Impact of COVID–19 on Energy and Infrastructure Projects in Arizona and the West

Snell & Wilmer

Snell & Wilmer

Disruption, Slowdowns, Uncertainty and Virtual Open Houses

With states now modifying their stay-at-home orders and social distancing restrictions, the long-term effects of the COVID-19 pandemic on energy and infrastructure projects remains unclear. There have been several immediate impacts ranging from supply chain and labor force disruptions, from delays arising from the stay-at-home orders and the financial impact of the pandemic, to the adoption of virtual open houses and other online tools for public engagement.

Renewable supply chain and labor impacts

The renewable sector relies heavily on imports from China and Southeast Asia for the components needed to construct solar, wind and battery storage projects. The COVID-19 outbreak halted production at many component and equipment manufacturers for several months, resulting in delays and backlogs in fulfilling orders. And depending on the location of the project, construction labor has also been in short supply, causing slowdowns at many projects.

Energy projects on tribal lands slowed or halted

At a time when renewable and infrastructure development is increasing on tribal lands in the west, many tribes have been hit hard by COVID-19. To counter the spread, many tribes have shut down government agencies and imposed “lock downs” to halt the spread of the virus which has, in turn, halted or suspended many projects. For projects that are already underway, construction will likely resume once health concerns over the spread of COVID-19 diminish, but future projects will likely experience greater uncertainty as tribes try to recover from the financial impact of closing casinos and hospitality businesses.

Uncertainty over energy demand may slow planned projects

Stay-at-home orders and social distancing guidelines have reduced retail sales of electricity in the commercial and industrial sector, but it remains unclear whether COVID-19 will have lasting effects on the demand for power for the second half of the year and beyond. As a result, utilities may elect to delay new projects that are being driven by future load projections as opposed to immediate reliability and service needs.

Impact of social distancing on public engagement

Federal and state regulations that govern siting new transmission facilities and other types of infrastructure require public engagement as part of the process. These public engagement programs typically include in-person stakeholder meetings and larger public open houses as key components of the outreach effort. But with the imposition of social distancing restrictions on public gatherings and health concerns over attending in‑person meetings, many open houses and stakeholder meetings have been canceled. As project developers look for alternative forms of engagement to keep the permitting process moving forward, the Office of Environmental Policy Act Compliance of the Department of the Interior issued guidance to its bureaus on April 10 regarding public participation under NEPA that includes the recommendation that where appropriate, bureaus may provide “virtual public involvement using live streams, teleconferences or virtual meeting rooms to encourage public involvement in the NEPA process.” While virtual public involvement will not completely replace newsletters and other traditional forms of public outreach, live streams and virtual open houses will become the norm in the near term and are likely to remain a key component of engagement programs even after the COVID-19 pandemic.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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