Tribal Energy Development Opportunities Abound: A Summary of the Energy Act of 2020 and Fiscal Year 2021 Omnibus Appropriations

On December 28, President Trump signed into law H.R. 133, which included, among other bills, the omnibus appropriations for fiscal year 2021 and the Energy Act of 2020. This legislation can advance the energy interests of tribes, Alaska Native villages and corporations, tribal utilities, tribal energy development organizations, tribal enterprises and other clean industry companies that seek to develop and deploy clean energy and energy efficiency projects on tribal lands.

The fiscal year 2021 appropriations have funded major federal financial assistance programs - loan, loan guarantee and grants - which in some instances have received increases in funding that can be used for tribal energy projects. The Energy Act of 2020 has also created new programs, or expanded existing programs, that tribes can access as well.

Department of Energy

• Office of Indian Energy Policy and Programs - $22 million. Tribes, tribal enterprises and tribal energy development organizations are eligible for grants and technical assistance to deploy facility and community scale energy projects on tribal lands. The Energy Act of 2020 expands the definition of tribal lands to include any census tract where the majority of residents are Alaska Natives or enrolled members of a federally recognized Indian tribe or village. The Secretary is also authorized to reduce cost-share requirements for the tribal energy grant program.
• Tribal Energy Loan Guarantee Program (TELGP) - appropriates $2 million for the TELGP.
• Tribal electricity access and reliability report - requires the Secretary to produce a report on access to electricity and reliability issues on tribal lands. The Secretary must consult with tribes to design and conduct the study, and include The Federal Energy Regulatory Commission (FERC) and The North American Electric Reliability Corporation (NERC).
• Weatherization Assistance Program (WAP) - $350 million. Tribes and tribal designated housing entities are eligible to receive direct funding for energy efficiency projects for low-income tribal households. The Energy Act also amended the WAP to allow renewable energy projects as a permitted use of the funds, to promote healthy indoor environments and to promote the use of private sector contractors. It also creates a competitive grant program, with grant amounts up to $2 million.
• Energy Efficient Transformer Rebate Program - the Secretary of Energy is required to establish a rebate program to replace inefficient transformers. The program is authorized at $5 million per year. Tribal utilities are eligible for the rebate, so they might be interested in this program as a way to upgrade their distribution grid transformers.
• Combined Heat Power Project Technical Assistance - creates a technical assistance program, including engineering and project design assessments, for combined heat power projects, especially in rural communities. Tribal governments, enterprises and utilizes appear eligible for this new program. The program is authorized at $12 million per year.
• Smart Energy Water Efficiency pilot program - creates a pilot program that will award grants for innovative technology-based solutions that promote water conservation, energy savings and costs savings. Tribes are eligible for the pilot program. The program is authorized at $15 million.
• Wind Energy Technology research and development - creates a new research and development program for wind energy technology. The program explicitly includes tribes, tribal energy development organizations and other tribal entities, with priority to projects that collaborate with tribes. Key program goals include integration of wind within the electric grid and workforce development. The program is authorized at $125 million per year.
• Solar Energy Technology research and development - creates a new research and development program for solar energy technologies. The program explicitly includes tribes, tribal energy development organizations, other tribal entities and Native Hawaiian organizations, with priority to projects that collaborate with tribes. Key program goals include integration of solar within the electric grid and workforce development. The program is authorized at $300 million per year.
• Energy Storage demonstration projects - creates a new energy storage demonstration research, development, and grant program. Tribes and tribal organizations are eligible for the competitive grant program for pilot projects. The demonstration pilot program is authorized at $70 million per year.
• Smart Grid, Grid Resiliency, and Grid Modernization - creates several new programs and initiatives to promote smart grid technologies, grid resiliency, and grid modernization efforts, especially focused on the integration of distributed energy and renewable energy resources and electric vehicle infrastructure. Consultation with tribes and tribal utilities, among others, is required. Tribes are also explicitly included as stakeholders and eligible for technical assistance for the development of model pathways for distribution grid modernization.
• Electricity Distribution Planning - creates a new technical assistance program for states, utilities and regional organizations to facilitate development of state, regional or utility plans for local distribution of electricity - including resource assessments, load and demand forecasting tools, and open source tools for planning purposes.
• Isolated Community Microgrid Development Strategy - establishes a program to develop integrated microgrid systems for isolated communities (defined as not currently connected to a regional grid) and for critical infrastructure. Assistance includes resource assessments, technical assistance, implementation planning, and demonstration project financial support. Eligible entities will include remote Alaska Native villages and tribes that lack grid access. Requires collaboration with tribes and utilities. Grants of up to $500,000 for a total of $15 million will be available.

