September 09, 2019

Winds of Change: Wind Energy on Tribal Lands

Rujeko (Rue) Muza

Introduction

Native American Tribes and Alaska Natives possess large quantities of land with great potential for wind energy projects. According to the U.S. Department of Energy (DOE), Native American territories comprise approximately 5.8 percent of land in the United States and represent an estimated 7.8 percent of total U.S. wind energy generation potential. Successful wind energy projects can provide Tribes with opportunities for income diversification, energy independence, and economic development. This is vitally important given that more than 14 percent of all Native American households do not have access to electricity.

Although wind energy projects have the potential to reduce energy poverty and scarcity on tribal lands, there are several legal, economic, cultural, and political barriers to development. Accordingly, the following paper is an overview of both the barriers to, and opportunities for, wind projects on tribal lands. The first section of this paper will provide an overview of wind resources on tribal lands by describing the “technical potential” for wind energy, jurisdiction over energy resources, and existing wind energy projects. The second section will discuss the legal, economic, and cultural barriers to wind energy development. The final section will discuss renewable energy portfolio standards, market deregulation, and energy justice as opportunities for future wind projects.

I. Overview of Wind Energy Resources on Tribal Lands

a. Potential for Wind Energy Technologies
Wind power generation has grown from around 4,000 megawatts (MW) of installed capacity in 2001 to over 82,000 MW of installed capacity in 2016, representing about 6.3 percent of total U.S. electricity generation. Nationally, 13 states generate more than 10 percent of their electricity from wind. The DOE estimates that U.S. wind energy capacity is more than 10 times the nation’s current electricity demand. The DOE also predicts that wind power could fulfil 20 percent of U.S. electricity demand by 2030 and 35 percent by 2050. Despite national trends and predictions, wind power development has lagged on tribal lands.

In July 2018, the National Renewable Energy Laboratory (NREL), a DOE research and development facility, conducted a study to estimate the potential for renewable energy generation on tribal lands. The NREL report states that the utility-scale “technical” generation potential of wind on tribal lands is approximately 7.8 percent of the total national technical generation potential. Technical wind potential is defined as “the resource potential that theoretically could be developed by considering the siting requirements for a given technology and incorporating the technology-specific performance characteristics.”It does not include any economic criteria for developing wind energy and is not meant to imply market potential. The tribal lands with the highest technical potential for wind electricity generation are located in Arizona, Oklahoma, South Dakota, North Dakota, Montana, and Utah, in that order.

b.  Jurisdiction over Wind Resources
Although there is large technical potential, developers are apprehensive about investing in projects because of the historical uncertainty regarding jurisdiction over Native American resources. By virtue of aboriginal political and territorial status, Native American Tribes are sovereign. However, jurisdictional boundaries over energy resources on tribal lands are often unclear.

Historically, federal policies regarding Tribes and their natural resources have ranged from assimilation to recognizing and protecting tribal autonomy. In early years, the federal government required federal consent for the lease of tribal lands. By 1830, the federal government adopted a policy of forcibly removing Native Americans from their ancestral land, pushing them to less desirable western lands. The policy then shifted to creating reservations for Tribes on federal lands held in trust by the federal government. These reservations were to be managed semi-autonomously by the Tribes.

By the end of the nineteenth century, Congress stopped entering into treaties with Tribes and adopted a policy designed to break up tribal lands by allotting land directly to individual Native Americans who had assimilated. Fortunately, this assimilationist policy ended in 1934 when Congress passed an act to hold all unpatented, allotted lands in trust for individual Native Americans. The legacy of these drastic shifts in federal policy toward Native Americans has created uncertainty and disputes about Native American resources. In recent years, policy makers have tried to implement policies to clarify and simplify processes for energy development on tribal lands. For example, under the Energy Policy Act of 2005 (Energy Policy Act), the Office of Indian Energy is authorized to fund and implement a variety of programmatic activities that assist Native American Tribes and Alaska Native villages with energy development, capacity building, energy cost reduction, and the electrification of Native American lands and homes. As part of the Energy Policy Act, Congress also passed the Indian Tribal Energy Development and Self-Determination Act (ITEDSA) to provide Tribes with a framework for developing renewable energy infrastructure. ITEDSA enables Tribes to regulate the conveyance of their own resources by giving them the authority to enter into leases and other energy construction agreements without federal supervision.

