[Senate Hearing 111-630]
[From the U.S. Government Publishing Office]
S. Hrg. 111-630
DISCUSSION DRAFT OF THE INDIAN ENERGY PROMOTION AND PARITY ACT OF 2010
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HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
APRIL 22, 2010
__________
Printed for the use of the Committee on Indian Affairs
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COMMITTEE ON INDIAN AFFAIRS
BYRON L. DORGAN, North Dakota, Chairman
JOHN BARRASSO, Wyoming, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota LISA MURKOWSKI, Alaska
DANIEL K. AKAKA, Hawaii TOM COBURN, M.D., Oklahoma
TIM JOHNSON, South Dakota MIKE CRAPO, Idaho
MARIA CANTWELL, Washington MIKE JOHANNS, Nebraska
JON TESTER, Montana
TOM UDALL, New Mexico
AL FRANKEN, Minnesota
Allison C. Binney, Majority Staff Director and Chief Counsel
David A. Mullon Jr., Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on April 22, 2010................................... 1
Statement of Senator Barrasso.................................... 4
Statement of Senator Dorgan...................................... 35
Statement of Senator Franken..................................... 5
Statement of Senator Johanns..................................... 6
Statement of Senator Murkowski................................... 25
Statement of Senator Tester...................................... 1
Statement of Senator Udall....................................... 46
Prepared statement........................................... 46
Witnesses
Andersen, Ralph, CEO, Bristol Bay Native Association; Co-Chair,
Alaska Federation of Natives Human Resources Committee......... 25
Prepared statement........................................... 29
Box, Hon. Matthew J., Chairman, Southern Ute Indian Tribe........ 12
Prepared statement........................................... 14
Garcia, Hon. Joe, Southwest Area Vice President, National
Congress of American Indians; Chairman, All Indian Pueblo
Council, Albuquerque, NM....................................... 7
NCAI prepared statement...................................... 9
Marchand, Hon. Michael, Chairman, Economic Development Committee;
Energy Committee Member, Affiliated Tribes of Northwest
Indians; Councilman, Confederated Tribes of the Colville
Reservation.................................................... 21
Prepared statement of Brian Cladoosby........................ 22
Stricker, Peter, Vice President, Strategic Asset Development,
Clipper Windpower, Inc......................................... 36
Prepared statement........................................... 38
Appendix
Blackfeet Tribe, prepared statement.............................. 58
Cesspooch, Curtis R., Chairman, Ute Indian Tribe Business
Committee, Uintah and Ouray Reservation, prepared statement.... 61
Crawford, Jeff, Attorney General, Forest County Potawatomi
Community, prepared statement.................................. 103
Finley, Hon. Michael, Chairman, Confederated Tribes of the
Colville Reservation, prepared statement....................... 82
Metcalf, Hon. Edward L., Chairperson, Coquille Indian Tribe,
prepared statement............................................. 108
Miskwish, Michael Connolly, paper, entitled ``Why Wind and Solar
Taxes Should Stay on the Reservation........................... 111
Pueblo of Laguna, prepared statement............................. 87
Shuravloff, Hon. Marty, Chairman, National American Indian
Housing Council, prepared statement............................ 90
Suppah, Hon. Ron, Chair, Confederated Tribes of the Warm Springs
Reservation Tribal Council, prepared statement................. 98
Wu, Hon. David, U.S. Representative from Oregon, prepared
statement...................................................... 55
Yazzie, Vincent, Flagstaff, AZ, letter, dated May 5, 2010........ 111
Yerington Paiute Tribe, letter................................... 103
DISCUSSION DRAFT OF THE INDIAN ENERGY PROMOTION AND PARITY ACT OF 2010
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THURSDAY, APRIL 22, 2010
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:15 p.m. in room
628, Dirksen Senate Office Building, Hon. Byron L. Dorgan,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JON TESTER,
U.S. SENATOR FROM MONTANA
Senator Tester. [Presiding.] I want to call this hearing to
order on the discussion draft of the Indian Energy Promotion
and Parity Act of 2010.
We are conducting this hearing to abolish the obstacles to
Indian energy development. I am sitting in for the Chairman,
Senator Dorgan, that is obvious, and I will put forth to you
some of the ideas that he has in his opening statement.
Over the past two years, the Committee investigated these
obstacles. There have been two hearings, a concept paper that
was released proposing solutions, and the Committee staff has
held a series of roundtables throughout Indian Country.
We have a good idea of what the obstacles are. They are
outdated laws that create a bureaucratic maze, a lack of
infrastructure, a lack of financing for Indian energy projects.
Based on the comments of the tribes and their industry
partners, Senator Dorgan released a draft Indian Energy
Promotion and Parity Act of 2010 on March 12th. The draft bill
is our launching point for this hearing, along with additional
draft provisions that Vice Chairman Barrasso released.
Let me get right to the point of today's hearing. Indian
tribes have vast energy resources that could provide
substantial economic development for their communities, while
increasing this Country's energy independence. The need for
economic development in Indian communities is urgent and
obvious. Many struggle with 49 percent unemployment and poverty
rates that the rest of America wouldn't tolerate for a moment.
Likewise, the Nation has an urgent need for greater energy
independence. Energy production on Indian lands can be a big
part of the answer to both problems, even though Indian lands
make less than five percent of the United States, it is
estimated that about 10 percent of the Nation's traditional and
renewable energy resources are on those Indian lands, yet much
of that potential is left undeveloped.
Indian energy resources are locked up by a century of
Federal law and policy that discourage development. This has
had a direct impact on the lives of American Indians and our
Nation's energy supply.
I would like to share some of the stories with you today.
First chart, and this is a chart of the oil and gas activity on
the Fort Berthold Reservation in North Dakota. On the chart,
the reservation is outlined in red and all the dots and blues
represent oil and gas activity. It has been more than two years
since oil and gas activity in this area took off and still most
of the activity is to the north, south, and west of the
reservation.
[The information referred to follows:]
Things are improving. Senator Dorgan has asked the
Department of Interior to open up an oil and gas one stop shop.
A year later, the number of producing wells went from 10 to 49,
and more than $180 million have been paid to the tribes and its
members. But this is no comparison to the hundreds of wells in
surrounding counties. Obviously, we still have a long way to
go.
Now, Senator Dorgan's draft bill would create more of these
one stop shops around Indian Country and streamline the
bureaucratic 49-step process used to approve a single oil and
gas lease.
The next chart shows the renewable wind potential in the
Lower 48 States. Wind turbines could be producing electricity
in all of the pink, the purple and the red areas. Many of these
areas overlap Indian Country, which are outlined in green on
the chart. On these reservations, tribes are trying to develop
wind projects, including the Blackfeet Nation up in
Northwestern Montana.
[The information referred to follows:]
The tribe has 1,000 megawatts of wind capacity, enough
energy to power about 250,000 homes, but the tribe's wind
project is stuck on the drawing board, like so many tribal wind
projects. Energy companies are interested in working with the
tribe, but are worried that the Federal approval process will
take too long and lease terms on Indian lands are too short.
Meanwhile, the tribe is left out of regional electric
transmission planning. Senator Dorgan's draft bill specifically
addresses these issues.
The last chart shows the weatherization needs of homes on
the Cheyenne River Sioux Reservation in South Dakota. You don't
have to be an energy auditor to see the energy benefits that
new windows, doors and insulation could provide this family.
But under current law, the weatherization needs of Indian
tribes are barely an afterthought. The Recovery Act provided $5
billion for weatherization and annual appropriations are in the
hundreds of millions, yet only a tiny fraction of this gets to
Indian tribes.
[The information referred to follows:]
In 2009, the Cheyenne River Sioux Tribe received $3,000 for
its weatherization program. The tribe was able to buy some
plastic wrap to help a few of their members tape up their
windows for the winter. The weatherization assistance tribes
receive is so small that the Department of Energy does not even
know what it is. The Department told Senator Dorgan's staff it
would ``take a really long time and an awful lot of effort to
figure this out.''
Tell that to the members of the Cheyenne River Sioux Tribe
who may have to decide between buying food and heating their
homes when winter temperatures on the Great Plains drop to 30
below zero.
Senator Dorgan's draft bill changes the law so that the
weatherization funding gets to those who need it most, to
provide more domestic energy and stimulate economic growth in
Indian Country. We need the laws that will support Native
American energy and I want to thank our witnesses that are here
today for traveling here to share your ideas and we look
forward to your testimony.
Senator Barrasso?
STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Thank you very much, Mr. Chairman. Thank
you for holding this very important hearing on one of the
Committee's highest priorities.
Each time I meet with the leaders of the Eastern Shoshone
and Northern Arapaho Tribes, we discuss how important energy
development is to Wyoming's Indian communities, because in the
Wind River Reservation energy development means jobs. Energy
development on the Wind River Reservation means incomes for
families. It means paying the heating the bill. It means food
on the table.
We know that many Indian communities have more than their
share of challenges: unemployment, crime, alcohol, drug abuse.
Far too often, I think we turn to government programs to
address the problems. And I am not saying that there is no role
for government. We do need more police in Indian Country. We do
need drug and alcohol programs. But many of these problems are
also aspects or features of something much larger: a pervasive
lack of opportunity to earn a good living.
Creating strong economies in Indian communities would have
a broad and lasting impact on all of these problems. Economic
development and employment opportunities, those are the keys to
healthy, well-educated, productive communities.
So I want to thank our witnesses for traveling long
distances to be here today, and I look forward to hearing your
testimony.
Thank you, Mr. Chairman.
Senator Tester. Thank you, Senator Barrasso.
Senator Franken, do you have any opening statement?
STATEMENT OF HON. AL FRANKEN,
U.S. SENATOR FROM MINNESOTA
Senator Franken. Yes, thank you, Mr. Chairman.
I want to thank Chairman Dorgan for prioritizing the issue
of energy development in Indian Country. Our Country is in the
midst of a major transition in the way we produce and use
energy. There is no doubt that a clean energy revolution is the
key to creating jobs and fostering economic development in
communities all across the Country. That chart on the wind
potential is a beautiful illustration of that.
No where is this need more urgent than in Indian Country,
where unemployment rates are 40 percent, 50 percent and higher,
and I so much agree with the Vice Chairman that economic
development has got to be the answer.
Energy development is a huge opportunity for Indian
Country. As Senator Tester said, and I will repeat it because
it bears repeating. Tribal areas comprise only five percent of
the land in the United States, but have 10 percent of our
conventional and renewable energy resources. And yet, as you
saw on the chart on oil production in that North Dakota
reservation, around it really, that potential is not being
tapped.
Tribes in Minnesota fully understand this potential, the
potential that energy development presents for job creation and
economic development. For example, the White Earth Reservation
is actively pursuing recommendations from a 2008 University of
Minnesota study on the potential of biofuels development on the
reservation. The Shakopee Sioux community has built a 12.5
megawatt combined heat and power plant that runs on waste
agriculture biomass from the local area. In Northwestern
Minnesota, the Fond du Lac Band of the Chippewa has built a 25-
kilowatt biomass pilot project using waste woody biomass from
surrounding forest lands.
There are many more examples like this from tribes in
Minnesota and they are a testament to the fact that they are
engaged in energy development and looking for ways to scale up
these projects. But while there are successes of energy
development in Indian Country on a small scale, broader energy
development on tribal lands has so far just been a missed
opportunity.
As I have talked to Minnesota tribes about energy
development, I keep hearing the same issues again and again:
lack of access to financing, regulatory hurdles, and lack of
technical assistance.
So I want to thank this Chairman and Chairman Dorgan for
bringing these critical issues before the Senate through this
legislation, and I look forward to digging into the issues
today.
Thank you.
Senator Tester. Thank you, Senator Franken.
We have five witnesses here today. I will introduce you as
a group and then we will start with you, Joe.
We have the Honorable Joe Garcia, Southwest Area Vice
President, National Congress of American Indians, Washington,
D.C., and Chairman, All Indian Pueblo Council, Albuquerque, New
Mexico.
Along to his right, we have the Honorable Matthew J. Box,
Chairman of the Southern Ute Indian Tribe in Ignacio, Colorado.
Next to him, we have the Honorable Michael Marchand,
Economic Development Committee Chairman, Energy Committee
Member, Affiliated Tribes of the Northwest Indians, Portland,
Oregon, and Colville Business Council, Omak District
Representative, Confederated Tribes of Colville Reservation,
Nespelem, Washington.
I hope I didn't butcher that too bad.
And next to him is Mr. Ralph Andersen, CEO of Bristol Bay
Native Association, Co-Chair of the Alaska Federation of Native
Human Resources Committee in Dillingham, Alaska.
And finally, last but not least, Peter Stricker, Vice
President of Strategic Asset Development, Clipper Windpower,
Incorporated in California. Let's just put it there.
In want to thank you all for being here. Before we get to
your testimonies, and Senator Johanns has come in.
Do you have an opening statement, Senator?
STATEMENT OF HON. MIKE JOHANNS,
U.S. SENATOR FROM NEBRASKA
Senator Johanns. Just very briefly.
I had the most remarkable experience. I walked in here and
everything you were saying, Senator Franken, I think I agree
with, so this is really good.
[Laughter.]
Senator Franken. What is the date today? Can we write this
down?
[Laughter.]
Senator Johanns. No, that was an excellent opening
statement. And actually in all sincerity, so many of the points
that have been made by Senator Franken are points that I have
heard from Native Americans in my State. We just had a summit
where I brought all the tribes together. We spent a half day
talking about economic development and healthcare and the
issues that impact our reservations so much.
I will just say, I think this is an opportunity for us to
maybe open up an avenue of economic development that has been
untapped, and in some respects a bit unexplored. If we can get
the right combination going here, then maybe there are some
jobs that can be created, and that is enormously positive.
So thank you, Mr. Chairman, for conducting the hearing. I
look forward to the testimony of the witnesses.
With that, I will be that brief.
Thank you.
Senator Tester. Thank you, Senator.
I once again want to thank the witnesses for being here
today. I would ask you to keep your testimony to five minutes.
Your entire statement will be a part of the official record,
but if you could keep it to five minutes, this is a very
important subject and I know you can't cover everything you
want in five minutes, but if you are concise, we will get it
done and we will get to some good questions.
Joe Garcia, do you want to start out?
STATEMENT OF HON. JOE GARCIA, SOUTHWEST AREA VICE PRESIDENT,
NATIONAL CONGRESS OF AMERICAN INDIANS; CHAIRMAN, ALL INDIAN
PUEBLO COUNCIL, ALBUQUERQUE, NM
Mr. Garcia. Yes, sir. Thank you so much, Senator Tester and
Vice Chairman Barrasso. We appreciate the Members of the
Committee for also sitting in.
On behalf of the National Congress of American Indians,
thank you for the opportunity to testify about our views on the
discussion draft on the Indian Energy Promotion and Parity Act.
NCAI is appreciative of the Committee's efforts to address our
concerns about tribal energy development.
The discussion draft establishes a solid foundation which
we wish to build upon to overcome the massive and complex
obstacles to tribal energy development. We need to move these
ideas forward and to enact them now.
As you are aware, tribal lands contain about 10 percent of
the Nation's energy resources. Tribal renewable energy
potential can meet the Nation's electricity demands several
times over. Tribal energy is critical to the Nation's efforts
to achieve energy independence and reduce greenhouse gases.
Tribes located in some of the poorest counties in America have
vast renewable energy resources that can help overcome this
persistent poverty.
I wish to share with you some examples of the tremendous
challenges Indian tribes confront, challenges that can become
opportunities. First is the DOE programs. NCAI fully supports
the discussion draft's elevation of the Department of Energy as
the major player in tribal energy and energy efficiency. Tribes
do not receive direct funding under some DOE Programs. Under
the Recovery Act alone, State governments received nearly $8
billion under DOE's Weatherization program and the State Energy
Conservation Plan Program.
However, only two tribes, the Navajo Nation and Northern
Arapaho Tribe, received a mere $10 million. Under the
Weatherization program a tribe cannot receive direct funding
unless it proves to DOE that the State is not serving its
people. And so let us be clear. Tribes are sovereign nations
with a direct nation to nation relationship with the Federal
Government. Tribal governments therefore should have the option
to work directly with DOE to address these conditions our
people face.
Second, challenges to large scale renewable energy
projects. Tremendous challenges confront tribal efforts to
develop commercial scale renewable energy projects. Similar
projects just outside of Indian Country have a huge competitive
advantage. The map demonstrates that. They have simpler, faster
and cheaper approval processes, better access to the grid, and
easier access to financing. And setting up a renewable energy
project on tribal lands takes three to five years. Whereas on
non-tribal lands, this may take only two to three years. Which
one would you choose?
And another challenge is the imposition of State and county
taxes. State and county taxation on renewable energy projects
such as those being imposed on the Campo Band of Kumeyaay
Indians and Rosebud Sioux Tribe are affronts to tribal
sovereignty and tribal self-determination. They hurt the tribes
economically. We urge the Committee to develop additional
provisions within the discussion draft that will prevent States
and counties from imposing taxes upon tribal energy projects.
Third, opportunity for small scale energy projects. Small
scale energy projects, particularly in remote areas, can
address the tribe's disproportionate lack of access to
electricity and high cost of home heating. We applaud the
discussion draft's provision to fund demonstrations projects
for distributed energy and community transmission, but we also
urge the establishment of a long-term program with consistent
funding to support these efforts.
There are additional issues. We have issues such as
transmission. We must include transmission as part of the
Indian Energy Development Plan because you can generate all the
energy in the world, but if you can't get it on the
transmission, on the grid, then it is useless. So we need to
worry about that.
Applications for permitting to drill. Tribes should not
have to pay large fees in the neighborhood of $6,500 imposed by
the Bureau of Land Management to drill on Indian lands, whereas
off Indian land, the numbers are a lot less.
Fuel cells, this is a new technology in terms of energy
generation. Fuel cell driven energy plants are not part of the
discussion, but I think it needs to be. It is an important
opportunity for new efforts in tribal energy development.
Energy storage, it is another opportunity for tribes to
develop the storage capability. For instance, if you generate a
lot of solar energy, you have no place to store it until the
time that it is needed onto the grid and onto the distribution
and to meet the customer base. You have to have storage
capability. And again, it is an opportunity for the tribes to
develop that.
In conclusion, tribal governments must be able to exercise
the inherent right of self-government, including fair
opportunities to develop their energy resources. We urge the
enactment of the Indian Energy Promotion and Parity Act. We
look forward to working with you and the Committee to ensure
that the needs of Indian Country for energy development and
economic development are addressed.
Thank you so much for the opportunity.
[The prepared statement of the NCAI follows:]
Prepared Statement of the National Congress of American Indians (NCAI)
I. Introductory Comments
The National Congress of American Indians wishes to thank Chairman
Dorgan for his interest in and leadership on Indian energy development,
and in particular, for recognizing the need to overcome historic and
present day inequities in tribes' ability to harness their vast energy
potential for the benefit of all Americans. We hope that this effort
will be part of the long and outstanding legacy that Senator Dorgan has
secured championing legislation that meets the needs of Indian tribes.
We are grateful for the significant tribal outreach that Chairman
Dorgan and Vice Chairman Barrasso have conducted. Since May of 2009,
the Committee has developed a concept paper, hosted roundtable sessions
to solicit tribal comments, and held hearings in first session of 111th
Congress. We look forward to working with all members of the Committee
to ensure passage of this important legislation.
This discussion draft of the Indian Energy Promotion and Parity Act
(IEPPA) reflects the Committee's efforts. We believe it is a
commendable effort to remove obstacles for tribally-driven energy
development. As tribal lands are estimated to contain 10 percent of the
nation's traditional and renewable energy resources, realizing this
potential is critical to the nation's efforts to achieve energy
independence, promote clean energy, and create jobs. Such efforts are
especially needed in Indian Country, where unemployment rates are many
times higher than the national average. Further, energy projects
represent the most meaningful and sustainable economic development
opportunities to ever arise for some tribes that have been mired in
endemic poverty.
However, the challenges are massive. For example, the vast majority
of large scale renewable energy projects on tribal lands, even those
which have made it through the maze of federal bureaucratic processes,
are stuck in the pre-development phase among other things, for lack of
financing, transmission access, and unfavorable tax structures.
