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Rosebud Sioux Tribe moves closer to setting up windmill farm

ROSEBUD, S.D. ? After taking one step forward and two steps back, the Rosebud Sioux Tribe is again closer to erecting a wind generator at the Rosebud Casino and Quality Inn site in south central South Dakota.

The on-again, off-again project has been pending over three terms of office in two tribal administrations. It met with delays during the past two years because of failed contract negotiations and attempts to secure funding. When originally proposed, the wind generator was an experimental project to serve as a foundation for a potential wind farm with three sites. After languishing for months, it was brought to the table again at a recent Rosebud Sioux Tribal Council meeting.

At a groundbreaking ceremony in April 2001, tribal officials indicated the project would be erected by an Aug. 1 deadline. This target date had already been delayed by a year because of failed negotiations with a contracting company. The firm made unacceptable demands for future rights to power generation and ownership of wind generators on tribal lands. The project was also stalled by the red tape of interconnection agreements.

Other issues behind the delay included a change in the matching requirement for a federal grant, said Robert Gough, a consultant for the Department of Energy who advises tribes on renewable energy options and who is also an attorney representing the Rosebud Sioux Tribal Utilities Commission.

Originally, the project was supposed be funded with an 80-20 match, with 80 percent paid by the Department of Energy. But when the commission chose to look at it as a potential commercial enterprise, the match became 50-50. A DOE grant would pay for half and the tribe had to find money for the remaining costs.

Pressing for 100 percent tribal ownership, Gough said the commission began to look at other options with other companies. It sought an additional source of funding pairing the $508,000 DOE grant with a Rural Utilities Services loan.

The Rural Utilities Services (RUS), formerly the Rural Electric Administration and now an arm of the United States Department of Agriculture, will provide the remaining funding. The loan, at six percent interest, would cover the 750-kilowatt wind generator and further development, including studies of potential sites for a larger wind generation operation along with training for tribal members to maintain the sites.

Despite some questioning by council members, the tribal council agreed to move forward with a company called Tatanka Energy Services L.L.C. to serve as a subcontractor for the project. Tribal member Pat Spears, the president of the newly formed company, said it would serve as a subcontractor for DISGEN, an Evergreen, Colorado-based firm that will assist the tribe in erecting the wind generator. Tatanka Energy wasn't incorporated under tribal law, and some council members worried that it raised potential conflicts of interest

Dale W. Osborn, president of DISGEN, is also a minority stockholder in the Tatanka Company. So is Gough, the consulting attorney representing the interests of the RST Tribal Utilities Commission. DISGEN, Osborn said, has worked on $350 million worth of projects across the nation and abroad.

Tribal Council Vice President Vernon "Ike" Schmidt raised the question of a potential conflict of interest because of the involvement of Gough and Spears in the Tribal Utilities Commission. He suggested that other tribally owned contractors were capable of erecting wind generators. The council didn't place the project out for competitive bidding.

The project will include the study of several surrounding sites in Mission, St. Francis and Soldier Creek.

Eric Antoine, the tribe's in-house attorney, noted several troublesome areas in the proposed contract with Tatanka, including a provision compromising sovereign immunity. He questioned the requests for advances to Tatanka of $3,000 per month for 18 months.

He noted that the agreement should be subject to the jurisdiction of the tribal courts and that the company should be required to use the Tribal Employment and Contracting Rights Office for the hiring of employees.

The loan from the RUS, said DISGEN president Olson would be repaid by the return from the power sold under an interconnection agreement.

"If the turbine doesn't produce," he said, "the loan will be forgiven. Essentially it is free money. The tribe will owe nothing."

However, Osborn said the non-recourse provision of the loan means the federal government can take the equipment and sell it for whatever it can get for it should the tribe default.

The first phase of the project, he said, can be completed by July 1. A wind generator would produce energy to help defray the nearly $10,000-a-month power bill for the Rosebud Casino and would return energy to power suppliers. The tribe would buy existing electrical equipment installed by Cherry Todd Electric when the casino was built and add some new pieces to allow for the transfer of untapped power back to the supplier.

Councilman Eric Nixon pushed in favor of signing the contract with the newly formed company, saying the tribe had waited long enough to start the project.

"These are lucrative resources. I would like to see this go through for the tribe. We need to get some sort of environmental project up with the tribe. We need to make a better face for Rosebud," Nixon said.

Darrell Marcus also pushed to make an agreement and start a project geared toward economic development.

"We have to start generating some kind of income for our people," Marcus said.

Gough said the tribe could take advantage of a narrow window of opportunity. Because of Congressional failure to act on federal production tax credits, tribes can develop wind projects across the nation during the next six months without competition from utility companies who have used the tax credits to fuel their own projects. If Congress restores the tax credits, tribes may lose this competitive advantage.

The state legislature is eying a moratorium on wind energy projects. This pause would give many of the state's cooperatives and larger power suppliers an advantage over small start-up companies interested in developing the resource.