Recently, Alan Anderson and I were thrilled to be invited to present to a class at the Washburn University Law School.  For those of you that don’t know, Washburn has developed a truly exceptional energy and oil & gas law program (something that I dearly wish I could have had in law school), thanks in large part to the efforts of Prof. David Pierce.  When Prof. Pierce’s invites us to do just about anything, we usually jump at the chance.

For this presentation, our goal was to provide a high-level but fairly comprehensive overview of the types of legal issues that arise during the main stages of a wind project’s design, construction and operation phases.  Interestingly, after we sat down to plan out the basic categories of information that we wanted to cover, we realized the rough outline of our presentation could be converted into an interesting one-page resource.  With a little coaxing, we were able to distill our notes down into the following chart:

Polsinelli - Wind Project Chart

When it came to preparing the presentation itself, however, we obviously had to provide quite a bit more detail on each of the three main phases of project development.  Our environmental law colleague, Adam Troutwine, proved to be invaluable (as he so often does) by providing an overview of the various state and federal permits that are required for a wind project.  A copy of our PowerPoint is available here:

Powerpoint

I know that I speak for Alan in once again thanking Washburn, Prof. Pierce, and the students for inviting us to speak., and we are very much looking forward to the opportunity to do it again soon.

As always, if you have any questions about any of the materials that we’ve linked to above, or any of the issues discussed therein, please don’t hesitate to reach out to me at lhagedorn@polsinelli.com or give me a call at (816)572-4756.

 

It’s been a busy few months here at RELI, with major projects taking up a substantial amount of my time.  Hopefully, I’ll be able to provide some details on that work in the next few days, but for the time being I wanted to pass along an article that I wrote for the March edition of the Missouri Municipal League‘s publication The Review.  Enjoy!

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There can be no doubt about it.  Electric vehicles are on the way.  In his 2011 State ofUnionaddress, President Obama put forth a firm challenge for theU.S.automotive industry when he called for theUnited Statesto “become the first country to have a million electric vehicles on the road by 2015.” 

Though President Obama’s goal of 1 million electric vehicles (“EVs”) by 2015 is probably overly optimistic, there are signs that the EV market in theUnitedStateis gaining momentum.  In the span of one year, the market for EVs tripled from approximately 17,500 EVs sold in 2011, to approximately 53,000 new EVs in 2012.  This growth is particularly impressive when you consider that even the most mainstream EV offerings such as the Chevrolet Volt, Nissan Leaf, and Toyota Prius Plug-in Hybrid have often only been available in limited quantities in major markets.  Additionally, it is unlikely that the market penetration of EVs will continue to grow at a slow, incremental pace.  Instead, it is likely that the number of EVs on the nation’s highways will increase dramatically as consumers become more exposed to EV technology and manufacturers release a broader selection of makes and models of EVs that appeal to a wider range of consumers.

Being the “Show-Me” State, it is perhaps unsurprising that many Missouricommunities have delayed planning the local infrastructure and procedural processes that will be necessary to support wide-spread EV adoption.  Fortunately, in 2011 the U.S. Department of Energy awarded a grant to the MetropolitanEnergyCenterin Kansas City, MOto produce a regional plan that can be implemented by municipalities in Kansasand Missourito prepare public resources and secure the economic and environmental benefits of EVs.  This plan, which will be accessible at www.electrifyheartland.org, compiles expert analysis from EV industry participants, local communities, public utilities, and subject matter experts such as Black & Veatch and the law firm of Polsinelli Shughart to provide guidance to communities that are seeking to lay the foundation for widespread EV adoption. 

Among the numerous findings detailed in the plan,Missouricommunities should perhaps benefit the most from the discussion of the unique planning and regulatory efforts that will likely be required to accommodate EV adoption.  While at face value EV usage may not appear to require much attention, local governments should strongly consider taking the following steps before EVs start appearing on city streets: 

  • First, an estimate should be prepared of exactly how many EVs might be purchased in the community in order to get a sense of the scope and timing of the planning efforts that should be undertaken. 
  • Second, the municipality should examine its existing building codes to determine what standards should be applied to the installation of EV charging stations in residential and non-residential settings. 
  • Third, the municipality should examine its current electrical permitting and inspection process to determine how it will ensure that EV charging stations installations are conducted in a safe and reliable manner without unduly burdening either the installers or the permitting office.
  • Finally, the municipality should examine its existing parking and signage ordinances to determine how it will treat parking spots with electrical vehicle charging stations.

Projections for Missouri EV Adoption

When talking about long-term national goals, it can be easy to lose perspective on local impacts.  If theUnited Stateswere to reach its goal of 1 million EVs on the road, how many EVs could be expected in the average community inMissouri? 