Furthermore, states and counties are increasingly keen on taxing tribal
energy projects, threatening their very viability and siphoning off
revenue that should be going to tribal governments for needed programs
and services. If the nation seeks energy independence, it must call
upon, and support, Indian tribes in their energy development efforts.
a. Legislative Process
The number of legislative days remaining in the 111th Congress is
few. We urge the Committee to move quickly to take action on a
legislative proposal. We understand that a new climate bill, which
contains energy provisions, is being drafted by Senators Kerry, Graham,
and Lieberman, may be rolled out as early as next Monday. We look
forward to working with the Committee, in collaboration with other
Senate Committees, such as the Energy and Natural Resources Committee
and the Finance Committee, to attach provisions from the IEPPA
discussion draft into this and other suitable legislative vehicles as
quickly as possible.
b. Tribal Process
NCAI has been working with tribal leaders, tribal representatives,
and tribal energy resource development organizations, including the
Council of Energy Resource Tribes, the Indian Country Renewable Energy
Consortium, and the Intertribal Council on Utility Policy, to provide
comments to Committee staff on the IEPPA discussion draft. Our outreach
and collaboration in the tribal community is ongoing, and we look
forward to continuing to provide input as the legislation develops.
The IEPPA discussion draft includes provisions to streamline and
eradicate some of the 49 bureaucratic steps that tribes currently must
go through to undertake energy development projects on tribal lands,
and to ensure equitable access to the transmission grid, financing
mechanisms, and federal programs for energy development and energy
efficiency. It is important the Committee moves to remove these
barriers to ensure that tribes are placed on a level playing field to
facilitate the realization of their energy potential for the benefit
not only of tribal governments and peoples, but the entire nation.
II. Comments on the IEPPA Discussion Draft
In this context, NCAI is pleased to provide general comments on
issues not yet adequately addressed in the IEPPA discussion draft and 3
specific comments about Department of Energy (DOE) programs.
a. General Comments
i. Transmission
Opportunities for large scale energy development on tribal lands
are moot if tribes do not have access to the transmission grid. While
IEPPA calls for a study on tribal inclusion in infrastructure planning,
more robust language is needed to ensure that tribal projects already
in development, as well as those which may be developed in the future,
have equitable and appropriate consideration in the transmission queue.
We believe that there should be a priority in the transmission
queue for energy emanating from federal lands, including tribal lands,
and look forward to working with the Committee to provide language to
that effect.
ii. State Taxation
A critical issue not currently addressed in the IEPPA is state and
county taxation of tribal renewable energy projects. The Campo Band of
Kumeyaay Indians has perhaps the only large-scale renewable project in
Indian Country. Yet for the first part of that project, the state and
county received more revenue than the tribe, through the imposition of
three kinds of taxes: (1) state sales tax, (2) county property tax, and
(3) county possessory interest tax. Notably none of the taxes collected
are shared with the tribe. This practice sets a dangerous precedent.
The State of South Dakota has told the Rosebud Tribe that it intends to
impose taxes on renewable energy projects located on tribal trust
lands, reversing a position the State held several years prior. Other
states are contemplating similar actions.
In the past, states and counties have justified this incursion into
the Native tax base on the grounds that non-Indians engaging in
commercial operations on Native lands are users of state services and,
as such, should not get a ``free ride'' by working on tribal lands
located within the state. But commercial scale wind energy brings very
little impact to schools, law enforcement, roads, or other
infrastructure. These taxes siphon revenue away from the tribes,
prevent the tribe from enacting their own taxes, and, in the future,
will place even more financial burdens upon projects. It is estimated
that states can net approximately $65 million in state sales, property,
and corporate income taxes from a 200 MW tribal project worth nearly
half a billion dollars in construction costs. This is revenue
rightfully due to the tribe, and for which the states and counties
provide no reciprocal services. Therefore, we urge the Committee to
develop legislation that will prevent states and counties from imposing
taxes upon tribal energy projects.
iii. Leasing and Siting Provisions
Many of the IEPPA discussion draft provisions related to Department
of the Interior processes, such as leasing and siting on tribal lands,
address or have the potential to address the broader issues, such as
the overall trust relationship between the federal government and the
tribes, and economic development opportunities beyond energy. We look
forward to working with the Committee to broaden and narrow the
parameters of those provisions as appropriate.
iv. Appraisals
In general, we strongly support the appraisals provisions of the
IEPPA discussion draft found in Section 106. Delays in BIA appraisals
have been a severe detriment to many economic development projects.
NCAI has long supported reforming the appraisals requirement to allow
tribes to perform their own appraisals. We believe however, that the
proposed 60-day Secretarial review and approval process of an already
certified appraisal--conducted by the Secretary or by a tribe or
through a third-party appraiser--is an unnecessary step that only adds
further delay. In addition, we believe that the proposed options for
conducting appraisals should extend to other transactions involving
Indian land or Indian trust assets, and not just energy-related
transactions. We urge the Committee to consider broader language
involving land transactions.
v. Leases and Rights-of-Way
Section 201 of the IEPPA discussion draft would make helpful
improvements in the area of leases and rights-of-way. However, with
respect to leases by Section 17 Indian Reorganization Act corporations
(subsection (d)), we are concerned that certain 99-year leases can
amount to a de facto sale of tribal land (for example, non-Indian
residential housing). Historic experience has shown that it is very
difficult for a tribe to recover its property once a non-Indian
residential community is established. A period of 50 years should
suffice for energy projects--including wind energy--and we recommend
that the Committee consider making those changes to the language of the
bill prior to introduction.
In addition, we would ask that the Committee consider including in
IEPPA provisions which would expand the Navajo Leasing Act to all
tribes, similar to the provisions of H.R. 2523, the Helping Expedite
and Advance Responsible Tribal Homeownership (HEARTH) Act. This
legislation would permit each tribe to lease surface properties without
Secretarial approval under tribal regulations that are approved by the
Secretary. This legislation is supported by NCAI Resolution PSP-09-016.
vi. Financing
Regarding the title on Energy Financing, Title III of the IEPPA
discussion draft, Indian tribal governments have long supported and
advocated for many of these provisions in other contexts, such as
tribal assignability of production and investment tax credits. We look
forward to working with this Committee and the Finance Committee to
develop creative solutions for the implementation of a tax credit
transfer program. At the same time, the Committee should pursue
alternatives to offset the additional cost of money for tribal
investments, such as providing grants, rebates, or payroll tax credits
(which tribes can use) in lieu of income tax credits (which tribes
cannot use). In addition, the Committee should encourage energy
development by facilitating greater tribal access to the Renewable
Energy Production Tax Incentive program. Such measures will help put
tribal energy projects on an equal competitive footing with other
energy projects.
vii. Definitions of ``Indian Tribe'' and ``Indian Land''
We note that the IEPPA discussion draft contains different
definitions of ``Indian tribe'' and ``Indian land.'' It is important to
ensure use of the most appropriate definition in the specific context.
For example, the definition of Indian tribe as it relates to leasing
will likely be different from that used in the context of a
Weatherization program. We look forward to working with the Committee
to ensure that these definitions are appropriate to the specific
issues, underlying statutes, and programs.
b. Provisions Related to DOE Programs
We are pleased to provide comments on provisions related to federal
programs, especially those at the Department of Energy, as they have
not been fully addressed in previous forums.
The Department of Energy's (DOE) Tribal Energy Program provides
tribes with an impressive degree of knowledge and professionalism, to
the extent they are able given the modest resources provided. DOE's
efforts to work with tribes, however, are hampered by outmoded laws,
regulations, and programs that have resulted in tribal exclusion and
dramatically inequitable levels of funding, compared to other
governments. As the nation moves resolutely towards energy independence
and reductions in greenhouse gas emissions, now is the time for DOE to
partner more fully and meaningfully with tribes, especially as DOE
possesses unique and unparalleled expertise to work in partnership with
tribes to tap tribal energy potential.
We are pleased that the IEPPA discussion draft seeks significant
changes to DOE's Weatherization Program, State Energy Conservation Plan
Program, tribal loan guarantee program, and the Office of Indian Energy
Policy and Programs, including the provision of funding directly to
tribes and funding to build tribal institutional capacity to carry out
energy development and energy efficiency programs. Tribes are sovereign
nations with a direct nation-to-nation relationship with the federal
government. Arrangements that exclude tribes, or compel tribes to work
through the states in order to access federal programs are demonstrably
unfair and obsolete.
i. Support for the Committee's Views and Estimates Regarding DOE's
Tribal Budget
We support the Committee's sentiments related to DOE's budget
request. The Committee has asked for $50 million more than the
President's FY 2011 budget request for DOE's Tribal Energy Program, for
a total of $61 million.
ii. State Energy Program
DOE's State Energy Program and DOE's Weatherization Program were
created 35 years ago, providing financial and technical support
directly to states for energy and home efficiency initiatives. Tribes
cannot receive funding directly from DOE under these programs. In the
case of the State Energy Program, tribes receive funding only at the
state's discretion. The equivalent DOE Tribal Energy Program was only
established in 2002. Not including the 35 years of disparate federal
funding, the Recovery Act alone provided states through the State
Energy Program with $3.1 billion, and the Tribal Energy Program $0.
Tribal access to the State Energy Program will ensure consistent
support for tribal energy and energy efficiency endeavors.
iii. Weatherization
Under the Weatherization Program (Wx), tribes cannot receive direct
funding from DOE, unless they prove that to DOE that the state is
failing to serve tribal members. Tribal homes in remote areas are often
beyond the reach or awareness of state Wx programs. Direct state
support of tribal needs varies by state. Even if a tribe does
demonstrate the state's failure, the funding is often too paltry to
justify the creation of a tribal program. DOE has helped state and
local Wx networks and services for decades. In contrast, only the
Navajo Nation and Northern Arapaho Tribe have tribal Wx Programs.
The impact of this awkward statutory and regulatory arrangement
upon tribes is significant. The Recovery Act alone provided the states
with nearly $5 billion through the Wx Program with no assurances that
tribes could receive some of this funding directly. The IEPPA
discussion draft provisions to make Wx funding directly available to
tribal governments will help address decades of exclusion.
These historic program and funding inequities and omissions result
in present day unpreparedness to undertake those programs. Therefore we
are heartened by the IEPPA discussion draft provision to allow DOE's
Office of Indian Energy Policy and Programs funding to help tribes
build the institutional capacity undertake this programs.
We look forward to working with all Committee members to improve
upon the IEPPA discussion draft, so that tribal governments can develop
their energy resources for the benefit of their peoples and all
Americans, and to ensure that tribes meaningful participants in
national energy efficiency initiatives. We urge quick action to ensure
that these important measures are adopted during this Congressional
session. We are thankful that the Committee, through the IEPPA
discussion draft, is working toward this goal.
Senator Tester. Thank you, Mr. Garcia.
Chairman Box?
STATEMENT OF HON. MATTHEW J. BOX, CHAIRMAN, SOUTHERN UTE INDIAN
TRIBE
Mr. Box. Good afternoon, Chairman Tester, Vice Chairman
Barrasso, Members of the Senate Committee on Indian Affairs.
My name is Matthew Box. I am the Chairman of the Southern
Ute Indian Tribe. I am honored to be here today. I appreciate
that.
On Tuesday, my written testimony was submitted to the
Committee, and it contains detailed responses to the March 12th
discussion draft and the April 16th discussion draft of
legislation addressing Indian energy development. The written
testimony was prepared with the assistance of our legal counsel
who communicates regularly with your legal counsel. And even
though I appreciate attorneys, I do not intend to duplicate
that written statement this afternoon.
Our tribe has a national reputation as a leading energy
tribe. Our reservation in Southwestern Colorado contains
significant natural gas resources. With the foresight of tribal
leaders, we rely and have maintained our very core government
and benefits for our tribal membership through that foresight.
We have relied on this for our financial engine.
As outlined in our previous testimony, our oil and gas
activities extend well beyond our reservation. We have overcome
many institutional obstacles to get where we are today.
Your legislative efforts make our path easier and for all
tribes who view energy development as a vehicle for improving
economic conditions of their community and the future of their
members.
I would like to focus on key provisions of this draft
discussion. Perhaps the most important provision in the March
12 the discussion draft relates to tax matters addressed in
Title III. Some of these provisions relate to renewable energy
projects, while others are more general in scope. We strongly
support the provisions and we commit to have our lawyers work
with your lawyers to help refine whatever language may be
needed for formal legislation to be introduced.
I would like to describe why these provisions are so
important. The first provision, Section 301, would encourage
taxpaying partners to join with tribes in building and
operating renewable energy facilities. Because most tribes do
not have significant investment capital, financial partners are
critical to the development of energy resources in Indian
Country. Without good partners, we would not have taken the
steps toward building our own energy businesses.
In most cases, what tribes have to offer are the right to
use their lands. Unlike energy leasing of the past, most tribes
today want to be directly involved with the ownership of the
project, but also to share in the profits of a successful
renewable energy project. Current tax laws create an economic
disincentive for such partnerships with regard to renewable
energy projects.
Production tax credits are a key economic component to
developing renewable energy. If a taxpaying entity has an
Indian tribe as a partner, those credits are lost in direct
proportion to the tribe's ownership percentage. Sections 301
and 302 dealing with incentive tax credits would encourage
effective partnerships by allowing tax credits associated with
the tribe's ownership to be used by the taxpaying partner. We
urge that this approach be extended to the accelerated
depreciation provisions and be made permanent under Section 303
by removing huge financial penalties associated with keeping
the tribes, the landowner, actively involved in ownership and
operation of the business.
This proposed tax treatment will encourage taxpaying
entities to join with tribes in developing energy on Indian
lands. We anticipate that other Senate or Congressional
committees will initially object to any measures that involve
marketing or disproportionate allocation of tax credit
deductions. However, the tax code was not written with the idea
that tribes would be financial partners in developing their
lands and their resources. Again, we hope that you will provide
the leadership on these tax issues needed to change existing
law.
Our written comments also support provisions that reduce
the involvement of the Secretary of Interior when not
necessary. We strongly support Section 103, which would allow
installation of temporary energy testing facilities on tribal
lands without secretarial approval. We also support Section
106, which would provide statutory relief from existing
appraisal requirements for land use transactions in Indian
Country.
My final comments are directed to the provisions of the
April 16th draft that would improve Title V of the Energy
Policy Act of 2005. The proposed provisions reduce the need for
secretarial approval of transactions involving tribes with
proven track records of land management. The proposed
amendments to Title V also make it more likely that tribes will
enter into agreements with the Secretary. We believe that the
TERA options are the right approach in balancing self-
determination and trust responsibility.
In conclusion, I thank you for this opportunity to be here
and hope that these comments are helpful in your great effort.
Senator Tester. They are.
[The prepared statement of Mr. Box follows:]
Prepared Statement of Hon. Matthew J. Box, Chairman, Southern Ute
Indian Tribe
I. Introduction
Chairman Dorgan, Vice Chairman Barrasso, and members of the
Committee on Indian Affairs, I am Matthew Box, the Chairman of the
Southern Ute Indian Tribe. I am honored to appear before you today to
provide testimony regarding the discussion draft of the ``Indian Energy
Promotion and Parity Act of 2010,'' initially distributed to the public
on March 12, 2010. The discussion draft is another step forward in our
longstanding effort to level the playing field of opportunity when it
comes to Indian energy development. We have also reviewed a second
discussion draft of possible Amendments to the Energy Policy Act of
1992 dated April 16, 2010, which also contains some very positive
suggestions. This statement presents our comments to each of those
discussion drafts.
II. Background
The Southern Ute Indian Reservation (``Reservation'') consists of
approximately 700,000 acres of land in southwestern Colorado within the
Four Corners area. Our Reservation, which is a checkerboard of land
ownerships, is located in the northern San Juan Basin, a prolific
natural gas producing region. We collect royalties and severance taxes
from our leased lands; however, we also generate substantial revenues
from our oil and gas operating company and our gas gathering and
treating companies, which conduct activities both on and off the
Reservation. We are also actively involved in renewable energy
development both on and off the Reservation.
In October of last year, our testimony outlined the challenges that
we have faced and overcome in developing our energy resources. We have
worked closely with this Committee to identify institutional obstacles
to the successful development of energy resources in Indian country. We
appreciate your willingness to address these issues. As we have stated
repeatedly to anyone who will listen to us, ``We are the best
protectors of our own resources and the best stewards of our own
destiny; provided that we have the tools to use what is ours.'' Both of
the discussion drafts reflect steps forward for energy development in
Indian country.
III. General Comments to Discussion Draft of March 12, 2010
The following comments reflect our general reaction to each of the
three titles set forth in the March 12th discussion draft. We also
believe that it may be helpful to the Committee to understand the
context for our reaction to different sections of the discussion draft.
A. Findings and Purpose
Initially, we agree with the findings and purposes set forth in
Section 2 of the discussion draft. We agree that outdated laws and
regulations have impeded the development of energy resources in Indian
country. We also believe that the principal purposes of this
legislation should be to remove those legislative and regulatory
obstacles and to provide incentives for the development of renewable
and non-renewable energy resources in Indian country.
B. Title 1--Energy Planning
With respect to Title 1 of the discussion draft, there are some
provisions of this title that we believe are critical improvements,
others that are interesting, and some that we would oppose in their
current form. We strongly support and urge you to retain Title 1,
Section 103 (Predevelopment Feasibility Activities). This section
allows temporary facilities to be installed on Indian land for purposes
of data collection, without approval of the Secretary of the Interior
or the Secretary of Energy, so long as the facilities will be removed
and the testing activities concluded within two years. Inclusion of
this section responds directly to testimony at field hearings regarding
the bottleneck in obtaining Federal approval for the installation of
temporary facilities on Indian land needed to evaluate the feasibility
of wind power facilities. We would, however, suggest that the duration
of the testing period be subject to renewal if needed to complete
feasibility studies.
We also strongly support Title 1, Section 106 (Appraisals),
although we would expand its provisions. This section would eliminate
the requirement for the Secretary of the Interior to conduct appraisals
of trust assets to be used in Indian energy development transactions if
such appraisals are being conducted by a tribe pursuant to a contract
under the Indian Self-Determination and Education Assistance Act (``638
Contract'') or by a certified third party appraiser under a contract
with the tribe. The issue addressed by this section relates to current
Interior regulations that call for a federal appraisal for many real
property transactions, including the granting of rights-of-way across
Indian lands. From a staffing perspective, the scope of the task makes
prompt compliance impossible, which causes inordinate delays in
processing rights-of-way needed in the conduct of ordinary business.
Additionally, however, the federal appraisal standards are
inflexible. For example, a number of years ago our Tribe consented to
the grant of a right-of-way to a telecommunications company that
paralleled a major public highway leading to our headquarters. Our
compensation was to be the exclusive use of strands of high-speed,
fiber optic cable for transmission of electronic information needed to
serve our extensive governmental and commercial operations. Obviously,
this form of compensation did not fit easily into standard Federal
valuation methodologies. Only through extraordinary efforts were we
able to convince the BIA to grant the right-of-way, and, even then, the
BIA was extremely reluctant to proceed. Our use of those fiber optic
cables, however, has been extensive. In order to avoid similar delays
in the future, we urge the Committee to expand the instances in which
Federal appraisals can be avoided to include situations in which the
tribal government expressly waives an appraisal. Additionally, we
believe that individual appraisals are unnecessary when a tribe has
legislatively adopted compensation schedules for categories of land
that correspond to area land values. Our Tribe generally uses surface
damage compensation fees based on different land classifications, which
the BIA now allows us to rely upon in lieu of actual appraisals.
Statutory confirmation of the acceptability of this approach would be
helpful.
We also support Title 1--Sections 105 (Department of Energy Indian
Energy Education Planning and Management Assistance), 107 (Technical
Assistance and National Laboratories), 108 (Preference for
Hydroelectric Preliminary Permits), and 109 (Study on Inclusion of
Indian tribes in National and Regional Electric Infrastructure
Planning). Each of these sections would be useful measures for tribes
seeking to expand energy resource development.
We question the need for Title 1--Section 101 (Indian Energy
Development Offices), which would authorize the creation of up to three
offices as one stop shops of multiple Department of the Interior
agencies with administrative jurisdiction over aspects of Indian energy
development, including the BIA, the BLM, that National Park Service,
the U.S. Fish and Wildlife Service, the Bureau of Reclamation, the MMS,
and the Office of Special Trustee. The Indian Energy Development
Offices would be set up in regions of significant Indian energy
resource activity or potential, and, through centralized staffing, the
Indian Energy Development Offices would presumably be better able to
handle Indian energy development than current administrative
structures. Although the establishment of Indian Energy Development
Offices has been advocated by others in the Indian community, we
seriously question the need for or the long-term viability of these
multi-agency offices. All of the administrative agencies at the
Department of the Interior share the federal trust responsibility. With
the exception of the BIA, all of those offices also have
responsibilities for activities on a variety of federal lands. Our
experience indicates that when dealing with officials from non-BIA
agencies, such as the BLM or the MMS, much can be accomplished through
officials held in high regard and occupying positions of broad
authority within their agencies, who have an awareness and sensitivity
to Indian matters. We fear that, because of their value to their
agencies for dealing with multiple issues, such officials would not be
the ones selected to fill positions in Indian Energy Development
Offices. With guidance from the Secretary, we believe that
prioritization of Indian trust matters and inter-agency cooperation can
be effectively addressed without the creation of Indian Energy
Development Offices.
