A16_JOFOC_22-0208_redacted_1.pdf

U.S. DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

SINGLE SOURCE DETERMINATION USING

SIMPLIFIED ACQUISITION PROCEDURES (SAP) UNDER THE

SIMPLIFIED ACQUISITION THRESHOLD (SAT)

AUTHORITY: FAR 13.106-1(b)(1)

PR # 40593951

CONTROL # 22-0208

1. Contracting Activity: This document is a justification for single source determination under

Simplified Acquisition Procedures (SAP) under the Simplified Acquisition Threshold (SAT) for the Department of the Interior, Bureau of Indian Affairs, Eastern Oklahoma Regional Office.

2. Description of supplies or services required to meet agency needs.

The following services are required to support the EORO’s revision of the Osage oil and gas regulations in 25 C.F.R. part 226:

- Completion of the remaining tasks in Phase II of the original contract for economic and regulatory impact analyses – Completion of analyses evaluating the direct and indirect economic impacts attributable to the regulatory revisions in the Proposed and Final Rules.

- Public comment support - Assistance aggregating, organizing, summarizing, and responding to public comments the BIA receives on the Proposed Rule.

- Public meeting support - Management of public meeting logistics and on-site meeting development and facilitation. This includes scheduling, venue preparation, audio-visual equipment, court reporter services, translation services, sign-in sheets, distribution of meeting materials, and recording public comments, if any.

- Administrative record preparation – Preparation of a comprehensive administrative record for the rulemaking process.

The Period of Performance is approximately one year.

3. Identification of the single source to be solicited.

Industrial Economics, Incorporated (IEc) 2067 Mass Avenue, Suite 4 Cambridge, MA 02140-1340

(617) 354-0074

4. Reason for authority cited. The Contracting Officer has determined the circumstances of the contract deem only one source reasonably available.

Urgency – The nature of the requirement has been deemed urgent and following competitive procedures would result in unacceptable delays.

5. Rationale: Provide an explanation that supports the reason cited in #4.

The rationale below is comprised of bullet points providing an overview of the circumstances supporting the BIA’s determination that a single source is available to perform the services contemplated, followed by a detailed narrative explanation of the relevant justifications.

The rulemaking process for the Osage Oil and Gas Regulations is well underway with the Proposed Rule scheduled for submission to the Federal Register for publication in September 2022.

The statutory and regulatory regime governing the leasing and development of oil and gas within the Osage Mineral Estate is different than the regime governing oil and gas throughout the rest of Indian country. At this stage in the rulemaking process, knowledge of these differences is critical to providing immediate assistance and preventing delay of the rulemaking process.

IEc has been working with the BIA in support of revision of the Osage oil and gas regulations since 2015 under an existing Task Order associated with a Blanket Purchase Agreement (BPA) administered by the Fish & Wildlife Service (FWS), Division of Economics. That Task Order is for IEc’s preparation of economic and regulatory analyses for the Proposed and Final Rules satisfying the requirements in Executive Orders 12866 and 13211, the Regulatory Flexibility Act, and Unfunded Mandates Reform Act, and includes public comment support and administrative record preparation relating to those analyses. The Task Order contemplates that work will be completed in two phases. IEc completed Phase I of the Task Order but has not completed all tasks in Phase II.

The additional public comment, public meeting, and administrative record services identified in paragraph 2 above are an extension of services IEc is already providing to the BIA under the existing Task Order.

Typically, the BIA would address the need to extend the period of performance under the existing contract and add services associated with the work the contractor is already providing via a contract modification. In late August 2022, however, FWS advised that it would not allow modification of the contract (despite prior representations to the contrary) and that it would be closing out the contract at the end of FY 2022. FWS does not wish to continue administering the

BIA’s contract with IEc because it no longer has a BPA with IEc. In essence, FWS simply wants the contract off its books.

The BIA cannot publish the Proposed Rule unless and until IEc completes the required draft economic and regulatory analyses. Further, the additional public comment and public meeting support the BIA seeks are required immediately upon publication of the Proposed Rule.

