Electric vehicle charging stations are popping up across the country at record speed, to both meet and drive demand. According to the U.S. Department of Energy, there are currently 46,868 publicly accessible EV charging stations in the U.S.,[1] many of which are located in retail parking lots and garages.

Charging stations and retail uses enjoy a robust symbiotic relationship in which EV drivers are afforded a place to conveniently charge their EV while shopping and the retail establishment benefits from the EV drivers' patronage.

But despite the growing demand and countless programs and incentives aimed at increasing EVs and charging stations, applicable zoning regulations relating to EV charging stations are deficient or nonexistent in many jurisdictions.

Additionally, given the novel nature of EV charging stations, there is often uncertainty regarding how to structure the underlying real estate transactions for the leasing or licensing of the premises or land upon which the EV charging stations will be installed, which can result in complex transactional structures.

Support for local municipalities, businesses and property owners looking to host EV charging stations is crucial as they tackle the necessary zoning amendments and standardize the approach to structuring transactions for facilitating EV charging infrastructure.

Growing Industry

EV charging infrastructure providers are racing to keep up with the increasing popularity of EVs, and to ensure meaningful charging opportunities for current and prospective EV drivers who may lack confidence in the charging infrastructure.

From 2020 to 2021, sales of new light-duty plug-in all-electric EVs and plug-in hybrid electric vehicles grew by 85% and 138%, respectively.[2] While all-electric EVs accounted for only approximately 3.4% of light-duty vehicles sold in the U.S. in the fourth quarter of 2021,[3] this number rose significantly over the prior year, and is expected to continue to grow exponentially.

New government initiatives aim to increase EV sales 50% by 2030.[4] The Biden administration recently allocated $7.5 billion in funding to grow EV charging station networks across the country.[5] As the proliferation of EVs increases, charging infrastructure must continue to grow to support EVs, which will in turn further accelerate their adoption.

Retailers, the EV industry, government agencies and researchers alike have identified retail locations as a prime opportunity for EV charging infrastructure. EV charging technology has rapidly advanced, and new public chargers installed today are largely direct-current fast chargers, which can charge an EV in as little as 20 minutes — the perfect amount of time to quickly run into the store for a few things.[6]

Locating EV charging stations in retail parking lots drives consumers to stores — with a whopping 90% of EV drivers typically making a purchase while charging.[7] Installing EV charging stations at retail locations also increases access to affordable public charging stations for EV owners who live in multifamily dwellings, or otherwise lack access to overnight charging at their residence.[8]

EV charging stations are thus a meaningful amenity for existing retail customers, and also bring new customers to stores that face stiff competition from online retailers.

Zoning and Local Municipalities

Another advantage of locating EV charging stations at retail and shopping centers is that EV charging stations are compatible with commercial uses from a zoning and planning perspective. Retail uses are typically located in commercial zoning districts that are convenient to residential zoning districts, and in close proximity to arterial highways and major streets.

Existing retail uses have presumably been deemed appropriately located from a land use, environmental and community character perspective, making it more likely that adding EV charging stations in such locations will also be deemed appropriate by the local municipality and community. Local municipalities also benefit from EV drivers visiting their commercial districts, as the dollars spent by EV drivers support the local economy.

Although many local municipalities have adopted regulations allowing, incentivizing and sometimes even requiring EV charging stations, others lack the resources or will to do so.[9] Resistant municipalities commonly cite concerns regarding a perceived lack of demand, traffic generation or safety.

Some jurisdictions limit the number of EV charging stations permitted, and some require planning board site plan approvals, special permits, variances or other discretionary zoning relief prior to the installation of EV charging stations, which can increase the cost and time required to obtain permits and deter applicants.[10]

Other municipalities are in the process of adopting EV regulations — some while authorizing charging stations as accessory uses within the context of existing regulatory structures in the interim, and some while delaying EV charging station approvals altogether.

Municipalities employ a wide range of approaches, and there is little consistency between jurisdictions. This makes the permitting process unpredictable and sometimes difficult for EV charging infrastructure providers.

