Another bill, introduced earlier this year by Sen. Byron Dorgan (D-N.D.), sought to ease some of the restrictions imposed on tribal renewable projects. The is the result of two years of hearings and discussions with tribal leaders conducted by the Senate Committee on Indian Affairs.
The legislation also sought to make it easier for tribes to take advantage of incentives in the form of tax credits, though that portion of the bill was subsequently shifted to another bill, which is still in draft form.
The lack of tax incentives is a big obstacle to securing project funding. Like counties and cities, tribal governments are not eligible for federal tax credits. That can be a big turn-off to would-be private sector partners, since federal tax incentives often constitute a significant portion of a project’s value. And unlike states and municipalities, tribes can’t, in most cases, generate revenue from property, sales and income taxes.
“To the extent that the tribe becomes a full partner in the deal, the project is penalized with credits that can’t be used,” said Bob Gough, secretary of the Intertribal Council on Utility Policy. “So the project across the street that can fully utilize the production tax credit comes into market with that advantage.”
The Dorgan bill originally would have allowed tribes who are part owners in a project, like the Campo Kumeyaay Nation, to transfer the production tax credits to a private sector partner.
“Then you could work it out,” he said. “Maybe the tribe could get 75 percent of the revenue and their partner gets 100 percent of the tax credit and 25 percent of the revenue. That way the tribe could have ownership without penalty.”
For now, though, tribes remain in limbo with regard to federal tax credits.
However slow, the attempt to bring a number of important policy initiatives together in one piece of legislation still signals increasing awareness of both the risks and potential of tribal renewable energy, according to Gough.
“You see more political support now coming from the full complement of senators on the Indian Affairs Committee rather than just one or two,” he said. “That’s progress, that a growing number of representatives and senators are supportive and understand these issues.”
Most concede it’s unlikely that the RES will pass during the lame duck session following the mid-term elections, however.
“The likelihood to getting anything to the floor is not great, but we’re going to try,” said Leon Lowery, a staff member of the .
Despite the slow pace of legislative progress, tribes like the Campo Kumeyaay Nation continue to pursue projects that give them more control over their energy resources.
“Tribes are saying, ‘We want sustainability, energy sovereignty, we want to operate these projects in a way that meets our needs,’” said Gough. “There are issues that might not be purely economic. Where a corporation would be looking out for shareholders and owners, a tribe might make different decisions.”