Based upon motor vehicle registration data gathered by the U.S. Federal Highway Administration,Missourihad a total of just over 5 million vehicles registered in the state in 2011, or roughly 8 vehicles for every 10 people in the state.  As Figure 1 below illustrates, assuming that the 1,000,000 nation-wide EVs are distributed proportionally with population among the states, Missouri could expect a total of just over 20,500 EVs, or about one EV for every 300 people in the state. For a community of 10,000 people, this equals roughly 34 EVs, or roughly 340 EVs for a community of 100,000.

Of course, the real challenge for municipal governments lies not in the vehicles themselves, but with the infrastructure necessary to charge the vehicles, known as Electric Vehicle Supply Equipment (“EVSE”) or simply as “charging stations.” 

It is probably safe to assume that every person who purchases an EV will also purchase a charging station for their home, so they will be able to charge their vehicles overnight.  Additional charging stations will likely be installed by local businesses, by potential third-party suppliers of electricity, and by the municipalities themselves.  Taking these additional charging stations into account, it can be estimated that roughly 1.5 charging stations will need to be permitted, installed and inspected for every EV located within a community.  Figure 2 below extrapolates this estimate across the state to show the projected number of charging stations that will be required.

Updating Building Codes to Address Charging Stations

Once local planners have a sense of how many EVs can be expected in their jurisdiction, the question raised is what changes should be made in the local ordinances and policies to accommodate this influx of new vehicles and charging stations.  Because there is no state-wide authority for building codes inMissouri, it will be necessary for local communities to review their building codes to ensure that EV charging stations will be safely integrated into new and existing structures.  As with any revisions of building codes, the main goal of the process is to incorporate as much flexibility as possible while still maintaining the highest level of safety for installers and citizens.

Specifically, there are a number of revisions that communities can make to their building codes that will significantly improve the processing time and effectiveness of their planning efforts for EV charging stations, a few of which are described below:

  • To ensure safe and up-to-date practices are utilized during installations, adopt the most current version of the National Electrical Code (“NEC”), or at least Article 625 of the NEC which includes best practices for wiring methods, equipment construction, control and protection, and equipment locations for EV charging stations.
  • Require all new, reconstruction and renovation building projects to ensure that the electrical room and all conduits leading to the electrical room in new multi-unit, commercial or industrial developments are appropriately sized to accommodate future electrical equipment necessary for charging stations, as well as the voltage and amperage capabilities of the accompanying infrastructure.
  • Require that all newly permitted construction or renovation projects install sufficient conduits, junction boxes, wall space, electrical panels and circuitry capacity in locations that could potentially serve EVSE sites in the future, such as garages and parking facilities.

Update Electric Permitting Ordinances to Address Charging Station Installations

For most municipalities acrossMissouri, the primary logistical hurdle for EV adoption is how to design a permitting and inspection process for EV charging stations that will allow for safe and reliable installations without unduly burdening their administrative staff.  Currently, when faced with an electrical permit for the installation of an EV charging station, most municipalities default position is to either follow the pre-established procedure for miscellaneous electrical permits, or fail to permit the installations at all.  Both scenarios present unsatisfactory results and fail to consider the particular complexities of installing an EV charger.  This puts the public confidence in EVs and EVSE at risk unnecessarily.

When designing these inspection programs, one of the easiest ways to minimize the administrative burden while efficiently allocating resources is to recognize the fact that communities will face a wide spectrum of potential scenarios for charging station permits, and there is no single permitting process that would be appropriate for all occasions.  For example, significantly less regulatory scrutiny will be needed for installation of a small charging system in a residence than would be required for a large commercial entity that wants to install numerous charging stations for use by customers and employees. As discussed more thoroughly below, in order to accommodate these different needs and allocate resources appropriately, many communities across the country are adopting a multi-tiered process that applies different levels of scrutiny to projects based upon the project’s complexity. 

Single-Family Residential Installations

By far the easiest EV charging alternative for most consumers is to utilize an existing 120-volt outlet located in the garage.  Obviously, in these cases an electrical upgrade is not required, so no permit is needed.  In cases where a dedicated 120V or 240V receptacle and circuit is desired for a charging station, a minor electrical permit likely needs to be issued, though it can easily be handled under the city’s existing permitting requirements. 

However, in cases where the resident’s existing electrical panel cannot safely meet the increased electricity needs, then an additional permit will be required in order to either upgrade the electrical panel or install a new panel and meter.  In order to gather all of the information needed to properly assess the safety of the installation, many municipalities across the country are adopting a stand-alone permitting form for these installations.  Often, these permits are based in large part upon a form permit application that has been prepared by the U.S. Department of Energy’s Alternative Fuels and Advanced Vehicles Data Center, available at http://www.afdc.energy.gov/pdfs/EV_charging_template.pdf.

