United States: EPA Draft Rules On Clean Energy May Benefit Indian Tribes

TUCSON – Newly proposed design details for the Environmental Protection Agency's Clean Energy Incentive Plan (CEIP) could open the door for economic development in Indian Country, according to Pilar Thomas, an attorney with Lewis Roca Rothgerber Christie LLP.

The CEIP is intended as a voluntary program for states to incentivize renewable and efficient energy projects in low-income communities to achieve federal carbon reduction by up to 35 percent from certain electricity generating units across the country.

It is generally designed to leverage the EPA Clean Power Plan's proposed emission trading schemes to promote early deployment of zero-carbon emission electrical generation from renewable energy resources, and reduction in electricity use through demand-side energy efficiency measures.

Thomas, whose practice is focused on Indian law, tribal renewable energy project development and finance, tribal economic development and Indian gaming, said that to incentivize early deployment, the EPA proposes to create state-based allocations of "early action" emission reduction credits and promote potential benefits to low-income communities.

States prohibited from excluding Tribal lands

"Proposed language in the rules prohibit states from disallowing or excluding projects located on tribal lands. This requirement is definitely welcome language to ensure that projects on tribal lands are treated equally with off-reservation projects," said Thomas.

The EPA seeks to promote tribal participation in both the CEIP and emission trading mechanisms so Indian tribes can directly benefit from their abundant renewable energy resources while contributing to the reduction of carbon emissions. At least 335 federally recognized tribes have an opportunity to participate in state CEIPs.

Tribal lands contain almost 6 percent of the technically feasible renewable energy resources in the United States, at least 27 billion megawatt hours (MWh) of potential renewable energy generation. This includes over 14 billion MWh of utility-scale solar, 1 billion MWh of wind, 5 million MWh of conventional geothermal, 7 million MWh of hydroelectric, and 5 million MWh of biomass and biogas, she explained.

States must conduct meaningful outreach, which presumably includes Indian tribes located within the state. Many, if not most, tribes are considered "low-income communities" under federal program definitions and may have a strong interest in developing energy efficiency programs, according to Thomas.

Multiple projects on Tribal land eligible

An eligible project includes "a program that aggregates multiple projects," said Thomas. "Under this definition, an Indian tribe can develop an energy efficiency program that will include several individual projects that deploy energy efficiency or distributed solar energy projects across the whole community.

"The tribe could then submit an application to the state for early action credit or allowances for a whole program that is an aggregation of multiple individual projects. While the focus of the energy efficiency project is on low-income households, the EPA is seeking comment on whether it should include government buildings, community buildings or non-profits."

Expansion of allowed renewable energy technologies

A positive move by the EPA is its proposal to expand the types of CEIP-eligible renewable energy technologies to include geothermal and hydroelectric, but not biomass, resources.

Most tribes do not have geothermal and hydroelectric resources, but many do have substantial biomass resources, which can have negligible emissions and produce biofuels for use in electricity generation.

Several tribes have already developed and implemented projects using landfill gas and biogas, and several more are in development stages, Thomas explained.

"Another positive change is an EPA proposal to include distributed solar energy technologies within the energy efficiency projects. Virtually every Indian Tribe has an opportunity to deploy distributed solar projects as part of an energy efficiency program. However, wind and storage technologies should also be considered," she noted.

Indian tribes have more than 375,000 MW of potential wind resources (1 billion MWh of generation potential), and many have deployed distributed wind, using their robust and favorable wind resources within their tribal community.

"Distributed wind should be eligible for inclusion in energy efficiency projects so that low-income tribal communities with substantial wind resources can also potentially benefit from the CEIP," said Thomas.

Tribes vulnerable to state-defined definitions

Overall, the proposed design rules for the CEIP are positive for Indian Tribes, she said.

"However, because the EPA defers in many ways to the states to develop and implement the CEIP—including defining 'low-income community,' defining eligible projects and even determining whether to do a CEIP—Indian tribes remain unacceptably subject to state decision-making on benefiting from their abundant renewable energy resources or energy efficiency efforts" said Thomas.

Renewable energy projects must be in operation on or after Jan. 1, 2020, while energy efficiency projects must be implemented after Sept. 6, 2018. Early action emission reduction credits or allowances will only be awarded for a two-period – 2020 and 2021.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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