Otter Tail Power ex rel Big Stone II

• Decision Date: 16 January 2008
• Docket Number: No. 24485.,24485.
• Citation: 744 N.W.2d 594,2008 SD 5
• Parties: In the Matter of OTTER TAIL POWER COMPANY on Behalf of BIG STONE II co-Owners for an Energy Conversion Facility Permit for the Construction of the Big Stone II Project.
• Court: South Dakota Supreme Court

744 N.W.2d 594

2008 SD 5

In the Matter of OTTER TAIL POWER COMPANY on Behalf of BIG STONE II co-Owners for an Energy Conversion Facility Permit for the Construction of the Big Stone II Project.

No. 24485.

Supreme Court of South Dakota.

Argued on November 7, 2007.

Decided January 16, 2008.

Janette K. Brimmer of Minnesota Center for Environmental Advocacy St. Paul, Minnesota, John H. Davidson, Vermillion, South Dakota, Attorneys for appellants

Fresh Energy, Izaak Walton League of America-Midwest Office, Union of Concerned Scientists & Minnesota Center for Environmental Advocacy.

Thomas J. Welk, Christopher W. Madsen of Boyce, Greenfield, Pashby & Welk Sioux Falls, South Dakota, Attorneys for appellee Big Stone II Co-Owners.

John J. Smith, Assistant Attorney General, SD Public Utilities Commission, Pierre, South Dakota, Attorneys for appellee SD Public Utilities Commission.

KONENKAMP, Justice.

[¶ 1.] Otter Tail Power Company, on behalf of several utilities, applied for a permit to construct Big Stone II, a coalfired energy conversion facility. Certain non-profit environmental organizations intervened to oppose the application. They asserted that the carbon dioxide (CO₂) emissions from Big Stone II would contribute to global warming, thereby posing a threat of serious environmental injury. The South Dakota Public Utilities Commission (PUC) concluded that although the facility will emit CO₂, the amount will not pose a threat of serious injury to the environment. It found that CO₂ emissions are not currently regulated by Congress or South Dakota and that Big Stone II would only increase the national amount of emissions by seven hundredths of one percent. Because the PUC followed existing legal guidelines in approving the permit, and its findings were not clearly erroneous, we uphold it's decision.

Background

[¶ 2.] The South Dakota Legislature acknowledged the significant impact energy development has on "the welfare of the population, the environmental quality, the location and growth of industry, and the use of the natural resources of the state." SDCL 49-41B-1. It enacted legislation to "ensure that [energy conversion and transmission] facilities are constructed in an orderly and timely manner so that the energy requirements of the people of the state are fulfilled." Id. The Legislature deemed it "necessary to ensure that the location, construction, and operation of facilities will produce minimal adverse effects on the environment and upon the citizens of this state by providing that a facility may not be constructed or operated in this state without first obtaining a permit from the [PUC]." Id; SDCL 49-414.

[¶ 3.] A permit application must include:

(1) The name and address of the applicant;

(2) Description of the nature and location of the facility;

(3) Estimated date of commencement of construction and duration of construction;

(4) Estimated number: of employees employed at the site of the facility during the construction phase and during the operating life of the facility. Estimates shall include the number of employees who are to be utilized but who do not currently reside within the area to be affected by the facility;

(5) Future additions and modifications to the facility which the applicant may wish to be approved in the permit;

(6) A statement of the reasons for the selection of the proposed location;

(7) Person owning the proposed facility and person managing the proposed facility;

(8) The purpose of the facility;

(9) Estimated consumer demand and estimated future energy needs of those consumers to be directly served by the facility (10) The potential short and long range demands on any estimated tax revenues generated by the facility for the extension or expansion of public services within the affected areas;

(11) Environmental studies prepared relative to the facility;

(12) Estimated construction cost of the facility.

SDCL 49-41B-11.

[¶ 4.] After a request for a permit is filed, the PUC must enlist a local review committee, which "shall meet to assess the extent of the potential social and economic effect to be generated by the proposed facility, to assess the affected area's capacity to absorb those effects at various stages of construction, and formulate mitigation measures." SDCL 49-41B-7. This committee issues a final report to the PUC with its findings and "recommendations of the committee as to mitigation measures and minority reports." SDCL 49-41B-10. The PUC may also "prepare or require the preparation of an environmental impact statement[.]" SDCL 49-41B-21. An applicant is required "to establish that: (1) The proposed facility will comply with all applicable laws and rules; (2) The facility will not pose a threat of serious injury to the environment nor to the social and economic condition of inhabitants or expected inhabitants in the siting area; (3) The facility will not substantially impair the health, safety or welfare of the inhabitants; and (4) The facility will not unduly interfere with the orderly development of the region with due consideration having been given the views of governing bodies of affected local units of government." SDCL 49-41B-22.