The Energy Policy Act and ITEDSA have simplified the process for developing wind projects on tribal lands. However, they do not eliminate regulatory duplication or confusion. As explained further in section III, ITEDSA still requires substantial federal involvement in energy project approvals. Further reducing regulatory barriers will help to increase the prevalence of renewable energy projects on tribal lands.

c.  Existing Wind Energy Projects
The Bureau of Land Management (BLM) has approved wind energy projects on public lands since 1982. As of March 2018, there were “over 35 BLM-approved wind energy projects on public lands with 3,284 MW of total installed capacity, enough to power one million homes.” In contrast, there are only 7 utility-scale wind projects on tribal lands, which are all located in California, South Dakota, Oklahoma, Alaska, and New York.

Wind energy projects can create a substantial increase in the standard of living for many tribal members. Small wind turbines allow for rural electrification, bringing power to remote parts of a reservation. Large wind farms produce a valuable commodity and produce high-quality jobs, such as electrical engineering and wind turbine mechanics. A notable wind project example is the Campo Band of the Kumeyaay Indians Wind Farm in San Diego County, California. The Campo Kumeyaay Nation was one of the first tribal nations to measure, collect, and voluntarily report data on greenhouse gas emissions. The wind farm was completed in 2005, and the Tribe is reinvesting the income into projects such as an overnight rest stop to stimulate the Tribe’s economy.

Another example is the 570 MW wind farm in South Dakota proposed by the Oceti Sakowin Power Authority (OSPA), a six-Tribe clean energy collective. In 2018, the Tribes entered into a majority-owned joint venture agreement with Apex Clean Energy to construct two wind farms. The goal is to generate 1 gigawatt (GW) of energy for joint use by the Tribes. The venture should be operational by 2021. Interestingly, none of the existing wind energy projects are located in the top fifteen tribal lands with greatest wind technical potential. Once operational, the wind farm in South Dakota will be the only wind farm operating on tribal lands with high technical potential.

II.  Barriers to Development

a.  Legal
Jurisdictional Questions.
 Questions about who has the authority to make energy resource decisions, and within what bounds, act as a barrier to wind development. The combination of tribal, state, and federal regulations often has a chilling effect on outside investment because it increases the complexity, cost, and risk of projects. States typically levy taxes on projects that occur on tribal lands, and taxation methods vary by state and county. For example, wind turbines leased by Tribes are assessed “one-time sales tax and property taxes by the state until they are wholly transferred to tribal ownership or other revenue sharing agreements are in place.” In the case of the aforementioned Campo Kumeyaay’s wind project, San Diego County received more revenue from taxing the Tribe’s lessee partner than the Tribe received from lease payments.

Tribes also have unique tribal constitutions and regulations that increase project complexity. For example, most Tribes impose Tribal Employment Rights Ordinances (TERO) that require all employers operating businesses on reservations to give preference to qualified Native Americans in all aspects of employment, contracting, and other business activities.

Federal guidelines and permitting processes include Federal Energy Regulatory Commission (FERC) compliance, National Environmental Policy Act (NEPA) compliance, and federal consultation requirements for leasing tribal lands. Although FERC and NEPA compliance slows everyone down, the additional layer of federal oversight required for tribal projects can cause significant project delays, further deterring outside investment. For example, the Oglala Sioux tribal leaders of the Rosebud Sioux Reservation were eager to build wind turbines on their land back in 2002. However, the Bureau of Indian Affairs (BIA) delayed approving the developers’ lease for over 18 months causing the Tribe’s Power Purchase Agreements with two local utilities to expire. Now, more than 16 years later, the Tribe is finally making headway toward a wind farm after joining OSPA and advocating for the aforementioned South Dakota wind farm project.

Costly federal delays are not unique to wind projects. In 2015, the U.S. Government Accountability Office determined that BIA shortcomings in relation to all tribal energy projects “can increase costs and project development times, resulting in missed development opportunities, lost revenue, and jeopardized viability of projects.” One Tribe estimated a $95 million loss in revenues it could have earned from tribal permitting fees, severance taxes, and royalties derived from a foregone oil and gas project.