Beyond adopting a specialized stand-alone permit, there are other steps that a community can take to streamline the permitting process.  For example, if the non-minor permit application has been submitted by a certified electrician that has received training in the installation of EV charging stations from an nationally-recognized training program, the local government can have some comfort that the installation is safe and therefore can adopt less stringent inspection processes, such as inspecting one out of ten installations or foregoing inspections altogether.  Where the installation was conducted by an electrician that has not been trained in EVSE, then many local governments have made it a priority to inspect the projects as soon as possible.  For example, many municipalities across the country have committed to conducting inspections within 24 hours of the installation of the charging station equipment.

Large Single-Family Residential, Multi-Family Residential and Commercial Installations

While small single-family residence installations likely present relatively few safety risks, charger installations in larger settings can be significantly more complex and thus require more significant oversight from local permitting bodies.  As an example, compare the installation of a new 120V / 1.8 kilowatt outlet in a residential garage to the installation of ten quick-charge stations outside of a movie theatre or grocery store, each of which are capable of handling 240V and up to 20 kilowatts of electricity.  For these more complex projects, communities should consider requiring applicants to fill-out a specialized permit and provide significantly more scrutiny to these types of installations.

EV Signage and Parking Marking Plans

Though we seldom stop and think about their impact, street signs can serve three important functions to facilitate the adoption of EVs in a community. First and most obviously, they can direct EV drivers to the nearest public charging stations.  Second, they serve to educate non-EV drivers about the availability of charging stations, and thus promote confidence that, should they decide to purchase an EV, there will always be a charging station readily-available.  Finally, they can publicize premium reserved parking spots, should the government choose to utilize the parking locations as an incentive for EV drivers.

Given the potential importance of signage to the public’s perception of EVs, it is perhaps not suprising that a significant amount of debate has occurred at the national level regarding the adoption of a uniform standard for EV charging station signs.  Currently, roadway signage is regulated by the U.S. Department of Transportation, Federal Highway Administration (“FHWA”).  Specifically, approved signage requirements are contained within the Manual of Uniform Traffic Control Devices (“MUTCD”).

In its current form, the MUTCD does not contain any requirements for EVSE signage.  However, there is a process by which state transportation agencies may submit a request for so-called “experimental” signage.  If approved, the experimental signs may be used within the state subject to certain requirements and restrictions.  By way of example, in 2011, the Departments of Transportation for the States of Washington andOregonsubmitted a request for the FHWA to consider an EV Charging General Service symbol, displayed as Figure 3 below. The FHWA granted those states an interim approval to use the signs to designate charging station locations.

In order to promote consistency,Missouricommunities should seriously consider adopting this FHWA-approved signage, and encourage the Missouri Department of Transportation to submit a request and obtain approval from the FHWA to utilize the symbols in the State.  These symbols have already been thoroughly evaluated by the FHWA and were found to be highly visible and comprehensible by a large segment of the population.  Additionally, adopting a symbol that is being utilized in other jurisdictions across the country increases the effectiveness of the symbols by promoting uniformity and recognizability.

While the FHWA approval process is being pursued, local communities can also begin to present this signage as an option for local businesses to utilize on private property, similar to what many businesses use currently for “Pregnant Mother” parking spaces.  Of course, such signage would be unofficial and entirely without the force of law, but its adoption would signal that the business recognizes and supports the needs of its EV-driving clientele.

Incentives or Penalties for EV Charging Station Parking

 

Finally, once the stations are installed and the signs are put up, public and private parking facility owners will need to determine whether, and to what extent, such signs will be enforced. 

InMissouri, the enforcement of street signs on public property is currently a prerogative of local governments, and thus each community will need to determine the level of enforcement that is appropriate for its populace.  However, when setting these enforcement policies, it is important that communities carefully weigh several competing interests.  First, during the early years of EV adoption, parking spots with EV charging stations may be vacant for large periods of time.  It is possible that a negative sentiment could develop if these spots are located in high-traffic areas and parking by non-EVs is prohibited and strictly enforced.   On the other hand, the availability of these charging locations is critically important for fostering range confidence for EV drivers.

To successfully balance these concerns, local communities might consider promoting the placement of EVSE in locations that are convenient and accessible, but not necessarily in the most desired or prominent parking locations.  Additionally, if the community is considering adopting punitive actions for non-EVs parked in an EV spot, the community might consider foregoing enforcement of those penalties until the level of EV adoption in the community is strong enough to ensure that the spots are filled a significant amount of the time.

Proper Planning Will Lead to a Smooth Transition to EVs

There can be no doubt about it, EVs are on the way.  By taking a few relatively minor steps to prepare for this influx of new vehicles and the infrastructure needed to support those vehicles, local communities will be able to minimize logistical and administrative burdens and ensure that local residents across the state are able to enjoy their new vehicles safely.

The legislature of the State of Colorado has been very active on renewable energy issues over the last few weeks.  Three bills have been making steady progress through the House and Senate in Denver, each of which could have a noticeable effect on the renewable industries in the state.

