By SKIP SPAULDING and MATHEW SWAIN June 28, 2013
This is an exciting time for the solar development industry.
A convergence of solar technology advances, government incentive programs, energy supply concerns and other factors has created a robust climate for solar energy development.
However, solar projects must clear a daunting array of environmental, land use and regulatory approvals because of multiple layers of government regulation, a wide range of potentially required permits and complex legal issues.
Based on our extensive permitting experience with both utility-scale and distributed generation solar projects, we offer 10 key strategies for successful solar project permitting.
1. Organize a targeted, balanced project-permitting team at project inception.
The most successful project-permitting teams often are organized early in the life of a project and are targeted to key environmental issues, agency sensitivities and subject matter needs. Although it is essential to have experienced environmental and engineering consultants, you should discuss whether local or statewide consultants are a better fit, what agency preferences may exist, and whether a second tier of peer review consultants is advisable. In addition to engaging an experienced land use/environmental attorney, you should evaluate whether any “boutique” legal issues, such as agricultural land conversion, irrigation district or public utilities commission approvals, require additional expertise. This expert input will ensure your permitting strategy is focused and effective from the outset.
2. Prepare a comprehensive strategy for sequencing and obtaining permits.
Obtaining permits is often an art as much as a science. Permits may be needed from many federal, state and local government agencies with different processes, goals, time frames and portfolios. It is critical to create an integrated plan early on to navigate this suite of permits.
For example, if the project involves federal grants, loan guarantees or permits, the federal National Environmental Policy Act (an environmental review statute) will likely be applicable. Many states, like California, have parallel state environmental review requirements, and there are ways to combine, sequence or keep separate these reviews, depending on your project timing and objectives. Similarly, if authorizations are needed for protected species or jurisdictional waters impacts, there are different paths, and sometimes different agency choices, for obtaining these authorizations. Careful sequencing of alternative permitting paths is often critical to meeting project deadlines.
Permitting for projects with both solar facilities and transmission lines can be especially challenging. Many solar projects are located along electrical transmission routes and can interconnect within the project site. Other projects, however, must construct a “gen-tie” from the project substation to the nearest transmission line for the regional electrical grid.
This line may be under a different agency’s jurisdiction than the solar facility or may have a separate permitting process (e.g., if one is on federal land and the other is under county jurisdiction). Because transmission through the gen-tie is imperative to meet power purchase or interconnection agreement schedules, it is essential to tightly coordinate gen-tie and solar facility permitting.
3. Approach stakeholders, including potential opponents, early.
It is important to engage opinion leaders and other key stakeholders early for a proposed project. We also recommend, in most circumstances, that project developers engage in early discussions with a wide range of other potential stakeholders, including neighbors and potential opponents. You should also proactively identify less obvious stakeholders, such as labor unions, who are influential and may not otherwise emerge until late in the development process.
Your interactions with potential opponents may involve difficult discussions, but there may be more common ground than you anticipate. Stakeholder input can sometimes help shape your project configuration or help formulate a compensatory mitigation package. That being said, agreements with stakeholders present myriad choices and risks and may not always be possible.
4. Carefully cultivate government agency relationships.
It is important to create credibility with the permitting agencies. This effort involves submitting excellent biological studies, being responsive to agency concerns, demonstrating an understanding of agency processes and presenting your plan for navigating them.
When appropriate, there may be opportunities to work directly with agencies to assist preparing underlying studies or commenting on draft environmental documents. This can create goodwill by supporting agencies that have limited resources, and it is an opportunity to address difficult issues in a proactive way. Occasionally, and sometimes uncomfortably, it is necessary for a project developer to request that an agency not take a potential “shortcut” or not ignore a key issue because that approach may not fully comply with legal requirements or could later expose the project to litigation risk.
5. Prepare and develop a mitigation strategy as soon as possible.
It is a fact of “permitting life” that a significant solar project will likely generate many “mitigation” conditions to reduce or compensate for its potential impacts. We recommend that a project developer proactively formulate proposed avoidance and minimization measures and a compensatory mitigation package early on. It is usually better to prepare an attractive package that fits within your financial plan (make sure to run financial models that pick up all later-in-time costs such as property endowments and monitoring expenses), rather than having measures imposed by various agencies over time. Your plan will likely evolve, so leave room to modify it as permitting proceeds.
