Clean Wis. v. Pub. Serv. Comm'n of Wis.

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Clean Wisconsin, Inc. and Sierra Club, Petitioners-Appellants, v. Public Service Commission of Wisconsin, Respondent-Respondent, South Shore Energy LLC and Dairyland Power Cooperative, Interested Parties-Respondents, v. Michael Huebsch, Other Party.

Nos. 2022AP1106, 2023AP120

Court of Appeals of Wisconsin, District III

October 8, 2024

Not recommended for publication in the official reports.

APPEALS from orders of the circuit court for Dane County Cir. Ct. No. 2020CV585 JACOB B. FROST, Judge. Affirmed.

Before Stark, P. J., Hruz and Gill, JJ.

HRUZ J.

¶1 Clean Wisconsin, Inc. and Sierra Club (collectively "Clean Wisconsin") appeal circuit court orders affirming a decision of the Public Service Commission of Wisconsin ("Commission"). The Commission conditionally granted a Certificate of Public Convenience and Necessity ("CPCN"), pursuant to WIS. STAT. § 196.491(3) (2021-22),^[1] to South Shore Energy, LLC, ("South Shore") and Dairyland Power Cooperative ("Dairyland") for the construction of a natural-gas-fired electric-generating facility in Superior Wisconsin.^[2]

¶2 Clean Wisconsin contends that the Commission committed several reversible errors in reaching its decision: (1)the Commission failed to assign a burden of proof and incorrectly applied the substantial evidence test-which is used upon judicial review of agency decisions under WIS. STAT. ch. 227-as its own standard for evaluating the evidence submitted; (2) the Commission misinterpreted-and thus misapplied-WIS. STAT. § 196.49l(3)(d)3. and 4., and its findings under those subdivisions are not supported by substantial evidence; (3) when the Commission interpreted and applied the priorities listed in subsection (4) of Wisconsin's Energy Priorities Law ("EPL")-WIS. STAT. § 1.12-as it is required to do pursuant to WIS. STAT. § 196.025(1)(ar), it did so incorrectly; and (4) the Commission's Environmental Impact Statement ("EIS") did not comply with the Wisconsin Environmental Policy Act ("WEPA"), WIS. STAT. §1.11.

¶3 We reject each of Clean Wisconsin's arguments. First, WIS. STAT. § 196.491(3) does not explicitly assign a burden of proof or standard of proof for the Commission to apply when reviewing a CPCN application, and there is nothing in that statute or any other applicable statute requiring an applicant to do anything more than establish, to the Commission's satisfaction, that it should receive a CPCN. As such, so long as the Commission's determination in that regard is reasonable and supported by substantial evidence, it is valid upon judicial review. Here, the record establishes that the Commission fulfilled its responsibility by considering all of the materials submitted and by making the determinations required by § 196.49l(3)(d), which were supported by substantial evidence.

¶4 Second, the Commission correctly interpreted subsection (4) of the EPL by determining that higher priority energy options could not satisfy the energy demand that the proposed facility would satisfy. See WIS. STAT. § 1.12(4). Therefore, the Commission correctly applied the EPL, and its finding that the proposed facility complied with subsection (4) of the EPL is supported by substantial evidence. Third, the Commission adequately assessed the EIS, which addressed the environmental impacts-including greenhouse gas emissions- resulting from the construction and operation of the proposed facility, and correctly determined that the EIS complied with WEPA.

¶5 The foregoing conclusions are consistent with, and largely compelled by, existing Wisconsin law regarding judicial review of Commission decisions pertaining to the siting and approving of electric-generating facilities, most notably our supreme court's decision in Clean Wisconsin, Inc. v. PSC, 2005 WI 93, 282 Wis.2d 250, 700 N.W.2d 768. And, in this particular context, that case law is not materially impacted by our supreme court's decision in Tetra Tech EC, Inc. v. DOR, 2018 WI 75, 382 Wis.2d 496, 914 N.W.2d 21. The decision to issue a CPCN remains a legislative one that the Commission is charged with making pursuant to WIS. STAT. § 196.49 l(3)(d), requiring the application of its technical expertise and knowledge. Accordingly, we affirm.

