The Journal of The DuPage County Bar Association

Back Issues > Vol. 23 (2010-11)

Tilting at Windmills?  Examining the Tension between the Promotion of Green Energy Initiatives and the Laws Regulating Them
By  James Cerami

In December 2010, a Chicago-based renewable energy company entered into three 20-year contracts to sell wind and solar power from Illinois facilities to the utility companies.[1]  Despite this and similar news, siting electricity generation facilities is often a complex and time-consuming process. Siting electricity generation facilities is often a complex and time-consuming process.  Energy generation projects are typically substantial undertakings with comparable political, economic, social, and environmental impacts.  Developers encounter numerous impediments throughout the siting process, including procuring financing, conducting site-impact studies, and obtaining permits.  An attorney representing a project developer must be familiar with multiple areas of practice including real estate law, tax law, zoning and land use, energy law, construction law, environmental law, and public relations.  Additionally, and depending on the project type and location, construction may require authorization from all three levels of government: federal, state, and local. 

Residents living near a proposed project site sometimes provide strong opposition to locating electricity generation facilities in their communities.  Real or perceived environmental, health, and safety consequences from the facility’s operation result in what are known as “LULUs” (Locally Unwanted Land Uses) and a “NIMBY” (Not In My Back Yard) attitude. 

Although the division between proponents and opponents of electricity generation facilities was historically clear (e.g., coal-fired power plants and nuclear reactors), it has become less distinct as environmental groups have taken sides on issues that have more complicated environmental attributes.  Drivers of this distinction are the rise in social, economic, and environmental consciousness regarding: 1. the human-caused impacts of greenhouse gases on global climate change, and 2. the need for independent, renewable sources of energy and a reduction in U.S. dependence on foreign oil. 

One example of an issue that divides environmentalists is electricity generated from nuclear power.  Nuclear reactors produce electricity without the release of hazardous air pollutants or greenhouse gasses.  However, the treatment and disposal of spent nuclear fuel is a major safety and environmental (not to mention, political) issue.  Another example is what is commonly called “clean coal” technology.  The U.S. has a vast supply of coal, which currently generates 45 percent of U.S. electricity.[2]  While many groups support the research and development of techniques to reduce the emissions associated with coal combustion, others oppose it mostly due to the negative environmental impacts of mining.  Moreover, developers of both nuclear power and clean coal technologies have received substantial federal funds to spur research and development.      

Renewable energy projects – e.g., wind and solar – receive less opposition than fossil fuel-based power generation.  Wind, for instance, has the ability to generate electricity without traditional land, air, and water pollution.  Furthermore, wind energy is an abundant and renewable resource that produces no climate change-inducing greenhouse gases and is sourced without negative geopolitical implications.  However, because wind energy – and renewable energy sources generally – cannot currently compete with coal, oil, and natural gas, the industry must be subsidized in order to encourage growth and private investment.  As a result, the U.S. government provides incentives for the development of wind energy projects.[3]  Regardless of their benefits, many individuals and groups take issue with renewal energy sources that are otherwise perceived as environmentally friendly.  And, even the most celebrated sources of energy sometimes produce undesirable environmental and social impacts, wind not excepted. 

An Introduction to Wind Energy.  Wind energy projects represent significant economic opportunities to the companies that develop them and the communities that host them.[4]  Most wind farms, a collection of large-scale wind turbines, are owned and operated by independent power producers that sell the power they generate to utility companies.[5]  The property on which they are sited is usually leased from land owners.  The land owner benefits directly from lease payments, while the community receives tax revenue and jobs.[6]

Wind turbines come in a variety of sizes depending on their intended use and location.  Commercial or “utility-scale” units now exceed 400 feet from the base of the tower to the tip of the blade.[7]  Wind turbines are rated by the amount of electricity they generate.  Most turbines recently installed have a 1.5 megawatt capacity.[8]  Turbines of this size and capacity are used in commercial wind farms that can generate several hundred megawatts per year.[9] 
In 2009, the U.S. wind industry installed roughly 10,000 megawatts of new generating capacity.[10]  This was a record year for the industry and brought the total amount of U.S. capacity to over 35,000 megawatts.[11]  As of October 2010, Illinois had over 20 wind projects operating with a capacity of over 1,800 megawatts.[12]  Although Illinois lacks the wind power potential of other states,[13] it has the advantage of substantial electricity infrastructure, unconstrained transmission, and large population centers with high demand for electricity.[14]  The Chicago area also provides headquarters to numerous wind power firms.[15]  

