Building On Sovereign Land

Data Center Resources Executive Summary:

Developing infrastructure on sovereign tribal land under Section 17 of the Indian Reorganization Act offers unique advantages: tax-exempt status, streamlined permitting, and federal support. This white paper explores legal frameworks, partnership models, and risk mitigation strategies to build resilient, cost-effective data centers and related infrastructure on tribal lands.

1. Introduction

Infrastructure projects face increasing hurdles: high land costs, lengthy permitting, and state/local regulations. Sovereign tribal land provides an alternative pathway, combining economic incentives with strategic benefits for both tribes and private developers.

2. Legal Framework: Section 17 Charters

  • Federal Chartering: Tribes can incorporate federal corporations through the Department of the Interior, creating entities with sovereign immunity.

  • Tax-Exempt Financing: Federally chartered tribal entities can issue tax-exempt bonds and leases, reducing capital costs.

  • Land Status: Tribal land is exempt from state and local taxes, and typically not subject to municipal zoning.

3. Partnership Models

  • Joint Venture (JV): Tribe and developer form a JV corporation. Profits and governance are shared per agreement.

  • Lease-Leaseback: Developer leases tribal land and subleases back to the tribal entity, unlocking tax-exempt bond financing.

  • Service Agreements: Tribe provides land and facilitation; developer handles construction and operations.

4. Economic and Strategic Advantages

  • Reduced Capital Costs: Tax-exempt bond interest rates can be 1–2% lower than taxable rates, saving millions.

  • Permitting Efficiency: Sovereign land status often bypasses state environmental reviews.

  • Federal Support: Eligibility for grants from DOE, EPA, and USDA rural development programs.

5. Risk Management

  • Tribal Council Resolutions: Secure clear tribal authorization and resolutions.

  • Legal Counsel: Engage experienced Indian law attorneys to draft charters, leases, and non-circumvent agreements.

  • Government Coordination: Early involvement of DOI, BIA, and state agencies to align processes.

6. Case Study: Nevada Industrial Center

Data Center Resources partnered with a Nevada tribe to charter a federal corporation under Section 17. A 150 MW substation project was delivered in 18 months using lease-leaseback financing, saving approximately $8 million in interest costs and bypassing multiple state reviews.

7. Implementation Roadmap

Phase

Key Activities

Timeline

1. Feasibility

Tribal outreach, initial site studies, legal review

2–3 months

2. Chartering

Draft charter, DOI approval, tribal council resolution

3–5 months

3. Financing

Bond issuance, lease agreements, funding close

2–4 months

4. Permitting

Coordinate DOE/BIA, environmental clearances

6–12 months

5. Construction

Site development, substation build-out, commissioning

12–18 months


8. Conclusion

Leveraging sovereign tribal land through Section 17 partnerships transforms infrastructure development—offering tax benefits, expedited approvals, and federal support. Data Center Resources specializes in end-to-end facilitation, from legal structuring to financing and execution.