I.   Coal-Mine Methane as a Renewable Energy Source

House Bill 1160 seeks to amend Colorado’s renewable energy standard to include electricity generated by burning captured coal-mine methane.  The legislation has passed in the House, and is now being considered by the Senate Local Government Committee.  The bill faces strong opposition by many environmental and renewable energy advocacy groups, including Western Resource Advocates (“WRA”), based in Boulder, Colorado.  In a March 23, 2012 guest commentary in the Denver Post, John Nielsen, the Energy Program Director at WRA stated as follows:

By allowing coal-mine methane to qualify as “renewable energy,” something it is not, HB 1160 would diminish further investments in Colorado’s wind and solar resources. Those resources are sustainable, emission-free, use little or no water, provide important health and economic development benefits, and reduce greenhouse gases.

II.   Prohibition on Severance of Wind Rights

House Bill 12-1105 seeks to establish a non-severable wind energy right in real property.  Essentially, under this proposal a landowner would not be able to sell fee simple title to the wind rights on his or her property, but must instead execute a lease, license, easement or other agreement to develop or participate in the income from or the development of a wind project on the property.  The legislation has passed in the House, and is now being considered by the Senate Local Government Committee.  This proposal law is in-line with a national trend against severance of wind and solar rights, and effectively prohibits a landowner from selling the wind or solar rights to a project developer while retaining the ownership of the underlying property.  Interestingly, however, this legislation seems to expressly contemplate and allow for the transfer of the rights to receive the income from the wind project to a third-party, which could potentially lead to many of the same down-stream ownership concerns that commonly give rise to severance restrictions in the first place.  K.K. DuVivier, professor of law at the University of Denver Sturm College of Law and author of the excellent resource “The Renewable Energy Reader,” was recently interviewed by Colorado Public Radio about this legislation.

III.   Ending PUC’s Authority Over Transmission Siting Issues

House Bill 12-1312 seeks to modify the Colorado Public Utilities Commission’s approval process for transmission line certificates of convenience and necessity, so that the PUC no longer has jurisdiction over the land use rights or siting issues related to the location or alignment of the proposed transmission lines.  Instead, those issues would be left to the discretion of the county and local governments.  Ms. Becky Quintana, a representative of the PUC, recently testified before the House Committee on Transportation about this legislation and stated that the PUC neither supported nor opposed the legislation.  From the PUC’s perspective, the legislation does not restrict the authority of the PUC, but rather more clearly defines the jurisdiction of the PUC and local governments, though she noted that, under the proposal, any transmission project that spanned multiple counties would require inter-governmental agreements as each county’s jurisdiction would end at the county line.

Do you have any questions or comments about any of these bills or about developing renewable energy projects inColorado?  If so, leave a comment below or contact me directly at lhagedorn@polsinelli.com.

President Barack Obama delivers the State of the Union address in the House Chamber at the U.S. Capitol in Washington, D.C., Jan. 24, 2012. (Official White House Photo by Pete Souza)

On Tuesday, President Barack Obama presented his annual State of the Union address. One of the most interesting topics discussed, at least to my biased ears, was the importance of pursuing an “all-of-the-above” strategy for developing every potential energy resource at the country’s disposal.

While I’m always thrilled when renewable energy policy gets a prominent place in our public discourse, the President’s remarks necessarily only skimmed the surface of the issues that the administration will face when seeking to continue promoting renewable energy in 2012, especially in light of the significant uncertainty caused by the PTC issue.  So, I went digging for more information.  Fortunately for me, the White House has released a “Blueprint for An America Built to Last”, which contains additional information about the President’s energy policy.  This is in addition to the “Blueprint for a Secure Energy Future” issued by the White House last March.  Boiling these documents down into the main points, it appears that the administration is planning on focusing its renewable energy efforts on the following:

Implementing a federal clean energy standard: During the State of the Union address, I was surprised and pleased to see the President renew the call for a federal Renewable Energy Standard, something which has been introduced numerous times through legislation but has failed to gain any serious traction among the legislators.  We have discussed state-level Renewable Energy Standards at length on this blog, but action taken at the federal level would provide much needed regulatory uniformity and a more robust and consistent REC market, both of which would make it quite a bit easier for projects to get financing from risk-averse lending institutions.

Targeted tax incentives: The President briefly called upon Congress during the State of the Union to “[p]ass clean energy tax credits.  Create these jobs.  We can also spur energy innovation with new incentives.”  The most obvious example of a program that needs a life-line from Congress is the Production Tax Credit originally set forth by Section 1603 of the American Recovery and Reinvestment Act of 2009.    These credits have been a major driver of project financing for the last few years, and the uncertainty surrounding their extension has put a major damper on the number of projects in the pipeline past 2012.

