Insight

Key Legal Considerations for Electric Vehicle and Hydrogen Fueling Infrastructure

June 16, 2023

Electric vehicles (EVs) and hydrogen fuel cell vehicles will be key players in the nationwide and industrywide effort to cut emissions. The industry has been focused on battery electrification for light-duty vehicles and the expansion of the EV charging infrastructure. Increasing attention is being paid to using hydrogen and adopting hydrogen fuel cell technologies in the heavy-duty transportation sector, as hydrogen is viewed as the option with the greatest long-term opportunity for decarbonizing that sector.

The Biden administration has made significant investments through grants and incentives to encourage and accelerate the development of the charging and fueling infrastructure and the continued development of hydrogen fuel cell technologies. The industry will need to consider and address a variety of commercial and legal issues to meet the ambitious greenhouse gas emissions reduction goals that the Biden administration has established for both types of transportation. 

Hydrogen Use in the Heavy-Duty Transportation Sector

Alignment of the development and deployment of hydrogen fuel cell vehicles and the availability and accessibility of hydrogen fueling stations will be critical to the successful incorporation of hydrogen fuel cell vehicles into transportation fleets to decarbonize the heavy-duty transportation sector.

Operators of hydrogen fuel cell vehicles must have certainty that hydrogen fueling stations will be accessible and available along their travel routes. At the same time, investors and developers of hydrogen fueling stations need assurance that hydrogen fuel cell vehicles will be on the road and will refuel at their stations to justify their investment and development.

Scaling hydrogen fuel cell vehicles will require continued investment, research, development, and demonstration of hydrogen fuel cell technologies to enable the fuel cell durability, cost, and performance that is required for heavy-duty vehicle use.

The US Department of Energy has made available $47 million to fund the research, development, and demonstration of hydrogen carriers with unique storage and delivery methodologies, onboard storage of liquid hydrogen, and liquid hydrogen transfer and vehicular fueling technologies for medium- and heavy-duty applications. The department has also made available $750 million for, among other things, improving the efficiency, durability, and cost of producing clean hydrogen using electrolyzers. Additional funding to further these efforts is expected to be made available in the near future.

Significant expansion to the existing hydrogen fueling infrastructure is needed to successfully incorporate hydrogen fuel cell vehicles in heavy-duty transportation fleets. The hydrogen fueling stations that exist today are located predominantly in California, which limits the overall range and reach of hydrogen fuel cell vehicles in the United States.

Key issues for investors and developers of hydrogen fueling stations to keep front of mind as they continue their efforts to accommodate the expected increase in use of hydrogen fuel cell vehicles include the issues discussed below.

Source of the Hydrogen

The scope and design of a hydrogen fueling station is directly impacted by the production site of the hydrogen that is dispensed from the fueling station. If the hydrogen is delivered to the hydrogen fueling station, the hydrogen can be delivered to an onsite storage tank or delivered in a container that can be swapped out at the station. On the other hand, if the hydrogen is produced onsite, the station design will need to account for the necessary equipment and any feedstock needed for the production of hydrogen.

Purity of the Hydrogen

The hydrogen that is dispensed from the hydrogen fueling station will need to meet certain purity requirements for use in a hydrogen fuel cell vehicle. Hydrogen fuel quality testing may need to be performed to confirm the quality and purity of the dispensed hydrogen.

Access to the Hydrogen Fueling Station

The hydrogen fueling station must have dispensing equipment that is compatible with the hydrogen fuel cell vehicles the hydrogen fueling station may serve.

Ownership of the Hydrogen Fueling Station

A station owner may not always own the property on which the hydrogen fueling station is constructed. Depending on whether the station owner owns or leases the property, there may be restrictions or limitations on the permitted use of the property and the type of equipment and facilities that may be installed on the property.

Regulatory Uncertainty

There remains a lack of a comprehensive regulatory framework that applies to hydrogen and the infrastructure that is used to produce, transport, and store hydrogen in the United States. The Occupational Safety and Health Administration, Environmental Protection Agency, and Pipeline and Hazardous Materials Safety Administration currently exercise some form of regulation over hydrogen. However, other federal agencies, including the Federal Energy Regulatory Commission and Surface Transportation Board, may play a role in regulating hydrogen and the development of hydrogen infrastructure, although they have yet to do so.

EV Charging Infrastructure

The Biden administration has long been focused on an expansive plan to promote the development and adoption of EVs. With an August 2021 announced goal for EVs to make up 50% of all vehicles sold in the United States by 2030, the administration has worked to propose or implement investment of $7.5 billion for building a national network of 500,000 EV chargers; tax incentives for buyers of new and used EVs; domestic production of the semiconductors, batteries, and minerals for EVs; and the most aggressive federal vehicle emissions standards to date. 

Network charging infrastructure is a threshold issue to be addressed in order to get more EVs on the roads in US markets. Range anxiety, exacerbated by what many potential consumers view as inadequate EV charging opportunities throughout the United States, is considered to be an obstacle to the Biden administration’s stated goal of achieving 50% zero-emission vehicles by 2030. Currently, the United States has approximately 140,000 public EV chargers. However, analysts project that the country will require approximately 1.5 million public EV chargers to meet the administration’s 2030 goals.

Some of the most germane issues that EV market participants must consider relate to the following.

Commercially Successful Siting of EV Charging Infrastructure

Charge point operators or real estate owners will need advantageous site host agreements that address numerous issues to protect their rights and provide them monetary success in the arrangement. These agreements should consider elements such as

  • Exclusivity in installation;
  • Operations and maintenance responsibility;
  • Revenue sharing and leasing payments;
  • Ownership of property after termination; and
  • Indemnification and insurance.

In addition, charge point operators must take care to consider the impact of utility rate design mechanisms and applicable usage patterns when modeling the extent to which energy sales opportunities can be commercially successful.

EV Infrastructure and Interconnected Utility Data Protection and Cybersecurity

Undeveloped cybersecurity and data protection standards and requirements for EV infrastructure could make consumer data vulnerable to hackers. This could also create entry points for hackers seeking to disrupt the US electric grid.

Vehicle-to-Grid Market Access, Monetization, and Regulatory Implications

Bidirectional charging allows EV customers or fleet lessors to use vehicle-to-grid capabilities to run power from the EV back into the grid, which can facilitate market access. However, vehicle-to-grid use may also trigger the need for energy services management functions between the EV operator and either its owner or the charge point operator. There are also regulatory implications of engaging in vehicle-to-grid activities by either the charge point operator or customer.

Conclusion

Opportunities and challenges continue to emerge in the ever-evolving automotive and mobility space, including developing hydrogen fuel infrastructure; safeguarding EVs, EV supply equipment, and the electrical grid from cyberthreat actors; and introducing more complex advanced driver-assistance systems (ADAS) technologies in passenger and commercial vehicles.

Morgan Lewis’s Automotive & Mobility team offers unique insight into the complex legal and regulatory issues automakers, component manufacturers, technology suppliers, distributors, and other mobility stakeholders need to consider before pressing the pedal today on the trends that are driving the industry toward tomorrow.

Contacts

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