Department of the Interior

• Bureau of Indian Affairs (BIA) Loan Guarantee Program - appropriated $11.797 million for loan guarantees that can be used for energy projects.
• BIA Housing Improvement Program (HIP) - appropriated $11.708 million for the HIP, which allows for energy efficiency upgrades.

Department of Housing and Urban Development

• Indian Community Development Block Grant Program - appropriates $100 million, which is available until 2025, that can be used for energy efficiency, electricity infrastructure, and distributed energy projects on tribal homes and facilities.
• Office of Community Development - $5 million for a pilot project, in conjunction with Department of Energy (DOE) WAP, for healthy homes weatherization and energy efficiency projects.

Department of Health and Human Services

• Low Income Home Energy Assistance Program (LIHEAP) - appropriates $3.75 billion for energy and utility assistance payments. Tribes and tribal housing authorities are eligible for direct funding, and funding can be leveraged for energy efficiency and distributed energy projects on low income households.

Department of Agriculture

• Rural Development - appropriates $56.4 million for direct loans and grants, authorizes $1 billion for loan guarantees to rural businesses, which include tribal enterprises.
• Rural Utility Service (RUS) - authorizes $5.5 billion in loan guarantees for energy and energy infrastructure projects; appropriates $10 million for high energy cost grants and $11 million for the Rural Energy Savings Program. Also clarifies that not for profit utilities, which could include tribal utilities, are eligible for RUS loans.
• Renewable Energy pilot project - appropriates $10 million for a pilot program to provide financial assistance to rural communities to develop renewable energy projects.

Environmental Protection Agency

• Clean Diesel Program - appropriates $90 million for Diesel Emission Reduction Act grants, which tribes and Alaska Native Villages access to replace mobile and stationary diesel engines
• Brownfields Redevelopment - appropriates $91 million, with a 20% set aside for low-income areas, to redevelop brownfields, including renewable energy project siting.

Department of Commerce

• Economic Development Administration - appropriates $119.5 million for the Public Works grant program that funds feasibility studies, business plans, engineering, and pre-development and construction costs for projects in economically distressed communities. Also include $38 million for regional innovation projects with a particular focus on economic adjustment and energy efficiency efforts. These programs can be used to support energy development projects.

Department of Treasury

• Tax Benefits - several tax benefits (credits, deductions) that are applicable to energy or renewable energy projects have been either made permanent or expanded, including the following:
  • New Market Tax Credits - made permanent
  • Energy efficiency projects expense deduction for government buildings - made permanent
  • Biofuels tax credit - extended to end of 2021
  • Renewable energy investment tax credit - extended to end of 2021
  • Indian coal tax credit - extended to end of 2021
  • Indian employment tax credit - extended to end of 2021

In short, the fiscal year 2021 appropriations bills and the newly enacted Energy Act of 2020 contain substantial program and financial support for tribes, Alaska Native villages and corporations, tribal enterprises, tribal utilities, tribal energy development organizations, and Native Hawaiian organizations to develop and implement tribal energy and energy efficiency projects on tribal lands and to benefit tribal communities. Given the number of new programs at the Department of Energy, tribes and tribal entities are encouraged to monitor the implementation of these programs, participate in consultation, and comment on potential rule-making.

For more information, please contact your Quarles & Brady attorney or:

• Pilar Thomas: (520) 770-8744 / pilar.thomas@quarles.com