Federal Incentives for Wind Energy Production.  The U.S. government has a long history of subsidizing energy research and development.  In 2009, Congress appropriated over $1 billion to the Department of Energy to allocate to Illinois.[16]  Of that sum, over $59 million was allocated to “Energy Efficiency and Renewable Energy,” over $20 million was allocated to “Nuclear Energy,” and over $19 million was allocated to “Fossil Energy Research and Development.”[17] 
The wind energy industry has had federal support since the late 1970s, with the advent of tax policies designed to spur research and development of wind projects.[18]  In 1992, the federal renewable electricity production tax credit (PTC) was enacted.[19]  Since then, it has been renewed and amended multiple times.  The PTC is an inflation adjusted per-kilowatt-hour tax credit that applies to facilities for the first ten years they are in operation.[20]  It currently provides 2.2 cents per kilowatt hour generated. 

The PTC has been instrumental in incentivizing the development of wind farms.  Since the PTC was enacted, construction and completion of wind energy projects peaked in the years the PTC was set to expire.[21]  In the years that it did expire, 1999, 2001, and 2003, there were significant reductions in the amount of installed wind power capacity.[22] 
In 2009, Congress extended the PTC through the American Reinvestment and Recovery Act (ARRA).[23]  It now applies to wind projects that are in service by December 31, 2012.[24]  In addition, the ARRA allows developers to convert the PTC to a 30% investment tax credit (ITC).[25]  And, because developers may not currently have the tax liability required to utilize the credit, the ARRA also allows the conversion of the credit to an equivalent cash grant through the end of 2010.[26]  

In addition to wind energy siting and generation incentives, the federal government has enacted legislation to fund and promote investment in  and manufacturing of renewable energy technologies.  The ARRA authorized the Advanced Energy Manufacturing Tax Credit (MTC) which provides a 30% credit for investments in advanced energy manufacturing projects.[27]  In addition, the ARRA and other federal statutes provides loan guarantees for clean energy manufacturing.[28] 

State Incentives for Wind Energy Production.  The State of Illinois, already home to many wind farms and wind power companies, has adopted numerous programs designed to promote and finance the development of wind energy projects.  First and foremost, and unlike the federal government, Illinois instituted a renewable portfolio standard (RPS) under the Illinois Power Agency Act of 2007.[29]  The standard requires public utilities to purchase a certain percentage of their electricity from renewable energy sources.  Under the Act, “renewable energy sources” include wind, solar, biomass, and other sources.[30] 

The Illinois RPS provides an incentive to develop wind energy projects because it ensures a minimum level of demand for renewable electricity.[31]  The RPS requires that by June of 2011, 6% of Illinois retail electricity sales come from renewable sources.  The percentage increases each year through 2025, when 25% of electricity will come from renewable sources.  In addition, the Act provides that, to the extent practical, 75% of the renewable energy purchased must be from wind generation.[32]

Illinois also has a sales and property tax incentive for developers of wind farms.  Under the Illinois Enterprise Zone Act, businesses that establish new commerical wind power facilities will be considered “High Impact Businesses” and be able to claim a full sales tax exemption for building materials incorporated in the facility.[33]   In 2007, the Illinois Property Tax Code was amended to set a uniform standard for assessing wind energy devices throughout the state.[34]  According to the Code, commercial wind energy devices rated at over 500 kilowatts are valued at $360,000 per megawatt of capacity (adjusted annually for inflation) regardless of in which county they are located.[35]  Finally, the Illinois Finance Authority issues tax-exempt bonds and credit enhancements to renewable energy projects, equipment, and transmission lines developed in Illinois.[36] 

Federal Laws Effecting Wind Energy Production.  The federal government has input into the siting and permitting of wind turbines when they are located on federal lands,[37] or when federally regulated natural resources, historic places, or endangered species may be affected.[38]  Wind projects must comply with federal environmental, safety, communication, aviation, and historic/cultural preservation statutes.

