Three Affiliated Tribes, and a class action lawsuit filed in federal district court in Bismarck, ND against Wilkinson and others, Wilkinson used his access to casino funds — and to the development corporation — to gain influence and craft an oil deal that would leave him one of the richest men on the reservation.

In 2006 he became an owner of a company, Dakota-3, with Richard Woodward, a white consultant who, records show, was receiving more than $20,000 a month from tribal funds for his work at the development corporation. Together, the suit and other legal filings allege, Wilkinson and Woodward planned to raise money and buy up rights to much of the remaining land not yet slated for drilling, all the while maintaining their work with the tribes and employing Wilkinson's relationship with the council to help get the oil leases approved.

Leases for oil rights generally work like this: A company purchases the right to drill for oil underneath an acre of land by paying a one-time upfront payment, called a bonus, and a percentage of the profits earned on the well, known as a royalty. On Indian lands additional laws also apply, dictating who can negotiate for whom and how the government has to oversee the agreements.

Wilkinson declined to comment and Woodward could not be reached. Wilkinson has filed a motion to dismiss the case. The suit alleges that Wilkinson and others aided and abetted the U.S. government in failing to fulfill its fiduciary responsibility to the tribes; Wilkinson's motion argues, among other things, that the government had no such responsibility. Woodward has not yet filed a response to the suit in court.

Many details of Dakota-3's deals remain murky. There is limited transparency into tribal government affairs, no public access to documents, no annual reporting on accounts, and limited communication about what tribal council members discuss in their meetings.

But, according to separate lawsuits and records filed with the North Dakota Secretary of State, Dakota-3 partnered with an Oklahoma-based oil speculator named Robert Zinke and his company Zenergy to buy leases and form additional joint venture companies. Documents from two law suits mention the involvement of the New York based hedge fund Och-Ziff Capital Management Group but do not specify the firm's role. The hedge fund is publicly traded and, according to its web site, has more than $33 billion under management.

A spokesman for Och-Ziff declined to comment, and Zinke did not return a telephone message.

The interlinked companies, the documents show, purchased drilling rights to some 42,500 acres of lands owned by individuals and families through dozens of separate small deals. Those rights were ultimately controlled by Dakota-3, which also purchased from the tribal council drilling rights to another 44,000 acres of lands managed by the council. Altogether, Dakota-3 accumulated rights to about a fifth of the 420,000-odd acres of leasable land on the reservation, having bought much of those rights for as little as $50 per acre and royalties of around 18 percent. At about the same time, records and interviews show, other companies were purchasing drilling rights to land on and near the reservation for $300 to $1,000 per acre plus royalties as high as 22.5 percent.

One of the lawsuits alleges that the difference in the one-time bonus payments, plus the difference in royalty payments, "could mean billions of dollars" over the life of the oil field.

In late 2010, an Oklahoma-based oil production company, Williams, bought Dakota-3 for $925 million. At the time of the purchase, Dakota-3 was pumping a small amount of oil, but the bulk of its assets were the drilling rights. Two lawsuits allege that by buying Dakota-3, Williams effectively paid more than $10,000 per acre for those rights — as much as 200 times what Dakota-3 had paid for the leases.

At issue is not just the question of how Dakota-3 managed to win the tribal council's approval for the deal, but whether the federal government should have stepped in to ensure that the tribes were paid higher rates.

Reservation lands are still held in trust by the U.S. government. As a trustee, the Department of the Interior has responsibility for overseeing the development of oil and gas on tribal lands, and for ensuring that any leases or sales of that land are made in "the best interest" of the Native Americans. When it comes to leases to drill for oil — even those negotiated directly between the tribal council and the oil industry — the Bureau of Indian Affairs is required to make sure the leases meet this standard.

The bureau did not respond to a list of written questions, but according to interviews and documents obtained by ProPublica, the bureau approved the leases even though some Interior Department staffers expressed misgivings. Other documents show that tribal members appealed to high-level Interior Department officials and others to reject the leases and step in on their behalf.

"Mr. Secretary, this company, Dakota-3, like the other companies in the oil business will turn around and sell the lease," wrote Russell Mason Sr., a tribal elder, to the Assistant Secretary for Indian Affairs in a December, 2007 letter. "We are making a plea to you that you exercise your trust responsibilities."

"The United States has uniformly failed in its duties to the Indian landowners," states one lawsuit in the U.S. Court of Federal Claims in Washington, D.C. that was brought by tribal landowners seeking restitution for the Dakota-3 leases sold to Williams.

The Dakota-3 deals are not the only controversial ones. For example, a company called Black Rock Resources purchased drilling rights to about 12,800 acres of land for $35 per acre and a 16.7 percent royalty. It later sold those rights to Marathon Oil for about $42 million, according to financial documents that describe the deal.

Messages left for multiple Black Rock Resources officials were not returned, and Marathon Oil did not immediately respond to a message seeking comment.

The Bureau of Indian Affairs approved the Black Rock deal, and documents obtained by ProPublica reveal the sometimes-contradictory advice the Bureau of Indian Affairs received from its own staff and other federal officials.

When Black Rock first offered to buy up reservation leases for $35 per acre beginning in 2005, some bureau staff justified the rates saying the cumbersome regulations and past problems with leasing on the reservation had driven down demand. "Unfortunately," wrote one staffer in a department letter, $35 per acre "is what the market will bear."

