should be used. For energy storage devices, the nameplate or maximum rated capacity means the storage device’s usable energy capacity (MWh). The Notice contains special rules regarding offshore energy facilities.Footprint TestIf the Facility does not have nameplate capacityThe Facility is located in or placed in service within an Energy Community Category if 50% or more of its square footage is in an area that qualifies as an Energy Community Category.Finally, the Notice provides additional detail regarding the Energy Community Categories, each of which is detailed below, and an interactive map that reflects currently available data on the Coal Closure Category and the Statistical Area Category. The map will be updated next month.The Brownfield CategoryUnder Section 45(b)(11)(B)(i) of the Code, the Brownfield Category includes a brownfield site as defined in Sections 101(39)(A), (B), and (D)(ii)(III) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. § 9601(39) as real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant (as defined under 42 U.S.C. § 9601) and certain mine-scarred land (as defined in 42 U.S.C. § 9601(39)(D)(ii)(III)). The Brownfield Category does not include the categories of property described in 42 U.S.C. § 9601(39)(B).The Notice also provides a safe harbor for the Brownfield Category if one of the following three conditions are satisfied and the site is not described in 42 U.S.C. § 9601(39)(B):The site was previously assessed through federal, state, territory, or federally recognized Indian tribal brownfield resources as meeting the definition of a brownfield site under 42 U.S.C. § 9601(39)(A);An ASTM E1903 Phase II Environmental Site Assessment has been completed with respect to the site in accordance with the most current applicable version of the Standard Practice for Environmental Site Assessments: Phase I

upon designated MSAs and non-MSAs, and the Coal Closure Category, which relies upon defined census tracts, the Brownfields Category lacks such clarity. This makes it very difficult to determine whether a project that seeks to qualify under the Brownfields Category in fact meets the Nameplate Capacity Test or the Footprint Test, since the Notice provides no guidance on how the boundaries of the “energy community area” are to be drawn for purposes of those tests. This is an issue that begs to be addressed in the final rule, and ideally in a clarification issued prior to that. Similar questions plague interpretation of the safe harbors that the Notice establishes for the Brownfields Category, as discussed below.Safe Harbors Under the Brownfield CategoryA brownfield site, as defined in CERCLA, includes real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant (as defined under 42 U.S.C. § 9601) and certain mine-scarred land (as defined in 42 U.S.C § 9601(39)(D)(ii)(III)). Excluded from the definition of a brownfield are properties described in 42 U.S.C. § 9601(39)(B), which include sites subject to government orders, consent decrees, or certain other requirements under CERCLA and other federal environmental statutes. To aid in determining eligibility of brownfield projects for the energy communities bonus credit, the Notice creates a “safe harbor” for the Brownfield Category under which eligible properties can automatically qualify as a brownfield site if one of the following three conditions is satisfied:The site was previously assessed through federal, state, territory, or federally recognized Indian tribal brownfield resources as meeting the definition of a brownfield site under 42 U.S.C. § 9601(39)(A). These sites can be identified on the U.S. Environmental Protection Agency webpage “Cleanups in My Community” or similar online databases maintained by states, territories

States potentially qualifying for the Energy Communities Bonus Credit, it will be interesting to see how market practices develop in incorporating the credit value into various transaction structures.Footnotes[1] More specifically, the IRA (i) amended sections 45 (PTC) and 48 (ITC) to provide increased credit amounts or rates if certain requirements pertaining to Energy Communities are satisfied, and (ii) added new sections 45Y (PTC) and 48E (ITC) that provide increased credit amounts or rates for certain qualified facilities, energy projects or energy storage technologies that satisfy similar requirements and that are placed in service after December, 31, 2024.[2] See Notice 2022-61 for guidance with respect to the prevailing wage and apprenticeship requirements.[3] See section 3.02 of Notice 2023-29, defining “brownfield site” by cross-reference to the definition of such term for purposes of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42 U.S.C. § 9601(39)(A)). A brownfield site does not include the categories of property described in 42 U.S.C. § 9601(39)(B) (providing exclusions from the term “brownfield site”).[4] More specifically, the Brownfield Site Safe Harbor provides that the site must not be described in 42 U.S.C. § 9601(39)(B) and must meet one of the following conditions: (1) the site was previously assessed as meeting the definition of a brownfield site under 42 U.S.C. § 9601(39)(A), including a site listed under the category Brownfield Properties of the EPA’s Cleanups in My Community webpage or on similar webpages maintained by states, territories or for federally recognized Indian tribes, available at https://java.epa.gov/acrespub/stvrp/; (2) a Phase II Assessment has been completed with respect to the site in accordance with the most current applicable version of the Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process of ASTM International and such Phase II Assessment confirms

