Will New York’s Revised Generation Siting Law Promote or Hinder Development?

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by Frederick R. Fucci and Daniel A. Broderick, Dickstein Shapiro LLP

On Aug. 4, 2011, New York restored and updated its long-expired Article 10, which governs in-state siting of new, repowered or modified electric generating facilities over 25 MW.

The new Article 10, like its predecessor, centralizes siting authority in the New York State Board on Electric Generation Siting and the Environment and is intended to guarantee developers a streamlined, time-certain permitting process.

By lowering the size threshold from 80 to 25 MW, Article 10 permits more wind, solar and other renewable projects to use its streamlined process while continuing to recognize the authority of local interests over smaller projects that have more local impacts.

Implementing regulations were proposed this spring, with comments due by the end of May. Noteworthy provisions of the proposed regulations are:

Disclosure of sensitive, detailed capital cost estimates. Not appearing to be required by Article 10, Section 1001.14 of the regulations requires applicants to provide detailed capital cost estimates, along with supporting work papers. The proposed disclosures would require developers to air competitively sensitive commercial information; fear of which could discourage developers from siting new projects or risk distorting a fully competitive market by permitting market participants to influence competitive bid processes like the New York State Energy Research and Development Authority solicitations.

Minor design revisions trigger substantial scrutiny. Certain minor project design changes such as shifting collection lines, interconnection lines or access roads could trigger more scrutiny and fees if such change is deemed a “revision” under Section 1000.2(ak) rather than a “modification” under section 1000.2(x). This possibility does not spring directly out of Article 10, which imposes additional scrutiny only on amendments’ warranting substantial additional scrutiny (Section 164(6)(a)).

High bar for ignoring local laws. Section 1001.31(e) requires that before asking the siting board to find that a compliance with a local law would be unreasonably burdensome, applicants must show it is technically impractical to comply with the local requirement or the costs to consumers of the applicant’s doing so would outweigh its benefits. In comparison, Article 10 gives the siting board discretion to overrule local laws that pose an unduly burdensome barrier. Arguably, then the implementing regulations adopt a more onerous standard than that contemplated in the actual legislation.

Low bar for forcing administrative hearings. Section 1000.12 allows parties, including those seeking to challenge or delay a project, to force an administrative hearing upon a showing of material and relevant concerns. This could expose developers to costly litigation of potentially frivolous issues. Article 10 does not codify a higher standard but would permit the siting board to impose a substantive and significant standard, which would prevent litigation concerns.

Long lead time for public involvement program (PIP) plan. Section 1000.4(d) requires applicants to submit a PIP plan at least 150 days before the preliminary scoping statement. Added to the three-month pre-application (1000.5(c)) and yearlong application, this five-month wait appears to extend the certification time line to 20 months—nearly twice the duration proposed in the notice of proposed rulemaking.

Costly detail for preliminary design drawings, noise and vibration studies, and site studies. While purporting to require “preliminary design drawings,” Section 1001.11 states such drawings must be completed by a state-licensed design professional and contain much of what normally would be considered construction-level detail. It is unclear why a developer should have to incur the costs of providing this level of detail so early. The requirement discourages applicants from improving the design once it has been submitted for fear such changes might be deemed “revisions” under the law.

Section 1001.19 requires professional noise and vibration studies “using actual measurement data recorded in winter and summer and during day and night as a function of time and frequency” and based on computer modeling software.

These studies depend on variables that cannot be known at the application stage, and the specificity sought adds costly layers of complexity without achieving any corresponding benefit.

Section 1001.21 requires construction-level detail of site geology, seismology and soils, which would impose a potentially large cost at the application stage.

Early-stage site safety response plans and New York State Division of Homeland Security and Emergency Services review. Section 1001.18(a)-(c) requires site security and safety response plans as part of certification. Would it not be better for this information to be left to the post-certification compliance phase, by which time certificated projects could more easily cover this expense?

Section 1001.18(d) requires applicants to ask the New York State Division of Homeland Security and Emergency Services to review plans, seeming unnecessary for relatively small projects, especially small renewable resources.

Study radius of groundwater analysis and storm water plans. Section 1001.23 requires detailed groundwater analysis and storm water plans. For wind power developers, this requirement extends to public and private groundwater wells within five miles of their sites (1000.2(ar), 1001.23(a)), without any indication that their projects might affect a broad number of wells.

The proposed regulations highlight some potential early-stage obstacles the siting board could impose on in-state developers.

Taken together, these obstacles would seem to undercut the objective and limit the effectiveness of Article 10, as well as frustrate the desire of developers and consumers that the legislation streamline permitting.

Before issuing its final regulations, the siting board should consider these concerns to best effectuate Article 10’s overarching purpose.

Authors

Frederick R. Fucci is a partner in Dickstein Shapiro’s energy practice. Fucci focuses on corporate and commercial transactions and the development and financing of infrastructure projects in the U.S. and emerging markets, principally in the energy sector. Reach him at fuccif@dicksteinshapiro.com.

Daniel A. Broderick is an associate in Dickstein Shapiro’s energy practice, focusing on regulatory and project development matters affecting clients in the electricity industry. Reach him at broderickd@dicksteinshapiro.com.

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