CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022
DUE DILIGENCE MEMORANDUM — ENVIRONMENTAL
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT. This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared in connection with the proposed initial public offering of common stock of Calloway-Briggs Renewables Inc. on the New York Stock Exchange. It is not intended for distribution to third parties without the prior consent of Calderwood & Harkness LLP and Calloway-Briggs Renewables Inc.
C&H Matter No.: 1015-00001
Date: April 25, 2022
To: Jennifer Kwon, Responsible Partner, Capital Markets
From: Brendan Walsh, Lead Associate; Natasha Forbes, Working Associate
Re: Calloway-Briggs Renewables Inc. — Proposed Initial Public Offering — Environmental Due Diligence Findings
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I. Executive Summary
This memorandum summarizes the findings of the environmental due diligence conducted by Calderwood & Harkness LLP ("C&H" or the "Firm") in connection with the proposed approximately $600,000,000 initial public offering (the "IPO" or the "Offering") of shares of common stock of Calloway-Briggs Renewables Inc. ("CBR" or the "Company"), a Delaware corporation headquartered at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746, on the New York Stock Exchange. The environmental due diligence was undertaken as part of the broader legal due diligence process in support of the preparation and filing of the Company's Registration Statement on Form S-1 (the "S-1" or the "Registration Statement") under the Securities Act of 1933, as amended.
The scope of this memorandum encompasses the environmental compliance status of CBR's entire project portfolio, which consists of the following:
• Operating capacity: Approximately 3.8 gigawatts ("GW") of renewable-energy generation and storage capacity across 22 projects located in the States of Texas, New Mexico, Arizona, California, and Oklahoma;
• Under-construction capacity: Approximately 1.4 GW of renewable-energy generation capacity at two project sites currently under construction; and
• Development pipeline: Approximately 6.2 GW of renewable-energy generation and storage capacity in various stages of development across the five-state footprint.
In conducting this environmental review, C&H worked closely with Greenridge Environmental Sciences LLC ("Greenridge"), an independent environmental consulting firm located at 8400 Shoal Creek Boulevard, Suite 200, Austin, Texas 78757. The principal scientist responsible for Greenridge's engagement on behalf of CBR is Dr. Nadine Torres, PhD, PG, who has over 20 years of experience conducting environmental site assessments for energy-sector clients. Greenridge was retained directly by CBR and has provided Phase I and Phase II Environmental Site Assessments, biological surveys, and environmental compliance reviews for substantially all of the Company's operating and under-construction project sites. C&H has reviewed and relied upon the Greenridge reports and supporting materials referenced herein.
The due diligence materials reviewed in connection with this memorandum were collected and produced in response to the Due Diligence Request List — Regulatory / Environmental / Permitting (Document 10) circulated by C&H to the Company and its counsel on February 14, 2022, and supplemented on March 7, 2022. The Company's responses were provided through the virtual data room maintained by Crestline Solutions (Project "Ridgeline") and through direct correspondence with CBR's General Counsel, Margaret T. Holcomb, and CBR's Vice President of Environmental Compliance, David Shin.
Key Finding: Based on our review of the materials described herein and the environmental assessments performed by Greenridge, CBR's project portfolio is generally in material compliance with applicable federal, state, and local environmental laws and regulations. Certain site-specific findings, pending remediation items, and ongoing mitigation obligations have been identified at individual project sites and are discussed in detail in Section III below. These findings are manageable, well-documented, and do not, individually or in the aggregate, constitute material environmental liabilities. They should, however, be addressed through appropriate disclosure in the S-1 risk factors and business description sections.
Recommendation: We recommend that the S-1 include risk-factor disclosure addressing environmental permitting risks, endangered species and wildlife considerations (including avian and bat mortality mitigation obligations), hazardous materials management associated with battery energy storage systems, site-specific historical conditions, decommissioning obligations, and potential changes in environmental laws and regulations. The specific disclosure recommendations are set forth in Section VII below. No gating environmental issues have been identified that would preclude or materially delay the IPO.
II. Scope and Methodology
A. Documents Reviewed
In connection with this environmental due diligence review, C&H reviewed the following categories of documents and materials, which were produced by the Company and Greenridge through the virtual data room and through direct correspondence during the period from February 28, 2022 through April 22, 2022:
1. Phase I Environmental Site Assessments ("Phase I ESAs"): Phase I ESAs conducted by Greenridge for all operating and under-construction project sites, prepared in accordance with the ASTM International Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, ASTM E1527-21. The Phase I ESAs included reviews of historical records, regulatory database searches (EDR reports), site reconnaissance, and interviews with knowledgeable parties. A total of 24 Phase I ESA reports were reviewed, covering all operating project sites and both under-construction project sites.
2. Phase II Environmental Site Assessments ("Phase II ESAs"): Phase II ESAs (limited subsurface investigations) conducted by Greenridge at select project sites where the Phase I ESA identified recognized environmental conditions ("RECs") warranting further investigation. Phase II ESAs were reviewed for the Pronghorn Wind, Mesquite Wind, and Cimarron Solar project sites, as described in detail in Section III below.
3. Environmental Permits and Permit Applications: Environmental permits, permit applications, permit modifications, and related correspondence for all operating and under-construction projects, including but not limited to air quality permits, construction and industrial stormwater permits, water quality permits, and hazardous waste generator determinations issued by the Texas Commission on Environmental Quality ("TCEQ"), the Oklahoma Department of Environmental Quality ("ODEQ"), the Arizona Department of Environmental Quality ("ADEQ"), the New Mexico Environment Department ("NMED"), and the California State Water Resources Control Board.
4. Biological Surveys, Habitat Assessments, and Endangered Species Consultations: Pre-construction biological surveys, habitat assessments, and threatened and endangered species surveys conducted by Greenridge and third-party biologists at all project sites, together with correspondence and consultation records with the U.S. Fish and Wildlife Service ("USFWS"), the Texas Parks and Wildlife Department ("TPWD"), the Oklahoma Department of Wildlife Conservation, the Arizona Game and Fish Department, the New Mexico Department of Game and Fish, and the California Department of Fish and Wildlife ("CDFW").