But in a review dated November, 2005, an expert at the Bureau of Land Management wrote that the offered price "appears to look low compared to those offered recently at both BLM and North Dakota State competitive oil and gas lease sales in the area." He cited other sales that same month for as much as $370 an acre. An Interior Department lawyer in Washington sent a letter to North Dakota BIA officials expressing similar concerns.

Even at the time, the tribe received higher offers. Jerry Nagel is a tribe member, businessman and former program analyst for the tribe who has been outspoken against leases he thought were being sold for too little. In an interview, he said that he financed a venture in 2006 that offered the tribe $140 per acre plus a royalty rate more than twice as high as the tribal council was offered for the big leases it ultimately signed. It's unclear why the tribal council didn't take that offer, but Nagel claims it's evidence that the council gave preferential treatment to certain suitors.

The tribal council's office did not immediately respond to questions about why the council passed over Nagel's offer.

Kyle Baker is a tribe member, geologist and former environment official for minerals and energy for the tribe. He said that his family struck deals to lease its acreage on and near the reservation for as much as $700 per acre around the same time as the Black Rock deal.

"Companies will come and find your weaknesses and then drive themselves in," Baker said on a recent wintery morning in his living room overlooking Lake Sakakawea. "Our laws, our setup wasn't ready for it."

Companies and the U.S. government have long known that the Ft. Berthold reservation lay in the heart of the oil-rich Williston Basin, a reserve thought by some to contain as much as 20 billion barrels of oil. But previous efforts to lease and drill on the Indian lands stalled in the 1970s, and again in the late 1990s, thwarted by a dense bureaucracy and a tangle of laws governing leasing on reservations.

Only after the advent of modern fracking — and after Congress passed a handful of laws to ease corporate access to the Ft Berthold reservation — did companies begin to invest seriously in drilling there.

Today it's estimated that the three tribes and individual Native American landholders are receiving some $50 to $80 million a year from the drilling leases and royalties, compared with revenues of about $5 million a year before the boom began in about 2006.

But that money has brought allegations of sweetheart arrangements that have left a few tribal members with disproportionate profits from oil development.

In 2011 a team of elders audited the tribal council's activities. They found widespread financial inconsistencies that they said indicated systemic misconduct. "We saw millions of dollars going out and hardly anything coming back" to the Three Affiliated Tribes, said Tony Foote a forensic auditor who chaired the team. "We're not just talking about cash. It's rooms, food, travel, donations, and there's only a handful of people that can get all this stuff."

Hall, the tribes' current chairman, had previously held that post from 1998 until 2006. He didn't deny that there had been corruption, but he said that since he came back into office in 2010 he has focused on reform and on making sure that the oil revenues benefit the broader tribal community. He said he has formed tribal entities to directly control a pipeline and refinery project, set up a $100 million trust fund for the tribes, and begun to sign lease agreements that are more favorable to the Native Americans on the reservation. He also demoted Wilkinson, who is now an administrative officer at the casino, not its CEO.

"I was called back because people were concerned about sweetheart deals, so we have totally changed the dynamic," he said.

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North Dakota’s Oil Boom Could Threaten Region’s Diverse Wildlife

CROSBY, N.D. -- Not many years ago, this outpost in extreme northwest North Dakota was considered a sleeper assignment by U.S. Fish and Wildlife Service officials. Ducks in particular - but also sharp-tailed grouse, golden eagles, bitterns, hawks, falcons and countless other species - were bountiful, nurtured in part by quality habitat on the region's nearly 100 waterfowl production areas.

Offering still more protection to wildlife were thousands of acres of private wetlands and grasslands under federal conservation easement.

Then advances in drilling technology sparked North Dakota's latest oil boom, wildly altering the region's land and people virtually overnight.

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"The biggest impact from oil is fragmentation of the countryside," said Lloyd Jones, Fish and Wildlife Service manager at Audubon National Wildlife Refuge near Coleharbor, N.D. "We've had contiguous areas of native prairies and grasslands and wetlands up here forever that have provided extremely valuable and richly diverse habitat.

"When you break that up, which is being done now with the expansion of drilling, you change the picture very dramatically for wildlife. And unfortunately, it's all negative. There's nothing positive about it."

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The North Dakota Oil Fracking Boom Creates Clash of Money and Devastation

This is a story about one tribal nation grappling with the stresses of life during oil time - housing, traffic, crime, crowds, their quality of life.

NEW TOWN N.D. –When the black gold rush began, no one on the Fort Berthold Indian Reservation expected it to take down Main Street.

A modest strip of one- and two-story buildings framed by undulating plains, Main Street doubled as the reservation’s community hub, in the tradition of small towns. Neighbors caught up at the Jack and Jill grocery, elders strolled to the library, children rode their bikes on the streets.

No one imagined tanker trucks barreling up and down Main Street, back-to-back like freight trains, seven days and nights a week.  No one predicted construction zones that grind traffic to a halt as far as the eye can see, the deafening clatter of semis, the dust kicked up by 10,000 vehicles pulverizing the two-lane road every day or the smell and taste of diesel. No one anticipated the accidents, two or more a week on Main Street and all over the rutted reservation roads, costing lives and shattering families.

In fact, Fort Berthold, home of the Mandan, Hidatsa and Arikara Nation, or Three Affiliated Tribes, did not reckon on a lot when North Dakota invited the energy industry to Drill Baby Drill. No one knew that energy companies in search of housing for their workers would buy private property and evict some of the reservation’s poorest residents from their homes. No one planned on police and fire calls multiplying. No one guessed that on a reservation of nearly one million acres, all the deer would disappear.

