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Energy Conservation Council of Pennsylvania v. Public Utility Commission

May 6, 2010

ENERGY CONSERVATION COUNCIL OF PENNSYLVANIA, PETITIONER
v.
PUBLIC UTILITY COMMISSION, RESPONDENT



The opinion of the court was delivered by: Judge Cohn Jubelirer

Argued: December 7, 2009

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE KEITH B. QUIGLEY, Senior Judge.

OPINION

Energy Conservation Council of Pennsylvania (ECC) petitions for review of that portion of the order of the Pennsylvania Public Utility Commission (PUC), which, in relevant part: (1) granted the Trans-Allegheny Interstate Line Company (TrAIL Co.) a Certificate of Public Convenience with respect to its Pennsylvania 502 Junction Facilities (502 Facilities), subject to certain conditions; and (2) granted TrAIL Co. authorization and certification to locate, construct, and operate the 502 Facilities, subject to certain conditions. On appeal, ECC argues that the PUC's determination must be reversed because: (1) TrAIL Co.'s applications for a Certificate for Public Convenience and authority to locate, construct, and operate the 502 Facilities (Applications) allegedly did not comply with the siting criteria set forth in the PUC's regulations; and (2) the PUC erred in finding a public need for the 502 Facilities.*fn1 The PUC argues, preliminarily, that ECC's appeal should be dismissed because ECC is not aggrieved and, therefore, lacks standing to bring this petition for review. The PUC also argues that it properly granted the Applications.

I. Background

In May 2005, PJM Interconnection, L.L.C. (PJM), the regional transmission operator charged with managing the electric utilities transmission systems in thirteen states (PJM Region), including, among others, Pennsylvania, Virginia, West Virginia, and the District of Columbia, announced the Project Mountaineer concept. PJM described Project Mountaineer as an approach through which PJM could identify a comprehensive plan to increase the transfer of electricity from the western part of the PJM Region to the eastern part of the PJM Region. Thereafter, Allegheny Energy, Inc. (Allegheny), TrAIL Co.'s parent corporation, submitted a proposal outlining its Trans-Allegheny Interstate Line Project (TrAIL Project), which involved 330 miles of kilovolt (kV) capacity transmission lines, including the 502 Facilities, as a possible solution for Project Mountaineer objectives. In March 2006, Allegheny recommended the TrAIL Project as a solution to reliability issues in certain parts of the PJM Region. In May 2006, PJM proposed a 5-year regional transmission expansion plan (2006 RTEP) designed to ensure the reliability of the electric transmission grid in the PJM Region and which included a modified version of the TrAIL Project. PJM approved the 2006 RTEP in June 2006.

On April 13, 2007, TrAIL Co. filed five applications, including: (1) an application for a Certificate of Public Convenience to offer, render, furnish, or supply electrical transmission service in Pennsylvania; and (2) an application for authorization to locate, construct, operate, and maintain the 502 Facilities in Greene County, southwestern Pennsylvania.*fn2 The 502 Facilities are a part of the TrAIL Project and consist of one 500-kV, high voltage (HV) transmission line (502 Segment) and a new 500-kV substation (502 Substation) in Greene County. The 502 Segment would run from the 502 Substation to the Pennsylvania-West Virginia border, 1.2 miles south, and would continue for 240 miles across West Virginia and Virginia. ECC, among others, intervened in opposition to TrAIL Co.'s Applications.

II. Hearings before the Administrative Law Judges

The matter was assigned to two Administrative Law Judges (ALJs), who held multiple public hearings and comment sessions, viewed the locations of the 502 Facilities, accepted both live testimony and deposition testimony, and admitted thousands of pages of documentary evidence into the record prior to issuing a recommended decision (RD). In the RD, the ALJs addressed each Application separately and, ultimately, found that TrAIL Co. failed to carry its burden of proof on any of its Applications. Therefore, the ALJs' RD was that the PUC should deny the Applications. Because ECC appeals only the grant of the certificate of public convenience and the application to site and construct the 502 Facilities, this Court will only address those two Applications.