5. Avian and Bat Mortality Monitoring Reports: Post-construction avian and bat fatality monitoring reports for the Red Mesa Wind and Pronghorn Wind project sites, including annual summary reports, raw monitoring data, and related correspondence with USFWS.
6. Compliance Correspondence: Compliance correspondence, inspection reports, notices of violation (if any), consent orders, and enforcement actions involving federal, state, and local environmental regulatory agencies across all project sites.
7. Environmental Provisions in Land Agreements: Environmental covenants, indemnification provisions, representations, and warranties contained in land leases, surface-use agreements, easements, rights-of-way, and related agreements for all project sites.
8. Corporate EHS Policies and Procedures: CBR's corporate Environmental, Health, and Safety ("EHS") policies, procedures, and management system documentation, including the Company's EHS Management System Manual (Version 4.2, revised January 2022), Environmental Compliance Audit Protocol, and Incident Reporting and Investigation Procedure.
9. Spill Prevention, Control, and Countermeasure Plans ("SPCC Plans"): SPCC plans prepared in accordance with 40 C.F.R. Part 112 for all applicable facilities, including facilities with above-ground storage of transformer oils, lubricants, and battery electrolyte solutions.
10. Stormwater Pollution Prevention Plans ("SWPPPs"): SWPPPs prepared for all operating and under-construction project sites in accordance with applicable state stormwater general permit requirements.
11. Decommissioning and Site-Restoration Obligations: Provisions in land leases and local land-use permits addressing decommissioning, removal, and site-restoration obligations at the end of the project useful life or lease term, together with any financial assurance instruments (surety bonds, letters of credit) posted in connection therewith.
B. Applicable Regulatory Framework
The environmental regulatory framework applicable to CBR's project portfolio encompasses the following principal federal, state, and local statutes and regulations:
Federal:
• National Environmental Policy Act ("NEPA"): 42 U.S.C. §§ 4321 et seq. — Requires environmental review of major federal actions significantly affecting the quality of the human environment. Applicable where CBR projects involve a federal nexus (e.g., federal land, federal permits, or federal funding).
• Endangered Species Act ("ESA"): 16 U.S.C. §§ 1531 et seq. — Prohibits the "take" of listed threatened and endangered species and provides for consultation with USFWS regarding potential impacts on listed species and their critical habitat. Section 7 consultations have been completed for all operating and under-construction projects.
• Clean Air Act ("CAA"): 42 U.S.C. §§ 7401 et seq. — Regulates emissions of air pollutants from stationary and mobile sources. Renewable energy generation facilities generally do not require major-source air permits; however, construction-phase fugitive dust control permits may be required under state implementation plans.
• Clean Water Act ("CWA"): 33 U.S.C. §§ 1251 et seq. — Regulates discharges of pollutants to waters of the United States, including stormwater discharges from construction and industrial activities (Section 402 NPDES permits) and discharges of dredged or fill material to jurisdictional waters (Section 404 permits).
• Resource Conservation and Recovery Act ("RCRA"): 42 U.S.C. §§ 6901 et seq. — Regulates the generation, transportation, treatment, storage, and disposal of solid and hazardous wastes.
• Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA" / "Superfund"): 42 U.S.C. §§ 9601 et seq. — Imposes strict, joint, and several liability for the cleanup of hazardous substance releases at contaminated sites.
• Migratory Bird Treaty Act ("MBTA"): 16 U.S.C. §§ 703 et seq. — Prohibits the unpermitted take, killing, or possession of migratory birds. Applicable to wind energy facilities where avian mortality may occur due to turbine blade strikes.
• Bald and Golden Eagle Protection Act ("BGEPA"): 16 U.S.C. §§ 668 et seq. — Prohibits the take of bald and golden eagles without a permit. USFWS has established a permitting framework for incidental take of eagles associated with wind energy projects.
• National Historic Preservation Act ("NHPA"): 54 U.S.C. §§ 300101 et seq. — Requires federal agencies to consider the effects of their actions on historic properties, including consultation with State Historic Preservation Officers ("SHPOs") and Tribal Historic Preservation Officers under Section 106.
State-Level Equivalents:
• Texas: TCEQ regulations (30 Tex. Admin. Code); TPWD regulations (31 Tex. Admin. Code); Texas Antiquities Code.
• New Mexico: NMED regulations (20 NMAC); New Mexico Department of Game and Fish regulations (19 NMAC); New Mexico Cultural Properties Act.
• Arizona: ADEQ regulations (Ariz. Admin. Code Title 18); Arizona Game and Fish Department regulations (Ariz. Admin. Code Title 12); Arizona State Historic Preservation Act.
• California: California Environmental Quality Act ("CEQA") (Cal. Pub. Res. Code §§ 21000 et seq.); CDFW regulations (14 Cal. Code Regs.); California State Water Resources Control Board regulations; California Hazardous Waste Control Law.
• Oklahoma: ODEQ regulations (OAC 252); Oklahoma Department of Wildlife Conservation regulations.
Local:
• Local zoning ordinances, land-use permits, conditional-use permits, and building codes applicable at each project site, including setback requirements, noise ordinances, and decommissioning requirements imposed by county authorities.
C. Site Visits
Greenridge conducted physical site visits for all operating and under-construction facilities during the period from 2018 through Q1 2022 in connection with the preparation of Phase I and Phase II ESAs and biological surveys. The site visits included visual inspections of facility conditions, surrounding properties, and environmental features; observations of stormwater management practices; and interviews with on-site operations and construction personnel.
Calderwood & Harkness participated directly in selected site visits during the due diligence period. Specifically, Brendan Walsh (Lead Associate) and Natasha Forbes (Working Associate) accompanied Greenridge personnel on site visits to the following facilities during the week of March 21 – March 25, 2022 and during a follow-up visit on April 18 – April 19, 2022:
• Mesquite Wind (Oldham County, Texas) — Under construction at the time of the site visit. C&H personnel observed active construction activities, reviewed SWPPP implementation and erosion control measures, visited the locations of the two RECs identified in the Phase I ESA (agricultural chemical storage shed on the northeast parcel and buried debris/fill area on the southern parcel), and met with CBR's site construction manager and EHS coordinator.
