siting issues for renewable energy projects · – advantage – will be required by lender and...

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©2013 Foley & Lardner LLP • Attorney Advertisement • Prior results do not guarantee a similar outcome • 321 North Clark Street, Chicago, IL 60654 • 312.832.4500

Siting Issues for Renewable Energy Projects

Thursday, March 14, 2013

For audio participation — Dial: 1.888.523.1208 / Passcode: 293104

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©2013 Foley & Lardner LLP • Attorney Advertisement • Prior results do not guarantee a similar outcome • 321 North Clark Street, Chicago, IL 60654 • 312.832.4500

Siting Issues for Renewable Energy Projects

Thursday, March 14, 2013

For audio participation — Dial: 1.888.523.1208 / Passcode: 293104

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Program Speaker

Jason N. BarglowPartnerFoley & Lardner LLP213.972.4576 [email protected]

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Program Speaker

Tanya C. O’NeillPartnerFoley & Lardner LLP414.297. 5836 [email protected]

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Program Speaker

Sarah A. SlackAssociateFoley & Lardner LLP608.258.4239 [email protected]

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Program Speaker

Dorothy E. WatsonAssociateFoley & Lardner LLP407.244.3236 [email protected]

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Agenda

Property Title IssuesNavigable Waters and Wetland IssuesNational Environmental Policy Act IssuesEndangered Species Act and Bald and Golden Eagle Protection Act IssuesFWS Voluntary Land-Based Wind Energy Guidelines

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Common Real Property Title Issues in Renewable Projects

Presented by Jason Barlow

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General Themes

All Projects Will Face Some Title Issues– Issue will be whether a given site’s title issues

are resolvable, and if so, at what cost and on what timeline?

– Ability to resolve often depends on early spotting of issues

Common mistake – waiting until late in development cycle to conduct title reviewCommon result – project delay or even project death – delay can equal death (PPA deadline, etc.)

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How to Identify Title Issues

Title matters will be reflected in the county’s real estate records – county recorder’s office– Obtain title report from commercial title

companyWritten report from insurer listing all exceptions to title

– Typical cost - $700 title company cost, plus minor attorney review time

– Worth relatively small upfront investment

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Common Title Issues

Common Issue 1 – Severed Mineral Rights– Mineral rights defined broadly – oil, gas, gold,

geothermal– General rule – unified ownership of surface

and mineral/subsurface estateOwner owns surface rights and all rights underneath surface

– Severance of mineral estateMineral estate leaseMineral estate deed reservation or express mineral estate conveyance

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Common Title Issues

Common Issue 1 – Severed Mineral Rights (cont)– How to identify severed rights

Title report will reveal existence of severed mineral rights

– Rights of mineral estate holder to use property surfaceLease, conveyance or reservation can grant surface rights, withhold surface rights, or be silent on the issueSurface rights withheld = good resultSurface rights granted = need to resolve issueSilent on surface rights = need to resolve issue

– State law varies. California = mineral estate holder has strong implied rights to reasonable use of surface

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Common Title Issues

Common Issue 1 – Severed Mineral Rights (cont)– Issues resulting from severed mineral estate

with express or implied surface rightsPractical project issues – project interference from explorationFinancing issues – big impediment to financing

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Common Title Issues

Common Issue 1 – Severed Mineral Rights (cont)– Methods of resolution

Option 1 - Purchase rights from rights holders– Can be difficult to locate all rights holders, especially if

ownership fractured – often dealing with heirs– Mineral rights consulting firms – will search, identify, and

negotiate for acquisition– Generally requires payment of money in exchange for

rights

Option 2 - Obtain surface access rights waivers– Same issues as buying rights – location of rights holders,

payment of money

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Common Title Issues

Common Issue 1 – Severed Mineral Rights (cont)– Methods of resolution

Option 3 - Enter into surface use agreement– Shared use of surface – development envelope concept– Sometimes costs money, but often less than buying rights– Can be lengthy negotiations, especially when many rights

holdersOption 4 - Title insurance solutions

– Title insurance companies very conservative – general rule is to resist issuance of coverage if any meaningful possibility of a claim exists

– Certain title companies developing innovative solutionsDrill islands – case example; title company to the rescue

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Common Title Issues

Common Issue 1 – Severed Mineral Rights (cont)

Summary– Severed mineral rights very common– Early identification key – sometimes resolvable,

sometimes not, or not at reasonable cost– Keep in mind that state laws vary – local counsel

knowledge important

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Common Title Issues

Common Issue 2 – Easements– Easement defined the right of a third party to use

another’s propertyLesser right than actual ownership

– Types of easements – exclusive vs. non-exclusiveExclusive easements – property owner or lessee can not have any improvements in, or access to, easement areaNon-exclusive easements – property owner or lessee can not unreasonably interfere with use of easement

