Developments in Energy - House and Senate

Native American Legislative Update - March 2012

House: Native American Energy Development Legislation

On February 15, the House Indian and Alaska Native Affairs Subcommittee held a hearing on the Native American Energy Development bill (H.R. 3973), authored by Chairman Don Young of Alaska. The measure, which includes some legislative provisions recommended by tribes that testified before the panel that day, would modify several administrative processes that delay energy development projects on Indian lands, and would give tribes more leeway in making decisions that involve their lands and resources.

H.R. 3973 covers a wide range of issues:

• provisions related to the review and approval of appraisals (and timelines for these processes);
• some limitations on Environmental Protection Agency reviews on Indian lands;
• the establishment of Indian Energy Development Offices at BIA;
• provisions relating to oil and gas fees and bonding requirements;
• approval of a tribal biomass demonstration project; and
• authorization for the Navajo Nation to issue mineral leases without federal approval, among other issues.

All the invited witnesses – from Southern Ute, Ute Tribe, Three Affiliated Tribes, Arctic Slope Regional Corporation, Shinnecock Nation, and Navajo Nation Oil and Gas Company – strongly supported the bill. The Navajo Oil and Gas Company representative stated that 90 percent of the Navajo Nation’s revenues are derived from energy-related activities. In response to a question from Representative Boren, the representative from the Navajo Oil and Gas Company responded that the company’s ability to expand its explorations for new oil resources would be significantly harmed if the administration were to order an end the practice of hydraulic fracturing (“fracking.”) Chairman Young stated his intention to expand the bill to include not only renewable but traditional energy sources, and in no way to do away with the trust responsibility to tribes in making changes to processes that require the review and approval of the Secretary of the Interior.

Witnesses also raised several tax issues, though they were outside the committee’s jurisdiction. The Shinnecock chairman spoke of the impact of climate change on the Tribe, and urged that Subcommittee include renewable energy tax credits. The Three Affiliated witness (representing three tribes in North Dakota) brought up the issue of state taxation of energy companies operating on Indian lands and the need for tribal authority to collect those taxes.

There were no witnesses representing the administration, much to the consternation of the members of the committee. As of this writing, the committee has not marked up the bill or reported it out. Testimony from this hearing can be found here.

Senate Committee on Indian Affairs: Oversight Hearing on Energy Development

On February 16, Chairman Akaka convened an oversight hearing on energy development in Indian Country. Senators Barrasso, Johnson, Tester, Franken and Tom Udall attended and actively participated. Vice Chairman Barrasso stated that the Committee would be holding a hearing on his Indian energy bill in March.

Department of Energy Reports:

Tracy LeBeau, Director of the Department of Energy’s Office of Indian Energy Policy and Programs, described the department’s outreach to tribes, collaboration with other federal agencies, and various initiatives the administration had taken. These consultations yielded significant learning for the Department. Ms. LeBeau shared several recommendations that arose out of the Department’s evaluations of its collaborative efforts over the past year.

• Scale of projects: There has been considerable focus on commercial-scale projects—both by the department of Energy and in Indian Country. Commercial-scale projects are typically developed to sell the electricity generated into the marketplace. In our view, however, there is a considerable opportunity in community-scale and facility-scale energy generation, as well as energy efficiency. Community-scale and facility-scale projects are developed to provide electricity to the local community (housing) or on-site (government buildings, community buildings). These types of projects meet local needs for energy and electricity, reduce energy costs, create jobs, and promote energy reliability and self-sufficiency.
• Commercial-scale projects are sometimes beyond the reach of tribes, because of the need for access to significant capital, access to the transmission grid, and access to potential buyers. Therefore the current commercial-scale energy development in Indian Country is almost exclusively in the purview of third-party developers who lease land from Tribes to build renewable energy projects in Indian Country.
• Tribes need a better understanding of renewable energy industry; even some tribes that are very sophisticated in business practices and investments lack this specific knowledge. More technical assistance could enable tribes to evaluate and develop energy projects on their lands.
• Alaska Native villages face specific challenges including remote locations, lack of any grid connection (for most Alaska Native villages), and a harsh environment (weather and location). Alaska possesses a large amount of renewable resources, especially wind, tidal, hydro, and biomass, but because of the environment it is very difficult to connect these resources to a market. Some of the smaller tribes in the continental U.S. share some of these problems.

Ms. LeBeau reported that her office would be focusing on overcoming some of these challenges in the short term, to help more tribes and Alaska native communities implement successful, cost effective projects.

Department of the Interior reports:

Jodi Gillette, Deputy Assistant Secretary - Indian Affairs for Policy and Economic Development focused on the Interior Department’s leasing regulations, which is the subject of various pieces of legislation. She also commented on the need for a “Carcieri fix”, and the Department’s their work in Alaska and with the Three Affiliated Tribes, ND. Senators questioned her about applications for permits to drill, the Department’s recent regulations on surface leasing, and access to the transmission grid.

Tribal witnesses described the work being conducted on their reservations, and raised issues related to dual taxation (state and tribe), the need for funding for infrastructure development, and the need to build tribal institutional capacity so that tribes can take on more of the regulation and oversight of energy development projects. Testimony from the Senate hearing (including a webcast) can be found here.

Administration announces energy grants:
Also on February 16, Energy Secretary Chu announced 19 awards to tribes totaling $6.6 million for feasibility studies and renewable energy development and installation projects. Additional information is available here.