• Cimarron Solar (Doña Ana County, New Mexico) — Under construction at the time of the site visit. C&H personnel observed foundation and racking installation activities, reviewed dust control measures and SWPPP compliance, inspected the area subject to the MEC awareness plan, and met with the CBR construction team and the Greenridge field scientist overseeing the MEC protocol.
These site visits provided C&H with direct observational confirmation of the environmental conditions and compliance practices described in the Greenridge reports and the Company's data room submissions.
III. Project-by-Project Environmental Findings
This section presents the environmental findings for each of CBR's significant operating and under-construction projects, followed by a summary of findings for the development pipeline. The project-by-project analysis is organized by project status (operating, under construction, and development) and includes, for each project, the findings from the applicable Phase I and Phase II ESAs, the status of environmental permits, endangered species and wildlife compliance, cultural resource reviews, and any pending remediation or monitoring obligations.
A. Solaris West — Solar PV, 450 MW, Pecos County, Texas
Project Status: Operating (Commercial Operation Date: Q3 2020)
Special Purpose Vehicle: Solaris West Solar LLC, a Texas limited liability company wholly owned by Calloway-Briggs Operating Company LLC ("CB Operating"), which is in turn wholly owned by CBR.
Project Description: Solaris West is a 450-megawatt ("MW") utility-scale solar photovoltaic ("PV") project located on approximately 4,800 acres of leased land in Pecos County, Texas. The project consists of single-axis tracking solar panels and associated inverters, transformers, a project substation, and a generation-tie line interconnecting with the ERCOT grid. The project achieved commercial operation in August 2020 and delivers electricity under a long-term power purchase agreement with an investment-grade utility offtaker.
Tax-Equity Financing: The project is subject to a tax-equity partnership with Veltara Basin Financial LLC, which invested approximately $280 million in exchange for investment tax credits and a share of project cash flows. The tax-equity partnership agreement includes a flip structure with an expected flip date in 2028. Of relevance to this environmental review, the tax-equity partnership agreement contains an environmental compliance covenant requiring that the project maintain compliance with all applicable environmental laws and permits throughout the partnership term, with a breach constituting a potential default event.
Phase I ESA: A Phase I ESA was completed by Greenridge in June 2019, prior to construction commencement. The Phase I ESA evaluated the environmental history and current conditions of the project site and surrounding properties. The site had been used historically as rangeland and agricultural land (livestock grazing), and no recognized environmental conditions were identified. No evidence of underground storage tanks, hazardous substance releases, or contaminated soil or groundwater was observed or reported. The regulatory database search revealed no listed sites within the applicable search radii that would pose a concern to the project site.
Phase II ESA: Not required based on the absence of RECs in the Phase I ESA.
Environmental Permits: The project obtained a construction stormwater general permit from the TCEQ and maintained a Stormwater Pollution Prevention Plan throughout the construction phase. Construction is complete and the construction stormwater permit has been terminated. An industrial stormwater general permit is not required for solar operations, although the project maintains best management practices for stormwater management. No air quality permit is required for solar PV operations, as the facility does not generate air emissions during normal operations.
Endangered Species: Pre-construction biological surveys were conducted by Greenridge across the project footprint. No federally listed threatened or endangered species were identified on the project site. The Texas horned lizard (Phrynosoma cornutum), which is listed as threatened under the Texas Parks and Wildlife Code, was documented in the vicinity of the project site (within approximately two miles) during the biological survey, although no individuals were observed on the project site itself. As a precautionary measure, CBR implemented a mitigation plan that included habitat avoidance measures (setbacks from identified potential habitat areas), seasonal construction restrictions (avoiding peak activity periods), and worker awareness training. The mitigation plan was developed in consultation with TPWD and has been successfully implemented. No take of Texas horned lizards was reported during the construction period.
Cultural Resources: An NHPA Section 106 cultural resources survey was not required for this project, as no federal nexus triggered the Section 106 consultation process. CBR voluntarily conducted a cultural resources desktop review, which did not identify any known cultural or archaeological sites within the project footprint.
Remediation: No pending remediation obligations.
Status: The Solaris West project is in material compliance with all applicable environmental laws, regulations, and permit conditions. No environmental issues requiring disclosure beyond standard risk-factor language have been identified for this project.
B. Red Mesa Wind — Onshore Wind, 380 MW, Custer County, Oklahoma
Project Status: Operating (Commercial Operation Date: Q1 2019)
Special Purpose Vehicle: Red Mesa Wind Energy LLC, an Oklahoma limited liability company wholly owned by CB Operating.
Project Description: Red Mesa Wind is a 380 MW onshore wind energy project located on approximately 48,000 acres of leased land in Custer County, Oklahoma. The project consists of 152 wind turbine generators, associated collection lines, a project substation, operations and maintenance facilities, and a generation-tie line interconnecting with the Southwest Power Pool ("SPP") grid. The project achieved commercial operation in February 2019 and delivers electricity under a long-term power purchase agreement.
Phase I ESA: A Phase I ESA was completed by Greenridge in March 2017. The Phase I ESA identified one de minimis REC: a historical agricultural chemical storage area located on a portion of the leased land in the northeast quadrant of the project site. The storage area consisted of a deteriorated wooden shed formerly used by the landowner for storage of agricultural herbicides and pesticides. The shed had been demolished prior to Greenridge's site visit, but staining was observed on the soil surface in the immediate vicinity. Greenridge classified this finding as a de minimis REC and recommended limited soil sampling to confirm the absence of significant contamination.
Phase II ESA: A limited Phase II ESA was conducted by Greenridge at the historical agricultural chemical storage area in May 2017. Soil sampling was performed at eight locations in and around the former shed footprint, with samples collected at surface (0-6 inches) and subsurface (2-4 feet) intervals. Laboratory analysis tested for organochlorine and organophosphate pesticides, herbicides, and metals. Results indicated that all detected concentrations were below the applicable Oklahoma Department of Environmental Quality ("ODEQ") residential cleanup levels established under the ODEQ Risk-Based Corrective Action framework. Greenridge concluded that no further action was warranted, and no institutional controls or ongoing monitoring were recommended.