Large-scale wind projects may also trigger traditional state and federal regulations when they spill over onto non-tribal lands or involve federally regulated development activities. For example, in December 2018, the Supreme Court was asked to take up a dispute arising from the development of a wind energy project in Osage County, Oklahoma. The court was asked to consider whether Osage Wind engaged in mining (for which it would need a mineral lease) when it removed soil, sand, and rock to build cement foundations for wind turbines. The U.S. Court of Appeals for the 10th Circuit held in the affirmative, prompting Osage Wind to seek Supreme Court review. Although, the Supreme Court ultimately denied the petition for certiorari, the Osage Wind dispute is a good example of why outside entities are apprehensive about making large investments on tribal lands.

Modern federal statutes like the 2005 Energy Policy Act and ITEDSA somewhat simplify the process for developing renewable energy projects on tribal lands. However, these laws do not eliminate the regulatory duplication and confusion in energy development on tribal lands. For example, ITEDSA still requires substantial federal government approvals. Before Tribes can: (1) enter into leases and business agreements for energy development; or (2) grant rights of way for transmission and distribution lines, without approval from the Department of the Interior (DOI), they must enter into tribal energy resource agreements (TERA) with the DOI. The Secretary is mandated to approve a TERA if the proposed agreement complies with a slew of statutory requirements, however the approval time is typically over a year. ITEDSA also provides multiple opportunities for public input into tribal decision-making, which causes further delay and conflicts with the goal of tribal self-governance.

The continued promulgation of flexible and expedited federal laws that simplify the process will help to reduce regulatory uncertainty, paving the way for increased wind development. The trend is well underway in relation to renewable energy generation on public lands. For example, in July 2019, Representatives Mike Levin (D-CA) and Paul Gosar (R-AZ) introduced the Public Land Renewable Energy Development Act of 2019. The bipartisan bill promotes the development of wind, solar, and geothermal energy on public lands by cutting red tape, making it easier to enter into leases on public lands, and updating permitting, siting, and planning processes. The text of H.R. 3794 has yet to be released. Accordingly, its ability to spur renewables on tribal lands is to be determined. However, new federal policies aimed at increasing renewables on tribal lands in particular must afford Tribes increased self-determination and greater jurisdictional control over their resources. Sovereignty puts decision-making in tribal hands and allows Tribes to better reflect the interests of their own communities. If a Tribe feels more in control, they may be more apt to create tribal laws that are conducive to outside investment and involvement.

Sovereign Immunity. A second legal barrier to development is sovereign immunity. Outside entities are often unwilling to enter into investment agreements with Tribes because disputes must be resolved in tribal courts absent waivers of sovereign immunity. Conversely, Tribes are reluctant to lose their ability to resolve conflicts pursuant to tribal values and beliefs by consenting to state jurisdiction. A potential solution is to model agreements between tribal governments and energy companies similarly to those between host governments in foreign countries and international energy companies. Energy arbitration agreements, wherein disputes are solved by neutral, pre-selected arbitrators could be a good way of ensuring fairness to both parties. Fairly negotiated arbitration agreements, whereby a tribal council member sits as one of the selected arbitrators, could reinforce tribal desires to be treated as sovereign nations and address historical distrust about federal and state court systems. If an arbitrator is selected from a different tribe, the arbitration process could also promote intertribal connectedness.

Land Ownership Patterns. A third legal barrier to wind development is the complex nature of land ownership on some reservations. The General Allotment Act of 1887, which allotted land to individual Native Americans who had assimilated, provided that their descendants should inherit equal shares of the undivided land should they die intestate. This has resulted in single parcels having thousands of co-owners, the majority of whom may need to agree to the wind project. Although developers can hire attorneys and landsmen to determine land ownership, tracking down and obtaining consent from multiple parties causes further delay.