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Common Title Issues

Common Issue 2 – Easements (cont)– Typical easements

Utilities – sewer, water, telephone linesRoadsOil or gas pipelines

– How to identify easements and their locationTitle report will show existence of easement

– Difficult to identify easement location from “metes and bounds” easement legal description

Option 1 – ALTA survey– In-depth mapping of precise location of easements by professional surveyor– Advantage – will be required by lender and contractor prior to financing and

construction, so will be needed at some point– Disadvantage – cost, time

Option 2 – have title company plot easements– Advantage – cost, time– Disadvantage – accuracy not guaranteed

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Common Title Issues

Common Issue 2 – Easements (cont)– Once have ALTA survey or title company

easement plot, analyze options

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Common Title Issues

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Common Title Issues

Common Issue 2 – Easements (cont)– Option 1- Design around easements

Generally must avoid improvements in easement areasAddressing through project design often feasible and is preferred alternative

– Sometimes can not be designed around, need alternate resolutions

– Option 2 - Obtain crossing rights /encroachment agreementNegotiate for crossing rightsGenerally manageable if small number of easementsIf large number of easements, can become large task

– Case examples – 100+ easements– Time and expense to mitigate easement constraints can harm

feasibility of projects

– Option 3 – Title insurance solutions– Case by case

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Common Title Issues

Common Issue 2 – Easements (cont)– Summary

Almost all sites will be subject to at least a few easementsUsually resolvable if number and scope of easements not excessiveOnce again, early identification is key, especially if must approach large number of easement holders for crossing rightsProject delay can equal project death

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Navigable Water &

Wetland Issues

Presented by Dottie Watson

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Section 404 of the Clean Water Act

regulates the “discharge” of “dredged or fill material” to

“navigable waters”

Regulation of Actions Affecting Wetlands

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What are navigable waters?

Navigable Waters = Waters of the United StatesBroadly interpreted– Came to a head with Solid Waste Agency of

Northern Cook County v. USACOE (SWANCC) and Rapanos v. United States (Rapanos)

Agency position after Rapanos

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Waters typically not regulated– Converted cropland or waste treatment

systems– Artificial lakes/ponds that would revert to

upland should irrigation cease– Artificial pools or swimming pools– Gullies, rills, swales, and ditches (that are not

tributaries or wetlands)

What are navigable waters?

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Agency Authority for Regulating Wetlands

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U.S. Army Corps of Engineers – Issue permits (both individual and general)– Conduct and verify jurisdictional determinations– Enforcement

U.S. EPA – Develop and interpret substantive environmental

criteria used by the Corps to evaluate permit applications (§ 404(b)(1) of guidelines)

– With the Army Corps, verify jurisdictional determinations

– Enforcement– Veto authority

Agency Authority for Regulating Wetlands

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Do You Need to Get a 404 Permit?

Identify action– Discharge– Of Fill or Dredged material– Into Waters of the United

States– From a Point Source

Identify any exemptions or general permitsEvaluate means to– Avoid damage– Minimize impacts– Compensate for losses

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General and Individual Permits

General permits –– Designed to minimize

delay and paperwork– May not require advance

notice to the Corps

Individual permits – Project specific– Strict procedural

requirements

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404(b)(1) Standard

Generally, the ACOE may only permit the least environmentally damaging practicable

alternative.

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General Permits for Renewable Energy Projects

As of March 19, 2012, two nationwide permits allow for discharges of dredged or fill material in conjunction with certain renewable energy projects– NWP 51 – Land-Based

Renewable Energy Generation Facilities

– NWP 52 – Water-Based Renewable Energy Generation Pilot Projects

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Pre-Construction Notification (PCN)

Potential to slow down a project.– The ACOE has 30 days in which to notify the

applicant of a deficiency.– Generally, activity may not begin until 45 days

from the ACOE’s receipt of a complete PCN.– However, if approval is required, activity

cannot begin until the applicant receives written approval.

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General Permits for Renewable Energy Projects – Other Alternatives

NWP 12 – Utility Line Activities– Total loss cannot

exceed ½ acreNWP 14 – Linear Transportation Projects– Total loss cannot

exceed ½ acre for non-tidal waters

– Total loss cannot exceed 1/3 acre for tidal waters

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Mitigation

2008 regulations require mitigation for unavoidable impacts– Applicant must first take appropriate and

practicable – Compensatory mitigation for remaining

impacts

ACOE evaluates what mitigation is environmentally preferable

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Mitigation Options

Mitigation bank creditsIn-lieu fee program creditsPermittee-led mitigation – On-site or in-kind– Off-site or out-of-kind

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Take Home Concepts

Jurisdiction over waters and wetlands is broad. When considering permits, choose carefully.Look for conditions that may trigger notification requirements.ACOE has significant discretion over mitigation.