Zoning regulations are a powerful tool that municipalities can employ to increase EV adoption. Many federal, state and local agencies have therefore issued guidance and tools to increase consistency and encourage EV-friendly zoning regulations, parking ordinances and permitting practices.[11]

Following governmental guidance and the example of early adopters of EV-friendly zoning regulations, local municipalities can ease permitting requirements where appropriate. This can be accomplished in various ways, and local municipalities should determine which tools best fit their community and existing regulatory structure.

For instance, zoning regulations typically include the concept of an accessory use, which is a use that is: (1) generally conducted on the same zoning lot as the principal use to which it is related; (2) clearly incidental to, and customarily found in connection with, such principal use; and (3) either under the same ownership as the principal use, or operated and maintained substantially for the benefit or convenience of the owners, occupants, employees, customers or visitors of the principal use.[12]

EV charging stations are quickly becoming a more common accessory use. Recognizing this, municipalities may either amend their zoning regulations to expressly include EV charging stations as an accessory use, or treat them as such pursuant to the existing zoning regulations.[13]

This allows for charging stations to be permitted on an as-of-right basis — requiring no discretionary approvals from the municipality — and avoids delays while municipalities enact more comprehensive zoning regulations relating to EV charging stations.

There are other common approaches to permit and encourage EV charging infrastructure that may be attractive to municipalities. For example, municipalities can provide incentives, such as development rights bonuses, or require a minimum number of EV charging stations in new parking facilities.

Another way to promote EV charging infrastructure is to streamline permitting requirements, which can be accomplished in various ways, such as creating a fast-tracked application for adding EV charging stations in existing commercial parking lots, or allowing applicant self-certification where appropriate.

Because existing parking facilities often only include the minimum number of required accessory parking spaces, permitting EV charging stations to count toward required parking also eases the zoning obstacles encountered when seeking to convert existing spaces to EV charging stations.

Municipalities can also enact zoning regulations that provide mechanisms to waive a certain number of required parking spaces when the installation of EV charging stations would result in a de minimis loss of such parking spaces — i.e., the equipment takes up one of the parking spaces such that five existing parking spaces become four proposed EV charging station spaces.

Local municipalities should rely on these tools and other zoning mechanisms, as appropriate, to encourage speedy EV adoption.

Leasing, Licensing, and Use and Occupancy Agreements

In addition to clearing the permitting hurdle, EV charging infrastructure providers must enter into lease, license, or other use and occupancy agreements with property owners or site hosts for the installation and use of the EV charging stations when the provider does not own the site.

There are a number of factors to carefully consider when structuring the underlying real estate transaction, including, but not limited to, (1) whether the site will be separately demised from the rest of the property, and (2) whether the EV charging infrastructure provider or host will have a regular physical presence at the site — i.e., whether there will be employees stationed on site.

Generally, the site upon which EV charging stations are installed is not separately demised from the larger property, and most often the EV charging infrastructure provider will not have a regular physical presence on site.

Therefore, the allocation of responsibilities with respect to maintenance and repairs and enforcing rules and regulations may need to be different with respect to the site of installation of EV charging stations than what may otherwise be contemplated in a traditional lease structure, as the EV charging infrastructure provider may not be in a position to perform such work, and may not be able to ensure compliance.

In such instances, the property owner or site host, rather than the EV charging infrastructure provider, may be best positioned to safeguard the site and larger property, in general, against trespassers and tortfeasors, and wrongful actions caused thereby.

The parties should carefully consider which party should undertake obligations, including indemnification obligations, if any, and liabilities in connection with any such third-party actions — for example, the obligation to repair, restore, and remediate property damage or environmental conditions caused by any such trespassers and tortfeasors.

Based on the foregoing factors and considerations, an underlying real estate structure utilizing a license or use and occupancy agreement, rather than a lease agreement, may be more appropriate, particularly in instances where EV charging stations are installed on sites that are not separately demised, and situations where the EV charging infrastructure provider will not have a regular physical presence.