Opening public lands:  Community-level opposition has long been an obstacle that many renewable projects have faced.  President Obama’s energy plan seeks to assuage some of this resistance by opening up sizable tracts of public lands to renewable developers.  To this end, the President has directed the Department of the Interior to commit to issuing permits that will enable the generation of 10 gigawatts of renewable generation capacity.  Of course, projects that are developed on these lands will also introduce additional regulatory burdens, including compliance with the National Environmental Policy Act (“NEPA”).

Powering the U.S. military with renewable energy: During the State of the Union, President Obama announced that the Department of the Navy will make a 1 gigawatt renewable energy purchase.  As the largest consumer of goods and services in the world, the Federal Government consumes an enormous amount of energy.  Additionally, the government often asserts requirements upon its agencies and departments to take into consideration societal benefits rather than pure price points when making its purchasing decisions, as is seen through the “Buy American” mandates and small and disadvantaged business requirements in federal procurement.  Ultimately, as far as the renewable industries are concerned, the more heavily-invested the various departments and agencies become in renewable energy, the better.

Ultimately, the President’s energy plan will not guarantee a bright future for renewable energy, but such guarantees are exceptionally rare in the business world (if you know of any, my contact information is below).  The key question that must be answered is whether or not this plan will incentivize the development of renewable projects.  To answer that question, we have to take a step back and look at the plan’s impact on the most significant risks that all renewable projects face, such as:

1.) Finding land for the project, and overcoming any community-level resistance.  The President’s plan reduces this risk by opening up public lands for development.

2.) Finding buyers.  The plan would increase the number of buyers by implementing a federal renewable energy standard and allowing the federal government to be a major consumer of renewable energy.

3.) Making a profit.  If tax incentives are increased, projects make more money.  Additionally, introducing a federal RES and opening up a federal REC market could potentially increase profits.

4.) Acquiring financing.  Lenders don’t like to lend money to risky ventures.*  However, by decreasing the risks discussed above, the President’s plan should increase the level of financing available to new projects.

* stunningly insightful analysis, I know, but you get what you pay for.

Taken as a whole, this plan appears to address a number of key areas of risk that renewable developers face over the life of their projects and this should help the various industries as they continue to grow.

Now, if only we could convince the federal legislature . . .

If you have any questions or comments about the information discussed above or about renewable project development generally, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com.

I’m proud to announce that Dave Strieker, a partner in Polsinelli Shughart’s Energy Group, and I recently published a paper for the annual meeting of the American Bar Association’s Section of Environment, Energy and Resources. 

The paper, entitled “Greenhouse Gas Permitting Advantages for Biomass Projects,” explores the EPA’s “Tailoring Rule,” which places significant regulatory burdens on certain emission sources of greenhouse gases.  Importantly for biomass project developers, the Tailoring Rule specifically exempts biomass projects for a period of three years, thus giving biomass an important advantage over traditional energy sources.  The abstract for the paper is as follows:

Ground breaking greenhouse gas regulation, know as the Tailoring Rule, has recently been implemented at the federal level. The Tailoring Rule will have far reaching impacts on industries that produce significant amounts of carbon dioxide emissions. While this may prove to be a heavy burden to established industries using fossil fuels, the Tailoring Rule contains a three year exclusion for projects utilizing a qualifying biomass feedstock. Accordingly, the Tailoring Rule’s biomass exclusion may provide a window of opportunity for the biomass industry to compete on a more level playing field with fossil fuel based projects. This paper will provide background regarding the Tailoring Rule and explore its specific implications on the biomass industry.

The paper can be downloaded here.  If you have an interest in biomass projects, or if you know anyone that does, feel free to download this paper and pass it along as you see fit.  If you have any questions or comments, feel free to contact either myself (lhagedorn@polsinelli.com) or Dave Streiker (dstreicker@polsinelli.com).

The Kansas Supreme Court on Friday issued a much anticipated ruling on a case involving a number of key issued for wind developers.  The case, Zimmerman v. Board of County Commissioners of Wabaunsee County, revolves around a dispute between the Board of County Commissioners of Wabaunsee County, Kansas and a group of landowners in Wabaunsee County who have entered into easement agreements to develop large-scale wind energy development systems on the landowners’ property.

Background

In order to develop a wind farm in Wabaunsee County, it is necessary to apply for a Conditional Use Permit (“CUP”) from the Wabaunsee County Board of Commissioners.  In November of 2002, the Board passed a temporary moratorium on the granting of CUPs for wind development projects in the county.  While this moratorium was in place, the Plaintiffs and the Plaintiff Intervenor entered into agreements which they contend severed the wind rights from the ownership of the underlying property and transferred the ownership of those wind rights to the Plaintiff Intervenor.

On June 28, 2004, after the wind development agreements had been entered into by the Plaintiffs and Plaintiff Intervenor, the Board amended the county zoning regulations to allow for small wind energy conversion systems (“SWECs,” essentially single turbines under 100’ in height generating less than 100 kilowatts), but outright prohibiting the placement of commercial wind energy development systems (“CWECs”) in the county. 