Siting wind farms may invoke federal environmental statutes enacted to protect land, air, water, or natural resources.  NEPA, the National Environmental Policy Act, requires federal agencies to assess the environmental impacts of their actions prior to making decisions.[39]  Although NEPA would most commonly apply to a wind project on federal land, it could also apply when federal funding or permit approval is a key aspect of a project.[40]

There are several federal environmental laws associated with the protection of wildlife that may be triggered during the siting of wind farms.  The Endangered Species Act (ESA) was enacted to protect threatened or endangered plants and animals and their habitats.[41]  If a wind project – i.e., construction and wind turbine operation – has the potential to harm an endangered species, the developer must apply for an Incidental Take Permit and submit a habitat conservation plan to mitigate the impact of the project.[42]  The Migratory Bird Treaty Act[43] and Bald and Golden Eagle Protection Act[44] can also be triggered by the siting or operation of wind farms.  Each statute was established to protect included bird species, regardless of whether they are endangered or threatened.[45]

Finally, federal laws regarding communications, aviation, and historic or culturally significant places may apply to wind energy projects.  For instance, the Federal Aviation Administration (FAA) lighting and safety regulations apply to turbines that are more than 200 feet in height or that otherwise interfere with navigable airspace.[46]  The National Historic Preservation Act applies if a project might interfere with a cultural resource or historic property.[47] 

State Laws Effecting Wind Energy Production.  The wind energy project siting process varies from state to state.[48]  In some states, siting authority is controlled at the state level, while other states delegate authority to local branches of government.  A state-level siting process may result in a state-issued comprehensive permit.  At the local level, approval will be granted by county commissions, zoning boards, and other local agencies.[49]  Illinois has neither a designated electricity regulating agency nor a state level permit or guidelines for siting wind energy projects.[50] 

 In Illinois, siting is controlled at the county and municipal level.  That said, in 2007, the state legislature passed enabling laws that allow counties and municipalities to establish siting regulations for wind farms, subject to certain restrictions.[51]  According to the legislation, “[a] municipality may regulate wind farms and electric-generating wind devices within its zoning jurisdiction and within the 1.5 mile radius surrounding its zoning jurisdiction.”[52]  A county can regulate wind farms in unincorporated areas of the county outside of the zoning jurisdiction of municipalities.[53]  At both levels of government, there must be a public hearing not more than 30 days prior to a siting decision and notice of the hearing must be published in a local paper.[54]  Also, neither a municipality nor county may require that a wind tower be setback more than 1.1 times the height of the tower from an end user’s property line.[55]   

Although Illinois does not oversee the zoning aspects of the wind farm siting process, the state does enforce applicable state environmental statutes and regulations.[56]  In some instances, Illinois has regulatory authority delegated from the federal government, and other times, it has a complementary or supplementary statute that augments the restrictions of the federal statute.[57]  When a proposed site potentially impacts wildlife, for instance, several Illinois “environmental statutes (the Illinois Endangered Species Protection Act, the Illinois Natural Areas Preservation Act, and the Interagency Wetland Policy Act) require local government agencies to consult with the Illinois Department of Natural Resources.”[58]  Wind energy projects must also comply with the Illinois Department of Transportation and the Illinois Pollution Control Board (IPCB) regarding materials transport, construction, operation, and decommissioning.[59]       

County and Municipal Ordinances Effecting Wind Energy Production.  In Illinois, the siting of wind farms is regulated at the local level, either through existing zoning ordinances or through specialized wind energy ordinances.  Multiple Illinois counties have drafted wind ordinances,[60] many of which are based on a model ordinance prepared in 2003.[61] 

 When a developer plans to site a project in a county or municipality without a wind ordinance, the developer typically must apply for a special use permit with the zoning or planning office.  A hearing is then held before a zoning board that makes a recommendation to the county board.  In counties and municipalities with wind ordinances, the process is often the same, except that the ordinance is written with wind energy facilities and their particular features and land use impacts in mind. 

Typical provisions incorporated into wind ordinances include:  the purpose of the ordinance (to promote wind energy and local economic opportunity), definitions, application procedures, installation methods, safety requirements, setbacks, public road issues, maintenance requirements, noise level standards consistent with the IPCB regulations, bird and wildlife impact studies, FAA requirements, liability insurance, and decommissioning plans, among other items.[62]  When one challenges the validity of a zoning decision, courts looks to “LaSalle/Sinclair” factors which consider, among other things: existing uses of nearby property, diminution in property values, economic gain to the community, the suitability of the property for its zoned purpose, the community’s need for the proposed use, and the amount and quality of planning.[63]