In the heart of the refuge of recession America, this little-known tribe is grappling mightily with the consequences of striking oil.

“It’s horrible,” said Becky Deschamp, a 41-year-old lifelong Fort Berthold resident.

Deschamp offered that verdict while packing her trailer, not by choice. In November, an oil company bought the run-down Prairie Winds Trailer Park two blocks off Main Street where she and her husband and two children have lived for seven years.  With land and housing nearly impossible to find, the park’s 45 families—more than 180 adults and children in all— were given two extensions before the final Aug. 31 deadline to leave.

Just six weeks before the deadline, when the tribe cleared and prepared a lot three miles outside of New Town, the evictees still had no idea where they would go. But they were luckier than some. Last year, a nearby trailer park was sold and its residents given 30 days to move. The tribe offered them a field about 10 miles away, but soon after they moved there, the lot buckled under sewer and water demands.  When the ground began to sink, families had to relocate again, even farther away from town.

“The tribe didn’t count on these disruptions,” Deschamp said, surveying the boarded trailers and junked cars left behind by neighbors. “I know I didn’t.”

What the tribe counted on when the boom hit two years ago was money.  It never had any to spare and the recession made things worse.  About 40 percent of the tribal workforce was unemployed and people were leaving the land where the Mandan, Hidatsa and Arikara have lived for more than a millennium. For a nation with only about 4,500 of its 13,000 enrolled members living on the rez, the wretched economy threatened the community’s very survival. Then Fort Berthold turned into a black gold mine.

The reservation’s swath of prairie and pasturelands sits over the Bakken, the biggest sea of oil discovered in the United States in 40 years. Until a few years ago, the Bakken, which also stretches across parts of South Dakota, Montana and Saskatchewan, was too deep to mine. Horizontal drilling and hydraulic fracturing, or fracking, which involves blasting chemical-laced water and sand deep underground to break apart shale and release gas, has given oil companies the means to have their way with the Bakken. And so they have.

Several states have banned fracking as too environmentally taxing. Other states have limited the practice. Not North Dakota.

With few regulations and little protest, oil production is proceeding at a dizzy pace. Last year, North Dakota became the third largest oil producing state in the nation, bumping California. This year it replaced Alaska for the number two spot after Texas. The oil patch is now producing more than 600,000 barrels of oil a day.  Thanks to oil taxes and related revenue, North Dakota is expecting its surplus to top $2 billion within the year. This in a state with only 641,480 people pre-boom.

New Town, with about 1,500 residents pre-boom, now boasts North Dakota’s fastest growing economy.  But while it is on Fort Berthold, it is considered part of Mountrail County, not part of the tribal nation.

Still, the tribe is raking in cash. The Fort Berthold reservation received more than  $117 million in royalties in 2011, according to the Bureau of Indian Affairs. Individual tribal members who own mineral rights on their private land, or allotments, receive anywhere from hundreds to tens of thousands of dollars a month. That’s about two-thirds of the tribe’s total royalties.

Unemployment, now between six and seven percent, keeps dropping. Businesses are thriving. The Four Bears Casino is adding 160 rooms to its 97-room hotel and plans to offer ferryboat gambling on Lake Sakakawea, the Missouri River reservoir that runs through the reservation.

People who used to come to the tribal offices asking for help no longer do. “We appreciate the money that’s coming in and helping to improve incomes and the socioeconomic status of our members,” said Dennis Fox, the tribe’s CEO.

But, Fox added, despite all the oil money coming in from royalties and taxes, Three Affiliated Tribes is spending all of its new income—and then some –dealing with the oil production’s impacts.

In an interview at tribal headquarters, Fox offered a “but” for every positive impact of the oil rush. The tribe’s budget for special projects is now double its average yearly operating budget of between $40 and $50 million, he said. But the tribe estimates that it will cost more than $100 million just to repair the reservation’s road system.

“It’s a matter of playing catch up,” he said. “We’re trying to beef up all of our infrastructure. Nobody anticipated the great influx of workers and the impact on the roads and housing and everything else.”

The tribal chairman, Tex Hall, regularly treks to Washington, D.C. to plead for road relief.  “I already receive almost daily calls telling me of serious accidents involving our members,” he told a Congressional appropriations subcommittee in April.

“In fact, we now have so many accidents on my reservation that my staff does not even both to call me unless the injuries are life-threatening. The situation has now gotten to be that bad.”

All over the Bakken lands of Western North Dakota, known as the oil patch, towns are going through many of the same challenges. Highways are getting pounded to dust, police, fire and social service departments are scrambling and housing is beyond hard to find.

In a way, history is repeating itself.  Cities and towns across the country have gone through similar upheavals for the sake of energy production and jobs, including the small towns of southwest West Virginia and eastern Kentucky during the heyday of coal.  That part of central Appalachia is still struggling to pick up after booms went bust.

Of course, North Dakota invited the oil companies. But the oil patch is like the high school wallflower who announces a backyard kegger on Facebook, only to find the entire student body has shown up. Before it gave oil drilling a go, North Dakota was the nation’s least-visited state. The once-overlooked, now overwhelmed oil patch never dreamed it would become the center of the biggest, messiest migration to one state since the California Gold Rush.

