Legal Issues Confronting the Development of Wind Power

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Legal Issues Confronting the Development of Legal Issues Confronting the Development of Wind PowerWind Power

Joe Nelson

Van Ness Feldman, P.C.November 9, 2004

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Increasing Trends for Development ofIncreasing Trends for Development ofWind PowerWind Power

Total installed U.S. wind energy capacity is approximately 6,374 MW (Jan. 2004)

Approximately 5,450 MW of wind generation capacity has been proposed for construction (Aug. 2004)

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Factors Behind Increased Factors Behind Increased Wind Energy ProductionWind Energy Production

Production Tax Credit extension signed into law in October 2004– 1.5 cents per KWH (indexed for inflation) for facilities

placed in service after 1993 and before 2006. State Renewable Portfolio Standards, Goals or

Mandates– States with RPS programs include: Arizona, California,

Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Pennsylvania, Texas and Wisconsin

– Colorado RPS ballot initiative passed in November election requiring utility resource mix to meet a 3% RPS by 2007, 6% by 2011 and 10% by 2015

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Legal Considerations in Legal Considerations in Wind Energy DevelopmentWind Energy Development

State & Local Siting Requirements– Environmental review/compliance addressed in siting

Federal Environmental Laws Implicated by Wind Energy Projects– National Environmental Policy Act – Endangered Species Act– Migratory Bird Treaty Act– Bald and Golden Eagle Protection Act– Clean Water Act – National Historical Preservation Act – Rivers and Harbors Act– Coastal Zone Management Act

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Legal Considerations in Legal Considerations in Wind Energy DevelopmentWind Energy Development

Aviation Safety– FAA No-Hazard Determination

Wind Energy Development on Federal Lands– BLM Proposed Wind Energy Development Program

Transmission System & Markets Integration– Transmission Interconnection Standards– Treatment of wind energy projects in ISO/RTO

Markets

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State/Local Siting RequirementsState/Local Siting Requirements Majority of States have generic siting requirements

for electric generation facilities– Predominant siting mechanism is for a Certificate of

Public Convenience and Necessity (or equivalent) Most States have capacity thresholds (e.g. 80 MW in New

York) that allow for expedited siting review for smaller projects Applicability of the State siting requirements may hinge on

scope of the statutory definition of “electric generation facility”

– Minnesota and Oregon have enacted specific siting requirements for wind energy projects

M.S.A. §116C.692 O.R.S. §469.320)

Coastal zones and other sensitive areas may have additional siting review requirements

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State/Local Siting RequirementsState/Local Siting Requirements

Key Issues– Applicability of State Siting Statute

Most State siting statutes do not specifically recognize wind generation

Definition of “electric generation facility” or equivalent for purposes of siting requirements varies

– Local Law Preemption Ability of State permitting/siting approval to preempt local

siting requirements often critical

– Timing of Review

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Federal Environmental StatutesFederal Environmental Statutes

Potential Issues– Avian mortality from wind turbines generally

considered to be less than communication structures and other stationary structures

– Facility placement and noise impacts viewed as potential disruptions for wildlife migration and foraging patterns

– Potential for construction-related impacts from road access, heavy equipment and habitat disruption

– Visual and cultural impacts can be significant concerns

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National Environmental Policy Act– Initial Environmental Assessment (EA) takes “hard look” at the

potential effects of an action to determine whether they are “significant”

– Environmental Impact Statement (EIS) required for federal actions significant affecting the quality of the human environment.

Requires extensive scoping, studies, public hearing/comments, and alternatives analysis

Record of Decision must “state whether all practicable means to avoid or reduce environmental harm from the alternative selected have been adopted and, if not, why they were not.”

Adoption of mitigation is limited by permitting agency’s organic statutory authority

– “Mitigated EA/FONSI” is alternative to full EIS Relies upon mitigation measures to reduce adverse effects below

significant levels

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Endangered Species Act (16 U.S.C. §§ 1531-1544)– Federal agency actions reviewing or permitting a wind

energy project may trigger review under ESA Section 7(a)(2) with respect to whether project operations will jeopardize the continued existence of a federally listed species or result in adverse modification of critical habitat.