With regard to its Application for a Certificate of Public Convenience, TrAIL Co. submitted evidence that there was a public need for the 502 Facilities as demonstrated by the 2006 RTEP. The 2006 RTEP revealed that there would be numerous North American Electric Reliability Council (NERC) reliability criteria violations within the PJM Region beginning in 2011 and that the 502 Facilities, in conjunction with the rest of the TrAIL Project, would resolve those reliability violations. TrAIL Co. witnesses testified that reliability issues in the transmission line in other states could result in reliability issues for electric customers in south central Pennsylvania. According to TrAIL Co.'s witnesses, the 502 Facilities, as a part of the TrAIL Project, were the most viable and cost-effective solution to the documented reliability problems in the PJM Region, and the alternatives proposed by ECC and the other objectors were neither feasible, nor viable. Thus, TrAIL Co. asserted that there was a public need for the 502 Facilities to ensure the reliability of the regional transmission system and services for Pennsylvania customers.

ECC argued that the TrAIL Project was not driven by reliability, but by economics. ECC and the other objectors presented evidence that the TrAIL Project, including the 502 Facilities, was not necessary to improve reliability concerns. ECC's witnesses attacked the validity of the 2006 RTEP and questioned whether there truly were any reliability problems in the PJM Region.

Nevertheless, ECC and other objectors presented the testimony of their own experts that there were other ways to improve the reliability of the transmission lines in the PJM Region by, inter alia, increasing ground clearance or retensioning and reconductoring the transmission lines.

The ALJs found that there was no public need for the 502 Facilitiespursuant to Section 1501 of the Public Utility Code (Code), 66 Pa. C.S. § 1501,*fn3 Section 57.76 of the PUC's regulations, 52 Pa. Code § 57.76, and this Court's decision in Pennsylvania Power & Light Co. v. Pennsylvania Public Utility Commission, 696 A.2d 248, 250 (Pa. Cmwlth. 1997) (PP&L).*fn4 (RD at 79-80.) The ALJs held that there is no public need in Greene County for the 502 Facilities and that TrAIL Co. does not claim that such need exists in Greene County. (RD at 110.) Further, the ALJs concluded that TrAIL Co. failed to meet its burden of proof for the 502 Facilities because, among other things: (1) the TrAIL Project, including the 502 Facilities, was driven by economics, not reliability problems with the PJM Region; (2) the costs and adverse impacts of the TrAIL Project clearly outweigh the benefits; (3) the RTEP process, used to identify reliability problems and the need for the 502 Facilities, was overly conservative and was designed to yield only solutions involving increases in transmission capacity; and (4) TrAIL Co. failed to consider any non-transmission alternatives for resolving the reliability issues. (RD at 111-16.)

With regard to its Application for approval to locate, construct, operate, and maintain the 502 Facilities, TrAIL Co. submitted its Line Route Evaluation Report (LRE Report) and testimony to support its selected 1.2-mile route. TrAIL Co. asserted that its route selection process was consistent with current siting methods and Pennsylvania law. TrAIL Co. pointed out that its criteria for the route selection process was to, inter alia, maximize the separation distance from residents and avoid residential developments outside of Morgantown, West Virginia. TrAIL Co. offered testimony that the route chosen, Route H, was the shortest and most direct of the alternatives, crossed only one small stream, crossed no wetlands, and required only slightly more than one mile of forest to be cleared. (TrAIL Co. Statement 5 at 6, 15; Reproduced Record (R.R.) at 175a, 184a.) The testimony also revealed that there were only two residences within 500 feet of the centerline and that there were no historic (architectural) sites within a quarter mile of the route. (TrAIL Co. Statement 5 at 6, 15; R.R. at 175a, 184a.) TrAIL Co. further asserted that the siting regulations do not impose a "no impact" standard, but require the applicant to show that it took reasonable steps to minimize environmental impact, which it did as evidenced by the facts noted above.

