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General Memorandum 11-121

General Memorandum 11-121
Indian Tribal Energy Development and Self-Determination Act Amendments Introduced; Committee to Hold Listening Session in Portland, Oregon, on October 31

On October 12, 2011, Senator Barrasso (R-WY), Vice Chairman of the Senate Committee on Indian Affairs (Committee), introduced S 1684, the Indian Tribal Energy Development and Self-Determination Act Amendments of 2011. In his floor statement, Senator Barrasso said, "For years, Indian tribes have expressed concerns about how Federal laws and regulations governing the management of trust resources, including energy resources, create significant delays and uncertainty in development proposals. This bill represents an effort to deal with some of those concerns."

If signed into law, this would be the first major piece of national Indian energy legislation since 2005 when Congress enacted the Indian Tribal Energy Development and Self-Determination Act (Title V) as part of the Energy Policy Act. The bill also builds upon the work of former Committee Chairman Byron Dorgan (D-ND) who drafted and introduced the Indian Energy Parity Act of 2010 after conducting a number of listening sessions across Indian Country.

The new bill reflects the suggestions from Indian Country, such as those heard at a May 19, 2011 listening session. As of this writing, the bill's co-sponsors include: Committee Chairman Daniel Akaka (D-HI) as well as Senators John Hoeven (R-ND); John McCain (R-AZ) and John Thune (R-SD). In his floor statement Chairman Akaka explained that "A number of tribes are already working in the areas of traditional and renewable energy production, energy transmission, and energy planning," while noting that, "It remains challenging for Indian tribes to develop adequate information about their energy resources, to obtain interconnection to the electric transmission grid, and to partner with private entities to engage in energy projects."

S 1684 is composed of two titles. Title I is "Indian Tribal Energy Development and Self-Determination Act Amendments" and Title II is "Miscellaneous Amendments." The bill can be downloaded from the Committee's website: http://indian.senate.gov/issues/legislations.cfm.

Amendments to the 2005 Act

Title I would amend certain provisions of Indian Tribal Energy Development and Self-Determination Act ("the 2005 Act"), most of which is codified at 25 U.S.C. §§ 3501-3506. Title V repealed and replaced what had been Title 26 of the Energy Policy Act of 1992.

The 2005 Act authorizes an option for streamlining the negotiation of leases, rights-of-way, and business agreements on tribal trust or restricted land, a mechanism called a "tribal energy resources agreement" (TERA). A tribe that enters into a TERA with the Secretary of the Interior can eliminate the requirement to have the Secretary approve leases, rights-of-way, and business agreements. To date, however, no tribe has successfully executed a TERA. S 1684 would make a few changes relating to TERAs intended to improve this mechanism. One change would be that, if the Secretary does not disapprove a TERA in 270 days, it would be deemed approved. Another change would affect the determination by the Secretary as to whether a tribe has demonstrated that it has the capacity to regulate energy resources pursuant to a TERA – if a tribe has carried out a Self-Determination contract or Self-Governance compact that includes programs relating to the management of tribal land for three consecutive years without material audit exceptions, such a record will be sufficient to demonstrate capacity.

The bill would make several other changes relating to TERAs, including: clarifying the effects of a TERA on the federal trust responsibility; limiting challenges to environmental review under a TERA to "interested parties," as determined by the Secretary; directing the Department of the Interior to make available to TERA tribes their "shares" of federal funding; allowing the pooling, unitization, or communitization of energy mineral resources; and explicitly preserving tribal sovereign immunity.

In addition to the changes relating to TERAs, S 1684 includes a new option for eliminating the requirement to have the Secretary approve leases, rights-of-way, and business agreements on tribal trust or restricted land. Such transactions between a tribe and a certified "Tribal Energy Development Organization" (TEDO) would no longer require Secretarial approval. The concept of a TEDO would replace "Tribal Energy Resource Development Organization" as defined in the 2005 Act. A TEDO would be:

(A) any enterprise, partnership, consortium, corporation, or other type of business organization that is engaged in the development of energy resources and is wholly owned by an Indian tribe …; or
(B) any organization of 2 or more entities, at least 1 of which is an Indian tribe, that has the written consent of all Indian tribes participating in the organization …

Among the requirements for certification of a TEDO by the Secretary is that a majority interest must be owned and controlled by a tribe (or by more than one tribe). In addition to being authorized to enter into leases, rights-of-way, and business agreements with a tribe without Secretarial approval, a TEDO could also apply for grants, loans, loan guarantees, and other assistance.