IEc has on-the-ground knowledge of operations within the Osage Mineral Estate as Phase I of the existing Task Order required IEc to gain a complete understanding of the regulatory baseline. To that end, IEc traveled to Pawhuska, Oklahoma and met with the Regional Director, Osage Agency Superintendent, and Osage Agency staff to discuss current operating practices and market considerations; accompanied the BIA on site visits to representative oil and gas facilities within the Osage Mineral Estate; and compiled, reviewed, and analyzed historical and contemporaneous data for Osage Mineral Estate.

IEc retained one of the foremost experts on Osage oil and gas (of which there are very few) to assist them with their work on the regulations and his knowledge and experience will be critical to helping the BIA analyze and respond to public comments on the Proposed Rule.

There are several justifications for the BIA using a single source contract. First, and most critically, the BIA’s retention of a contractor to perform the work contemplated is time sensitive. On-time submission of the Proposed Rule to the Federal Register is a priority for the Assistant Secretary – Indian Affairs, BIA Director, and BIA Eastern Oklahoma Regional Director as revision of the regulations in 25 C.F.R. part 226 is necessary to address deficiencies highlighted in prior litigation by the Osage Nation against the Department for mismanagement of its oil and gas resources and revenues as well as an Office of Inspector General (OIG) report.

The Proposed Rule is complete, OMB has been briefed and issued it significance determination, and the BIA is simply completing the final two procedural requirements for publication – completion of the draft economic and regulatory analyses (being prepared by IEc) and Departmental surname. The additional public comment, public meeting, and administrative record services identified are directly associated with the Proposed Rule.

Specifically, the BIA seeks assistance planning and facilitating the public meeting that must be held immediately following publication of the Proposed Rule; seeks assistance handling and responding to the public comments on the Proposed Rule; and administrative record services of which the public meeting for, and public comments on, the Proposed Rule are an integral part. The BIA cannot submit the Proposed Rule to Federal Register without a contract in place for these services. Competition of this contract will therefore delay publication of the Proposed Rule and harm the Department’s interests.

Moreover, were there to be a contract dispute by a vendor who loses the bid, the Proposed Rule could be delayed for a substantial amount of time. The draft economic analysis IEc is preparing for the Proposed Rule is based on market and Osage Mineral Estate data for a ten-year period. In the event of a contract dispute, the possibility exists that the delay in publication of the Proposed Rule could result in some or all the data that IEc relied on becoming stale. In such instance, the BIA would be left with a draft economic analysis for the Proposed Rule that no longer accurately represents the baseline or relevant markets and, therefore, may not withstand public scrutiny or judicial review. Thus, the BIA would have to expend additional funds to have the analysis updated prior to publishing the Proposed Rule.

Second, IEc has not completed all tasks under Phase II of the existing Task Order for the economic and regulatory analyses. The existing Task Order contemplates that IEc will summarize and draft the BIA’s responses to all public comments on the Proposed Rule addressing issues related to economic impacts, prepare a draft final economic analysis and supporting regulatory analyses following conclusion of the public comment period on the Proposed Rule, and provide a written report for use in the preamble of the Final Rule. IEc cannot complete those tasks prior to publication of the Proposed Rule. Thus, FWS will be closing out the existing Task Order before IEc completes deliverables that are critical to the rulemaking.

Competition of the unfinished tasks under the existing Task Order would be inefficient and problematic. The tasks in Phase II of the existing Task Order are part of a continuum where each task relates to and relies upon the tasks before it. Further, much of the ability to complete the tasks in Phase II are built upon knowledge gained in Phase I. If a contractor other than IEc were to come in at this juncture and take over the economic and regulatory analyses, their lack of knowledge of the Osage Mineral Estate, rulemaking process, and revisions to the regulations, combined with their lack of involvement in completion of the prior Phase I and Phase II tasks would, effectively, hobble them. A new contractor would have to duplicate work IEc previously completed in Phases I and II (likely at a cost to the BIA) just to try and get up to speed. As previously noted, however, there is little time for a new contractor to engage in that exercise. Further, it is inherently complicated to have one contractor complete the draft economic analysis and another, who was completely removed from that process, respond to the public comments regarding that analysis and prepare the final economic analysis that must arise therefrom and be wholly consistent therewith.