That it was unprepared for the deluge is painfully obvious. The oil patch looks like the aftermath of a natural disaster. There are long lines everywhere, from gas stations to taco trucks, store shelves look ransacked and forget about getting a hotel room within a hundred miles. Man camps, the makeshift encampments for oil workers, crop up overnight in fields where cows graze. So many newcomers crash at the Wal-Mart parking lot in Williston – at least 100 vehicles from all over the country every night – that it’s almost becoming a neighborhood.

And traffic in the patch is like traffic nowhere else, not even in the nation’s biggest cities. It can take 90 jaw-clenching minutes to drive 30 miles. Pity the passenger car driver surrounded on every side by tankers, flatbeds and cement mixers. Everywhere you go, people are beleaguered and out of sorts.

Fort Berthold is suffering all the woes of the Bakken boomtowns, and many more.

The tribe is a federally recognized sovereign nation, which makes its challenges more complicated. North Dakota is creating a fund for road repairs and upgrades in the oil patch, for example, but, Fox said, the tribal nation is not eligible for the money.

Its biggest day-to-day problem is policing the reservation. Under Federal law, imposed by a 1978 Supreme Court ruling that has bedeviled Indian Country, tribal nations have no criminal jurisdiction over non-Indians.

So while police calls on Fort Berthold have more than doubled, many of the calls involve newcomers who are not tribal members and who tribal police lack the power to arrest.

Crime is up all over the oil patch.  Police blotters in communities where a stolen bike was once noteworthy now list robberies, assaults, prostitution, drug trafficking and organized crime, not to mention many traffic accidents.

For a Fort Berthold tribal officer, answering a call can be a day’s work. The tribal force of 11 tribal officers patrols over 1,000 miles of road. Since the reservation includes about 150 miles of state highways and 660 miles of county roads, a tribal officer can call a sheriff’s department if an incident is on county land—the reservation includes parts of six counties—or they can call state police if the incident falls in their jurisdiction. Or they can call on federal officers, from the Army Corps of Engineers, Bureau of Indian Affairs, Dept. of Homeland Security, if non-tribal members commit crimes that fall under those entities’ jurisdictions.

It was an inefficient and sometimes ineffective system before the oil boom.  Now, with law enforcement agencies all over the Bakken lands overburdened, there are not enough officers to handle every incident. The tribe is working with local and state law enforcement agencies and the Bureau of Indian Affairs to revamp its policing and develop a strategy to empower its force, such as cross-deputizing tribal police with sheriff’s departments.

What residents of Ft. Berthold say they miss most is their peace. Peace and quiet has always been Western North Dakota’s primary currency, the main answer hardy souls could pitch to those who might ask why anyone would live Way Out There. These days, long-time residents often complain that they no longer feel safe. They read stories in the papers, see warnings of registered sex offenders on community bulletin boards, bump into newcomers who don’t make eye contact.

It’s a culture shock on a reservation with five tight-knit villages, each with just hundreds of residents. People grow up here knowing which neighbor gets home when by the sound of their cars—the hum of a 4×4, say, or the putt-putt of an old Jeep.

Now, they hear rumors.  “It’s kind of scary,” said Loren Fox, as he sold $6 Indian tacos under a white tent by his family’s trailer in the rural community of Mandaree.

He kept his daughters, two and four years old, tucked by his side.

“Before there was no problem,” said the 41-year-old Fort Berthold native.  “But you hear stories—people coming around talking to kids and stuff.”

Loren Fox is torn between believing that oil is the best thing to happen to Fort Berthold and the worst. His cut from royalties he shares with a half dozen relatives for seven wells drilled on their land comes to about $2,000 a month. His wife receives between $400 and $900 a month for mineral rights her family holds on their ancestral land.

But Fox has lost three family members to car accidents with trucks in the last three years. He lost two nephews, 28- and 25 years old, within four months of each other, he said.  In June, he lost a 40-year-old cousin to a crash with a semi.

He also laments the loss of wildlife.  The tribe is canceling deer season this year for the first time.

“All the traffic,” Loren Fox said, “has scared the deer away, I guess.”

His guess is as good as anyone’s: no one is quite sure why the deer have disappeared. Of all the talk of all the problems in the oil patch, one barely hears a whisper about the possible environmental consequences of the fevered development.

Environmental advocates have been sounding the alarm on fracking for its potential to contaminate ground water, the amount of energy  it uses (hundreds of millions of gallons of water per well) and its possible disruption to the earth. It has been linked to earthquakes in Oklahoma, Texas and Great Britain.

Cities and towns in the oil patch have had a problem getting a handle on all the accidental oil and wastewater spills that occur. The Three Affiliated Tribes are also trying to stem the deliberate dumping of chemical-laden wastewater along roads or in remote areas of the rez.

Tribal police were getting so many calls from people spotting trucks dumping toxic fluids– several each week, Dennis Fox said– that in August 2011 it imposed fines of up to $1 million for a third deliberate offense.

Then there are the gas fires.

All over the Bakken lands, startling fires rise above the hayfields, spewing natural gas into the atmosphere. The fires, or flares, are a byproduct of oil production. When fracked gas is released, so is natural gas, but since natural gas is going begging on the worldwide market, and building the infrastructure to capture the gas would be expensive, companies just burn it. The fires spew over two million tons of carbon dioxide into the air each year, the equivalent of nearly 400,000 cars.

