North American Windpower Runs John Marciano Article on Tax Incentives for Native American Tribes
North American Windpower has published “Indian Country Deserves A Second Look,” co-authored by tax partner John Marciano, on ways in which Native American tribes can monetize federal subsidies to stimulate wind energy potential—reported by the authors at 535,000 GWh per year, or 13 percent of the United States’ total electricity production.
The authors write:
“Nonetheless, very few utility-scale wind power developments exist or are planned in Indian Country. One possible explanation for the lack of such developments is the combination of a lack of tribal capital and the insistence of most tribes that they have proprietary control over any project.” They note, however, that the “idiosyncrasies” of wind power make it difficult for tribes to profit from developments, including because of the fact that tribes not paying tax, they “cannot directly benefit from programs that offset tax obligations, and tribal involvement may make a project ineligible for other federal subsidies.”
Consequently, the authors write, “[T]ribes must monetize or extract value from the subsidies in some other way. Two ways that tribes can monetize federal subsidies include the Renewable Energy Production Incentive (REPI) and issuance of tax-exempt tribal bonds.”
The article discusses bond issuance and other financing means, including a pre-paid power purchase agreement; incentives to develop wind projects in Indian Country, including the New Markets Tax Credit and the Indian Employment Tax Credit; and benefits from a land-use perspective.
The authors close with a discussion of advantages to working in Indian Country and issues unique to business dealings with tribes.