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Permit contains strict conditions for environment
BY ANNE ADAMS • STAFF WRITER
RICHMOND - The State Corporation Commission' s final order granting a permit to Highland New Wind Development was issued in a 31-page document outlining the background and arguments of the case, and adding conditions mostly steeped in recommendations from the state Department of Environmental Quality and Department of Game and Inland Fisheries.
Commissioners Theodore Morrison Jr., Mark C. Christie, and Judith W. Jagdmann issued the state certificate Dec. 20, more than two years after Highland New Wind Development LLC applied for it on Nov. 8, 2005.
The company wants to build the facility on the northwestern edge of Highland County, a stone's throw from the West Virginia state line, just off U.S. 250 on Allegheny Mountain. HNWD owners, H.T. "Mac" McBride, his wife, Lola, and son, Tal, have some 4,000 acres of property they've owned since 1958. The utility is planned for Red Oak Knob and Tamarack Ridge, consisting of up to 20 wind turbines, each with a capacity for 2 megawatts of power. The turbines would be mounted on freestanding towers with rotors reaching up to a height of 400 feet. If built, it would be Virginia's first wind energy plant. As such, SCC officials leaned on the expertise of several state and federal agencies for advice on everything from environmental issues to financial viability.
The facility requires a new substation with transformers and other equipment connecting it to an existing 69- kilovolt line owned by Allegheny Power. That transmission line has just enough open capacity to support the 39- megawatt project.
After HNWD applied for its state permit, SCC held a series of public hearings, received public comment and evidence, and appointed hearing examiner Alexander Skirpan to oversee the case.
Several people participated formally, with legal representation, including Highland citizens and landowners Ralph R. Swecker, Christopher T. Swecker, Pendleton Stokes Goodall III, McChesney Goodall III, William Stokes Goodall, Wayne Stokes Goodall, and Gregory Warnock; The Nature Conservancy in Virginia; the Highland County Board of Supervisors; and Michel A. King.
Following nearly two years of public and evidentiary hearings plus briefs from those participating in the case, Skirpan submitted his initial report March 1, 2007 with recommendations and conclusions including that:
• The facility would have no adverse ef fect on the reliability of electric service provided by any regulated public utility;
• The project would advance the goal of electric competition in Virginia;
• It would have a positive impact on economic development in the state;
• Construction and operation would not be contrary to the public interest;
• A permit issued by the SCC should include a sunset provision that calls for the certificate to expire if construction has not begun within two years from the date of issuance;
• Any certificate issued should require HNWD to comply with all permitting requirements listed in the Department of Environmental Quality report; and
• A certificate should require HWND to comply with conditions recommended by the DEQ to minimize adverse environmental impact.
April 6, 2007, SCC commissioners remanded the case back to Skirpan for a closer look at environmental issues, especially how to monitor and mitigate those potential impacts. SCC concluded the risk to bats and birds required further scrutiny, and asked Skirpan to examine more specifically how that risk could be studied and mitigated.
Skirpan coordinated further hearings on that issue, and submitted a second report Oct. 16, 2007, in which he recommended a specific monitoring and mitigation plan.
The SCC spent the better part of last fall to make its final decision granting the permit, with conditions.
Commissioners agreed with Skirpan on most findings, including his conclusion that they would not consider things already addressed by the conditional use permit approved for HNWD by Highland County supervisors. Those issues included: property values; tourism; view shed; height re- strictions; setbacks; lighting; color of structures; fencing; security measures; erosion and sediment control; signage; access roads; and decommissioning.
The biggest issue, commissioners said, was how the project might damage the environment and wildlife. "We must consider environmental impact," commissioners said in their order. "The statute, however, does not require the commission to find any particular level of environmental benefit, or an absence of environmental harm, as a precondition to approval. Rather, the statute directs that the commission 'shall give consideration to the effect of the facility and associated facilities on the environment and establish such conditions as may be desirable or necessary to minimize adverse environmental impact.'"
The SCC, by law, depends on the expertise of state and federal agencies with experts who address environmental issues. A number of those were consulted about HNWD's application, including departments of conservation and recreation; historic resources; agriculture and consumer services; health; forestry; transportation; and mines, minerals and energy, among others. The DEQ then issued its report on the application after consulting these agencies for comment, and set forth a number of recommendations. The SCC agreed with Skirpan those conditions be adopted and attached to the permit.
