Continuing Regulatory Uncertainty Need Not be a Showstopper

By Anna J. Wildeman | March 21, 2011

The regulatory climate for renewable energy project development is unpredictable. The federal government is promulgating new rules and regulations and officially “reconsidering” them at the same time, defending in court EPA’s greenhouse gas (GHG) permitting rules, and trying to thwart public nuisance actions against GHG emitters. Meanwhile, most states are working to implement the new GHG permitting requirements at the same time that bipartisan legislative efforts are attempting to moot EPA’s GHG rulemakings outright. And it’s not just agency rulemaking and legislative action creating this uncertainty. Public backlash to the siting, development and operation of various renewable energy projects—from wind farms to biomass energy generating projects—threatens to derail hundreds of proposed projects.  So renewable energy developers need to make smart business decisions in this climate.

The best advice for renewable energy developers is to build the project’s professional team early, create a regulatory strategy and timeline for implementation, and execute. Building a team of professionals requires a project developer to identify the technical, legal and political experts in the relevant field and jurisdiction. Each team member should have demonstrated success in executing similar projects and a can-do approach to project execution. The team must be integrated and, without sounding like too much of a sales pitch, a project’s legal experts will likely be involved in every element of the project.

Technical expertise must come in the form of knowledgeable and effective facility designers and engineers. These experts must not only design facilities in compliance with all relevant technical standards, but they must have a deep understanding of the proposed site, design elements and potential concerns of the reviewing agency. Even if a technically compliant design meets all necessary standards, its project proponents must be able to effectively communicate, justify design decisions and address agency concerns to keep the project moving. Competent technical professionals must also be able to work closely with legal experts to identify and execute all necessary construction and operation permits. 

The permitting element is complex for biomass projects right now, as federal and state agencies and legislatures continue to spar over applicability of certain air emission limitations and pollution control and permitting requirements. Although the biomass industry recently scored a three-year reprieve from EPA’s GHG permitting requirements, that does not provide the industry with any long-term certainty and it does not provide relief from other EPA and state-agency rulemaking or the seemingly constant federal and state litigation surrounding these issues.

A project can be slowed or stopped if opponents can effectively inject alternate “expert” opinions and evaluations into an agency’s internal review process or during the public comment period. Even after a project has been reviewed and vetted by every level of federal or state regulators and all permits have been issued, developers must be aware of the potential for legal challenges. If the agencies issuing permits have done their jobs effectively, any such challenge should be handily defeated in the early stages of administrative or judicial review. However, the project’s legal experts must keep a close eye on the agency’s actions and the public record to ensure that any permit issued—and the procedure leading up to issuance—is legally defensible. Accurate front-end technical evaluations and sound legal support, including the ability to develop trust and negotiate with regulators, can keep a project moving.

Finally, although the regulatory climate is uncertain, economic conditions are such that if a project has the potential to create jobs or boost the local tax base, local political leaders can become effective advocates. A competent political expert can help identify opportunities and open lines of communication with state and local leaders to develop incentive packages. Again, a project’s legal expert should be involved here too to identify potential business and tax implications of incentive packages. 

Although the regulatory climate is extremely uncertain and does not appear to be changing anytime soon, renewable energy projects can succeed, if the right team is involved.

Author: Anna J. Wildeman
Member, Michael Best & Friedrich LLP’s Land and Resources Practice Group and Energy and Sustainability Industry Group
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