Surface Transportation Board. The Surface Transportation Board (“STB”) was created after the Interstate Commerce Commission was abolished by Congress in 1996. Although the STB’s role in regulating railroads is much smaller than that of its predecessor, it exercises preemptive jurisdiction over all railroad operations other than safety. Once a track falls under STB jurisdiction, most material changes to the track or even the track’s ownership must be approved by the STB.

If ethanol plants are careful, they can easily avoid triggering the limited jurisdiction of the STB. STB jurisdiction extends to the mainline and shortline (i.e., “common carrier”) railroads but not to “construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks.” For most ethanol plants, this is a crucial distinction because this means that their private spur tracks and industrial rail yards are generally not going to be subjected to STB jurisdiction. But what is a “spur, industrial, team, switching, or side track?” Although the statute does not specifically define these terms, the courts and the STB itself have issued rulings that provide guidance.

First, the STB looks to the actual use of the track, and not its label, to determine what it is. If the track in question is only used as a spur, side or an industrial track then it is more likely that the STB will determine that it has no jurisdiction. As an example of a use for a spur track that would fall under the STB’s jurisdiction, let’s assume that a given industry track is extended through the rail yard to transport train cars to another mainline. If cars for other shippers traverse that connection, then the track has a mixed use; one of the uses is functionally the same as that of a short line railroad. The STB will likely assert jurisdiction. Other facts that the STB look at include the length of the track involved and how many different shippers share the same exempt industry track. The longer the track and the more shippers who use that industry track, the higher the risk that the STB will assert jurisdiction.

Federal Railroad Administration. Some tracks can also be regulated by the Federal Railroad Administration (“FRA”), which only oversees railroad safety. The FRA exercises jurisdiction over any railroad operating on the “general railroad system of transportation,” which is defined as “the network of standard gage track over which goods may be transported throughout the nation.” The FRA has, as a matter of policy, excluded from its regulations certain categories of rail operations, including railroads whose entire operations are confined to an industrial installation and where the only connection is by a switch for the receipt of shipment.

However, the FRA has taken the position in numerous cases that if one shipper switches a car for a different shipper on a shared industrial track that the shipper is subject to FRA jurisdiction. This can trigger onerous safety requirements, including the inability to use a dual-use railcar mover, having to purchase locomotives certified for mainline use, and having to establish worker training, engineer certification, safety inspection programs and policies for the shipper. Avoid FRA jurisdiction by adopting a strong policy that each shipper must move their own cars or that the common carrier must handle the spotting and delivery of cars for shippers who do not have their own railcar mover.

Before you agree to a neighborly request to help out another industry move their cars in or through your yard, be certain that you are not going to trigger federal jurisdiction for both you and your neighbor.

Author, James L. Pray
Attorney, BrownWinick Law Firm
pray@brownwinick.com
515-242-2404

This article originally appeared in the April, 2013 edition of the Ethanol Producer Magazine.

As background, Eagle Point Solar is in the business of providing design, installation, maintenance, monitoring, operational and financing services with respect to solar electric generation systems in Iowa. The City of Dubuque was interested in pursuing the development of a renewable energy resource in the form of an on-site solar power system to satisfy a portion of the electric power needs of a single city building. Dubuque sought to enter into a long-term financing agreement with Eagle Point Solar to accomplish that goal. Eagle Point proposed to finance, install, own, operate, and maintain the solar system and charge the City on a cents-per-kWh basis for the electric output. Under the proposed power purchase agreement, Eagle Point Solar would be entitled to the incentives associated with the solar power system, including tax credits and accelerated depreciation, and would credit Dubuque with one-third of any revenues received from the sale of the credits. The city-owned building is located within the exclusive electric service territory of IPL. The building would continue to remain connected to the electric grid and Dubuque would continue to purchase electricity from IPL to satisfy some of the electric energy needs of the building.

Eagle Point Solar petitioned the IUB for a declaratory order determining that under Iowa law Eagle Point Solar was neither a “public utility” subject to regulation by the IUB under Iowa law nor an “electric utility” subject to the exclusive service territory provisions of Iowa law. On April 12, 2012, the IUB issued an order finding that Eagle Point Solar would be a “public utility” subject to regulation by the IUB and an “electric utility” subject to the exclusive service territory provisions of Iowa law. Based on these findings, the IUB order declared that Eagle Point Solar would be prohibited by Iowa law from offering the services described in its petition.

On appeal, the district court held that the IUB erred by applying an incorrect legal standard in determining whether Eagle Point Solar would be a “public utility” under Iowa law. The court went on to hold:

“Applying the correct legal standard as set forth in [the] Northern [Natural case] and subsequent relevant cases cited herein, the Court concludes Eagle Point does not provide electricity ‘to the public’ and thus is not a ‘public utility’ as defined [by Iowa law]. The Court further concludes Eagle Point [Solar] is not an ’electric utility’ as defined [by Iowa law], and thus is not prohibited from serving, offering to serve, or constructing facilities to serve the [city-owned building] located in IPL’s exclusive electric service territory.”