Environmental Permits: The project obtained construction stormwater permits from ODEQ, which have been closed out following completion of construction and stabilization of disturbed areas. The project maintains a Stormwater Pollution Prevention Plan for the operational phase. No air quality permit is required for wind energy operations. No other environmental permits are currently required for the operational phase.
Endangered Species / Avian and Bat Compliance: Pre-construction avian and bat surveys were conducted by Greenridge over two full survey seasons (spring 2016 through fall 2017), including point count surveys, raptor nest surveys, eagle use surveys, and acoustic bat monitoring. The results of these surveys were provided to USFWS as part of an informal consultation process under Section 7 of the Endangered Species Act. USFWS concluded that the project was not likely to adversely affect any federally listed species. Specifically:
• Indiana bat (Myotis sodalis) (endangered): Range data and acoustic monitoring results indicated that Indiana bats were not present in the project area. USFWS concurred that the project area is outside the species' known range in Oklahoma.
• Whooping crane (Grus americana) (endangered): The project area is within the broader Central Flyway migration corridor for whooping cranes. However, USFWS determined, based on the project's location relative to known stopover sites and the low density of documented whooping crane sightings in the area, that the project was not likely to adversely affect the species. CBR voluntarily adopted an avian protection plan that includes training for operations personnel on whooping crane identification and reporting protocols.
Avian and Bat Mortality Monitoring: The project maintains an ongoing post-construction avian and bat fatality monitoring program in accordance with the USFWS Land-Based Wind Energy Guidelines (2012). Annual fatality monitoring has been conducted since the project's commercial operation date, with monitoring reports submitted to USFWS. Through the 2021 monitoring season (the most recent complete season), reported mortality rates for birds and bats have been within industry norms for onshore wind projects in the southern Great Plains region. An adaptive management plan is in place that specifies curtailment modifications (including low-wind-speed curtailment during bat migration periods and seasonal operational adjustments) to be triggered if mortality rates exceed pre-defined thresholds. To date, no adaptive management curtailment triggers have been activated.
Remediation: No pending remediation obligations.
Status: The Red Mesa Wind project is in material compliance with all applicable environmental laws, regulations, and permit conditions.
C. Painted Rock Solar — Solar PV, 320 MW, Maricopa County, Arizona
Project Status: Operating (Commercial Operation Date: Q4 2020)
Special Purpose Vehicle: Painted Rock Solar LLC, an Arizona limited liability company wholly owned by CB Operating.
Project Description: Painted Rock Solar is a 320 MW utility-scale solar PV project located on approximately 2,600 acres of leased land in western Maricopa County, Arizona. The project consists of single-axis tracking solar panels, inverters, transformers, a project substation, and a generation-tie line. The project achieved commercial operation in November 2020.
Phase I ESA: A Phase I ESA was completed by Greenridge in September 2019. The project site consists of historically undeveloped desert scrubland with no history of agricultural, industrial, or commercial use. No recognized environmental conditions were identified. The regulatory database search revealed no listed sites within the applicable search radii.
Phase II ESA: Not required based on the absence of RECs in the Phase I ESA.
Environmental Permits: The project obtained a construction stormwater general permit from ADEQ and a Maricopa County Air Quality Department fugitive dust control permit for the construction phase. Both construction-phase permits have been closed out. The project maintains an ADEQ stormwater general permit for the operational phase and a Stormwater Pollution Prevention Plan. Given the arid conditions at the site, stormwater management focuses primarily on erosion control during monsoon season precipitation events.
Endangered Species: Pre-construction biological surveys were conducted by Greenridge, including protocol-level surveys for the Sonoran desert tortoise (Gopherus morafkai). At the time of the survey and as of the date of this memorandum, the Sonoran desert tortoise is a candidate species under the Endangered Species Act (distinct from the Mojave desert tortoise, Gopherus agassizii, which is listed as threatened). Individual desert tortoises were identified within portions of the project area during the surveys.
CBR engaged in informal consultation with USFWS, which confirmed that no formal Section 7 consultation or Biological Opinion was required because the Sonoran desert tortoise is a candidate species and not yet listed. However, as a best practice and in anticipation of potential future listing, CBR developed and implemented a desert tortoise translocation plan in coordination with USFWS and the Arizona Game and Fish Department. Under the plan, tortoises encountered during construction were relocated to suitable habitat areas outside the project footprint by qualified biologists. Post-construction monitoring of translocated tortoises is ongoing, with annual monitoring reports prepared by Greenridge. To date, translocated individuals have exhibited satisfactory survival and site fidelity at the relocation areas.
Cultural Resources: An NHPA Section 106 cultural resources survey was completed in connection with the project's generation-tie line, which crossed land administered by the Bureau of Land Management (providing the federal nexus). The Section 106 consultation with the Arizona State Historic Preservation Office ("SHPO") was completed in 2019. No significant cultural or archaeological resources were identified within the project area of potential effect. The SHPO issued a letter of concurrence with a finding of "no adverse effect" on historic properties.
Remediation: No pending remediation obligations.
Status: The Painted Rock Solar project is in material compliance with all applicable environmental laws, regulations, and permit conditions. The ongoing desert tortoise monitoring program is a noteworthy operational commitment but does not constitute a material liability.
D. Pronghorn Wind — Onshore Wind, 510 MW, Nolan County, Texas
Project Status: Operating (Commercial Operation Date: Q2 2021)
Special Purpose Vehicle: Pronghorn Wind LLC, a Texas limited liability company wholly owned by CB Operating.
Project Description: Pronghorn Wind is a 510 MW onshore wind energy project located on approximately 62,000 acres of leased land in Nolan County, Texas. The project consists of 170 wind turbine generators, associated collection lines, two project substations, operations and maintenance facilities, and generation-tie lines interconnecting with the ERCOT grid. The project achieved commercial operation in June 2021.
