Stimulus-funded projects got to jump regulatory line

Congressional ‘help’ delayed private-sector energy projects, costing millions of jobs

Politically sponsored energy projects across the country that were funded with federal "stimulus" dollars also received preferential regulatory treatment over private-sector projects, Nevada Journal has learned.

Not only did the projects receive billions of taxpayer stimulus — "American Recovery and Reinvestment Act" — dollars, but Congress mandated that federal regulators also usher the stimulus projects to the front of the regulatory line.

"Project No Project," a recent report from the U.S. Chamber of Commerce, identified 351 energy projects nationwide that have been stalled due to various causes, including "activism, a broken permitting process and a system that allows limitless challenges by opponents of development."

However, the Chamber report did not address the direct role of Congress in effectively moving private energy projects all across America to the back of the regulatory queue, behind the favored, but not shovel-ready, ARRA projects.

According to a November 2010 report to Congress by the Obama administration's Council on Environmental Quality, over two-thirds of all stimulus-funded projects received special environmental exemptions, including 98 percent of energy-related projects.

However, as of the end of 2010, almost two years after passage of the so-called stimulus legislation, the federal Department of Transportation had spent only slightly more than half of the $45 billion it had been allocated. And while the Department of Energy had been allocated nearly $35 billion, it had paid out only one-third.

According to the U.S. Chamber's report, if the 351 projects had not been stalled, their construction would create 1.9 million annual jobs and a $1 trillion short-term economic boost.

In Nevada, 10 stalled projects are estimated to be costing the state $66.9 million in economic output and 86,700 jobs over the projects' operating lives. Of the 10 projects, half are alternative-energy or transmission-line projects, while the other five include coal projects and the defunct Yucca Mountain nuclear storage facility.

Senate Majority Leader Harry Reid, D-Nev., has weighed in heavily on most of these projects — celebrating alternative energy in Nevada as "the nation's renewable energy epicenter," while claiming the coal industry is using "the old Hitler lie" to avoid progress.

   

One stalled project is a wind farm on federal land near Reid's own hometown of Searchlight. North Carolina-based Duke Energy first proposed the project in late 2008, at a projected cost of $600 million. While the project received zero stimulus funding, Reid supported the project as a "good idea" and James Rogers, Duke Energy's CEO, donated $4,000 to Reid's 2010 re-election PAC, Friends for Harry Reid.

Robert Charlebois, managing director for Duke Energy, says the regulatory process has been very long and complex. The Bureau of Land Management is currently scheduled to make a final decision on the project in the second quarter of 2012.

In Washoe County, both the New Comstock Wind Energy and Virginia Peak Wind projects are behind schedule. BLM project manager Colleen Sievers said the New Comstock project is being revised due to concerns over its location within the Comstock Historic District.

The government's website for the project suggests it will reach the "draft" stage of the federal Environmental Impact Statement process by mid 2012. Final approval from the government is not expected until late 2013 or early 2014.

While the Virginia Peak Wind Project is on privately owned land, it is still held up by the BLM. According to the agency, the developers need to build a road and transmission line two-thirds of a mile long on public land for transporting equipment to the new facility. Washoe County granted Virginia Peak a special-use permit back in 2008, but Virginia Peak is waiting on a right-of-way permit from the BLM, which is needed for any construction project on public land.

According to Sievers, Virginia Peak developers want to begin construction "as soon as possible," but the best-case scenario would be this summer.

Assemblyman Ed Goedhart, R-Amargosa Valley, whose personal windmill project ran into federal regulatory red tape, thinks the government's regulatory procedures contradict their alternative energy philosophy.

"It's hard to promote [energy] independence when the government won't let you be independent," said Goedhart, a member of the Assembly's Natural Resources committee.

According to the Chamber study, actual construction of a wind project takes between two and three years, meaning the regulatory process takes twice as long as the construction. However, even when finally constructed, a wind farm generates the second-lowest amount of energy of all energy sources.

     

Upgraded transmission lines, which Reid claimed are essential for "making energy use more efficient and affordable," are facing major delays as well. An important case in point is a proposed NV Energy line in Henderson.

In 2009, NV Energy proposed an upgrade to an existing transmission line on the east side of Henderson, but the Henderson Planning Commission rejected the proposal, citing citizen testimony claiming the transmission lines would ruin property values. Instead, the Commission proposed an alternative route for the lines that would have added $18 million in cost to the project's original price tag of $27 million.

NV Energy went to court over the Planning Commission's decision, and the case is now at the Nevada Supreme Court. In January, NV Energy submitted its Opening Brief, and in March the City of Henderson filed its Answering Brief.

"The procedural issue," wrote the utility, "is whether the decision of the City Council should be set aside because of the City Council's failure to make any findings on the seven criteria for granting or denying a CUP [Conditional Use Permit] laid out in the City's governing ordinance." Another issue "is whether testimonial evidence of citizen remonstrators on matters unrelated to the seven criteria, and on matters as to which they were unqualified to testify, constitutes ‘substantial evidence.'"

In its answering brief, the City of Henderson claimed NV Energy's argument is "entirely contrary to the facts and record" and that the Commission's decision was based on "substantial and specific concerns by members of City Council, based on their knowledge of existing conditions."

Given the number of delayed alternative energy projects, the authors of the Chamber study questioned the "shovel-readiness" of President Obama's "stimulus" package. Since energy projects go through such a long approval process, noted the study, "very few projects are truly ‘shovel-ready,' and getting through the permitting process is difficult if not impossible."

"[T]he permitting process is harming our ability to grow our economy so we can compete with the world," wrote Bill Kovacs, Chamber vice president.

He noted that politicians had amended the National Environmental Policy Act, which regulates environmental assessment of energy projects, to favor stimulus projects over privately developed ones.

In the stimulus bill, Congress mandated that "applicable environmental reviews under the National Environmental Policy Act are completed on an expeditious basis and that the shortest existing applicable process under the National Environmental Policy Act shall be utilized."

Due to this amendment, only 820 of the 250,000 stimulus-funded energy projects completed an environmental impact statement, one of the longest regulatory approval processes, while the same process was stalling the privately funded New Comstock and Duke Energy projects.

The Chamber study concludes that regulatory reform and a lack of favoritism are essential for economic growth.

"It is time that Congress acts to provide a process under which all projects have a fair opportunity within a reasonable time frame to prove their contribution to society," wrote Kovacs in the study forward.

"This simple act will get this nation building again and creating jobs and a stronger economy."

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