We are pleased to announce a four-part webinar series based on developing best practices for US public-private partnerships (P3s). P3s are coming into their own across the US with high expectations as to how federal and state infrastructure funds can be leveraged when partnered with the private sector. Partnerships are complex on a good day and parties often must readjust expectations based on market risk, interest rates, contractor and supply shortages and recognition that risk has to be allocated on a reasonable basis, acceptable to both the private and public sector.
Our series is designed to help smooth the rough edges for parties working on P3 projects in the US by taking into consideration what the UK, UAE and Australia do well and the issues unique to implementation of any P3 project in the US. We hope you will join us for each webinar and that you will feel free to submit questions ahead of time or ask during the webinar.
We are thrilled to announce that Sandra McQuain, CEO of the McQuain Group will moderate each webinar. Her infrastructure experience and quick wit will make for good conversation with our panelists.
Karol Denniston, our global projects partner, is excited to welcome Sandra McQuain, James Duckworth and Brent Henderson to our first webinar panel. The panel will cover how public-private partnerships (P3s) are governed and implemented in the UK, UAE, and Australia. The panelists will discuss why the P3 process may be easier than the US experience and highlight some of the differences, including the government’s role, standardized documents, the business case for a P3 and risk allocation vs. risk sharing.
Unlike many countries, the United States has generally remained open for investment in US real estate by foreign owned entities, albeit with some government oversight. The primary regulatory hurdle has long been the Committee on Foreign Investments in the United States (CFIUS), a federal interagency committee with a relatively narrow scope of review related to national security interests.
Additionally, the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA)[i] requires increased transparency for transactions related to agricultural land in particular. As discussed below, growing anti-China sentiment is largely driving the policy discussion around foreign investment in US real estate, particularly Chinese-ownership, transactions involving farmland, and overall national security interests.
To read more on this topic, please access our article from AFIRE’sSummit Journal here.
[i] Agricultural Foreign Investment Disclosure Act of 1978 [Public Law 95-460] [as amended through P.L. 110–246, effective May 22, 2008] [7 U.S.C. §§ 3501-3508]
The National Environmental Policy Act (NEPA) plays a critical role in infrastructure and energy project development. The statute requires federal agencies to consider the environmental impacts of proposed major federal actions as part of the agencies’ decision-making process. Most proposed projects that require a federal approval, such as a permit, or that receive federal financing must comply with NEPA’s requirements. The significance of the expected environmental impact dictates the precise NEPA process that must be followed, as well as the final NEPA approval document that must be prepared. Federal agencies also use the NEPA process as an “umbrella,” under which to ensure the project proponent’s compliance with other federal environmental programs.
With Labor Day behind us, Congress returns to Washington with a packed agenda. One month now stands between lawmakers and the end of the government’s fiscal year. And Congress has only four months to tackle various end-of-year deadlines. From domestic policy discussions to international relations, we look back at the first eight months of 2023 and provide our assessment of what Congress will – and will not – be able to accomplish this year.
Established by the Infrastructure Investment and Jobs Act (IIJA), the Strengthening Mobility and Revolutionizing Transportation (SMART) Program awards grants to various public sector agencies – state, local, and tribal governments, public transit agencies, metropolitan planning organizations – to execute projects that use advanced technologies to improve transportation efficiency and safety. The Fiscal Year (FY) 2023 SMART Notice of Funding Opportunity (NOFO) is now open until October 10, 2023.
Program Background
The SMART Program supports new transportation-related applications of emerging or existing technologies, expanded or systemized usage of proven technologies, and increased integration of solutions to critical transportation challenges, among other approaches.
For example, a SMART grant may be used to carry out a project that focuses on an advanced smart community technology in at least one of the following: coordinated automation, connected vehicles, sensors, systems integration, delivery or logistics, innovative aviation, smart grid, or traffic signals.
Despite its flexibility in approach, SMART emphasizes that it is a demonstration program for innovative and experimental technologies. SMART is not designed to support fundamental research for widely adopted existing systems.
Through its FY 2022 NOFO, the Department of Transportation (DOT) awarded $94 million in grant funding to 59 projects across 33 states for Stage 1 planning and prototyping grants. Examples of funded projects include integrating on-demand microtransit into fixed route services, utilizing drone technology for medical care and equipment delivery, implementing passive detection for cyclists and pedestrians, and installing smart traffic signals that can detect air quality and road temperatures.
Program Structure
The SMART Program is divided into two stages: Stage 1 planning and programming grants, and Stage 2 implementation grants. Only recipients of Stage 1 grants will be eligible for Stage 2 grants. DOT expects to release the first Stage 2 NOFO in Calendar Year 2024.
Stage 1 planning and prototyping grant recipients are expected to build internal buy-in and partnerships with stakeholders to refine and prototype their concepts and report on results. At the conclusion of Stage 1, grant awardees should have gathered enough information to create a comprehensive implementation plan or make an informed decision not to proceed with the concept.
Stage 2 implementation grants will provide funding for Stage 1 projects and are expected to result in a scaled-up demonstration of the concept, integrating it with the existing transportation system, and refining it so that it can be replicated by others.
Funding Amount
The IIJA authorized and appropriated $100 million per year for the SMART Program for FYs 2022-2026. For the FY 2023 funding opportunity, DOT will make available up to $50 million for 20 to 30 Stage 1 planning and prototyping grants. The maximum grant award size is $2 million, and the minimum is $250,000.
As a new program, SMART offers state, local, and tribal governments an opportunity to implement cutting edge technology for their communities. The authors of this blog have successfully advised SMART awardees through the application process and into the execution of their project. For those interested in applying, please contact the authors for assistance in these matters.
