On November 27, 2012, the United States Department of the Interior announced new final rules concerning leases for wind and solar energy development in Indian Country. For the first time, the rules will specifically address renewable energy projects that require approval by the Bureau of Indian Affairs (BIA), granting more autonomy to Native American tribes to make leasing decisions. The timing could not be better for renewable energy development in Michigan, which has twelve federally recognized Indian tribes. On November 29, 2012, Michigan Governor Rick Snyder announced his administration’s new priorities for a reliable, adaptable, and affordable energy policy that also protects the environment.
The Department of the Interior engaged in a series of consultations with Indian tribes in 2011 and 2012 that identified the serious deficiencies in the existing regulations in 25 CFR 160 and developed a new process. The new rules, which will become final thirty days after publication in the Federal Register, leave in place regulations for agricultural leases, but now separately address the requirements for residential, business, and wind and solar project leases.
Wind energy projects fall under a two-part process. In the first stage, wind energy evaluation leases (WEELs) allow temporary possession of Indian lands to install equipment to determine whether a site is suitable for development. A WEEL involves a less intensive environmental impact evaluation and does not require property valuation. This reduced regulatory burden allows tribal and Indian landowners and wind energy developers to determine whether a site has realistic renewable energy potential before answering long-term questions regarding the project’s environmental impacts, fair compensation for the lease, and other business concerns. The BIA has only twenty days to approve or deny a complete WEEL application.
If the site is suitable for wind energy development, a wind and solar resource (WSR) lease addresses the long-term project. A solar energy project does not require a WEEL and uses only a one-stage WSR lease because the assessment to determine whether a site is suitable for solar energy development does not typically require installing equipment on land. A WSR involves more substantive requirements, including property valuation and compliance with the National Environmental Policy Act, 42 USC 4321 et seq. BIA has only sixty days to act on a complete WSR application.
The new rules provide substantially more oversight and autonomy to tribes to regulate and approve or deny leases and activities that may be conducted by permit. They clarify tax obligations associated with renewable energy development and eliminate many of the burdens under the rules that date back to the 1960s. Tribes, individual Indian landowners, and businesses that invest in renewable energy resources can look forward to new partnerships under these rules.