Energizing Indian Country: The Legal Side of Economic Development

Kyle McEntee:

We're joined today by Pilar Thomas, a member of the Pascua Yaqui tribe. Who is a partner at Quarles and Brady, a very large firm with offices throughout the United States. She's in the Tucson, Arizona office where she advises a number of Native American tribes.

How would you describe your practice?

Pilar Thomas:

It's as narrow as it can be and as broad as it has to be. I practice primarily in the area of tribal energy development and economic development. And that encompasses an incredible breadth of work, thankfully, because it's a nice variety. For example, I do a lot of work with tribes around federal energy policy and tribal energy policy development.

I do a lot of work with other clients who want to work with tribes around tribal government relations work. I work with tribal governments directly to develop their legal infrastructure. And I also work with tribal enterprises, whether it's corporate formation or project finance, ways to build out tribal enterprises, which are very important ways for tribes to generate revenue. There's also a bit of business support and business advising because I have done clean energy development for almost over 10 years now, both from the federal and tribal side. And so it's kind of almost a jack of all trades, a master of half.

Kyle McEntee:

When you say clean energy development, can you say a little bit more about what that means specifically?

Pilar Thomas:

A handful of clients are trying to do just small solar plus storage rooftop solar projects or community scale projects. So maybe a one megawatt solar project that's going to power multiple houses. We have clients that are doing geothermal projects, geothermal heat pumps. So they're trying to replace natural gas, for example, in their government buildings and their enterprise buildings. And a handful of tribes that are doing big utility scale. So it's a wide range and it's all renewable energy. We have the bipartisan infrastructure law and the Inflation Reduction Act, tens of billions, if not hundreds of billions of dollars in federal support for clean energy, renewable energy. And a lot of states now getting into that business as well.

Kyle McEntee:

So it's not just the small scale projects where you're trying to power a small community by buying those panels, the land use requirements to actually put those panels on the property. But you're working on these larger scale projects that really tie into this economic development work you do. Can you talk a little bit about the importance of economic development in this context?

Pilar Thomas:

When I talk to tribes about what their energy resources can bring to them, I tend to talk about it in two ways. One is from a commercial opportunity. Your energy is a commodity. So big solar projects, big wind projects where you're selling power to other people.You might even create a biomass product that you're selling to somebody else. And that's clearly economic development from a revenue generation standpoint, creating jobs for your tribal members. And you might have a tribal enterprise that wants to get into the energy business. Maybe you don't have resources but you're leveraging somebody else's resources. And there are a couple of tribes that have partnered with people off the reservation to develop somebody else's resources and they're generating revenue for the tribe that way.

The other way I talk about energy is as a community benefit or a public good. And that's where tribes can use their energy resources for themselves. And that too can generate economic activity. For example, a tribe might have its own tribal utility authority. And if it's generating its own power locally, it's creating resiliency. They don't have to import power onto the reservation. And they might be able to attract more businesses to the reservation because they're going to have reliable power. The tribe might be in a state where the state doesn't believe in climate change. So you don't see a lot of off-reservation clean energy projects, but businesses like Facebook or Apple, who have big data centers, want to locate. And so they might be incentivized to locate on the reservation. Again, bring jobs, bring revenue to the tribe. And so as the community development grows, because it's got reliable power, and maybe even cheaper power than what their current utility is charging them, they have room to then grow businesses or other enterprises.

Kyle McEntee:

So are you involved solely on the legal side of this, trying to figure out how to make it work?

Pilar Thomas:

I spent four years at the Department of Energy under the Obama administration when we stood up the Office of Indian Energy, and we spent four, four and a half years developing programs, education, information for tribes, providing direct technical assistance. So I have the fortune of also having a strong technical background in this. You don't spend four years wandering the halls of the Department of Energy and not pick up something. I tend to be able to take a step back and help tribes very strategically understand what they need to know, what kind of information they should get, what kind of people they should hire, the kind of folks that need to help them accomplish what they're trying to accomplish. And because energy is so heavily regulated at the state and or federal level, understanding what the law is and the regulatory context is important as well.

