Category: Climate Change

1
Keeping “PACE” in Commercial Real Estate Improvements: A Primer on the New Washington Commercial Property Assessed Clean Energy and Resiliency (C-PACER) Program
2
CLE Presentation: COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies
3
FERC Sets Technical Conference to Assess COVID-19 Impacts on Energy Industry
4
Join Us! Energy Storage Association Webinar: Energy Storage, Trade and China
5
Treasury to Extend Deadlines for Accessing Wind, Solar Tax Credits
6
United States Announces Intent to Withdraw From Paris Climate Accord: What is the Real Impact?
7
Paris Agreement to Enter into Force: Implications for Enforcement in the United States and Internationally
8
CEQ Issues Final Greenhouse Gas Guidance Directing Federal Agencies to Consider Climate Change in their NEPA Reviews
9
The Washington State Department of Ecology Reissues Clean Air Rule
10
High Court Grants Stay of Clean Power Plan

Keeping “PACE” in Commercial Real Estate Improvements: A Primer on the New Washington Commercial Property Assessed Clean Energy and Resiliency (C-PACER) Program

Authors: Rhys W. Hefta, Craig S. Trueblood, David L. Benson, Kari L. Larson

Commercial property owners in the state of Washington may soon have access to a new source of funding for energy efficiency, renewable energy, and resiliency improvements to their buildings. Washington’s C-PACER legislation (House Bill 2405), passed by the legislature during the 2020 regular session, went into effect 11 June 2020. The C-PACER program aims to address the significant needs for property owners to finance energy efficiency upgrades, renewable energy improvements, stormwater management, water conservation, and resiliency retrofits to address vulnerabilities to earthquakes and other natural disasters.

The state and many local governments across the country are imposing new requirements on the owners of existing buildings to reduce water and energy consumption, control stormwater runoff, minimize damage from earthquakes, and convert to renewable sources of energy. These types of building improvements often have high up-front capital costs and long cost-recovery periods. This combination has inhibited investment by property owners who may not plan on holding an asset long enough to see the benefit of these improvements.

With the enactment of the C-PACER program, Washington joins 36 other states that have enacted some form of property assessed clean energy legislation (20 of which have current active programs). Washington’s C-PACER program, like some other states, relies on private rather than public financing. Unlike traditional private financing models, C-PACER loans are not personal debt obligations. Rather, the C-PACER loan is repaid through a voluntary assessment on the improved property that runs with the land and is secured by a super-priority lien. Accordingly, the obligation to repay the C-PACER loan remains with the property regardless of any transfer of ownership. Because of this unique structure, C-PACER loans can allow for a much longer repayment period than traditional financing options. In addition, the super-priority of the lien allows for lower interest rates. In theory, the longer term and beneficial rate will improve the ability of the owner to repay the C-PACER loan, as the owner actually accrues the benefit of savings on utility bills, lower insurance premiums, and other operating cost reductions from the improvements.

The following is a brief summary of the key information to know about the C-PACER program.

Is the C-PACER Program Available Statewide?

The C-PACER program is a voluntary program that is to be managed on a statewide basis by the Washington Department of Commerce (though a C-PACER program guidebook is not expected this year as a result of COVID-19). Once established, each county must opt into the program on a voluntary basis. However, counties are not required to wait for the statewide program. Each county is empowered to establish its own program in compliance with the requirements of the state legislation. Accordingly, availability will vary by jurisdiction. No counties have yet adopted a program.

What Properties Qualify?

Under the C-PACER program, owners of agricultural, commercial, and industrial properties are eligible to obtain financing for qualifying projects. The C-PACER program also applies to owners of multifamily residential properties with five or more dwelling units. Eligible property may be owned by any type of business, corporation, individual, or nonprofit organization permitted by state law. However, as noted above, individual counties have broad discretion to establish their own program within the parameters of the state legislation and could limit the types of properties that qualify.

What Projects Qualify?

