WASHINGTON – Legislation has been introduced in the House and Senate that would allow tribes to hold an un-penalized equity position in renewable energy projects built on their reservations. The political climate is right, tribal advocates say, to make progress in an area that would spur job creation and clean energy production on many reservations.

The bill that’s got tribal energy folks excited at the moment is known as the Fair Credit Act. Its long name is the Fair Allocation of Internal Revenue Credit for Renewable Electricity Distribution by Indian Tribes Act.

Rep. Raúl M. Grijalva, D-Ariz., introduced the legislation, which is similar to a bill he offered up last year that went nowhere, in mid-June. He said its passage would bring tribes one step closer to economic self-sufficiency and help to address the climate crisis facing the nation.

How would the legislation assist tribes?

In short, it would alter the Internal Revenue Code of 1986. The change would allow 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 current federal law, tribes are tax-exempt and are therefore not allowed to take advantage of the production tax credit. Also, private groups that partner with tribes for renewable energy projects on reservations can only get 50 percent of the credit, rather than 100 percent if they chose to invest in such projects on private lands.

Tribes end up facing a penalty, and are deterred from trying to reap the benefits of pursuing renewable energy projects, tribal energy experts say.

Meanwhile, federal studies have shown tribes to have some of the most significant wind and solar resources in the country. Wind generation on tribal lands alone was estimated at 14 percent of the total U.S. energy production in 2007, while the solar electricity potential was estimated at 4.5 times the annual total electricity needs of the U.S., according to the U.S. Department of Energy. Tribal lands are also known to contain significant geothermal resources.

Bob Gough, a leader with the Intertribal Council on Utility Policy energy-focused nonprofit, said the time is ripe for tribes to contact their congressional delegations and to weigh in with the House Committee on Ways and Means and the Senate Committee on Indian Affairs.

“We’re very excited,” Gough said of the new legislation now introduced in both branches of Congress. “It’s taken years of staging and educating legislators. Now is the time to let these folks know how important these issues are to tribes.”

With the new presidential administration and Congress having expressed desires to make renewable energy and its job growth potential a priority, Gough said tribal leaders should be able to explain how and why their reservations could benefit economically from enhanced incentives.

Grijalva has started making the case for one reservation in his state. When he introduced the legislation, he noted that nearly 37 percent of all households on the Navajo Nation alone are without electricity and unemployment is above 50 percent.

The congressman predicted renewable energy projects that would be spurred by the changes in tax code could play a big role in resolving the dire situation.

George Hardeen, a spokesman for the Navajo Nation, said the tribe’s Diné Power Authority has been toiling in the area of renewable energy for years and is ready for increased development.

He said the legislation “is greatly appreciated and is a step in the right direction,” but the Navajo Nation, which has 100 years of minable coal and is its most plentiful resource, does not want to limit itself to just renewable resources.

“Central to our energy development plan is the Desert Rock Energy Project, which would responsibly use our natural resources and will produce needed jobs and revenue for the Navajo people,” Hardeen said.

While each tribe has its own vision in terms of what it wants to do in the energy arena, observers say that if the federal legislative and administrative forces align, many tribes, including the Navajo Nation, could face better prospects.

The House version of the legislation is nearly identical to legislation offered by Sen. Tim Johnson, D-S.D., earlier this year.

Gough said the bills are basically in alignment and could easily be resolved in a conference agreement if Congress decides to move forward. Even given President Barack Obama’s ambitious agenda beyond renewable energy, he said prospects are high that the legislation could be passed this year.

“We’re farther along than we’ve ever been before. There’s a lot of reason to be encouraged.”