Local Opposition to Wind Energy Production.  For the past several decades, disputes have arisen concerning the siting of wind turbines or farms where they are not universally welcome.  Most challenges have been associated with the attempted siting of wind turbines in relatively populous areas.[64]  Common concerns include noise, vibration, shadows, disruption of views, diminished property values, and other “nuisance-type” factors.  In other cases, project opponents were concerned with the welfare of local birds and wildlife[65] or the impact of the development on aviation.[66] 

In Muscarello v. Ogle County Board of Commissioners, an individual opposed the siting of a wind farm in a twelve-count complaint based on numerous state and federal causes of action.[67]  The plaintiff objected to each and every stage of the siting process, including the permit application, the public hearing, the findings of fact, the issuance of the permit and the authorization of a real estate value protection plan![68]  Although the Court affirmed the judgment of the district court in dismissing her claims, the case presents an example of a conflict between residents and developers that impedes siting.[69] 

 In many Illinois Counties and municipalities, there is a dispute over whether and how to create a wind ordinance at all.[70]  In Lake County, for instance, months of public hearings and meetings have occurred without passage of a controversial wind ordinance.[71]  The ordinance was drafted by a task force consisting of the county and 20 municipalities and consists of requirements more stringent than some state regulations, yet local residents still express concerns over the impact of wind turbines near their homes.[72]

In certain circumstances, the roles of proponent and opponent are harder to define.  In the case of Stark County, IL the county board is concerned that a proposed wind energy project by school districts will actually deprive the county of tax revenue.[73]  Under the School District Intergovernmental Cooperation Renewable Energy Act, wind projects owned by consortiums of public schools are exempt from property and income taxes.[74]  Although the county’s input cannot prevent the siting of school district wind farms, it has encouraged state legislators to consider alternative forms of compensation to the local tax base.[75]

Conclusion. 
Renewable energy production facilities face many of the same difficulties as traditional energy production facilities.  The gap between opponents and proponents is less significant with regard to renewable energy sources than traditional fossil fuel-generated energy.  However, there is still local opposition to the siting of renewable electricity facilities, including wind farms.  While Illinois could transfer siting authority to the State, minimizing expense, delay, and frivolous local objections to siting, the current system addresses valid local environmental and social concerns that may be otherwise overlooked. 

Effective siting requires the intent to minimize environmental and social impacts and maximize economic benefits to the surrounding community.  With proper planning and the continued support of federal and state regulatory and tax incentives, the U.S. will increase its use of clean and renewable energy while reducing dependence on foreign energy sources. 

