IRA - Does it stand for something good for Indian Country this time?

In August, the House passed H.R. 5376, the Inflation Reduction Act (IRA), touted as the ‘most significant’ climate bill in U.S. history. Not to be confused with the Indian Reorganization Act of 1934, this new IRA promises to bring significant benefits to Indian Country. But will it?

The former was a set of wide-reaching reforms designed to improve quality of life for Native Americans, especially those living on federal reservations, as the centerpiece of the “Indian New Deal,” focused on protecting tribal land, reestablishing tribal governments, and spurring economic development among and within tribal nations. But it fell short. There were some successes, but the 1934 act’s highly touted material benefits largely failed to materialize, and when they did, they were unevenly distributed among tribes. If one is even a little bit familiar with Native American history, one has to wonder if this new IRA will live up to its intentions for Indian Country.

H.R. 5376 is far from an environmentalist's ideal - compromises include carve-outs for the oil and gas industries, such as new offshore drilling leases, included to garner the support of Senator Joe Manchin, a conservative Democrat from West Virginia and a critic of earlier versions of the IRA that more greatly constrained the fossil fuel industry.  But the IRA does allow our government to do what climate scientists have been advising it to do for several decades - make a serious investment in the decarbonization of our nation’s energy sector and begin to incentivize transition off of dirty fossil fuels. But does the IRA encourage a just transition? I'm a tad more than cautiously optimistic.

The IRA includes a $272.5 million dollar climate and energy investments package tailored for Native American tribes, to be administered by the Bureau of Indian Affairs. The money is earmarked for climate resiliency efforts, fish hatcheries and drought mitigation programs in Native communities. The bill also authorizes $150 million for a new program to electrify homes without electricity in Indian Country, and make efficiency improvements to homes and tribal buildings. $145.5 million of the funding is being provided directly to tribes, with the remaining $4.5 million for BIA administration costs. The money is to be spent over 10 years.

Additionally, the bill significantly expands U.S. Department of Energy tribal programs. The measure authorizes $75 million in loans to tribes for energy development and increases the loan guarantee program for tribes from $2 billion to an unprecedented $20 billion (that's billion with a B). Wahleah Johns , director of the U.S. Department of Energy (DOE) Office of Indian Energy Policy and Programs and her team have made a concerted effort to listen to their constituents and advocate for this historic and much-needed legislation.

In my personal favorite provision of the bill, there are two new tax rules: “elective pay” and transferable credits.  Under this provision, taxpayers can elect to treat the amount of certain specific credits as a prior payment of tax. This then allows entities with little or no tax liability - like tribes - to accelerate utilization of these credits. This is a game changer for tribes, and makes renewable energy development on tribal lands exponentially more beneficial. Tribal lands hold enough potential for clean energy to power the entire country . Bypassing traditional tax equity structures and utilizing the $20B of funding from the Tribal Energy Loan Guarantee Program will unlock a beneficial cycle of capacity building within the tribes.

In the coming weeks, Indigenized Energy Initiative (IEI) will be working with Jigar Shah and Matt Ferguson at the Loan Programs Office of the U.S. Department of Energy, and the folks at NAFOA and Joel Laubenstein at Baker Tilly to raise awareness among tribes about the availability of the favorable financing options and tax credit monitization incentives this groundbreaking legislation has created. Stay tuned for webinar announcements.

With all due respect to Sen. Brian Schatz (D-Hawaii), chair of the Senate Committee on Indian Affairs, who, after passage of the bill in the U.S. Senate on Sunday afternoon said, "Native communities have the technical expertise, capacity, and place-based knowledge needed to develop effective climate change and energy solutions,” While I agree with the Senator on place-based knowledge, I have to disagree on the balance of that statement. Some Native communities have the technical expertise and capacity needed to develop clean energy infrastructure. The majority do not, and without the expertise and capacity-building support of clean energy technical, financial, policy and workforce development and training experts, even the most well-funded projects run the risk of failure. This leaves tribes in the difficult and expensive situations we've seen them in so many times before. With unfinished projects, unpaid debt, and the all-too-familiar anguish of being let down by the U.S. government.

This is where IEI comes in, leveraging our Native-led team of experts along with the power of philanthropy and federal funding, to build the capacity of tribes to develop renewable energy infrastructure on their homelands...themselves. With tribal members building it. It is essential that the solar, wind and other renewable projects on tribal lands are built by Natives, for Natives. Clean energy development can be nearly as extractive as fossil fuel development, if not. Tribes are the original stewards of this land. Of all land. It only makes sense that they lead this transition.

There were several reasons why the original IRA failed to realize reformers’ hopes. Primarily, it was a blanket solution that did not address the disparate needs of the hundreds of federally recognized tribes. Whatever its actual merits, the act was destined to prove controversial among tribal nations because it was created by a federal government with a history of deceiving, dispossessing, and murdering Indigenous people.

But, thanks to the tremendous efforts of our clean energy and Native advocate colleagues in Washington, I'm feeling that sense of optimism that H.R. 5376 will achieve its objectives for Indian Country. IEI was created to ensure this just transition. Our systems-based approach is rooted in Indigenous traditions and life ways, and is based on a foundation of trust. Our methodology weaves expertise in energy planning, renewable energy project development, and education to support tribes in their pursuit of energy independence, hope, and true sovereignty. Think about it. How can a tribe be truly sovereign, if it is dependent on outsiders for its energy?