Lack of Financial Incentives. A final legal barrier to development is the current legal framework for providing financial incentives to tribal governments. Under current federal law, tribal governments are considered sovereign, non-taxable entities that cannot use renewable energy financial incentives. Therefore, to obtain these incentives, Tribes often pursue “inverted lease structures with non-tribal partners, or simply lease the land for the duration of the project to an outside developer.” Leasing land instead of directly holding equity in a wind energy project often results in reduced revenue for the Tribe. A suggested solution is the reformation of federal financial incentives to include Tribes. The federal government could develop specific grants, loan rebates, federal power purchase agreements, and tax incentives for Tribes.

b.  Economic
Although the technical potential to generate wind exists on most tribal areas, economic viability functions as a barrier to wind development. Reservations are often remote and underdeveloped in terms of infrastructure. When a Tribe is not located near transmission infrastructure or a large metropolitan area, it can make finding electricity off-takers challenging. Several Tribes in high potential areas would require significant investment into transmission lines to make wind projects economically feasible.

Even though investment would be expensive, it could be argued that the federal government has a trust responsibility to the Tribe to approve such infrastructure. At a minimum, the federal government should be generous in their approval of rights-of-way across land managed by the federal government for transmission lines. Investments into large infrastructure could also be contrary to the movement toward a distributed generation system. However, small-scale investment into microgrids may be a viable alternative to large-scale projects requiring substantial transmission investments, as further discussed in section IV.

General grievances against wind power also bear mentioning. Wind is “intermittent,” meaning it only produces energy when the wind blows. Wind generators cannot be turned on and off like fossil fuel and nuclear plants, and thus a grid with lots of renewables needs resources that can ramp up and down to compensate for its natural variations. While energy storage and grid reliability issues are not unique to Tribes, they more heavily impact Tribes in remote locations. A suggested solution is continued research and development into smart grids and energy storage solutions such as batteries and electric vehicles to help make wind projects increasingly viable both on and off reservations.

c.  Cultural
Many Tribes have cultures and religions rooted in concern for ecological balance. Accordingly, there may be some conflict between wind projects and tribal beliefs. Land development may be at odds with cultural beliefs regarding the sacredness of the earth. Some of the aforementioned “high technical potential” lands may be where religious ceremonies are performed, where spirits or deities have interacted with humans, or where ancestors are buried. Large-scale projects have an even greater potential to negatively impact cultural resources, sacred sites, landscapes, plants, wildlife, and viewsheds. Mitigating impacts on these cultural resources pursuant to existing regulations does not always ensure a culturally sensitive solution. By way of example, the Osage Nation claimed that the Osage Wind farm has altered the people’s ability to cohabitate with nature. The Nation argued that the addition of wind turbines has reduced the Tribe’s ability to perceive the world through all five senses of the human body. Part of the previously described lawsuit was based on the Osage Nation’s cultural disapproval of the wind project.

Although each of the 573 federally recognized Tribes are unique and thus interpret and protect culture differently, wind energy can be compatible with many tribal beliefs, such as living in harmony with nature. For example, the six aforementioned Sioux Tribes believe energy is “a gift to be respected and harnessed for the good of humanity.” The Tribes have supported the proposed South Dakota wind farm project because they view wind energy as complimentary to that sacred part of their culture.

Internal politics may function as an additional cultural barrier to development. Tribes may be apprehensive about participating in larger capital markets and global financial systems because they reflect values in conflict with traditional cultural norms. Energy projects can also influence how people make a living, the distribution of power, and the nature of leadership within a Tribe.

A way of mitigating against internal politics is for Tribes to develop comprehensive strategic energy plans that engage tribal citizens and include cultural values into long-term energy visions. “Tribes that create strategic energy plans are more likely to develop energy resources in a manner consistent with their cultural values.” Moreover, energy plans can be used as a basis for evaluating future wind energy projects, thus streamlining the process and providing outside partners a greater understanding of tribal priorities.

A final cultural barrier is the historically rooted distrust between tribal nations and those seeking to develop lands. Tribal leaders often operate within a historical context of forced political reorganization, cultural removal, and economic devastation. The presence of economically valuable natural resources on lands occupied by Native Americans, and the desire for colonizers to exploit them, contributed to the aforementioned removal of Native Americans from the vast majority of their ancestral lands. Therefore, governments and land developers need broader improved relations with tribal communities. This means promulgating and abiding by laws that protect Tribes’ cultural resources, decreased disputes with Tribes over natural resources, and fostering meaningful relationships with Tribes to encourage future development.

