Solar power on tribal lands: Part 1

Jan 26, 2011 - Ryan D. Dreveskracht - Planet Profit Report

Last month, the Quechan Tribe obtained an injunction that shut down a 709-megawatt solar farm planned for more than 6,000 acres of public land in the desert near El Centro, California. The project would have been one of the nation's largest solar facilities.

A number of factors have hindered the proliferation of solar projects on public lands. By far the largest hurdle, exemplified by the Quechan suit, is the permitting process. Indeed, a recent study found that in 2009 alone, traditional energy companies had received 1,927 leases for nearly 28 million acres of federally managed land, while solar companies had received none.

Because public lands fall under the jurisdiction of land stewards such as the Bureau of Land Management, a federal review under the National Environmental Policy Act, the National Historic Preservation Act and other federal laws is required. Obtaining permits that comply with these laws can take years and cost millions. Further, once the permits are granted, there will surely be litigation as to the propriety of the permitting process. As a result of these permitting setbacks, many solar companies that started in the supposed solar-boom of 2005 have gone bankrupt.

“Not in my backyard (NIMBY)” and collective action problems also loom large on public lands, despite support from the public and the environmental community. When it comes to specific siting, it seems, opposition to solar projects is universal. As recently reported by Newsweek, for solar developers “NIMBY” has been replace by BANANA: build absolutely nothing anywhere near anyone. As California Gov. Arnold Schwarzenegger said, “They say that we want renewable energy, but we don‘t want you to put it anywhere. I mean, if we cannot put solar power plants in the Mojave Desert, I don‘t know where the hell we can put them.”

Solar Projects in Indian Country

In Allen v. Gold Country Casino, the court noted that where a tribe owns and operates an economic development project, “there is no question that . . . economic and other advantages inure to the benefit of the Tribe.” This is true – relatively speaking. Tribes, as sovereign nations, are necessarily and by definition not restrained by the same mechanisms as are federal and state governments.

In other words, tribes have advantages, like China has advantages, when compared with the U.S. – the defining factor being that sovereign nations are able to enact their own laws and be ruled by them. Thus, neither states nor the Federal Energy Regulatory Commission can block solar projects on Indian lands. Where the energy goes is of no consequence either, since no “federal action” is required in the sale. Although “federal action” is required where a project affects a federal trust resource (i.e. land, water, etc.), the 2005 Energy Policy Act granted the Department of Energy the power to “authorize individual Indians and tribal governments to enter into energy development leases or business agreements without Federal review . . . .”

Further, unlike public lands, where there the “BANANA” mantra resonates, many tribes have shown a very active interest in solar projects. For example: the Jemez Pueblo are building the Nation’s first utility-scale solar plant on tribal land; the Pyramid Lake Paiute have installed numerous photovoltaic panels on their reservation; the Augustine Band of Cahuilla Indians are running a 1.1-megawatt photovoltaic renewable energy system on its reservation; and a Navajo company called Sacred Power will provide solar power systems to Navajo Nation homes without access to electricity.

Finally, although by no means exhaustive, a laundry list of economic incentives unique to investment in Indian Country is at least warranted: New Market Tax Credits; Utility Net-Metering Rebates; Investor Tax Credits; Renewable Energy Certificates/Green Tags; Employment Tax Credits; Accelerated Depreciation; Tax-Exempt Financing; Clean Renewable Energy Bonds; USDA – Rural Energy for America Program (REAP) Grants; Economic Stimulus Bonds; Discounted Leasing Rates; Federal Contracting Preferences; and Customs Duty Deferrals.

With solar electricity forecasts on tribal lands estimated to be 4.5 times the yearly total electricity needs of the U.S., Indian Country presents a very viable option for solar projects. If the tribal solar projects mentioned above are any indication, some tribes and energy companies have been catching on.

In Part 2 of this series I will explain why this is a good thing for tribes seeking sustainable economic development projects.