The Law of Wind: A Guide to Business and Legal Issues

The Law of Wind: A Guide to Business and Legal Issues

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Aaron C. Courtney
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    Victoria Twogood Practice Group Director 612.373.8842

Federal Land Issues with Siting and Permitting

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Wind energy developers are comparing siting opportunities on state and private lands, weighed against the potential opportunity to develop on federal land offering appropriate project sites. This trend appears to have cooled somewhat in the recent years as the increasing generation capacity and efficiency of new generation turbines have reopened consideration of nonfederal lands with access to nearby transmission systems. Plus, increasing demands for wind energy to satisfy state renewable energy portfolio requirements and emerging state climate change policies have led to a fresh look at nonfederal lands. Development on federal lands can require compliance with a daunting collection of federal regulations that only add to the already complex and often onerous requirements imposed by many states. And within the context of these risks, federal policy and permitting practices remain unsettled in a changing political landscape.

Foremost among these challenges are the land control issues arising from federal rights-of-way (“ROWs”) processes and permitting, as well as satisfying the document-intensive procedural requirements of the National Environmental Policy Act (“NEPA”), 42 U.S.C. § 4321, et seq. Additionally, habitat preservation and other natural resource protection concerns that are not relevant to private or state land development can have significant consequences for activities on federal lands. Less obvious are the potential environmental liability issues that can exist on federal lands associated with historical land use practices such as mining. Finally, a host of antidevelopment advocacy groups exist and have significant experience in challenging projects in federal court under federal laws. These groups tend to be more sophisticated and better funded than local entities that have historically created the bulk of opposition to wind power project development.

Nevertheless, project development on federal land can present opportunities for risk management that are difficult to come by or simply unavailable absent a federal nexus. Development on federal land also can allow a project proponent to avoid some of the difficulties posed by often esoteric local regulations.

This chapter outlines the numerous challenges created by development on federal land and the regulatory nuances associated with such activities. Given the vast expanses of wind-resource land under the control of the U.S. Bureau of Land Management (“BLM”), this following chapter focuses primarily on the regulatory processes followed by BLM and concludes with a more general discussion of tools for navigating through what for many in the industry could be uncharted waters.

I. Development on BLM Lands. Section 211 of the Energy Policy Act of 2005, Pub. L. No. 109 58, established a goal that the Department of Interior, through BLM, approve 10,000 MW of nonhydropower renewable energy projects on public lands by 2015. In anticipation of that legislation, in October 2003 BLM initiated the preparation of a Programmatic Environmental Impact Statement, under NEPA, for wind energy development. On June 24, 2005, BLM released the Final Programmatic Environmental Impact Statement on Wind Energy Development on BLM Administered Lands in the Western United States (the “Programmatic EIS”). A Record of Decision (“ROD”) was signed on December 15, 2005 to implement the Best Management Practices (“BMPs”) and land use plan amendments identified in the Programmatic EIS.

While the Programmatic EIS laid the environmental groundwork for permitting wind energy developments in the 11 western public-land states, it provided little in the way of actual permitting guidance. Would testing facilities be treated like full-blown energy developments? Would competing applications be subject to competitive bidding? What level of bonding and NEPA analysis would be required? These and other questions, as well as federal pressure to streamline the permitting process, prompted BLM to issue an instruction memorandum, Wind Energy Development Policy IM 2006 16, on August 24, 2006 (the “2006 IM”). Though it expired on September 30, 2007, the 2006 IM established the basic framework used today for permitting wind energy facilities on BLM lands. That framework was carried forward and supplemented by BLM’s revised Wind Energy Development Policy IM 2009 043, issued on December 22, 2008 (the “2008 IM”).

II. BLM Wind Energy ROW Grants. Project development usually proceeds in two phases: (1) a site testing and monitoring phase and (2) if the wind resource is viable, a project construction and operation phase. BLM permits all wind facilities, whether for testing and monitoring or for project construction and operation, through use of ROW grants authorized by the Federal Land Policy and Management Act (“FLPMA”), 43 U.S.C. §§ 1701 1784. To accommodate the above development schedule, BLM offers three types of BLM wind energy ROWs: a Site-Specific Grant for Testing and Monitoring (“Site-Specific Grant”), a Project Area Grant for Testing and Monitoring (“Project Area Grant”), and a Development Grant for project construction and operation.

A. Site-Specific Grants. A Site-Specific Grant may be issued for testing and monitoring facilities such as meteorological towers (“met towers”). The area authorized for use under a Site-Specific Grant will be limited to the minimum area necessary for construction and maintenance of the facility—that is, one Site-Specific Grant would be issued for each met tower and would cover only the minimum area necessary to accommodate the met tower. The term of a Site-Specific Grant is limited to three years. The minimum rental fee is $100 per year, and the minimum bonding requirement is $2,000 per met tower.