Recommendations included HNWD must:
• Provide a detailed site plan with maps showing the location of towers and all other components including the three stream crossings, location of wetlands along the three stream channels, and where the drilling beneath the stream channels will occur;
• Conduct archaeological and architectural surveys if necessary and work with the Department of Historic Resources on studies evaluating the project's impacts to historic resources;
• Avoid direct and indirect impacts to wetlands, and minimize them as much as possible;
• Protect water quality, habitat, and resources from construction by adopting recommendations from the DEQ, DGIF, and DCR;
• Work closely with DGIF and the U.S. Fish and Wildlife Service to ensure threatened and endangered species are adequately protected; and
• Coordinate closely with the Virginia Department of Transportation to ensure transportation issues are adequately addressed.
HNWD had requested the SCC limit the DEQ's recommendations, but commissioners declined to do that. "We reject Highland Wind's request for limitations and/or modifications to the requirements in the DEQ report," SCC said. "Rather, we find that requiring Highland Wind to comply with the conditions recommended by DEQ is desirable or necessary to minimize adverse environmental impact."
Skirpan also recommended HNWD comply with other requirements in DEQ's report including with regard to water quality and wetlands; air quality permits; erosion and sediment control, and storm water management; solid and hazardous waste management; protected species laws; and local permits and requirements.
"We reject the applicant's request to specifically limit this requirement to obtaining three permits related to water protection, open burning, and storm water management," the commissioners said. "Rather, as a requirement of our approval herein, Highland Wind shall acquire all environmental and other approvals and permits necessary to construct and to operate the proposed wind energy facility and shall provide a complete list of said approvals and permits to the Director of the Commission's Division of Energy Regulation prior to operation of the facility. We find that such requirement is desirable or necessary to minimize adverse environmental impact. This requirement, however, does not direct the applicant to obtain specific permits or approvals if Highland Wind is not otherwise legally obligated to do so."
Threatened, endangered species
Highland citizens involved in the case had asked SCC to either deny HNWD's application, or require the company to enter into a habitat conservation plan and get an incidental take permit, both federally issued, before the utility is built, to protect endangered species.
Skirpan had said, "Highland citizens contended that because the project site is within the documented migration route of the endangered Indiana bat and Virginia bigeared bat and based on the presence of bald and golden eagles, Highland Wind should follow the advice of DGIF and U.S. Fish and Wildlife and file a habitat conservation plan acceptable to the U.S. Fish and Wildlife Service."
Citizens recommended HNWD's application be denied just as the West Virginia Public Service Commission denied a similar project (Liberty Gap) proposed about 10 miles from HNWD's site. The PSC had rejected Liberty Gap's application next door in Pendleton County, W.Va., in part because of the project's potential impact to the same endangered bat species and Liberty Gap's failure to get a federal habitat conservation plan and incidental take permit.
In HNWD's case, however, Skirpan did not find enough evidence to require HNWD to get the federal plan and permit.
"We agree," commissioners said. "We find that neither the risk to threatened or endangered species, nor Highland Wind's failure to enter into a habitat conservation plan and to seek an incidental take permit, make this project contrary to the public interest or otherwise necessitate denial of the application ... we require a monitoring and mitigation plan, which will provide significant information on the impacts to protected species. In addition, Highland Wind has committed to comply with ... all state and federal laws regarding endangered species."
Skirpan had agreed with state agencies, though, that not getting the federal plan or permit, HNWD "risks costly shutdowns and penalties."
Skirpan had concluded HNWD's failure to get either the plan or the permit is likely to make it more difficult to finance the project. He said, "Highland Wind apparently has chosen to accept the business risks attendant to not entering into a habitat conservation plan and not seeking an incidental take permit. This is a business risk voluntarily assumed by Highland Wind, which may impact the viability of the project."
Commissioners agreed with his conclusion, however, that it could not force the issue. "We do not find ... the statutory criteria applicable to this proceeding requires us to order Highland Wind not to undertake the financial and operating risks associated with eschewing a habitat conservation plan and an incidental take permit," SCC said.
Highland citizens also argued the SCC cannot authorize the taking of endangered species or waive provisions of the Endangered Species Act. "We agree," commissioners said. "Obviously, this commission has no authority to sanction the take of endangered species or to waive provisions of the Endangered Species Act."
