In 2005, Congress created a federal program to grow energy projects in Indian Country, where the build-out of electricity lags significantly behind the national average.
Nearly 17 years later, the Tribal Energy Loan Guarantee Program designed to serve as a financial safety net for tribes’ energy investments has yet to back a single project.
Democrats want to allocate $200 million for the program and raise the cap on total loan guarantees from $2 billion to $20 billion as part of the sweeping climate change and social spending bill known as the Build Back Better plan. But the legislation – which is stalled in the Senate – does not directly mention a key barrier for tribal participation in the program: upfront costs for tribes.
In a letter sent in April to congressional leaders, tribal groups including the National Congress of American Indians and 30 other organizations, asked Congress for help accessing loans and expanding loan guarantees for native applicants.
Issuing and guaranteeing loans is a central mission of the Energy Department, which manages more than $40 billion in loans, loan guarantees and other financial commitments through its Loan Programs Office, and the Biden administration has plans to ramp up lending. In the case of the Tribal Energy Loan Guarantee Program, DOE does not issue loans but instead promises to repay up to 90 percent of what a bank or other financial is owed if the borrowing tribe defaults.
“Our loan authority has helped some of America’s bravest entrepreneurs get their best ideas off the ground,” Energy Secretary Jennifer Granholm said at an industry convention in March.
“Much of this authority went unused over the last four years,” Granholm said. “But I’m ready to rev those engines back up.”
The engine for the Tribal Energy Loan Guarantee Program has yet to rev.
Established through a 2005 energy bill, the program is authorized to provide up to $2 billion worth of loan guarantees, but it has not been funded for most of its existence. DOE first requested funding for the program in fiscal 2016, and Congress appropriated $9 million the next fiscal year.
Ramzey Smith, a DOE spokesman, said the department has “proactively engaged with tribes” since 2018 but declined to specify how many have pursued the guarantees. “We cannot comment on the status of applications, as we consider it confidential business information,” Smith said.
Sens. Mark Kelly, D-Ariz., and Catherine Cortez Masto, D-Nev., asked Granholm at a hearing last year why the program has yet to generate any agreements. All three referred to the program incorrectly as a loan program rather than a guarantee program.
“Not a single loan has been issued under this program. Not one. Do you have any idea why this is?” Kelly asked.
“I do know we are reversing that,” Granholm said. “And so this year so far, our Loan Programs Office has met with at least 20 interested entities to be able to take the tribal loan funding.”
‘Clean energy path’
Cortez Masto said she wanted tribes to have access to the program as the U.S. goes “down the clean energy path.”
But experts who follow the program say its financial requirements present hurdles for interested tribes.
Lycia Maddocks, political director of NDN Collective, an Indigenous-led advocacy organization, said in an interview the costs to tribes could reach $250,000 or more per application.
Before joining NDN, Maddocks worked at NCAI, where she said tribes were aware of the program but would often give up due to the upfront costs.
Asked if the Biden administration would support waiving, lowering or altering the fees for tribes, Smith, the DOE spokesman, declined to provide a comment on the record.
“The applicant is a bank or financial institution that’s working with a tribe,” Jigar Shah, head of the loan office, said on a video call last year.
Still the tribe doing the borrowing is required to work with the lender through the process and as is responsible for costs including consulting and technical fees for the project and legal reviews to make sure it meets environmental standards.
Expenses before ground can be broken on a project may thwart tribes from considering this program, Wahleah Johns, director of DOE’s Office of Indian Energy Policy and Programs, said on last year’s video call.
“Those are the areas that I feel like could also be a barrier for smaller tribes or tribes that don’t have the staff or capacity,” Johns said.
Under the program, groups whose loans are guaranteed must be tribes, tribal companies, a joint venture or “wholly-owned and controlled by a Tribe or a tribal joint venture,” according to a summary that Jeremy Kalin, an attorney based with the law firm Avisen Legal, provided to NDN this summer.
“The 90 percent DOE Guarantee is a potent mechanism already authorized and funded by Congress, and is significantly underutilized,” Kalin wrote in his memo.
About 25 percent of the country’s onshore oil and gas reserves, about 3.5 percent of the nation’s wind energy and about 5 percent of its solar energy potential rests on tribal lands, Dawn Sharp, president of NCAI, said in testimony to the Senate Indian Affairs Committee in February 2021.
“Despite the energy potential in Indian Country, tribal nations face many challenges, including that approximately 14 percent of homes on reservations lack access to electricity and unique federal laws, regulations, and policies create additional burdens for energy development on tribal lands,” Sharp said.
Whether through relief bills and passed in the 116th Congress or in the roughly $2 trillion package Congress passed shortly after President Joe Biden took office, financial relief for tribes has arrived with molasses-like speed, Maddocks said.
“When it comes to actually getting funds into communities, it took months and even more than a year. Especially for Alaska Natives, who probably need the money more than anyone,” she said. “Funds get bottlenecked at the federal level.”
Kalin, who represents NDN in an application to the DOE program, said it’s rare for tribes to have the physical space and money to see an energy project through.
“Very few tribes have both the land and the capital to do so,” Kalin said, adding that the tribal energy market is untapped.
It’s a bit like waiting for the first person to hit the dance floor, he said. Only instead of awkward teens, it’s hesitant developers.
“Someone has to get out and dance,” he said.
Another problem could be notions that tribes are politically unstable, he said. “In Indian Country there is a perceived risk — emphasis on perceived — of the political turnover of tribal governments.”