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It’s Good To Be A Brownfield Site — As Long As It’s Not Too Brown – Renewables



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Tucked away in the recesses of the Inflation Reduction Act is a provision that
reminds everyone why they love Superfund so much. On its face,
it’s simply an incentive for renewable energy development,
giving an adder to the amount of the investment tax credit (ITC) or
production tax credit (PTC) to which certain renewable energy
projects would otherwise be entitled, if they are located in an
“energy community”. The adder for projects claiming the
ITC can increase the ITC credit rate by as much as ten percentage
points (e.g., a project with a base credit rate of 30% is increased
to 40%). The adder for projects claiming the PTC is an increase
equal to 10% of the PTCs otherwise available. The definition of
energy community has multiple parts, but the key for today is
simply this – any property meeting the definition of a
“brownfield site” under CERCLA is considered an energy
community. The new adder only applies to projects placed in service
on or after January 1, 2023.

Renewable energy developers are now busily trying to figure out
whether target projects meet the definition. Here’s where the
fun starts. It turns out that the common sense definition most
people think of when they think about brownfield sites is not what
Congress had in mind when it defined the term under CERCLA. A
brownfield site is indeed a property where redevelopment is more
difficult because of the presence of historic contamination -
but only if the contamination is relatively
minor
.

Here’s what renewable energy developers need to know to
determine whether their property is a brownfield site and thus
eligible for the IRA adder, or whether it’s just a piece of
contaminated property. The basic definition is reasonably clear:

The term “brownfield site” means real property, the
expansion, redevelopment, or reuse of which may be complicated by
the presence or potential presence of a hazardous substance,
pollutant, or contaminant.

However, there are several different exclusions about which
developers need to be aware. The exclusions are lengthy and
complicated, but can be conveniently placed into four categories.
Facilities in any of the categories are excluded from the
definition of “brownfield site”.

  • Facilities that are actually federal superfund sites,
    including:

    • Sites on the National Priorities List (or proposed for
      listing)

    • Sites at which a removal action is occurring

    • Sites that are the subject of a court order, consent decree, or
      administrative order under CERCLA


  • Facilities that are otherwise subject to court orders, consent
    decrees, or administrative orders. (Maintaining CERCLA’s reputation for incoherent
    drafting
    , it is not clear whether the exclusion applies to any
    such orders or only orders issued pursuant to certain other federal
    environmental statutes, including the Resource Conservation and
    Recovery Act and the Clean Water Act.) Fortunately, the language is
    written in the present tense, so at least it
    is clear that this exclusion only applies
    where such an order remains in effect.

  • Facilities “to which a permit has been issued by the
    United States or an authorized State” under RCRA, the CWA, the
    Toxic Substances Control Act, or the Safe Drinking Water Act.

  • Facilities subject to RCRA corrective action or at which there
    has been a PCB release subject to remediation under TSCA.

There are nuances, but these are the basics. What’s
important to understand is that, while developers need to carefully
parse through these exclusions to see if they are entitled to the
adder, there will remain a significant number of facilities where
the exclusions are not applicable and the adder will be
available.

To view Foley Hoag’s Energy & Cleantech Counsel
blog please click
here

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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