We are concerned that this legislation may not be the appropriate
vehicle for considering matters addressed in Title 1--Section 102
(Indian Energy Program Integration Demonstration Projects). Section 102
establishes an elaborate process under which multiple federal agencies
would be compelled to survey and report to the Secretary regarding
Indian related programs within their departments. Following publication
of these multiple programs, an Indian tribe could present a plan to the
Secretary under which the tribe would propose to carry out those
multiple programs in an integrated fashion with funding derived from
the multiple agencies. In some respects, Section 102 appears to be an
expansion of the 638 Contract process beyond the Department of the
Interior with respect to community development and energy related
matters. It is ambitious in scope and would clearly require greater
inter-agency cooperation and coordination with respect to Indian-
related programs. While Section 102 reflects worthwhile objectives, we
are concerned that this proposal will require the involvement of
multiple congressional committees and, because of its scope, may result
in delays in congressional approval of other provisions in this
legislation that are long overdue with respect to Indian energy
development.
Our greatest concern extends to Title 1--Section 104 (Comprehensive
Energy Resource Planning). In our view Section 104 undermines the
fundamental underpinnings of the Indian Tribal Energy Development and
Self-Determination Act of 2005, particularly the amendments to the
Title XXVI of the Energy Policy Act of 1992 now found at 25 U.S.C.
Sec. 3504. In order to understand our position on Title 1--Section 104
of the discussion draft, it is helpful to review what Congress and
Indian tribes attempted to achieve in Title V of the Energy Policy Act
of 2005.
Because Indian energy leases, business agreements, and rights-of-
way generally require the approval of the Secretary, and because such
approval constitutes Federal action, consideration of such a Federal
action triggers compliance with the National Environmental Policy Act
of 2005 (``NEPA''). NEPA is a procedural statute designed to ensure
that Federal agencies evaluate alternatives to a proposed Federal
action, taking into consideration the potential environmental and
social impacts of the alternatives and the views of the public. Except
for the United States Government, no owner of land in the United
States, other than an Indian tribe or an Indian allottee, is subject to
NEPA with respect to land use transactions. Unlike Indian lands, which
are owned beneficially by Indian tribes or Indian individuals, other
Federal and public lands are generally owned for the benefit of the
public at large. Many tribal representatives have felt that application
of NEPA to tribal land use decisions unfairly encroaches on tribal
sovereignty. To be sure, Indian tribes are bound to substantive
environmental protection laws of general application when Congress has
indicated its intent to bind tribes. So long as a proposed energy
lease, business agreement, or right-of-way was to be performed in
compliance with those substantive laws, however, the evaluation of
multiple alternatives to a tribal land use decision and inclusion of
the public in second-guessing a tribe's decision were objectionable.
Further, in the context of energy development, the NEPA process
penalized tribes. Energy development on private lands adjoining tribal
land does not require NEPA compliance. Thus, while Federal officials
undertook detailed evaluation of alternatives to a tribal energy lease,
for example, tribal oil and gas resources were being drained by their
neighbors. Particularly for tribes, like the Southern Ute Indian Tribe,
with sophisticated energy and environmental staffs and decades of
proven success, the NEPA review process was frustrating and damaging.
After several years of legislative consideration, Congress offered
tribes the alternative reflected in Section 2604 of the Energy Policy
Act of 2005, through the vehicle known as a ``Tribal Energy Resource
Agreement'' (``TERA''). A TERA is a master agreement which may be
entered into between a tribe with demonstrated capacity and the
Secretary. Upon entering into a TERA, an energy-related lease, business
agreement, or right-of-way with a TERA-tribe no longer requires
Secretarial approval, and, thus, no longer requires NEPA review. In
place of NEPA, however, Congress required that a TERA-tribe establish a
tribal environmental review process that allows for limited public
participation. Under the statute, a TERA would also permit a Tribe to
assume Federal administrative functions related to review and operation
of energy development on tribal lands.
Inexplicably, Title 1--Section 104 appears to increase rather than
decrease application of NEPA in Indian country. Section 104 establishes
mechanisms, utilizing 638 Contracting, under which Indian tribes may
undertake preparation of comprehensive programmatic environmental
review documents related to energy resource development. These
programmatic environmental review documents are themselves subject to
NEPA review. Even if a tribe were to participate under Section 104,
nothing in the discussion draft would eliminate Secretarial approval or
subsequent NEPA review of an actual energy lease, business agreement,
or right-of-way proposed in conformity with the programmatic NEPA
planning document. Significantly, Section 104 would also re-write the
prior TERA statute to now require that a tribal TERA environmental
review process satisfy new Federal standards to be developed by the
Office of Indian Energy and Economic Development. In our view, Section
104 is a step backwards, not a step forward.
In summary, with respect to Title 1 of the March 12th discussion
draft our position is as follows:
Section 101 (Indian Energy Development Offices)--Seriously
question.
Section 102 (Indian Energy Program Integration Demonstration
Projects)--Seriously question.
Section 103 (Predevelopment feasibility activities)--Strongly
support, but would allow for renewals.
Section 104 (Comprehensive energy resource planning)--Strongly
oppose.
Section 105 (DOE Indian energy education planning)--Support.
Section 106 (Appraisals)--Strongly support, but would expand.
Section 107 (Technical assistance from DOE National
Laboratories)--Support.
Section 108 (Preference for hydroelectric preliminary
permits)--Support.
Section 109 (Study on inclusion in electrical infrastructure
planning)--Support.
C. Title II--Energy Development and Energy Efficiency
Title II--Section 201(Leases and Rights-of-Way on Indian Land)
proposes a number of statutory changes designed to address existing
statutes affecting Indian mineral and non-mineral leasing and rights-
of-way. The first issue addressed by Section 201(a) and (b) is to
confirm that a mineral lease of allotted or tribal land may also
include an associated right-of-way without the necessity of a separate
right-of-way document. We generally support this proposal; however, we
also believe that this provision requires a drafting change.
Specifically, in addressing the contemporaneously issued right-of-way
under the Allottee Mineral Leasing Act of March 3, 1909 (25 U.S.C.
Sec. 396), Section 201(a)(2)(B)(i) would eliminate the separate
approval of ``the applicable Indian tribe . . . pursuant to the Act of
February 5, 1948 (25 U.S.C. 323 et seq.).'' See page 34, lines 14-17 of
the March 12th discussion draft. This provision should be changed to
confirm that any proposed right-of-way crossing tribal land issued
contemporaneously with an oil and gas lease of allotted land, must be
separately approved by the applicable Indian tribe pursuant to the Act
of February 5, 1948 (25 U.S.C. Sec. 323 et seq.). Since passage of the
Indian Reorganization Act of 1934 (``IRA''), Congress has consistently
recognized that tribal consent is a pre-condition to the valid use of
tribal land. That consistent treatment should not be altered in this
provision.
The second issue, which is addressed in Section 201(c) and (d) of
the March 12th discussion draft, is the duration of leases that may be
issued by tribes under the Long-Term Leasing Act (25 U.S.C.
Sec. 415(a)) or by tribal corporations chartered under Section 17 of
the IRA (25 U.S.C. Sec. 477). Section 201(c) and (d) would expand the
terms of those durational provisions, and, because they would increase
the options available to tribes, we support those provisions.
Title II--Section 202 (Application for Permit to Drill Fees Not
Applicable) of the March 12th discussion draft would confirm that
increased fees imposed by the Bureau of Land Management for each
application for a permit to drill (``APD'') submitted to that agency
would not apply to APDs submitted with respect to Indian lands. We
support this change.
Title II--Section 203 (Distributed Energy and Community
Transmission Demonstration Projects) of the March 12th discussion draft
would authorize the Director of the Office of Indian Energy Policy and
Programs for the Department of Energy to conduct not less than 5
demonstration projects to increase the availability of energy resources
to Indian tribes and Alaskan Natives. We support this proposal.
Title II--Section 204 (Environmental Review) authorizes
participating Indian tribes to undertake NEPA review for energy
projects developed on tribal land that would otherwise be applicable to
the Secretary of Energy if the Secretary of Energy were conducting that
activity with respect to a Federal project. We do not clearly
understand the context of this provision, but surmise that it is
intended to address NEPA compliance that might arise in the context of
a DOE loan or grant to an Indian tribe for an Indian energy project. We
object to the purpose as stated to the extent that it suggests that
NEPA should apply to ``all energy projects developed on tribal land.''
See page 41, lines 5-12 of March 12th discussion draft. In that regard,
if a tribe undertakes such activity directly without a lease or other
instrument requiring Secretary of the Interior approval, then NEPA
would not typically apply to the tribe's direct energy development
activity, and we do not believe that the statement of purpose in
Section 204 should conflict with existing law. A more accurate
statement of purpose, consistent with existing law, would be to ensure
that NEPA review for Indian energy projects is completed with respect
to the Secretary of Energy's actions, when applicable. In addressing
that substantive issue, we submit that the best approach would be to
exempt NEPA review by the Secretary of Energy with respect to any such
projects on tribal land that do not require NEPA review by the
Secretary of the Interior and to also authorize the Secretary of Energy
to rely upon and concur in NEPA review undertaken by the Secretary of
the Interior when applicable under existing law. Notwithstanding the
positive approach authorizing delegations to tribes to conduct NEPA
review undertaken on behalf the Secretary of Energy, the current
language of Section 204 implicitly doubles the NEPA review that must be
undertaken in instances in which both the Secretary of the Interior and
the Secretary of Energy have some involvement. We believe that the
assumptions underlying Section 204 should be more carefully examined
and that a more constructive solution to non-duplication of NEPA review
for actions involving multiple Federal agencies should be pursued.
We generally support Title II--Section 205 (Department of Energy
Loan Guarantee Program), which would provide clarification and assist
in implementation of loan guarantees by the DOE for Indian energy
projects proposed by Indian tribes or tribal energy resource
development organizations.
We also support Title II--Section 206 (Inclusion of Indian Tribes
in State Energy Conservation Plan Program), which would expand tribal
participation in energy conservation planning programs currently
available to states.
Additionally, we support Title II--Section 207 (Home Weatherization
Assistance) which would expand access for home weatherization
assistance to tribes and would increase the administrative role of the
Secretary of the Interior for such programs.
We also support Title II--Section 208 (Tribal Forest Assets
Protection), which would provide for tribal demonstration projects
related to use of woody biomass for electrical power generation and
distribution.
In summary, with respect to Title II of the March 12th discussion
draft our position is as follows:
Section 201 (Leases and rights-of-way on Indian land)--Support
with drafting revision.
Section 202 (Application for permit to drill fees not
applicable)--Strongly support.
Section 203 (Distributed energy demonstration projects)--
Support.
Section 204 (Environmental Review)--Oppose unless substantially
revised.
Section 205 (DOE loan guarantee program)--Support.
Section 206 (Inclusion of tribes in state conservation
programs)--Support.
Section 207 (Home weatherization assistance)--Support.
Section 208 (Tribal forest assets protection)--Support.
D. Title III--Energy Financing
Title III--Section 301 (Transfer by Indian tribes of credit for
electricity produced from renewable resources) creates a special rule
allowing an Indian tribe's ownership interest in a renewable energy
facility to be treated as that of a co-owner for purposes of allocating
production tax credits under Section 45 of the Internal Revenue Code.
We strongly support this provision; however, we also believe that
additional provisions should be included in any final legislation to
reflect the indirect participation of an Indian tribe. Currently, there
is an economic disincentive for Indian tribes to acquire or retain
ownership interests in renewable energy facilities because there is no
way to monetize production tax credits associated with the tribe's
ownership interest. Production tax credits are a critical component in
the economics of renewable energy projects. Our tribe is the sole owner
or member of an alternative energy limited liability company that has
attempted to invest in major wind projects in the West. The absence of
tax credits attributable to our ownership interests adversely affects
the economic viability of those projects if we participate.
Additionally, under existing law, tribal participation complicates the
structure and the timing of our potential investments.
It is our understanding that the intended result of Section 301
would be to allow an Indian tribe to transfer the tax credits
associated with power production from a renewable energy facility and
attributable to the tribe's ownership interest to the taxpaying
partner. Currently, the proposal addresses only the transfer of energy
production, and we hope that final legislative language eliminates any
ambiguity with respect to the assignable character of the production
tax credits, while allowing the tribe to retain the sales revenue
attributable to its ownership percentage.
With regard to such facilities, it is most likely that a taxpaying
partner and an Indian tribe, or a business entity wholly owned by the
tribe, would form a special purpose entity, such as a limited liability
company, which would own the renewable energy facility. Tax liabilities
would typically track ownership percentages in the limited liability
company. Use of such special purpose entities is a common and accepted
way to limit general (non-tax) liability for the participating partners
beyond the value of the assets of the project. We urge the Committee to
consider modifying the definition of ``Indian tribe'' for purpose of
Section 45 of the Internal Revenue Code to also include a business
entity wholly owned by an Indian tribe. See page 56, line 22 through
page 57, line 8 of March 12th discussion draft. Modification of the
definition would allow for the following structure: (i) owner of
renewable energy facility is a limited liability company; (ii) owners
or members of the limited liability company that owns the renewable
energy facility, are (x) a wholly-tribally owned business entity, and
(y) a taxpaying entity. We urge the Committee to give Indian tribes the
same business flexibility that other investors possess by allowing for
the tribe's participation to be indirect rather than direct ownership
of a portion of the facility.
We also strongly support Title III--Section 302 (Investment Tax
Credits), which we understand would allow investment tax credits
attributable to an Indian tribe's ownership interest in an energy
property to be monetized. This provision would clearly provide
increased tax incentives for energy investment in Indian country, while
also encouraging ownership retention by an Indian tribe in such
projects. Again, for the same reasons discussed with respect to Title
III--Section 301, above, we would urge the Committee to consider
language that would allow the contemplated allocation of basis to flow
from an Indian tribe's wholly-owned business entity to the other
investor so that tribes would have the option of holding ownership of
an energy property indirectly rather than only directly through the
tribal government. This treatment would, for example, be consistent
with the use of tribal corporations under Section 17 of the IRA.
Title III--Section 303 (Permanent Extension of Depreciation Rules
for Property on Indian Reservations) is another provision of Title III
that we strongly support. Use of accelerated depreciation under Section
168(j) of the Internal Revenue Code has encouraged investment in Indian
country, and tribal leaders have repeatedly requested that the
accelerated depreciation rules be made permanent with respect to on-
reservation investments. Again, with respect to utility scale
investments, accelerated depreciation is a key factor in economic
feasibility. As with Section 301 and Section 302 above, we would urge
the Committee to incorporate language permitting a disproportionate
allocation of depreciation to a taxpaying partner of an Indian tribe or
a business entity wholly owned by the tribe.
We also support Title III--Section 304 (Permanent Extension of
Indian Employment Credit). Permanent extension of the Indian employment
credit under Section 45A of the Internal Revenue Code would continue to
encourage employers in Indian country to hire Indians.
Finally, we also support the statutory changes reflected in Title
III--Section 305 (Extension of Grants for Specified Energy Property in
Lieu of Tax Credits). These proposed changes would extend the time
periods during which investors in qualified renewable energy equipment
could make such investments and request grants in lieu of tax credits
under Section 1603 of division B of the American Recovery and
Reinvestment Act of 2009. Additionally, this section would make Indian
tribes eligible for such grants. Currently, tribes are not eligible for
this favorable tax treatment, yet they are looked to by their
communities for leadership with respect to such investments.
In summary, with respect to Title III of the March 12th discussion
draft our position is as follows:
Section 301 (Transfer by Indian tribes of renewable energy
production tax credits)--Strongly support, but also urge
modification to include wholly-owned business entities of
tribes.
Section 302 (Investment tax credits)--Strongly support, but
also urge modification to include wholly-owned business
entities of tribes.
Section 303 (Permanent extension of depreciation rules)--
Strongly support but also urge modification to include
assignments of depreciation from Indian tribes or wholly-owned
business entities of tribes.
Section 304 (Permanent extension of Indian employment credit)--
Support.
Section 305 (Extension of grants under 1603 of ARRA)--Support.
E. Title IV--Amendments to Indian Energy Policy Laws
Title IV--Section 401(Amendments of Indian Energy Policy Laws)
proposes a number of clarifying changes to the Energy Policy Act of
2005, some of which would help implement changes addressed in previous
sections of the March 12th discussion draft. We have no objections to
those changes; however, our previous comments regarding Section 101
(Indian Energy Development Offices) should be considered with respect
to Section 401(b) of the discussion draft.
IV. General Comments to Discussion Draft of April 16, 2010
The April 16th discussion draft addresses two principal matters:
(i) Amendments to the Indian Land Consolidation Act (25 U.S.C.
Sec. Sec. 2201 et seq.) and (ii) Amendments to the Energy Policy Act of
1992 (25 U.S.C. Sec. Sec. 3501 et seq.). Our remarks are limited to the
proposed amendments to the Energy Policy Act. As our previous comments
have indicated, our Tribe was a vigorous supporter of Title V of the
Energy Policy Act of 2005, including the provisions allowing for a TERA
between the Secretary and a qualified Indian tribe. Our support for the
TERA provisions was driven not only by frustrations in obtaining prompt
NEPA review for energy related transactions requiring Secretarial
approval, but was also motivated by our belief that our internal
capabilities in evaluating such transactions exceeded those of the BIA.
Since the mid-1970s, we have taken a hands-on approach to management
and development of our energy resources. Our extensive staff includes
geologists, engineers, land specialists, environmental specialists,
information technology experts, and lawyers. Our successful operations
in energy development have not been limited to on-Reservation
activities, but have also included exploration and production
activities in more than 10 states and the Gulf of Mexico. For us, the
costs associated with delays in obtaining Secretarial approval were not
offset by added value arising from Secretarial review.
Notwithstanding our support for the TERA provisions contained in 25
U.S.C. Sec. 3504, neither our Tribe nor any other tribe has yet entered
into a TERA. There are a number of reasons why no TERA has yet been
completed. First, the process of adoption of implementing regulations
took several years. Second, the regulations once promulgated withheld
from tribes the opportunity to assume ``inherently Federal functions''
related to their lands. This term was not mentioned as a limitation in
the statute and remains undefined in the regulations. The regulations
also left unanswered how the Secretary would measure tribal capacity.
Third, tribes remain reluctant to include the public in a tribal
environmental review process. Fourth, the financial expense of taking
over Federal administrative duties is imposing and TERAs provided no
funding mechanism. And fifth, TERAs are viewed by some tribal leaders
as relieving the Federal Government of its trust duties, primarily
because of the Federal Government's poor performance of those duties.
The April 16th discussion draft proposes statutory changes that
address some of the factors mentioned above, and we generally support
the proposed modifications. The remaining comments address specific
provisions contained in the April 16th discussion draft.
A. Definitions (25 U.S.C. Sec. 3501)
The April 16th draft would supplement the definition of ``tribal
energy resource development organization,'' which is an organization of
two or more entities, at least one of which is an Indian tribe, to
allow such an organization to enter into a lease or business agreement,
or acquire a right-of-way from an Indian tribe under specific
circumstances subsequently addressed in the statute. It should be noted
that one of the suggestions contained in Section 401 of the March 12th
discussion draft would amend the term ``sequestration'' set forth in 25
U.S.C. Sec. 3501(10). We are supportive of both of those definitional
changes.
B. Amendments to 25 U.S.C. Sec. 3504(a)(2) and 3504(b)
The proposed amendments to 25 U.S.C. Sec. Sec. 3504(a)(2) and
3504(b) would significantly and beneficially expand the instances in
which energy leases, business agreement, and rights-of-way involving
tribal land could be entered into without Secretarial approval. So long
as the Indian tribe retained majority control of the energy lease,
business agreement or right-of-way throughout the duration of the
instrument, and provided that a tribe had successfully carried out its
responsibilities over a 7-year period under a land use-related 638
Contract, Secretarial approval would not be required. We strongly
support this approach. First, it substantially eliminates the
uncertainty associated with measuring tribal capacity under the TERA
mechanism. Second, it eliminates the Secretarial approval process when
the affected, qualified tribe retains ownership and control over the
activities being conducted on tribal land.
