Sustainability Law Blog

On January 15, 2009, the U.S. Senate passed the Omnibus Public Land Management Act of 2009 (S.22). This legislation will designate approximately two million of acres of land as components of the National Wilderness Preservation System, which confers the government's highest level of protection on land, in addition to making amendments to a variety of other public laws. The fate of the legislation, which is actually a collection of about 160 bills more than a decade in the making, now rests with the U.S. House of Representatives where a vote was expected in the first half of February (and which was presumably delayed by the federal stimulus package).

Oregonians have a stake in this legislation because it contains the following seven land bills:

(1) The Lewis and Clark Mount Hood Wilderness Act of 2007— Preserves almost 127,000 acres of national forest on Mt. Hood and adds nearly 80 miles of Oregon rivers to the National Wild and Scenic River System;

(2) The Copper Salmon Wilderness Act—Designates 9.3 miles of rivers as Wild and Scenic and designates as wilderness over 13,000 acres of old growth and cedar forests in central Oregon;

(3) The Oregon Badlands Wilderness Act of 2008—Designates as wilderness almost 30,000 acres of high desert east of Bend;

Continue reading " Fundamental Sustainability—Protecting the Wilderness that Sustains Us " »

On February 4, I wrote about the renewable energy provisions of the initial stimulus bill from the House of Representatives. For the most part, those provisions emerged unscathed from the bill-writing process. Today, President Obama signed the American Recovery and Reinvestment Act of 2009, which compares to the original House bill with respect to renewable energy as follows:

• The Act provides $16.8 billion (down from $18.5 billion) to promote energy efficiency and renewable energy. No specific allocation is made for renewable energy research and development, but the funds to promote development of advanced battery technologies have increased from $1 billion to $2 billion.
• The Act maintains $4.5 billion to fund "smart grid" research and improvements.
• As in the original bill, the Act authorizes $3.25 billion in loans to the Western Area Power Administration for transmission system upgrades, and gives the Bonneville Power Administration authority to borrow up to $3.25 billion to improve its transmission system in the Pacific Northwest.
• As in the original bill, the Act extends the production tax credit for wind energy to the end of 2013, and for other renewables (including biomass and geothermal) to the end of 2014.
• As in the original bill, the Act terminates a rule reducing the cost basis for government-subsidized renewable energy projects.

As I discussed on February 4, the truly new ground in the Act concerns alternative financing for renewable energy projects. Section 1602 of the original bill survived as Section 1102 of the Act, and allows developers of PTC-eligible facilities the option to take the investment tax credit instead. For wind energy projects to elect the ITC, the credit must be taken by 2012. For all other projects eligible for the PTC, the election must be made by 2013.

Finally, and perhaps most importantly, Section 1721 of the original bill survived as Section 1603 of the Act. That Section allows renewable projects of all types to receive a grant from the Department of Energy of up to 30% of the cost basis of the facility, in lieu of tax credits (either the PTC or the ITC). To qualify for a grant, construction of the project must start by December 31, 2010.

On February 4, I suggested renewable energy advocates had a lot to smile about in the original House bill. Now that the Act bears the President's signature, they can keep on smiling.

Post authored by David Petersen, partner practicing in the Sustainability and Real Estate and Land Use Practice Groups.

A new rule proposed by the Environmental Protection Agency should provide a measure of relief to prospective purchasers of large tracts of property. It removes any doubt that a Phase I environmental site assessment ("ESA") conducted under the E2247-08 standard will be a reliable component of an "innocent purchaser" defense against potential Superfund claims.

In December 2008, the EPA issued a proposed rule that would allow, but not require, prospective purchasers of property to use a certain industry standard, designated E2247-08, when performing a Phase I environmental site assessment as part of the environmental due diligence process. Phase I ESAs are "above-ground" property inspections that include a review of the property's historical use, ownership and aerial photographs, a site visit, and interviews of owners and local government officials. They do not involve testing the soil or groundwater. EPA's proposed rule would amend its "All Appropriate Inquiries" rule, one of the components of a defense to liability under Superfund and which imposes strict liability for environmental contamination on current property owners and operators. If the proposed rule becomes final without delay, which the EPA considers likely, it will take effect on March 23, 2009.