In addition to determining the underlying structure for the real estate transaction, the property owner or site host and EV charging infrastructure provider should evaluate and negotiate, as appropriate and applicable: (1) any EV charging station exclusivity provision, and the terms thereof; (2) any continuous operations provision, and the exceptions thereto; (3) emergency procedures in the event of an EV charging station malfunction; and (4) procedures and protocols for decommissioning the EV charging stations at the end of the applicable term.

It is important to note, however, that the process for decommissioning may be jurisdiction-specific, and is subject to change as technology advancements are made. Therefore, the parties should anticipate and negotiate significant flexibility in connection with any decommissioning requirements set forth in the agreement.

Furthermore, in jurisdictions where it is unclear or uncertain whether the installation and use of EV charging stations is permitted under applicable zoning regulations, codes and parking ordinances, to minimize risks inherent in obtaining government approvals for EV charging stations, the agreement entered into between the property owner or site host and the EV charging infrastructure provider may need to contain contingencies allowing the parties to terminate the agreement in the event the necessary approvals are not obtained.

Closing

EVs are increasingly common in the U.S. Public charging infrastructure is essential to the success of the EV industry and the economic, environmental and energy benefits it promises.

The proliferation of EVs and EV charging stations is a positive feedback loop, each dependent upon and supporting the other. Widespread access to public charging infrastructure can be a catalyst for the large-scale adoption of EVs.

Local municipalities and retail property owners have an important role to play — and much to gain — in supporting such infrastructure.

Elizabeth Bennett and Mary Therese O'Sullivan are partners at Fox Rothschild LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] See U.S. Department of Energy, Alternative Fueling Station Locator, available at https://afdc.energy.gov/stations#/find/nearest?fuel=ELEC&country=US.

[2] See Minos, Scott, New Plug-in Electric Vehicle Sales in the United States Nearly Doubled from 2020 to 2021 (March 1, 2022), available at https://www.energy.gov/energysaver/articles/new-plug-electric-vehicle-sales-united-states-nearly-doubled-2020-2021.

[3] See U.S. Energy Information Administration, Electric Vehicles and Hybrids Surpass 10% of U.S. Light-Duty Vehicle Sales, available at https://www.eia.gov/todayinenergy/detail.php?id=51218.

[4] National Renewable Energy Laboratory ("NREL"), Electric Vehicle Charging at Retail Locations Offers Convenience, Building Integration Opportunities, Oct. 27, 2021, available at https://www.nrel.gov/news/program/2021/electric-vehicle-charging-retail-locations-offers-convenience.html.

[5] See U.S. Department of Transportation and Federal Highway Administration Memorandum Re: The National Electric Vehicle Infrastructure Formula Program Guidance, Feb. 10, 2022, available at https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf.

[6] See U.S. Department of Energy, Alternative Fuels Data Center, Developing Infrastructure to Charge Plug-In Electric Vehicles, available at https://afdc.energy.gov/fuels/electricity_infrastructure.html.

[7] See fn iv., NREL.

[8] See id.

[9] See Great Plains Institute, Summary of Best Practices in Electric Vehicle Ordinances (June 2019), available at https://www.betterenergy.org/wp-content/uploads/2019/06/GPI_EV_Ordinance_Summary_web.pdf.

[10] See WXY Architecture & Urban Design (prepared for New York State Energy Research and Development Authority and Transportation and Climate Initiative), Creating EV-Ready Towns and Cities: A Guide to Planning and Policy Tools (Nov. 2012), available at https://www.transportationandclimate.org/sites/default/files/EVSE_Planning_and_Policy_Tool_Guide.pdf (hereinafter "EVSE Tool Kit").

[11] See, e.g., EVSE Tool Kit; U.S. Department of Energy, Alternative Fuels Data Center, Plug-In Electric Vehicle Deployment Policy Tools: Zoning, Codes, and Parking Ordinances (Aug. 2015), available at https://afdc.energy.gov/bulletins/technology-bulletin-2015-08.html.

[12] See, e.g., Zoning Resolution of the City of New York § 12-10.

[13] See, e.g. id. (New York City amended their Zoning Resolution to specifically include EV charging in connection with parking facilities as an accessory use).

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