As greater public attention is given to environmental justice and ESG concerns, many companies are increasingly exploring or revisiting the development of renewable energy projects on contaminated lands. As of October 2021, the United States Environmental Protection Agency (“EPA”) has identified 459 completed renewable energy installations on contaminated lands, landfills and mine sites as part of its RE-Powering America’s Land Initiative, and is tracking 200 additional projects that are in various stages of development. The completed installations include 1,271.8 MW of solar generation, 635.6 MW of wind generation and 65.1 MW of biomass generation.1The EPA estimates that there is almost 1,332,000 MW of technical potential for renewable energy redevelopment for contaminated and potentially contaminated lands in the United States.2
The EPA’s RE-Powering America’s Land Initiative encourages the redevelopment of contaminated and potentially contaminated sites for renewable energy projects. It provides an online toolkit for project developers, which includes an interactive mapping of 130,000 potentially contaminated land sites for renewable development that have been pre-screened by the EPA.3The program also provides trainings and other “best practices” guides for prospective developers. In addition to the programmatic support provided by the RE-Powering America’s Land Initiative, financial incentives are available for these types of projects through the EPA’s brownfields program,4 certain grants and loans offered by the U.S. Department of Agriculture,5 and tax credits for renewable energy development in the Internal Revenue Service’s opportunity zones.6
Outside of the federal realm, there are also a variety of state and local programs in place to support the development of renewable energy projects on contaminated lands, including grants, adders (pricing components added to the cost of producing electricity), dedicated program offices, and low interest rate loans. Under the SMART Program in Massachusetts, the owner of a solar array may participate in the marketing and selling of solar renewable energy certificates. There is a $0.04/KWh adder for projects developed on landfills under this program.7In 2020, the Rhode Island Brownfields Remediation and Economic Development Fund provided approximately $3,000,000 of grants for projects that support the clean-up of contaminated property and contribute to the state’s economic development. Developers of renewable energy projects on contaminated lands should thoroughly explore any state benefits their project may be eligible for.
The development of renewable energy projects on contaminated lands offers project developers some unique environmental and economic benefits. Projects developed on these sites can leverage existing infrastructure available at the project site (e.g. access to roads and transmission lines). In addition, contaminated and potentially contaminated lands often have zoning designations compatible with renewable energy developments, reducing the cost and time to obtain land use approvals. These projects also preserve open/green spaces and address existing site contamination.8The EPA has tracked reported benefits for renewable energy projects on contaminated land, finding that 41% of projects have reported energy costs savings or environmental benefits and 26% of projects have reported revenue benefits such as tax benefits, payment in lieu of taxes or renewable energy credits.9 Projects have also reported job creation and other community benefits arising from the redevelopment of contaminated land.
An important benefit of these projects to both developers and the communities in which they are located is the environmental justice impact of such projects. Under the Biden Administration, the EPA has increasingly prioritized environmental justice, with Administrator Michael S. Regan stating “too many communities whose residents are predominantly of color, Indigenous, or low-income continue to suffer from disproportionately high pollution levels and the resulting adverse health and environmental impacts” and directing all EPA offices to make environmental justice a top priority.10 The redevelopment of contaminated sites into productive use has the potential to remediate sites that create a disparate impact on the communities in which they are located, as well as increase property tax revenue to the local community and potentially even allow these communities to benefit from a new renewable source of energy.11
The planned 50 MW Sunnyside Solar project in Houston, Texas provides an interesting case study of how environmental justice concerns can be addressed in renewable energy projects developed on contaminated lands. The project will be built over a capped landfill in the Sunnyside neighborhood of Houston, Texas. When complete, the Sunnyside Solar project will be the largest brownfield solar installation in the United States. The project will provide discounted power for qualifying residents of the Sunnyside area, an agriculture hub and education center, as well as initiatives to train and employ local labor. Mayor Turner has touted the project as “an example of how cities can work with the community to address long-standing environmental justice concerns holistically, creat[ing] green jobs and generate renewable energy in the process.”12
Although there are many benefits to redeveloping contaminated lands for renewable energy projects, there are also risks developers should be aware of. These include potential liability for response actions and clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), as well as liability for corrective action and closure under the Resource Conservation Recovery Act. Developers should also consider what liability may arise under state environmental protection statutes. When looking to manage CERCLA liability, developers can look to the statutory protection provided by qualifying as a bona fide prospective purchaser under CERCLA13 or as a secured creditor.14 They may also seek issuance of a “comfort/status” letter from the Assistant Administrator for Enforcement and Compliance Assurance of the EPA, as EPA has developed model versions of such letters specifically designed to benefit renewable energy projects.15Developers may seek protection from state environmental liability through voluntary clean-up programs and state hazardous site response statutes. Pollution legal liability insurance and prudent contractual arrangements can also serve as effective tools for mitigating potential liability risks.
13https://www.epa.gov/enforcement/bona-fide-prospective-purchasers. Liability protection under these provisions is available not only for purchasers of real estate, but also lessees and tenants that satisfy the applicable statutory and regulatory criteria.
Visit 2021 – Traditional Energy Rebounds and Increased Energy Transition, for the complete list of individual, detailed articles associated with this publication.
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