Procedural History

The Plaintiffs filed suit in the Wabaunsee District Court, asking that the Board’s decision be declared void and requesting damages under a number legal theories. Among the arguments made, the Plaintiffs stated the County’s actions diminished the economic value of their wind rights in their own property, and therefore amounted to a taking of their property interest in violation of their Fifth Amendment rights.  

The Plaintiffs also argued that by allowing small wind projects, but banning utility-scale projects, the County was unjustly burdening out-of-state commerce in violation of the Commerce Clause of the United States.  Ultimately, however, the District Court granted a Motion to Dismiss in favor of the Board, and the Plaintiffs and Plaintiff Intervenor appealed to the Kansas Supreme Court.

On October 30th, 2009 the Kansas Supreme Court issued a decision in favor of the Board for the majority of the issues presented, with a few notable exceptions.  Specifically, the Supreme Court decided to table the issues of whether the Board’s amendment violated the Takings Clause or the Commerce Clause of the United States Constitution.   

These issues remained tabled until October 21, 2011, when the Court issued a ruling on the Takings and Commerce Clause arguments advanced by the Plaintiffs and Plaintiff Intervenors.

The Takings Issues

The Plaintiffs’ essentially raised three legal bases for their contention that the County was unlawfully “taking” legal property interests: (1) the County violated Article 5 of the United States Constitution, which prohibits the taking of private property for public use, without just compensation; (2) the County’s action constituted an act of inverse condemnation; and (3) the County’s action constituted a violation of 42 U.S.C. § 1983.

In its October 21 Order, the Court disposes of all three of these takings arguments in one swoop.  Essentially, the Court notes that in order to prevail on a takings claim a party must first establish that a vested interest exists in the property in question.  “Vested interest” has been defined by the Court in the past as a right that “is not dependent on any future act, contingency or decision to make it more secure.” 

Here, the Court found that no such vested interests exist, as all of the Plaintiffs’ and Plaintiff Intervenors’ interests are conditioned upon the Board’s discretionary issuance of a CUP.  Thus, because there were no vested property interests, there can be no taking under any of the various legal theories advanced by the parties.

The Commerce Clause Issues

Overview of Dormant Commerce Clause

Before describing the decisions, it might first be helpful to provide an overview of Commerce Clause jurisprudence.  Article I, §8 of the U.S. Constitution (the “Commerce Clause”) grants Congress the power to regulate interstate commerce.  The “dormant” Commerce Clause refers to the prohibition, implied in the Commerce Clause, against states passing legislation that discriminates against or excessively burdens interstate commerce.

In a Dormant Commerce Clause case, a court is initially concerned with whether the law facially discriminates against out-of-state actors or has the effect of favoring in-state economic interests over out-of-state interests. If the action is facially discriminatory, it will be deemed invalid unless the County can show that it has no other means to advance a legitimate local purpose.

If the action is not facially discriminatory, the Court is much more flexible. If the law is not outright or intentionally discriminatory or protectionist, but still has some impact on interstate commerce, the court will apply a balancing test which examines whether the interstate burden outweighs the local benefits. If it does, the law is usually deemed unconstitutional.

Remand of Commerce Clause Issues

In addressing the Dormant Commerce Clause issues in this case, the Court first notes that, because the zoning regulations prohibit all CWECs in the county regardless of the connection to interstate commerce, there was no facial discrimination. 

Therefore, the Court must examine whether the burden imposed in interstate commerce is “clearly excessive in relation to the putative local benefits.”  Specifically, the Court notes that it should consider (1) the nature of the putative local benefits advanced by the County action; (2) the burden placed on interstate commerce by the statute; and (3) whether the burden is “clearly excessive” when weighed against these local putative benefits.

Here, the Court noted that because the lower courts dismissed the case without allowing discovery or an evidentiary hearing, there is not enough evidence in the record to conduct a full analysis of the benefits and burdens of the County’s actions.  Therefore, the Court reversed the District Court’s grant of the County’s Motion to Dismiss and remands the case back to the District Court for a full analysis of whether the interstate burden outweighs the local benefits.

If you have any questions about the impact of this ruling or would like any additional information about renewable project development in Kansas going forward, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com.

With the state and federal legislatures out of session, it has been a relatively slow couple of weeks in the world of renewable energy law.  Fortunately for you, what may seem like a lack of significant new developments is actually an excellent opportunity for me to highlight a few of the significant stories that I wasn’t able to cover the first time around.

With this in mind, it is time once again to continue our series of state-by-state updates of some of the most signficant renewable energy stories.  Today, we will focus on Missouri. 