nsport or storage of coal, oil or natural gas, and (ii) has an unemployment rate at or above the national average unemployment rate for the previous year.Coal Closure Category: Either (i) a census tract in which, after December 31, 1999, a coal mine as closed, or an adjoining census tract, or (ii) a census tract in which, after December 31, 2009, a coal-fired electric generating unit has been retired, or an adjoining census tract.Brownfield CategoryGiven the specific cross-references to the CERCLA statutes, it is unsurprising that the Notice does not provide any expansion or restriction of these references. The referenced sites are those where the expansion, redevelopment or reuse of the site must be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant, or are mine-scarred sites, and that are not on a list of specifically excluded sites.The Notice provides a safe harbor for the Brownfield Category if a site is not excluded as a result of 42 U.S.C. § 9601(39)(B) and one of the following three conditions is satisfied:The site was previously assessed through federal, state, territory or federally recognized Indian tribal brownfield resources as meeting the definition of a brownfield site under 42 U.S.C. § 9601(39)(A).An ASTM E1903 Phase II Environmental Site Assessment has been completed with respect to the site confirming the presence on the site of a hazardous substance as defined under 42 U.S.C. § 9601(14) or a pollutant or contaminant as defined under 42 U.S.C. § 9601(33).For projects with a nameplate capacity not greater than 5 megawatts (MW) alternating current (AC), an ASTM E1527 Phase I Environmental Site Assessment has been completed with respect to the site.With respect to the final potential condition for projects that are 5 MW AC or smaller, the guidance seems incomplete as there is no indication of what findings must be contained in the Phase I ESA. Presumably, the Notice will be supplemented so as to require the Phase I ESA to hav

ts under Sections 48 and 48E (ITC) and production tax credits under Sections 45 and 45Y (PTC).The regulations will apply to taxable years ending after April 4, 2023. Until the issuance of the proposed regulations, taxpayers may rely on the rules in Notice 2023-29.Notice 2023-29 provides rules for determining what constitutes an energy community (the Brownfield Category, Statistical Area Category, and the Coal Closure Category described below) and for determining whether property is located in an energy community.Brownfield CategoryBrownfield sites are defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) as real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant and certain mine-scarred land (each as defined in CERCLA). A brownfield site does not include the categories of property excluded from brownfield sites by CERCLA in 42 U.S.C. § 9601(39)(B).Notice 2023-29 provides three safe harbors pursuant to which a site will be treated as a brownfield site if it is not described in 42 U.S.C. § 9601(39)(B):The site was previously assessed through federal, state, territory, or federally recognized Indian tribal brownfield resources as meeting the definition of a brownfield site under 42 U.S.C. § 9601(39)(A). Potential site lists may be found under the category of "brownfields properties" on the EPA's Cleanups in My Community webpage ( https://java.epa.gov/acrespub/stvrp/).An ASTM E1903 Phase II Environmental Site Assessment has been completed with respect to the site in accordance with the most current applicable version of the Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process of ASTM International and such Phase II Assessment confirms the presence on the site of a hazardous substance as defined under 42 U.S.C. § 9601(14), or a pollutant or contaminant as defined under 42 U.S.C. § 9601

Not all conduct that results in contamination at a Superfund site falls within the statute’s liability provisions. 42 U.S.C. §9601, et seq. 42 U.S.C. §6903.See 42 U.S.C. §9601(29). See 42 U.S.C. §6903(27).Id. §6903(3) (emphasis added).

ply to taxable years ending after April 4, 2023. However, until these proposed regulations are issued, taxpayers may rely on the substantive guidance provided in the Notice.The EC Bonus under the IRAUnder the IRA, a project that is eligible for the PTC or CEPC and is located in an Energy Community will receive a 10 percent increase to the base credit amount. A project, including an energy storage project, that is eligible for the ITC or CEIC and is placed in service (as determined for federal income tax purposes) within an Energy Community will receive a 10 percentage point increase to the applicable credit.The IRA defines an Energy Community as one of the following location types:a brownfield site, which means (1) real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant and (2) certain mine-scarred land but, in each case, excluding the categories of property described in 42 U.S.C. Section 9601(39)(B) (for example, a site that is subject to remediation, on the Superfund National Priorities List, or previously permitted for hazardous waste disposal or treatment) (the Brownfield Category);a metropolitan statistical area (MSA) or non-metropolitan statistical area (Non-MSA) that (1) has, or had at any time during or after 2010, at least 0.17 percent direct employment related to the extraction, processing, transport, or storage of coal, oil, or natural gas (Fossil Fuel Activities) or at least 25 percent of local tax revenues related to such activities and (2) has an unemployment rate at or above the national average for the previous calendar year (the Statistical Area Category); ora census tract, or a directly adjoining census tract, in which (1) a coal mine closed during or after the year 2000 or (2) a coal-fired electric generating unit was retired during or after 2010 (the Coal Closure Category).Definitional Guidance under the NoticeBrownfield Category Safe HarborThe Notice provides

