Energizing Indian Tribes and America

Mike Connor

As recently noted by the United States Court of Appeals for the District of Columbia, "[s]ince the founding of this nation, the United States' relationship with the Indian tribes has been contentious and tragic." Cobell v. Norton, 240 F.3d 1081, 1086 (D.C. Cir. 2001). Tribes have had to suffer the results of the federal government's ever-changing and sometimes schizophrenic approach to federal Indian policy. Fortunately, however, the eras of removal, assimilation, termination and reorganization have passed and given way to the present policies of self-determination and self-governance. Clearly, there is still much progress to be made in restoring the vitality, strength and economic self-sufficiency of many Indian nations. But sustained federal commitment to self-determination and self-governance, coupled with meaningful government-to-government consultation, bring the hope that the twenty-first century will begin to write a different history for Indian tribes in this country.

One area where the 107th Congress has a chance to write part of that history is in energy policy. Instability in the world, coupled with increasing demand, changing markets and ongoing environmental concerns, are causing the United States to reassess its current energy policies. Accordingly, the Congress, for the first time in a decade (See Energy Policy Act of 1992, Pub. L. 102-486 (EPACT)), is actively considering comprehensive energy legislation with the goals of increasing domestic energy supplies (through gains in both production and efficiency in use), diversifying energy supplies, and maintaining environmental protections. Tribal representatives have argued that Indian tribes can and should play a strong role in the formulation of a new national energy policy. Their arguments are being heard as evidenced by legislation introduced by Senators Tom Daschle and Jeff Bingaman. This legislation, entitled the Energy Policy Act of 2002 (Energy Policy Act), contains an Indian energy title as well as several other provisions that would direct the federal government to work with Indian tribes in a partnership that helps tribes develop and utilize energy resources. The Act was originally introduced as S. 1766, but will be taken up for consideration by the Senate as a substitute amendment (Amend. No. 2917) to S. 517.

This article discusses the role that Indian tribes play in domestic energy production. It also describes provisions in the Energy Policy Act that relate to Indian energy and how those provisions might expand the opportunities for tribes to both supply and utilize energy resources.

Indian Country and Energy Development

Native American energy matters raise two different basic issues. First, tribal lands contain significant and diverse energy resources and therefore have a role to play in national energy policy. Second, a lack of energy infrastructure has left many reservation residents unable to fulfill their basic energy needs. Comprehensive energy legislation addressing Native American issues must therefore assist tribes in developing their energy resources and also improve on-reservation quality of life through increased access to energy supplies.

With respect to the first issue, Indian lands contain a significant share of domestic energy resources. The Bureau of Indian Affairs estimates that there are almost 90 reservations with energy resource potential, including oil and gas, coal and coal bed methane, wind, and geothermal resources. Over the last 20 years, Indian lands have contributed approximately 11% of the nation's coal and onshore oil and natural gas production, and it is estimated that only 25% of the oil resources and 17% of the natural gas resources on tribal lands have been developed. Bureau of Indian Affairs, National Energy Policy Development Group Report (2001) (BIA Report). The level of tribal contribution to national energy supplies could therefore increase in the future given available supplies of fossil energy resources and the potential development of significant renewable energy resources. Clearly, Indian lands hold significant potential to help the United States achieve an acceptable level of energy independence. Developing these resources though - particularly those such as wind power that have the capability to enable tribes to generate electricity on-reservation - requires dealing with current obstacles such as limited transmission capacity.

As for on-reservation energy needs, there is much to be done. Just as an adequate and assured energy supply is central to the economic prosperity of the United States, it is also central to upgrading the quality of life and improving the chances of economic prosperity on impoverished Indian lands. A recent Department of Energy report estimated that 14.2% of all Native American homes on reservations have no access to electricity, compared to just 1.4% of all U.S. households. See Energy Information Administration, Energy Consumption and Renewable Energy Development Potential on Indian Lands (April 2000) (EIA Report). The situation is especially acute on the Navajo Reservation where approximately 37% of Navajo homes do not have electricity. Moreover, the average Indian household spends 4% of its income on electricity, twice that of the average for all U.S. households. The high cost of energy is particularly harmful to reservation communities, where unemployment averages 43%. See BIA Report. Another 33% who live in and around those communities earn wages below the poverty level. Given these statistics, it is readily apparent that Indian tribes with substantial energy resources and high unemployment rates have a critical interest in enhancing their participation in the development of energy resources as well as providing electrical services to their reservation communities.

Following is a summary of the provisions in the Energy Policy Act of 2002 that will assist Indian tribes in developing and utilizing energy supplies, particularly renewable energy resources. In general, this will be accomplished by providing financial and technical assistance, removing barriers to development consistent with tribal self-determination, and creating markets for Indian-developed energy supplies.