BACKGROUND

¶6 On January 8, 2019, and pursuant to WIS. STAT. § 196.49l(3)(a)l., South Shore and Dairyland (collectively "Applicants") submitted a detailed application with the Commission for a CPCN. The Applicants sought to construct a natural-gas-fired, combined-cycle electric-generating facility in Superior consisting of one gas turbine generator, one heat recovery steam generator with duct firing, and one steam turbine generator.^[3] The facility would burn natural gas with the capability to use fuel oil as a backup fuel. The facility would be called the Nemadji Trail Energy Center ("NTEC").

¶7 The NTEC would have a generating capacity of 550-625 megawatts,^[4]and it would operate as a "wholesale merchant plant" as defined in WIS. STAT. § 196.491(1)(w).^[5] The application proposed the construction of five non-potable, high-capacity water wells and a cooling tower to be used by the facility. The application also provided extensive information, including potential impacts on wetlands, impacts on nearby animal species, and other environmental matters.

¶8 In April 2019, the Commission issued a notice of a class 1 contested case proceeding regarding the application.^[6] Clean Wisconsin, Sierra Club, and other parties were allowed to intervene with full party status.^[7] The Commission then scheduled three hearings to be held in Superior before an administrative law judge: one hearing was scheduled to receive evidence from the parties, and two hearings were scheduled to receive public comments. The hearings were preceded by several rounds of written, pre-filed testimony and exhibits from witnesses- including expert witnesses-for the Applicants, Clean Wisconsin, the Commission, and the Wisconsin Department of Natural Resources ("DNR"). The Commission and the DNR also prepared an EIS as required for this type of proceeding under Wis.Stat. § l.ll(2)(c) and Wis. Admin. Code§ PSC 4.10(1) (Feb. 2011).^[8] At the hearings, the Commission received testimony from these witnesses and heard public comments on the CPCN application. As relevant to this appeal, there was competing testimony regarding the project's EIS as well as its compliance with the EPL.

¶9 On January 16, 2020, the Commission conditionally approved the CPCN application in a two-to-one vote. The Commission later issued a written, sixty-eight-page final decision with its findings of fact and conclusions of law. Given the nature of Clean Wisconsin's challenges in this appeal, we outline many of the Commission's findings and conclusions in relative detail below.

¶10 As required by administrative regulations regarding CPCN applications, the Applicants had presented information on, and the Commission considered, two proposed sites for the NTEC: the Nemadji River site (the Applicants' preferred site) and the Hill Avenue site (the Applicants' alternative site). See WIS. ADMIN. CODE §§ PSC 111.51-111.53 (June 2014). Both sites are in the city of Superior. The Commission authorized the construction of the NTEC at the Nemadji River site, which is located along the banks of the Nemadji River. The site is approximately fifty-one acres, is mostly wooded, and includes a small stormwater retention pond on its southwest corner. The land on which the NTEC would be built is relatively flat, but the surrounding area slopes from higher elevations northwest of the site to lower elevations southeast of the site and near the river. The total elevation change is forty-six feet.

¶11 The Commission concluded that the NTEC project satisfied the requirements of WIS. STAT. § 196.491(3). In particular, pursuant to § 196.49 l(3)(d)3., the Commission found that the design and location of the NTEC were "in the public interest considering alternative locations, individual hardships, safety, reliability, and environmental factors." The Commission also found, pursuant to § 196.491(3)(d)4., that the NTEC would "not have undue adverse impacts on environmental values including ecological balance, public health and welfare, historic sites, geological formations, aesthetics of land and water, and recreational use." Of note, the Commission specifically credited the Applicants' evidence that sufficient groundwater was available to supply the plant. Finally, the Commission concluded that the NTEC complied with the EPL and that the prepared EIS complied with WEPA.

¶12 The Commission's EIS, which was prepared jointly with the DNR, considered a range of impacts resulting from the construction and operation of the NTEC. These included impacts to: "local natural resource areas, landowner rights, aesthetics, airports and airstrips, archaeological and historic resources, cultural resources, electric and magnetic fields, property values, radio and television reception, recreation and tourism, safety, communication facilities, endangered resources, forested lands, grasslands, invasive species, waterways, wetlands, and wildlife." The EIS also included information on environmental impacts associated with upstream gas extraction. Additionally, the EIS assessed "wetland, waterway, water use, water withdrawal, air emission, and endangered resource impacts."

¶13 In all, the Commission found that the record supported conditional approval of the CPCN because the evidence, as a whole, indicated that the NTEC was in the public interest and would not have an undue adverse environmental impact if certain conditions were satisfied. Accordingly, the Commission imposed multiple conditions-approximately seventy in total-that the Applicants were required to meet before they could...