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National Environmental Policy Act, Endangered Species Act and Bald and Golden Eagle Protection Act

Issues

Presented by Sarah Slack

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National Environmental Policy Act

NEPA – Overview and purpose– Ensure that federal agency carefully considers

the potential environmental consequences of their actions prior to making a decision

– Provide the public with information regarding the potential environmental consequences and provide an opportunity for public comment and participation

– Purpose – to mandate a process for informed and involved decision making

Who’s in charge? Lead agency

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What’s the trigger for NEPA? Agency action.– Major federal actions significantly affecting the quality

of the human environment. 42 USC § 4332(c)

Certain actions are categorically excluded– Categorical exclusion means a category of actions

which do not individually or cumulatively have a significant effect on the human environment ... and ... for which, therefore, neither an environmental assessment nor an environmental impact statement is required. 40 CFR § 1508.4

– Specific CEs are set out in various agency guidance and regulations

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NEPA ProcessAction?

– Proximate cause? – Agency discretion?

Categorical Exclusion?– If yes, then no EA or EIS required

Significant Impact? – Environmental Assessments (EA) vs. Environmental

Impact Statement (EIS)– Finding of No Significant Impact (FONSI)

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EIS Process– Who’s responsible? Lead agency and cooperating

agencies. – Scoping process – who’s involved/interested?– Required elements of EIS include:

Discussion of the environmental impact of the proposed action (including direct, indirect and cumulative effects)Analysis of multiple alternatives (including a no action alternative)Discussion of adverse environmental effects that cannot be avoided

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NEPA Best Practices/Lessons Learned– Just because it’s green, doesn’t mean it’s clean– Start early – do not underestimate the timeline– Forum selection – lead agency? – Timing and strategy – EA vs. EIS– Mitigation is not required, but if agency decision relies upon

mitigation, then the measures must be fully developed. See Alaska Wilderness League v. Kempthorne, No. 07-71457 (9th

Cir. 2008); compare Bering Strait Citizens v. U.S., 524 F.3d 938 (9th Cir. 2008)

– Be prepared to “cooperate” with the lead agency to develop the data necessary for, and to prepare, the EIS

– Potential for legal challenges

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Endangered Species Act

Overview and purpose– Protect plant and animal life to prevent extinction– Use policy and regulations to recover endangered and

threatened species and maintain populations– Not just process – substance

Who’s in charge?– U.S. Fish and Wildlife Service (FWS)– National Marine Fisheries Service (NMFS)– Role of consulting agency

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The ESA Listing Process – Section 4– FWS/NMFS list endangered species and

threatened species– Initiation – agency or petition– Listing (can not consider economic impacts)– Critical habitat designation (may consider

economic impacts)– 2011 listing settlements

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ESA Take Prohibitions – Section 9– ESA prohibits any person from harassing, harming,

pursuing, hunting, shooting, wounding, killing, trapping, capturing or collecting a listed animal or fish (not plants) See 16 USC § 1532(19).

– Harm has been broadly interpreted to include habitat modification if the modification will result in:

Death or actual injuryOf or to a listed speciesThat is proximately caused by the habit modification.

(see Sweet Home)

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What if there are, or there is the potential for, listed species within a project area? – Value of early surveys– Timing and strategy considerations– Consultation under Section 7– Habitat Conservation Plan (HCP) and

Incidental Take Permits (ITP) under Section 10

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Consultation – Section 7– Trigger –a project requires a Federal Permit– “Jeopardy” Standard – no action that would likely jeopardize

the continued existence of a species or adversely modify its critical habitat

– If no jeopardy, agency can only require “reasonable and prudent” measures

– Result – biological assessment (informal) or biological opinion (formal)

– No independent NEPA review required– Consulting agency has final say

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HCPs and ITPs – Section 10– Trigger – development in area of a listed species but

project does not require any other federal permits– “Maximum Extent Practicable” Standard – Applicant

must, to the maximum extent practicable, minimize and mitigate the impacts of the taking, show that adequate funding is available, and that the take will not appreciably reduce the likelihood of survival and recovery of the listed species

– Requires preparation and funding of an HCP– Mitigation measures: avoid, minimize, rectify, reduce,

compensate – FWS has final say– No Surprises Assurances

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ESA Best Practices/Lessons Learned

–Start early– An ounce of prevention… Surveys may seem

expensive up front, but may be less expensive than the alternatives (reduction in units placed in the field, relocation and reestablishment costs)

– Difficulty of proving the negative – if there is suitable habitat, may be easier to assume a species is present

– Consider participating in the listing process – Option for CCA or CCAA

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ESA Best Practices/Lessons Learned: Strategy & Timing – Section 7 vs. Section 10?