[1] Associated Press, ICC approves 3 renewable energy contract proposals, Dec. 17, 2010
[2] Energy Information Administration, Electric Power Monthly, (Dec. 2010) available at http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
[3] Environmental Law and Policy Center, The Wind Energy Supply Chain in Illinois, 11 (Oct. 2010).
[4] Roger Brown and Jeffrey Nemeth, Illinois Inst. Of Rural Affairs, Converting Wind Energy into Opportunity in Illinois, Rural Research Rept, 1 (Spring 2008).
[5] Am. Wind Energy Ass’n, Wind Energy Siting Handbook, Chapter 2-1, (Feb. 2008).
[6] Brown and Nemeth, supra note 4, 1.
[7] National Wind Coordinating Collaborative, Wind Turbine Interactions with Birds, Bats and their Habitats:  A Summary of Research Results, 1 (Spring 2010) (noting towers are 200-260 feet in height and the rotors are 150-260 feet in diameter. 
[8] Id.
[9] Am. Wind Energy Ass’n, supra note 5 (stating a 1.5 megawatt turbine can power 300-900 households).
[10] David Loomis and Jennifer L. Hinman, Center for Renewable Energy, Illinois State University, Wind Energy Development in Illinois, 8 (June 2010).
[11] Blue Green Alliance, Winds of Change:  A Manufacturing Blueprint for the Wind Industry, 8 (June 2010) at http://www.bluegreenalliance.org/admin/private_publications/files/BGA-report-062510_FINAL.pdf.
[12]  Loomis and Hinman, supra note 10, at 8, Environmental Law and Policy Center, supra note 2, at 1.
[13] Loomis and Hinman, supra note 10, at 8 (Illinois ranks 16th in the U.S. in potential capacity).
[14] Id. at 12.
[15] Environmental Law and Policy Center, supra note 3, at 1.
[16] Office of Chief Financial Officer, U.S. Department of Energy, FY 2010 Budget Request to Congress, (May 2009) (noting the total 2009 appropriation was over $35 billion). 
[17] Id.
[18] Blue Green Alliance, supra note 11, at 9.
[19] 26 U.S.C. § 45 et seq.
[20] Loomis and Hinman, supra note 10, at 9.
[21] Id.
[22] Id.
[23] American Recovery and Reinvestment Act of 2009, H.B. 1 (111th Congress, 1st Session).
[24] Pub. L. No. 111-5.
[25] Id.
[26] Blue Green Alliance, supra note 11, at 9.
[27] Id. at 29.
[28] Id. at 31.
[29] Ill. P.A. No. 095-0481
[30] Id.
[31] Loomis and Hinman, supra note 10, at 13.
[32] 20 ILCS 3855/1-75
[33] Ill. P.A. No. 96-28 codified at 20 ILCS 655/5.5
[34] Ill. P.A. No. 95-644 (Amended in 2010 by HB 4797) 
[35] Ill. P.A. No. 95-644
[36] Ill. P.A. No. 96-817
[37] This topic is outside the scope of this article.
[38] National Wind Coordinating Committee, State Siting and Permitting of Wind Energy Facilities (April 2006), at page ii. 
[39] 42 U.S.C. §4321 et seq.
[40] For example, an incidental take permit under the Endangered Species Act or a Clean Water Act Permit. See Am. Wind Energy Ass’n, supra note 3, at 4-4.
[41] 16 U.S.C. §1531-1544
[42] Am. Wind Energy Ass’n, supra note 3, at 4-9 and 4-10.
[43] 16 U.S.C. §§703-712
[44] 16 U.S.C. §§668-668d
[45] Am. Wind Energy Ass’n, supra note 3, at 4-11.
[46] National Wind Coordinating Committee, supra note 37, at page ii.
[47] 16 U.S.C. §470
[48] Am. Wind Energy Ass’n, supra note 3, at 4-33.
[49] Id. at 4-35.
[50] Victoria Pebbles, Great Lakes Wind Collaborative, State and Provincal Land-Based Wind Farm Siting Policy in the Great Lakes Region, (Jan. 2010) at 6.
[51] Ill. P.A. No. 95-203
[52] 65 ILCS 5/11-13-26
[53] 65 ILCS 5/5-12020
[54] 65 ILCS 5/11-13-26
[55] 65 ILCS 5/11-13-26
[56] Pebbles, supra note 50, at 6.
[57] Am. Wind Energy Ass’n, supra note 2, at 4-36
[58] Pebbles, supra note 50, at 6.
[59] Id.
[60] See Wind Powering American: Wind Energy Ordinances, available at http://www.windpoweringamerican.gov
[61] Available at http://www.illinoiswind.org.
[62] See Illinois Inst. for Rural Affairs, Model Ordinance Regulating the Siting of Wind Energy Conversion Systems in Illinois available at http://www.illinoiswind.org.
[63] La Salle National Bank v. County of Cook, 12 Ill.2d 40, 145 N.E.2d 65 (1957) and Sinclair Pipe Line Co. v. Village of Richton Park, 19 Ill.2d 370, 167 N.E.2d 406 (1960). 
[64] See e.g., Ecogen, LLC v. Town of Italy, 438 F.Supp.2d 149 (W.D.N.Y. 2006)
[65] See e.g., Animal Welfare Institute v. Beech Ridge Energy, LLC, 675 F. Supp. 540 (D. Md. 2009) and Kerncrest Audobon Society v. City of Los Angeles Department of Water and Power, 2007 WL 2208806 (Cal. App. 5 Dist., 2007)
[66] See Clark County, Nevada v. FAA, 522 F. 3d. 437 (U.S. App. DC, 2008)
[67] Muscarello v. Ogle County Bd. Of Comm’rs, 610 F.3d 416 (7th Cir. 2010)
[68] Id at 419
[69] Id.
[70] See e.g., Patrick Wade, Urbana Council to take up wind turbines, 1875 home, The News Gazette, Sept. 26, 2010, (online ed) and Megan Craig, Village steps closer to ordinance on wind energy systems, Chi. Trib., Oct. 13, 2010, (online ed).
[71] County delays vote on wind energy rules, Pioneer Press, Nov. 18, 2010 (online ed).
[72] Id.
[73] Jameel Naqvi, Suburban districts may sweeten pot for downstate wind farms: School districts want to build downstate wind farms; locals want a piece of the action, Daily Herald, Oct. 21, 2010 (online ed).
[74] Id.
[75] Id.
 
 
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