Phase I ESA: A Phase I ESA was completed by Greenridge in November 2019. The Phase I ESA identified one recognized environmental condition: an abandoned oil well located on a leased parcel in the southwestern portion of the project area. Historical records and Texas Railroad Commission well records indicated that the well had been drilled in the 1960s and plugged in approximately 1978. The wellhead and surface casing were visible at the site, and staining was observed on the soil surface in the immediate vicinity of the wellhead. The broader project area has a history of oilfield activity, consistent with the general Permian Basin region, although the specific project parcels are primarily agricultural (cotton farming and cattle ranching).
Phase II ESA: A Phase II ESA was conducted by Greenridge at the abandoned well site in February 2020. The investigation included the following activities:
• Advancement of four soil borings to depths of 20 feet below grade surface in the vicinity of the wellhead, with collection of soil samples at 2-foot intervals for the first 10 feet and at 5-foot intervals for the remaining depth.
• Installation of one monitoring well to a depth of 35 feet below grade surface, screened across the water table (encountered at approximately 28 feet below grade surface).
• Collection of one round of groundwater samples from the monitoring well following well development and stabilization.
• Laboratory analysis of soil and groundwater samples for total petroleum hydrocarbons (TPH), volatile organic compounds (VOCs), and RCRA 8 metals.
The results of the Phase II investigation indicated the following:
• Soil: Low-level total petroleum hydrocarbons (TPH) were detected in soil samples collected within five feet of the wellhead at concentrations ranging from 85 to 340 milligrams per kilogram (mg/kg). These concentrations are below the applicable TCEQ Tier 1 Protective Concentration Levels ("PCLs") for commercial/industrial land use (1,000 mg/kg for TPH). VOCs and metals were either not detected or were detected at concentrations below applicable PCLs. TPH was not detected in soil samples collected at distances greater than 15 feet from the wellhead.
• Groundwater: TPH was detected in the groundwater sample at a concentration of 0.12 milligrams per liter (mg/L), which is below the TCEQ Tier 1 groundwater PCL for TPH (1.0 mg/L for commercial/industrial use). No VOCs were detected above reporting limits. Metals were within background ranges.
Based on these results, Greenridge concluded that the petroleum hydrocarbon contamination at the abandoned well site is limited in extent and does not exceed applicable regulatory standards for commercial/industrial use. No formal remediation is required under current TCEQ standards. However, Greenridge recommended the installation of a dedicated groundwater monitoring well (which was installed during the Phase II investigation) and semi-annual groundwater sampling to confirm the stability of groundwater conditions over time. CBR has adopted this recommendation and is conducting semi-annual groundwater sampling. The estimated annual cost of the monitoring program is approximately $15,000.
Environmental Permits: The project obtained TCEQ construction stormwater permits, which have been closed out following completion of construction. The project maintains a Stormwater Pollution Prevention Plan for the operational phase. Federal Aviation Administration ("FAA") Determinations of No Hazard to Air Navigation were obtained for all turbine locations prior to construction, as required under 14 C.F.R. Part 77. No air quality permit is required for wind energy operations.
Endangered Species / Avian and Bat Compliance: Pre-construction avian and bat surveys were conducted by Greenridge over two full survey seasons (spring 2019 through fall 2020), including point count surveys, raptor nest surveys, golden eagle use surveys (in compliance with BGEPA), and acoustic bat monitoring.
• Golden eagle (Aquila chrysaetos): Golden eagle nesting surveys were conducted within a 10-mile buffer of the project boundary, as recommended by the USFWS Eagle Conservation Plan Guidance (2013). No active golden eagle nests were identified within the survey area. Incidental eagle observations during the survey period were limited and did not indicate significant eagle use of the project area. Based on these results, USFWS determined that a BGEPA Eagle Take Permit was not required.
• Lesser prairie-chicken (Tympanuchus pallidicinctus): At the time of the pre-construction surveys, the lesser prairie-chicken was not listed under the ESA but was proposed for listing as threatened. A habitat assessment was conducted and determined that the Pronghorn Wind project area is outside the species' designated or proposed critical habitat. USFWS informal consultation was completed pre-construction, and USFWS concurred that the project was not likely to adversely affect the species. We note that the lesser prairie-chicken was subsequently listed as threatened under the ESA in November 2022 (after the date of this memorandum but relevant for ongoing disclosure purposes), and the implications of this listing for the Company's operations should continue to be monitored. See Section V.A below.
• Bat species: Acoustic bat monitoring detected several common bat species, but no significant concentrations of federally listed bat species were identified. The project area is outside the known range of the Indiana bat and the northern long-eared bat in Texas.
Avian and Bat Mortality Monitoring: A post-construction avian and bat fatality monitoring program was initiated at the Pronghorn Wind project upon achievement of commercial operation in June 2021. The first two monitoring seasons (summer/fall 2021 and spring 2022) have been completed. Reported mortality rates for both birds and bats are within the expected range for onshore wind projects in the western Texas region. The adaptive management plan specifies curtailment protocols to be triggered if mortality rates exceed pre-defined thresholds, including low-wind-speed curtailment during bat migration periods (generally March through November). To date, no adaptive management curtailment triggers have been activated.
Remediation: Ongoing semi-annual groundwater monitoring at the abandoned oil well site. Based on the two rounds of monitoring data collected to date (August 2021 and February 2022), groundwater TPH concentrations remain stable and below TCEQ Tier 1 PCLs. Active remediation is not expected to be required based on current data trends. The estimated annual monitoring cost of approximately $15,000 is de minimis relative to the project's operating revenues.
Status: The Pronghorn Wind project is in material compliance with all applicable environmental laws, regulations, and permit conditions. The ongoing groundwater monitoring obligation at the abandoned oil well site should be disclosed as a minor environmental matter in the S-1. The evolving status of the lesser prairie-chicken listing should be addressed in risk-factor disclosure.
E. Brazos Storage — Battery (Li-ion), 200 MW / 800 MWh, Fort Bend County, Texas
Project Status: Operating (Commercial Operation Date: Q4 2021)
Special Purpose Vehicle: Brazos Energy Storage LLC, a Texas limited liability company wholly owned by CB Operating.