Creativity is often a key factor in a successful compensatory mitigation approach. Frequently, there are alternative mitigation choices. Payment of an “in lieu” fee is often the simplest approach, but it may not be available unless habitat conservation plans or similar regional programs are in place. Third-party mitigation providers and mitigation banks are a potential option, but they are sometimes expensive and may not be available to compensate for your exact type of impact. Self-initiated mitigation projects can sometimes be effective, but are often complicated, multiple year endeavors.
Wildlife agencies often request that project developers obtain mitigation land to compensate for project impacts. This type of mitigation is complicated and usually requires early action to identify and secure land. There are a variety of real estate mechanisms to protect land (such as acquisition or perpetual conservation easements), and there are many intricacies to structuring the transactions involving multiple parties (e.g., owner, easement holder, endowment holder, land manager and government agencies). Although these complications sometimes make this option infeasible, land mitigation has been the keystone for several successful projects.
6. Make sure your environmental studies are thorough, reliable and accurate.
Several major solar projects have been slowed or halted by faulty or incomplete environmental studies and modeling that needed to be supplemented or completely redone. It is critical that studies be performed during accepted “survey windows” (for example, botany surveys generally should occur in the spring) so poor sequencing of studies does not impede project permitting. The studies must be thorough to ensure they have credibility with agencies and stakeholders. The environmental studies also provide a vehicle for the developer to understand, financially assess and address project environmental issues.
7. Pay early attention to endangered species and wetlands issues.
Endangered species issues are often a key driver in determining whether, where and how major solar development projects go forward. The most prominent species issue has been potential desert tortoise impacts for solar projects in the Mojave Desert. The desert tortoise is listed as “threatened” under federal and California law, and the wildlife agencies have taken a proactive approach to protecting both individual tortoises and their habitat. There are many other protected species throughout the country potentially impacted by solar projects. The federal Endangered Species Act has a strong set of public policies protecting such species. It is essential at the outset of any project to evaluate whether such issues exist and to develop a strategy for addressing them.
Wetlands issues can also be a significant driver of solar project design and permitting schedules. These issues arise both for “true” wetlands, such as swamps and bogs, and for “other waters” that are subject to government jurisdiction if they are dredged or filled during construction activities. Activities that are subject to the federal Clean Water Act require authorization from the U.S. Army Corps of Engineers, which also triggers a series of related federal and state agency approvals. These issues need to be identified early as they can dramatically affect your project design and permit path.
8. Put on a construction hat when evaluating proposed project conditions.
When evaluating a proposed permit condition, consider the practical impact on the construction crew that must comply with it and, if possible, have your contractor or construction team review proposed permit conditions. Thinking ahead on these kinds of issues and obtaining buy-in from the construction side may be critical to meeting construction schedules and budget targets.
For example, carpooling and shuttle requirements to mitigate traffic impacts can be difficult to achieve because workers must be incentivized to comply, and they present non-obvious logistical issues such as locating offsite parking and organizing ride-sharing and shuttle services.
Similarly, wheel washing before heavy trucks come on site is a common requirement to prevent the spread of invasive weeds. However, careful thought should be given to whether the wheel washing station should be located onsite or off- site, because it will require adequate space and staffing, will increase water consumption and wastewater generation, and may cause a “bottle-neck” of truck traffic if access routes are limited. Early construction input can avoid unanticipated problems later.
9. Keep abreast of permitting and legal developments.
Solar plant permitting is a dynamic legal area that must be constantly monitored. Federal initiatives to promote renewable energy development have resulted in new policies or procedures in many individual agencies. Some states, like California, have adopted similar policies, and these policies sometimes lead to new legislation or streamlined government permitting. On the other hand, solar projects raise environmental and other concerns that can generate more stringent permitting standards or generate litigation that can change permitting requirements. It is also advisable to track the permitting successes and problems of similar and/or nearby projects to learn from their experiences.
10. Anticipate change and be flexible.
Despite the best advance planning, circumstances will undoubtedly change as you move forward with project permitting. Project design, configuration or technology changes will undoubtedly occur during the permitting process. To anticipate this possibility, it often makes sense to assume during environmental surveys and reviews that there could be geographically larger, more intensive or alternative environmental impact scenarios so that these analyses will remain valid when such changes occur.
It is important to be prepared to make changes based on new or unexpected developments. However, make sure you understand which project elements cannot change without making the project infeasible.
By using these 10 key strategies and other best practices, you can maximize your ability to achieve project financial and scheduling goals.
Skip Spaulding is a partner and Mathew Swain is a senior associate in the Environmental Law Department at Farella Braun + Martel LLP in San Francisco where they both handle permitting and compliance for renewable energy projects.