Ninth Circuit’s recent decision in Gifford Pinchot Task Force v. U.S. Fish and Wildlife Service, 378 F.3d 1059 (9th Cir. 2004) could make the “adverse modification” element of Section 7 consultations more stringent.

– Turbine operations may pose risk of “take” liability under ESA Section 9

Incidental take authorization gained either through a Section 7 consultation or development and approval of a habitat conservation plan under Section 10(a)(1)

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Rivers and Harbors Act (33 U.S.C. § §401 et seq.)– Prevents the unauthorized obstruction or alteration of the navigable

waters of the United States– Section 10 (33 U.S.C. § 403) requires review by the U.S. Army Corps

of Engineers to address any construction, excavation or deposition of materials in navigable waters or any work that affects the course, location, condition or capacity of navigable waters

– U.S. Commission on Ocean Policy recently criticized the Section 10 review process as inadequate for purpose of addressing wind energy projects on the OCS

Section 10 does not provide a basis from which to grant leases or exclusive rights to use and occupy space on the OCS

No comprehensive planning guidelines for off-shore wind No ability for federal government to assess fees or royalties of placement

of a project on the OCS.– There are ongoing Congressional efforts to authorize royalty fee

assessments for wind and other off-shore energy projects.)

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Coastal Zone Management Act (16 U.S.C. § 1451 et seq)– Covers on and off-shore facilities within 3 miles of the

coastline (16 U.S.C. §1453)

– Review (by State coastal authorities) required to determine consistency of project with a federally approved coastal management plan.

– Effect of a wind generation project on shipping lanes, fishing grounds and military zones may be implicated.

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Federal Environmental StatutesFederal Environmental Statutes Migratory Bird Treaty Act (16 U.S.C. §§ 703-712)

& Bald and Golden Eagle Protection Act (16 U.S.C. §§ 668-668d)– Migratory Bird Treaty Act is a strict liability statute that provides

that it is unlawful “at any time, by any means, or in any manner to” pursue, hunt, take, capture, kill, possess, offer for sale, sell, purchase, ship, export, import or transport a migratory bid species.

– 1972 amendment of MBTA included bald eagles and other birds of prey into definition of migratory birds

– Bald and Golden Eagle Protection Act provide additional legal protection with penalties of up to $250,000 and 2 years imprisonment for felony

– U.S. Fish & Wildlife enforcement policy “focuses on those individuals, companies, or agencies that take migratory birds with disregard for their actions and the law”

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Federal Environmental StatutesFederal Environmental Statutes Clean Water Act

– Construction and operation of wind energy projects may trigger permitting requirements under § 401-water quality certification (33 U.S.C. §1341), § 402-point source discharges (33 U.S.C. §1342) or §404-discharge of dredged or fill material (33 U.S.C. §1344)

National Historical Preservation Act (16 U.S.C. §§

470-470b, 470c-470n)– Protects significant historical features (buildings,

objects and sites)– Typically functions in conjunction with NEPA review

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Aviation SafetyAviation Safety Federal Aviation Administration Review (14 C.F.R.

Part 77)

– Applies to facilities with heights over 200 feet– Determination required that facility will not be a hazard

to aviation– Facilities may be required to install aircraft warning

lights and/or markings– FAA is reportedly developing draft report on

obstruction lighting for wind turbines.

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Federal Policies on Environmental Federal Policies on Environmental Impacts of Wind Energy DevelopmentImpacts of Wind Energy Development

U.S. Fish & Wildlife Service (FWS) has issued Interim Guidelines to Avoid and Minimize Wildlife Impacts From Wind Turbines

– Issued on May 13, 2003 with planned two-year evaluation period. – Guidance is voluntary and interim in nature.– After evaluation period, FWS “plans to develop a complete operations manual

for evaluation, site selection, design, construction, operation, and monitoring of wind energy facilities in both terrestrial and aquatic environments.”

