Navigating the Permitting Obstacle Course

March 6, 2007

BY Anduin Kirkbride McElroy

Ethanol plant permitting is a bit like navigating an obstacle course. Projects of all sizes and design must complete the same course with speed and precision. The permitting process, like an obstacle course, can be confusing. Knowing where the obstacles are, how to clear them and when to start are some of the biggest challenges in permitting for an ethanol plant. Project developers must find their way through multiple governmental systems as they file for permits with several different agencies. This can take months, or even years. Meanwhile, investors are shouting from the sidelines to move faster.

To add to the confusion, there is no generic list of permits a plant must acquire; a project's list is truly specific to the project design and the site. Some plant developers have reported that they needed to acquire more than 40 permits or approvals. This number can vary widely by state, and by how one defines a permit. "Iowa will award numerous permits for the same process," explains James Pray, an attorney with BrownWinik law firm in Des Moines, Iowa. "One plant will get dozens of permits for its air discharges, whereas Minnesota gives you one permit and it captures all different discharges for air. You could end up with someone saying they got 40 permits, but that process might have been easier than in a state in which you got one permit."

Ethanol plants are permitted in order to comply with several federal acts. "All states have the same basic minimum requirements that are imposed on a federal level," says Howard Gebhart of Air Resource Specialists Inc., which has assisted over 50 ethanol facilities in 20 states with environmental permitting. "Federal programs are delegated to states for implementation. Most have the same requirements—the differences are around the edges. For example, there might be a different threshold when a different requirement is triggered."

According to Natural Resources Group Inc. (NRG), renewable energy projects generally require permits and/or approvals related to air emissions, water discharge, storm water and erosion control, as well as wetlands, endangered species, cultural resources, and local site development and zoning. There are also approvals and permits for rail, and to sell denatured alcohol through the Alcohol and Tobacco Tax and Trade Bureau.

Permitting starts up to a year before construction and continues throughout the construction process. The construction air permit usually receives the most attention and stress because it's at the front end of the schedule and it probably has the longest timeline of all permits, Gebhart says. Acquiring an air permit can take as little as 90 days after submittal, or as long as six to eight months for a minor emitter, he says. For a major source, it takes at least six months, or up to a year, he says.

A comprehensive list with advice on specific permits would require a book, so EPM instead will offer tips from experts on how to move efficiently through some of the more common obstacles.

Navigation Tips
Filing permit applications is not the first step in successfully maneuvering through the permitting process. One of the first steps is to have a thorough feasibility study, which will determine if there are any deal breakers before they're discovered by a regulating agency. "If there's no water in the area, that might be a deal breaker," NRG Environmental Consultant Todd Potas says. Since 1992, Potas has been involved with all types of environmental permitting for over 70 ethanol facilities in 28 states, ranging in size from 3 MMgy to 140 MMgy.

"My advice typically is to look at the project from the economic standpoint without weighing in the environmental factors," Gebhart says. "Then look at environmental constraints, and the client can make his judgment if the added costs make sense to mitigate the environmental issues to make the project economically viable or not. There's no site you can't permit—it's a matter of mitigation and costs."

Consultants can suggest many options for mitigation, such as zero liquid discharge in areas where water discharge is limited, or selling all distillers grains as wet to lower emissions. There are consultants whose sole job is to do permitting for renewable energy projects. Their experience is beneficial because they know what to watch out for and when to submit applications. They are hired to assist with environmental permitting, which includes the air quality permit (both construction and operation) and various water permits.

"It's important to understand that there are significant regulations and we would have knowledge of those regulations," Potas says. "We would have expertise and experience of doing several applications in the past. Nothing says you have to hire a consultant, but it provides additional assurance that you're efficiently moving through the air permitting process. It's also nice to have an existing relationship with the agencies. The familiarity helps you with technical review."

Attorneys like John Eustermann of Holland & Hart in Idaho usually serve as managers of the permitting process. The firm gathers information about the state where the ethanol plant is going to be located. "Based on that, we determine what permits are needed," Eustermann says.

Local permitting, such as building and zoning, could be handled by any number of people, Gebhart says. The general contractor, an engineering company or a local project manager can serve as a local representative for the plant. This person may also be able to represent the ethanol plant in negotiations with the railroad.

Most permitting processes allow for a public input period, and a project can usually expect some opposition. Community groups have the potential to be a real force in stalling, relocating or even killing a project. "If there is a show-stopper in the environmental side, it tends to be where there is significant public opposition," Gebhart says. "Groups often use environmental issues as one of their sounding boards to create the stir and use it as their rationale to ask the local zoning board to deny a zone change or other local approval."

"If zoning doesn't allow an ethanol plant in an area where you're proposing to build, that could be a hold up," Potas agrees. "Zoning has killed project locations many times."

Potas says state regulatory agencies usually check to make sure there isn't a local issue that is holding up the project before they issue the air permit. However, Gebhart says he's been involved in projects that already have the air permit but couldn't get local zoning approvals.

To prevent this type of holdup, Potas says it's important to project a positive message for the project and try to provide a good community relationship during project development. "If they don't have knowledge about the project, people are negative fairly quickly," Potas says. "It's important to communicate the project plans and ensure the project doesn't have any adverse environmental effects."

Gebhart suggests focusing communication efforts on the decision makers. "Work with decision makers to show them why the concerns that are being raised aren't valid, or how you're going to mitigate those concerns," he suggests. "When it comes to a vote, the company will prevail on the merits of its argument."

As previously mentioned, permits are specific to the site and the plant's design. This is why no applications should be filed before a site is selected and project details—down to the equipment list—are decided. Also, prior to submitting an application, pre-application meetings should be held with all of the concerned agencies. "From what I've seen, the facilities that come to us early in the process, that talk to the appropriate regulatory agencies, those that do their homework and know what the requirements are, are the ones that typically run the smoothest," says Joe Francis, associate director for the division of environmental assistance at the Nebraska Department of Environmental Quality (DEQ).

"In the pre-application meeting we'll go through unique issues, plans for the project, discuss modeling and anything that might cause us to require additional information," says Shelley Kaderly, air quality division administrator for the Nebraska DEQ. If there are issues, or if the application is incomplete that will cause a delay, which is frustrating for both the applicant and the department, she says.

Potas agrees. "The more complete information you provide on your project, the smoother your review will go," he says. "Every time they come across something that's not included, the agency has to ask for additional information and it takes time. Minimize the amount of technical questions the agency has to go through."

It's a given in this quickly changing industry that there will be slight plant design changes during the construction phase as engineering companies improve, Gebhart says. That would require modification to the major environmental permits before operation commences to make sure the permits match what's been built. "If it's a minor change, it may not be an issue," BrownWinik's Pray says, adding that regulators could object to a modification depending on the scope of the design change, and thus slow the process.

Although the permit process varies from state-to-state, permitting professionals agree that early and frequent communication with regulating officials, an organized project and a complete application are the surest ways to moving quickly through the process.

Anduin Kirkbride McElroy is an Ethanol Producer Magazine staff writer. Reach her at (701) 746-8385 or amcelroy@bbibiofuels.com.

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