Project Description: Brazos Storage is a 200 MW / 800 MWh lithium-ion battery energy storage system ("BESS") located on approximately 15 acres of leased land in Fort Bend County, Texas. The facility consists of containerized lithium-ion battery modules, power conversion systems, a project substation, and a generation-tie line interconnecting with the ERCOT grid. The facility provides energy arbitrage, ancillary services, and grid reliability services. The project achieved commercial operation in December 2021.
Phase I ESA: A Phase I ESA was completed by Greenridge in January 2021. The project site is a former agricultural parcel (rice cultivation) with no history of industrial or commercial use. No recognized environmental conditions were identified. No underground storage tanks, hazardous substance releases, or other environmental concerns were observed or reported.
Phase II ESA: Not required based on the absence of RECs in the Phase I ESA.
Environmental Permits: The project obtained a TCEQ construction stormwater general permit (now closed out) and maintains a Stormwater Pollution Prevention Plan for the operational phase. A TCEQ hazardous waste generator determination has been completed for the facility. The lithium-ion battery electrolyte solutions used in the facility are classified as hazardous materials, and the facility has been determined to qualify as a conditionally exempt small quantity generator ("CESQG") under RCRA based on the limited quantities of hazardous waste generated during normal operations (primarily spent electrolyte and damaged battery cells requiring disposal). The facility maintains an SPCC plan for transformer oil and battery electrolyte containment systems, including secondary containment for all containerized battery modules and the main power transformer.
Endangered Species: No federally listed threatened or endangered species were identified during the biological survey of the project site. The site's prior use as cultivated agricultural land and its proximity to developed suburban areas in the Fort Bend County corridor made the presence of sensitive species unlikely. No USFWS consultation was required.
Hazardous Materials Management: The Brazos Storage facility is the Company's only operational battery energy storage system and presents unique environmental and safety considerations relative to the Company's wind and solar projects. The lithium-ion battery cells and electrolyte solutions contained in the facility are classified as hazardous materials under the U.S. Department of Transportation regulations (49 C.F.R. Parts 171-180) for transportation purposes, and spent or damaged battery cells and electrolyte solutions are regulated as hazardous waste under RCRA. CBR maintains compliance with all applicable RCRA storage and handling requirements, including proper labeling, containment, and record-keeping for hazardous waste accumulation.
Of particular note, lithium-ion battery systems are subject to the risk of thermal runaway, which can result in fires that are difficult to extinguish using conventional firefighting methods. CBR has developed a comprehensive emergency response plan specific to the Brazos Storage facility, including a fire-response protocol for lithium-ion thermal runaway events. The emergency response plan was developed in coordination with the Fort Bend County Fire marshal's Office and the Fort Bend County Office of Emergency Management. CBR has provided training to local fire department personnel on lithium-ion battery fire response procedures and has installed on-site fire suppression and monitoring systems, including thermal monitoring of individual battery containers, gas detection systems, and water-based suppression systems.
Remediation: No pending remediation obligations.
Status: The Brazos Storage project is in material compliance with all applicable environmental laws, regulations, and permit conditions. We recommend that the S-1 include specific risk-factor disclosure regarding hazardous materials management and fire risk associated with lithium-ion battery energy storage systems, given the unique risk profile of this technology and the increasing public and regulatory attention to BESS safety.
F. Mesquite Wind — Onshore Wind, 420 MW, Oldham County, Texas
Project Status: Under Construction (Expected Commercial Operation Date: Q3 2022)
Special Purpose Vehicle: Mesquite Wind Holdings LLC, a Texas limited liability company wholly owned by CB Operating.
Project Description: Mesquite Wind is a 420 MW onshore wind energy project under construction on approximately 55,000 acres of leased land in Oldham County, Texas. The project will consist of 84 wind turbine generators, associated collection lines, a project substation, operations and maintenance facilities, and a generation-tie line. Foundation and turbine erection activities are underway, with commercial operation expected in Q3 2022.
Construction Financing: The project is financed by a $165 million construction-to-term credit facility provided by Prairie Commercial Bank, N.A., with conversion to a term loan expected in December 2024. The credit agreement contains customary environmental compliance covenants and representations.
Phase I ESA: A Phase I ESA was completed by Greenridge in August 2020. The Phase I ESA identified two recognized environmental conditions:
1. Agricultural chemical storage shed (northeast parcel): A deteriorated wooden shed located on the northeast parcel of the leased project area was identified as a former storage location for agricultural chemicals (herbicides and pesticides). The shed was partially collapsed at the time of Greenridge's site reconnaissance, and staining was observed on the soil surface in and around the shed footprint. Historical interviews with the landowner confirmed that the shed had been used for chemical storage for approximately 20 years (1970s through 1990s).
2. Buried debris/fill area (southern parcel): Anomalous surface conditions (uneven terrain, scattered debris) were observed on the southern parcel, suggesting the possible presence of buried debris or fill material. Historical aerial photographs reviewed during the Phase I ESA showed evidence of earth-moving activities in the area in the 1980s.
Phase II ESA: A Phase II ESA was conducted by Greenridge at both REC locations in November 2020. The investigation findings were as follows:
Agricultural Chemical Storage Shed (Northeast Parcel):
Soil sampling was conducted at twelve locations in and around the former shed footprint, with samples collected at surface (0-6 inches), shallow subsurface (1-2 feet), and deeper subsurface (4-6 feet) intervals. Samples were analyzed for organochlorine pesticides (OCPs), organophosphate pesticides, herbicides, and RCRA 8 metals.
The results indicated that organochlorine pesticide residues — specifically DDE (a degradation product of DDT) and DDT — were detected in surface and shallow subsurface soil samples at concentrations slightly above the TCEQ Tier 1 residential Protective Concentration Levels but below the Tier 1 commercial/industrial PCLs. The maximum detected DDE concentration was 2.8 mg/kg (residential PCL: 1.7 mg/kg; commercial/industrial PCL: 12 mg/kg). The maximum detected DDT concentration was 4.1 mg/kg (residential PCL: 1.7 mg/kg; commercial/industrial PCL: 12 mg/kg). No other pesticide, herbicide, or metals concentrations exceeded applicable screening levels. No groundwater impact was identified; a shallow hand-auger boring advanced to 15 feet below grade surface did not encounter groundwater.