Department of Game and Inland
Fisheries' monitoring plan
DGIF had filed testimony from Rick Reynolds, its wildlife diversity biologist, and statewide non-game mammals project coordinator. Reynolds testified that to minimize adverse environmental impact, a monitoring and mitigation plan for bats and birds for the life of the project is appropriate. DGIF proposed a plan commissioners agreed with.
"We find that requiring Highland Wind to comply with the monitoring and mitigation plan ... is desirable or necessary to minimize adverse environmental impact," commissioners said.
HNWD had argued the SCC must balance its consideration of environmental impacts with the potential positive impacts its renewable power would create. SCC said it did consider those, but "such (positive) attributes, however, even if verifiable, do not alter the significant risk to bats and birds that will result from this project. We conclude that such attributes, even if taken in the light most favorable to the applicant, neither legally nor factually warrant the 'downsized' monitoring and mitigation plan proposed by Highland Wind."
HNWD had argued the Virginia Energy Plan, legislation passed by the General Assembly during the pending application for the project, mandates the SCC take "discretionary action" with regard to energy issues, and noted the plan encourages removing impediments to renewable energy project. HNWD said the "appropriate legal conclusion, contrary to the hearing examiner's recommendation, is that Virginia should not impose the most stringent monitoring and mitigation standards in the country on this project in order to chart new territory in a regional if not national concern about future cumulative bat fatalities," and that if the SCC were to adopt Skirpan's recommendations, "every potential investor in the wind market will lose interest in the project."
The SCC, however, said the state's policy "does not eliminate our obligation under (state code) to 'give consideration to the effect of that facility on the environment and establish such conditions as may be desirable or necessary to minimize adverse environmental impact.' Indeed, we have done just that," they said, "and, furthermore, we have followed the additional mandate in that same statute to 'receive and give consideration to all reports that relate to the proposed facility by state agencies concerned with environmental protection.'"
HNWD had told the SCC, "If the project is not built due to undue expenses imposed to address specific environmental concerns which prevent financing, then the significant positive environmental benefits arising from the project are lost and Virginia's stated energy policy is defeated."
The company argued the monitoring and mitigation recommended by Skirpan would likely "prevent the project from becoming a reality in Virginia" and that it "did not expect a monitoring and mitigation plan to be the most expensive and intrusive plan in the mid-Atlantic region or for it to become the tipping point for the economic viability of the project."
Commissioners said the state's energy policy is intended to provide guidance to state agencies and "shall not be construed to amend, repeal, or override any contrary provision of applicable law É We have given consideration to the plan proposed by DGIF, which has the environmental expertise this commission does not."
Costs of the plan
One respondent in the case, The Nature Conservancy, supported capping monitoring expenses as suggested by Skirpan because they were based on an objective estimate of the likely costs involved, not because they were proportional and affordable, which the Conservancy said was irrelevant. The Conservancy had argued any cap should be based on actual costs HNWD could incur "without regard to the size of the project, to the project's projected revenues, or to whether the applicant can afford to pay the cost of compliance."
The SCC agreed, saying there's nothing in state statutes that limits establishing conditions based on an applicant's ability to pay for them, or on whether conditions would make the project not viable financially. Skirpan had concluded that under the cost caps he recommended, the developer would not have any trouble paying off its debt attached to the project.
Skirpan had recommended costs as follows:
• Year 1 - $150,000 for monitoring;
• Year 2 - $150,000 for monitoring and 0.85 percent of Year 1 revenue for mitigation; and
• Remaining life of the project - 1.75 percent of the prior year's revenue for monitoring and 0.85 percent of the prior year's revenue for mitigation.
The commissioners disagreed with Skirpan's caps, and in fact, left them more open-ended. "We find that basing the caps only on revenue may result, in certain circumstances, in a level of monitoring lower than what DGIF initially recommended," they said, adding, "DGIF witness Reynolds supported monitoring costs of $150,000 per year for Years 1, 2, and 3; and a maximum of $100,000 per year thereafter. We find that the monitoring cost cap shall be $150,000 per year ... however, we find that a different cap structure for the monitoring and mitigation plan is desirable or necessary to minimize adverse environmental impact."
Commissioners instead said costs should be:
• For years 1, 2, and 3, and thereafter shall be the higher of $100,000, or 1.75 percent of the prior year's gross revenue.
• The mitigation cost cap shall be the higher of $50,000 or 0.85 percent of the prior year's gross revenue.