The World Bank, which has been campaigning for 10 years to get nations such as Russia, Nigeria, Iran and Iraq to stop flaring, now ranks the United States as the fifth worst offender thanks to North Dakota’s oil boom.

Neither North Dakota nor the Mandan Hidatsa Arikara Nation have rules limiting flaring. But the tribe does plan to capture the wasted natural gas. In July, it received the final permit approval to build a crude oil refinery, the first to be built in the continental United States in over 40 years.  The tribe also plans to build a pipeline to move oil – and gas—to the refinery.

What tribal leaders do not want are more regulations. The Obama administration has proposed requiring that oil companies disclose the chemicals they use in fracking, a move tribal leaders say would slow down oil production.

Tribal leaders are determined to make the most out of this oil boom, which they see as the ticket to independence from the federal government. They remember all too well how the tribe missed out on the last oil craze.

In the 1980s, when North Dakota experienced a smaller, more conventional oil boom, the tribe was virtually shut out. Oil companies skipped the reservation because the federal government, which administers Indian lands, required that oil companies go through dozens of steps, taking many months, before granting  permits. Outside the reservation, companies received permits within weeks.

To make sure they would not miss out this time, the tribe made two moves. It struck a deal with North Dakota to lower the taxes companies would pay the state and the tribe for leases on tribal land and it lobbied the Bureau of Indian Affairs to set up “one-stop shops” to streamline the permitting process.

Tribal leaders say they are looking out for their own interests, tired of history repeating itself.

Fort Berthold children learn early, in school and at home, that United States policies have betrayed the tribe again and again.  The U.S. government broke the Fort Laramie Treaty of 1851, which set the reservation’s borders, to seize millions of acres of reservation land to establish Montana and expand railroad lines.

Then, in the late 1940s, the federal government decided to damn the Missouri River to create hydroelectric power and Lake Sakakawea. The project flooded river bottomlands that the tribe had so assiduously cultivated and that provided its major source of income. Over one-fourth of the reservation’s total land base was inundated by water. By 1954, nearly 80 percent of the tribe had relocated and almost all of its crop and grazing land, 94 percent, was lost.

The reservation now comprises just under a million acres. Only about half of that is tribal land, either owned by the tribe or tribal members whose families received allotments under an 1887 federal act that sought to privatize Indian lands. The rest of the land is either privately owned, largely by those whose ancestors settled in the Plains when the federal government gave away “unclaimed” Indian lands to homesteaders (beginning with the first Homeststead Act, in 1862) or public land, as in national park land.

Tribal members lucky enough to have mineral rights on their allotments are reaping the oil rush’s bounty. But even some of those members feel cheated. After the first leases were signed, energy companies began to “flip,” or sublease, their leases, at huge profits, with the federal government’s approval but without the allotees’ permission. Since then, tribal landowners have organized their own associations to maximize their interests.

But not everyone is collecting royalty checks. A little over half of the tribal enrolled membership now receives oil checks. The rest: nothing. The new reality is creating a divide in the Mandan, Hidatsa and Arikara tribe between the haves and have-nots.

No one blames the have-nots for resenting the unmitigated upheaval they’re enduring while the haves buy new cars and take vacations. Allotees receiving oil checks have formed a development corporation to invest their money in ways that will benefit all tribal members. Tribal leaders say that at some point in the future, they plan to develop a fund to “share the wealth” with all tribal members.

Becky Deschamp, from the Prairie Winds Trailer Park, is one of the have-nots. Her mistrust of government, honed from both distant and recent history, now extends to the tribal government.  She is thrilled that the tribe found a place to house the evicted Prairie Winds families but wonders why it took so long.

These days she avoid Main Street unless absolutely necessary. Driving home still means running a gauntlet of road construction on Route 23, dubbed “suicide road.” But she’s philosophical about it: At least she still gets to overlook the meditative waters of Lake Sakakawea. If the sewer and water systems hold up, she said, “I may never leave my home again.”

By Evelyn Nieves, originally published by Alternet with production assistance from the Economic Hardship Reporting Project.

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North Dakota’s Oil Boom Brings Damage Along With Prosperity

by Nicholas Kusnetz, Special to ProPublica June 7, 2012, 11:47 a.m.

Oil drilling has sparked a frenzied prosperity in Jeff Keller's formerly quiet corner of western North Dakota in recent years, bringing an infusion of jobs and reviving moribund local businesses.

But Keller, a natural resource manager for the Army Corps of Engineers, has seen a more ominous effect of the boom, too: Oil companies are spilling and dumping drilling waste onto the region's land and into its waterways with increasing regularity.

Hydraulic fracturing — the controversial process behind the spread of natural gas drilling — is enabling oil companies to reach previously inaccessible reserves in North Dakota, triggering a turnaround not only in the state's fortunes, but also in domestic energy production. North Dakota now ranks second behind only Texas in oil output nationwide.

The downside is waste — lots of it. Companies produce millions of gallons of salty, chemical-infused wastewater, known as brine, as part of drilling and fracking each well. Drillers are supposed to inject this material thousands of feet underground into disposal wells, but some of it isn't making it that far.

According to data obtained by ProPublica, oil companies in North Dakota reported more than 1,000 accidental releases of oil, drilling wastewater or other fluids in 2011, about as many as in the previous two years combined. Many more illicit releases went unreported, state regulators acknowledge, when companies dumped truckloads of toxic fluid along the road or drained waste pits illegally.