BrownWinick attorney Philip Stoffregen argued the case before the district court on behalf of Eagle Point Solar. Mr. Stoffregen and BrownWinick attorney James Pray researched and drafted the briefs filed with the district court.

Copy of Eagle Point Solar Decision

Press Release on the decision:

http://votesolar.org/2013/04/iowa-becomes-the-23rd-state-to-enable-solar-financing/

Disclaimer: James L. Pray participated in the case as co-counsel for Petitioner Eagle Point Solar. Phil Stoffregen argued the case before the district court.

Everyone seems to know that the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA and also known as “Superfund”) (Pub. L. 96-510), 42 U.S.C. 9601 et seq., as amended, establishes broad federal authority to assess, remove, and remediate historically contaminated sites or sites for which there is no solvent responsible party. They also know that under Section 107, CERCLA generally imposes strict liability on past and current owners for clean-up costs. 42 U.S.C. §9607(a)(1)-(4). Strict liability means that liability is imposed in the absence of fault, knowledge, intent, negligence, breach of contract, or any other direct or indirect wrongdoing by the person held responsible. Not only are potentially responsible parties held strictly liable for the damages resulting from the contamination, any one potentially responsible party can be held jointly and severally liable for the entire cost of the clean-up. Note that the purpose of this article is not to get into the detailed exceptions, sister statutes, or defenses. This liability scheme meant that for many years property developers and their lawyers were inclined to avoid any properties that could possibly hide contaminates. Although an innocent landowner defense was added to CERCLA when it was amended in 1986, that defense was only available to property owners with no knowledge of the presence of hazardous substances when they bought the land. Also, the EPA could always argue that even if the owner did not know of the contamination, ignorance was not an excuse if commercially reasonable efforts could have uncovered the contamination. These factors led to the inadvertent creation of barren urban landscapes, called “brownfields,” where no lender or investor would dare to get involved because of the possibility of federal liability. The desire for reform created the need for major amendments to the Superfund law. On January 11, 2002, the Small Business Liability Relief and Brownfields Revitalization Act was signed into law. Title II of that Act amends 107 of CERCLA (42 U.S.C. 9607) by providing immunity from liability for three classes of landowners who could qualify for liability limitations: (1) bona fide prospective purchasers, (2) contiguous property owners, and (3) innocent landowners. In order to qualify, these landowners needed to demonstrate that they had taken all appropriate inquiry regarding the environmental condition of the real estate prior to a purchase.

This article does not address the specific requirements for properties to qualify for the All Appropriate Inquiry Rule, but it can generally be stated that the rule does not apply to properties that are already the subject of many EPA removal or remediation actions. The EPA was charged under the law to establish by rule the “generally accepted good commercial and customary standards and practices” that had to be followed by a party seeking immunity. Those rules went into effect on November 1, 2006. After November 1, 2006, buyers and seller of real estate must comply with the requirements of the Environmental Protection Agency’s “All Appropriate Inquiry Rule,” or follow the standards set forth in the ASTM E1527-05 Phase I Environmental Site Assessment Process, to satisfy the statutory requirements for conducting all appropriate inquiries. All appropriate inquiries must be conducted in compliance with either of these standards to obtain protection from potential liability under CERCLA as an innocent landowner, a contiguous property owner, or a bona fide prospective purchaser. The rule differs from the old Phase I standard in such areas as the definition of environmental professional, certain interviewing requirements, and the documentation of data gaps that may affect an environmental professional’s ability to render an opinion regarding the environmental conditions of a property.

Under the new rules a landowner can now buy real estate that has been contaminated by a past use on that same property and get protection from CERCLA liability. This is important because the purpose of a Phase I investigation has changed from a “Buy or Not Buy” decision-making to “I can buy the real estate even if it is contaminated because I can buy it clear of major CERCLA liability.” Therefore, a commercial property owner may actually end up knowingly buying contaminated property.

Before you purchase real estate for development purposes, please strongly consider getting a Phase I report that complies with the ASTM 1527-05 standard. Also, if your consultant suggests further action consult an environmental attorney and the consultant as to the duties that may ensue following the receipt of additional information. A heavily contaminated site may indeed require that a new owner take steps to avoid additional contamination. Those steps could indeed prove to be too burdensome for the intended use of the property.

The programs that are reported to have been saved include:
1. Production tax credit for wind energy. This tax credit is available on any facility under construction before the end of 2013.
2. Bioldiesel Tax Incentives. The bill extends biodiesel production tax incentives for two years.
3. Cellulosic Biofuel Producer Tax Credit. The bill provides for a one year extension of the $1.01-per-gallon cellulosic producer tax credit. To my knowledge there are no commercially viable cellulosic ethanol plants currently in production. Nevertheless, this bill may ease some of the costs associated with research projects now underway.
4. Accelerated Depreciation for New Ethanol Plants. The bill also contains accelerated depreciation for new plants placed in service in 2013. Again, there are few if any plants currently under construction other than (reportedly) some research/test projects that may be started.
5. Alternative Fuel Infrastructure Tax Credit. Finally, the bill extends the alternative fuel infrastructure tax credit. This extension is reported by some industry sources to apply to gas stations looking to add equipment to allow the storage and sale of E15.