Third, the contractor selected for this work must have an existing, in-depth knowledge of oil and gas operations within the Osage Mineral Estate. The Osage Mineral Estate is governed by a unique statutory and regulatory regime. Unlike the rest of Indian country, where the BIA shares regulatory authority for oil and gas leasing and development on Indian lands with BLM and ONRR, the BIA has sole jurisdiction over such operations within the Osage Mineral Estate. The reason for this incongruity is that the statutes authorizing the BIA, ONRR, and BLM to manage oil and gas leasing and development in the rest of Indian country, and the regulations promulgated thereunder, contain language explicitly excluding leases of the Osage Mineral Estate from coverage. Due to the need for immediate assistance addressing substantive comments on the Proposed Rule, the selected contractor must have intimate knowledge of Osage oil and gas operations and the current and proposed regulatory requirements. It is impossible for a contract who was uninvolved in the rulemaking to date to have a working knowledge of the BIA’s revisions to the regulations and the bases for those revisions. IEc has been working with the BIA as part of this rulemaking effort since 2015 and has the knowledge requisite to providing the services needed. Moreover, IEc has strong experience in energy sector and retained one of the only “experts” regarding the Osage Mineral Estate to assist them with their work. That individual was involved in the BIA’s prior effort to revise the regulations in 25 C.F.R. part 226 and, therefore, is uniquely situated.

Fourth, the contractor selected must have an existing knowledge of stakeholders’ interests in the Osage Mineral Estate and Proposed Rule to properly navigate and assist with the public meeting, analyze public comments, and prepare appropriate responses thereto. Stakeholders for the Proposed Rule include the Osage Nation, Osage Minerals Council, Osage Headright holders, Osage Producers Association, Osage County oil and gas operators, Osage County surface owners, and the State of Oklahoma. Relations between the Osage Nation and Osage County surface owners is demonstrative of the sensitive and highly divergent interests of stakeholders.

The 1906 Act allotted the Osage Nation’s reservation lands but severed the surface estate from the subsurface mineral estate (“Osage Mineral Estate”), reserving all oil, gas, and other minerals to the Osage Nation in perpetuity. Thus, the United States holds the Osage Mineral Estate in trust for the benefit of the Osage Nation pursuant to the 1906 Act. The 1,474,500-acre Osage Mineral Estate is a 100% split estate – the Osage Nation owns all right, title, and interest in the subsurface minerals and the surface estate is held almost entirely in fee (as opposed to trust or restricted status).

As the Osage Nation owns the Osage Mineral Estate (comprised of all subsurface minerals beneath Osage County, Oklahoma), even if you own surface lands in Osage County, you do not own the oil and gas beneath your lands. As the Osage Mineral Estate is the dominant estate, surface owners’ interest in their lands is subordinate to that of the Osage Nation;

surface owners cannot lease their lands for oil and gas mining, nor can they prevent the Osage Nation from executing leases for oil and gas mining on their lands. Ultimately, however, surface owners do not profit in any way from oil and gas mining on their lands. As a result, Osage County surface owners routinely take administrative or legal action to try and delay, or prevent, drilling on their lands to the detriment of both the Osage Nation and the Osage County oil and gas operators who leased the lands. Osage Headright holders also have a vested interest in continued oil and gas development, as they are the ones who receive all revenues derived from the Osage Mineral Estate.

Relations between the BIA, Osage Minerals Council, and Osage Producers are also demonstrative. The BIA must update the regulations in 25 C.F.R. part 226 because they are outdated, inadequate, and expose the Department to litigation risk. The Osage Minerals Council, an independent agency of the Osage Nation that manages development of the Osage Mineral Estate, agrees that the regulations require revision. Despite that, however, the BIA’s prior effort to revise the regulations through negotiated rulemaking with the Osage Nation and Osage Minerals Council ultimately ended in litigation. Upon publication of the original Final Rule, the Osage Minerals Council and Osage Producers Association filed suit to prevent the Rule from taking effect. Due to that litigation, the BIA had to voluntarily remand the Final Rule and engage in the current agency rulemaking effort. While the Osage Minerals