State officials say most of the releases are small. But in several cases, spills turned out to be far larger than initially thought, totaling millions of gallons. Releases of brine, which is often laced with carcinogenic chemicals and heavy metals, have wiped out aquatic life in streams and wetlands and sterilized farmland. The effects on land can last for years, or even decades.

Compounding such problems, state regulators have often been unable — or unwilling — to compel energy companies to clean up their mess, our reporting showed.

Under North Dakota regulations, the agencies that oversee drilling and water safety can sanction companies that dump or spill waste, but they seldom do: They have issued fewer than 50 disciplinary actions for all types of drilling violations, including spills, over the past three years.

Keller has filed several complaints with the state during this time span after observing trucks dumping wastewater and spotting evidence of a spill in a field near his home. He was rebuffed or ignored every time, he said.

"There's no enforcement," said Keller, 50, an avid outdoorsman who has spent his career managing Lake Sakakawea, a reservoir created by damming the Missouri River. "None."

State officials say they rely on companies to clean up spills voluntarily, and that in most cases, they do. Mark Bohrer, who oversees spill reports for the Department of Mineral Resources, the agency that regulates drilling, said the number of spills is acceptable given the pace of drilling and that he sees little risk of long-term damage.

Kris Roberts, who responds to spills for the Health Department, which protects state waters, agreed, but acknowledged that the state does not have the manpower to prevent or respond to illegal dumping.

"It's happening often enough that we see it as a significant problem," he said. "What's the solution? Catching them. What's the problem? Catching them."

Ron Ness, president of the North Dakota Petroleum Council, a lobbying group, said the industry is doing what it can to minimize spills and their impacts.

"You're going to have spills when you have more activity," he said. "I would think North Dakotans would say the industry is doing a good job."

In response to rising environmental concerns related to drilling waste, North Dakota's legislature passed a handful of new regulations this year, including a rule that bars storing wastewater in open pits.

Still, advocates for landowners say they have seen little will, at either the state or federal level, to impose limits that could slow the pace of drilling.

The Obama administration is facilitating drilling projects on federal land in western North Dakota by expediting environmental reviews. North Dakota's Gov. Jack Dalrymple has urged energy companies to see his administration as a "faithful and long-term partner."

"North Dakota's political leadership is still in the mold where a lot of our oil and gas policy reflects a strong desire to have another oil boom," said Mark Trechock, who headed the Dakota Resource Council, a landowner group that has pushed for stronger oversight, until his retirement this year. "Well, we got it now."

Reaching 'the Crazy Point'

Keller's office in Williston is as good a spot as any to see the impacts of the oil boom.

The tiny prefab shack — cluttered with mounted fish, piles of antlers and a wolf pelt Keller bought in Alaska — is wedged between a levee that holds back Missouri River floodwaters and a new oil well, topped by a blazing gas flare. Just beyond the oil well sits an intersection where Keller estimates he saw an accident a week during one stretch last year due to increased traffic from drilling.

Keller describes the changes to his hometown in a voice just short of a yell, as if he's competing with nearby engine noise. Local grocery stores can barely keep shelves stocked and the town movie theater is so crowded it seats people in the aisle, he said. The cost of housing has skyrocketed, with some apartments fetching rents similar to those in New York City.

"With the way it is now," Keller said, "you're getting to the crazy point."

Oil companies are drilling upwards of 200 wells each month in northwestern North Dakota, an area roughly twice the size of New Jersey.

North Dakota is pumping more than 575,000 barrels of oil a day now, more than double what the state produced two years ago. Expanded drilling in the state has helped overall U.S. oil production grow for the first time in a quarter century, stoking hopes for greater energy independence.

It has also reinvigorated North Dakota's once-stagnant economy. Unemployment sits at 3 percent. The activity has reversed a population decline that began in the mid-1980s, when the last oil boom went bust.

The growth has come at a cost, however. At a conference on oil field infrastructure in October, one executive noted that McKenzie County, which sits in the heart of the oil patch and had a population of 6,360 people in 2010, required nearly $200 million in road repairs.

The number of spill reports, which generally come from the oil companies themselves, nearly doubled from 2010 to 2011. Energy companies report their spills to the Department of Mineral Resources, which shares them with the Health Department. The two agencies work together to investigate incidents.

In December, a stack of reports a quarter-inch thick piled up on Kris Roberts' desk. He received 34 new cases in the first week of that month alone.

"Is it a big issue?" he said. "Yes, it is."

The Health Department has added three staffers to handle the influx and the Department of Mineral Resources is increasing its workforce by 30 percent, but Roberts acknowledges they can't investigate every report.

Even with the new hires, the Department of Mineral Resources still has fewer field inspectors than agencies in other drilling states. Oklahoma, for example, which has comparable drilling activity, has 58 inspectors to North Dakota's 19.

Of the 1,073 releases reported last year, about 60 percent involved oil and one-third spread brine. In about two-thirds of the cases, material was not contained to the accident site and leaked into the ground or waterways.

But the official data gives only a partial picture, Roberts said, missing an unknown number of unreported incidents.

"One, five, 10, 100? If it didn't get reported, how do you count them?" he said.

He said truckers often dump their wastewater rather than wait in line at injection wells. The Department of Mineral Resources asks companies how much brine their wells produce and how much they dispose of as waste, but its inspectors don't audit those numbers. Short of catching someone in the act, there's no way to stop illegal dumping.