Yes (No Surprises)NoAssurances

YesNoNEPA

HCPBiological OpinionProduct

Maximum Extent Practicable No jeopardy, reasonable and prudent measures

Standard

None195 daysTime limit

FWSConsulting agencyLead

Development in area of a species (no federal permit)

Federal permitTrigger

Section 10Section 7

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Bald and Golden Eagle Protection Act

Overview and purpose– Protect Bald and Golden Eagles– Protect Bald and Golden Eagle Habitat– Not just process – substance

Who’s in charge?– U.S. Fish and Wildlife Service (FWS)

Similar to, but different from, ESA

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BGEPA’s “Take” Prohibition– Prohibits anyone, from "taking" bald and

golden eagles, their parts, nests, or eggs– Defines "take" as "pursue, shoot, shoot at,

poison, wound, kill, capture, trap, collect, molest or disturb."

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– “Disturb" means: to agitate or bother a bald or golden eagle to a degree that causes, or is likely to cause, based on the best scientific information available, 1. Injury to an eagle, 2. A decrease in its productivity, by substantially

interfering with normal breeding, feeding, or sheltering behavior, or

3. Nest abandonment, by substantially interfering with normal breeding, feeding, or sheltering behavior

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2009 Eagle Rule– Regulations established a permitting scheme

for a “take” of an eagle that is the result of an otherwise lawful activity

Individual Take – permits individual take where the take can not be practically avoided and the activity will be for a limited time frameProgrammatic Take – permits “programmatic”take where the take is unavoidable even though advanced conservation practices are being implemented, and the permit is valid for a period of 5 years

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BGEPA Best Practices/Lessons Learned– Start early– An ounce of prevention…– NEPA– 2012 proposed rule – could extend

programmatic permit term to 30 years– To date – no programmatic permits issued– Coordination with ESA and FWS Guidelines -

uncertainty

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FWS Voluntary Land-Based Wind Energy Guidelines

Presented by Tanya O’Neill

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FWS – Voluntary Land Based Wind-Energy Guidelines (2012)

Long awaited update to former 2003 guidanceDeveloped in coordination and cooperation with numerous stakeholdersGoals– Provide a structured set of best management practices – Allow wind energy developers to work efficiently

with FWS – Ensure that wind energy projects are protective of

avian species of concern (migratory birds, bats, and bald and golden eagles)

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Applicable statutes– ESA– BGEPA– Migratory Bird Treaty Act (MBTA)

Generally, prohibit the “take” of listed/protected species

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Tiered Approach - iterative process for gathering and evaluating risks to species and habitats as part of the siting, construction, and operation of wind energy projects Intended to provide the opportunity for evaluation and decision-making at each stage of development

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Tier 1 — Preliminary site evaluationTier 2 — Site characterization Tier 3 — Field studies to document site wildlife and habitat and predict project impacts Tier 4 — Post-construction studies to estimate impacts Tier 5 — Additional post-construction studies and research

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Not every tier, or every element within each tier, will need to be implemented for every projectAt each tier, evaluate next steps – Project proceeds to the next tier without additional

data collection – Project requires additional data before proceeding to

the next tier– An action or combination of actions is indicated – Conclusion of tiered review may be that the project

site should be abandoned because the risk is considered unacceptable

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Guidelines are voluntaryAdherence to guidelines does not relieve either a developer or an agency of its obligations to comply with all applicable laws and regulations, such as the NEPA and the ESA FWS will consider a developer’s communications with FWS and adherence to the Guidelines if a violation occurs

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Focus of the guidance – early and active involvement of FWSIssue – projects already undergoing developmentCreated to enable developers to avoid areas where development would be precluded, or where impacts to species are high and difficult or costly to remedy or mitigateEarly consultation may help protect developers from investment in a project site at which mitigation of impacts to species is either not possible, or is economically unfeasible

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Questions & Answers

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Thank You!

A copy of the PowerPoint presentation and a multimedia recording will be available on the event Website early next weekhttp://www.foley.com/energy--environmental-law-update/

CLE questions? Contact Jennifer Bartz at [email protected]

Those seeking NY & NJ CLE credit must complete the Attorney Affirmation Form. Email the 5-digit code announced in the program to [email protected] to get a copy of the form. Immediately fill it out and return it after the program.

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