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Opportunities In Renewable Energy Projects In Indian Country

Indian Law Update Roger K. Ferland, Luis A. Ochoa, Jeremy A. Lite

Quarles & Brady LLP is committed to assisting tribes as they pursue renewable energy initiatives on their lands. This update outlines some of the current opportunities available to tribes to pursue funding of renewable energy projects. We have also included a brief discussion of an opportunity available to tribes to voice concerns regarding barriers that they face in developing renewable energy on tribal lands.

Proposed Federal Economic Recovery Package Provides Possible $2B Bond Initiative for Tribal Economic Development

In the current U.S. Congress, Representative Charles Rangel of New York has introduced H.R. 598, the "American Recovery and Reinvestment Tax Act of 2009," to provide an opportunity for tribes to access a portion of the economic recovery package. This bill provides for federal support to issue up to $2 billion in tax-exempt "tribal economic development bonds." Investors could purchase the bonds and receive interest on them, and the interest income received is not subject to federal tax. The bill would not permit tribes to apply such revenues to "any portion of a building in which class II or class III gaming is conducted or housed" or for "any facility located outside the Indian reservation," but tribes would be able to apply such revenues to renewable energy projects. Information about H.R. 598 can be found here.

In addition to the bill discussed above, the unavailability of tax credits for tribal renewable energy projects is on the radar screen of other Congressional representatives. In 2007, Representative Raul Grijalva of Arizona introduced H.R. 1954 to address the inability of tribes to utilize renewable energy tax credits as a means of attracting outside investors as partners in renewable energy projects. The bill would have allowed tribes to utilize the tax credits for electricity produced from renewable resources by transferring such credits to any other person who has an ownership interest in the renewable energy project; however, the bill was never passed. Tribes should consider whether the provisions of the Grijalva bill should find their way into the renewable energy legislation currently before Congress. Information about H.R. 1954 can be found here.

We encourage tribes to approach Congressional representatives about the above referenced bills and the economic recovery package to discuss the importance of renewable energy projects and the barriers tribes face. Although these renewable energy issues have been touched upon, there is much work that needs to be done. At the recent Tribal Leaders Forum, Senator Daniel Inouye called on tribes to "Provide [him] with the descriptions of the initiatives that you believe will bring more jobs and economic opportunities to your communities…" Tribes should take advantage of the invitation to voice their concerns and propose solutions so that they have the opportunity to develop successful renewable energy projects.

The Department of Energy ("DOE") Tribal Energy Program Offers $3M in Funding to Tribal Entities for Renewable Energy Programs

The Department of Energy ("DOE") Tribal Energy Program is currently seeking applications from federally recognized tribes, tribal consortia, Alaska Native villages or corporations, and tribal energy resource development organizations for funding of eligible renewable energy projects. The deadline for applications is April 1, 2009. Eligible projects include: (1) installation of efficiency improvements to existing tribally owned buildings, including energy efficiency upgrades and renewable energy systems for building heating or cooling; (2) preconstruction activities for renewable energy projects and (3) construction of renewable energy systems for power production. The total estimated available funding is $3,000,000.

Applications proposing the installation of efficiency improvements to existing buildings must demonstrate the potential for a 30% reduction in energy usage. Applications proposing the use of renewable energy systems for building heating and cooling must meet at least 30% of the building heating or cooling load. In addition, applications proposing the construction or development of renewable energy must be for projects producing more than 1 MW at the point of interconnection. Further information can be found on the DOE website or the DOE Renewable Energy Funding Opportunity Announcement.

Quarles & Brady encourages tribes to take advantage of this funding opportunity. Because funding for renewable energy projects in Indian Country is limited, opportunities such as this DOE opportunity are important to pursue.

DOE's Tribal Energy Program Provides Opportunity for Tribes to Voice Concerns Over Barriers to Developing Renewable Energy on Tribal Lands

DOE's Tribal Energy Program is currently requesting information from tribes and other parties interested in the development of renewable energy in Indian Country. This is a request for information only and is not a funding opportunity. However, it offers tribes an opportunity to voice concerns about, and propose solutions to, the barriers facing tribes who seek to develop renewable energy. The information acquired will be used by DOE for internal planning and decision-making purposes. This is a forum in which tribes can raise concerns about tax credits and bonds, while also proposing solutions for these issues.

Quarles & Brady encourages tribes to take action to create the changes that are needed in order to spur renewable energy development in Indian Country, since there are several barriers to developing renewable energy in Indian Country. For instance, as noted above, currently tribes cannot take advantage of the federal tax credits available for renewable energy development as a means of obtaining outside financing of renewable energy projects. Although tribes are not subject to federal taxes, the tax credits available for renewable energy projects are often so large that it is more economical to develop a project on non-tribal lands. Taxable partners interested in developing renewable energy are turning to non-tribal lands to take advantage of the tax credits.

Other barriers that may inhibit renewable energy development on tribal lands include the need in many cases for BIA approval and related, lengthy environmental studies. The delays that often result from project-by-project environmental impact analyses can effectively kill renewable energy development on reservations because it lengthens the time before the development can begin producing power, thereby discouraging investment. It is ironic that environmentally beneficial projects could be derailed by environmental impact studies. Voicing concerns to DOE about this issue could prompt measures to streamline such reviews in the legislation we have described.

To learn more about ways that Quarles & Brady can assist with tribal efforts in renewable energy, please visit our website, contact Roger Ferland at 602-229-5607 / [email protected], Luis Ochoa at 520-770-8702 / [email protected], Jeremy Lite at 520-770-8739 / [email protected] or your Quarles & Brady LLP attorney.

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