Ranked 13th in the nation for wind capacity, 24th in the nation for solar resource, and first in our hearts, the Show-Me State is currently facing a critical juncture in its renewable energy development due to uncertainty surrounding the state’s Renewable Portfolio Standard.  With this background in mind, let’s take a look at what has been going on in the Missouri…

Missouri Public Service Commission Announces New Chairman 

Missouri Governor Jay Nixon recently appointed Kevin Gunn as the new chairman of the Missouri Public Service Commission. Chairman Gunn will replace Robert M. Clayton III, who will remain on the Commission. 

Chairman Gunn was appointed to the Commission in 2008 to a six-year term. Prior to that appointment, Chairman Gunn was an attorney in St. Louis. He received his bachelor’s degree from American University and his law degree from Saint Louis University School of Law.

In commenting on the appointment, Governor Nixon stated that

Kevin Gunn has experience and vision that will be invaluable as we formulate Missouri’s energy policy for the coming decades. A key part of that will be wise investment in renewable energy sources, and Kevin will give us strong leadership on that issue. I appreciate Commissioner Robert Clayton’s service as chairman of the PSC for the past two years in standing up for the fair treatment of Missouri energy consumers, and look forward to his continued good work on the commission.

Missouri RES Provisions Still in Flux

As I briefly mentioned above, in 2008, Missouri voters approved ballot initiative Proposition C by 66% of the vote. Proposition C requires electric utilities to obtain 15% of their electricity from renewable sources by 2021, and includes a cost cap that limited the increase to retail rates resulting from compliance with the mandate to an average annual 1%. However, the language of the ballot measure was ambiguous, and a controversy over the voters’ intent continues to be debated by legislators as they work to clarify the statute.

There are a number of issues at the heart of this debate, but perhaps the most contentious is whether the renewable energy has to be generated in or delivered to Missouri, as opposed to allowing a Missouri utility to buy a REC (renewable energy credit) from another location in order to meet the RES requirement. 

I have discussed the importance of geographic sourcing requirements before, and this is yet another excellent example of how important the issue can be in practice.  Public utilities justifiably want to purchase RECs from projects located in other states, because those RECs are almost always cheaper than building their own generation or buying RECs from projects within Missouri.  Nonetheless, allowing for the purchase of out of state RECs effectively destroys the incentive to develop renewable projects within the states, as there is no longer any guarantee for project developers that the energy that they generate will be purchased by the utilities.

To address the contentious issues surrounding the RES, the Missouri Speaker of the House formed a Special Committee on Renewable Energy and appointed Representative Jason Holsman, a Democrat from Jackson County, to chair the Committee.  Rep. Holsman, a supporter of renewable energy, filed legislation (HB 613) to address the Prop C issues.   Among other things, this legislation specified that utilities can only satisfy their RES requirement with energy that is generated within the state, or energy that can serve Missouri customers. 

To complicate the political dynamics on this issue, a nuclear cost recovery bill was also proposed that, in many peoples’ eyes, may have hindered passage of HB 613. Through this bill, Ameren and the other regulated electric utilities, the electric cooperatives, and the municipal utilities proposed allowing Ameren to recover the costs of obtaining an early site permit from ratepayers for the construction of a new nuclear plant. There was strong opposition to the bill from certain members of the Senate and all efforts to move the bill forward were stalled. Though the two bills were unrelated on their face, the nuclear bill and the renewable energy bill have been indirectly associated with one another, and a loss of momentum for the nuclear bill harmed the chances of any success for the Proposition C revisions.

Ultimately, it will still be a while longer before we know the fate of Missouri’s Renewable Energy Standard.  The Missouri legislative session concluded on May 13, 2011, and no progress was made on either of the bills prior to the conclusion of the session.

As this blog has noted numerous times, it isn’t always easy to get a solar or wind project constructed.  In fact, as we’ve discussed before, often one of the most expensive impediments to a project’s development is the local and state permitting process.  The Colorado Solar Energy Industries Association (COSEIA) puts a number on this expense, stating that permitting costs can add about $2,516 per U.S. residential installation and can easily exceed $100,000+ for large scale installations.

As it turns out, the state of Colorado has been, until recently, one of the worst offenders when it comes to tacking on substantial state and local permitting fees to renewable energy projects.  The Vote Solar Initiative and the COSEIA recently teamed up to collect and evaluate information about the current state of permitting in 34 local jurisdictions throughout Colorado.  The resulting study, which was recently released by the two groups, indicated that the average fee for obtaining the necessary local permits in Colorado for a solar project is nearly twice as high, and the approval process can take up to seven times as long, as the national permitting best practices.  The groups point to this result as reinforcing the need for Colorado to adopt a more standardized, streamlined solar permitting practices.

However, there is hope in sight.  Shortly after the study was released, the Colorado State Senate approved legislation that seeks to prevent the state and local governments from charging excessive permit fees and plan review fees to customers installing solar technologies.  The Legislation, entitled the Fair Permit Act (H.B.1199), was sponsored by Rep. Bob Gardner, Sen. Bob Bacon, and Sen. Shawn Mitchell to address these high permit costs and inefficiency.  The legislation now only needs the signature of Colorado Governor John Hickenlooper to become law.