C. Amendments to 25 U.S.C. Sec. 3504(e) (TERA Requirements)
The changes to 25 U.S.C. Sec. 3504(e) found on pages 17, 18, and 19
of the April 16 discussion draft are largely clarifying measures, which
we support. We also support the additions of 25 U.S.C.
Sec. 3504(e)(2)(F) and (G), which add certainty to the TERA disapproval
process and tribal capacity determinations for tribes with track
records of positive performance under the 638 Contract or self-
governance programs of the Indian Self Determination and Education
Assistance Act. The changes to 25 U.S.C. Sec. 3504(e)(6) maintain the
basic concept of retained Federal trust responsibility reflected in the
existing statute, but affirmatively restate the circumstances under
which Federal liability for breach of those duties will exist. We
believe that this clarification will provide meaningful assurance to
Indian tribes considering the TERA option.
D. Proposed 25 U.S.C. Sec. 3504(g)
This proposed addition would include a funding component to TERAs
that is lacking under existing law, by incorporating the 638
Contracting and self-governance mechanisms and applying them to TERAs.
Addressing the administrative cost issue associated with TERAs is a
significant positive development.
E. New Provisions Related to APD Fees
Unlike the discussion draft of March 12th, the fee provisions of
April 16th would allow APD fees associated with Indian lands to
continue to be collected; however, the use of those fees by the BLM
would be required to address permitting and inspection costs associated
with development of Indian lands. While we support the discussion draft
provisions of March 12th, the provisions of the April 16th draft are a
significant improvement over existing BLM practices.
Conclusion
The two discussion drafts addressing Indian energy issues are
responsive to concerns raised by tribes in testimony already presented
to this Committee. We have been honored by your interest and by our
inclusion in the process. We hope that our comments are useful to the
Committee in refining and formally introducing legislation on these
matters in the near future.
Senator Tester. We certainly appreciate your comments and
everyone's comments on the witness panel today.
Michael Marchand?
STATEMENT OF HON. MICHAEL MARCHAND, CHAIRMAN,
ECONOMIC DEVELOPMENT COMMITTEE; ENERGY
COMMITTEE MEMBER, AFFILIATED TRIBES OF NORTHWEST INDIANS;
COUNCILMAN, CONFEDERATED TRIBES OF THE COLVILLE RESERVATION
Mr. Marchand. Thank you, Members of the Committee, and
thanks for inviting the Affiliated Tribes of Northwest Indians
to speak today. I am speaking on behalf of President Cladoosby
who was not able to make it today.
My name is Michael Marchand. I am a Councilman at the
Colville Tribes. Also, I am teaching at my college. I am a
doctoral student in bioenergy at the University of Washington,
so a Husky.
The ATNI organization in the Pacific Northwest is 57 tribes
and they have been around for 50 years. For 15 years, ATNI has
had an active energy program, working with our membership on
these issues and trying to promote their needs and develop this
area.
ATNI member tribes are very interested in this because it
is a key to economic development on many of our reservations,
many of which are impoverished and our unemployment rates are
very high.
ATNI member tribes appreciate the efforts of this Committee
and the staff who seek the advise of tribes and organizations
prior to the drafting of this bill. Our representatives
attended roundtables regarding the concerns on energy
development in Indian Country. We are pleased to see many of
our suggestions for improving opportunities for energy
development in the bill, including the amendments to the Tribal
Forest Protection Act, which enhances our capabilities to
coordinate with our Federal neighbors both on and off
reservations. We have additional suggestions for improving the
bill as follows.
First, a number of the directives and authorities described
in the bill are for the Director of the Office of Indian Energy
Policy and Programs of the Department of Energy. This petition
remains vacant at this time. We strongly urge Congress to
request that the President make the appointment to this
important position as soon as possible. Apparently, funding
designated for use in this office is being diverted to other
offices within DOE pending the appointment.
We would like you to consider an option that would allow
tribal leadership to be more involved in this appointment by
establishing a timely process for tribal leaders to make
nominations and then requiring an appointment from the list of
nominees within a reasonable time frame upon the change of any
Administration.
Secondly, because many of our tribes have treaties that
cover the ocean and they are currently heavily dependent upon
ocean health, we request that a provision be added to give
Indian tribes participation on any federally funded group that
is studying or otherwise making recommendations related to the
Outer Continental Shelf. In addition, to the extent that States
have rights to share in royalties in energy development on the
Outer Continental Shelf, coastal and ocean treaty tribes should
also have the same right.
Third, we also support the amendments disseminated earlier
this week by Vice Chairman Barrasso, specifically those that
would amend that the Indian Land Consolidation Act to provide
tribes with more flexibility and additional funding for
consolidating fractionated lands.
Fourth, ATNI member tribes have strong recommendations for
improving the use of Federal funds for energy efficiency and
conservation in Indian Country. Most energy conservation
programs were designed with States and cities in mind and could
be improved for areas with substandard housing and old and even
dangerous government buildings such as many reservations have.
For example, we have found that the term ``weatherization''
has too narrow a definition when applied to funding sources.
Many buildings in Indian Country are substandard, even
dangerous. Weatherizing them does not make any sense. We
request a new provision that authorizes the use of fund for
repair or replacement of existing substandard buildings where
there would be overall cost and energy savings.
Another issue is that on many reservations, a large
percentage of housing is old mobile homes. Mobile homes built
prior to 1976 were not subject to building standards and are
therefore not energy efficient. We request that weatherization
programs be broadened to allow tribes the flexibility to assist
the community in the replacement of these older mobile homes
with newer, more efficient homes.
Thank you for this opportunity.
[The prepared statement of Mr. Cladoosby follows:]
Prepared Statement of Hon. Brian Cladoosby, Chairman, Swinomish Tribe;
President of the Executive Board, Affiliated Tribes of Northwest
Indians
Good afternoon Chairman Dorgan, Vice Chairman Barrasso, and Members
of the Committee. Thank you for inviting the Affiliated Tribes of
Northwest Indians to provide testimony regarding the Indian Energy
Promotion and Parity Act of 2010. I am Brian Cladoosby, the Chairman of
the Swinomish Tribe in Washington State and President of the Executive
Board of the Affiliated Tribes of Northwest Indians (ATNI). ATNI is an
organization of Indian Tribes that has celebrated over 50 years
representing tribes from Alaska, California, Nevada, Washington,
Oregon, Montana and Idaho on issues of concern to our people. For
fifteen years, ATNI has had an active energy program that has advised
our membership on policy issues and has provided technical assistance
and training to tribes, and has assisted federal agencies in better
serving our members.
The ATNI member tribes are very interested in this subject matter
because it is a key to economic development on our reservations, many
of which are impoverished and have unemployment rates that are much
higher than other areas of the country. Our member tribes include:
The Blackfeet Tribe, who has oil and gas issues, and also
the best wind energy opportunity in the United States, but also
lacks transmission access;
The Colville, Warm Springs, Coquille, Spokane, Salish &
Kootenai and Yakama Nations who all have excellent biomass
opportunities but are struggling to complete the development of
their projects;
At least ten Coastal tribes, and many other tribes with
treaties that protect salmon, all of whom are extremely
interested in energy development and protection in the Outer
Continental Shelf;
Numerous tribes developing vast potentials of wind, solar,
geothermal, and hydroelectric power;
Tribes who wish to address the impacts of renewable energy
endeavourers on and off the reservation by increased capacity
in the areas of legal, science and policy to ensure the
protection of their treaty and subsistence resources.
All our members are interested in energy conservation, and
who wish to make weatherization and low income programs more
useful to Indian tribes;
Many members, such as the Swinomish Tribe who has completed
a climate change adaptation and mitigation plan and who are
concerned about the effects of climate change in ocean, rain
and snowfall, and changes in fish and wildlife, and in our
culture;
Tribes who are developing traditional generation, wind,
biomass, hydroelectric, and transmission projects such as
Tulalip, Shoshone-Bannock, Crow, Umatilla, and Slitez that will
be able to move their projects forward and create many new jobs
by using the tax credits, accelerated depreciation, grants, and
employment credits provided for in this bill.
Many Tribes who will benefit from strong legal and policy
capacity building and coordination with neighboring industries
to address the challenges of converting the renewable energy
opportunities to profit.
ATNI and our member tribes appreciate the efforts of this Committee
and your excellent staff in seeking the advice of Indian tribes and
organizations prior to drafting this bill. Our representatives attended
the Roundtables held regarding the concerns of energy development in
Indian Country. We are pleased to see many of our suggestions for
improving the opportunities for energy development in Indian Country in
the bill. For example, our member tribes have emphasized the importance
of coordinating with neighboring federal and other government entities,
and with industry. We also emphasized building tribal internal capacity
to ensure the immediate and long term success of energy projects. Many
of the provisions in the bill reflect these suggestions and others that
were requesteded by ATNI member tribes (along with other tribes and
tribal organizations); including Sections:
103 (Predevelopment Feasibility)
105 (Including intertribal organizations as potential
recipients of energy assistance)
106 (Improving the land appraisal process)
108 (Hydroelectric Permits Preference to include Tribes)
109 (Including Tribes in Transmission Planning Studies)
201 (Coordinating leases and right of ways)
204 (Streamlining NEPA requirements during preliminary study
phases)
206 (Include Tribes in State Weatherization Plan Programs)
207 (Home Weatherization)
208 (Tribal Forest Protection)
301 (Production Tax Credit transferability)
302 (Extend Investment Tax Credits)
303 (Extend Accelerated Depreciation)
304 (Extend Employment Credit)
305 (Extend Grants for Energy in Lieu of Tax Credits)
401 (Agricultural practices are added to sequestration;
intertribal organizations added as potential recipients of
energy assistance, adding weatherization to energy department
priorities)
Some additional suggestions we would like to provide include:
A number of the directives and authorities described in the bill
are for the Director of Office of Indian Energy Policy and Programs of
the Department of Energy. This position remains vacant at this time. We
strongly urge Congress to request that the President make the
appointment to this important position as soon as possible. Currently
funds designated for use in that office are being diverted to other
offices within DOE pending the appointment. We would like you to
consider an option that would allow tribal leadership to be more
involved in this appointment, by requiring a timely process for tribal
leaders to make nominations, and then requiring an appointment from the
list of nominees within a reasonable time frame upon the change of any
administration.
Because many of our tribes have treaties that cover the ocean, and/
or currently heavily depend on ocean health, we request that a
provision be added to give Indian Tribes participation on any federally
funded group that is studying or otherwise making recommendations
related to the Outer Continental Shelf. In addition, to the extent that
states have rights to share in royalties from energy development on the
Outer Continental Shelf, coastal and ocean treaty tribes should also
have the same right.
We also support the amendments disseminated earlier this week by
Vice-Chairman Barrasso, specifically those that would amend the Indian
Land Consolidation Act to provide tribes with more flexibility and
additional funding for consolidating fractionated lands. ATNI has
previously expressed support for these and other initiatives, such as
the Indian Trust Asset Demonstration Project in S. 1439 (as introduced
in the 109th Congress), that would improve the federal government's
administration of the trust and encourage economic development. ATNI
urges the Committee to continue to address these issues both in the
discussion draft and in other contexts.
Some of the Bill's provisions that can be improved include:
Section 102 authorizes various federal agencies to coordinate on
Integrated Demonstration Projects. A provision authorizes the agencies
to waive certain regulations in order to implement an approved plan. We
believe that the authority to waive regulations would be strengthened
in the event of a court challenge if criteria for a waiver were
included in law. Potential criteria could include that a finding by the
Secretary be made that the waiver would not likely significantly impair
human health, cultural resources, or the environment, or that
alternative measures were in place to address these issues.
Section 203 directs the Director of Office of Indian Energy Policy
and Programs of the Department of Energy to conduct not less than five
distributed energy demonstration projects. These projects are excellent
ways in which we can immediately and cost effectively improve energy
use at the local level. This section would be improved by providing a
time limit, or by requiring a certain number of such projects ``per
year''.
We had strong recommendations for improving the use of federal
funds for energy efficiency and conservation in Indian Country. Most
energy conservation programs were designed with states and cities in
mind, and could be improved for areas with substandard housing, and old
and even dangerous government buildings such as many reservations.
For example, we have found that ``Weatherization'' has too narrow
of a definition when applied to funding sources. Because many buildings
in Indian Country are substandard and even dangerous, ``weatherizing''
them does not make sense. For example, the bill prioritizes the use of
``weatherization'' funds for windows, doors, repair of floors walls,
ceilings and secondarily for heating and cooling. These priorities
ignore problems with building roofs, needed structural repairs, mobile
home upgrades, water conservation measures, and many other conservation
programs that would be very beneficial in substandard housing or
buildings.
We also recommend adding a provision that authorizes energy
efficiency and conservation funds use for leveraging the replacement of
existing substandard buildings where there would be overall cost and
energy savings. On many reservations a large percentage of housing is
mobile homes. Mobile homes built prior to 1976 were not subject to
building standards and are therefore not energy efficient. We request
that ``weatherization'' programs be broadened to allow tribes the
flexibility to assist their community in the replacement of these older
mobile homes with new energy efficient mobile homes.
We support your efforts to improve energy development opportunities
in Indian Country. We also support this Committee's efforts to improve
the federal government's trust reform issues as they related to energy
policy. We encourage you to consider energy related changes and
clarifications to the Indian Land Consolidation Act by providing tribes
with more flexibility and additional processes for working with
fractionated lands and improving the flexibility for using income from
these lands.
We would be happy to answer any questions.
Senator Tester. I want to thank you for your testimony.
Before we hear from you, Mr. Andersen, I want to kick it
over to Senator Murkowski for a proper introduction.
STATEMENT OF HON. LISA MURKOWSKI,
U.S. SENATOR FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I appreciate
the opportunity to introduce to the Committee a gentleman, a
friend from Alaska and a true leader within our State. Ralph
Andersen is the CEO of Bristol Bay Native Association. He hails
originally from Clark's Point, which is outside of Dillingham.
He is the Co-Chair of the Alaska Federation of Natives
Human Resources Committee and has been a leader on so many
issues. He has had an opportunity to appear before the
Committee on numerous issues, but we look to him on guidance in
so many areas as they relate to the health and well being of
our Alaska Natives.
So Ralph, it is good to have you before the Committee
again.
Mr. Andersen. Thank you.
Senator Tester. Mr. Andersen?
STATEMENT OF RALPH ANDERSEN, CEO, BRISTOL BAY
NATIVE ASSOCIATION; CO-CHAIR, ALASKA FEDERATION OF NATIVES
HUMAN RESOURCES COMMITTEE
Mr. Andersen. Thank you, Senator.
Mr. Chairman, Members of the Committee, ladies and
gentlemen, thank you for the invitation to provide testimony
today. It is quite an honor for me to be here.
As introduced, my name is Ralph Andersen. I am the CEO of
the Bristol Bay Native Association and Co-Chair of AFN's Human
Resources Committee composed of the Chief Executives of the 12
regional nonprofit tribal consortiums in Alaska.
I also serve as Chairman of AFN's Energy Working Group and
as Chairman of the Bristol Bay Partnership, our leadership
group composed of the Chief Executives of the five regional
organizations in Bristol Bay.
BBNA is a nonprofit tribal consortium of 31 federally
recognized tribes in Southwest Alaska. Our region covers about
40,000 square miles and is about the size of the State of Ohio.
BBNA provides a wide range of social, economic, cultural and
educational services to benefit the tribes and the native
people of Bristol Bay.
A common goal of all these organizations that I chair or I
am involved with is to help find answers to lowering the high
cost of energy in rural Alaska. Rural Alaska faces unique
energy challenges that are hard for most to imagine. We pay the
highest per capita for electric power and fuel in the United
States.
The summer of 2008 was painful for us in rural Alaska. That
is when the price of crude went to nearly $200 a barrel and the
prices we pay for gas, diesel and heating fuel doubled or
tripled. The high crude prices added millions to the State's
revenues, but emptied the bank accounts of us living in rural
Alaska.
In the summer of 2008, a study by the University of
Alaska's Institute of Social and Economic Research showed that
rural Alaskans pay 41 percent of our monthly incomes on energy,
while urban residents pay four percent. Last winter, our hearts
went out to village people who have to choose between paying
the heating or fuel bill or buying food for their families.
During the past two years, we have seen more friends, more
families, more neighbors move out of our villages and out of
our regions because of the high cost of living. The high price
of fuel is the biggest factor raising our cost of living,
discouraging economic and business investments. It affects
every part of our lives.
Costs for groceries, fresh milk, a dozen eggs, airline
tickets, toothpaste, medicine, baby diapers, clothes, lumber
and building materials, car and truck parts, everything has
gone up. Rural Alaskans are experiencing an energy crisis and
we continue to feel its impacts. Despite the drop of crude
price, we continue to pay high costs. Retail prices for heating
fuel ranges from $2.88 a gallon to $10 a gallon. Retail prices
for gasoline ranges from $2.96 to $10 a gallon.
Delivering fuel to rural Alaska is complicated and
expensive. There is no comparable delivery model anywhere else
in the world. Fuel is transported thousands of miles from
either Anchorage or Seattle. Delivery windows are narrow and
often complicated by inclement weather or inhospitable
conditions such as low water levels needed for barges to reach
tribal communities along rivers and deltas. Fuel delivery
arrangements are often made several months in advance,
requiring significant financial commitments and the inability
to participate in the market fluctuations fully and to
appreciate low prices when they are available.
One way to reduce these costs for economic development is
to develop our power resources locally, become more energy
efficient, and practice conservation. We are strong supporters
of the development of alternative energy sources and many rural
Alaskan communities are actively working toward that goal.
I offer the following comments and recommendations on
sections of the discussion draft now before you. The draft has
been available to us for only a short time and I respectfully
request the Committee to give us some additional time for
comments and suggestions.
My remarks are today focused on sections in Title I and
Title II.
Title I, we are encouraged by the provisions in the
section, but believe it can be improved and strengthened by
requiring tribes to be consulted in the appointment of
directors to head the Indian Energy Development Offices. This
section should also include provisions for tribes or tribal
consortia to provide IEDO services under self-determination
compact or contract agreements.
Our experiences with existing DOI or BIA Indian energy
programs have not been as beneficial as we would like. We are
not sure how the energy funds are appropriated, how they are
being spent, because we don't see any solicitations or notices
in the Federal Register.
We are encouraged by the language in this section
supporting tribal energy resource development organizations.
BBNA and other tribal consortia in Alaska have established
tribal energy programs, but we lack funding to get them into
full operation or to fully develop their potential. The scope
of our program is limited by the amount of BIA compact funding
and funding my Administration is able to dedicate every year.
Soon after this Committee's energy oversight hearing in
Bethel two years ago, led by Senator Murkowski, we sent a
funding proposal at least twice to BIA, the Department of
Interior's Tribal Energy Program. We finally received a
response about a month ago that was not very encouraging.
Funding to establish and maintain tribal energy programs
should be provided for in this section, establishing three to
five-year power projects will help to improve their
effectiveness.
Title II, Section 203, we have offered in the past to be
part of a national demonstration project to help reduce energy
costs. We are encouraged by language in Title II, Section 203
calling for at least five distributed energy demonstration
projects for Indian tribes and Alaska Natives. We suggest the
number of demonstrations should be at least doubled to 10, with
a specific dollar amount of funds allocated over the pilot
project years based upon accomplishment of certain milestones,
and the funds be distributed through Public Law 93-638 contract
agreements.
Rural Alaska is comprised of small, isolated transmission
grids within each community. Many of our villages are not
connected to each other or to a larger energy grid where
economies of scale could keep prices down. There are a few
communities closely situated that are connected by an electric
intertie and others close enough together where interties would
be a natural.
I don't want to take up a lot of time. I want to encourage
that pilot demonstration projects under this section be
provided for.
Under Title II, Section 206, there are no programs funded
that support tribal energy efficiency and conservation efforts.
The Energy Efficiency and Conservation Block Grants established
by the Energy Independence and Security Act of 2007 wasn't
funded until ARRA, the American Recovery and Reinvestment Act
of 2009. This block grant calls for direct funding to local,
State and tribal governments to develop and implement projects
to improve energy efficiency, reduce energy use and fossil fuel
emissions.
Regardless of the future prospects of funding for EECBG, we
support the inclusion of a five percent tribal setaside of the
State Energy Conservation Plan Program, a more established
funding opportunity within the Department of Energy.
