Creating State “Working Groups” to Encourage Renewable Energy Projects on Brownfields Using the Ground Lease Liability Relief Model

The purpose of this post is to focus on the need for state-by-state efforts to encourage liability relief for those renewable energy projects which utilize ground leases on Brownfields rather than actually purchasing the site.  As always, anyone reading this blog post should take the time to read my first two blog entries, as they set the stage for these ongoing discussions.

It is a fact that most renewable energy projects operate on very thin financial margins, and often pencil out only because of the numerous tax credit and other financial incentives which savvy project proponents are able to piece together.   Given these stark financial realities, it is critical that renewable energy developers be offered up a Brownfields development model that requires little in the way of cleanup cost expenditures and provides concrete protections from future cleanup liability uncertainties.

But how do we get to the point where renewable energy project proponents and their lenders/investors regularly feel comfortable focusing their sights on old landfills and other contaminated properties?  Well, the obvious first step is to make sure that each individual state’s laws and regulations provide the necessary liability relief comfort.  In California, the SB 989 law already exists; it provides actual “immunities” to a renewable energy developer that operates under a ground lease, once that developer makes its site safe for the intended human use.  California’s Department of Toxic Substances Control (DTSC) is looking to use this law to encourage renewable energy projects on landfills and other contaminated sites throughout the state.  As noted in my first blog post, DTSC is also teaming with us on our ground lease “White Paper” outreach.

For other states, the analysis must be done on a case-by-case basis.  Some states already have broad, developer-friendly bona fide prospective purchaser statutory protections, as well as broad regulatory programs, such that very few modifications need be made to encompass a ground tenant liability protection approach.  Many other states might have the appropriate statutory framework, but lack the necessary regulatory programs.  Still other states will require new legislative initiatives in order to accommodate a ground lease liability bifurcation/relief model.

Since the approach to jumpstarting the ground lease liability relief model must necessarily start with this state-by-state analysis, our ground lease White Paper outreach efforts include the organizing and coordination of stakeholder “Working Groups” in each of several states.  We are focusing our initial efforts in this regard on states with strong renewable energy incentives.

It is our hope that through this Brownfieldgroundlease.com blog site, together with the “Jumpstarting Renewable Energy Projects Using the Bona Fide Ground Tenant Lease Model” panel discussion next week in Philadelphia, we will attract solid stakeholder participation for several of our state Working Groups.  Please feel free to contact us on this blog, or through our Twitter Account (BFGroundLease), if you have an interest in participating in one of these Working Groups. Or, attend our panel discussion (on Tuesday, April 5, at 3:15 p.m.) and sign up then.

I will have one more blog post prior to Brownfields 2011, on Thursday, March 31.  That entry will focus on federal EPA enforcement of CERCLA at renewable energy sites, including the 2002 Amendments and the Bona Fide Prospective Purchaser protections of those Amendments.  You won’t want to miss that blog post as it will set the stage for much of the roundtable discussion which will occur  during our panel in Philadelphia on April 5.   EPA will also be introducing its own renewable energy project Liability Fact Sheet, for the first time, at the Philadelphia conference.  That Liability Fact Sheet will be a major source of discussion during our April 5 roundtable.

(Please note that this is not a public blog site, so I do not publish many of the comments I receive.  If you make a comment and want to keep it private, just let me know and I will be sure to respect your wishes.)