Office of Indian Energy Policy and Programs

1. Office of Indian Energy Policy and Programs 2013 Tribal Webinar Series Renewable Energy Project Leasing on Tribal Lands June 26, 2013 11:00 am – 12:30 PM

2. Today’s Presenters • Randy Manion manion@wapa.gov • Nathan Dexter Nathan.Dexter@hq.doe.gov • Matthew Kirkland matthew.kirkland@bia.gov • Anna Carter geothermalservices@gmail.com • Gary Brownell gbrownell@abqsonosky.com

3. Real Estate Services Update Presented by

4. Emerging trends in real estate services • New Leasing Regulations • 25 CFR Part 162 • Includes subparts specific to residential & business leasing, and leasing for wind & solar energy • Final rule became effective January 4, 2013 • The Hearth Act of 2012 • Helping Expedite and Advance Responsible Tribal Home Ownership Act of 2012 • Signed into law July 30, 2012 • The Hearth Act allows tribes to draft their own leasing regulations and upon approval by the Secretary, allows tribes to approve leases of tribal land.

5. HEARTH Act • Allows tribes to process leases on tribal land under their own regulations, as long as BIA has approved their leasing regulations • The Act is only applicable to tribal land and does not apply to lands held in trust for individual Indian landowners • BIA has 120 days to review and approve or deny a tribe’s leasing regulations December 2012

6. HEARTH Act • Requirements for Tribal leasing regulations • Must be consistent with the new leasing regulations under 25 CFR Part 162 • Must provide for an environmental review process that: • Provides for identification and evaluation of significant effects on the environment • Provides for public notice and comment relating to significant effects on the environment and for the tribe to respond to relevant comments prior to approving a lease • Tribes can define “public” December 2012

7. HEARTH Act • Currently the review of tribal leasing regulations occurs at BIA’s Central Office with the Division of Real Estate Services and the Office of the Solicitor • Central Office has published a National Policy Memorandum with a list of criteria for use in determining whether tribal regulations are consistent with 25 CFR 162 • The review will transition to the Regional Realty Officers in August 2013 December 2012

8. OTHER FEATURES OF HEARTH • Other features of the HEARTH Act • BIA will provide technical assistance to tribes in developing an environmental review process • Allows for lease terms up to 75 years in certain instances

9. WHO DO TRIBES CONTACT • Contact your Regional Realty Officer or BIA’s Central Office realty staff for questions Matthew C. Kirkland Chief, Division of Real Estate Services Office of the Deputy Bureau Director, Trust Services Phone: 202.208.3615 E-mail: matthew.kirkland@bia.gov • Staff Recommendations • When defining terms be consistent with Part 162 • Consider collaborating with BIA Realty to review in draft • Do not include Tribal approval of individually allotted lands December 2012

10. HEARTH Act (continued) Final Submission of Leasing Regulations are required by the Act to be submitted to the Deputy BIA Director, Trust Services Mr. Bryan Rice, Deputy Bureau Director BIA-Office of Trust Services 1849 C Street, NW, MS 4639-MIB Washington, D.C. 20240 December 2012

11. 25 CFR PART 162 Final Rule published December 5, 2012 and effective January 4, 2013 View at: http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&tpl=/ecfrbrowse/Title25/25cfr162_main_02.tpl June 2013

12. Significant changes • Replaces Subpart F, Non-agricultural Leases, with: • Subpart C, Residential Leases • Subpart D, Business Leases • Subpart E, Wind & Solar Resource (WSR) Leases • Includes short-term Wind Energy Evaluation Leases (WEELs) • Subpart G, Records • Subpart B, Agricultural Leases does not change • Subpart E does not change but is now Subpart F, which is the special requirements for Certain Indian Reservations

13. What falls under each subpart • Residential leasing applies to leases for: • Housing purposes; or • Construction of single family homes or housing for public purposes. • Business subpart applies to: • Business leasing • Leases for religious, educational, recreational, cultural, other public purposes; • Leases for commercial or industrial purposes • Surface leases not covered by other subparts. • Wind & solar energy subpart applies to leases for: • Wind energy evaluation leases (WEELs); • Harnessing wind and/or solar energy to generate & supply electricity (WSR Leases).

14. OTHER CHANGES • Permits • Landowners may issue permits for use of Indian land without BIA approval • BIA no longer enforces or administers permits on Indian land • Agriculture and subsurface excepted • Permit does not encumber the land • Permitted activities must comply with all applicable environmental and cultural resource laws

15. What version of the regulation applies • When New Regulations Apply • If lease document was submitted for approval after January 4, 2013, the new regulations apply • If lease document was submittedbefore January 4, 2013 and BIA approved it before January 4, 2013, then the prior regulations apply to that lease.