Title II, Section 207, the Department of Energy's Home
Weatherization Program is minimally funded compared to the vast
need in our Nation and in our region. Alaska is fortunate that
DOE funds have historically been used by the five recognized
contractors for the State for housing in our villages. In
addition, the Alaska Legislature has funded a program mirrored
on the Federal program, with funds allocated to the five
recognized contractors receiving DOE funds, but also to 14
Native Tribal Housing Authorities in our State.
Even with these new resources reaching our tribes, the need
far exceeds available resources. In Bristol Bay, approximately
1,300 of 2,500 homes in the region are classified as low income
according to the income guidelines. The need for weatherization
on low income homes exceeds $50 million. Of the 1,300 homes
that are classified as low income, with a mix of State and
Federal funding, we are able to weatherize 100 homes per year.
If we relied strictly on Federal funds, we would be able to
weatherize only 20 homes per year.
Current available resources will fund 10 percent of the $50
million needed, leaving a 90 percent gap. It is this gap that
must be filled.
That concludes my formal testimony. Again, I request that
we be allowed additional time to submit comments and
recommendations.
I will be happy to answer any questions. Thank you.
[The prepared statement of Mr. Andersen follows:]
Prepared Statement of Ralph Andersen, CEO, Bristol Bay Native
Association; Co-Chair, Alaska Federation of Natives Human Resources
Committee
Attachments have been retained in Committee files.
Current Community Conditions: Fuel Prices Across Alaska--
January 2010 Update.
Bristol Bay Energy Policy and Energy Crisis Recovery Plan:
Phase 1 and 2.
These attachments can be found at:
www.commerce.state.ak.us/dca/pub/Fuel_Report_Jan_2010_final.pdf
www.bbna.com/Energy/3_ImplementationStrategies_5-6-08.pdf
www.bbna.com/BBEPECRP_Apr15_gg_RA_5-7-08.pdf
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
The Chairman. [Presiding]. Mr. Andersen, thank you very
much.
Let me before I call on the last witness apologize to my
colleagues and to the witnesses for my absence. I was involved
in the debate on the Floor of the Senate and I was determined
to get the last word and it took me some while.
[Laughter.]
The Chairman. So thanks to Senator Tester and thanks to my
colleagues, and I will recognize them first for questions when
our next witness completes.
The next witness is Peter Stricker, Vice President of
Strategic Asset Development at Clipper Windpower, Inc., at
Carpinteria, California.
Mr. Stricker?
Mr. Stricker. Yes, thank you.
The Chairman. Thank you very much. You may proceed.
STATEMENT OF PETER STRICKER, VICE PRESIDENT,
STRATEGIC ASSET DEVELOPMENT, CLIPPER WINDPOWER, INC.
Mr. Stricker. Clipper Windpower and I would like to share
with you, Senator Dorgan and the entire Committee, our
appreciation and support for this Committee's commitment to
explore new ways to meet the challenges of tribal clean energy
and infrastructure development.
The discussion draft of the Indian Energy Promotion and
Parity Act is an encouraging step forward in addressing the
challenges and opportunities to finally create a sensible
development environment for the vast amounts of world class
renewable energy that is located in Indian Country.
We are encouraged by this Committee's recognition that
unlocking the renewable energy potential on tribal lands is a
key to meeting this Country's goals of energy independence and
reducing carbon emissions. Today, we are pleased to share with
the Committee our perspective as a U.S. wind development and
turbine manufacturing company that is partnered with and are in
mature stage discussions with numerous Indian tribes.
First, I would like to introduce you to Clipper Windpower.
Clipper began as a startup company in 2000, and now is the
developer of an 8,500 megawatt project portfolio and
manufacturer of one of the premier utility scale wind turbines
in the U.S. Well-placed DOE funding was key to creating our
turbine technology company, which now directly employs over 700
people and several times that indirectly in our supply chain.
We contend that similarly placed Federal incentives can
fundamentally help bring renewable energy development on tribal
lands into the windpower market.
Now, to the question of existing tribal wind projects. We,
no doubt like many others in this room, at some point have
asked ourselves: Why is there now only one commercial wind
project in Indian Country? It is an interesting question.
Without getting into great detail, I would like to list the key
issues as we see them.
One, project development costs. Given lack of existing
infrastructure on remote reservation lands and higher project
return requirements associated with higher development risk,
elevated costs are inevitable.
Two, regional siting competition. Additional permitting and
approvals are required on tribal land unless certainty as to
the associated process make tribal projects less desirable to
develop than adjacent non-tribal projects.
Three, transmission access and infrastructure. Access to
transmission is a substantial benefit for many tribal projects
primarily due to the scarcity of infrastructure and lack of
available capacity on existing lines.
Four, unworkable financial incentives for tribes as project
participants. Tribes have a keen interest in participating in
project ownership, but are fundamentally handicapped by their
inability to use tax-based incentives.
From Clipper's perspective, despite our commitment to
tribal projects, those projects must be weighed against others
in our portfolio as we wrestle with risk and budget
considerations.
Okay, so now let's talk about incentives, specific tribal
incentives. As an established member of the U.S. wind industry,
we recognize that tribal projects are disadvantaged and that
the provisions in this Act will move them in the direction of
being more competitive. In our mind, that is a reasonable
direction to take for tribal projects.
We also recognize that in addition to the broad benefit of
producing clean, renewable energy for the U.S., the benefits to
tribes are significant: sustainable and diversified tribal
economies, infrastructure development and professional training
of tribal members, to name a few.
Tailored financial incentives. This proposed legislation
would encourage private and tribal ownership of projects with
very limited impact on taxpayers. These targeted financial
incentives will help make tribal projects competitive, and
importantly, would only be granted to viable, successfully
completed projects.
Transmission planning and incentives. As currently
contemplated, the proposal for a large scale transmission study
in Indian Country is a positive step. But actually enhancing
access and building transmission infrastructure is what is
needed to make tribal projects go forward. For example, we are
well aware of limitations to move power out of the Dakotas,
which is home to many of the windiest tribal lands in the U.S.
Studies are plentiful, but very little transmission has been
built.
Now, I would like to mention the importance of a national
renewable energy standard. Finally, when considering tribal
incentives, it is important to note that the bottom line for
all renewable energy projects is the electric power markets.
Projects are driven by their ability to sell power, and
renewable energy standards drive markets.
To get meaningfully beyond wind energy's current installed
capacity of two percent of the U.S. power market, the piecemeal
approach of State renewable standards must be stepped up to a
Federal level with a national renewable energy standard. I
cannot emphasize enough the importance of a renewable standard
to the success of tribal and non-tribal projects to capture
this clean, inexhaustible energy resource for the long-term
benefit of the Country.
Without a capital commitment to projects and transmission,
infrastructure will be severely constrained and our industry
will never realize its potential. All other incentives,
including those proposed for tribes, will be less effective if
not in concert with a national renewable standard.
In closing, I would like to mention the interesting twist
of fate that has placed reservation lands in some of the
sunniest and windiest areas of the Nation. In addition,
critical transmission corridor siting has often occurred on
tribal lands. These two factors now present unparalleled
opportunities to tribes and their partners to finally develop
these world class wind and solar resources on a scale which can
fundamentally shift how we generate electric power in the U.S.
We thank the Committee for asking us to share our
perspective with you today, and look forward to the final
Indian Energy Promotion and Parity Act.
Thank you.
[The prepared statement of Mr. Stricker follows:]
Prepared Statement of Peter Stricker, Vice President, Strategic Asset
Development, Clipper Windpower, Inc.
Introduction
Clipper Windpower and I would like to share with you, Senator
Dorgan, and the entire Committee, our appreciation and our support for
this Committee's commitment to explore new ways to meet the challenges
of Tribal clean energy and infrastructure development.
The discussion draft of the Indian Energy Promotion and Parity Act
is an encouraging step forward in addressing the challenges and
opportunities to, finally, create a sensible development environment of
the vast amounts of world class renewable energy that is located in
Indian Country. We are encouraged by this Committee's recognition that
unlocking the renewable energy potential on tribal lands is a key to
meeting this Country's goals of energy independence and reducing carbon
emissions.
Today we are pleased to share with the Committee our perspective as
a U.S. wind development and turbine manufacturing company that has
partnered with and are in mature stage discussions with numerous Indian
Tribes. We are excited at the opportunities that lie ahead, but will
share with you today the particular vantage point that we have
regarding some of the complex obstacles facing the future of Indian
Country and prospects for any significant clean energy development into
the future.
Clipper Windpower
Clipper Windpower Development Company, Inc. manages over 8,500 MW
of wind resource development assets, and provides a full range of wind
energy project development capabilities focused on the sale of these
projects and the deployment of Clipper wind turbines.
Clipper Windpower has its origins as a start-up company in 2000
which received critical Department of Energy funding in its early years
to develop what is now one of the premier utility-scale turbines in the
United States. We employ over 700 people today and are proud that this
initial federal incentive allowed Clipper to realize its potential as a
U.S. company and to now advance our wind turbine technology in the
world market.
We share this particular company background today to illustrate the
power of well-placed Federal investments and incentives in clean
energy. We contend that similar combinations of incentives and Federal
leadership can make a significant difference for Indian Tribes seeking
a more balanced and competitive position with non-tribal projects, in
the form of Federal streamlining initiatives as well as appropriate
incentives for renewable and infrastructure investments in Indian
Country.
The Challenge of Developing Tribal Resources: Why Is There Now Only One
Commercial Wind Project on Tribal Lands?
We, no doubt like many in this room, prior to entering into
negotiations with several Indian Tribes on commercial wind projects,
asked ourselves initially why there is now only one commercial wind
project in Indian Country? What are the reasons for this lack of
progress when, clearly, there is plentiful world class wind resource in
Indian Country?
Although Clipper Windpower has made and is making commitments with
tribes, we remain concerned about key development challenges-which I
will note-are often further hampered by the larger market and
infrastructure challenges we as industry face on a broader level. That
being said, the fundamental obstacles have been and largely remain:
1. Project Development Costs. Reservation sites are often
further from grid and markets, placing an upfront cost burden
on the project in areas and often in incumbent utility markets
that have low-cost federal hydro and/or coal-fired power
supply. Keeping this in mind, the added risk of regulatory
uncertainty, creates an inverse need for higher rates of return
to compensate for probable regulatory delays.
2. Regional Siting Competition. Frankly, many Tribes are
competing with surrounding private property, as well as state
and federal lands, all of which have clarified and streamlined
and eased leasing and permitting processes. As a developer and
partner, it is far from clear what the processes are to lease
and permit tribal trust and allotted lands. There is a lack of
established protocols or even a pro forma renewable and
transmission leasing and permitting process for tribal lands,
making it more attractive to invest precious capital on lands
and jurisdictions which can provide both a clear path and level
of regulatory certainty so we as developers can stick to
development schedules.
3. Transmission Access and Infrastructure. A critical component
that is substantively missing in this discussion draft bill is
any incentives or initiatives related to transmission. We
cannot realistically talk about generation development without
discussing transmission development.
4. Unworkable Financial Incentives for Tribes as Project
Participants. We have seen in negotiations that Tribes have a
strong interest in ownership participation in wind projects but
realize that the opportunity to do so is constrained by their
inability to utilize tax-based incentives for wind For
instance, we have had prolonged discussions with Tribes in the
Dakotas as we have struggled together to identify ways in which
the Tribe could access equity or other capital, or structure
partnerships, to participate more actively in the development
and ownership of the projects. In the meanwhile, investments
and project development moves forward around them.
Certainly there are other hurdles to be overcome, but I will leave
it to other witnesses today to cover some of those. So let us circle
back again to the initial question and maybe we simply conclude that
the fact that there is only one commercial wind project in operation,
speaks for itself. Clearly something needs to be done to confront the
embedded challenges of developing on tribal land if there is going to
be any progress towards accessing the vast wind resources that exist
there.
Speaking from our experience, and although Clipper has made
development commitments in Indian Country, none of our prospective
tribal projects have yet reached the full leasing and permitting stage.
In making those commitments, we are looking to advance these projects
but are already faced with lack of clarity in the leasing and
permitting process, constrained transmission access and lack of
certainty on how tribal ownership may be structured--all of which is,
frankly, slowing us down. In the project development business, time is
money, and those projects which have built-in delays will be far less
competitive. In reviewing the projects in our development portfolio,
those on tribal lands must be weighed against others as we assess risk
and budget constraints.
The Need for Tribal Renewable Energy and Transmission Incentives
Specific Tribal Incentives Needed to Overcome Challenges of
Developing Projects on Reservations. We need tailored and specific
incentives because it is a fact that tribal reservation lands are
unique and pose unique challenges and opportunities. As a member of the
wind industry, we recognize that tribal projects are disadvantaged
coming out of the starting gate so that special consideration and
support is needed to make them viable. Unlocking tribal wind resources
will provide the U.S. a substantial source of renewable energy which
will not only reinforce our energy security but will also help to keep
that energy competitively priced for consumers. And the benefits to
tribes are significant: sustainable and diversified tribal economies,
infrastructure development and professional training for tribal
members.
Tailored Financial Incentives. And this proposed legislation, as it
is currently contemplated, would encourage private and tribal ownership
of projects with very limited impact on tax payers. It includes some of
the most significant elements to achieving financeable projects on
tribal lands: loan guarantees, assignability of tax credits, grants-in-
lieu-of-tax-credits, extension of the tribal accelerated depreciation
and employment tax credit provisions. Targeted financial incentives,
like these that are proposed, will help make tribal based projects
competitive with non-tribal projects and allow them to be financed, and
importantly would only be granted to successful projects.
Transmission Planning and Incentives. As you are probably well
aware transmission is critically needed to support the expansion of
U.S. wind energy. As currently contemplated, the proposal for a large-
scale transmission study in Indian Country is a positive step forward.
But this is one of the biggest conundrums facing tribal renewable
development: transmission--access to it and expansions of it in Indian
Country. From a tribal perspective, although a sizeable federal
hydropower and transmission footprint runs through Indian Country,
ironically, tribal renewable projects experience great difficulty in
securing access to the transmission infrastructure on their lands.
Clipper Windpower is deeply involved in transmission issues across the
U.S. and has particular experience with transmission development from
the Upper Midwest to Eastern load centers. We have observed the
opportunity for tribes in the Dakotas to interconnect with the Western
Area Power Administration, but are also keenly aware to the need to
deliver beyond WAPA's system to urban load. Like most non-tribal wind
development across the country, expansion of transmission is a key
element of tribal wind development.
The opportunity for renewable energy based transmission expansion
is that it can benefit tribal and non-tribal projects alike.
Transmission is a collaborative process requiring multiple stakeholders
to complete. Utilities, private developers, state regulators, the
Federal Government--and in some cases tribes--must all jump into the
ring and push for transmission expansion. In the case of tribal
projects, more Federal leadership will be required to overcome the
inherent challenges transmission projects, including encouragement of
public-private partnerships or tailored financial incentives for siting
transmission on tribal lands or providing for a more streamlined
interconnection process for tribal projects.
Secondary benefits of these efforts to expand renewable energy
transmission/collection systems would be creating a sustainable
infrastructure as well as bringing electricity to areas of reservations
presently not connected with the grid. The Tribes, the states, the
regions and the country will benefit from a more secure and robust
transmission infrastructure.
Setting the Stage for Tribal Renewable Energy Success: The Importance
of a National Renewable Energy Standard (``RES'') and
Consistent Energy Policy
Again, it is critical to place this historic tribal opportunity in
context of the power markets in which they will operate and the
viability of those markets. It is a fact, with a few exceptions, that
renewable projects are currently being built at rates that track
requirements of state renewable energy standards, the current
underlying driver for all renewable energy development in U.S. This
piecemeal state-by-state approach so far has resulted in barely 2
percent of national electricity demand being met by wind energy--for
renewable energy to make any sort of meaningful dent in the U.S. energy
portfolio, a Federal Renewable Energy Standard, or ``RES'' will be
needed.
All other incentives less effective if not in concert with a
national RES--above all, we must have a market to buy renewable energy.
Consistent and long-term energy policy will not just help tribal
projects, it will create a stable foundation for the renewable energy
industry as a whole. We have already experienced the development lags
when disrupted tax credit extensions have made it more difficult to
attract investment for longer lead-time projects, especially hurting
tribal projects.
As energy legislation moves this month and next, these tribal
provisions, which are wholly congruent, are important piece of the
puzzle and needs to be included in whatever legislation that moves
forward. Clarifying and streamlining tribal-federal processes as well
as leveling the playing field for Tribes are critical tools to be used
in concert to help tribal projects play catch up. However, after these
tribal-specific incentives and provisions are put into place, what
would tip the scale would be the creation of stable marketplaces
through a national RES.
An interesting twist of fate has placed reservation lands in some
of the sunniest and windiest areas in the nation. In addition, critical
transmission corridor siting has often occurred on tribal lands. These
two factors now present unparalleled opportunities to Tribes and their
partners to finally develop world class wind and solar resources not
just for the benefit of tribal communities but for the country.
We thank the Committee for asking us to share our perspective with
you today and look forward to the final Indian Energy Promotion and
Parity Act.
Peter Stricker, Vice President--Strategic Asset Development
Peter Stricker has been with Clipper since its beginning and
initially joined Clipper as Director of Project Engineering in August
2000. After serving within a number of senior positions at Clipper,
including leading project development, in September 2008, he was named
Vice President, Strategic Asset Development. An engineer by training,
Mr. Stricker came to Clipper from Enron Wind Corp. where he served as
Manager of Service Engineering. At Enron, he and his team of engineers
and data analysts provided comprehensive technical support and warranty
failure analysis for a fleet of 763 wind turbines installed worldwide.
In early 2001, Mr. Stricker led the development of CWD's project
portfolio to upwards of 6,500 MW distributed across the U.S. and in
Latin America, and directed commercial engagement and delivery of
transactions involving over 2,500 MW of project assets.
In addition to cultivating a team skilled in the acquisition and
development of finance-ready project assets, Mr. Stricker formalized
origination and transaction functions to support full market entry and
transactional capability within CWD. Mr. Stricker earned his Bachelors
and Masters in Mechanical Engineering degrees from the University of
Washington in Seattle, where he specialized in control system
engineering.
The Chairman. Mr. Stricker, thank you very much for that
perspective. We appreciate that.
Let me call on my colleague, Vice Chairman Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Chairman Box, if I could visit with you. You are down in
that kind of four corners area, Southwestern Colorado, and you
have had phenomenal success, in my opinion, in the things that
you have been able to accomplish. You have achieved incredible
success in developing oil resources, gas resources, and by and
large, I think you have done it through your own efforts,
rather than reliance on the Bureau of Indian Affairs.
And I am wondering if you could share with the Committee,
tell your story, if you would, about how your tribe really
assumed greater control over energy development on the
reservation. When did that happen? What steps did you take?
Because this really is incredible success.
Mr. Box. In the 1970s, our leaders, as I spoke earlier in
the testimony, basically because of the chipping away of
sovereignty or the way the Bureau of Indian Affairs was
handling the leases, recognized that they could develop the
core capacities to do, if not a better job, with more care for
the membership and control their own destiny with those
resources.
So they did, with a small amount of finances at that time,
invest in gathering those leases together and managing those
leases. Through those leases, they were able to get into the
gathering not only the development of the resource of natural
gas, but the gathering and the treatment of it through Red
Cedar Gathering Plant. And then from there, we were able to
take off.
There are probably some very key component things to
recognize in that. The way our tribal government was
structured, the Tribal Council was able to take those steps,
recognizing that for a period of time the membership were
unable to receive some of those benefits that normally would
have been available, although they were very minor at that
time. They took a sacrifice as a whole, as a membership, in
going into that direction.
So it was quite difficult, and I applaud the efforts of
those tribal leaders at that time that were able to take that
direction, knowing that in the future better planning through
financial planning, what we call the financial plan, which
developed the growth fund, the permanent fund in these entities
in which we were able to secure a protected government from
liability, so to speak, and allow for those entities under
their own management to make those decisions and move forward.
And so it is quite complex in regards to how the structure
was developed and then where it took off from there.
Senator Barrasso. If I could ask, I know you have been a
strong supporter of Title V of the Energy Policy Act of 2005,
including the provisions related to the Tribal Energy Resource
Agreements. But as you explain, some of the provisions in Title
V and the implementing regulations have discouraged your tribe
from entering into that. I have had some provisions that I have
been drafting and working on to try to improve it.
Do you have some additional ideas, things we ought to be
considering when we are preparing amendments for Title V?