The Department of Homeland Security has announced a Notice of Funding Opportunity (“NOFO”) for the fiscal year (“FY”) 2023 State and Local Cybersecurity Grant Program (“SLCGP”). This program makes approximately $374.9 million available in funding available to help state, local and territorial governments manage and reduce systemic cyber risks through focused investments.
The White House has announced long-awaited final guidance to federal agencies to implement domestic content and manufacturing requirements in federally funded infrastructure projects.
The Biden Administration guidance applies broadly to the use of iron, steel, and other common construction materials and products and, as a result, is expected to have broad implications for awardees of federal funding, prospective applicants, contractors, and suppliers.
P3 state legislation continues to expand and move forward with governors signing legislation into law and sending some bills back to legislatures for review and revision. The states have in common efforts to define the breadth and depth of projects suitable for public private partnerships and many are working to establish specific offices to manage their infrastructure projects. Suffice it to say that the infrastructure to build infrastructure is being built out through state legislation. You can find our current P3 State Legislation Tracker here.
In Mahoney v. U.S. Department of the Interior,[1] the United States District Court for the Eastern District of New York recently addressed an environmental challenge to the South Fork Wind Farm (“Wind Farm”) that is being constructed on the Outer Continental Shelf (“OCS”) approximately 35 miles off Montauk Point, New York. The Mahoney decision is illustrative of the “shore side” legal challenges faced by the offshore wind industry and is a reminder of the continued significance of constitutional standing doctrine, which requires parties bringing suit to demonstrate that they are appropriate parties to bring an environmental challenge to court.
Factual Background
Plaintiffs, residents of East Hampton, New York, brought an action to halt the construction of the Wind Farm and the Wind Farm’s Export Cable Project (“Export Cables”). The Export Cables Project required onshoring trenching to tie the cables carrying power offshore into the shore-side power grid. As the proposed trenching location was adjacent to their property, the Plaintiffs were concerned that the Export Cable trenching would worsen pre-existing perfluoroalkyl and polyfluoroalkyl (“PFAS”) groundwater contamination in their groundwater. Plaintiffs challenged permits issued by Bureau of Ocean Energy Management (“BOEM”), and the U.S. Department of the Army, and U.S. Army Corps of Engineers (the “Army Corps”) for the Wind Farm and the Final Environmental Impact Statement (“FEIS”) issued in connection with the permits.
The District Court’s Decision
Plaintiffs suit was based on the assertion that the Wind Farm’s permits and FEIS did not adequately consider the potential of PFAS contamination as required under the National Environmental Policy Act (“NEPA”), Clean Water Act (“CWA”), Outer Continental Shelf Lands Act (“OCSLA”) and the Administrative Procedure Act (“APA”). The Government moved to dismiss suit under the constitutional standing doctrine.
Under Article III of the Constitution, federal courts can only hear disputes if the plaintiff has standing to sue.[2] “[T]o establish standing, a plaintiff must show (i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.”[3] A plaintiff has the burden to establish each element of the standing test.[4]
The Court’s analyses focused on the second element – whether the Plaintiffs established a causal connection between the federal agencies decision to permit the Wind Farm and Plaintiffs’ alleged damages, which the loss of Plaintiffs’ property value due potential PFAS contamination. Plaintiffs alleged that the causation element was met because “but for” the federal agencies requiring the wind farm developer to use the route for the Export Cables specified in the permits, Plaintiffs would not sustain any property damage.
The District Court noted that the location and manner of onshore trenching for the Export Cables were dictated by local and state agencies, which included the New York State Power Commission (“NYSPC”), which approved the trenching after a lengthy administrative process in which Plaintiffs participated. The NYSPC rejected Plaintiffs’ argument that the Project would exacerbate the existing PFAS contamination in their groundwater, given the preventative measures employed by the Project to ensure groundwater flow was not altered. By contrast, the federal agency defendants did not require or specify the location of the onshore trenching of the Export Cables in connection with their approvals, leaving these details to NYSPC and its administrative process. The District Court rejected Plaintiffs’ contention as too attenuated that “but for” the federal agencies permitting the Wind Farm as a whole, there would not be any need for the Export Cables.
Under the relevant federal statutes, the District Court held that BOEM had jurisdiction over the portion of the Wind Farm on the OCS under the OCSLA and the Army Corps had jurisdiction over permits needed to discharge dredged waste matter under the CWA. The District Court held that Plaintiffs’ alleged injuries were directly traceable to NYPSC, which had exclusive jurisdiction over onshore trenching and whose third-party actions were not before the Court. Accordingly, the District Court dismissed the suit due to lack of standing.
Conclusion
The decision in Mahoney v. U.S. Department of the Interior is a reminder the standing doctrine remains a formidable hurdle to those asserting an environmental challenge. The decision is a further reminder of the complex web of state and federal action that is required to bring offshore wind energy into the shoreside power grind.
[1]See Mahoney v. U.S. Department of The Interior, No. 22-CV-1395, 2023 WL 4564912 (E.D.N.Y. July 17,2023).
It is reported that globally the construction industry is responsible for almost 25% of greenhouse gas emissions, 40% of total energy production, 16% of total water consumption and 30% to 40% of all solid waste. Growing environmental awareness and activism means it is likely that industries with a large carbon footprint and environmental impact, such as the construction industry, will face increasing scrutiny of their “green” claims. Managing the risk of greenwashing is challenging and complex. While at its core it is a matter of “doing what you say you are doing, or are going to do”, in practice it is far from that simple.