Energy Policy Act - Energy Title (Division A, Title IV)

As noted earlier, the Energy Policy Act contains a specific Indian energy title and several additional provisions intended to help address a number of tribal energy needs. In general, the goals of this title are to (1) establish a comprehensive program to assist tribes in developing their resources, (2) build more energy infrastructure on Indian lands, and (3) assist with overall energy production and transmission access. The specifics of the title follow:
Sections 401-403. Comprehensive Indian Energy Program. These sections create an Office of Indian Energy within the Department of Energy (DOE) and establish a comprehensive energy program within DOE to assist tribes in meeting their energy needs and expanding opportunities to develop energy resources on tribal lands. It provides for a grant program and a loan guarantee program to support tribal energy development activity, and it also allows federal agencies to give a preference to the purchase of electricity or other energy products that are produced on Indian lands by a tribal government or tribal business enterprise.

Of particular note, the secretary of Energy's existing authority under EPACT to provide grants and technical assistance to tribes would be broadened under the Energy Policy Act. Such assistance will help tribes create long-term energy strategies, develop tribal utilities and connect with existing electric power transmission facilities located on or near tribal land. The loan guarantee program should also play a strong role in achieving these goals by increasing tribal access to the financial resources necessary to develop energy-related projects.

Section 404. Siting Energy Facilities on Tribal Lands. This section's purpose is to create a more efficient process to develop tribal energy projects that is consistent with tribal sovereignty and self-determination. This goal can be achieved by permitting tribes to develop and manage a program to approve agreements, leases, and rights-of-way associated with certain energy facilities located on tribal lands. Under this section, tribes will be authorized to approve such arrangements by submitting regulations governing leases, rights-of-way, and an environmental review process to the secretary of the Interior for approval. Once the secretary approves the regulations, a tribe may approve development agreements, leases, and rights-of-way for generation, transmission, distribution or energy processing facilities on tribal lands without separate secretarial review. Ultimately, improvements in the approval process should assist tribes in making timely business decisions regarding development of their energy resources and therefore better competing in the energy field.

Section 405. Indian Mineral Development Act Review. This section requires the secretary of the Interior to undertake a review of activities under the Indian Mineral Development Act and make recommendations to improve tribal opportunities to develop energy resources and remove existing barriers to such development.

Section 406. Renewable Energy Study. This section requires the secretary of Energy, on a biennial basis, to report on energy consumption and renewable energy development on Indian land, including identifying barriers to the development of renewable energy on tribal land.

Section 407. Federal Power Marketing Administrations. This section authorizes the Bonneville Power Administration and the Western Area Power Administration to provide technical assistance to Indian tribes seeking to use high-voltage transmission lines for the delivery of electrical power. The assistance would be funded through appropriations or at cost to a tribe so that rate-paying customers would not be affected. The secretary of Energy is also required to consult with tribes and report to Congress on Indian use of federal power allocations, including recommendations to improve such use.

Section 408. Study of Combined Wind and Hydropower Demonstration Project. This section requires the secretary of Energy, in coordination with the secretary of the Interior and the Army Corps of Engineers, to conduct a feasibility study of developing a demonstration project that would use wind energy generated by Indian tribes and hydropower generated by the Army Corps of Engineers on the Missouri River to supply firming power to the Western Area Power Administration.

Energy Policy Act - Tribal Renewable Energy Incentives (Division A, Title II, Subtitle E)

There are no incentives currently in place for the development of renewable energy on Indian lands, notwithstanding the significant potential that exists. The Department of Energy has reported that 61 Indian reservations (including tribal jurisdictional areas in Oklahoma) have renewable energy resources such as wind, solar, biomass and geothermal that potentially could be developed economically for central-station generation. See EIA Report. Moreover, with today's rapid improvements in technology, renewable power generation is increasingly viable in the energy marketplace, thereby enhancing the role that Indian nations can play in supplying domestic energy needs. As an example, substantial wind resources have been identified on Indian lands in the northern Plains and Four Corners regions. DOE's National Renewable Energy Laboratory estimates that on Indian reservations in North Dakota and South Dakota alone, there exists 276,000 megawatts of potential wind energy (a megawatt is sufficient energy to power three houses for a full year). Overall, roughly forty-five reservations have areas with class 5 or 6 winds, which are optimal for wind power development. To help cultivate this potential and diversify domestic energy supplies, the Energy Policy Act contains a number of provisions that would create significant incentives to develop tribal renewable energy resources:

Section 261. Renewable Energy Production Incentive. This section amends EPACT to include Indian tribes within the list of entities eligible to receive funding from the Renewable Energy Production Incentive program. This DOE program provides incentive payments for electricity produced and sold by qualifying renewable energy generation facilities. Funding for the program is made available through annual appropriations.