"In addition, we note that the plan does not require annual expenditure of funds up to the caps if, over time, actual experience shows that less funds are necessary to meet the goals of the plan and targeted fatalities rates," commissioners said. "The mitigation cost cap could prove insufficient if the cap is routinely met, yet the bird and bat carnage continues to exceed target levels. Conversely, the cap could conceivably prove too high for the amount of actual mitigation necessary. In either scenario, if either DGIF or the applicant believed necessary and appropriate, it could petition this commission for modifications to the mitigation cost caps, which could include raising, lowering, or reallocating funds among mitigation and monitoring. We would regard such a petition as premature, however, if it were brought before at least three years actual monitoring had taken place.
Commissioners agreed with Skirpan that the caps involved don't include charges for raptors, which he said should be assessed separately based on actual deaths of those birds.
SCC also clarified that the revenue involved in calculating caps should include gross receipts from the sale of power, gross receipts from the sale of renewable energy credits, and any other revenues, other than tax credits, which can properly be classified as income to the project.
Notice for studies
HNWD had requested "reasonable notice" be given each February to its project operator about changes in the plan for monitoring, saying DGIF can't be given authority to direct daily operations of the plant.
SCC said the plan doesn't do that. "Rather, such plan is a requirement of our approval of the application, and that requirement relies upon actions to be taken by DGIF."
Commissioners said it was within their authority to have the plan "with DGIF directing operational modifications, and with the commission retaining jurisdiction to address any disputes that may arise related to the monitoring and mitigation plan.
"Not only do we recognize and acknowledge the expertise of DGIF in this matter, we find DGIF's proposals adopted herein credible and persuasive. DGIF will implement both the monitoring and mitigation portions of the required plan."
DGIF will structure an annual curtailment plan for the project, and provide the operator, on an annual basis, parameters for curtailment that will be required for the next plan year, they said.
HNWD had also expressed concern about access to its project site, saying officials should give 48 hours' notice before site visits by e-mail. Skirpan said the site must be "accessible, without limit, to state and federal agencies operating within the scope of their authority."
The SCC agreed with Skirpan, saying 48 hours' notice was not in the public interest. "Highland Wind, however, shall maintain a list of state and federal employees that have access to the site and shall maintain a log of who has accessed the site and when," commissioners said. "Finally, Highland Wind shall implement safety procedures to protect all those on the site during site visits."
Sunset clause
Skirpan recommended the SCC's permit be good for two years, and expire if construction hasn't begun within that time. HNWD, the SCC noted, said it had every intention of starting construction before tax credits expired at the end of this year, but asked the provision be changed to account for any appeal of the SCC's final order granting the permit.
"We reject this request," commissioners said. "The two-year sunset provision ordered below specifies that Highland Wind may petition the commission for an extension for good cause shown. Accordingly, if the applicant subsequently believes that it has good cause to request an extension, due to legal proceedings or other reasons, it may properly request the same."
Dissent
Under these conditions, the SCC granted HNWD's certificate, but one commissioner, Judith W. Jagdmann, felt the mitigation caps imposed by the conditions were too open-ended. "At any time after year three, DGIF and/or the applicant may petition this commission for modifications to the mitigation cost caps, which could include raising, lowering, or reallocating funds among mitigation and monitoring," she said. "I dissent because this provision in effect establishes no cost cap on mitigation activities for the life of the project and, further, allows the mitigation requirements of the plan to become a perpetual moving target.
"The environmental concerns addressed by the monitoring and mitigation plan have not risen to a level that necessitates a permit from a federal, state, or local governmental agency specifically charged with protecting the environment. Indeed, if such a permit were required, the commission would be prohibited from imposing additional conditions with respect to such matters. As no permit is required, the commission is to consider the environmental impacts of the facility (in this instance, impacts on birds and bats) and 'establish such conditions as may be desirable or necessary to minimize adverse environmental impact.' This requires the commission to exercise its discretion, just as we must regarding other requirements in the applicable statutes. Accordingly, the commission is to be cognizant of environmental concerns, just as it is required to be cognizant of service reliability, effects on economic development, and the other statutory standards that we must apply.
