TechVision21’s CEO interviewed by Portfolio Media – DOE Struggles To Balance NEPA, Fast Stimulus Cash
By Jesse Greenspan
Portfolio Media, Inc.
Publisher of the Law360 Newswires
New York
As companies vie for a share of the stimulus cash earmarked for renewable energy, one of the biggest challenges the U.S. Department of Energy faces is trying to distribute funds rapidly without sacrificing environmental regulations, according to attorneys.
"There’s this obvious tension between get the money out quickly, but don’t make any mistakes," said Kelly Carnes, president and CEO of consulting firm TechVision21.
Perhaps especially at issue is the stimulus plan’s $6 billion in innovative technology loan guarantees, which are expected to support more than $60 billion in actual loans.
The loan guarantees are designed for "development that wouldn’t get off the ground financially without this help," according to Tom Mounteer, a partner at Paul Hastings Janofsky & Walker LLP.
The DOE has said that a National Environmental Policy Act review must be completed before a loan guarantee can be issued.
"DOE’s loan guarantees are considered major federal actions and are subject to NEPA review," the agency said in a statement. "NEPA compliance is integrated into DOE’s Loan Guarantee Program Office decision-making procedures to ensure that environmental impacts are considered throughout the loan guarantee process."
Research and development funding is generally not subject to a lot of review under NEPA — which requires federal agencies to consider the environmental impacts of proposed projects — but any project involving the construction of a facility or the siting of a large-scale renewable energy plant would require NEPA analysis, Carnes said.
"Both the legislation and the Office of Management and Budget have made it clear that NEPA should apply to stimulus awards, but they also said it should be applied on an expedited basis," said Roger R. Martella, a partner with Sidley Austin LLP.
Mounteer expressed concern, however, that NEPA review could prove problematic, as the stimulus act establishes a Sept. 30, 2011, deadline for the DOE to issue those loan guarantees.
He pointed out that the DOE just got around to issuing its first loan guarantee under the Energy Policy Act of 2005.
"These projects have to be being constructed by 2011, so we don’t have time for three years of environmental review," Mounteer said.
Congress didn’t address this issue clearly in the stimulus act, and it is up to the DOE to reconcile it, he said.
Projects on federal land wouldn’t be adversely affected because they have to go through NEPA review anyway, and projects to be constructed close to the deadline wouldn’t be affected because they should have enough time to undergo NEPA review, said Ed Feo, a partner at Milbank Tweed Hadley & McCloy LLP.
NEPA review might prove onerous, however, for projects on private land that were hoping to obtain a loan guarantee and begin development soon, Feo said.
"They would basically have to go out and redo that," he said. "And that would be problematic if they’re actually trying to get construction commenced in the next 12 months."
The tricky part for the government will be to do it quickly and to do it right, all while dealing with a lot of different projects and a ton of money, said David R. Hill, another Sidley Austin partner and former general counsel of the DOE.
"They’re faced with a pretty tough task of trying to act quickly, but at the same time not cut corners on their analysis or compliance with the regulations," Hill said.
Many companies, particularly smaller ones, have expressed concerns to the DOE about burdensome applications making it hard to compete for some of these programs, Carnes said.
Under the $787 billion economic stimulus package, officially known as the American Recovery and Reinvestment Act of 2009, $16.8 billion was allocated for energy efficiency and renewable energy, including $2 billion for the manufacture of advanced batteries and components, $3.1 billion for states to promote energy conservation, and $5 billion for home weatherization.
Another $2.5 billion of the $16.8 billion was allocated for applied research, development, demonstration and deployment, including $800 million for biomass, $400 million for geothermal, $300 million to create an alternative fuel vehicle pilot grant program, $400 million for electrification of transportation, and $300 million for the energy-efficient appliance rebate program and the Energy Star program.
The DOE has already issued formal solicitations for several of those programs, and the solicitation period has even closed for the advanced battery initiative and the transportation electrification initiative, Carnes said.
However, companies are still waiting for guidance before applying for the $2.5 billion in applied research, development, demonstration and deployment funds, she said.
"But companies that are interested should start preparing in advance of the solicitations coming out," Carnes said.
As for the U.S. Department of the Treasury, which is responsible for a separate program under the stimulus act that lets renewable energy producers get cash grants in lieu of tax credits, the department has said it would not subject its grants to NEPA review.
Treasury could do this because the grant awards are not major federal actions and are nondiscretionary, Mounteer said.
Most, if not all, projects would be subject to environmental review of one sort or another as they obtained permits and other authorizations, he pointed out.
Neither the DOE nor the Treasury has issued guidance yet on the innovative loan program or the renewable energy grant program, but when they do, they are not expected to issue formal rulemakings, attorneys said.