The state also has no real estimate for how much fluid spills out accidentally from tanks, pipes, trucks and other equipment. Companies are supposed to report spill volumes, but officials acknowledge the numbers are often inexact or flat-out wrong. In 40 cases last year, the company responsible didn't know how much had spilled so it simply listed the volume of fluid as zero.

In one case last July, workers for Petro Harvester, a small, Texas-based oil company, noticed a swath of dead vegetation in a field near one of the company's saltwater disposal lines. The company reported the spill the next day, estimating that 12,600 gallons of brine had leaked.

When state and county officials came to assess the damage, however, they found evidence of a much larger accident. The leak, which had gone undetected for days or weeks, had sterilized about 24 acres of land. Officials later estimated the spill to be at least 2 million gallons of brine, Roberts said, which would make it the largest ever in the state.

Yet state records still put the volume at 12,600 gallons and Roberts sees no reason to change it.

"It's almost like rubbing salt in a raw wound," Roberts said, criticizing efforts to tabulate a number as "bean counting." Changing a report would not change reality, nor would it help anyone, he added. "If we try to go back and revisit the past over and over and over again, what's it going to do? Nothing good."

In a written statement, Petro Harvester said tests showed the spill had not contaminated groundwater and that it would continue monitoring the site for signs of damage. State records show the company hired a contractor to cover the land with 40 truckloads of a chemical that leaches salt from the soil.

Nearly a year later, however, even weeds won't grow in the area, said Darwin Peterson, who farms the land. While Petro Harvester has promised to compensate him for lost crops, Peterson said he hasn't heard from the company in months and he doesn't expect the land to be usable for years. "It's pretty devastating," he said.

Little Enforcement

The Department of Mineral Resources and the Health Department have the authority to sanction companies that spill or dump fluids, but they rarely do.

The Department of Mineral Resources has issued just 45 enforcement actions over the last three years. Spokeswoman Alison Ritter could not say how many of those were for spills or releases, as opposed to other drilling violations, or how many resulted in fines.

The Health Department has taken just one action against an oil company in the past three years, citing Continental Resources for oil and brine spills that turned two streams into temporary toxic dumps. The department initially fined Continental $328,500, plus about $14,000 for agency costs. Ultimately, however, the state settled and Continental paid just $35,000 in fines.

The agency has not yet penalized Petro Harvester for the July spill, thought it has issued a notice of violation and could impose a fine in the future, Roberts said, one of several spill-related enforcement actions the agency is considering.

Derrick Braaten, a Bismarck lawyer whose firm represents dozens of farmers and landowner groups, said his clients often get little support from regulators when oil companies damage their property.

State officials step in in the largest cases, he said, but let smaller ones slide. Landowners can sue, but most prefer to take whatever drillers offer rather than taking their chances in court.

"The oil company will say, that's worth $400 an acre, so here's $400 for ruining that acre," Braaten said.

Daryl Peterson, a client of Braaten's who is not related to Darwin Peterson, said a series of drilling waste releases stretching back 15 years have rendered several acres unusable of the 2,000 or so he farms. The state has not compelled the companies that caused the damage to repair it, he said. Peterson hasn't wanted to spend the hundreds of thousands of dollars it would take to haul out the dirt and replace it, so the land lies fallow.

"I pay taxes on that land," he said.

At least 15 North Dakota residents, frustrated with state officials' inaction, have taken drilling-related complaints to the U.S. Environmental Protection Agency in the last two years, records show.

Last September, for example, a rancher near Williston told the EPA that Brigham Oil and Gas had plowed through the side of a waste pit, sending fluid into the pond his cattle drink from and a nearby creek. When the rancher called Brigham to complain, he said, an employee told him this was "the way they do business."

A spokeswoman for Statoil, which acquired Brigham, said the company stores only fresh water in open pits, not wastewater, and that "we can't remember ever having responded in such a manner" to a report about a spill.

Federal officials can offer little relief.

Congress has largely delegated oversight of oil field spills to the states. EPA spokesman Richard Mylott said the agency investigates complaints about releases on federal lands, but refers complaints involving private property to state regulators.

The EPA handed the complaint about Brigham to an official with North Dakota's Health Department, who said he had already spoken to the company.

"They said this was an isolated occurrence, this is not how they handle frac water and it would not happen again," the official wrote to the EPA. "As far as we are concerned, this complaint is closed."

Salting the Earth

Six years ago, a four-inch saltwater pipeline ruptured just outside Linda Monson's property line, leaking about a million gallons of salty wastewater.

As it cascaded down a hill and into Charbonneau Creek, which cuts through Monson's pasture, the spill deposited metals and carcinogenic hydrocarbons in the soil. The toxic brew wiped out the creek's fish, turtles and other life, reaching 15 miles downstream.

After suing Zenergy Inc., the oil company that owns the line, Monson reached a settlement that restricts what she can say about the incident.

"When this first happened, it pretty much consumed my life," Monson said. "Now I don't even want to think about it."

The company has paid a $70,000 fine and committed to cleaning the site, but the case shows how difficult the cleanup can be. When brine leaks into the ground, the sodium binds to the soil, displacing other minerals and inhibiting plants' ability to absorb nutrients and water. Short of replacing the soil, the best option is to try to speed the natural flushing of the system, which can take decades.

Zenergy has tried both. According to a Department of Mineral Resources report, the company has spent more than $3 million hauling away dirt and pumping out contaminated groundwater — nearly 31 million gallons as of December 2010, the most recent data available.