So there might be a client who wants to do a lot of rooftop solar, but they might be in a state that doesn't have any net metering. So you have to understand what that state regulatory scheme is. That's hand in glove with just thinking through what kind of projects do we want to do, where do we want to do them, what federal law applies, what tribal law applies, what state law might apply. And you don't want to kind of get going down a path of project development and then find out, oh, can't do it, right? The utility won't let you do it or there's a federal issue with whatever it might be, you know, endangered species or birds, bats and butterflies, right? The three things that kill all wind projects. So you have to have a good understanding of the legal and regulatory regime as you're doing project development. And I have the, I think the unique ability to be able to do both with folks.

Kyle McEntee:

Well, you also have a money background, right? Cause your first career was in financial services.

Pilar Thomas:

Yeah, no money, no energy.

Kyle McEntee:

And that wasn't just like a minor detour too. You went to law school 15 years after graduating college and you were in the financial services industry in that time. Why did you go down that path first? Even though like, I know you wanted to be a lawyer from the get-go.

Pilar Thomas:

I got my degree in economics. I was able to find a good company. I worked for a company, Household International, and one of their subsidiaries was Household Finance so it gave me great opportunity to live around the country. I've lived in four or five different states with them. Got a really good understanding of how things work in the real world, right? I grew up in Los Angeles, it was a nice background in terms of meeting people, working with people, and understanding money and how important money can be.

Kyle McEntee:

And moving around that much, it just requires you to figure out how do you change? How do you get to know people? How do you learn the new world around you? And then you can apply that in all kinds of different ways.

Pilar Thomas:

That's exactly right. And Household was well known for having a very good management program. I think at one point I estimated they probably spent a million dollars on me in just management training over that 15-year career. But in addition to that, they were, as a for-profit company, they're always trying to make more money and they were in a constant state of change. We used to just kind of laugh at the six-month mark. All right, what change are we gonna see now?

Kyle McEntee:

So what was it that finally pushed you to apply to law school?

Pilar Thomas:

I think for me it was just time for a new career. As you had mentioned, I always wanted to go to law school when I was in college. You know, you look at, do I just go to law school next or do I just go make some money so I can eat? And I decided I just needed to kind of get out of school. But it was always in the back of my mind. And so as I started kind of exploring what my additional career, new career options were, you know, one option was just to stay in the business, stay in the industry, just go work for another company.

And then I thought, well, the grass is probably not greener on the other side. I had already known enough people who had left who are still kind of miserable. So it felt like it was time for a complete break. Three years of school felt like the perfect break from work and an opportunity to just really do what I wanted to do, which was practice law. But I also did some homework. So this wasn't just any law – specifically Indian law. And so I researched law schools that had strong Indian law programs. My mother's family is from southern Arizona, were members of the Pasco Yaqui tribe. And I thought, well, that might be a nice opportunity to go back to Arizona, come back west because I was living in Chicago at the time, get back closer to my family, and work with my tribe and other tribes.

Kyle McEntee:

You've had a number of different roles across the federal government and in private practice. But I want to talk a little bit about the work that you did with your tribe. You have described it in the past as being “in-house with my tribe.” Can you explain what that means?

Pilar Thomas:

So my tribe is, more tribes are getting like this, but we were one of the first tribes to have kind of a full in-house council department. So we had an attorney general. He brought me on board as deputy attorney general. And in house, you're doing all the legal work across the tribal government and the tribal enterprises. Our tribal government has 23 departments, ranging from law enforcement to health care to social services. And so the work there was incredibly broad, ranging from employment law to construction contracts to land real estate law for leases and right of ways, and to gaming law for the gaming enterprise, to gaming regulatory law. So in-house, in a tribe that's very active in both providing governmental services and doing economic development and gaming, creates this very broad range of work to be done.

But when I joined and when I left, we had eight lawyers in house, plus the attorney general, several law clerks, and around the tribe, the tribal court had its own lawyer. So the gaming enterprise had its own lawyer. And then we had our prosecutors and our public defenders. So there were a lot of lawyers working for my tribe.