Section 263. Federal Purchase Requirement. This section requires the federal government to ensure that a certain percentage of the electric energy that it consumes shall be derived from renewable energy sources. The percentage gradually increases through the year 2010. Of the requisite renewable energy purchases, 10% shall be acquired from Indian tribes or tribal businesses if available on the market.

Section 265. Federal Renewable Portfolio Standard. This section establishes a Renewable Portfolio Standard that requires retail electric suppliers to obtain a minimum percentage of their electricity from renewable energy sources. Tradable credits are used to account for the quantity of renewable energy being utilized and to provide retailers flexibility in fulfilling the requirement. Subsection (d)(3)(C) creates an incentive to acquire tribal supplies in meeting the requirement by providing retail suppliers with double credit when they utilize renewable energy generated on Indian land.

Energy Policy Act - Electricity Reform (Division A, Title II)

In discussing energy policy, tribal representatives have made clear that transmission capacity issues are integral to a comprehensive Indian energy strategy, particularly the development of renewable resources. In concert with other provisions, electricity reform should assist tribes in accessing transmission and distribution systems, thereby providing flexibility to either market tribal-generated power to the grid or use the power on-reservation.

The Energy Policy Act would address this concern by (1) requiring the Federal Energy Regulatory Commission (FERC) to establish uniform standards and procedures for the interconnection of electricity generators to the interstate distribution grid; (2) allowing FERC to ensure that transmission service rates charged by many unregulated transmitting utilities are comparable to what they charge themselves, and that the terms and conditions are comparable to those required of other utilities; (3) requiring transmitting utilities to provide service for intermittent generators - such as wind - at rates and terms that do not penalize the generator for scheduling deviations; and (4) requiring states to consider standards for competitive access to the distribution grid, competitive pricing of service, simplified contracts for connection to the distribution grid, connection of distributed generation to the distribution grid, minimum fuel and technology diversity, and fossil fuel efficiency.

Conclusion

The Energy Policy Act of 2002 holds much promise for Indian country and tribal leaders have provided significant support for the legislation. See, e.g., Bingaman Energy Bill Would Help Tribes, Albuquerque Journal (Jan. 7, 2002). Moreover, the legislation was developed with bipartisan input from the Senate Indian Affairs Committee and is consistent with President Bush's Energy Plan, which calls for more domestic energy production. See National Energy Policy - Report of the National Energy Policy Development Group (May 2001). The Senate has begun to debate and act on the Energy Policy Act.

Notwithstanding the widespread support that exists on Indian energy issues, there are still several unrelated issues that are potential impediments to final enactment of the necessary legislation. Included among these issues are the average fuel economy standards for cars and light trucks (so-called CAFÉ standards), many elements of electricity reform, and opening up the Arctic National Wildlife Refuge to oil exploration. Assuming these issues do not derail enactment of the bill, the Senate would then conference with the House of Representatives, which passed an energy bill late last summer. See H.R. 4, Securing America's Future Energy Act of 2001 (Sept. 4, 2001). The House and Senate conferees would have to reach agreement on controversial issues, and also agree to include the Indian energy sections in the final bill. Those sections were not included in H.R. 4. Assuming ultimate agreement and final enactment by the House and Senate, the bill would go to President Bush for his signature. The President has been a strong advocate for energy legislation and it is likely that he would sign a final bill that includes a number of items addressed in the National Energy Policy Report.

Although the politics concerning comprehensive energy legislation are complicated, it does appear that most people agree that it is time to update our national energy policies. That fact gives hope that some form of broad legislation will be enacted in 2002. The Energy Policy Act addresses the often-ignored trust responsibility that the federal government owes to Indian tribes and their people by including Indian tribes as both important benefactors and beneficiaries of energy reform.

Mike Connor is majority counsel to the Energy and Natural Resources Committee of the United States Senate. The views expressed in the article are those of the author and not the Committee.

President Bush visited the Silver Spring, Maryland, campus of the National Oceanic and Atmospheric Administration on Feb. 14, 2002, to announce his Clear Skies & Global Climate Change Initiatives, the most aggressive initiative in American history to cut power plant emissions, as well as a bold new strategy for addressing global climate change.

The Clear Skies Initiative:
1) Cuts power plant emissions of the three worst air pollutants - nitrogen oxides, sulfur dioxide, and mercury - by 70 percent. The initiative will improve air quality using a proven, market-based approach.