Greenridge recommended institutional controls at this location, consisting of a land-use restriction limiting use of the affected area to commercial/industrial purposes (consistent with the project's wind energy use) and documentation of the environmental condition in the property records. Greenridge also recommended periodic monitoring (annual visual inspections and possible confirmation soil sampling) to verify the stability of conditions. CBR has agreed to implement these recommendations, and the institutional controls are in the process of being formalized through a restrictive covenant to be recorded against the affected parcel.
Buried Debris/Fill Area (Southern Parcel):
Test pits and soil borings were advanced at six locations across the area of anomalous surface conditions. Construction and demolition debris — consisting of broken concrete, rebar, wood fragments, and minor quantities of non-hazardous scrap metal — was encountered at depths of approximately 3 to 5 feet below the ground surface. The debris layer extended over an area of approximately 0.5 acres. Soil samples collected from within and below the debris layer were analyzed for VOCs, semi-volatile organic compounds (SVOCs), RCRA 8 metals, and TPH. No hazardous materials or constituents were detected above applicable TCEQ screening levels.
Greenridge concluded that the buried debris consists of non-hazardous construction and demolition waste, likely from the demolition of former ranch structures. No active remediation is required. Greenridge recommended that the presence of the buried debris be documented in the project's environmental record and that any future excavation in the area be conducted with awareness of the subsurface conditions.
Environmental Permits: The project currently holds an active TCEQ construction stormwater general permit. A Stormwater Pollution Prevention Plan has been in place since the commencement of construction activities and is maintained by CBR's on-site construction EHS coordinator. Erosion and sediment control measures (silt fencing, stabilized construction entrances, sediment basins) are in place and are inspected on a weekly basis and following rainfall events exceeding 0.5 inches. FAA Determinations of No Hazard to Air Navigation have been obtained for all 84 turbine locations. No air quality permits are required for wind energy operations.
Endangered Species / Avian and Bat Compliance: Pre-construction avian and bat surveys were conducted by Greenridge over two full survey seasons (spring 2020 through fall 2021). The survey program included breeding bird point count surveys, raptor nest surveys, golden eagle use surveys, lesser prairie-chicken lek surveys, and acoustic bat monitoring. USFWS informal consultation was completed in March 2022, prior to the conclusion of the due diligence period.
• Lesser prairie-chicken: A habitat assessment was conducted, and the project area was found to be within the estimated range of the lesser prairie-chicken but outside designated or proposed critical habitat boundaries. No active lek sites were identified within the project footprint during two seasons of lek surveys. However, three active lek sites were documented within 2 miles of the project boundary. As a voluntary conservation measure, CBR adopted a 0.5-mile setback from all documented lek sites, which resulted in the relocation of two turbine positions during the project design phase. USFWS concurred with the "not likely to adversely affect" determination.
• Golden eagle: Golden eagle nesting surveys were conducted within a 10-mile buffer of the project boundary. No active golden eagle nests were identified within the survey area. Eagle use of the project area was assessed as low based on survey data. A BGEPA Eagle Take Permit was not required.
• Bat species: Acoustic bat monitoring was conducted using full-season detector deployments at representative locations across the project area. The monitoring detected several common bat species (e.g., Brazilian free-tailed bat, evening bat) but did not detect significant concentrations of any federally listed bat species. The project area is outside the known range of the Indiana bat and the northern long-eared bat in the Texas Panhandle.
Avian and Bat Mortality Monitoring: A post-construction avian and bat fatality monitoring plan has been developed by CBR in consultation with USFWS. The plan provides for a three-year monitoring commitment commencing upon achievement of commercial operation, with standardized search protocols, carcass persistence and searcher efficiency trials, and adaptive management provisions. The adaptive management plan specifies curtailment protocols, including feathering of turbine blades below manufacturer's cut-in speeds during bat migration periods, to be triggered if mortality rates exceed pre-defined thresholds. The monitoring plan was reviewed and approved by USFWS in February 2022.
Cultural Resources: An NHPA Section 106 cultural resources survey was completed in 2020 in connection with the project's generation-tie line, which crosses land subject to a federal right-of-way. The cultural resources pedestrian survey identified one potentially eligible historical site: a cluster of abandoned ranch structures (a stone house, barn foundation, and corral) dating to the early 20th century. The site was evaluated for eligibility for listing on the National Register of Historic Places. In consultation with the Texas SHPO, CBR implemented avoidance measures consisting of a 100-foot buffer around the identified structures, with construction exclusion fencing installed during the construction phase. The Texas SHPO issued a letter of concurrence with a finding of "no adverse effect" on the historic property, conditioned on the maintenance of the buffer during construction.
Pending Remediation / Monitoring: Institutional controls are recommended and in the process of being formalized at the agricultural chemical storage site on the northeast parcel. The estimated annual cost of monitoring at this location is approximately $10,000. No active remediation is required at the buried debris/fill area on the southern parcel; costs associated with documentation are nominal.
Status: Construction of the Mesquite Wind project is on track for the expected Q3 2022 commercial operation date. Environmental compliance has been maintained throughout the construction phase. We recommend that the Phase II ESA findings and the institutional controls at the northeast parcel be disclosed in the S-1 as part of the project description and in the risk factors section.
G. Cimarron Solar — Solar PV, 350 MW, Doña Ana County, New Mexico
Project Status: Under Construction (Expected Commercial Operation Date: Q1 2023)
Special Purpose Vehicle: Cimarron Solar Development LLC, a New Mexico limited liability company wholly owned by CB Operating.
Project Description: Cimarron Solar is a 350 MW utility-scale solar PV project under construction on approximately 3,200 acres of leased land in Doña Ana County, New Mexico. The project will consist of single-axis tracking solar panels, inverters, transformers, a project substation, and a generation-tie line. Foundation and racking installation activities are underway, with panel installation expected to commence in Q3 2022 and commercial operation expected in Q1 2023.