C-PACER financing is available both for qualifying improvements to existing commercial buildings and new construction. Qualified improvements include, among others, solar panels, high-efficiency heating and cooling systems, insulation and other improvements that address safe drinking water, or those that decrease energy or water consumption or demand through efficiency technologies, products, or activities. Improvements that support the production of clean, renewable energy, including a product, device, or interacting group of products or devices on the customer’s side of the meter that generates electricity, provides thermal energy, or regulates temperature, would also be deemed qualifying improvements. Likewise, improvements that increase resilience are also qualified improvements. Examples of resilience improvements include seismic retrofits, flood mitigation, stormwater management, wildfire and wind resistance, energy storage, and microgrids. The inclusion of resiliency improvements is a feature of the Washington legislation that is not found in other jurisdictions and may be of particular interest for owners of unreinforced masonry buildings and other properties in need of seismic improvements.

How Is the C-PACER Loan Repaid?

As discussed above, C-PACER loans are repaid by a voluntary assessment on the improved property, secured by a lien in favor of the county, which is then immediately assigned to the C-PACER lender. The lien is second only in priority to the lien for unpaid taxes. Once a C-PACER loan is advanced, the administration of the C-PACER loan (including enforcement) is done by the private lender. After the adoption of a C-PACER program, a county’s role is limited to the approval of an assessment and recordation of a C-PACER lien, as well as to the administration of the C-PACER program (which may be contracted out to a private third party).

Who Makes the C-PACER Loans?

Subject to compliance with generally applicable licensing requirements, any private entity can make a C-PACER loan.

What Is the Impact for Holders of Mortgages on the Property?

Because the lien of a C-PACER loan is superior to all other debt obligations other than unpaid taxes, written consent of any existing mortgagee or other holder of a security interest in the real property is required before an owner can obtain a C-PACER loan. Note that the super-priority nature of C-PACER loans may be objectionable to mortgage lenders (and, in fact, some lenders expressly prohibit borrowers from obtaining any such loans).

How Is the C-PACER Lien Enforced?

The private lender is responsible for collection and enforcement of delinquent C-PACER liens or C-PACER loan installment payments. The C-PACER lien is enforced by the lender in the same manner that the collection of delinquent real property taxes is enforced by the county under chapter 84.64 RCW, including the provisions of RCW 84.64.040, with minor exceptions.

CLE Presentation: COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies

Join us on Wednesday, June 10, 2020, for a CLE presentation on “COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies.”

Companies are seeing unprecedented legal and business impacts due to the COVID-19 pandemic.  These impacts are bringing about changes in strategy and how many companies approach their day-to-day business operations to adapt to this new business environment. This one-hour session will involve a presentation by the following K&L Gates attorneys sharing their perspectives on what to consider during the “next new normal.”

Moderator: 

Panelists:

This presentation will include the evolving legal and business impacts of COVID-19 in connection with:

  • Contract Issues
  • Insurance Issues
  • Potential Work Issues
  • Litigation Trends

This webinar will contain a chat feature in which you can submit questions so that we may tailor this presentation to address your concerns.

To register, please click here.

FERC Sets Technical Conference to Assess COVID-19 Impacts on Energy Industry

By: William Keyser, Sandra Safro, Patrick Metz and Abraham Johns

On May 20, 2020, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) announced that it will hold a technical conference to discuss the impact on the energy industry of emergency conditions arising from the COVID-19 pandemic.  The conference will take place July 8-9, 2020 from 9 a.m. to 5 p.m. 

Preregistration for the conference is available at: http://www.ferc.gov/whats-new/registration/07-07-20-form.asp.  FERC will issue a supplemental notice that includes the conference agenda in a proceeding opened in Docket No. AD20-17-000.

The Commission plans to use the conference to assess the ongoing impacts that the COVID-19 pandemic is having on parts of the U.S. energy industry.  While the Commission already enacted short-term regulatory relief actions for regulated entities, the conference will explore long-term options for safeguarding the nation’s energy markets, electric transmission system, natural gas and oil transportation, and future operation of energy infrastructure. 