16. SIGNIFICANT CHANGE • Taxation • Permanent improvements on leased land, activities conducted under a lease, and the leasehold or possessory interest may not be taxed by State/local governments (but may be taxed by tribes) • Employment Preferences • Leases may require lessee to give a preference to qualified tribal members, based on their political affiliation with the tribe • Does not have to be general “Indian” preference

17. RESIDENTIAL LEASING • Who must obtain a residential lease? • Anyone who is not the landowner • A tribal housing authority if it is a legal entity independent from the tribe, regardless of whether it is owned and operated by the tribe. • A tribal housing authority does not need an approved residential lease if the tribe has authorized the tribal housing authority’s possession through a tribal land assignment

18. Approval timelines

19. Geothermal Exploration on Tribal Lands Permitting an Exploratory Geothermal Well on the Fort Bidwell Indian Reservation Anna Carter

21. How It Plays Out (Lessons Learned) • The experience from consultant point of view: • Tribes are (understandably) both protective of and resentful of their relationship with BIA. • Generally, on small reservations, tribes have managed housing, health, education, water and sewer, but not geothermal resources. • It helps to review with them how the project would be regulated if it were on state or federal public lands and what standards/permits would be required.

22. Tribal/Federal Regulation of this Exploration Drilling • Tribe was the authorizing entity. • DOE was the lead agency for NEPA. • For Clean Air Act, Clean Water Act, and Safe Drinking Water Act, EPA is the regulatory agency -- not the state agencies. • EPA has little direct geothermal experience but they do have tribal offices and work with tribes on an ongoing basis on other issues.

23. Concerns Raised by Tribe • Protecting sovereignty paramount (concern over state authority) • Consultants just doing it for the money (concern that well would only be for research and might not be useful to tribe) • Are consultants ethical/competent • Will granting agencies own the well or have a claim on the resource (no) • Must tribe pay back grants (no) • Liability (injury or death of workers)

24. Concerns for Consultants/Contractors • Turnover in governance (Tribal Council and staff) and repeated briefings increase administrative/travel costs and uncertainty. • Will you get paid timely. Might not be able to sue a tribe unless they waive immunity. • Regulatory uncertainty: Without a lease, you need to create a regulatory framework and contractual responsibility for compliance with grant terms and regulatory standards.

25. Future Tribal Decisions • Assuming a successful well capable of power production or direct uses and an intention to proceed, the Tribe must determine: • Create Tribal Energy Resource Agreement w/ BIA or operate under BIA/BLM oversight under IMDA • Continue with, or create new consultant team • Self-develop or lease or partner with a developer • Pursue as Tribe or Tribal Enterprise Corporation • Form a utility • Tax and finance consequences of each • Regulatory consequences of each

26. Should Tribes Use Consultants to Explore? Or Lease/Partner/JV With Developers? Using Consultants: Tribes take early exploration risk, retain greater ownership/control and all potential revenues. Tribes have access to loans/grants. BIA can help if tribe requests help. Leasing/Joint Venturing with Private Developer: Easier, less responsibility, and BIA/BLM oversight. Private partner tax benefits can increase total project revenues. With a lease, royalty to tribe is small percentage of revenue -- much more with a joint venture.

27. Recommendations to Consultants and/or Developers • Authorizations/contracts should be signed by Council Chair or Tribal Administrator, and always supported by a Council resolution. • Budget more than usual for interaction with the tribe for joint project and budget administration (and also as the regulatory/permitting agency) . • Be prepared to educate the agencies and the tribe as to the regulatory framework. • Make sure project operations are well insured. • Be flexible and comfortable with uncertainty.

28. More Recommendations and Reminders to Consultants/Developers • Budget for tribal administrative costs, for development of contracts, and for legal counsel to tribe on project/contract issues. • Protect tribal interests, as well as your own. • Support tribes in protecting their sovereignty whenever you can -- the courts are constantly chipping away at it. • Develop/maintain trust, but don’t rely on it. • Create technical standards for the project. • The tribe makes final decisions.

29. Recommendations to Tribes • Create a clear tribal point of contact with the time for, interest in, budget for, and commitment to the project. • Require regular reports to the Tribal Council. • Communicate progress to tribal members regularly, including responses to questions and rumors. • Understand that projects can be delayed and maintain tribal commitment to a geothermal project over the long term.

30. Project Funded by: • Fort Bidwell Paiute Indian Community (with many Non-Grant hours contributed by the Tribal Councils, Staff and Tribal Members) • US Department of Energy Geothermal Program, GRED III grant to FBIC Jay Nathwani and Erik Hass, Contract Managers • California Energy Commission GRDA grant to FBIC. Bill Glassley and Pablo Gutierrez, Commission Project Managers

31. QUESTIONS

32. Future Tribal Energy Program Webinars (all start at 11 am Mountain Time)