Mr. Box. I believe what is put forth initially in the
beginning did have concerns of many tribes in regards to the
definition of the inherent Federal trust responsibility. I
think that some of the things that have been provided in this
discussion draft meet those expectations for our tribe, at the
least, in regards to those directions.
But also, more importantly, is the ability for tribes to
build that core capacity. As you know, in the 2005 title, Title
V, there were monies for that. And so that was another key
component in regards to those TERA regulations.
So I believe that we are very supportive of the work that
has been done on it to date.
Senator Barrasso. Thank you.
Mr. Marchand, if I could please, it is my understanding
your organization supports efforts, including the provisions in
some of the things that I have been working on, to address the
problem of fractionation. So having had an opportunity to
review some of this, can you talk a little bit about what your
thoughts are when we are preparing amendments to the Indian
Land Consolidation Act?
Mr. Marchand. I would just say in general, realty and land
is always the first stumbling block involved in any
development. Our Bureau of Indian Affairs people, many of them
are tribal members and I think they do their best, but they are
just really understaffed and the systems are really not working
really well. And the tribe is usually able to get its bigger
projects through, but it is almost impossible for the small
business sector to get through the system.
Fractionation is just a very difficult problem to deal
with, and I hope we can solve it.
Senator Barrasso. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Tester?
Senator Tester. Yes, thank you, Mr. Chairman.
I want to touch a little bit on the Tribal Energy Resource
Agreements. I will start with you, Joe.
The information I have in front of me says that in the four
and a half years since the Energy Policy Act of 2005 was
adopted, and these Tribal Energy Resource Agreements were a
part of that, that no tribe has applied for TERA. Does that
mean no tribe has filled out the application and the
application has not been approved? Or does that mean that no
tribe has applied for TERA? And could you shed some light on
why that is the case and what can be done to fix it?
Mr. Garcia. Senator Tester, I believe part of the issues
stem from an understanding of what the entire process is for
applying for any grant or any program or any funding. Sometimes
the tribes are under the impression than unless a project is
ready to go, it is hard to apply for anything.
That is part of the problem, but I think part of the other
issues have to stem from the bureaucracy that the tribes face.
And it is a matter of, I call it ``historical trauma.'' They
have been accustomed to dealing with any funding, and the red
tape that we had to deal with in going forward.
So that may be part of the issue, but as far as I know, New
Mexico tribes have not applied for any of that.
Senator Tester. Okay.
Chairman Box, do you see it the same way?
Mr. Box. I would like to add on that, too, in regards to my
statement with the TERA regulations. But there was also the
formula, I guess, that would be for secretarial use to
determine what core capacity really is and what that capacity
is. And so I believe what has been developed in regards to
proven track records of land management certainly provide more
incentive for tribes to take on that direction.
Senator Tester. Okay.
Mr. Stricker, I want to talk to you a little bit. You had
talked about incentives and some that work, some that don't
work very well. But in the end of your presentation, you talked
about the RPS and the need for an RPS.
Just to boil it right down to its basics, if we don't set
an RPS up, are we wasting our time with the incentives?
Mr. Stricker. I would say not. I think the incentives are
important elements of moving tribal projects forward and making
them more competitive with non-tribal projects. But I think
that the big picture is that the industry as a whole is
certainly confronted with what seems to be a strong desire for
this type of energy to be produced. But there is a declining
electricity market, and so the RPS is needed in order to
continue the replacement of fossil-burning generation with
wind.
So the problem the tribes are facing, just like the rest of
us who are developing non-tribal projects, is that there is a
large market that we all are selling into and the stronger the
market, the more chance there is for success.
Senator Tester. Okay. And you are working with the tribes
in, well, just tell me. Which tribes are you working with to
set up some wind development?
Mr. Stricker. We are working with Colville. We have a study
going on with Colville. We are negotiating an MOU with another
tribe who I won't mention at this point.
Senator Tester. That is fine.
Are these the first tribes you have been in contact with to
develop wind?
Mr. Stricker. No. We have actually spent considerable time
working with tribes along the Missouri River in the Dakotas. We
haven't signed agreements with them, but we have worked a long
way down the path towards understanding their issues and they
understand ours better as well.
Senator Tester. If this bill was passed, would it expedite
your ability to sign agreements to get your projects going?
Mr. Stricker. Yes, it would. Absolutely, yes.
Senator Tester. Okay. Last question. I will make it real
quick, and there are some other ones.
But Ralph, you talked about weatherization. You said if it
was Federal dollars, it would only be 20 houses, and with the
State dollars combined with the Federal, you can do 100. Can
you tell me why the money isn't flowing to the ground for
weatherization?
Mr. Andersen. Well, the money is flowing, I guess was my
point.
Senator Tester. Well, 20 is not many.
Mr. Andersen. Well, that is strictly with Federal funds,
but we are able to use a mix of State and Federal. And I think
a lot of it has to do, Mr. Tester, with a number of things. One
is income guidelines, because the cost of living is so high in
Alaska that many households that are actually barely making it,
that the household income would disqualify them from
participating in the program.
I had a long discussion with the CEO for our Housing
Authority before coming down here, and I asked him that
question as well. There are a whole mix of problems that are
involved in trying to increase the amount or use of Federal
funds in Alaska. The number one, or probably one of the top
issues that is involved is basically the income guidelines that
might work in America, but don't work in Alaska.
Senator Tester. Got you. Okay. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Senator Murkowski?
Senator Murkowski. Thank you, Mr. Chairman.
Mr. Andersen, I will go ahead and follow on to Senator
Tester's comments because I think your testimony was very
important to put into the record today.
I think it is difficult for people who have not been out to
some of our villages, been out to rural Alaska and had an
opportunity to appreciate the difficulties that are faced with
just the day to day living and the expenses that are associated
with being in a very remote area that is not accessible by
road.
So much of what you receive out in your area in Bristol Bay
comes to you by barge or it is flown in. People say, well, you
have barges coming up and down your river all the time. Well,
we don't. We have two barges that come in. Sometimes you only
have one barge a year. And to any one of you sitting out there,
I challenge you, plan your whole business for a year, your
whole family food sources for a year. You are the village
store. You have to think about what your community is going to
need because you have one barge.
Hopefully, in the bigger communities, you are going to have
access to two barges coming in a year. And otherwise, you are
stuck flying in your fuel, which happens in too many of our
villages because they misjudged. They are not able to pay for
the fuel up front as is required.
When I have an opportunity to bring folks from the Lower 48
up and go out into the villages, we look at the water and
sewer. We go into the schools, but we also go to the grocery
store. We look at the price of a box of clothes detergent,
Tide, and then you realize that you are paying close to $45 for
a box of Tide. Go and price the diapers. Go and price milk, if
you can find milk. In most of the villages, the smaller
villages, you won't have fresh milk.
It is a fact of what we deal with, and your testimony this
morning was very important in trying to convey some of the
challenges that you face. People cannot understand how you
could live in an area where 40 percent to 45 percent of your
income is spent on meeting your basic energy needs, when in the
rest of the Country you may be looking to, you say, four
percent. In some parts, it may be as high as six, seven, eight
percent. But we are talking close to 50 percent of your income.
So it is very important that you place that into the record.
I wanted to ask you a question about the access to
transmission and recognizing that we can do more with our
energy efficiencies if we have the ability to intertie, to hook
in with others. In some parts of the State, it is very
difficult because of the geography, because of the distances
that we deal with.
We are looking to some opportunities to tie in. I know up
in the Naknek area we are hopeful that we are going to do
better with the geothermal resource and then be able to tie in
as many as 11 villages to rely on that.
From a Federal perspective, and I appreciate your role
within AFN and your position as leadership on the Energy
Committee there, what more can we be doing at the Federal level
in partnering with the State to enhance and build out not only
some of our renewable energy projects, but how we deal with the
transmission side of it?
Mr. Andersen. Thank you, Senator.
There are a number of ways that assistance can be provided.
First, I want to explain to the Committee and to the people
listening here that I grew up in a small village. The
population is now 20. When I was a child, the population was
125 people, Clark's Point. I grew up without running water. I
grew up without electricity. I grew up in very what are
considered now primitive conditions. That was a way of life.
And in some cases the way in some of our villages throughout
rural Alaska, those conditions still exist.
How can we help or how can our Federal Government help to
deal with transmission issues? Well, one of the things that the
Bristol Bay Partnership did is we developed the Bristol Bay
Energy Policy and Crisis Recovery Plan. We did this a year
before a year before the big crunch hit us. We saw what was
coming down the pike and the partners, my counterparts in the
organizations agreed that the most we could do, the best we
could do now at this point is figure out a way or try to find
ways to deal with the most immediate problems, the most
immediate problem being the price of electricity.
Our energy policy and plan focuses on developing interties.
Like I mentioned in my testimony, there are some communities
that are very closely situated where interties are a real
natural. There are some where interties are now in place, such
as Newhalen and Iliamna. There is an intertie at Naknek, South
Naknek, and King Salmon. They are all intertied there.
There is more than one issue involved here, Senator,
because there is a definite connection between certain
activities. And a lot of our communities, my hometown of
Clark's Point of 20 people, we don't have the capacity there to
develop proposals to pursue funding agreements, to develop
complicated and technical programs and plans and things like
that.
One of the ways that we can use help on is really funding
our Tribal Energy Programs, because each of the regions in
Alaska, each of the rural areas in Alaska, this same need
exists, except we don't have the capital or funding to cover
costs for capacity-building, for plan development to pursue
grants.
The transmission issue, again we lay out a number of
scenarios in our recommendations in the Bristol Bay Energy
Policy and Plan, but we don't have the capital to develop any
of them, to put them in place.
In addition to that, there are multiple utility owners. I
will give you an example. In Dillingham, we have a local
resident who went and purchased wind generators for his own
home. The problem is that the utility company was very
reluctant to do any net metering so that he would be able to
sell back the excess power so that he can lower his electric
rates.
The same kind of issue is mirrored on a much larger scale
up at Nome, the Bering Straits region, where the Bering Straits
Regional Corporation installed an array of wind generators and
spent a lot of time negotiating the net metering with Nome
utilities.
So while there are some ways, again, that I believe we can
use a lot of help on, but then the issues become more and more
complicated as we try to develop some of those areas.
Senator Murkowski. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Udall?
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you, Chairman Dorgan.
And I first just want to thank you and your staff for all
the hard work you have put into the Indian Energy Promotion and
Parity Act of 2010. I think it is a very important piece of
legislation.
And once again, and I know you serve on the Energy
Committee also in the Senate. In order to put ourselves as a
Country on a path to energy independence, it is very important
to get the tribes to play a role in that.
And I would like to just put my opening statement in the
record and proceed directly to questions.
The Chairman. Without objection.
Senator Udall. Thank you.
[The prepared statement of Senator Udall follows:]
Prepared Statement of Hon. Tom Udall, U.S. Senator from New Mexico
I first would like to thank Chairman Dorgan and his staff for the
hard work they have put into the Indian Energy Promotion and Parity Act
of 2010, and for holding today's hearing on this important piece of
legislation. There has been an impressive amount of outreach to tribes
on this piece of legislation--including hearings, letters, and
roundtable discussions on draft legislation.
I would also like to thank all of the witnesses for joining us
today, especially my good friend Joe Garcia from Ohkay Owingeh Pueblo
in New Mexico. Joe is president of the All Indian Pueblo Council, and
former president of the National Congress of American Indians. He has
done much to benefit native communities across the country, and I
applaud his work to promote energy development on tribal lands.
Approximately 5 percent of the nation's land base is tribal land
that contains approximately 10 percent of the nation's energy
resources. Development of these resources means jobs for native
communities, electricity in rural areas, the national security that
comes with domestic production, and a great potential for development
and expansion into the renewable energy sector.
Native American Communities have long been hindered in energy
development efforts by bureaucratic delays and complications,
difficulty securing financing and tax credits, and a lack of access to
the grid. Chairman Dorgan's bill that under consideration today
addresses these longstanding problems.
In these times of economic difficulty and international turmoil, it
is more important than ever to remove the longstanding roadblocks to
energy development on tribal lands. I look forward to hearing testimony
today and to working with my colleagues on this Committee to push this
bill forward through the legislative process.
Senator Udall. A question for my good friend Joe Garcia
from New Mexico, from the Ohkay-Owingeh Pueblo. I don't quite
know what to call him. He has been President of the NCAI. He
has been Chairman. He has extensive experience and he has done
such a good job of working with native communities across the
Country, and I applaud his work in promoting energy
development.
Everybody should also know he is a lead singer in a band.
That is one of the best performances that shows up at many of
the parades across New Mexico.
Chairman Garcia, we have a provision in our draft bill to
direct more assistance from our national laboratories to Indian
tribes in developing their energy resources. It is my
understanding that New Mexico labs, Los Alamos and Sandia, are
involved in this kind of outreach, but they only do it on an ad
hoc basis and a limited basis.
Do you have any experience or knowledge of the labs' work
in this area? And what could our national labs do to help
develop tribal energy resources? Do you see a key role they
could play there?
Mr. Garcia. Thank you, Senator, for the introduction and
acknowledgment. My opening statement also includes an invite to
Chairman Dorgan, that when I first met him, we were going to
get together and play some guitar and sing.
[Laughter.]
Mr. Garcia. And maybe when you leave and your retirement
party or whatever, we can do so. That would be nice.
The Chairman. Maybe on ``American Idol.''
[Laughter.]
The Chairman. It would be the only and first duet on
``American Idol.''
Senator Udall. That would be a good combination.
Mr. Garcia. Yes.
Well, first off, Senator, I think one of the issues that
hinders progress in Indian Country is that there are these
partnership opportunities with such places as the national
laboratories, but it is not out in the plans, and they do do it
ad hoc and only when tribes ask for assistance in a specific
area.
And so I think in terms of energy development, that is why
it is important for expertise coming from places like the
Department of Energy, and the partnership between tribes and
the Department of Energy means a lot more and makes more sense
so that we can directly work on projects that directly work on
the development of a long-term plan, not just a piece here and
a piece there because that randomizes everything.
And I think, as you know, projects don't work well when you
do it that way. And so a long-term effort would be to include
the interactions and the partnerships of tribes directly with
the Department of Energy, not just on weatherization, but on
full scale development of energy.
What we also need to do is not look at just energy
development in the community. That is a different level, a
different scale versus the energy development in Indian Country
for commercial purposes. I think the big hard thing right now
is the transmission. There is not an easy way to get that
energy that developed from tribal lands out onto the grid for
transmission for internal use as a community or, in the bigger
case, export. And as you see the stumbling blocks already off
the bench that we can't sell it to the companies, although it
is part of Federal law that the companies have to buy energy
that is there available.
But the way to get it onto the grid was in my testimony
that if the grid is not ready, then there is no way we are
going to get the energy to distribution. And I think that is a
lot of work that we need to do on the grid building and the
improvement of the grid, but as well on the commercialization.
A lot of the technology that the laboratories possess and the
laboratories are not an expert in commercializing a lot of the
new technology that they build.
So we have to partner up with the tribes in identifying
what it is that we need to commercialize, and the tribes can be
sort of the grounds by which we can do the development with
both Sandia and the National Lab Los Alamos, but as well
throughout the others in the Country like Argonne, Hanford and
other places.
Senator Udall. Thank you very much.
I know you make a very important point on transmission.
Senator Murkowski said that. I know Chairman Dorgan feels that
ways, too. In order to access on a commercial basis, we have to
make sure when we do our transmission development we include
Indian tribes.
So thank you for that. Thank you for being here.
Thank you, Chairman Dorgan.
The Chairman. Senator Udall, thank you very much as well.
Let me ask, if I might, Mr. Stricker you talked about the
urgency of transmission. There is a great deal of potential for
wind energy development on Indian reservations across the
Country. In fact, many reservations are located where the sun
shines a lot and the wind blows a lot. To collect energy from
both of those sources is pretty easy to do these days with new
technology, but to collect it and not be able to send it to a
load center where it is needed is largely irrelevant.
So is it your impression that if we can address the
transmission piece of this, we will have addressed the most
important piece for Indian reservations?
Mr. Stricker. I think so. As you just said, there is the
wind resource itself, and the reservations in the Upper Midwest
is one area. Some of the best wind in the Country, and in fact
some of the best in the world exists on Indian reservations in
this Country.
And so certainly the ability to get that power out to a
market is fundamental. And I would say if you solve the
transmission problem, you probably can treat the other problem,
and the other problem is the market. You need to have a place
to sell it. And in fact if could export from the Dakotas to
Chicago, for instance, I think you are a long way to getting
the power to a functional market.
However, as you go through the different layers of trying
to plan strategic deliveries of wind projects, you start to
realize that in Illinois they are also wanting to build wind,
and so there is some resistance to imported wind from the
Dakotas because they want economic development in-State. And so
you start to have more State by State issues that have to be
resolved along with transmission.
But I think that transmission is a fundamental and key
piece that if there was let's say a substantial trunkline built
from the Dakotas to Illinois, you would suddenly have companies
buying, purchasers gravitating to that from the eastern side.
You would have potentially tribal projects and perhaps other
projects working together to get the transmission built.
So you have the opportunity to do some great development
around a transmission solution that in fact would really move
the ball significantly down the field.
The Chairman. Thank you.
Mr. Garcia, first of all, thanks for all of your work. It
is a pleasure to work with you on these issues and has been for
a long while.
You, in your testimony, described with interesting
language, you say the impact of this awkward statutory and
regulatory arrangement upon tribes is significant when you were
talking about weatherization, the delivery of a substantial
body of money to the States of $5 billion, with no assurance
that the tribe was going to get the funding.
Give me your best assessment of the experience so far with
respect to weatherization?
Mr. Garcia. Thank you, Mr. Chairman.
I think it is a variety of levels of functionality, if you
will. And certainly New Mexico is different than a lot of the
other States because the tribal-State relationship in New
Mexico is a lot better than, say, another State. And so we have
a lot of partnerships within the State of New Mexico working
with the local counties in terms of weatherization.
But if you sum it up in the bigger picture is that the
funds actually do go to the State and it is almost at the mercy
of the State that you have to apply for weatherization funds.
And that ought not to be the case. And I think Alaska is a
demonstration that if the relationship between the tribes and
the villages and the State are not very good, then you are
almost already hitting the wall from the word get-go and you
don't get access to those funds. And it is the same with a lot
of other programs, not just the Department of Energy funds.
That has been the dilemma.
And I think if we overcome that, the way to overcome that
is to provide direct funding to the tribes directly from the
Department of Energy, but also to have working relationships
with the Department versus having to go a roundabout way of
getting to those funds.
That is the only efficient way that we can do it because
you talk about the need, you talk about the priorities, you
talk about what you can address with the current funding, and
the dollars, you might say the middleman is out of the picture.
And so you have directly efficiency in the way you implement
the funding to meet the needs of the people.
The Chairman. Let me also say, I should have at the start,
that Senator Barrasso has recommended in a draft some
improvements that I think are a fine addition to what we are
trying to do here. I appreciate his work in those areas and
they are also incorporated in the discussions today.
Mr. Box, I was looking at your testimony. You have, it is
safe to say, mixed feelings about this legislation. Some parts
of it you have concerns with, and I think it is helpful to us
to understand your concerns.
You have a 700,000-acre reservation. Is that correct?
Mr. Box. Yes.
The Chairman. Give us again a description of the energy
that you produce. As Senator Barrasso said, you have been very
successful.
Mr. Box. The main energy that we produce is natural gas
from the Northern San Juan Basin. Like most tribes, the area
where we were situated didn't seem to be worth very much, but
in fact it did hold that large resource. And that, in fact, is
partly to our success is to have that resource.
The Chairman. Have you had difficulty in accessing it,
permitting, anything of that sort?
Mr. Box. Secretarial approval, signatures, mostly during
the BIA modernization era, I like to call it, millions of
dollars because of those delays. And so these are important in
regards to approval processes.
The Chairman. Yes. I asked the question because of our
experience with the Three Affiliated Tribes in North Dakota.
The most significant oil play in America is occurring there
now. It is called the Bakken Shale.
Mr. Box. Yes.
The Chairman. It is the largest assessed amount of
recoverable oil using today's technology that has ever been
assessed in the Lower 48 States, up to 4.3 barrels recoverable.
What our experience was is that the Bakken extends
throughout the Three Affiliated Tribes Reservation land and
that there was substantial oil development north of the
reservation; substantial development west of the reservation; a
lot of development south of the reservation; and virtually
none, virtually no wells being dug on the reservation, or
drilled, I should say.
