Don't Waste Oregon Committee v. Energy Facility Siting Council

• Decision Date: 27 October 1994
• Citation: 881 P.2d 119,320 Or. 132
• Parties: DON'T WASTE OREGON COMMITTEE and Lloyd K. Marbet, Petitioners, v. ENERGY FACILITY SITING COUNCIL, Public Utility Commission, Hermiston Generating Company, City of Hermiston, and Hermiston 2000, Respondents. SC S41175.
• Court: Oregon Supreme Court

Page 119

881 P.2d 119

320 Or. 132

DON'T WASTE OREGON COMMITTEE and Lloyd K. Marbet, Petitioners, v. ENERGY FACILITY SITING COUNCIL, Public Utility Commission Hermiston Generating Company, City of Hermiston and Hermiston 2000, Respondents.

SC S41175.

Supreme Court of Oregon,

In Banc.

Argued and Submitted June 14, 1994.

Decided Sept. 29, 1994.

Reconsideration Denied Oct. 27, 1994.

[320 Or. 134] Daniel W. Meek, Portland, argued the cause and filed the petition and reply brief for petitioners.

John T. Bagg, Asst. Atty. Gen., Salem, argued the cause for respondents Energy Facility Siting Council and Public Utility Com'n. With him on the response were Theodore R. Kulongoski, Atty. Gen., and Virginia L. Linder, Sol. Gen., Salem.

Jacob Tanzer, of Ball, Janik & Novack, Portland, argued the cause for respondent Hermiston Generating Co. With him on the response was Richard M. Whitman.

Rustin Brewer, Hermiston, waived appearance for respondent City of Hermiston.

Daniel Hill, Hermiston, waived appearance for respondent Hermiston 2000.

Barbee B. Lyon, of Tonkon, Torp, Galen, Marmaduke & Booth, Portland, filed a brief on behalf of amicus curiae Portland General Elec. Co.

GRABER, Judge.

This case is before us on review from a Final Order of the Energy Facility Siting Council (EFSC), certifying a proposed natural gas facility near Hermiston to generate electricity. ¹ For the reasons that follow, we affirm EFSC's Final Order.

PROCEDURAL, LEGISLATIVE, AND REGULATORY BACKGROUND

Petitioners challenge the validity of OAR 345-23-010(2), the rule under which EFSC was considering the site certification, in three ways:

"Number one, [the rule] is inconsistent with the energy policy expressed in ORS, Chapter 469. Two, Senate Bill 1016 of 1993 does not authorize the Energy Facility Siting Council to adopt such a rule. And three, such a rule was adopted without compliance with applicable rule-making procedures." ²

In order to address the specific challenges that petitioners raise, we start with a brief description of the legislative and regulatory context, which will be explored more fully later in the opinion.

ORS 469.510 (1991) pertinently required that EFSC "shall set standards and promulgate rules" for the siting of energy facilities; subsection (5) directed that the standards and rules "shall take into account" present and future needs for power. In October 1992, EFSC adopted OAR 345-23-020, which provides standards under which applicants must demonstrate a need for the power from the proposed facility. At the same time, EFSC also adopted OAR 345-23-010, which exempts applicants for specified megawatt levels of power from having to demonstrate compliance with the need-for-power standard stated at OAR 345-23-020. The October 1992 rules were adopted after public hearing, with EFSC having before it data on resource needs, and provided with respect to the type of natural gas facilities at issue here:

"Natural gas fired facilities with a fuel chargeable to power heat ratio of 8000 Btu/kWh or less shall be exempt from the requirement to demonstrate need if all but 20 percent of the capacity will be used by energy suppliers operating in the Pacific Northwest Region as defined in 16 U.S.C. 839a. (14), unless the capacity of natural gas fired facilities for which applications are pending before the Council, including the proposed facility, plus extant site certificates for natural gas fired facilities exceeds 950 megawatts at the time the application is filed." OAR 345-23-010(2) (1992).

Two applications for new natural gas facilities, each within the definition of facilities The 1993 Legislative Assembly enacted Senate Bill 1016, effective August 2, 1993. Or Laws 1993, ch 569. That law replaced ORS 469.510 (1991), among other provisions. ORS 469.501(1) (which is § 22 of SB 1016), like its predecessor, ORS 469.510 (1991), provides that EFSC "shall adopt standards for the siting" of energy facilities and directs that the standards shall take into account, among other things, the need for the facility, consistent with state energy policy. (See post, 320 Or. at 150, 881 P.2d at 129, for a more complete statement of the text of ORS 469.501(1).) ORS 469.501(2) (which is also part of § 22 of SB 1016) provides:

covered by OAR 345-23-010(2), were complete as of June 11, 1993. One was for the facility near Hermiston involved in this proceeding, with an output power capacity of 474 megawatts. The other was for a plant in Boardman, with an output power capacity of 462 megawatts. The two applications totaled 936 megawatts of output power capacity. No other applications for natural gas facilities, within the definition of facilities covered by OAR 345-23-010(2), were complete.