ous year (the “Statistical Area Category”), and (3) census tracts or directly adjoining census tracts in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009 (“Coal Closure Category”).Observation: As enacted, the IRA left open significant questions for developers about how to prove that a particular project is in an energy community. This has been especially true under the Statistical Area Category, where there are multiple competing data sets with similar information. This uncertainty has significantly slowed tax equity and debt financings related to adder eligibility in the first quarter of 2023.Brownfield Category GuidanceBrownfield Category Determinations – To qualify as a brownfield site, the expansion, redevelopment, or reuse of the site must be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant or be mine-scarred land, and the site must not be an excluded property as defined in 42 U.S.C. § 9601(39)(B).Observation: Because the IRS declined in its guidance to limit the scope of the exclusions found in 42 U.S.C. § 9601(39)(B) (which is a portion of the definition for “brownfields” found in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”)), it appears that significant categories of sites with confirmed contamination will be excluded from approval as “brownfields”, including (among others):Sites listed on the National Priorities List (and those proposed for listing);Sites subject to a planned or ongoing removal actions or corrective actions under CERCLA or the Solid Waste Disposal Act (the “SWDA”), which includes the Resource Conservation and Recovery Act (“RCRA”);Sites subject to administrative or judicial orders or consent decrees issued under CERCLA, SWDA and other statutes;Sites subject to cleanup, corrective action or other orders under CERCLA, SWDA and other federal statutes;Sites used for land disposal (i.e., landfills) that have submitt

“brownfield site” for purposes of the Brownfield Category is defined in CERCLA as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant” and certain mine-scarred land. The exclusions to the definition of “brownfield site” in CERCLA also apply to the Brownfield Category.Notice 2023-29 also provides a safe harbor under which the IRS will accept that a site meets the definition of a “brownfield site” under CERCLA if it satisfies at least one of the following conditions:it was previously assessed through federal, state, territory, or federally recognized Indian tribal brownfield resources as meeting the definition of a “brownfield site” under CERCLA;an ASTM E1527 Phase II Environmental Site Assessment has been completed with respect to the site in accordance with current standard practices and that assessment confirmed the presence of a hazardous substance (as defined in 42 U.S.C. § 9601(14)) or a pollutant or contaminant (as defined in 42 U.S.C. § 9601(33)); orfor projects with a nameplate capacity of 5MW (AC) or less, an ASTM E1527 Phase I Environmental Site Assessment has been completed with respect to the site in accordance with current standard practices.The Statistical Area CategoryUnder the IRA, the second category of locations that qualify as “energy communities” are MSAs and non-MSAs that (i) have (or had at any time after 2009) 0.17% or greater direct employment (“Fossil Fuel Employment”) or 25% or greater local tax revenues (“Fossil Fuel Tax Revenues”) related to the extraction, processing, transport, or storage of coal, oil, or natural gas, and (ii) have an unemployment rate at or above the national average unemployment rate for the previous year. Although Notice 2023‑29 provides some clarity on these rules, it does leave some open questions, particularly with respect to the determination of Fossil Fuel Tax Revenues.Determination of MSAs and Non-MSAsMSAs are g

Washington’s Department of Ecology concluded that PFAS are hazardous substances under Washington’s Model Toxics Control Act.PFOA and PFOS may just be the beginning. According to the PFAS Strategic Roadmap, EPA is developing an Advance Notice of Proposed Rulemaking to seek input on whether to designate other PFAS as CERCLA hazardous substances. Ultimately, as our understanding of CECs advances, new chemicals may become designated as “hazardous” under CERCLA or state cleanup programs.But before CECs become CERCLA hazardous substances, if they ever do, where do they fit into the CERCLA liability framework?CERCLA uses the term “hazardous substance” and the term “pollutant or contaminant.” A chemical is a CERCLA “hazardous substance” if it falls within the purview of CERCLA §101(14), 42 U.S.C. §9601(14). That section provides that “hazardous substance” means, inter alia, any substance designated as hazardous under or pursuant to various identified federal environmental law provisions. See 42 U.S.C. §9601(14). The CERCLA list of hazardous substances can be found at 40 C.F.R. §302.4. The term “pollutant or contaminant” is broader. It includes, but is not limited to:any substance . . . which, afterrelease . . . and upon exposure, ingestion, inhalation, or assimilation into any organism, either directly . . . or indirectly . . . will or may reasonably be anticipated to cause death, disease, behavioral abnormalities, cancer, genetic mutation, physiological malfunctions (including malfunctions in reproduction) or physical deformations, in such organisms or their offspring.See 42 U.S.C. §9601(33). CECs, if and until they become CERCLA hazardous substances, may become pollutants or contaminants. Indeed, in EPA’s PFAS Action Plan, the Agency noted that PFOA and PFOS are considered pollutants or contaminants, giving the Agency the authority to investigate releases or threats of releases of PFOA and/or PFOS at sites pursuant to CERCLA §104(e), 42 U.S.C. §9604(e).The distinction between CERCLA hazard