And what we discovered was the Interior Department had four
separate agencies that had to weigh in on a drilling permit
request and there was, I believe, a 49-step process. Well, it
was just like walking through thick glue to get through it and
most of the development by oil developers, independents, they
said: You know what? We will just go north and west and south.
We don't need to put up with all of this. On State-owned land,
you get a permit like that. On private-owned land, just like
that. And if you decide you want to drill a well on the
reservation, you are going to be waiting forever.
So we put together a virtual one stop shop. It is not
perfect, but I am proud to tell you I think we have 37
producing wells right now on the reservation. And I think, and
I may be wrong, but about 17 drilling rigs that are drilling a
new well every 30 days. So there is a lot of activity going on
just because we unlocked the bureaucratic glue that existed
that prevented full access and development.
That is why I asked you the question of what your
experience had been.
Mr. Box. If I may as well, I understand the question, too,
in regard to the one stop shop. But along with secretarial
delays and those of our agencies signatures that need to be
taken care of, it is also the NEPA compliance. And that is an
important part of all of this.
It is not that we are totally against a one stop shop. What
we are concerned about is that agencies' expertise that exist
in these agencies that are necessary to handle approval
processes exist and oftentimes aren't very far from each other.
And now it is going down further into other areas, and we are
not sure that that expertise will carry on.
That is not all where we are concerned. It is just that it
is a great idea. We just want to be ensured that expertise will
also be included at those levels.
The Chairman. Yes, I understand your point. There are a lot
of good ideas that don't quite work out because they are not
implemented the right way. I take your point.
I do think in this case the ability to streamline, if in
fact when it is implemented is indeed streamlining, is very
important to unlock the full opportunity of energy development
on Indian lands.
Mr. Marchand, you made a point about one of the
recommendations of the Vice Chairman, which I strongly support,
and that is the funding for the consolidation of fractionated
lands. It has been my impression that fractionation is also an
impediment to development in many cases.
Can you describe that impediment?
Mr. Marchand. One example might be where a casino is
located. We have a casino located on an allotment called MA-8,
and there is about 60 landowners on the property. In that
property are also subleases to the master lease, and it has
been property that has been under development long before there
were casinos. It is on a tourist-based lake and there is some
leases for an RV park, for example.
And then trying to re-plan the area and redevelop it to
take advantage of a casino and resort development, we have had
to deal with these master leases and different groups. It has
just been a nightmare to kind of keep this all coordinated. We
have spent a lot of money on litigation. We were in court, and
nobody really wants to be there, but that is where we are at on
this particular piece.
And that is kind of how, you know, for top of the line
development for the Colville has been, but it is just a real
difficult problem everywhere you go.
The Chairman. Let me just say Mr. Garcia needs to leave for
the airport, so we will excuse you. Thank you for being with
us, Joe. Thanks for all of your work. You have been a great
friend to this committee and to Indian people all across the
Country.
Mr. Garcia. Thank you for the opportunity. We need to
discuss one other item, but I think we can do that over the
phone. It has to do with storage of energy that is developed.
The Chairman. All right. We will plan to do that.
Mr. Garcia. Thank you.
The Chairman. Sorry for interrupting you, Mr. Marchand.
But I think your description, the point you have raised is
probably a pretty apt description of the problem of
fractionation. And it seems to me that we ought to, as the Vice
Chairman says, we ought to try to more aggressively address
that because if that impedes development, full development of
the energy potential, it means we are losing jobs, losing
revenue opportunities in areas of the Country that most
desperately need the revenue.
This is important to me, and I know to Senator Barrasso as
well, for a very important reason. Number one, our Country
needs additional energy. We need additional production here of
all kinds of energy to make us less dependent on foreign oil
and to make us more energy secure.
But even as we look at that, when we understand that a
substantial portion of energy is available to be produced on
Indian lands, and that is where we most need economic
development and the creation of new jobs and new income
streams, it just seems to us there is an urgency to connect the
two.
And so what we are trying to do with legislation is to
remove impediments and to create incentives, both.
Now, some of these issues are much, much bigger than just
one hearing of this Committee. For example, building an
interstate highway of transmission capability that is modern,
that will deliver energy from where you can produce it to the
load centers where it is needed to be used, that all sounds
good. I can say that in one sentence. But it is the case that
it is very, very hard to do.
We have produced 11,000 miles of natural gas pipeline in
the last nine years in this Country, 11,000 miles. We have
produced 660 miles of high voltage interstate transmission
lines. Why? Can't do it. It is very hard. You have more
jurisdictions out there who can say no and do and will than you
can count.
And so we have a lot of work to do to put together a
national plan. And by the way, this is an advertisement just a
bit. The Energy Committee bill that we reported out included a
lot of work I and many others did, that sets up a planning
process, a siting process and a pricing process. You have to do
all three, planning, siting and pricing, in order to build new
transmission.
And we set that up, and we involved everybody in the local
planning, but we also, and I strongly pushed this, we also have
backstop authority for proceeding with FERC. Ultimately, if you
can't get it done, you have to have backstop authority for
somebody to say here's what America is going to do. Because our
transmission system is largely created around what used to
exist: a big power plant and then a bunch of wires in a circle
around the power plant that extends out 50 miles or 100 miles
or whatever it is.
And so that is the kind of transmission that was built in
this Country. And then what we did is we put some patches like
you put a patch on an inner tube between a couple of our little
spider webs of wires in order to see if we could connect the
systems. But that is not the same as having an interstate
highway system of modern transmission capability.
So I am determined to try to make that happen, which will
unlock substantial amounts of opportunity to produce
electricity on Indian lands all across the Country. These are,
in many cases, some more remote areas that really need the
opportunity to tie into a modern transmission grid system.
So let me thank all of you for contributing to this. And
let me also say that we are going to keep the record open for
two weeks. We would invite you, your tribes or others
interested in this to submit comments for the official record
on what you see as the merit and value of both the discussion
draft we put out earlier, as well as the discussion draft and
points that Senator Barrasso included in this hearing. And I
think that will give us the basis and the capability on which
to move forward.
Let me thank all of you, and again my apologies for being a
bit tardy today, but this is a very important hearing for this
Committee.
The Committee is adjourned.
[Whereupon, at 3:49 p.m., the Committee was adjourned.]
A P P E N D I X
Prepared Statement of Hon. David Wu, U.S. Representative from Oregon
______
Prepared Statement of the Blackfeet Tribe
The Blackfeet Tribe is pleased to submit the following comments on
the draft ``Indian Energy Promotion and Parity Act of 2010''. This
draft was the subject of a hearing before the Senate Indian Affairs
Committee on April 22, 2010.
The Blackfeet Tribe would first like to extend its thanks to the
Senate Indian Affairs Committee and its staff for the hard work that
has gone into the draft bill. We commend the Committee on its
leadership in these important matters.
The Blackfeet Reservation consists of over 1.5 million acres of
land. Oil and gas activity has occurred on the reservation since the
1930s. The Tribe also has significant potential for wind energy and
hydropower development, and also has significant timber reserves. The
Tribe therefore has a great interest in the draft bill and its
potential for removing the obstacles and disincentives to tribal energy
development that has been created by current laws. Our specific
comments are set out below.
Title I--Energy Planning
Section 101--Indian Energy Development Office
As a general matter, the Blackfeet Tribe supports much greater
coordination among the various federal agencies in the development of
Indian energy resources. We have supported the idea of one-stop
offices, and we do support the designation of a person within a
Regional Office to coordinate and insure the timely processing of
Indian energy material. However, we are concerned that the
establishment of only three such Indian Energy Development Offices
throughout Indian country will make the process more difficult, not
less difficult for the Tribe. Unless such an office is established
nearby, we would be concerned that the Tribe will have less access to
the relevant agencies.
We believe that the issues of how to best coordinate the activities
of the various federal agencies may need some additional consideration
given the varying circumstances among the tribes as to location, size
and significance of resources, and the particular expertise of
officials within the various agencies.
Section 102--Indian Energy Program Integration Demonstration Projects
We are not clear what Indian energy issue or problem this section
is intended to address. The section appears to establish a very
complicated process, but the benefits of the process for Indian energy
development are not entirely apparent. We do support a process by which
regulations can be waived where appropriate.
Section 103--Pre-Development Feasibility Activities
The Blackfeet Tribe fully supports this section which allows for
certain activities to be carried out without Secretarial approval to
determine the feasibility of, or in preparation, for development of a
renewable energy project, including the construction of temporary
facilities. This provision will greatly facilitate the decision making
process on tribal energy projects.
Section 104--Comprehensive Energy Resource Planning
The Blackfeet Tribe strongly believes that the manner in which the
National Environmental Policy Act (NEPA) is applied to Indian lands
needs full review and reconsideration. While the development of
programmatic documents under NEPA is helpful to streamline the NEPA
process as applied to tribal energy development, as this section
provides, it does not get at the heart of the problem--that Indian
lands are not public lands and should not be treated as if they are.
While the federal government is required to protect the public interest
in development that occurs on public lands, there is no similar public
interest in the development that occurs on Indian lands. Such
development is strictly a matter for tribes, in their sovereign
capacities, to determine. The NEPA process puts tribes at a very
significant disadvantage in terms of time and cost compared to
development on private lands where NEPA does not apply. This larger
issue is what needs to be addressed.
It is also not clear how this section is intended to work with or
coordinate with the TERA process. A comprehensive energy resource plan
is itself subject to NEPA and appears to require a more significant
public process than might be required under a TERA.
Section 106--Appraisals
The Tribe supports this section which allows for alternatives for
the conduct of appraisals, including tribal appraisals through 638
contracts or other arrangements and third party appraisers. Appraisals
are required in order to obtain federal approval for a variety of
activities, and this section will allow alternatives that will
facilitate such approvals, given the significant delays in BIA
appraisals. This provision will also allow for alternatives in
conducting appraisals where BIA does not necessarily have the necessary
expertise.
Section 108--Preference for Hydroelectric Preliminary Permits
The Tribe strongly supports this provision which provides a
preference for tribes in the issuance of preliminary permits for
hydroelectric development under the Federal Power Act in the same
manner as States and municipalities currently have preference. At the
present time, states and municipal governments have preference to
develop tribal water resources for hydro purposes on reservations, but
the Tribe, itself, has no similar preference. We agree that situation
needs to be remedied, and this provision is long overdue.
Section 109--Study on Inclusion of Indian Tribes in National and
Regional Electrical Infrastructure Planning
The Blackfeet Tribe has significant potential for development of
both wind power and hydropower. However the feasibility of such
projects is greatly impacted by the lack of transmission facilities.
Therefore, the Tribe fully supports this section which will identify
alternatives to address the lack of access to critical transmission
facilities.
The Blackfeet Tribe also supports Section 105 (Department of Energy
Indian Energy Education and Planning Management Assistance) and Section
107 (Technical Assistance and National Laboratories of the Department
of Energy).
Title II--Energy Development and Energy Efficiency
Section 201--Lease and Rights of Way on Indian Lands
The Tribe supports this section which allows for approval of all
necessary rights of way as part of a lease. In general, the Tribe also
supports the increase of lease terms and rights of way to 99 years
which will allow tribes more flexibility in entering into lease
arrangements.
Section 202--Application for Permit to Drill Fees Not Application
The Tribe fully supports this provision which will significantly
level the field in tribal development.
Section 204--Environmental Review
The Tribe fully supports this section which allows tribes to
conduct environmental reviews associated with Department of Energy
projects. Again, however, the Tribe believes that the more fundamental
issue of whether and how NEPA will apply on Indian lands must be
addressed.
The Tribe also supports the other sections of this Title, including
Distributed Energy and Community Transmission Demonstration Projects,
Department of Energy Loan Guarantee Program, Inclusion of Tribes in
State Energy Conservation Plan Program, Home Weatherization Assistance,
and Tribal Forest Assets Protection.
Title III--Energy Financing
Tribes have been unable to take advantage of tax credits and other
accounting provisions in the law that are intended to encourage energy
development. The Blackfeet Tribe therefore fully supports the
provisions in Title III that will allow tribes to benefit from these
tax credits and accounting provisions. Without such benefits, Indian
energy development in some cases may not otherwise be feasible.
Title IV--Amendment to Indian Energy Policy Laws
The Blackfeet Tribe further supports the proposed amendments to
Indian energy policies.
Again, we appreciate the opportunity to comment on the draft Indian
Energy Promotion and Parity Act of 2010, and thank the committee for
making these important issues a priority within the Committee.
______
Prepared Statement of Curtis R. Cesspooch, Chairman, Ute Indian Tribe
Business Committee, Uintah and Ouray Reservation
______
Prepared Statement of Hon. Michael Finley, Chairman, Confederated
Tribes of the Colville Reservation
______
Prepared Statement of the Pueblo of Laguna
At the Pueblo of Laguna, our history and destiny are intertwined
with energy production. The Pueblo Indians built the Country's first
passive solar homes. We used the sun to warm us in the winter and
careful planning brought us cool interiors in the summer.
At the Pueblo of Laguna, we have also lived with the consequences
of short sighted energy policy that would sacrifice human health and
our fragile environment. As home to the world's largest open pit
uranium mine for decades, we know first-hand the long lasting harm that
energy production can cause--our miners and villages are still
experiencing high rates of disease associated with radiation exposure,
and after years of clean-up that met federal standards of the time, we
can still see leaching from the old mine that covers nearly 1,000 acres
of now unusable land.
Because the Pueblo lives in the arid Southwest, we will bear a
disproportionate burden of an anticipated climate change that will
bring hotter summers, longer droughts, and less winter snow to feed our
rivers, agriculture, wildlife and traditions.
At the Pueblo of Laguna, we do not want to be passive in the face
of climate change. We refuse to stand by while others develop solutions
that may not solve our problems. We have the experience and resources
to be active in both managing the negative effects from climate change,
and developing energy production solutions that draw upon our historic
reliance on the natural environment to warm us and give us sustenance.
As an example, at the Pueblo of Laguna there are three (3) surveyed
sites that could provide up to 400 MW of solar derived electricity if
fully developed. The sites are adjacent to three (3) different high
voltage electric transmission lines. Two of the solar sites are also
crossed by a gas transmission line that could be used to complement a
solar energy facility. The Pueblo is willing to invest its own funds in
the development of these sites.
Under the existing federal incentives and transmission regulations,
however, these sites may not be developed because federal policy does
not encourage alternative energy investment in Indian Country in the
same manner as off-Reservation development. Utilization of the existing
transmission lines is moribund and complicated because of FERC
regulations and bottlenecked queues for transmission.
Indeed, in 2008, the Pueblo of Laguna invested time, energy and
resources as the land partner with a large solar developer interested
in providing 175,000 megawatt hours to the Public Service Company of
New Mexico. When PNM abruptly withdrew its RFP for the solar energy,
our potential solar partner pulled out of Laguna. Because we were
relying on the partner's utilization of federal incentives to make the
deal work and the transmission lines could presently only be used to
supply PNM--this ideal solar field is not in development. Our
experience highlights several problems that Congress can address:
First, Tribes need to be able to capture all the federal tax
incentives for generating new renewable energy plants similar
to non-Tribal businesses.
Unfortunately, the existing federal tax incentives do not
favor a model of energy development on Indian lands where the
Tribes are full partners and beneficiaries in the business. The
tax incentives, if not monetized, are useless to Tribes, and
make Tribes very unattractive partners. The Pueblo has
repeatedly called for Congress to offer the same incentives
available to non-Indian renewable energy developers available
to tribally owned renewable energy projects. We asked Congress
to consider monetizing the production tax credits and the
accelerated depreciation. We are pleased that the proposed
Indian Energy bill would allow for the transfer of tax credits
for electricity produced from renewable resources on Indian
lands. However, we are disappointed that the bill does not
address the accelerated depreciation that is available to
developers off-reservation. It is only through the combination
of both the tax credits and the accelerated depreciation that
most renewable projects can be financially feasible. Like
Tribes throughout the country, we call upon Congress to
monetize the accelerated depreciation. The impact to the
federal treasury would be the same, but the potential benefit
to Indian country would be significant.
Sect. 303 of the draft bill extends the accelerated
depreciation provisions found in IRC Sect. 168(j) for property
on Indian reservations by deleting the termination clause at
IRC 168(j)(8). Still, the benefits of accelerated depreciation
accrue to non-tribal owners, not tribes. There is no provision
for tribal owners to transfer this benefit to another owner as
is now allowed for Production Tax Credits, much less to sell
the accelerated depreciation benefit outright when a tribe is
the sole owner.
Second, Tribes should be able to monetize the tax credits on
projects they undertake themselves.
Section 301 only works if the Tribe can assign production to a
partner in a renewable energy facility thus forcing Tribes to
have a partner if they are to get the benefits of the tax
credits.
We urge Congress not to limit the ability to monetize the tax
credits to solely a tribe's partner in the energy generation.
While certain large scale projects would require a partner,
there are many small scale projects that a Tribe may wish to
pursue without a partner.
Requiring a tax paying partner would also add layers of
complication to the deal structure, which necessarily adds cost
to the project. The hundreds of thousands of dollars of extra
cost could financially doom a smaller project. We know of at
least one project that has at least $1 million in incremental
structuring costs that could be avoided under a monetized tax
credit approach.
The Pueblo urges Congress to develop a simple solution to the
need to monetize the tax credit and accelerated depreciation
benefits. Allow Tribes to sell the tax benefits on the market
to any taxable entity. The cost to the Treasury would be same,
yet the cost to the Tribes would be significantly less--putting
more money directly into the renewable energy project instead
of into financial intermediaries.
Third, the renewable energy potential of Indian Country must
not be restricted by the transmission bottlenecks. Tribes must
be included in national and regional transmission planning and
there must be a reform of the FERC queue process.
Sec. 109 of the draft bill calls for a study on inclusion of
Indian tribes in national and regional electrical
infrastructure planning. The study will assess the potential
for electric generation on Indian land from renewable energy
resources and the electrical transmission needs relating to
carrying that energy to the market. The Pueblo has already
identified the valuable potential for solar electricity
generation on its land and determined that access to close-by
PNM transmission lines are key to the viability of that solar
project.
Once again, Tribes do not want to be passive participants. The
transmission lines crossing our reservations should work for us
while at the same time helping to transition our country to
clean energy. The transmission lines crossing Laguna have
excess capacity for energy traveling away from Albuquerque. If
PNM does not want to buy power from a nearby reservation-based
solar plant, then we should be able to send that electricity to
other markets.
If the country is to get the benefit of the tremendous
renewable resource potential located in the heart of Indian
Country in the Southwest, then the reform of the transmission
grid needs to take into account our unique position and
opportunities. We need to be able to move renewable energy out
to the rest of the country. The bottlenecked queue process
means that even if we had solar electricity to sell tomorrow,
we could not feed it into the grid because of the two year plus
backlog in the FERC regulated queue.
Fourth, Congress should explicitly state that Tribes retain
jurisdiction over rights of ways.
Section 201 of the draft bill provides for the ``inclusion of
necessary and reasonable rights-of-way in leases'' of Indian
land. The Pueblo of Laguna reminds Congress that several courts
have interpreted rights of way granted by the Secretary as the
equivalent of non-Indian land. Tribes never intended rights of
way to be transformed into non-Indian land. We have lost too
much land over the centuries to allow the courts to decree that
when we allow others to use our land for energy or
transportation, we are giving up our jurisdiction over that
land. At the Pueblo of Laguna we will no longer use the right
of way statutes to grant easements across our Reservation.
Instead, we will utilize the leasing statutes. We recently
concluded two energy transmission right of way renewals using a
lease instead of a right of way. We urge the Indian Affairs
Committee to ensure that any legislation it proposes to modify
the right of way or leasing statutes preserve the ability of
Tribes to use leases for expiring rights of way, and contain an
explicit statement that it is not the intent of Congress to
strip Tribes of jurisdiction over their lands even if there is
an existing right of way. Since many energy rights of way will
not come up for renewal for decades, an express congressional
statement that Tribes retain jurisdiction in rights of way
would resolve the problems posed by Strate and lead to better
cooperation between energy companies, Tribes and the states.
Fifth, eliminate NEPA's application to approvals of leases or
rights of way.
A significant portion of the bill addresses the delays that
occur in the permitting process when developing energy projects
in Indian country. In some projects where there is no direct
federal funding, the only federal action is approval of the
lease or right of way. Tribal leaders have been arguing for
years that this application of NEPA to tribal lands places
development on tribal lands at an unfair advantage when
compared to development on private lands. The fact that the
United States has a trust obligation to approve the lease,
should not impose upon tribal projects additional burdens--the
trust relationship becomes a hardship rather than a benefit.
