The Mandan, Hidatsa, and Arikara Nation’s Tribal Employment Rights Office on the Fort Berthold Indian Reservation cracked down on contractors and consultants in violation of Indian Preference laws by issuing a cease and desist order May 26 to all contractors not meeting tribal employment requirements. TERO requires that companies working on the reservation must give hiring preference to contractors and subcontractors which are either tribal-owned or employee tribal members, and those not doing so must report themselves and come into compliance.
“All entities that have used non-Indian services including but not limited to roustabout services, contract pumping services and flow testing services are ordered to immediately self-report to TERO to come into compliance,” the office announced on April 4 in a notice to companies working on the reservation. After some companies failed to comply, TERO began seriously enforcing the law in May. Shawn Redfox, a compliance officer at TERO told Petroleum News Bakken that his office did not see many violations when oil activity was booming, but the slowdown due to low oil prices has left some tribal members looking for work.
“With work being slow, that’s what we’re looking out for,” Redfox said. “So these Native contractors ― we don’t want their trucks and equipment sitting. They’ve got a lot invested into their companies so we want to help them out so we’re not losing them.”
Violators of TERO requirements can face a variety of penalties that range from denial, suspension or termination of business on the reservation to civil fines of $500 per day per violation.
Getting into compliance
The ordinance requires any contractors that are “100 percent owned and controlled by members of the Three Affiliated Tribes get first preference on all contracts and subcontracts in connection with oil and gas exploration and production, including ancillary services.”
Enforcement of the TERO ordinance has historically been limited to crews such as roughnecks and truck drivers, said North Dakota Petroleum President Ron Ness, but now it is hitting companies that have been working on the reservation for years. KLJ, an engineering firm headquartered in Bismarck, works for some of the companies that received the cease and desist orders. Government Relations Director Sandy Tabor told Petroleum News Bakken that KLJ is willing to help contractors get into compliance, particularly since her office has developed good relationships with tribal government.
“We’re trying to make sure, if any way, we can help our contractors to get into compliance, however that may be,” she said.
She anticipates the cease and desist orders will slow the progress of projects on the reservation until the violations are resolved with individual companies.
Questioning safety and expertise
In most cases, Redfox said, the violations occurred when companies didn’t go through the proper bid process to allow tribal companies the opportunity for employment. According to TERO rules, jobs need to be bid to tribal companies, and if the bids are within 2 percent of the low bid and the qualifications fit, operators are required to hire them. Redfox said there are approximately 140 tribal companies working in the oil and gas industry on the reservation. Most of the violations can be easily remedied by working with the TERO office, he said, to bid the work properly and obtain a necessary license.
Ness told Petroleum News Bakken that the industry has attempted to employ as many tribal companies as possible, but it isn’t always feasible. He adds that the highly qualified companies being forced off the reservation due to the violation has raised some concerns.
“It starts getting into the safety and technical expertise issues,” he said. “They (operators) have to ensure they have competitive opportunities to bid work in terms of the quality of work and available expertise.”
But Redfox stands behind the work of tribal companies.
“Usually when someone puts in a bid they have the men or equipment to handle something like that,” he said. “When we do a pipeline or even a big project, we have all these bids and they’re going to take a closer look at what they’re capable of handling, and if they’re not up to par, that would disqualify them.”
Redfox said companies operating on the reservation who have contracted with a tribal company can continue to hire that tribal company for additional work without re-bidding. He reiterated that the cease and desist order is to get tribal members back to work, but “it’s not like we’re going to shut things down, unless it’s something major,” he added. He said that Sacagawea Pipeline Co., an affiliate of Paradigm Energy Partners, was one company working on a large project that was in violation of the ordinance but the TERO office has since resolved those issues with the company. The pipeline is being built to send crude oil from various points south of Lake Sakakawea in and around Johnson’s Corner and Keene in McKenzie County to rail and pipeline destinations in Palermo and Stanley.
“It’s a simple fix,” Redfox said. “They’ve just got to follow the rules and regulations we set forth.”
check
