New Rules in Place to Facilitate Renewable Energy Projects on Indian Lands

On January 4, 2013, new Department of the Interior, Bureau of Indian Affairs (“BIA”) rules went into effect that expressly address renewable energy projects on Indian lands.

The federal statutes governing “business use” leases of Indian land generally require BIA approval of business leases. BIA’s prior business lease rules were silent on renewable energy project leases. This resulted in uncertainty among tribes and prospective lessees, and inconsistency among BIA offices, regarding both BIA’s approval conditions and process.

The new BIA rules:

• Establish a new class of permit – the Wind Energy Evaluation Lease or “WEEL” – which may be entered into without BIA approval. They have a limited duration (not more than 3 years, subject to one like renewal period), and authorize limited surface disturbance, but the delay and process of approval has been removed. The rule lists certain terms and subject matter any WEEL must contain to be exempt from BIA approval. BIA still has a 20-day review period in which to advise the tribe if the WEEL does not conform to the requirements of this rule, but absent BIA notice in that period, the WEEL is effective.
• Establish a new class of business lease for project development – the “Wind and Solar Resource Lease” or “WSR Lease.” BIA approval is still required, but the rules set a clear framework for approval, and largely defer to the terms negotiated by the tribe and the proponent.
• Prescribe a list of issues the tribe and developer must address in the lease, but leave the parties flexibility to design their contract “boilerplate,” such as remedies for default, insurance and bonding coverage, and ownership of and responsibility for improvements.
• Allow a tribe to bypass BIA appraisal or economic review of the compensation to be paid under the lease both before and after energy production begins.
• Set the “best interests of the tribe” as the standard for BIA evaluation and approval of a WSR Lease. A body of Interior Department case law is developing that fleshes out this standard for the exercise of the federal trust responsibility.

These rules also implement the so-called “HEARTH Act” of July 2012, P.L. 112-151. It authorizes tribes to take more complete responsibility for renewable energy project leases on their lands, and end the BIA approval requirement for WSR Leases. Under the HEARTH Act:

• A Tribe may enter into a “Tribal Energy Resources Agreement” or “TERA” with BIA, formalizing its ordinances and rules for renewable energy project leasing; and
• Upon BIA approval of the Tribe’s TERA as consistent with statutory and BIA standards, tribal leasing under the TERA is excluded from the coverage of the new Part 162 WSR Lease rules, and BIA approval of individual leases is not required.

While a Tribe’s TERA must contain provisions for environmental, land use, wildlife and cultural resources review, these clearances would occur under the Tribal program, not under the strictures of federal law binding BIA.

 The combination of new WEEL and WSR Lease rules and the HEARTH Act’s TERA provisions should facilitate renewable energy projects on tribal lands. However, they are not a complete, exclusive regime for all aspects of these projects on Indian lands. One shortcoming is that outside of the generation project lease, a right-of-way will still be required for the power line connecting to the nearest transmission lines. The statute and rules for power line rights of way have not been modernized or simplified, so BIA’s issuance of a right-of-way grant (subject to the consent of the Tribe) may still delay getting the new renewable generation facilities connected to the grid.

The rules are found at 25 CFR Part 162, as new Subpart E, 25 CFR 162.501 through 162.599, issued at 77 Fed. Reg. 72,440, 72,494-508 (Dec. 5, 2012).

The HEARTH Act is Public Law 112-151, 126 Stat. 1150-54, and the provisions for TERAs discussed here are codified as 25 U.S.C. § 415(h).

For further information on these subjects, contact Larry McBride: lmcbride@foley.com; 202-295-4017