Specifically, the Act improves transparency in the permit process by requiring the government agency to clearly and individually identify all solar fees and taxes assessed on an invoice, and limits solar permit fees to the government’s actual costs in issuing the permit, not to exceed $500 for a residential installation or $1,000 for a commercial system.

If you have any anecdotes about permitting renewable energy projects in Colorado, or if you’d like more information about permitting projects in general, leave a comment or send me an email at lhagedorn@polsinelli.com.

Illinois has seen a flurry of activity at the county level regarding how to best balance the economic and environmental benefits of wind energy development in the state with the concerns of local landowners.  In addressing this issue, Bureau County and Iroquois County have recently decided upon dramatically different approaches, and the resulting economic impacts should provide an interesting comparison point for future legislative and permitting efforts within the state.

On the pro-development side, Donna Barker of the Bureau County Republican has reported that the County Board of Bureau County recently voted to not only extend the conditional use permits that had been previously awarded to Midwest Wind for the company’s planned 150-MW Big Sky project, but also went a step further and rejected a proposal to institute a wind moratorium in the county.  With moratoriums becoming a more common trend across the nation, it is refreshing to see a county take it upon itself to gain the necessary expertise within a time frame that won’t delay development of actual renewable projects.

On the anti-development side, Kevin Borgia of the Illinois Wind Daily recently reported that the County Board of Iroquois County recently approved a remarkable 2000-foot setback from non-participating property lines.  This would be among the most restrictive county setback requirements in the nation, and could have a significant negative impact on renewable energy investments in the county.

I’ve previously discussed the dramatic impact that local activism and permitting obstacles can have on the development of renewable projects, and I must admit that I’m very curious as to whether the amount of renewable energy investments that these two counties are able to generate support that conclusion.

I’ll be sure to keep you all updated on the status of these counties’ efforts going-forward, but in the meantime, I’d love to see whether you have run across any anecdotal evidence of the impact of local NIMBY activism or highly-restrictive permitting processes on renewable project development.  Feel free to leave a comment or drop me an email at lhagedorn@polsinelli.com with your experiences.

Let me start with this up-front.  I can’t shake the feeling that the term “NIMBY” comes off as somehow derogatory.  That is not what I intend to convey when I use the term.  For the uninitiated, NIMBY is short for “not in my backyard” and describes local activists who campaign against renewable projects in their communities.

One of the great ironies of Renewable Energy is that the energy and enthusiasm that spurs its development is the same energy and enthusiasm that ultimately shuts many projects down.  It tends to go something like this:

1.)    Coal and natural gas plants impact the environment.

2.)    Environmentalists call for renewable projects that rely on wind, solar, geothermal, biomass, hydro, etc.

3.)    Renewable projects impact the surrounding ecosystems, though far less than coal or natural gas.

4.)    Environmentalists object to the impact on the local environment, and call for greater regulation of the renewable projects.

5.)    The cost to develop the project increases and may no longer be competitive with coal or natural gas.

6.)    We stick with the coal and gas plants that we started with.

Let there be no doubt, this NIMBY resistance is the single greatest impediment to the future of renewable energy in the United States.  As I pointed out a few weeks ago, recent studies have shown that wind farms in the United States face just as much local opposition as coal plants.  The “Project No Project” iniative put together by the U.S. Chamber of Commerce has compiled a list of energy projects (traditional and renewable) that have been stalled, stopped, or outright killed nationwide due to NIMBY activism or permitting delays.  Of the over 700 challenged projects that that the database tracks, 351 are renewable energy projects.

There are some legitimate concerns with renewable projects, but the real heart of this conflict is simple…FEAR.    Fear of the unknown impacts of new technologies on the ecosystems of our homes. Fear of the potential intrusion of noise or shadows in our daily lives.  Fear of unnatural objects on the horizon when we look out our windows.

This is the issue that we face.  The human brain is an amazing thing.  It will come up with an infinite number of obstacles to prevent us from facing our fears and trying something new.  But, when properly focused, it also has an amazing capacity to come up with innovative and insightful solutions to seemingly insurmountable obstacles.

So, the question is…what are we going to do to solve the NIMBY dilemma?  I have a few ideas, but first I want to send out this digital-age call to action.  The NIMBY movement is effective because it is well-connected, motivated and energetic.  Let’s use that model. What can you and I do as members of our community, voters, professionals in this industry, or simply as human beings to help address and remove the fear of NIMBY activists?

Feel free to email your thoughts and suggestions to me at lhagedorn@polsinelli.com or discuss your ideas in the comments section of this post.  I’ll also set up a hashtag on twitter (#NIMBYplan) if you would like to post your thoughts there.  I’ll track our collective ideas and insights and give you all the results in an upcoming post.