Environmental Issues in the Siting of Power Generating Facilities

Sara Beth Watson
Steptoe & Johnson, LLP
Washington, DC

California's rolling blackouts in the summer of 2000 focused attention on transactions involving power-generating facilities. Whether it is the transfer of existing assets as the power industry restructures or the siting of new generating facilities, there are numerous environmental issues that must be addressed. This article gives a brief overview of environmental issues in siting generating facilities from the perspective of regulatory counsel including federal and state issues. This article highlights state issues by briefly looking at the regulatory schemes in Washington and Idaho, two western states that have taken slightly different approaches to expediting the process of facility siting.

The first step in siting a facility is to determine the various federal and state regulatory schemes that would be applicable to the proposed facility. This requires an assessment of all aspects of the facility and determining the reviews, approvals and permits that will be required from both federal and state regulatory agencies as these actions will impact the environmental review. For example, the siting of the generating facilities are subject to state rather than federal regulation; however, the interconnection of those generating facilities to the transmission grid and the wholesale sale of power in interstate commerce are subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC). If the project is hydroelectric, a FERC license is required. Depending on the project, FERC's role may trigger the National Environmental Policy Act (NEPA).

Approvals or permits from other federal agencies may also trigger the NEPA process. For example, if a lease on tribal lands is required, the Bureau of Indian Affairs (BIA) is normally required to approve the lease. BIA lease approval will trigger application of NEPA.

If NEPA is triggered, then NEPA review will require that one consider a variety of impacts including those to air quality, surface and ground water, vegetation, fish and wildlife, including endangered species, noise, cultural resources, architectural resources, and other impacts of the project. Most federal agencies have regulations implementing the NEPA process. It is important to coordinate the NEPA processes among the various federal agencies to avoid duplicative action and increased costs.

States will conduct their own environmental assessment of the construction and operation of power facilities, which look at a variety of impacts including air quality, water impacts, and waste issues. States use various statutory and regulatory schemes to address environmental issues and several states have examined the efficiency of their programs in light of recent energy concerns. Washington and Idaho provide two examples of different approaches developed by states in light of recent energy concerns to expedite the siting of facilities. Each is described briefly below.

Washington State has specific statutory requirements regulating the siting of energy facilities. The statute was amended in May 2001 to facilitate and expedite the siting approvals for the construction, reconstruction or enlargement of certain energy facilities as defined in the statute. For stationary thermal power plants the trigger point for inclusion in the statute's requirement is a generating capacity of 350,000 kilowatts or more, measured using maximum continuous electrical generating power. The statute also applies to floating thermal power plants of 100,000 kilowatts or more and facilities using alternative energy resources regardless of the generating capacity of the project. Alternative energy resources are defined as wind, solar energy, geothermal energy, landfill gas, wave or tidal action and biomass energy.

The statute requires coordination between the state and federal approval processes. Under the amendments passed in May 2001, the regulatory body, the Energy Facility Site Evaluation Council (Council), must conduct an informational public hearing as soon as practical, but not later than 60 days after receipt of an application for the site certification has been received. The Council must hold a subsequent public hearing to determine whether the proposed site is consistent with, and in compliance with, county and regional land use planning. The application covers a variety of issues including financial information and environmental issues. The environmental issues that must be addressed in the application include: wastewater treatment, spill prevention and control measures regarding accidental or unauthorized discharges or emissions, surface water runoff and erosion; air emissions; protection from natural hazards such as earthquakes, volcanic eruptions, floods, tsunamis, storms, avalanches or landslides; impacts to the natural water environment including surface water movement quality and quantity, runoff and absorption; impacts on floods, groundwater movement quality and quantity, and public water supplies, if any; and impacts to plants and animals.

In Idaho, various programs within the Department of Environmental Quality (DEQ) address environmental regulation of power generating facilities. Facilities in Idaho would be subject to similar requirements as in Washington regarding air emissions, wastewater treatment and impacts on water, groundwater, fauna and flora. While there has been no legislative action in Idaho to expedite the siting review process as there has been in Washington, Idaho DEQ announced in May 2001 that it has adjusted its permitting process to "provide flexibility to allow production capacity to come on line as quickly as possible while assuring protection of air quality." The size, location and nature of the project will impact the processes followed to expedite reviews. For example, DEQ has stated that "qualifying short-term projects" will be handled under an accelerated process that reduces the timeframe from construction to operations from 120 to 30 days. The DEQ process appears to provide for a temporary authorization to operate a generating source, which is followed by permitting through the standard process.

In addition to federal and state approvals, the project will require the necessary building and zoning permits and usually rights-of-way. Local counsel familiar with the specific site selected and the relevant jurisdictions should be selected to perform a detailed analysis of local permitting issues.

Understanding the interplay between the power generation regulatory requirements and the environmental requirements is fundamental to assessing the timeline and cost of a proposed project and moving forward in an efficient and timely manner. Coordination between regulatory counsel with a knowledge of energy and environmental regulations and local counsel with knowledge of the zoning issues will lead to a timely and cost efficient approval process for the siting of new power generation facilities.