In addition, FERC intends for the event to serve as a public forum for the Commission and stakeholders to address the recovery of the industry from the COVID-19 pandemic.  The event will afford the public an opportunity to receive high-level information about how COVID-19 may change the energy industry moving forward. 

Among the topics the Commission plans to cover in panels and discussions are: (1) ongoing and future operational and planning challenges due to COVID-19; (2) operations, planning, and infrastructure development impacts anticipated due to the effect of COVID-19 on electric demand; (3) operations, planning, and infrastructure development impacts anticipated due to the effect of COVID-19 on natural gas and oil demand; and (4) anticipated issues related to access to capital, such as credit, liquidity, and return on equity.

Further information about the event will be posted on the Calendar of Events webpage for the event.  K&L Gates will continue to monitor for updates from the Commission about the conference.

Join Us! Energy Storage Association Webinar: Energy Storage, Trade and China

Please join K&L Gates’ Elizabeth Crouse on the Energy Storage Association’s upcoming webinar, Energy Storage, Trade and China, on Thursday, May 21 from 12:00 PM – 1:00 CDT.

This webinar will explore the key trade and national security policies that currently impact the ESS market in the U.S. and assess their potential impacts on future deployments, including:

• How might regulatory developments under the Executive Order impact storage?
• What might the future hold for tariffs?
• How do these processes play out in an election year?

For more information and to register, please click here.

Treasury to Extend Deadlines for Accessing Wind, Solar Tax Credits

Author: Elizabeth Crouse

This afternoon, the Office of Legislative Affairs at the Department of Treasury, issued a letter to Charles Grassley, the Chairman of the Senate Committee on Finance, indicating that Treasury intends to issue administrative relief to the solar and wind industries regarding certain investment tax credit (“ITC”) and production tax credit (“PTC”) deadlines. Although the letter does not provide any details as to the nature of this relief, Chairman Grassley’s April 23, 2020 letter to Treasury requested that the four-year safe harbor for the continuous construction and continuous efforts test for the PTC and ITC be extended to a five-year safe harbor period.

Chairman Grassley did not request administrative relief concerning the impact of COVID-19 related measures taken by manufacturers and shipping companies on a customer’s “reasonable expectation” that materials purchased in 2019 would be delivered within 3.5 months after payment. This latter provision is important for purposes for establishing beginning of construction of solar projects in 2019.

United States Announces Intent to Withdraw From Paris Climate Accord: What is the Real Impact?

By William M. Keyser, Laurie B. Purpuro, Cliff L. Rothenstein, Alyssa A. Moir, and Christina A. Elles

On June 1, President Trump declared that he would withdraw the United States from the Paris Climate Accord (the “Agreement”).  His announcement, though not unexpected, raises a host of questions on several legal, technical, and policy fronts.  And while the news and commentary on President Trump’s position continues to change, three fundamental questions are worth asking:

  1. How is the Agreement structured to handle withdrawal?
  2. What legal actions could potentially force the Trump administration to take actions to address climate change?
  3. What impact, if any, would a withdrawal have on U.S. state and private-side initiatives to address climate change?

We focus our analysis on these questions in this Legal Insight, which you can view on K&L Gates HUB.

Paris Agreement to Enter into Force: Implications for Enforcement in the United States and Internationally

By Ankur K. Tohan, Alyssa A. Moir, David L. Wochner, Cliff L. Rothenstein, and Christina A. Elles, K&L Gates

Global policy on climate change and greenhouse gas regulation is poised to take a significant step forward as the Paris Agreement (“Agreement”) enters into force just before international climate negotiations resume in Morocco next month. The 22nd “conference of the parties” (“COP-22”) will be held in Marrakech, Morocco, November 7 through 18, 2016, and will be the first time that parties to the Agreement gather after its ratification. Signatories to the Agreement include 191 countries and represent 95 percent of global greenhouse gas emissions. Now the hard work of implementing the Agreement begins. Parties are expected to start to reduce emissions under the Agreement in 2020, with a long-term goal of holding global temperature increase well-below 2 degrees Celsius. Meeting this goal requires steep reductions in carbon—for the United States, this will impact sectors of the economy that have not yet seen significant carbon regulation, such as oil refineries, cement makers, paper processers, chemical companies, and other manufacturers and will require continued reductions via the deployment of renewable energy, energy efficiency, decreasing use of hydrofluorocarbons and methane, and motor vehicle emissions regulations.

