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Tuesday, December 15, 2009

Strategies For Securing Regulatory Approval Of Sustainable Energy Projects

Dear readers:

I came across this article while I was researching for another article in solar energy, and I wanted to share it with you all.

Brian C. Fish is a Partner at Luce, Forward, Hamilton and Scripps, LLP, where he focuses his practice on land use, redevelopment, environmental and real estate matters. He’s the author of this article, which is both interesting and timely because it points out some of the difficulties attendant on getting the land to start the renewable energy projects in the first place, not to mention all the regulatory hoops that everybody is going to have to jump through just to get to the point of being ABLE to get the land and the usage permits.

Regardless of what greedy sharks like T. Boone Pickens think, it’s not always possible to eminent domain land for renewable energy use. Yes, he really did try to do that, and that’s a story for another column. Please read this one – this is a very interesting topic, succinctly put, by a man that knows what he’s talking about.

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The national debate continues over climate change and greater energy independence. U.S. Senators Kerry and Boxer recently offered their vision of the future when they introduced the Clean Energy Jobs and American Power Act. In the same week, the Environmental Protection Agency announced proposed rules that would regulate larger producers of greenhouse gases under the Clean Air Act. These efforts, coupled with the unprecedented investment in alrenative energy and "green" technology flowing from the 2009 American Recovery and Reinvestment Act, will focus greater attention on the sustainable energy industry in general and solar and wind power developments in particular.

It remains to be seen whether solar and wind power projects are truly viable means of addressing a meaningful portion of the nation's climate change and energy independence goals. Both solar and wind energy projects have great potential as they rely largely on renewable resources to generate power.

Unfortunately, these technologies also require larger tracts of land that meet very specific criteria and are often subject to many different layers of regulatory approvals.

While hardly perfect, compared to other alternatives such as nuclear or coal fired power plants, one might think that new solar and wind energy developments would at least have few opponents and little trouble securing required approvals. In fact, the same types of issues that derail and delay other developments also apply to many sustainable energy projects.
The problem has become so prevalent that the United States Chamber of Commerce launched "Project No Project". The stated goal of the Web site, which maintains information about sustainable energy projects and the organizations (including many well known environmental groups) that oppose them, is to make policy makers more aware of the problems posed to the burgeoning renewable energy field by "Not in My Back Yard" attitudes.

Given today's political and regulatory climate, the question becomes what is a proponent of a sustainable energy development to do? The following are a few approaches that a sustainable energy developer might consider:

+ Site Selection. Sites appropriate for solar and wind energy development must meet specific, technical criteria. However, to truly gauge the merits of a site, a project proponent must also assess issues such as environmental constraints and the political climate.

+ Strategies for Contract Negotiations. Given the uncertainty in the approval process, a well negotiated and drafted contract can make a huge difference. Option contracts, tiered lease structures, liquidated damage clauses and generous due diligence periods are just some of the mechanisms that a renewable energy developer might want to consider.

+ Keeping Control of the Message. The ultimate success of any project often has less to do with that project's merits and more to do with how the public and the decision makers perceive the project. While the internet makes it nearly impossible for a project proponent to truly control the flow of information, a sustainable energy developer would be wise to engage a team that can analyze the legal, political, social and economic elements and formulate creative strategies for a project's specific circumstances.

+ Understanding and Enforcing Your Rights. Especially in California, but not exclusively, the approval process itself serves as a significant impediment to renewable energy projects. Recognizing this fact, some states have enacted legislation to simplify and expedite the process.
For example, California has adopted Government Code section 65850.5 to limit the ability of local governments to impose more costly permit processing requirements for solar energy systems. A working knowledge of all such laws could save a sustainable energy developer significant money and time.

+ Influencing Regional Planning Efforts. A ray of hope is offered by those governmental agencies that have commenced master planning and master environmental review of large areas with good sustainable energy potential. By way of example, the State of California has established a Renewable Energy Action Team and the State and the Federal governments are cooperating on a Renewable Energy Conversation Plan in an effort to expedite wind and solar projects in the Mojave and Colorado Desert areas. Similarly, the Interior Secretary Ken Salazar has announced plans to "fast track" solar development on 670,000 acres of Federal land in western states. Although often time consuming and loaded with politics, if these efforts result in meaningful master planning and environmental documents, it may eventually be possible to expedite project approvals.

Therefore, savvy sustainable energy companies and developers will want to promote, monitor and participate in these efforts to ensure that industry interests are adequately protected.
The reality of the situation is that no simple solutions exist to the difficulties posed to the future of sustainable energy developments by the applicable permitting process.

Further, with the entrenched interest groups that operate at the various governmental levels and the infeasibility of a one size fits all solution, meaningful legislative relief also seems highly unlikely. Therefore, relying on techniques such as those identified above, sustainable energy developers will continue to have to take matters into their own hands if the U.S. is ever to achieve greater energy independence.

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