Tribal energy development: A model for sustainability

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The role of energy on the environment and the economy is a common theme in policy discussions and debate at the local, national and international levels. But what about the social leg of the triple bottom line? How does energy – its development, use, sale and conservation – impact our social institutions?

The question is a key issue for our tribal and Alaska Native corporation clients. Because of the importance that a single energy project can have on a tribe, and the implications of the business decisions on tribal institutions, tribes and businesses seeking to work with tribes are tackling the real world mechanics of sustainability on energy projects across the nation. The success of their efforts will influence the success of the new energy economy and the role of tribes in society for generations.

To view sustainability through the lens of tribal energy development, it is important to understand the concept of tribal sovereignty and the distinct historical and legal framework of U.S. American Indians. Beginning with the inherent sovereignty derived from each tribe’s human and cultural origins, the evolving principles of political and legal sovereignty rooted in the U.S. Constitution and woven through some of the earliest U.S. Supreme Court decisions, followed by myriad acts of Congress drive much of the decision making and nation building for tribes today. Energy development for tribes is no exception.

The expenditure of millions and sometimes billions of dollars on project development, the granting of leases and rights of way across tribal lands, the long-term impacts of contractual and legal relationships, and the opportunities for tribes to become equity participants in the energy market are just some of the issues facing tribes in the energy development process.

Each business decision during the development process can impact a tribe’s sovereignty in ways that may not be understood until decades after a project is built. A key goal of our practice is to provide tribes and Alaska Native corporations with tools and strategies to undertake all phases of energy project development. In the process, that includes protecting tribal assets, preserving tribal sovereignty and, if the tribe chooses to do so, partnering with non-tribal entities for financing and project development.

Indian tribes and Alaska Natives in the United States are well positioned to take advantage of energy development opportunities, including renewable energy and energy efficiency, as a result of the vast amount of land and energy resources controlled by tribes. Tribes are actively exploring new business models to own and invest in energy assets, and to develop and produce power, either for consumption by their own people or as a commodity sale for economic development purposes.

Because of the strategic importance of tribal trust lands, the overlay of federal Indian law and principles of sovereignty will continue to dominate tribal energy development. According to the U. S. Department of the Interior, the United States government currently holds approximately 55 million acres of land in trust for American Indians, Indian tribes and Alaska Natives. Under the Alaska Native Claims Settlement Act (ANSCA), another 44 million acres have been set aside for Alaska Natives. The Bureau of Indian Affairs estimates that while Indian land comprises only 5 percent of the land area of the United States, it contains an estimated 10 percent of all energy resources in the United States.

Renewable energy potential in Indian country is even more significant. The National Renewable Energy Laboratory (NREL) has estimated that there is the potential for about 535 billion kWh/year of wind energy alone available on Indian lands in the contiguous 48 states, which is equivalent to 14 percent of current U.S. total annual energy generation. NREL estimates that there is also 17,600 billion kWh/year of solar energy potential on Indian lands in the lower 48 states; this amount is equivalent to 4.5 times the total U.S. electric generation in 2004. In addition, Indian Country will continue to play a growing role in transmission infrastructure throughout the nation.

Many tribes are already involved in energy development. The Tribal Energy Program of the United States Department of Energy participated in funding 93 tribal energy projects between 2002 and 2008 and the number continues to rise. Of these 93 projects, 34 were in the “planning and prefeasibility stage,” 51 were performing “feasibility studies,” and eight were proceeded to “development and demonstration.” Several tribes have developed commercial scale wind projects and others are in the process of developing commercial scale biomass and solar projects.

In addition to the significant tribal resources in the U.S. and the national focus on renewable energy, tribal interest in energy projects will also likely be fueled by each tribe’s long-term goals relating to sovereignty, sustainability and financial security.

The past decade has brought with it a renewed focus on tribal self-determination, with tribes asserting more control over their land, resources and self-governance. Renewable energy may support a wide range of tribal economic activities, from tourism and gaming to manufacturing and telecommunications. Many tribes have also begun to experiment with their unique legal status to accelerate their economic development efforts. Energy development is one way tribes are creating the infrastructure and capacity to achieve economic independence.

Doug MacCourt, Chair of Ater Wynne’s Tribal Business Practice, has spent the last two decades working with tribes and a variety of governmental and private sector energy enterprises. He is Co-Chair of Law Seminars International’s Third Annual Tribal Energy Development Conference in Washington DC on June 10-11, 2010. For more information, contact Doug at dcm@aterwynne.com, or go to www.aterwynne.com.