To read the full alert of K&L Gates HUB, click here.

CEQ Issues Final Greenhouse Gas Guidance Directing Federal Agencies to Consider Climate Change in their NEPA Reviews

By Craig Wilson, Cliff Rothenstein, Sandra Safro, Ankur Tohan, David Wochner and Michael L. O’Neill

On August 2, 2016, the White House Council on Environmental Quality (CEQ) published a final version of its guidance to federal agencies requiring the consideration of greenhouse gas (GHG) emissions and effects on climate change when evaluating potential impacts of a federal action under the National Environmental Policy Act (NEPA). CEQ explains that it does not expect the Final Guidance to be applied to federal actions for which a NEPA review has been concluded or actions for which a final environmental impact statement or environmental assessment has been issued. As discussed in greater detail below, although the Final Guidance is not legally binding on federal agencies, various aspects of the document have the potential to delay permitting timelines as agencies determine whether and how to incorporate the Final Guidance into their reviews and very likely will add to the level of review that agencies undertake.

To read the full alert, click here.

The Washington State Department of Ecology Reissues Clean Air Rule

By Ankur Tohan, Alyssa Moir and Alyssa M. Fritz

On June 1 the Washington State Department of Ecology (“Ecology”) reissued a draft Clean Air Rule (“CAR”). A prior iteration of the rule was filed on January 6, 2016, but was withdrawn by Ecology to address and incorporate feedback from stakeholders and covered parties. Ecology anticipates that the revised CAR will be finalized sometime in September 2016; comments on the proposed rule are due by July 22, 2016.

Like the withdrawn rule, the intent of the reissued CAR is to establish emission standards to cap and reduce greenhouse gas (“GHG”) emissions from in-state stationary sources, petroleum product producers and importers, and natural gas distributors. The CAR would cover two-thirds of all in-state GHG emissions, including both public and private sector parties.

According to Ecology, some of the changes in the reissued rule include “incorporating mechanisms to ensure emissions are reduced while supporting business growth; recognizing early actions already taken to reduce emissions; and an effective pathway for power plants.”

Reactions to the reissued CAR have been mixed. Some stakeholders have raised concerns about the costs of implementing the program and the potential costs to energy customers. Others have asserted that the proposal would not sufficiently reduce emissions to protect the environment.

Below, we address what parties could be affected by the reissued rule, how the rule would operate, and the different options for compliance. We also outline the significant changes and significant omissions in the reissued CAR as well as the key dates for stakeholder input and covered party compliance.

Click here to read the full alert on K&L Gates HUB.

High Court Grants Stay of Clean Power Plan

On February 9, 2016, in an historic and unprecedented decision, the U.S. Supreme Court blocked the U.S. Environmental Protection Agency (“EPA”) from implementing the Clean Power Plan (“CPP”) while the rule is challenged in lower courts. The decision is a victory for twenty-nine states and state agencies, along with several industry and trade groups (the “Petitioners”), who appealed the D.C. Circuit’s January 21, 2016 decision not to stay the CPP.

The Petitioners argued to the Supreme Court that the EPA does not have the Clean Air Act authority to implement the CPP, which they assert would reorganize the entire electric power sector of the U.S. economy. The petitioners persuaded the U.S. Supreme court that there was a reasonable probability that four justices would agree to hear the case, that there was a fair prospect that the majority of the court would find that the CPP was unlawful, and that irreparable harm would have resulted from the denial of the stay.

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