The bill would make several other amendments to the 2005 Act. One amendment would add "planning" to the assistance program administered by the Department of the Interior (DOI). Under the bill, DOI would have a mandate to provide technical assistance to tribes to develop energy plans, which could include:

(i) plans for electrification;
(ii) plans for oil and gas permitting, renewable energy permitting, energy efficiency, electricity generation, transmission planning, water planning, and other planning related to energy issues;
(iii) plans for the development of energy resources and to ensure the protection of natural, historic, and cultural resources; and
(iv) any other plans that would assist an Indian tribe in the development or use of energy resources.

In the competitive grant program administered by the Department of Energy (DOE), the bill would add tribal capacity building for managing energy development and energy efficiency as an authorized activity. The bill would add intertribal organizations as eligible applicants. The bill would also mandate the Secretary of Energy to promulgate regulations to implement the DOE guaranteed loan program for tribes and TEDOs.

Miscellaneous Amendments

Hydropower Licensing. Title II of S 1684, captioned "Miscellaneous Amendments" consists of three sections. Section 201 would amend the Federal Power Act (16 U.S.C. § 800(a)) to include Indian tribes in the preference that states and municipalities are given for hydroelectric project licenses issued by the Federal Energy Regulatory Commission. This amendment would not affect licenses issued or pending at the date the bill is enacted into law.

Biomass Demonstration Project. Section 202 of the bill would amend the Tribal Forest Protection Act of 2004 (PL 108-278, codified at 25 U.S.C. § 3115a) to establish a Tribal Biomass Demonstration Project. The bill would authorize the Secretary to enter into agreements with tribes to carry out demonstration projects to promote energy production from woody biomass, including biofuels, heat and electricity generation. In each of the five fiscal years from 2013 through 2017, the Secretary could select up to four new demonstration projects, applying selection criteria set out in the bill.

Weatherization Assistance Program. Section 203 of the bill would amend section 413(d) of the Energy Conservation and Production Act of 1976 (42 U.S.C. § 6863(d)) to change the process through which tribes can seek direct funding from the DOE Weatherization Assistance Program (WAP). Under current law, WAP funding is allocated to the states, and the weatherization services are typically provided by nonprofit organizations that receive funding from state energy offices. The only way for tribes to receive direct funding on behalf of their low income members is if DOE makes a determination that "the low-income members of an Indian tribe are not receiving benefits under this part that are equivalent to the assistance provided to other low-income persons in such State" (Emphasis added) and only a few tribes actually receive direct funding. Section 203 would allow a tribal organization serving the low-income members of the tribe to apply to DOE for a direct grant, and DOE would instead have to determine that the services to be provided through the tribe would be equal to or better than services through the state.

Issues Not Addressed in the Bill

Over the past several years, the National Congress of American Indians has been coordinating efforts of tribal advocates to keep track of legislative developments relating to energy. A number of issues have been identified that are not addressed in the bill. It is our understanding that the Committee is interested in receiving input from tribes on issues that could be added to the bill. Some issues may present greater challenges, in political terms, than others.

One set of issues that is not addressed in the bill has to do with tax incentives for renewable energy development (mainly, the Production Tax Credit and the Energy Investment Tax Credit). Since tribes are not taxable entities, tax credits have no value for projects that are owned by tribes. This is a real obstacle to utility-scale renewable electricity projects in Indian Country. Since projects owned by taxable business entities can benefit from tax incentives, tribal projects are not competitive in the market unless they join with partners that are taxable, but that means tribes cannot be equity owners of such projects, except by using complicated partnership-flip agreements. In the last several sessions of Congress, bills have been introduced to solve this problem, by authorizing tribes that are owners of renewable energy projects to transfer their share of the tax credits to taxable business partners. A related issue concerns energy efficiency tax credits. Under current law, states and local governments can allocate these credits to taxable developers of energy efficiency projects, but tribal governments cannot.

Another set of issues concerns federal assistance programs for states and local governments that do not include tribes. One example is the federal program to help states and local governments enhance the energy efficiency requirements in their building codes. Another example is the federal program to carry out energy efficiency improvements in institutional buildings, including schools and hospitals.

Listening Session

The Senate Committee on Indian Affairs will be conducting a listening session during the annual convention of the National Congress of American Indians in Portland, Oregon, on October 31, 2011, at 4:30 pm in room A105 of the Oregon Convention Center, 777 NE Martin Luther King, Jr. Blvd., Portland, OR 97232. S 1684 is one of the bills on the agenda for that session. In addition, Chairman Akaka has indicated that the Committee intends to hold hearings on this bill. Those wishing to RSVP for the listening session may do so by phone to Christiane Cardoza at (202) 224-2251 or by email to listeningsession@indian.senate.gov

If you would like further information regarding S 1684, please contact us at the information below.

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Inquiries may be directed to:
Dean Suagee (dsuagee@hobbsstraus.com)
Chris Stearns (cstearns@hobbsstraus.com)

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