Good Planning Helps Satisfy Regulatory Hurdles

By Lindsey Hemly and Emily Chad | March 19, 2012

Opportunities for innovation in algal fuel development and production are significant and attracting even presidential attention. With innovation, however, often comes uncertainty, and in the case of algae product development, regulatory uncertainty has tagged along for the ride.

In the face of such uncertainty, algae developers should plan on the front end to satisfy the most obvious regulatory hurdles. Several regulatory schemes likely apply to algal development and production activities. These include:

• The U.S. EPA’s Toxic Substances Control Act.

• The USDA’s Plant Protection Act.

• The National Environmental Policy Act.

• State and local planning and permitting

The Toxic Substances Control Act requires that a manufacturer or importer notify the EPA 90 days before manufacturing or shipping certain new chemical substances, including microorganisms such as microalgae that are a combination of genetic material from organisms of different species. Notification is not required when the microalgae are naturally occurring or when the genetic material from microalgae of the same genus is combined. Sufficient time should be built into development and financing schedules to accommodate this notice requirement if genetically modified algae strains are involved.

Microalgae research and development activities may also be subject to National Institute of Health Guidelines if federal funds are involved. If testing will involve the release of microalgae into the environment, a TSCA Experimental Release Application could be required. Research conducted in a “contained structure” is generally exempt from reporting requirements.

The USDA’s Animal and Plant Health Inspection Service regulates the interstate movement of bioengineered plants and microorganisms deemed “plant pests” pursuant to the Plant Protection Act. Plant pests are organisms which can directly or indirectly injure or cause disease or damage to any plants or plant products, and include all bioengineered organisms without a known plant pest classification. Plant pests require a permit for import, interstate movement, or environmental release. 

Environmental planning and permitting, such as National Pollutant Discharge Elimination System permitting, industrial wastewater discharge authorization, and waste disposal regulations may also come into play. The National Environmental Policy Act requires that federal agencies consider the environmental impacts of “federal actions.” Federal actions include projects and programs financed, assisted, conducted, regulated, or approved by federal agencies. If an algae project will use federal funds or will require a federal approval, a NEPA environmental assessment may be required prior to project commencement. The NEPA process can take several months to complete and can add costs to a project, so project developers should be sure to factor in the potential for added time and costs during the planning process.

Various state and local laws could apply to algae product development, including state permitting and licensing requirements, which may be complicated by the fact that production of algae products is a hybrid of aquaculture and manufacturing. In addition, states and localities have a patchwork of nonnative species regulations. Although these have focused primarily on algae released by boats and aquaculture, algae fuel developers should plan to put in place containment systems to avoid releasing nonnative algae into the environment.

Project developers should contact state regulatory agencies such as aquaculture and agriculture agencies, departments of natural resources, fish and wildlife departments, water quality and energy regulatory commissions, and economic development agencies, to bring to light any potential issues. These groups may also have access to funding sources such as EPA grants or economic development incentives, making them potentially useful allies as well as regulatory obstacles. 

Additionally, zoning requirements can make or break development projects, and project developers should carefully consider land use planning processes and the discretionary authority of local governmental entities prior to selecting a facility location and beginning development.

The applicability of these and other federal, state and local laws and regulations to algae-for-fuel projects depends on the type of algae involved, funding sources (e.g., federal, state or private), whether project activities are taking place indoor or outdoors, and the specific location of the project. As a result, it is crucial to communicate early and often with governmental authorities at all levels to keep projects on schedule and avoid fines or litigation down the road.

Authors: Lindsey Hemly, Emily Chad
Attorneys, Fredrikson & Byron
(612) 492-7454