Renewable Energy Development, Including on Brownfield Properties. Topics to be Covered

Transcription

1 // 2015 National CLE Conference ENVIRONMENTAL LAW, LAND USE, ENERGY AND LITIGATION FACULTY INFORMATION Renewable Energy Development, Including on Brownfield Properties Presented by Polly Jessen Kaplan Kirsch & Rockwell LLP January 7-11, Topics to be Covered What makes renewable development different than other development on contaminated property? What are some of the characteristics of renewable projects, including projects on contaminated property? What are the relevant liabilities and liability protections for renewable development on contaminated property? What are the resulting concerns of the parties? What terms and requirements would be expected or desirable in the standard project contractual structure to address these concerns? 2 1

2 Source: U.S. Environmental Protection Agency 3 EPA Repowering our Land Initiative Source: U.S. Environmental Protection Agency 4 2

3 Tax and Other Financial Incentives Investment Tax Credits Accelerated Depreciation Production Tax Credits Renewable Energy Credits 5 Source: DSIREUSA.com 6 3

4 Brownfields Tax Incentives Source: State of Colorado, Department of Public Health and Environment 7 Renewable Projects on Contaminated Properties Source: U.S. Environmental Protection Agency 8 4

5 Solar Installations Source: U.S. Environmental Protection Agency 9 Wind Installations Source: Wind Farm Development Permit Application, Lincoln County, Colorado 5

6 Third Party Developer with PPA Site Owner Lease or other use rights Contractors EPC and O&M Agreements Third- Party Developer Power Purchase Agreement ( PPA ) Utility or Site Owner Regional Transmission Operator Interconnection Agreement Lender 11 Tax Investors Project Developer Project developer partners with tax-motivated investor in a special purpose entity that owns and operates the project Site Owner Tax-Motivated Investor Investor provides most of the equity Special Purpose Entity Contractors Investor receives most of the tax benefits Regional Transmission Operator Utility 12 6

7 Public Entity Involvement Example 1: Municipality constructs project and sells it to a tax investor Tax investor leases back the project in exchange for lease payments and federal tax benefits Municipality Tax-Motivated Investor Example 2: Municipality purchases energy from developer under a Services Agreement 13 Project Contracts Power Purchase Agreement Real Property Lease or Other Use Rights Interconnection Agreement Engineering, Procurement, and Construction Agreement Operation and Maintenance Agreement 14 7

8 Sources of Environmental Liability CERCLA Other Federal Statutes RCRA Clean Water Act TSCA State Statutes RCRA CERCLA analogues Disclosure statutes Other transfer, reporting, and cleanup requirements State Common Law 15 Cleanup and Liability Protections CERCLA and the BFPP Defense Establishing the Defense Phase I ESA Purchaser has exercised appropriate care No affiliation with the responsible parties Not available to operators or lessees unless the lessor maintains the defense or lessee has sufficient indicia of ownership Department of Defense sites and other federal facilities are conveyed with statutory protections 16 8

9 BFPP Defenses and Tenants Owner is BFPP Owner must maintain its status Tenant does not impede remedy Owner is not a BFPP EPA enforcement policy governs Tenant treated as a BFPP if Lease after January 11, 2002 Otherwise meets requirements 17 EPA Assurances Comfort/status letters Model Federal Superfund Interest and No Current Federal Superfund Interest Comfort/Status Letter Model No Previous Federal Interest Comfort/Status Letter Model State Action Comfort/Status Letter Prospective Purchaser/Prospective Lessee Agreements 18 9

10 State Programs Voluntary Cleanup Programs Orders Mandatory cleanup Covenants not to sue 19 What are the resulting concerns of the parties? Project developers want: Access to liability protection/assurances Necessary cleanup/accommodation of existing contamination Compliance obligations and maintenance of defenses Access to financial incentives and cost recovery 20 10

11 What are the resulting concerns of the parties? Landowners want: Maintenance of BFPP defenses (if landowner has any) Compliance obligations Cleanup to accommodate redevelopment Cleanup cost recovery opportunities 21 What are the resulting concerns of the parties? Contractors want to: Avoid owner/operator liability Avoid construction delays and unexpected costs associated with contamination Avoid transporter/generator liability 22 11

12 Environmental Terms: Real Property Lease Conditions of leasing/due diligence Comfort letter or other liability assurances Due diligence/disclosure rights and obligations Grant funding or other tax incentives Cleanup/remedy protection requirements Indemnification Ownership of any brownfield tax credits/incentives Environmental insurance 23 Environmental Terms: Power Purchase Agreement Construction milestones extensions Environmental insurance 24 12

13 Environmental Terms: Interconnection Agreement Allocation of liability for new and pre-existing contamination Environmental insurance 25 Environmental Terms: Engineering, Procurement, and Construction ( EPC ) Agreement Design standards Cleanup/materials management and engineering protections Costs are incurred consistent with the National Contingency Plan to preserve CERCLA cost recovery options Records Generator 26 13

14 Engineering, Procurement, and Construction ( EPC ) Agreement, cont. Contractor s pollution legal liability insurance Owner/project developer oversight and inspection Reporting/cleanup requirements for new conditions Warranties Indemnification Compliance with applicable environmental laws 27 Environmental Terms: Operation and Maintenance (O&M) Agreement Contractor s obligations to monitor and maintain engineering protections and coordinate with any O&M related to the remedy Bonding/financial assurances Contractor s pollution legal liability insurance Reporting and maintenance coordinated with the underlying site remedy Indemnification Compliance with environmental laws 28 14

15 Examples Steel Winds facility in Lackawanna, New York Source: U.S. Environmental Protection Agency Solar Power facility in Fort Carson, Colorado Source: U.S. Environmental Protection Agency 29 Questions? Polly Jessen, John Putnam Benjamin Israel