Eliminating NEPA's application to approval of leases will bring
tribal developments into the same approval process timeline as
other projects occurring on non-Indian, non-federal lands. It
is the simplest and quickest way to remedy the finding set out
in Section 2(a)(2)(B) that ``Federal policies have created
uncertainty and inequality regarding tribal energy
development.''
Finally, eliminate dual taxation on energy projects.
At the Roundtable discussion on Indian Energy legislation held
in Albuquerque New Mexico, our representatives raised the issue
of dual taxation and called upon Congress to eliminate the
burden that dual taxation would place on energy development in
Indian Country. State and local taxes should not apply to
tribal renewable energy projects, since tribes provide all
services for such facilities, which have little or no off-
reservation impact. As an example, in our negotiations over the
solar project, the non-Indian developer was asking the Pueblo
to waive its possessory interest taxes because they were going
to have to pay the county property tax on the lease. The Tribal
tax revenue was an important benefit of the project that would
have been hard to give up. Since there is not yet significant
renewable energy development in place in Indian Country, a
prospective pronouncement from Congress disallowing State and
County taxation of projects located on trust lands would not
have any negative impact on existing revenue streams to those
local governments.
______
Prepared Statement of Hon. Marty Shuravloff, Chairman, National
American Indian Housing Council
______
Prepared Statement of Hon. Ron Suppah, Chair, Confederated Tribes of
the Warm Springs Reservation Tribal Council
______
Prepared Statement of Jeff Crawford, Attorney General, Forest County
Potawatomi Community
On behalf of the Forest County Potawatomi Community (``FCPC'' or
``Tribe''), I would like to greatly thank the Senate Committee on
Indian Affairs (the ``Committee'') for its concern about and
understanding of Tribal energy issues as shown in its preparation of
the Draft Indian Energy Promotion and Parity Act of 2010 (the ``Draft
Act''). The Tribe strongly supports your efforts to promote renewable
and other energy development and energy-efficiency projects in Indian
Country.
The provisions in the Draft Act are greatly needed and will
significantly benefit both Indian Country and our nation as a whole,
since the Draft Act will allow Indian tribes more of an equal playing
field in developing renewable energy and energy-efficiency projects.
This is particularly important because of the vast renewable as well as
traditional energy resources that tribal lands possess and because of
the significant present hurdles to developing those resources.
As is discussed below, FCPC has made it a great priority to
implement energy-efficiency measures and to develop its available
renewable resources. However, it presently faces significant hurdles in
implementing these projects. Many of these hurdles would be addressed
through passage of the Draft Act. These comments focus on some of the
key elements of the Draft Act for the Tribe, as well as modifications
and additions to the Draft Act to help address additional hurdles that
the Tribe faces.
Among the most important aspects of the Draft Act are the
provisions that put tribes on an even playing field with other
renewable energy developers, by being able to utilize production tax
credits, investment tax credits and grants in lieu of investment tax
credits. This is crucial, given the critical importance of these tax
credits and grants to making renewable energy projects economically
viable. Accordingly, FCPC wishes to especially stress the importance of
these provisions in the Draft Act. In addition, because small changes
to these provisions would make them substantially more valuable to
tribes such as FCPC who are focused on developing their renewable
assets, these comments also include suggested modifications to these
provisions of the Draft Act.
Background Regarding FCPC Renewable Energy and Energy-Efficiency
Initiatives
Because of the Tribe's long dedication to protection of the
environment and because of the Tribe's goal of becoming energy
independent through the use of only renewable carbon-free or carbon-
neutral resources, the Tribe has taken significant steps to improve its
energy efficiency and to develop its renewable resources.
Energy-efficiency efforts. The Tribe has implemented an extensive
energy-efficiency program that has included energy audits of all of the
Tribe's major energy-using buildings. These audits have identified over
100 potential energy-efficiency measures, which the Tribe has been
working diligently to implement. As a result, the Tribe now uses 11.6
percent less energy per square foot of building space and has 19.7
percent less carbon emissions than in 2007. The Tribe is continuing to
put in place major energy-efficiency projects, in a continuing effort
to improve its overall energy efficiency. However, many of these
additional projects require substantial capital investments.
Accordingly, the provisions in the Draft Act that provide incentives
for energy-efficiency projects are very important to the Tribe's
continuing efforts to become more energy efficient and to lower its
carbon profile. In addition, as discussed below, allowing tribes to
transfer energy-efficiency tax credits, as other governmental units are
presently able to do, would be a very beneficial addition to the Draft
Act.
Renewable energy development. The Tribe is taking a number of steps
to develop its available renewable resources. These steps include
developing its Community Renewable Energy Project that utilizes the
extensive forestry biomass material on and around the Tribe's
Reservation, as well as biogas from digested waste materials, to
produce green energy and steam for use by the Tribe and sale to its
utility and potentially other third parties. The Project also includes
a biomass drying facility that produces significant amounts of dried
wood chips both for the on-Reservation biomass/biogas generation
facility and for use to displace significant amounts of coal in
existing off-Reservation power plants.
On January 21, 2010, the U.S. Department of Energy (DOE) named the
Tribe as one of the only five communities nationwide, and the only
tribe, to receive the competitive Community Renewable Energy Deployment
Grant. Under this grant, the Tribe would become a ``showcase''
renewable community, showing other communities how to become energy
independent in a sustainable manner. DOE awarded the Tribe a potential
$2.6 million grant based on DOE's recognition of the Tribe's
longstanding environmental commitment and because of the thoroughness
of the Tribe's application and its renewable energy plan. The Tribe's
application included several renewable energy components, including the
biomass/biogas energy and steam system and wood chip-drying facility
described above, as well as smaller biomass heating and wind and solar
generating systems.
The Tribe is also performing a feasibility analysis to potentially
develop a biogas digester and co-generation facility that will utilize
waste from the Tribe's Milwaukee Casino and surrounding businesses to
produce green energy and steam. In addition, the Tribe is evaluating
installing a large geothermal heating and cooling system to serve its
historic Concordia Trust Property, which is located in a Milwaukee
urban neighborhood, as well as potentially the surrounding area.
All of these projects involve significant planning and capital
resources, as well as permitting and other complexities. Accordingly,
the provisions in the Draft Act are very important to help make sure
that these projects become a reality. In addition, it is very important
that the Draft Act contain the suggested modifications below to help
ensure that it is beneficial to FCPC's renewable energy projects, as
well as numerous other projects in Indian Country.
FCPC Comments on Title I of the Draft Act
FCPC's strong support for federal program integration in Title I.
FCPC strongly supports Title I of the Draft Act, which allows for
integrated federal support of Tribal energy projects through
comprehensive planning, expedited permitting, and coordinated technical
assistance. This is a critical issue for Indian Country, where agencies
of overlapping jurisdiction and assistance are often involved in
renewable energy projects. This is the case with the Tribe's Community
Renewable Energy Project. Accordingly, the Tribe greatly appreciates
the provisions in Title I that provide for streamlining and
coordination among federal agencies of Indian energy matters and notes
that its Community Renewable Energy Project would be significantly
benefitted if it could participate as a Indian Energy Program
Integration Demonstration Project.
FCPC's strong support for development of Indian Energy Development
Offices and request for office in Midwest Region. The Tribe also
strongly supports establishing Indian Energy Development Offices in
regional agency offices as one-stop shops for timely processing of
Indian energy projects. The Tribe agrees that it is very important to
focus on efficient processing of Indian energy matters, since tribes
are a very important source of renewable and traditional energy and any
slowdowns in processing Indian energy matters hurts both Indian Country
and our country as a whole. The Tribe notes that it is very important
to have an Indian Energy Development Office in the BIA Midwest Regional
Office, which serves Minnesota, Michigan, Wisconsin and Iowa, given the
significant biomass and wind energy resources available in this area.
It is also very important that this office have expertise with respect
to these and other renewable energy resources available in this area.
Accordingly, the Tribe respectfully requests that the Draft Act
designate that one of the Indian Energy Development Offices is to be
located in the BIA Midwest Regional Office and that it focus on
renewable energy resources.
FCPC Comments on Title II of the Draft Act
FCPC's strong support for distributed demonstration projects and
FCPC's noting of need for funding of projects. The Tribe also strongly
supports Title II of the Draft Act. In particular, the Tribe supports
Section 203, which calls for the Department of Energy to conduct at
least five distributed energy demonstration projects. However, FCPC
notes the importance of making sure that there is adequate funding for
these demonstration projects. Accordingly, FCPC respectfully requests
that efforts be taken to ensure adequate funding for these important
demonstration projects.
FCPC's strong support for amendments of DOE loan program and FCPC's
noting of need for immediate effect of changes. The Tribe also strongly
supports the amendments to the Department of Energy Loan Guarantee
Program in Section 205 of the Draft Act. Since many Indian Country
energy projects require significant private investment to make them
work (especially if the investment tax credit, production tax credit
and grant in lieu of investment tax credit rules are not changed), it
is very important to make sure that DOE Indian loan guarantees are
available to tribal energy resource development organizations, as well
as tribes themselves. However, since these loan guarantees are
important right now, FCPC respectfully requests that the changes to the
Energy Policy Act of 1992 reflected in Section 205 take effect
immediately, rather than up to one year after enactment of the Draft
Act.
FCPC's strong support for inclusion of tribes in State Energy
Conservation and Home Weatherization Programs. The Tribe also strongly
supports both the inclusion of tribes in the State Energy Conservation
Plan Program (Section 206) and the Home Weatherization Assistance
Program (Section 207). The Tribe strongly concurs with the drafters
that there should be at least a 5 percent set aside for tribes under
the State Energy Conservation Plan Program and at least a 10 percent
set aside for tribes under the Home Weatherization Assistance Program.
These levels of funding are critical to help ensure the development of
energy efficiency, weatherization, and renewable resources in Indian
Country and to address historic lack of funding for Indian Country in
these important areas.
Request for effective allocation system for Section 206 like that
in Section 207. The Tribe notes that Section 206, regarding inclusion
of Indian tribes in the State Energy Conservation Plan Program does not
set forth factors regarding how resources under this program should be
allocated among tribes. FCPC respectfully recommends that Section 206
include an allocation provision similar to that provided under Section
207, regarding home weatherization assistance. This would allow for one
third of the funds to be allocated in equal shares among tribes that
elect to receive funds, while two thirds are allocated under
competitive grants. This would help ensure that sufficient funding
flows to tribes that have well-developed plans for projects that can be
effectively implemented once competitive funding is obtained, while
still ensuring that all tribes have access to funds.
Suggestion to not prioritize building repair and construction over
new heating and cooling equipment in Section 207. With respect to the
Home Weatherization Assistance Program, the Tribe strongly supports the
provisions that recognize the government-to-government and trust
relationships between the United States and Indian tribes and therefore
remove potential barriers to the use of weatherization assistance funds
such as energy audits, grant limitations, income and other
administrative and other eligibility requirements. The Tribe notes,
however, that the requirement that activities funded primarily involve
the acquisition and installation of energy-efficient windows and doors
and the repair, replacement or installation of floors, walls and
ceilings and only secondarily involve the acquisition and installation
of heating and cooling equipment may not allow tribal members to
achieve maximum energy-efficiency gains. While for some Indian
households the installation of energy efficient windows and doors and
the repair, replacement or installation of floors, walls and ceilings
may be the most pressing energy-efficiency need, with respect to other
Indian households, with older and inefficient heating and cooling
equipment, installation of new equipment may be a substantially more
cost-effective measure. Accordingly, the Tribe respectfully recommends
that the Draft Act remove the distinction in priority between energy-
efficiency measures related to building repair and construction and
measures to install efficient heating and cooling equipment.
FCPC's strong support for and request for modification and
clarification of woody biomass demonstration projects. The Tribe also
strongly supports the addition of woody biomass demonstration projects
to the Tribal Forest Protection Act of 2004, as reflected in Section
208 of the Draft Act. This provision, which allows for contracts
between tribes and the Departments of Agriculture and Interior to
provide reliable supplies of woody biomass from federal lands for
Indian biomass demonstration projects, is critically important for
biomass energy projects, such as the Tribe's Community Renewable Energy
Project. While tribes such as FCPC often have significant forestry
resources, to make a biomass-energy project feasible, it is often
critical to obtain substantial additional forestry material. That is
the case with the Tribe's Community Renewable Energy Project.
The Tribe respectfully requests that the drafters add to the
selection criteria whether the proposed demonstration would add to the
electric reliability of the Indian land and surrounding areas. Many
rural tribes, such as FCPC, are located in areas with poor electric
reliability, and the siting of new biomass generation in these areas
can provide significant reliability as well as renewable energy
benefits. This added electric reliability is key to further economic
development in Indian Country.
In addition, the Tribe respectfully requests that this section be
clarified to indicate that contracts can be entered between tribes and
the U.S. Government to provide woody biomass so long as any portion of
the tribe's reservation is adjacent to any portion of the federal
lands. This confirmation is important, since many Indian lands, such as
the FCPC Reservation, are ``checker boarded.'' This checker boarding,
combined with the checker boarding of adjacent or nearby federal lands,
such as the Nicolet National Forest (which is adjacent to portions of
the FCPC Reservation but not others) may create confusion regarding
whether a tribe such as FCPC can enter into contracts with various
portions of the federal land at issue. With respect to the Tribe's
Community Renewable Energy Project, it appears likely that the most
effective location for the biomass/biogas generation facility may be on
Reservation lands that are not directly adjacent to the Nicolet
National Forest. Accordingly, the Tribe respectfully requests that this
provision be modified to clarify that contracts can be entered into by
tribes and the Departments of Agriculture and Interior for federal
lands that are adjacent to any portion of a tribe's reservation.
FCPC Comments on Title III
FCPC very strongly supports Title III of the Draft Act, especially
the provisions that bring tribes into parity with states and local
governments and private individuals with respect to production tax
credit, investment tax credits and grants in lieu of investment tax
credits.
FCPC's strong support for Sections 301 and 302 and request for
limited modifications to substantially increase flexibility and value
of credits to tribes. The Tribe welcomes and strongly supports Sections
301 and 302, which would allow tribes to at least indirectly take
advantage of federal tax credits for investments in renewable energy
projects. However, the Tribe respectfully suggests that the transaction
costs associated with the transfer of these credits could be
dramatically decreased, and that both the value of the credits and
tribal flexibility with respect to Indian energy projects could be
dramatically increased, if tribes could transfer these credits to
taxable parties that do not have an ownership interest in a tribal
energy facility or in tribal energy equipment. The Tribe respectfully
proposes below, language that would allow tribes to more freely
transfer these tax credits:
Section 301: in proposed Section 45(e)(3)(B)(i) of the Code,
strike the words ``who has an ownership interest in the gross
sales from such facility'' immediately following the words
``the Indian tribe may assign to any other person.''
Section 302: in proposed Section 48(a)(6)(A) of the Code,
strike the words ``who has an ownership interest in the
property'' immediately following the words ``such government
may assign to any other person.''
This added flexibility should greatly aid the development of Indian
energy project without adding any additional costs to the Federal
Government.
FCPC's strong support for extension of Treasury grants to tribes.
The Tribe also welcomes and very strongly supports extension of the
Treasury grants to tribes. This change is critical since it allows, for
the first time, tribes to own their renewable energy projects, while
receiving critical financial incentives, available to other entities.
This will help tribes achieve true energy autonomy. However, while
extending the Treasury grants to tribes brings tribes closer to parity
with for-profit developers of renewable energy projects, the Code still
imposes a number of limitations on depreciation deductions for projects
owned in part by, or leased to, tribal governments. These include the
requirement that owners of projects leased to, or owned in partnership
with, tribal governments calculate depreciation deductions for those
projects using a straight-line depreciation method and much longer
recovery periods than would be available under the modified accelerated
cost recovery system. They also include the general limitation of
losses imposed on owners of projects leased to tribal governments.
These limitations on losses, and particularly the limitations on
depreciation deductions attributable to property leased to or owned in
part by tribal governments, impedes tribal governments from exercising
control over renewable energy projects on Indian land and therefore
hampers tribal energy autonomy. The Tribe believes that a logical--and
enormously beneficial--corollary to the extension of Treasury grants to
tribes would be to relax these limitations on a very limited basis and
allow for-profit entities that work with tribes to develop renewable
energy projects on Indian lands to take advantage of the accelerated
depreciation generally available to for-profit entities that place
business property in service on Indian lands. The Tribe feels that such
a rule, properly tailored to cover only renewable energy projects that
would otherwise be eligible for the Treasury grants, would remove a key
remaining imbalance between tribes and for-profit developers of
renewable energy projects, and would thus be integral to helping tribes
take control of and develop the energy resources on their lands. The
Tribe would, of course, be happy to work with the Committee in crafting
appropriate language to address this issue.
Request for harmonization of expiration dates of tax credits and
grants. The Tribe respectfully notes a disconnect between both the
placed-in-service deadline for the Treasury grants (December 31, 2015)
and the expiration of the provision allowing tribes to transfer ITCs
(December 31, 2014) and the latest placed-in-service deadline under the
ITCs (December 31, 2016). The Tribe respectfully acknowledges that
there may be myriad legislative concerns underlying this disconnect.
Nevertheless, for simplicity in the tax code, and to ensure that the
tribes have flexibility to choose the most appropriate ownership
structure for a renewable energy project, the Tribe respectfully
suggests that these expiry dates be harmonized to all fall on December
31, 2016.
Request for equal playing field regarding energy-efficiency tax
incentives. The Draft Act does not include provision for tribes to take
advantage of federal income tax incentives for energy-efficiency
projects. Currently, tribes are shut out of energy-efficiency tax
incentives that federal, state and local governments can allocate to
the developers of their energy-efficiency projects. See, U.S.C.
179D (d)(4). Unlike federal, state and local governments,
which are allowed to transfer these incentives to the developer of
their energy-efficiency projects, tribes are provided no such
opportunity. These energy-efficiency tax incentives are critical to
help FCPC and other tribes implement significant energy-efficiency
initiatives. Accordingly, FCPC respectfully suggests that the Draft Act
should allow for tribes to be provided equal access to energy-
efficiency tax incentives as are other government entities. This could
occur simply by adding federally-recognized Indian tribes to the list
of governmental entities that can allocate the tax incentive to the
person primarily responsible for designing the energy-efficiency
improvements.
Thank you for your consideration of our comments, and we look
forward to working with you to help ensure that tribal energy
development (including renewable-energy development) and tribal energy-
efficiency measures can be successfully implemented.
______
Prepared Statement of Hon. Edward L. Metcalf, Chairperson, Coquille
Indian Tribe
______
Vincent Yazzie
Flagstaff, AZ, May 5, 2010
Dear Honorable Senators,
I have been reading the draft version of the Indian Energy
Promotion and Parity Act of 2010.
It almost reminds me of the last chapter in the Book of Revelation.
Kill in the Name of energy development. The tribal entities will run
rough shod over the indigenous people for that gold, silver, uranium,
coal, peat, oil, gas, etc.
Again we have been pushed, shoved, and harassed off good grazing
into the deserts to live humble lives many years ago. Now there is
uranium, coal, oil, and gas under those lands and now you send
holocaust guards to do the dirty work of moving their own people off
the land and paying them in coupons.
At 36 degrees 7 minutes 54.52 seconds North, 111 degrees 14 minutes
22.90 seconds West, WGS 84 on Google Earth is a blown steam plant. A
Navajo Navy man ran the steam plant, but he retired and the people
replacing him did not know how to run it. One day it blew up spreading
asbestos threw out the whole building.
The tribes will start a power plant, but Indians will not be
running it. If Indians are going to be running power plants, they need
to spend two years at another power plant shadowing power plant people.
Do not let the BIA train the people or you get another blown up steam
plant.
Another broken dam is at 36 degrees 3 minutes and 10.31 seconds
North, 110 degrees, 35 minutes, 8.71 seconds West WGS 84 Google Earth.
Another broken dam is at 35 degrees, 46 minutes, 57.29 seconds
North, 109 degrees, 6 minutes, 21.36 seconds West. The dam was built
and someone used too much plastic explosive and drained the lake.
Giving tribes waivers is not good if they already had a history of
messing things up.
I say table the legislation.
Vincent Yazzie
______
**A copy of the Discussion Draft on the Indian Energy Promotion and
Parity Act of 2010 has been retained in Committee files and can be
found at www.indian.senate.gov under ``Issues''.**