"The [Energy Facility Siting Council] may adopt exemptions, except for coal or nuclear power plants, from any need standard adopted under subsection (1)(L) of this section if the exemption is consistent with the state's energy policy set forth in ORS 469.010, 469.190 and 469.310 and the council's consideration of the implementation of the strategy prepared under ORS 469.060 for reducing the emission of gases that contribute to global warming."

On August 13, 1993, 11 days after SB 1016 became law, EFSC adopted temporary rules that readopted many of its siting rules and amended others. The general need-for-power standard, set out in OAR 345-23-020, was amended in terms that reflected the need-for-power phrasing of the newly enacted ORS 469.501. The exemption from having to demonstrate need for power in applications for natural gas-fired facilities, stated in OAR 345-23-010(2), also was amended by the August 1993 temporary rule. That amendment to the October 1992 rule, with additions italicized and deletions in brackets, provided:

"Natural gas fired facilities with a fuel chargeable to power heat ratio of 8000 Btu/kWh or less [ADDED: [for which applications have been determined to be complete under OAR 345-21-030 on or before August 13, 1993]] shall be exempt from the requirement to demonstrate need if all but 20 percent of the capacity will be used by energy suppliers operating in the Pacific Northwest Region as defined in 16 U.S.C. 839a. (14)[DELETED: [, unless the capacity of natural gas fired facilities for which applications are pending before the Council, including the proposed facility, plus extant site certificates for natural gas fired facilities exceeds 950 megawatts at the time the application is filed]]."

The August 1993 temporary rule had the practical effect of exempting the applications for the plant near Hermiston and the plant in Boardman from having to demonstrate a need for their power.

In December 1993, EFSC issued a notice of intended action, stating that it intended to adopt the temporary rules as permanent rules. A rulemaking hearing was held on January 18, 1994. The hearing officer then submitted a report to EFSC, and EFSC adopted the rules on January 25, 1994. The 1994 permanent rules are the same as the 1993 temporary rules.

On January 31, 1994, a contested case proceeding concerning the siting of the plant near Hermiston commenced. On March 11, 1994, EFSC issued a Final Order, granting the site certificate. Within the statutory 60-day period for bringing such a challenge, petitioners, who had participated in the siting proceeding, filed their challenge to the order in this court. ³

THE STATEMENT OF FISCAL IMPACT

ORS 183.335(2)(b)(E) requires an agency promulgating a rule to include with its notice of intended action

"[a] statement of fiscal impact identifying state agencies, units of local government and the public which may be economically affected by the adoption, amendment or repeal of the rule and an estimate of that Petitioners first assert that the statement of fiscal impact that EFSC included, pursuant to ORS 183.335(2)(b)(E), in its notice of intended rulemaking for the 1994 amendment is deficient and that the defect requires invalidation of the rule under which this application for a site certificate was approved. A materially deficient statement of fiscal impact that accompanies a notice of intended action in a rulemaking proceeding can result in the invalidation of the rule that ultimately is enacted. ORS 183.335(2)(b)(E); Dika v. Dept. of Ins. and Finance, 312 Or. 106, 111, 817 P.2d 287 (1991).

economic impact on state agencies, units of local government and the public. In considering the economic effect of the proposed action on the public, the agency shall utilize available information to project any significant economic effect of that action on businesses which shall include a cost of compliance effect on small businesses affected." (Emphasis added.)

In this case, the proposed rule amended the 1992 rule. ORS 183.335(2)(b)(E) requires, therefore, that EFSC have included with its notice of intended action in the amendment process a statement of fiscal impact that (1) identifies persons and entities that may be economically affected by the amendment to the 1992 rule and (2) estimates the economic impact of the amendment to the 1992 rule on those persons and entities.

The statement of fiscal impact that EFSC included with its notice of intended action stated:

"Fiscal and Economic Impact: Permanent adoption of the temporary rules is expected to have no fiscal impact on most applicants for energy facility site certificates. The proposed rules implement changes to EFSC jurisdiction as required by the new statute, clarify the requirement to show need for power for new energy facilities, and allow an exemption from the need standard for applicants whose applications were filed before August 13, 1993. The cost of preparing and reviewing applications for energy facilities site certificates is not expected to change significantly."

EFSC consistently has characterized the 1994 amendment to the 1992 rule as one that produces no substantive change in the need-for-power exemption in the rule. EFSC asserts that the 199...