III.  Opportunities for Development

Although there are several barriers to wind development on tribal lands, overcoming these barriers is not an impossible task. Today’s cultural and economic environment has created many opportunities for clean energy partnerships, particularly with underserved communities. Many states are enacting policies to incentivize clean energy development. Tribes, and those seeking to enter into partnerships with Tribes, should use and/or replicate these market mechanisms to spur development on tribal lands.

Moreover, movements like the Green New Deal are causing energy participants to think about ways of addressing inequity through energy development. As further explained below, wind energy projects on tribal lands provide a unique opportunity to remedy long-standing inequities while promoting the adoption of clean energy.

a. Renewable Energy Portfolio Standards
Tribes with access to electricity are usually connected to the grid and thus receive power generated by non-tribal sources. However, renewable portfolio standards (RPS) can be used to incentivize clean electricity generation on tribal lands. RPS require utilities to ensure that a percentage, or a specified amount, of the electricity sold is derived from renewable resources. States can be creative in the way they devise RPS programs. For example, states could introduce legislation that requires a certain percentage of renewable energy to be generated on tribal lands. Alternatively, states could award double credits for renewable energy generated by Tribes.

In addition to incentivizing new builds on tribal lands, RPS can provide markets for existing tribal capacity and lower barriers to finding non-tribal off-takers. RPS can particularly benefit Tribes in areas where renewable energy sources are competing against other forms of energy that are cheaper for utilities to purchase. Although there is a possibility of constitutional challenges to this kind of legislation under the dormant commerce clause (DCC), RPS statutes have generally survived DCC lawsuits. Courts recognize the legitimacy of a state’s interest in clean energy and are therefore hesitant to overturn RPS legislation.

Wind energy production on tribal lands can also help states to achieve traditional RPS goals, many of which are increasing. For example, California recently set a new 100 percent clean electricity by 2045 goal. The 50 MW Campo Kumeyaay wind project is well-positioned to help California meet the increased renewable electricity demand created by its ambitious target. Although California does not have a high technical potential for wind, tribal energy investors and wind developers should monitor future wind development in California to ascertain the extent to which increased RPS targets boost renewable energy projects on tribal lands.

Another idea is for Tribes to create their own markets for wind energy by creating an intertribal RPS program. An RPS program between North American Tribes would be an excellent opportunity for Tribes to achieve energy independence and intertribal cooperation. Admittedly, creating a tribal RPS program would be difficult. The development, implementation, and enforcement of these regulations and incentives on tribal lands may exceed the internal capacity of an individual tribal government. However, Tribes could address this information gap by creating cooperative agreements to implement such standards with states and public utilities, which is an expression of de facto tribal sovereignty. Moreover, there is already a trend toward intertribal cooperation regarding wind energy projects as exemplified by the OSPA-initiated South Dakota wind farms.

b.  Market Deregulation
Following several changes to federal law, some states have also started to deregulate their energy markets, opening them up to competition. Currently, 15 states and the District of Columbia have fully deregulated markets for both electricity and gas. As the market opens up, both new and existing companies have the opportunity to provide a unique and differentiated product by generating wind on tribal lands.

Tribal microgrids have unique opportunities in deregulated markets. Microgrids are localized grids that can disconnect from the traditional grid to operate autonomously. They are successful in deregulated markets because utility services are unbundled, and increased competition is allowed. Microgrids are already proving to be useful in remote environments like isolated communities in the Arctic where providing heat and power are challenging.

Market deregulation may also create space for tribal utilities. “Tribal utilities can be formed as a tribal corporation under tribal law, a Section 17 corporation under federal law, or a corporation or limited liability company formed under state law.” In 2016, there were 10 tribal utilities formed, several of whom were developed by the BIA. Some utilities were developed in tandem with casino development, some are “virtual utilities,” and others were formed by acquiring existing utility infrastructure. With virtual utilities, the Tribe doesn’t actually own or operate the infrastructure. Rather, the Tribe administers and coordinates existing distributors. Tribal utilities would be advantageous because they would give Tribes the power to add renewables into the grid, further tribal RPS goals, and could perhaps capture state and federal tax incentives. A key success factor would be for the revenue generated by tribal utilities to be funnelled back into the tribal community.

