Most stakeholders support a proposal before FERC to exempt energy projects developed by federally recognized Native American tribes from deposits and other fees in the generator interconnection process.
The Alliance for Tribal Clean Energy filed a petition for an expedited rulemaking to exempt tribal energy projects from fees designed to discourage speculative development, which won widespread support in comments filed ahead of a Nov. 18 deadline (RM24-9). (See FERC to Consider Special Interconnection Rules for Tribal Energy Projects.)
Tribes and their representatives from around the country were supportive of the policy, arguing that commercial readiness deposits and withdrawal penalties, which are meant to discourage speculative projects, do not make sense for the developments that tribal entities pursue.
The Inflation Reduction Act effectively opened up tax credits for tribal energy projects, but some of FERC’s rules still offer regulatory barriers to that development, said the Midwest Tribal Energy Resources Association, which represents 27 tribes from the region.
“We have witnessed firsthand the unique challenges tribes face due to current regulations that require commercial readiness deposits and impose withdrawal penalties,” the association said. “These requirements, while intended to manage speculative interconnection requests, disproportionately impact tribal nations who often lack access to the same financial resources and capital as traditional energy developers.”
The Navajo Transitional Energy Co. (NTEC) is a Tribal Energy Development Organization (TEDO) owned by the Navajo Nation, which controls 17 million acres of “trust lands” in the Four Corners area in the Southwest and includes 300,000 members, including 170,000 at the reservation. NTEC owns the Navajo Mine, which serves the Four Corners Generating Station, a 1,540-MW coal plant in which it owns a 7% stake with plans to add a carbon capture and storage demonstration project to the site.
NTEC is also pursuing renewable energy projects, including a 1,200-MW solar plant that will be built in several stages with ENGIE North America.
“The federal government has recognized it has a trust responsibility to protect tribal sovereignty, economic security and Tribal Energy Development Organizations’ energy development on tribal lands,” NTEC said. The commission has, likewise, stated it endeavors to “work with the tribes on a government-to-government basis.”
TEDOs have historically been structurally excluded from capital markets and are unable to use traditional tax equity or debt financing, NTEC said. “Instead of traditional financing available to other transmission developers, Tribal Energy Development Organizations secure much of their financing through philanthropy and federal grants only available once a project has secured interconnection rights.”
The sovereign nature of tribes can discourage private parties from entering into contracts with them, but they have land with often good resources to develop.
“Land, without an interconnection, cannot support a generating facility,” NTEC said. “The commission can make tribal energy development more attractive to development partners by modifying the pro forma interconnection procedures to increase Tribal Energy Development Organizations’ chances of being able to offer a favorable position in the interconnection queue.”
The Environmental Defense Fund, National Wildlife Federation, Earthjustice, Natural Resources Defense Council, Sustainable FERC Project and Center for Biological Diversity filed joint comments in support of the petition. They said the process leading to Order 2023 involved insufficient input from federally recognized tribes and that led to a rulemaking that does not work for them, which is a potential violation of FERC’s “trust responsibility” to tribes.
“The United States government holds a trust responsibility toward tribes, rooted in Article I, Section 8 of the Constitution, shaped and defined by 375 treaties, hundreds of laws and countless executive orders,” the groups said. “This fiduciary duty requires the government to honor treaty obligations, manage resources for tribes’ benefit and act in their best interests. Federal agencies are mandated to actively consult and engage with tribes on matters impacting tribal lands, resources and cultural heritage, ensuring respect for tribal sovereignty and upholding commitments to promote tribal self-determination and wellbeing.”
Energy projects developed by tribes are not speculative because tribes always have direct control of the land and limited points of interconnection, which means they cannot file speculative projects in search of the best one, the environmentalists said. Tribal lands on average have 70% fewer kilometers of transmission and 43% less high-voltage transmission than the rural U.S.
The environmentalists agreed that tribes often face issues with financing in part because lenders are unfamiliar with their legal systems, their lands have little pre-existing infrastructure, and it is hard to secure financing.
“Much of tribal land is held in trust by the federal government, restricting lenders’ ability to claim an interest in land as collateral if a borrower defaults,” they added.
The Choctaw Nation of Oklahoma urged FERC to also give deference to tribes when they oppose jurisdictional energy projects being built on their lands.
“These projects provide benefits to non-tribal entities while imposing most of their costs on the tribal nations, which is the definition of environmental injustice,” the tribe said. “The proposed Pushmataha County Pumped Storage Project is a textbook example of this.”
The tribe was referring to a project proposed by Southeast Oklahoma Power Corp. on lands and waters within the Choctaw reservation that derive profit by generating electricity to be sold to Texas (P-14890). Despite opposition from the Choctaw and Chickasaw Nation, it is moving forward.
While most of the intervenors in FERC’s docket were supportive of the petition, it did run into opposition from Idaho Attorney General Raúl Labrador (R).
“Instead of following the same requirements as everyone else, the tribes would get a blanket waiver from paying commercial readiness deposits at the same time as other requesters and from paying the full withdrawal penalties,” he said. “This exception would give the tribes an easier path to connecting their generators to the grid, giving them an unfair advantage.”