"Applying these statutory obligations, I find that the monitoring and mitigation cost cap established by the majority should be adopted without the majority's additional conclusion that such cap is not really a cap, but may be increased without limit based on some undefined proceeding at one or more undefined points in the future. Moreover, by keeping this matter subject to further modification pursuant to the final order issued today, the majority adopts a condition that invites the very core of the mitigation requirements to be re-written, over and over again, at subsequent points in the future. An applicant before this commission, requesting a certificate of public convenience and necessity under Virginia statutes, deserves a more definitive ruling on the requirements that will be attached to such certificate.
"The hearing examiner found that his recommended cost cap satisfies our statutory mandate above ... The majority, however, apparently believes that there should be no real cost cap on the monitoring and mitigation plan because 'the mitigation cost cap could prove insufficient if the cap is routinely met, yet the bird and bat carnage continues to exceed target levels.'
"I do not share in this finding. We do not have to conclude, under the statute, that the monitoring and mitigation plan will, without exception or question, result in a specific number of bird and bat kills. Rather, we must find that the monitoring and mitigation plan is 'desirable or necessary to minimize adverse environmental impact.' Based on the evidence in this proceeding, I find - as did the hearing examiner and DGIF - that a specific cost cap can be established, as part of a comprehensive monitoring and mitigation plan, that adequately and reasonably addresses the risk to birds and bats ... There is sufficient evidence, right now, for the commission to allow DGIF to allocate future funds under the total cap based on actual results.
"Finally, the philosophical approach reflected in the majority opinion, if extended to future applications of this nature, could put an end to the construction of generating facilities in the commonwealth, renewable or otherwise. That is, the provision to which I dissent could create untenable financial uncertainty. As repeatedly explained by Highland Wind throughout this proceeding, construction of generating facilities obviously requires investment decisions based on analyses as to the financial viability of the proposed project. By not establishing a definable cost cap for mitigation and by leaving the plan wide open for future modifications, the majority has created a situation where potential investors simply will not know the limits to which operation of the project may be curtailed, pursuant to Commission order, throughout its expected life.
"With the exceptions discussed herein, I agree with the remainder of the majority order approving Highland Wind's application subject to the specific requirements set forth therein," she wrote.
Monitoring,
mitigation plan
DEQ's monitoring and mitigation plan outlined below was adopted as an attachment to the SCC's final order granting HNWD a permit for its wind energy utility. The plan must be met by HNWD as a condition of the permit.
The research suggested by the agency is to help determine the number and species of birds and bats killed by each turbine annually, and how they correlate with weather conditions and other factors.
DEQ recommended daily carcass searches at 10 or more randomly selected turbines from April 1-Oct. 30 for at least the first three years of operation. Such searches are also recommended from Nov. 15-March 31 each year to look for raptors killed.
Data on climate will be collected to look for correlations with bird or bat deaths.
Existing migration data will be used to identify peak migration times as well.
Based on bird/bat deaths during the first year of operation, officials will design and implement a plan to reduce bat fatalities to:
• 3 migratory tree bats (red, hoary, and silver-haired) per turbine a year;
• 1 eastern pinistrelle per turbine a year;
• 0.1 eastern small-footed myotis per turbine a year; and
• 5 other bats (little brown, big brown, northern long-eared, etc.) per turbine each year.
The long-term objective, DEQ said, is to achieve a fatality rate of no more than two bats killed per turbine each year, or a figure otherwise considered acceptable to DGIF after analysis of projectspecific, regional, and national mortality data.
"Regarding birds, the focus is on raptors and on other species in decline and/or otherwise exhibiting imperilment in Virginia," DEQ said, adding the mortality rate target will only apply to "species of greatest conservation need."
Based on mortality data gathered during the first year of operations, the operator and DGIF cooperatively will design and experimentally implement, if necessary, procedures during peak migration periods to reduce bird fatalities to 6.9 such birds per turbine a year or less, beginning with the second year of project operations.
The long-term objective of testing and implementing operational adjustments, DEQ said, is to achieve a fatality rate of no more than 2.3 such birds per turbine a year, or a figure "otherwise considered acceptable to DGIF after analysis of project-specific, regional, and national mortality data."
If a dead or injured endangered or threatened species is found on the site, DEQ said, the U.S. Fish and Wildlife Service and DGIF will be notified as soon as possible, and within 24 hours.
DEQ said for each raptor killed at the utility, HNWD will pay money to DGIF for raptor research. Replacement costs range from $400 to $1,500 per bird, depending on the species, which range from red-tailed hawks to bald eagles, snowy owls and osprey.
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