Prepping for Project Development in 2011

By John Eustermann | November 23, 2010

As 2010 comes to a close, some biomass project developers may be feeling a sense of "woulda, shoulda, coulda" when looking back. This may be the result of trying to meet year-end timing issues related to the 1603 Grant program, changes to the Biomass Crop Assistance Program, Qualified Energy Conservation Bonds and other bond financing requirements, and limits for city, county and state permit approval meetings. These issues can be stressful and result in hastily prepared project documents. In such situations, project developers often find they lose leverage when negotiating critical project development documents such as engineering, procurement and construction contracts, waste supply agreements, power purchase or biogas off-take agreements. Avoiding these situations is easier said than done, but with regard to those developers looking at developing 2011 projects, appropriate planning cannot be underestimated.

The following is a brief, high-level discussion of components in projects that tend to be underestimated or overlooked completely: the applicable city, county, state and federal permitting requirements and process; and the community involvement or "buy-in" process. These components involve third parties, which the developer has little if any control over, but potentially a measurable bit of influence if managed appropriately. 

Permitting: Permitting is a requirement that must be performed with the utmost diligence and consideration. In a perfect world, consolidated permitting activities within interagency coordinating bodies, or through master agency agreements where agencies work under one regulatory framework, would likely expedite review, improve communication regarding cross-media impacts, and reduce costs, both for developers and the agencies. In the absence of a consolidated permitting environment, the developer is wise to put the permitting process at the top of the Gantt chart and to keep these permitting management activities in mind:

•Location—Before committing to a property, understand the local zoning and potential obstacles that may arise at particular sites such as: wetlands, endangered species/biological obstacles; airports, traffic and access issues; distance to utilities and feedstock; properties requiring rezoning in addition to other approvals; properties requiring use permits and in some states, such as California, the additional environmental review that may accompany a use permit; and neighbors (see discussion below).

•Timeline—Develop a realistic timeline taking into account the application process and, potentially, the environmental review, including the additional time it may take to coordinate co-permitting agencies. In addition, the timing of the permits themselves, the decision-makers’ meeting schedules and related regulatory constraints, such as mandated notice periods, and even the length of agenda, need to be superimposed on the dates that are set out for the permits.

•Permits—Depending on the location and the type of facility, there may be air, water, and land use, utility and certainly building permits, all of which have timelines. A meeting with the main permitting agency early on in development is essential.

Community Involvement: Informed citizens, stakeholders, decision makers and opinion leaders are crucial to the successful adoption of any biomass project and engaging the services of professionals to assist with gaining consensus warrants consideration.

Though not applicable in all situations, the biomass developer should consider the following activities in developing a project: educate the public and decision makers about biomass systems and issues in sustainable biomass development; inform key project participants about corporate social responsibility and environmental and social implications of their involvement; conduct outreach to government decision makers, schools, nongovernmental organizations, sustainability groups and others; provide outreach on biomass utilization and seeking to create early dialog with the affected communities; attend civic leadership luncheons to hear about local issues as appropriate; educate farmers, operators, investors and others of research and development efforts and provide outreach and coordination with farming organizations and agencies, and sponsor information outlets regarding the project and the technology.

Author:John Eustermann
Partner, Stoel Rives LLP
(208) 387-4218