California Opens New Permitting Pathway for Renewable Energy Projects

7.8.22

News & Publications

California Opens New Permitting Pathway for Renewable Energy Projects 

By Anne E. Mudge, Peter H. Weiner, Robert C. Hull[1]

This article summarizes the law and its benefits and disadvantages, explains the law’s key provisions, and discusses the circumstances under which the California Energy Commission (“CEC”) may approve projects that are either inconsistent with or prohibited by local zoning and planning laws.  To date, no renewable projects have opted in. It may take some time to assess whether the opt-in achieves its goals.[4] 

1.  Qualifying Projects    

There are four types of projects eligible to opt in: 

1. a photovoltaic solar or terrestrial wind project (and appurtenant features) of 50 or more megawatts (MWs), including new projects and additions or changes to existing projects,
2. an energy storage project capable of 200 or more MW hours,
3. other thermal energy projects of 50 or more MWs, not including power plants burning fossil or nuclear fuels,
4. facilities for the manufacture, assembly or production of components or systems used in renewable energy (including storage) technologies and that involve a capital investment of at least $250 million over a period of five years. 

In addition, a qualifying project must: 

• Apply prior to June 30, 2029.
• Certify that the project is subject to a Project Labor Agreement (PLA) or demonstrate other specific labor benefits such as payment of prevailing wages and the hiring of a skilled and trained workforce.
• Demonstrate a net positive economic benefit to the local government that would have had authority over the project, such as employment growth, increased taxes, assistance for schools or public safety services or some other economic benefit.
• Enter into an enforceable community benefits agreement with one or more community-based organizations, such as labor unions, environmental groups, local government, social justice advocates or California Native American tribes.  Examples of community benefits include job training, high road training partnerships, assistance for parks or playgrounds, urban greening, paving and bike lane projects, public safety projects or other benefits.[5] 

1. Benefits and Potential Disadvantages 

Choice of Forum.  A chief benefit of the new opt-in law is that it is optional.  A developer may still seek permits from renewable-friendly local governments or may now choose to by-pass local government and apply to the CEC. While some may decry this option as forum shopping, the option was perceived as necessary due to a rising number of local permitting barriers.  The same local barriers that motivated creation of the CEC in the 1970s --born of opinions by local decision makers that energy generation and storage projects are unsightly, dangerous, and insufficiently beneficial to local communities--have now come for renewable energy projects. 

Other benefits include:  

Exclusive Jurisdiction (with some exceptions):  Opting-in is easy: “Upon the receipt of an application,” the CEC obtains exclusion jurisdiction over the California Environmental Quality Act (CEQA) and site certification process.  Exclusive jurisdiction means that approval from the CEC is in lieu of permits from any other local, state or federal permits or certifications (to the extent permitted by federal law) and supersedes local, state and federal laws and regulations (to the extent permitted by federal law).   The CEC also acts as the CEQA Lead Agency. Opt-in projects would not be required to obtain conditional use permits, change of zone or general plan amendments from local agencies.   Nor would projects be required to obtain take permits or streambed alteration agreements from the California Department of Fish and Wildlife (CDFW) or encroachment permits from the California Department of Transportation, although as described below, the CEC will consult with CDFW before acting on any application.[6] 

The new law contains an important exception to its exclusivity: qualifying projects must still obtain any required approvals from the State Lands Commission, the California Coastal Commission, the Bay Conservation and Development Commission and the Regional Water Quality Control Boards.[7]

Potentially Faster Approval. With some “off-ramps” for events like “new significant information” and “changed circumstances” (see discussion below), the CEC is required to approve projects within 270 days of accepting the application as complete.

Environmental Leadership Project Designation.  Qualifying projects are automatically deemed to be “Environmental Leadership Projects” without the need for independent certification by the Governor’s office. Among other benefits, Environmental Leadership Projects are subject to streamlined judicial review for any project challenges.

There are likely some disadvantages to opting-in, including:  

High Scrutiny; Numerous Conditions. CEC scrutiny on projects is known to be comprehensive.  Approved projects are generally saddled with copious conditions and mitigation measures. Projects that receive significant opposition from local government are likely to be both highly controversial and potentially subject to additional conditions. 

CDFW Involvement. CDFW has outsized influence on CEC projects; measures imposed on projects are generally similar to those contained in an Incidental Take Permit (ITP).  For projects that might otherwise not seek an ITP, opting into the CEC permitting process may result in ITP-like conditions of approvals.  The CEC process will also likely preclude any meaningful opportunity to negotiate with CDFW. On the other hand, the CEC process allows projects to obtain take protection for state-listed species. 