Construction Financing: The project is financed by a $143 million construction-to-term credit facility provided by Prairie Commercial Bank, N.A., with conversion to a term loan expected in March 2025. Approximately $100 million of primary IPO proceeds are expected to be allocated to fund construction of this project, as disclosed in the anticipated "Use of Proceeds" section of the S-1. The credit agreement contains customary environmental compliance covenants and representations.
Phase I ESA: A Phase I ESA was completed by Greenridge in April 2021. The Phase I ESA identified one recognized environmental condition: a portion of the project site was historically used for military training exercises due to the site's proximity to a former military installation (a World War II-era training facility that was decommissioned in the late 1940s). Historical records and aerial photographs indicated that the affected area, comprising approximately 400 acres in the southeastern portion of the project site, may have been used for small-arms training and vehicle maneuvering exercises. The potential for unexploded ordnance ("UXO") and military munitions of concern was identified as a REC requiring further investigation.
Phase II ESA: A Phase II ESA was conducted by Greenridge in August 2021. The investigation included the following activities:
• A detailed historical records review, including U.S. Army Corps of Engineers archives, Bureau of Land Management records, and state land office files, to refine the understanding of historical military use of the area.
• A magnetometer survey (electromagnetic geophysical survey) across the approximately 400-acre affected area, designed to detect subsurface metallic anomalies that could indicate the presence of buried ordnance or munitions.
• Intrusive investigation (excavation) of identified anomalies by a qualified UXO technician team under the supervision of Greenridge.
The magnetometer survey identified 47 metallic anomalies within the survey area. All 47 anomalies were investigated through excavation. The items recovered were determined to be agricultural equipment debris (plow parts, fence wire, scrap metal) and miscellaneous metallic objects, none of which were identified as military munitions, unexploded ordnance, or explosives. No munitions or explosive hazards were confirmed.
Notwithstanding the negative findings of the intrusive investigation, Greenridge recommended the implementation of a munitions and explosives of concern ("MEC") awareness plan for the duration of construction activities in the affected area. The MEC awareness plan includes worker training on the identification of potential UXO and munitions items, protocols for reporting and responding to suspected finds, and procedures for halting work and notifying qualified UXO personnel in the event of a discovery. CBR has implemented the MEC awareness plan, and it is currently in effect during active construction activities. Upon completion of construction in the affected area, Greenridge has indicated that the MEC awareness plan can be decommissioned, as the risk of encountering munitions during normal solar facility operations (which do not involve ground disturbance) is negligible.
Environmental Permits: The project obtained a construction stormwater permit from NMED and maintains a Stormwater Pollution Prevention Plan. A fugitive dust control plan has been implemented in compliance with Doña Ana County air quality requirements. Construction activities are ongoing in compliance with all applicable permit conditions. NMED has not issued any notices of violation or compliance orders in connection with the project.
Endangered Species: Pre-construction biological surveys were conducted by Greenridge across the project footprint. No federally listed threatened or endangered species were identified on the project site. Suitable habitat for the northern aplomado falcon (Falco femoralis septentrionalis), which is listed as endangered under the ESA, was identified in areas adjacent to but not within the project boundary. USFWS informal consultation was completed in December 2021, and USFWS issued a "not likely to adversely affect" determination for the aplomado falcon, noting that the project site itself does not contain suitable nesting or foraging habitat for the species.
Cultural Resources: An NHPA Section 106 cultural resources survey was completed in 2021. The pedestrian survey covered the entire project footprint and a buffer zone. No significant cultural or archaeological resources were identified within the area of potential effect. In accordance with NHPA Section 106 requirements and federal agency guidelines, consultation was conducted with nearby Pueblo communities, including the Pueblo of Tortugas and the Pueblo of Isleta del Sur. No objections were raised by any consulted Tribal entities, and the New Mexico SHPO issued a letter of concurrence with a finding of "no historic properties affected."
Remediation: The MEC awareness plan is currently in effect during construction activities. No active remediation of environmental contamination is required. Upon completion of construction in the affected area, the MEC awareness plan will be decommissioned.
Status: Construction of the Cimarron Solar project is progressing on schedule for the expected Q1 2023 commercial operation date. Environmental compliance has been maintained throughout the construction phase. We recommend that the UXO/MEC awareness program be disclosed in the S-1 risk factors section, given the potential public sensitivity to the topic and the fact that IPO proceeds are expected to fund a portion of this project's construction costs.
H. Development Pipeline Projects (6.2 GW)
CBR's development pipeline consists of approximately 6.2 GW of renewable-energy generation and storage projects in various stages of development. Development-pipeline projects are held by CBR Development Co. LLC, a Texas limited liability company wholly owned by CB Operating. The two most advanced development-pipeline projects, for which material environmental diligence information is available, are summarized below, followed by a general discussion of the remaining early-stage pipeline.
1. Silverleaf Wind — Onshore Wind, 600 MW, Irion County, Texas
Expected Commercial Operation Date: Q4 2024
Environmental Diligence Status: A Phase I ESA was completed by Greenridge in January 2022. No recognized environmental conditions were identified at the project site. The site consists of rangeland and agricultural land (primarily cattle ranching) with no history of industrial use or known contamination. Pre-construction avian and bat surveys are currently underway, having commenced in spring 2021, and are expected to be completed following the fall 2022 survey season. USFWS consultation has not yet been initiated and will be conducted following completion of the biological surveys. FAA Determinations of No Hazard are pending and will be obtained prior to construction commencement.
Key Environmental Consideration: The Silverleaf Wind project area is within the broader estimated range of the lesser prairie-chicken, and the evolving status of the species' ESA listing (proposed threatened at the time of pre-construction survey planning; listed as threatened in November 2022) should be monitored closely. Depending on the final designation of critical habitat and the results of ongoing lek surveys, USFWS consultation may result in conditions or conservation measures that could affect project layout, construction timing, or operational protocols. This risk should be addressed in the S-1 risk factors.
2. Copper Basin Solar + Storage — Solar PV + BESS, 750 MW + 300 MW / 1,200 MWh, Riverside County, California
Expected Commercial Operation Date: Q2 2025
Environmental Diligence Status: A Phase I ESA was completed by Greenridge in March 2022. The Phase I ESA identified one re