On July 13, Senator Martin Heinrich (D-NM) and Congressman Raúl M. Grijalva (D-AZ) took another step to further allow Tribes to exert their energy autonomy by introducing the Tribal Tax Incentive for Renewable Energy Act. This Act would permit Tribal Governments to take advantage of federal renewable energy tax credits by allowing tribes to transfer their share of the production tax credit to private entities that finance joint venture renewable energy projects on tribal lands. Tribes would then be able to offer 100 percent of the tax credit to their partners. Under the current regime, the tax credit is wasted:
[U]nder the IRS Tax Code of 1986,tribes, because they are tax-exempt, are not allowed to take advantage of the production tax credit. This tax credit provides a 2.1-cent per kilowatt-hour tax benefit for the first ten years of a renewable energy facility’s operation. Private companies seeking to partner with tribes face a disincentive in that they receive only 50% of the credit, rather than the 100% that they would receive investing on state land. This situation puts tribes at a tremendous disadvantagewhen trying to attract renewable energy projects to their lands, and is a clear example of a situation where federal law burdens the freedom of tribes to develop their own path towards building sustainable communities.
If passed, the Act will finally level the playing field for tribes, allowing them to offer the same economic incentives to companies that operate solar farms, wind farms, and other clean-energy projects.
Ryan Dreveskracht is an Associate at Galanda Broadman, PLLC. His practice focuses on representing tribal governments in public affairs, energy, gaming, taxation, and general economic development. He can be reached at 206.909.3842 or firstname.lastname@example.org.