c.  Energy and Environmental Justice
Incorporating principles of energy and environmental justice into new projects also presents a unique platform for renewable energy development on tribal lands. Environmental justice concerns the secondary effects of environmental regulations, especially those that disproportionately affect poor or minority communities. Similarly, energy justice seeks to incorporate principles of justice, fairness, and social equity into energy systems and energy system transitions. It can take three different forms: (1) procedural justice––the ability of people to be involved in decision-making procedures around energy system infrastructures and technologies; (2) distributed justice––questions about the siting of energy infrastructure and economic issues of benefits and burdens; and (3) recognition justice––understanding the basis for social inequalities and the acknowledgment or dismissal of marginalized and deprived communities in relation to energy systems.

Many Native American communities are victims of energy injustice. Despite the ample resource potential that exists on Native American lands, energy security is a major concern in many Native American communities. Ready access to electricity is still considered a luxury in many tribal communities. Nearly 14.2 percent of all Native American households have no access to electricity, which is more than 10 times the national average. As many as 15,000 homes in the Navajo Nation in the Southwest U.S., about 30 percent, still lack electricity. More than 175 remote Alaska Native villages rely almost exclusively on diesel fuel for electricity generation and heating oil for heat. Even where energy infrastructure exists, rural reservation environments have made affordable access to energy difficult, resulting in disproportionately high electricity rates. For example, in some rural Alaska communities, electricity costs exceed $1.00/kWh––more than eight times the national average of $0.12/kWh. Aged and constrained transmission is also an issue, even where energy prices are competitive.

Wind energy projects on tribal lands provide an opportunity to address the energy poverty and scarcity on certain reservations. Investing in such products would help Tribes gain access to energy, while also generating revenue through the sale of energy to consumers throughout the United States. As earlier described, several states are facing pressure to decentralize in part due to a perception that utilities are not doing enough for the community or for the environment. In light of such pressures, more utilities will seize opportunities to provide their consumers with sustainable and equitable energy.

Developing wind energy on tribal lands can also address environmental justice concerns in relation to climate change. Although climate change affects all natural resources, there is increasing evidence that climate change disproportionately impacts tribal communities. For example, Native Alaskans, whose way of life depends on arctic conditions, have experienced effects of climate change including declining species that depend on sea ice and tundra habitats and an increased risk to traditional subsistence activities such as hunting. Another example is the Native American community in south Louisiana who became “climate refugees” when they were forced to relocate inland from their coastal lands due to rising sea levels.

As consumers become increasingly aware of issues like environmental justice and energy poverty, the demand for energy products that address these issues will also increase. Consumers are often ambivalent about the cost and source of their energy; however, shedding light on energy justice issues is a way for electricity providers to engage their customers and provide a differentiated product. This trend is already well underway in the business sector. There are several renewable energy coalition groups such as the Word Resources Institute and the Renewable Energy Buyers Alliance that are helping corporate buyers like Facebook and Google to procure renewable energy. Non-utility purchasers signed 23 contracts for wind energy totalling more than 2,000 MW. In total, non-utility purchasers have procured more than 9,100 MW of wind power. Residential consumers are also concerned about resource justice and social equality. If given the option and information, many consumers will purchase renewable energy from Tribes to support their economic development. Wind power doesn’t need to be limited to addressing environmental concerns. Wind projects can also be used to effectuate social change.

Conclusion

Despite the barriers, producing wind energy on tribal lands can increase tribal revenues, help meet state and federal renewable energy targets, and provide a service to customers who desire clean and socially responsible sources of energy. Experts predict that the levelized cost of wind power will continue to decline as wind turbine technologies improve, battery storage capacity increases, and transmission expands. Law and policy makers must not forget about Tribes as wind inches closer to grid parity. Tribes are a non-negligible part of securing our clean energy future.

    Rujeko (Rue) Muza

    Rujeko (Rue) Muza is a Washington, D.C.–based attorney and fellow with the Clean Energy Leadership Institute. Rue received a Master of Laws in Energy and Environmental Law from Georgetown University and works in Government Affairs at General Electric.