B. Project Area Grants. Though Project Area Grants are also designed to accommodate testing and monitoring facilities, they provide several distinct advantages. First, a Project Area Grant may cover not only the individual met towers, but also the entire proposed project area, including required access routes. The term is also extendable: provided that the developer submits an application for a Development Grant and a Plan of Development prior to the end of the initial three-year term, BLM may extend the Project Area Grant for an additional three years. Rent during this term equals $1 per acre per year, or $1,000 per year, whichever is greater, and the minimum bonding requirement is $2,000 per met tower.

Important to developers, a Project Area Grant also precludes competing applications for the same lands for the term of the grant, including the extension. Applications are processed on a first-come, first-served basis, and are not subject to competitive bidding unless required by the land and resource management plan. This means BLM will usually process the first complete application with attached cost recovery fees before all others. This term of exclusivity allows a developer to fully assess site viability without fear of competing developers that might otherwise be willing to proceed on incomplete information. However, because project financing and viability frequently depend on the terms of this exclusivity, and because BLM regulations are very specific about the timing of the extension request and the extent of the draft Plan of Development, it is advisable to review BLM policy carefully and maintain an open dialogue with counsel and BLM staff as the end of each term draws near.

C. Development Grants. If the project proves viable and the developer satisfies BLM’s permitting prerequisites, including all environmental analysis and completion of the Plan of Development, BLM may issue a Development Grant for up to 30 years, with provision for renewal. The annual rental fee for a Development Grant is based on the anticipated total installed capacity in MW on public lands, as described in the Plan of Development. The fees are phased in over two years to accommodate project construction. The rental fees equal $1,039 per anticipated MW in the first year, $2,078 per anticipated MW in the second year, and $4,155 per MW thereafter. As with a Project Area Grant, the rental fees are to be paid annually in advance, on a calendar-year basis, and are prorated for partial years. Additionally, BLM will require a minimum bond of $10,000 per turbine.

III. 2008 IM Substantive Revisions and Subsequent 2016 Rulemaking. For those familiar with the 2006 IM, the following outlines the major substantive revisions made by the 2008 IM:

  • The 2008 IM recognizes the existence of Visual Resource Management (“VRM”) objectives in many land and resource management plans, but stresses that VRM objectives may be met through strategic placement of facilities and thoughtful design treatments that visually integrate the facilities into the landscape setting.
  • The 2006 IM universally precluded wind energy development from all Areas of Critical Environmental Concern (“ACECs”). The 2008 IM allows wind energy development in an ACEC to the extent that it would be consistent with the management prescriptions of that individual ACEC.
  • While testing and monitoring facilities, including met towers, will require an FLPMA ROW, geotechnical testing activities for foundation designs or other purposes may be authorized by a land use permit.
  • Bonding is no longer discretionary, and the Development Grant rental fees have almost doubled.
  • Attachment 1 to the 2008 IM modified and clarified several of the BMPs first espoused in the ROD.
  • Attachment 2 to the 2008 IM details the required elements of a Plan of Development for purposes of obtaining a Project Area Grant extension and a Development Grant.

Finally, on December 19, 2016, BLM published a final rule revamping its leasing regulations to include competitive processes, incentives for development in “designated leasing areas” (identified in the rule and relevant resource management plans), and new payment and bonding requirements for wind energy development rights of way. 81 Fed. Reg. 92,122 (Dec. 19, 2016). Much of what was included in the formal rulemaking derived from existing policies, described above, that the agency had issued in prior years. The rule went into effect on January 18, 2017.

IV. NEPA Analysis Associated with BLM ROW Grants. Like with all BLM ROWs, an applicant for a wind energy ROW initiates the application process by submitting form SF 299. The application triggers, among other things, BLM’s duty to conduct the environmental analysis required by NEPA. Unless an activity falls within a Categorical Exclusion (“CX”), BLM must conduct an Environmental Analysis (“EA”) to determine whether the proposed agency action would significantly affect the quality of the human environment. 42 U.S.C. § 4332(2)(C). The EA will either make a Finding of No Significant Impact (“FONSI”) or conclude that the agency action requires further study in the form of an Environmental Impact Statement (“EIS”). If BLM issues an EA/FONSI, then BLM may take the proposed federal action without further NEPA analysis. If, on the other hand, BLM concludes that an EIS is warranted, it will undertake a significantly more detailed analysis that will contemplate alternatives to the proposed action and mitigation for projected impacts on the environment. For purposes of expediting private development on federal land, a CX or an EA/FONSI is preferable to an EIS.