1. Key Procedures 

Determination of Complete Application.  Upon receipt of an application, the CEC must notify the applicant if the application is complete within 30 days.  If the application is not complete, the CEC must inform the applicant what additional information is required.  The applicant must then submit the requested information within 30 days.    

As a practical matter, the completeness determination can take a substantial amount of time. In our experience, agencies that have specific deadlines to act once an application is determined to be complete tend to continuously find a lack of completeness so as not to trigger the approval deadline. Although the act does not specifically discuss a pre-application process, we recommend a pre-application meeting to seek a detailed list of required submissions with the goal of minimizing the back and forth of the permit application process.

CEQA Scoping Meetings and AB 52 Consultation.  Under the new provisions, the CEC is the designated CEQA lead agency and shall carry out its Lead Agency functions in the following ways:

• Send out a Notice of Preparation within three days of accepting application as complete.
• Hold a public information meeting “as close as practicable to the proposed site.”
• Hold a scoping meeting “as close as practicable to the proposed site.”
• Initiate consultation with California Native American Tribes pursuant to AB 52.
  • In addition to the requirements under AB 52, the CEC shall solicit from the tribes “traditional ecological knowledge” and shall incorporate it into the CEQA environmental impact report (EIR) for the project.
  • Take feasible measures to avoid or minimize adverse impacts to tribal cultural resources.
  • Invite cultural monitors to observe and monitor activities at the site “during the environmental review and certification process.”[8]
• Circulate the Draft EIR for a period of not less than 60 days.
• Hold at least one public meeting on the merits of the project.

Deadline to Act on Application.   Under the new law, the CEC process is set up to move quickly:  within 270 days (approximately 9 months) after an application has been deemed complete, “or as soon as practicable thereafter,” the CEC must determine whether to certify the EIR and approve the project. 

Whether this quick review will actually occur remains to be seen; the 270-day deadline is subject to a number of off-ramps.  Specifically, this deadline may be extended if (a) the EIR requires recirculation, (b) substantial changes are proposed in the project that may involve new significant impacts, (c) substantial changes occur with respect to the circumstances under which the project is to undertaken, (d) new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence, is submitted, or (e) the CEC, in consultation with CDFW or the State Water Resources Control Board, determines that additional time is necessary to obtain information and conduct surveys, including due to seasonal constraints.  

The offramp identified under (e) is particularly soft and subject to potential extension requests.  It is recommended that early consultation occur with the CEC and CDFW about survey windows to avoid unexpected delays after the submission of background technical studies regarding biological impacts.  

If a complete application has been filed with the California Coastal Commission, the Bay Conservation and Development Commission, or the state or applicable regional water quality control boards, these agencies must act within 90 days of after the CEC certifies the EIR as complete.   

1. Approval of Projects Noncompliant with Local Zoning Laws 

If the Commission finds that a project is noncompliant with state, local or regional ordinance or regulation, it is required to “consult and meet with the state, local or regional government agency concerned to attempt to correct or eliminate the noncompliance.”  If, however, the noncompliance cannot be corrected or eliminated, the CEC can still approve the project if it “determines that the facility is required for public convenience and necessity and that there are not more prudent and feasible means of achieving public convenience and necessity.” 

“Public convenience and necessity” is not defined in the Public Resources Code or in the Public Utilities Code but this language appears in Public Utilities Code section 1001 and it appears likely that the Legislature intended to apply a similar concept in a new  context.  There is substantial case law on the meaning of “public convenience and necessity,” however,  an analysis of its meaning  is beyond the scope of this memorandum.

1. Conclusion

The CEC opt-in could provide a “life-after-death” scenario for certain projects that are consistent with local law, regulations and ordinances but have nonetheless been denied by local governments based on subjective concerns about community character, property values and other local issues.  The CEC opt-in may also assist new projects and the repowering of existing projects in jurisdictions that have enacted moratoria or flat-out prohibitions.  It may also assist projects that are currently in the pipeline and that are not yet approved or denied.   For such projects, the ability to opt-in to CEC jurisdiction because of concerns about local government views or after denial at the local level could incentivize local agencies to approve of (rather than deny) projects on their own terms rather than having terms and conditions dictated to them by a state-level agency. Finally, if the CEC proves itself adept at approving renewable energy projects quickly, fairly and efficiently, it could become the preferred forum for the majority of renewable energy projects located on private land in California. 

While it is unknown how many developers avail themselves of this new permitting pathway, most renewable developers welcome the option of a state-level process, putting California in the good company of the states of New York, Washington and Oregon, all of which have adopted state level review and permitting for renewable energy projects.