As greenfield development continues to grow, the title industry is facing increasing demand resulting in higher price tags and longer turnaround time for early stage title work. While it may have been common practice to wait until nearly all site control agreements were complete and a close-to-final site plan was in hand before requesting title commitments, this approach is no longer ideal.

Title insurance provides the project company, and its lenders and investors, protection against title defects such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy. The first step in obtaining this protection is the issuance of a commitment for title insurance where the title company agrees that it will insure a piece of real property if certain requirements are met. The title company will also provide a list of matters that are excluded from coverage, such as prior-in-time mortgages, utility easements, oil and gas leases or other encumbrances. Quite a bit of work is required on the part of the project company to satisfy the requirements and reach agreement on acceptable exclusions from coverage. Because of the amount of time, expense and work involved, the earlier the project company engages the title company and obtains title commitments, the more likely it will be that the project will stay on schedule, on budget and successfully close.

In addition, until a title commitment is received, the project company lacks essential real estate knowledge about the property with the only information the project company has  about the property coming from what the landowner may (or may not) disclose, or what was revealed in preliminary environmental testing. For example, without the title commitment, , the project company has no knowledge whether there are any third parties with rights over the property (whether surface or subsurface) that could interfere with the planned development and site plan. A developer could be planning to blanket an area with panels but then discovers from the title commitment that an oil and gas developer has superior rights to the same swath of ground and installation of panels would not be permitted without permission—which usually comes at a price. As this impacts both the site plan and budget, the sooner these constraints are identified the better.

There is of course a balancing act here because the fees involved in issuing title commitments can  be high in some states, so it is not efficient or budget friendly to request commitments too early in the process and before any real site plan is identified; however, because of the increased demand on title companies, we suggest engaging the title company as soon as a preliminary site plan is identified, even if not all site control agreements are final. Even in states where the cost of title work is high, the cost to obtain information for parcels that do not end up being part of the project can be less than the costs associated with project delay.

Contact Mara Pollets or another member of Husch Blackwell’s renewable energy team with any questions you have about obtaining title commitments or any other renewable project development questions you may have.

In the wake of winter storm Uri, ERCOT market participants are grappling with the resulting financial fallout. Many are now familiar with actions the Texas Public Utility Commission took during the February weather event with the intent to bring and maintain as much generation online as possible – notably ordering ERCOT to implement a temporary adjustment to the scarcity pricing mechanism designed to result in real time prices reaching the system-wide high offer cap at the statutory maximum of $9,000/mWh during the height of the generation forced outages.

Now, more than two months removed from the storm, the resulting financial impacts are having serious repercussions across the ERCOT market. Several retail electric providers have filed for bankruptcy, lawsuits are underway against a wide swath of market participants and regulators (ERCOT, the Public Utility Commission, generators, REPs, gas utilities, etc.), and countless market participants are faced with paying record-high bills for a range of reasons, including the need to procure energy in the real-time market during scarcity conditions, to obtain high priced gas supplies, to cover positions when their resources incurred outages, or exposure to uplift of default amounts owed to ERCOT. Complicating that, ERCOT has failed to pay many who did perform during the storm due to the short payment of some market participants, which means those who performed may not soon realize revenue associated with that performance. Additionally, the higher prices for power and ancillary services prompted ERCOT to substantially increase Counter-Party collateral requirements. Last month, the Public Utility Commission issued an order in Docket 51812 extending the deadline to dispute ERCOT invoices related to the winter event from 10 business days (under the current ERCOT Protocols) to six months. Since this order, the Commission has taken no additional action to address issues related to settlement invoices resulting from the storm. Continue Reading ERCOT Unveils Plan for Invoicing Default Uplift Charges

Bottom Line Up Front: The Department of Energy (DOE) will implement new cybersecurity programs to enhance energy sector resilience. DOE’s announcement coincides with the Senate Energy and Natural Resources Committee’s support for the DOE’s Office of Cybersecurity, Energy Security, and Emergency Response (CESER). Expect to see resilience to cyber attacks in future government procurement activities.

On March 18, 2021, CESER announced several new research programs designed to enhance the safety and resilience of the U.S. energy sector. The Trump administration established CESER to protect critical energy infrastructure by assisting oil, natural gas, and electricity industries secure their infrastructure. Currently, energy infrastructure faces threats not only from climate and natural hazards, but also evolving and increasing physical and cyber threats. Continue Reading White House and Congress Support Improved Cyber Resilience in the Energy Sector

Recent Regulatory Steps

On January 14, 2021, on the eve of President Biden’s inauguration, EPA issued an advance notice of proposed rulemaking, seeking comment on whether PFOA and PFOS should be regulated under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the Resource Conservation and Recovery Act (“RCRA”). This will likely lead to the designation of PFOA and PFOS as “Hazardous Substances” under CERCLA and RCRA. Such a designation will likely lead to EPA and the state agencies taking more aggressive action to investigate and identify new sites where PFAS may be a concern and also to review the status of existing sites where PFAS may be a concern that was not addressed in previous investigations or response actions and to potentially pursue response actions at such sites.  At this moment though there is only the interim policy that EPA provided to assist in addressing PFOA and PFOS groundwater contamination. The comment period on this advance notice just closed and we anticipate a proposed rulemaking in the near future. Continue Reading PFAS – Regulation is Upon Us