Interim Guidelines address:– Evaluation of potential wind resource areas– Proper location of projects– Turbine and associated structure designs– Pre- and post-construction research and monitoring of wildlife impacts

FWS Director issued a memorandum clarifying guideline implementation on April 26, 2004.

– Interim guidelines are “not to be construed as rigid requirements” and should not override locally applicable scientific data and/or local expertise

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Wind Energy Development Wind Energy Development on Federal Landson Federal Lands

Federal lands represent a significant source of required open space for wind energy projects

BLM Wind Energy Policy Issued on October 16, 2002– Applies to right-of-way applications for site testing and monitoring

facilities s and wind energy development projects on public lands administered by BLM

– Interim policy while long-term programmatic approach finalized

2004 Draft Programmatic Environmental Impact Statement (PEIS) for Wind Energy Development on BLM Lands

– Project-specific siting decisions will tier off the PEIS and Record of Decision

– Draft PEIS proposes the implementation of a “Wind Energy Development Program” that includes programmatic policies and best management practices

– Public Comment Period Ends December 10, 2004

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Transmission System and Transmission System and Markets IntegrationMarkets Integration

Wind energy considerations within FERC development of generation interconnection procedures and pro forma interconnection agreements

Integration of wind generation into ISO/RTO Markets

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Factors requiring wind energy-specific criteria for interconnection.– Non-synchronous operation

Wind generation typically is non-synchronous induction generation operating at 60 hertz.

Thermal/hydroelectric generation is synchronous with operation at several multiples of 60 hertz

– Need for reactive power from external resources Induction generation, typically, does not have ability to

generate reactive power

– Remote locations

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FERC Proceeding Addressing Wind Energy Interconnection Procedures (RM02-1-005)– May 20, 2004-Petition filed with FERC by the

American Wind Energy Association requesting establishment of “Appendix G” with wind energy-specific interconnection standards as part of FERC’s development of the Large Generation Interconnection Procedures and pro forma Large Generation Interconnection Agreement

– September 24, 2004- FERC technical conference – November 1, 2004 – Comments filed with FERC in

follow-up to technical conference

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Interconnection Issues –– Capability curve for “low-voltage ride-through” criteria

Necessary to allow wind generator to stay on-line during and after transmission system faults that cause severely depressed voltages

– Leading/lagging power factor requirements Proposal for .95 leading/lagging power factor Issue of whether wind generation should be required to have

capability to supply reactive power to 0.95 lagging (requires additional design elements)

– Scope and timing of engineering and design requirements Wind developers seeking later time (at time of System Impact Study)

for detailed electrical diagrams Interconnection queue position held by wind project developer “self-

study” for feasibility (versus transmission owner/ISO/RTO feasibility study)

– Use of remote SCADA

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Transmission System andTransmission System andMarkets IntegrationMarkets Integration

Market Issues –– Energy imbalances

Inadvertent generation and schedule fluctuations can be more prevalent for wind generation causing larger energy imbalance charge exposures

– Reactive Power Recognition of capacitors, static compensators or other

equipment as reactive power source for any market payments for VAR Support

– Installed Capacity Treatment of wind generation in ICAP markets with respect to

determination of available capacity and bidding/availability requirements for ICAP resources

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Transmission System andTransmission System andMarkets IntegrationMarkets Integration

December 1, 2004 “Technical Conference on Assessing the State of Wind Energy In Wholesale Electricity Markets (Docket No. AD04-13-000)”– Potential OATT modifications to better accommodate

intermittent resources such as wind generation– Review of energy imbalance methodologies and

whether they discriminate against intermittent resources– Integration of wind generation in regional transmission

planning processes– Inclusion of wind energy in State resource adequacy

plans and installed capacity markets– Transmission provider experiences with integration of

wind energy projects

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Legal Issues Confronting the Development of Wind Power