By Kathleen Davis, Associate Editor
June 2, 2003 — According to attorney Karen Atkinson, there are a number of opportunities available for American Indian tribes to reap advantages from partnerships with energy companies. Atkinson, senior counsel to the U.S. Senate Committee on Indian Affairs, recently spoke to EL&P about the topic.
EL&P: What are the new opportunities for energy development on American Indian tribal lands?
Atkinson: Well, there seems to be a lot of focus these days on looking at new sources of domestic energy production. Oil and gas prices are going up. The government is looking at national security issues, and, so, there is an increasing focus on pushing that supply and diversifying that supply.
I think American Indian tribes are uniquely situated to address that problem. Tribes are owners of millions of acres of land nationwide, and, currently, they already contribute a significant share of our domestic energy resources. In the last 20 years, 11 percent of the nation’s onshore oil and natural gas production came from Indian lands, and 11 percent of the coal production came from Indian lands.
Additionally, there is a huge opportunity for tribes to develop renewable energy, and in 2000, the Department of Energy (DOE) did a study-a survey of renewable energy resources on Indian lands. It was a very general study, of course, but they concluded that there were at least 61 tribes that have sufficient renewable energy resources for central station generation or utility-scale generation.
EL&P: Is the energy industry open to developing Indian lands?
Atkinson: I think there is a tremendous interest, with a lot of companies who are trying to figure out the best way to approach and work with tribes. For two years now, the DOE has begun putting together a grant program for tribes to look at the feasibility for developing renewable energy on tribal land.
In fact, one utility-scale, wind-generation [750 kw NEG Micon] turbine on tribal land has been constructed and began operating a couple of months ago in South Dakota on the Rosebud Sioux Nation reservation. They are working with Great Basin Energy up there and selling power to the area U.S. Air Force base, as well as Native Energy in Vermont.
EL&P: Are the tribes themselves open to that development?
Atkinson: Many Indian reservations are grossly underserved, as far as electrical services to their own communities. They have the highest percentage of homes in the nation without electricity, and, on a lot of reservations, you also have high unemployment. So, energy development-and, in particular, renewable energy development-can provide needed jobs and training to Indian communities. So, yes, I believe there is a lot of interest in looking at energy development. The Fort Mojave Reservation in Arizona, for example, partnered up with Calpine, and Calpine built one of the first power plants built on Indian lands as a result of that partnership. And, I think Calpine now has a couple of other tribes they’re talking to about locating a power plant on tribal lands.
Many of the tribes are located in the West, of course, and, therefore, are in somewhat critical or strategic locations-close to pipelines or transmission lines. Additionally, tribes also have water rights, which is critical to power plant development.
EL&P: What hurdles does this development still face?
Atkinson: I think the biggest hurdles are probably financial hurdles, actually. There is a lack of capital investment on Indian reservations, but there are a couple of pending bills in Congress to help attract capital and generate jobs in the energy field for tribes. The Energy Tax Incentives Act of 2003 provides incentives for the tribes.
The Republican Energy Policy in Congress right now also has a title that addresses Indian energy issues. And, there are a couple of important pieces within that title that would help create a market for energy developed on Indian lands. One of the thoughts behind that legislation was to provide some sort of financial incentive to developers to locate on Indian lands. One of those incentives is a federal purchase requirement, and the federal government is one of the largest consumers of electricity in the nation, of course, with facilities and buildings and installations nationwide.
The Tax Incentives Act would extend the renewable energy tax credit, and, right now, that tax credit is available to private developers. It’s very key to providing financing and making wind projects economic and financially feasible in rural America. So, this would extend that provision to tribal lands as well.
EL&P: Do you see these pieces of legislation passing Congress and moving forward?
Atkinson: I think the Tax Incentives Act has a very good chance of passing. It has strong bi-partisan support, and it hasn’t been that controversial. I do think some version of that will pass this year.
EL&P: Trace how you see this development unfolding over the next decade and its impact on the tribes themselves.
Atkinson: I think tribes are looking at different models now with energy development. In the past, tribes have been rather passive owners of energy resources, and the developer would come onto Indian land, lease it and extract oil, gas or coal resources. And, all the revenue would flow off the reservation. The tribe would get a lease payment or a royalty payment. I think what we’re seeing now is tribes wanting to move to a different model.
The Rosebud project is a good example of that. In this situation, the tribe worked with a developer very closely. It’s a partnership, and the tribe is the owner of the project. That way, the tribe can build off the experience with a much more active ownership interest. They have plans, down the line, to build an 80 MW plant with this project.
Atkinson is a partner in the Indian and gaming practice group for Dorsey & Whitney. She can be reached at 202-442-3000.