ASTM International (originally known as the American Society for Testing and Materials) publishes the standard for conducting Phase I ESAs of forestland or rural property 120 acres or greater. Consequently, the parties that likely will be most affected by this new ruling include purchasers of large tracts of forested lands or large rural properties that intend to claim one of three protections. These include:

- The innocent landowner defense (no knowledge of contamination after completion of the Phase I ESA);
- The bona fide prospective purchaser liability protection (knowingly purchasing contaminated property); and
- The contiguous property owner liability protection (groundwater or soil contaminated by releases from other property).

The proposed rule will clarify uncertainty for purchasers of forestland or rural property because the only standard that is currently approved by EPA (and which remains valid under the proposed rule), is a standard for conducting Phase I ESAs of commercial property. The procedures under this standard, while for the most part very similar to the new standard are not all practical for large rural properties.

Post authored by Jeanette Schuster, attorney practicing in the Sustainability and Real Estate and Land Use Groups.

The federal economic stimulus package passed by the House of Representatives on January 28 (H.R. 1) contains numerous provisions that should put a smile on the face of renewable energy advocates. Some key provisions of the bill include:

• $18.5 billion to promote energy efficiency and renewable energy, including $2 billion for renewable energy research and development and $1 billion to promote development of advanced battery technologies.
• $4.5 billion to fund "smart grid" research and improvements.
• Authorization for up to $3.25 billion in loans to the Western Area Power Administration (WAPA) to upgrade the transmission grid in the western United States, specifically to accommodate renewable energy.
• Authorization for the Bonneville Power Administration (BPA) to borrow up to $3.25 billion to improve its transmission system in the Pacific Northwest.
• Extension of the production tax credit (PTC) for wind energy to the end of 2013, and for other renewables (including biomass and geothermal) to the end of 2014. The PTC for these resources currently expire at the end of 2009 and 2010, respectively.
• Termination of a rule reducing the cost basis for government-subsidized renewable energy projects. That rule had limited the ability of some government-sponsored projects (mostly solar) to take full advantage of the investment tax credit (ITC).

The truly new ground in H.R. 1, however, concerns alternative financing for renewable energy projects. First, Section 1602 of the bill gives developers of PTC-eligible facilities that come online in 2009 or 2010 the option to take the ITC instead. The primary distinction is that the PTC is a credit based on electricity produced, whereas the ITC is calculated as a percentage of the cost basis of the facility.

Continue reading " A Lot To Like In The House's Economic Stimulus Package " »

Last week, outgoing Agriculture Secretary Ed Schafer announced the USDA's approval of the first-ever loan guarantee for a commercial-scale cellulosic ethanol plant. The loan guarantee, authorized by the 2008 Farm Bill, guarantees an $80 million loan to Range Fuels, Inc. to build a 20 million gallon-per-year plant in Georgia. Once fully operational in 2010, the plant is expected to support 63 permanent jobs.

Cellulosic ethanol is the holy grail of the ethanol industry. Currently, commercially produced ethanol comes from food grains like corn and sugarcane. The increased demand for these grains by ethanol producers has led to a hotly disputed controversy over whether such fuels have increased food and feed prices worldwide.

Cellulosic ethanol technology manufactures fuel from non-food plant products. The Range Fuels project, for example, will use wood chips as its source material. Many other promising plant materials are being evaluated for their fuel-making potential, from rapeseed to algae. Bringing a commercial cellulosic plant online is an important step, not only because it is positive news for the biofuels industry but more importantly, it represents a crucial milestone on the road to a carbon-free energy supply.

Post authored by David J. Petersen, partner practicing in the Sustainability and Real Estate and Land Use Groups.