Kyle McEntee:

And how many tribal members were there at the time?

Pilar Thomas:

The time I think we had about nine or 10,000 tribal members. We're up to 20, 25,000 tribal members now.

Kyle McEntee:

So I think that gives some important context, because on the one hand, talking about a tribal government, a lot of parallel systems to US states and the US government. It's a much smaller population, but that's still a pretty high proportion of lawyers to people, which I think is kind of interesting.

Pilar Thomas:

Yeah. Well, I mean, we had 1,700 or so tribal government employees and at the time, another 1,500 gaming employees. So we had over 3,000 employees. And as I mentioned, 23, 24 departments doing 23 or 24 different kinds of things. So eight lawyers didn't feel like enough at the time.

Kyle McEntee:

You mentioned at the top of the episode that you also work on developing legal infrastructure for tribes. Are you basically trying to replicate what your tribe did across other tribes?

Pilar Thomas:

No, no, because every tribe is different and every tribe has a different approach to how it wants to govern. Many tribes are, well, in the federal world we would call it arbitrary and capricious. They just make stuff up as they go along. But more and more tribes understand that if they want to do business with people, if they want to be effective governments.

They need to write the law down so that their tribal members can see what the law is and so that their business partners or other non-tribal entity or non-tribal people can see what the law is. So people know this is how we get stuff done, this is what we're not supposed to do. And so my tribe has had for a long time an ethos of creating a lot of what we would call positive law: law written down that you can see. We published it. One of the first projects I worked on when I went over there was a recodification of the law. We passed a lot of laws, but they're all kind of cobbled together. And so I recodified all of our laws and kind of put it into an organization that is easy to read, easy to understand.

If a state wants to attract outside investment in the state, you know, that investment wants to know, well, what law am I going to be subject to? How do I resolve disputes? How do I, what does the court system look like? How do I get into court? How do I, you know, get a permit, how do I get a loan, right?

So you would see this in a non-tribal space, and people make investment decisions about where to go based on what the law is. And that's, I think, in many ways, been a hindrance for a lot of tribes is the lack of law. You'll see people go, well, we don't know what the law is. We don't know, we don't see laws, we don't see court systems. We see you have a court, but we don't know how it operates. So, we're not gonna make an investment there because we just don't know what we're getting into.

Kyle McEntee:

I'm struck by the law not being written down or people not knowing what the law is. How do you first come to figure out what the law is if it's not been written down to then codify it?

Pilar Thomas:

Great question. In the American legal tradition, British legal tradition, we call that the common law, right? King didn't write a lot of stuff down, so the courts made up the law. And so you have something similar happening. We don't call it common law in Indian country, but we do call it traditional law or cultural law.

I teach tribal law and courts and we've tried to teach law students one about the kind of diversity of tribes, even tribes within maybe the same grouping, if you will. The Lakota Nation, for example, you've got seven or eight tribes that are Lakota, but seven different tribes that go do things seven different ways. So there might be a cultural affiliation across that and you might see that show up in how they govern or in how they determine what the laws should be for their respective reservations. One of the challenges is trying to incorporate traditional values, traditional cultural practices, or their traditional unwritten law into law.

And sometimes it just doesn't, it doesn't happen. For example, a lot of times, I know my tribe, we have a lot of our cultural background shows up in what would be domestic law, family law. So if we had a child custody dispute, you're going to tribal court to resolve that. The judges, our judges, are all tribal members. And so they would apply our cultural approach to who should get the kid. That wouldn't necessarily be written down, but it will show up in a court situation.

From an outside standpoint, our law might look just like everybody else's law, and especially in the business context where we don't necessarily want to deviate too much from maybe other local law. Because again, we want to attract business onto the reservation, so we don't want to make it hard for them. We want them to see something they already know and might be used to. Our tax ordinance looks just like the state's. We charge the same taxes the state does.