[¶ 5.] On November 8, 2004, in accord with SDCL 49-41B-5, the Otter Tail Corporation, doing business as Otter Tail Power Company, submitted a proposal to the PUC for permission to construct an energy conversion facility. Otter Tail submitted the proposal on behalf of Central Minnesota Municipal Power Agency, Great River Energy, Heartland Consumers Power District, Montana-Dakota Utilities Company, a division of MDU Resources Group, Inc., Southern Minnesota Municipal Power Agency, and Western Minnesota Municipal Power Agency (Applicants).¹ As proposed, the facility would be a 600 megawatt (MW) coal-fired electric generating plant to be located in Grant County, South Dakota, east of Milbank and Northwest of Big Stone.² The facility would be named Big Stone IT and be situated next to an older facility, Big Stone I.

[¶ 6.] Several organizations sought to intervene: Clean Water Action; South Dakota Chapter Sierra Club; Union of Concerned Scientists; Mary Jo Stueve; Minnesotans for an Energy-Efficient Economy; Izaak Walton League of America, Midwest Office; and Minnesota Center for Environmental Advocacy (Intervenors). The Intervenors opposed the application on multiple grounds related to the environmental impact of Big Stone II. The PUC granted intervention to all parties.³

[¶ 7.] The Applicants' petition to the PUC triggered SDCL 49-41B-6, and a local review committee was established to prepare a social and economic assessment of Big Stone II. The assessment (1) examined the potential impacts of Big Stone II; (2) addressed the area's ability to absorb those impacts; (3) identified a list of actions needed to ensure a smooth project; and (4) prepared a list of recommended mitigation measures. The committee's findings relate to issues not implicated in this appeal, and therefore, will not be discussed.

[¶ 8.] An environmental impact statement was also prepared. Among many other things, the impact statement assessed the air quality effects of Big Stone II. In so doing, the statement first identified the applicable regulations, stating

The Clean Air Act, and its amendments (CAA), requires the Federal U.S. Environmental Protection Agency (USEPA) to set National Ambient Air Quality Standard (NAAQS) for pollutants considered harmful to public health and the environment.... The USEPA Office of Air Quality Planning and Standards has set NAAQS for six principal pollutants, which are called "criteria" pollutants.⁴

Draft Environmental Impact Statement May 2006 at 3-1, 3-2. The statement also recognized applicable regulations from Prevention of Significant Deterioration (PSD), New Source Performance Standards (NSPS), Best Available Control Technology (BACT), and the Clean Air Mercury Rule (CAMR). Id. at 4-2.

[¶ 9.] Although CO₂ is not regulated, the statement recognized that Big Stone II was estimated to emit approximately 4.7 million tons of CO₂ per year. It remarked, however, that "[p]rojected emissions of all hazardous air pollutants from the existing and proposed plants would be reduced by approximately 41 [million] tons/year (from approximately 63 [million] tons/year by the existing plant to approximately 22 [million] tons/year by the combined existing and proposed plant operations)." Id. at ES-18. Moreover, the statement noted that "[t]he proposed super-critical combustion technology for the proposed Project is three-to-four percent more efficient, and would result in lower CO₂ emissions per MWh [megawatt hours] of electrical energy output as compared to the sub-critical boiler technology." Id. at 4-11.

[¶ 10.] The statement summarized the air quality effects of Big Stone II:

"Overall, no air quality impacts exceed significance criteria for air resources. The long-term impacts from the proposed Project for NAAQS and PSD increment would be less than significant. The Grant County, South Dakota area is in attainment or is unclassifiable for all criteria pollutants. Emissions from the proposed project would not conflict with or obstruct implementation of any applicable air quality plan. Since the increase in criteria pollutant emissions would either be less than the PSD significance levels or well within the NAAQS and PSD increments, the proposed Project long-term and short-term emissions impacts on distant air quality areas that are not in compliance with NAAQS is unlikely. In addition, visibility impacts to Class I and Class II areas would be less than significant...." Id. at 4-13. Nevertheless, according to the statement, "[t]he proposed Big Stone II plant would generate unavoidable emissions of air pollutants that would be an adverse impact." Id. at 5-1. This was determined notwithstanding that Big Stone II "would operate under [an] appropriate air emission permit from the state of South Dakota that requires...