FERC is in the process of gathering information and building a public record on technical and market issues that are prompted by the growing interest in “hybrid resources.”  FERC held a technical conference in the summer of 2020 (Docket No. AD20-9), followed by written comments from conference participants. In mid-January 2021, FERC directed RTOs and ISOs to submit reports on specific information requests.  Those reports are due in July 2021 and will likely provide valuable RTO and ISO specific facts and information for developers seeking to build, own, and operate hybrid resources in FERC-regulated RTOs and ISOs.

This technical conference proceeding could imply that FERC sees a basis or need to revise regulations or tariffs to address issues limiting hybrid resource development.  While FERC is not mandating any new requirement at this time, it could foreshadow a rule making proceeding for new regulations that facilitate and perhaps incentivize hybrid resources.

Generally, “hybrid resources” are projects that are comprised of more than one resource type at the same plant location.  For purposes of the Technical Conference, FERC focused on hybrid resources that consist of “a generation resource and an electric storage resource paired together.”  In industry vernacular, “hybrid resources” are also referred to as “Co-Located Resources,” “Combination Resources,” or co-controlled resources that share a single point of interconnection (“POI”). Continue Reading FERC Explores Barriers to “Hybrid Resources”

Senior Counsel Coty Hopinks-Baul recently published “The Tide Turns: Recent Developments In Federal Regulation Of Discharges To WOTUS” in Rock Products, discussing the changes the Biden Administration is expected to make to the federal regulation of discharges to waters of the U.S. (WOTUS).  The article provides a brief round-up on some of these actions and a few details that are easy to miss but may prove useful to the regulated community.

Read the article here.

Texas property owners are becoming more knowledgeable on renewable energy as wind and solar projects continue to thrive in the state of Texas. In the early stages of renewable development, leases were not heavily negotiated and were executed swiftly, at little cost to developers. Today, the expectation is quite different. Continue Reading Increased Landowner Sophistication Ramps Up Lease Negotiations in Texas

Solar panels are once again in the news due to several recent developments.  Due to various trade remedy actions taken over the course of the past few years, solar panels are 45% more expensive in the United States than in Europe and Australia and 50% more expensive in the United States than the global average. The Solar Energies Industries Association (SEIA) believes tariffs are largely responsible for the high price of solar panels in the United States.  The Congressional Research Service (CRS) estimates that 98% of solar panels and their components are manufactured outside the United States, as a result solar panels have been the subject of several ongoing trade disputes. Continue Reading Section 201 Safeguard Solar Panel Tariffs Set to Expire in February 2022

A recent Texas case, Lyle v. Midway Solar, S.W. 3d, 2020 WL 7769632 (Tex. App. Ct., El Paso 83rd Dist. 2020), addressed a challenge that many solar developers wrestle with: how to handle mineral owners. The El Paso Court of Appeals clarified this complex issue and demonstrated the importance of properly addressing the minerals on a site prior to developing a project.

Key Takeaways for Renewable Energy Developers:

This is an important case that renewable energy developers can look to in assessing the minerals on a project site. First, the court actually acknowledged that Texas was a leader in energy and produced the largest share of oil and gas, but that public policy favors adding renewable energy sources into the State’s energy portfolio, which is a great development for renewable energy developers. This case focuses on the conflict between the surface/solar owner and mineral owner/developer, which is always an issue especially for solar developers. The opinion does not address any fact-specific analysis that must be performed when applying the accommodation doctrine, but it 1) does help confirm that the accommodation doctrine does apply when the deed/contract does not address the uses of the surface, 2) sets when the application of the accommodation doctrine should be used, and 3) shows the importance of obtaining any agreements from the proper parties before filing them of record. Continue Reading Mineral Owner vs. Solar Company: New Texas Case Addresses Key Issue

On February 5, 2021, House Democrats reintroduced the GREEN Act. The GREEN Act extends federal tax credits for renewable energy and expands them to include new storage technology.

Key provisions include:

  • extending the Investment Tax Credit (ITC) for solar energy at 30% through 2025 before phasing down to 26% in 2026, 22% in 2027 and then 10% from there;
  • extending the 30% investment tax credit for offshore wind property through 2026;
  • preserving the wind production tax credit’s 60% phaseout level through 2026;
  • extending the production tax credit for marine and hydrokinetic renewable energy facilities through 2026; and
  • providing for a 30% investment tax credit for energy storage technology.

Continue Reading New and Expanded Clean Energy Tax Incentives on the Horizon