According to the 2008 IM, BLM may, in some instances, grant a “short-term right-of-way authorization” under a CX. The CX identified by the BLM NEPA Handbook, H 1790 1, Appendix 4, Section E.19 (January 30, 2008), encompasses “issuance of short-term (3 years or less) rights-of-way or land use authorizations for such uses as storage sites, apiary sites, and construction sites where the proposal includes rehabilitation to restore the land to its natural or original condition.” The 2008 IM does not further clarify the nature of the “short-term” authorizations eligible for the CX, although it seems that a nonrenewable Site-Specific Grant is the most likely candidate.

Discussions with agency staff reveal a preference for an EA when considering large Project Area Grants. The level of required environmental analysis increases with the acreage and number of met towers requested. In most circumstances, BLM will require, at a minimum, vegetation, wildlife, archaeological, and cultural studies. The 2008 IM indicates that “[s]ite testing and monitoring right-of-way applications should be processed within a 60 day timeframe, consistent with the requirements of 43 CFR 2804.25.” However, in recent experience, BLM frequently takes much longer.

NEPA requires that an EA consider potential cumulative impacts. However, the 2008 IM is clear that an EA for a Project Area Grant “should not address wind energy development facilities, as the installation of wind turbines is not proposed during site testing and monitoring.” Consequently, the EA for a Project Area Grant may be limited in scope to the environmental effects of the met towers. Furthermore, the EA is to tier off of the BMPs and mitigation measures included in the Programmatic EIS. The site-specific NEPA analyses are to include micrositing considerations, monitoring program requirements, and appropriate site-specific stipulations.

With regard to a Development Grant, the 2008 IM indicates that the environmental analysis is to tier off of the Programmatic EIS and “focus just on the critical, site-specific issues of concern.” While the 2006 IM posited that an EA “will usually be sufficient,” the 2008 IM is more conservative, stating that while tiering to the Programmatic EIS may allow for preparation of an EA, the “level of NEPA documentation necessary will be determined based on the context and intensity of the proposed action and how much analysis may be tiered to the Programmatic EIS.” Despite this language, experience suggests that almost all major wind developments on federal land will require an EIS.

V. U.S. Forest Service Wind Energy Permitting. Like BLM, the U.S. Forest Service (the “USFS”) authorizes wind energy facilities pursuant to Title V of FLPMA. The USFS has developed a series of regulations for issuing Special Use Permits on federal lands at 36 C.F.R. subpart B. Following BLM’s lead, in 2011 the Forest Service issued internal guidance related to the issuance of permits for wind energy uses on National Forest System lands, including “direction on authority, objectives, responsibility, definitions, and references for use in authorizing wind energy uses on National Forest System lands.” Forest Service Handbook 2709.11, Chapter 70. This guidance provides direction on siting turbines and other facility components, evaluating protected resources, and addressing issues unique to wind energy in the special use permitting process. Thus, although the Forest Service lacks a national special-use wind-siting program and still makes its decisions about wind energy development on a case-by-case basis at the individual National Forest level, developers should carefully review the Forest Service’s guidance.

VI. Other Potentially Applicable Federal Laws. In addition to the unique federal land control issues described above and arising under FLPMA and NEPA, certain other federal laws and regulatory programs only apply on federal lands. For example, the Archaeological Resources Protection Act, 16 U.S.C. §§ 470aa 470mm, creates a program for managing and protecting archaeological resources on public lands. Similarly, some federal lands are subject to use rights of tribes, see Chapter 6, that do not exist on private land (e.g., rights to hunt and gather foods under treaties securing tribes’ rights on “open and unclaimed lands”).

Federal land development also requires compliance with federal land resource management plans and, if necessary, the ability to navigate through administrative appeals and judicial review procedures that can be complicated and time-consuming. Further complicating matters, such management plans and administrative review processes are often specific to the authorities of each individual federal agency.

Other laws, while potentially applicable to private land development, have greater impact on federal lands. For example, the National Historic Preservation Act, 54 U.S.C. § 300101, et seq., requires extensive consultation with tribes and mitigation plan development in instances where project development could impact cultural resources on federal lands.

Moreover, of great significance in the context of wind energy development is the fact that the regulatory scope of the Endangered Species Act (“ESA”), 16 U.S.C. § 1531, et seq., increases exponentially on federal lands. For example, certain protections not provided to imperiled plant species on private or state lands do apply on federal lands. Furthermore, project development on federal lands often triggers the requirement for the land management agency to consult with the natural resource agencies (the National Marine Fisheries Services and the U.S. Fish & Wildlife Service) to ensure that a proposed project will not jeopardize a listed species or adversely modify the species’ critical habitat. ESA consultations can be time-consuming and expensive, and often result in species protection measures that can significantly impact design and operation of projects.

