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Permit contains strict conditions for environment  

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.

therecorderonline.com

1/3/2008

BY ANNE ADAMS • STAFF WRITER

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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