(1) all disposal of hazardous substances at the facility occurred prior to acquisition, as provided by section 101(40)(A); and
(2) the tenant does not impede the performance of a response action or natural resource restoration, as provided by CERCLA § 107(r)(1).

The problem arises when the owner fails to maintain compliance with those criteria. If the
owner loses its BFPP status, whether by its own action or inaction or that of the tenant, then the EPA views the CERCLA’s provisions to provide that the tenant would no longer be a tenant with derivative BFPP status.

The new guidance tries to clear up this problem by allowing the tenant to take its own measures to meet the BFPP status requirements independent of the landlord’s effort (or lack of effort).

The second development is that the Fourth Circuit heard oral arguments in Ashley II of Charleston LLC v. PCS Nitrogen Incorporated, 11-1662 on December 5, 2012. This will be an important case as the district court ruled that the developer had failed to meet the BFPP criteria and was liable for a portion of the cleanup costs.

Apparently the EPA’s first response failed to adequately address the charge that drones were being used but eventually the EPA clarified that it was only using Cessnas with real live humans aboard.

Although the courts have ruled that law enforcement can fly over private property without needing to first obtain a subpoena, critics of the practice contend that the flights are an overreach by a federal agency. It is interesting that while the rest of society ignores the continued erosion of privacy that cattlemen are raising a concern. Now if we can only get rid of the invasive and useless searches at airport terminals.

RPM Access announces it has secured construction and term financing for two new wind projects currently under construction in Iowa; the 36-megawatt Hawkeye wind energy project in Fayette County and the 50-megawatt Rippey wind energy project in Greene County.

Rabobank and BayernLB, through their New York offices, will provide credit facilities that include construction, ITC-cash-grant bridge, and term loans in excess of $116 Million.
“We are very pleased to have received financing from two highly-respected and leading financial institutions in the international renewable energy arena that will provide both short-term and long-term funding for our Hawkeye and Rippey wind farms in America’s heartland,” said Stephen Dryden, principal of RPM Access.

Construction on the Hawkeye and Rippey wind energy projects began in November, 2011. Both projects are on schedule to be fully operational in the fall of 2012. The two projects, combined, will consist of thirty-five Nordex 2.5 megawatt turbines manufactured at Nordex USA’s new manufacturing facility in Jonesboro, Arkansas. M.A. Mortenson of Minneapolis, Minnesota, is the construction contractor for both projects.

The two projects together will generate enough clean renewable energy to serve more than 30,000 homes. Central Iowa Power Cooperative (“CIPCO”), which is based in Cedar Rapids, Iowa, will purchase the power generated by both projects under long-term power purchase agreements.

In 2011 RPM Access completed the 41 MW Elk Wind Farm. With a cash grant under the American Recovery and Reinvestment Act of 2009 and financing from Rabobank and another bank, Elk became the first wind farm owned and operated by RPM Access. With the addition of its Hawkeye and Rippey wind farms this year, RPM Access will own and operate approximately 127 MW of wind energy projects in Iowa.

Combined with RPM Access’ sale of its 120 MW Laurel Wind Farm and 103 MW Vienna Wind Farm to MidAmerican Energy Company, RPM Access has been responsible for the development of nearly 350 MW of new installed wind generation capacity in Iowa in 2011 and 2012.

About RPM Access LLC

RPM Access, headquartered in West Des Moines, Iowa, is an independent developer, owner and operator of wind projects with its main focus on the continued development of high quality wind farms in the Midwest. Over the last twelve years RPM Access has initiated the development of over 700 megawatts of operating wind farms located in Iowa. For more information: http://www.rpmaccess.com
About Rabobank

Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest and safest banks in the world, with nearly $1 trillion in assets, operations in more than 40 countries, and the highest rating among private banks by Standard & Poor’s and Moody’s. In North America, Rabobank is a premier bank to the food and agriculture industry and a leading financier of solar, wind, bioenergy, and energy infrastructure projects. http://www.Rabobank.com

About BayernLB

Bayerische Landesbank, based in Munich, Germany, is owned by the Free State of Bavaria and the Association of Bavarian Savings Banks. Its consolidated total assets as of March 31, 2012 were € 304.6 billion. BayernLB concentrates on the customer segments including large German and international corporate customers, German mid-cap corporate customers, German public sector and institutional investors, German commercial real estate and German retail customer business. For more information: http://www.bayernlb.com

BrownWinick provided state and local permitting legal assistance to RPM Access. James Pray led the review team with assistance from Brad Kruse. Phil Stoffregen was the lead attorney for utility board compliance issues. Milbank Tweed Hadley McCloy LLP served as legal counsel to the lenders. Kaye Scholer LLP served as lead national legal counsel to RPM Access.