So some areas of law are ripe for traditional law use, cultural law use. In some areas, nope, we'll just do what the state does because it's easier for us and it's easier for the people we're trying to do business with and we're not going to mess with it. And for native attorneys who may either come out of the community or come out from another tribal community, but become lawyers. You know, when we go to law school, we get ingrained with the Western view of law. And now we have to have two sets of laws in our head And working with tribal councils on how they draft that law from both a Western standpoint and then from a tribal standpoint. And the two might be completely incongruent and so you can't really bring it together. In other cases, they find a way to do it.

So some tribes like Navajo have found a way, Cherokees I think have done the same thing where they've been able to weave a lot of their traditional cultural approach into a western looking law. It's a unique skill that those native attorneys pull off.

Kyle McEntee:

It's incredibly overwhelming.

Pilar Thomas:

It's a lot. It's why I focused just on energy and economic development. I got out of the rest of it for a reason. It is very overwhelming.

Kyle McEntee:

And so was that your primary motivation to focus more on energy?

Pilar Thomas:

So once I left my tribe and I went into private practice, I was working for a partner who was mostly focused on gaming. But at the same time, the Energy Policy Act of 2005 -- the Tribal Energy Act -- it created the office of Indian Energy in the Department of Energy. And we had a couple of clients who were starting to look at clean energy projects. It just happened to dovetail. Arizona Corporation Commission had just created their renewable energy standards. So there's a big effort around the states to start to promote renewable energy. And the state itself actually was doing a lot of outreach to tribes at the time. After gaming, the next thing for tribes was gonna be renewable energy opportunities. And so I saw that as a great opportunity to parlay, again, my finance background and of course my love for clean air.

So I try and help tribes do their own thing with mitigating climate change, replacing fossil fuels. And the Indian country has very high asthma rates because of either their location close to coal-fired power plants or indoor air quality. It's a combination of improving the community, improving the environment, and helping tribes make some money.

Kyle McEntee:

It's funny, the theme across everything we've talked about today is infrastructure. Infrastructure is everything. It is interesting that you ended up with a narrower focus, but arguably the most important part of that infrastructure. Although maybe you might argue that the legal infrastructure is more important because you can't attract investment in the necessary energy without actual legal infrastructure.

Pilar Thomas:

You know, it's just laying groundwork. You never know, today the tribal council says, great, just go do what you want to do. Five years from now, they're gone. But the project's still there and you got a problem. And there are some examples of this throughout Indian country where tribes maybe did not lay the groundwork around legal infrastructure and are now playing catch up.

I won't name any names, but there are some tribes that came across lots of opportunity to do maybe oil and gas development and did not have the legal infrastructure in place. And it took five or seven years and in that time period, the industry just wreaked havoc because if you don't have to follow a rule or regulation, you're not gonna. And it's gonna be the Wild West. And we see this in many states, for example, where they have just basically thrown open the doors to certain types of development. It is the Wild West. And a decade later, 15 years later, everybody goes, what happened here?

In fact, I would say this to the EPA many times, “Look what you did 20 years ago or 30 years ago.” Where you just let people do what they wanted to do And now you're playing cleanup and the tribes are suffering for it. So let's not make that mistake again Let's work with the tribes help them figure out how they protect themselves and in many cases the law is and especially in the area of energy development. It is destructive. There's no doubt about it. When you put in a thousand acre solar project, you're blading the land. You're destroying whatever resources might be there. You might be having impacts on biological resources, animal resources, water. You don't know unless you're really studying it. But it is not a passive activity. And if you're not anticipating, and then again, legally requiring people to behave a certain way, they're not going to do it. They're taking the cheapest, fastest way out. And you don't want to play catch up. And I've just seen, we've seen that around Indian country where, “uh, yeah, great idea. Let's go do this.” And then we're playing catch up. Because we didn't think through the legal issues, the downstream issues, or we just didn't care. We just wanted to make money now because we need to make money. And so now somebody else is left holding the bag.

And so that's one of the reasons why I really try and promote understanding what that legal infrastructure should be or could be, because it serves more as a prophylactic to try and prevent downstream problems. And we know what those problems are gonna be. It's not like this is the first time a solar project's been done. So we know what it looks like 20 years from now, and we don't want it to necessarily happen here.