VII. Liability Risks. Development on federal land can open the door to liability risks not normally encountered when constructing wind projects on private lands. Most notably, liabilities associated with historical hazardous waste contamination may arise, as may exposure to lawsuits in federal court brought by sophisticated, well-funded antidevelopment nongovernmental organizations (“NGOs”).

Unlike most nonfederal lands, significant portions of federal lands have experienced mineral exploration and mining. Often these activities leave behind a legacy of contaminated tailings and other hazardous wastes, and they do so in forms not always recognizable to the untrained eye. Under the strict and joint and several liability schemes found within many federal and state cleanup laws, entities that disturb these areas of historical contamination—for example, through road building and turbine pad construction—can find themselves responsible for remediating these sites, at significant cost, despite not having caused or contributed to the original contamination. Additionally, mitigating against such risks by avoiding contaminated areas on a project site can create design and operational challenges that add time and expense to a project.

In addition to potential liability arising from historical contamination, developers of federal land often face significant scrutiny and challenges by sophisticated NGOs. Unlike local antidevelopment groups or neighbors that might try to impede the development of a wind project on nonfederal lands, many regional and national NGOs are well funded and focused on federal land issues. Such groups often do not hesitate to use litigation, see Chapter 15, in the federal courts to advance their interests, and thus have significant legal and technical expertise in complex federal administrative and judicial processes. The pressure these groups can bring to bear on the federal agencies whose authorizations are needed to develop a project on federal land can be considerable and should not be discounted.

VIII. Navigational Tools. Despite their complicated regulatory nature, federal lands provide viable and significant opportunities for wind project development. Understanding and addressing the challenges before embarking on a project should enable a developer to take advantage of the benefits of federal lands while satisfactorily managing any risks.

For example, when developing on BLM lands, project proponents should familiarize themselves with the 2008 IM ROW process and manage project development in a manner that preserves application seniority pursuant to the requirements of this federal guidance. To this end, environmental analyses should tier off of the Programmatic EIS whenever possible. Although NEPA compliance can be expensive and create delay, the process and documentation created thereunder should be embraced as a project planning tool rather than deemed a mere nuisance.1

Similarly, although ESA consultations can create delay, if they are considered and incorporated from the outset in project planning, timing issues can be avoided. Moreover, notwithstanding the expense of engaging in an ESA consultation, the result—a biological opinion and incidental take statement—can provide protection against the ESA’s significant civil and criminal liability provisions for incidental harm inflicted upon imperiled species by the construction and operation of a wind farm. Such protections are often worth the time and expense of an ESA consultation and are not normally available on nonfederal lands (unless associated with a federal permit or funding).

As to potential liability risks associated with federal lands, affordable and practical strategies exist for minimizing these risks. For example, to best insure against liability arising from exacerbating historical hazardous waste contamination on a site, a project proponent should conduct a Phase I environmental site assessment to identify areas of risk, so it can avoid or otherwise address these areas. Such assessments can also provide statutory defenses to liability under federal cleanup laws, as well as to liability arising under many equivalent state statutes. Regarding the potential exposure to third-party challenges to an agency’s authorization of a project under federal environmental laws, the vulnerability is only as great as the weakness of the supporting administrative record. Consequently, in addition to any NGO outreach, project proponents should work closely and cooperatively with relevant federal permitting agencies and other interested stakeholders to ensure the creation of a strong administrative record.

Finally, it is noteworthy that development on federal land can allow a project proponent to avoid some of the difficulties posed by often esoteric local and state land use regulations. To the extent state environmental regulatory programs overlap with the federal authorizations needed for a project, federal and state agencies are becoming more experienced in ensuring that the parallel processes do not conflict. In fact, through a process facilitated by Stoel Rives attorneys, BLM and the Oregon Department of Energy recently signed an unprecedented Memorandum of Understanding that seeks to streamline the agencies’ siting and permitting processes and facilitate cooperation among federal and state agencies for commercial wind projects in Oregon.

In sum, although the federal regulatory maze can be daunting, it is not insurmountable, and certainly not a reason to miss out on the potentially significant development opportunities presented by siting wind projects on federal lands. Download The Law of Wind - 8th Edition (PDF)

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Project developers should also be prepared to utilize the resources of BLM Renewable Energy Coordination Offices, which are located in most states to facilitate ROW application processing, environmental review, and coordination between other relevant federal agencies.

Key Contributors

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Media Inquiries

    Victoria Twogood Practice Group Director 612.373.8842
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