But more than a dozen acres of Monson's pasture remain fenced off and out of use. The cattle no longer drink from the creek, which was their main water source. Zenergy dug a well to replace it.

Shallow groundwater in the area remains thousands of times saltier than it should be and continues to leak into the stream and through the ground, contaminating new areas.

There's little understanding of what long-term impacts hundreds of such releases could be having on western North Dakota's land and water, said Micah Reuber.

Until last year, Reuber was the environmental contaminant specialist in North Dakota for the federal Fish and Wildlife Service, which oversees wetlands and waterways.

Reuber quit after growing increasingly frustrated with the inadequate resources devoted to the position. Responding to oil field spills was supposed to be a small part of his job, but it came to consume all of his time.

"It didn't seem like we were keeping pace with it at all," he said. "It got to be demoralizing."

Reuber said no agency, federal or state, has the money or staff to study the effects of drilling waste releases in North Dakota. The closest thing is a small ongoing federal study across the border in Montana, where scientists are investigating how decades of oil production have affected the underground water supply for the city of Poplar.

Joanna Thamke, a groundwater specialist with the U.S. Geological Survey in Montana, started mapping contamination from drilling 20 years ago. She estimated it had spread through about 12 square miles of the aquifer, which is the only source of drinking water in the area. Over the years, brine had leaked through old well bores, buried waste pits and aging tanks and pipes.

In the Poplar study and others, Thamke has found that plumes of contaminated groundwater can take decades to dissipate and sometimes move to new areas.

"What we found is the plumes, after two decades, have not gone away," she said. "They've spread out."

Poplar's water supply is currently safe to drink, but the EPA has said it will become too salty as the contamination spreads. In March, the agency ordered three oil companies to treat the water or to find another source.

North Dakota officials are quick to point out that oversight and regulations are stronger today than they were when drilling began in the area in the 1950s. One significant difference is that waste pits, where oil companies store and dispose of the rock and debris produced during drilling, are now lined with plastic to prevent leaching into the ground.

New rules, effective April 1, require drillers in North Dakota to divert liquid waste to tanks instead of pits. Until now, drillers could store the liquid in pits for up to a year before pumping it out in order to bury the solids on site. The rule would prevent a repeat of the spring of 2011, when record snowmelt and flooding caused dozens of pits to overflow their banks.

But Reuber worries that the industry and regulators are repeating past mistakes. Not long before he left the Fish and Wildlife Service, he found a set of old slides showing waste pits and spills from decades ago.

"They looked almost exactly like photos I had taken," he said. "There's a spill into a creek bottom in the Badlands and it was sitting there with no one cleaning it up and containing it. And yeah, I got a photo like that, too."

Keller has grown so dispirited by the changes brought by the boom that he is considering retiring after 30 years with the Army Corps and moving away from Williston. He runs a side business in scrap metal that would supplement his pension.

Still, determined to protect the area, he keeps alerting regulators whenever he spots evidence that oil companies have dumped or spilled waste.

Last July, when he saw signs of a spill near his home, Keller notified the Health Department and sent pictures showing a trail of dead grass to an acquaintance at the EPA regional office in Denver. The brown swath led from a well site into a creek.

If the spills continued, he warned the EPA in an email, they could "kill off the entire watershed."

EPA officials said they spoke with Keller, but did not follow up on the incident beyond that. The state never responded, Keller said. The site remained untested and was never cleaned up.

"There was no restoration work whatsoever," Keller said.

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In North Dakota and Nationwide, A Boom in Health Problems Accompanies Fracking

The first symptom was a rash on Jacki Schilke’s nose. It appeared late in the winter of 2009 and was soon followed by a flood of other health problems afflicting Schilke, her husband, their dog, and many of the animals on their 160-acre ranch near Williston, North Dakota -- a tiny town in the state’s northwest corner that has become the epicenter of the recent Great Plains oil and gas boom.

Winters are long and cold here, and animals die from time to time; that’s just a fact of life on the dry, hilly prairie. Long hours in the fields, together with a second job, can wear a body down. Schilke’s face shows it in hard lines and weathered skin. At 53, she’s short and sturdy, with a ponytail of straw-colored hair. She says she’s always been healthy. But since that winter, her body, along with everything and everyone around her, seems to have deteriorated.

Schilke lost 25 pounds in the summer of 2009 and started having trouble breathing. She had constant diarrhea and would get lightheaded. Her husband Steve’s asthma worsened, frequently leaving him tired and short of breath. The couple began getting unusual muscle aches. The following winter, Jacki got another rash, a quarter-sized spot on her leg that wouldn’t go away. She visited a neurologist who couldn’t explain what was happening. She noticed an ammonia-like smell in the house and started looking for a source, thinking that might be what was making them sick. "Hell, I hauled shit out of here by truckloads," Jacki says. "I threw everything away. There wasn’t even a bottle of cleaner left in this house."

In June 2010, the couple’s Yorkie, Blue, got bloody diarrhea and started coughing up mucus. They had to put him to sleep a few days later. Soon after, the water from a well they used for their animals started bubbling, "like 7UP." Then the creek behind the house started bubbling, too, with a frothy film forming on the water’s surface and white residue appearing on the creek bank. The Schilkes started hauling water in from town. In August, Jacki was out feeding her bull one morning when she lost strength and fell to her knees. From that spot, she could see a giant drilling rig across the property line, a few thousand feet from her house. "It just kind of clicked," she says.

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