ECC asserted that the analysis TrAIL Co. submitted in support of its preferred route, Route H, did not adequately describe and distinguish the alternative routes. Additionally, ECC argued that the LRE Report failed to conduct a true environmental impact analysis of the proposed routes and that TrAIL Co.'s Application failed to address numerous environmental and cultural impacts of the preferred route. ECC asserted that TrAIL Co. must provide an analysis of these impacts before the PUC grants approval for the siting of the 502 Facilities.

The ALJs concluded that TrAIL Co.'s siting process did not meet the PUC's siting regulations and could not support a finding that Route H was reasonable for the 502 Facilities. (RD at 169, 176-177.) The ALJs agreed with ECC and the objectors regarding TrAIL Co.'s efforts to minimize the environmental impact of the proposed project. Thus, the ALJs concluded that TrAIL Co. failed to satisfy its burden of proof that it acted responsibly and reasonably to mitigate the environmental impact of the proposed project. (RD at 189-90.)

III. Appeal to the PUC

TrAIL Co. filed eleven exceptions to the ALJs' determination with regard to the 502 Facilities, six of which are relevant to ECC's present petition for review to this Court.*fn5 ECC, among other objectors, filed reply exceptions to the RD. The PUC considered each exception in turn.

In exceptions two through five, TrAIL Co. challenged the ALJs' determination that there was no public need for the 502 Facilities, arguing that the ALJs: (1) failed to consider regional reliability issues pursuant to Section 2805(a) of the Code, 66 Pa. C.S. § 2805(a); (2) failed to give proper weight to the evidence that the TrAIL Project was designed as a direct response to documented reliability problems and not motivated by economic needs; (3) erroneously found that TrAIL Co. and PJM did not consider alternatives to the TrAIL Project; and (4) erred in holding that the 502 Facilities would negatively impact the development of generation facilities in the eastern PJM Region. (TrAIL Co. Exceptions at 4-20; R.R. at 1638a-53a.)

In response, ECC contended that the ALJs considered the regional reliability concerns, but found that TrAIL Co. failed to establish any NERC violations or prove that a regional, interstate reliability issue existed sufficient to justify the 502 Facilities. ECC asserted that the ALJs' finding that the TrAIL Project was economically motivated was supported by the record. ECC next argued that the 2006 RTEP, and the RTEP process in general, clearly contemplates only those solutions involving increased transmission capacity by constructing additional transmission lines, and that the record shows that no non-transmission solutions, such as improving ground clearance around the existing transmission lines, retensioning or reconductoring the existing lines, or reducing energy demand, were considered. Finally, ECC contended that the entire TrAIL Project would result in incentives for generators to build generating facilities in the western PJM Region, rather than in the eastern PJM Region, because ratepayers would essentially subsidize the western generators by paying for the TrAIL Project.

In its opinion, the PUC was persuaded by the 2006 RTEP and TrAIL Co.'s supporting testimony detailing the system stress modeling and projections relating to the twelve future NERC standard violations. (PUC Op. at 34 (citing TrAIL Co. Ex. SWG-1, R.R. at 165a).) The PUC held that it:

has an obligation to enhance regional reliability and mitigate transmission constraints in order to reduce congestion for ratepayers in Pennsylvania and adjacent jurisdictions. 66 Pa. C.S. § 2805. In our view, the record is clear that the Mount Storm to Doubs line is heavily congested and that alternatives, such as reconductoring, retensioning, or otherwise raising the height of the rights-of-way to improve clearance are likely to impose heavy congestion costs on consumers. Conversely, the record also indicates that the [502 Facilities] will resolve all of the projected overloads in the southern portion of the Allegheny Power*fn6 transmission zone in a cost-effective and timely manner.

(PUC Op. at 35.) The PUC then stated that it did not disagree with the ALJs' consideration of factors such as whether the TrAIL Project was built to facilitate transmission from the western PJM Region to the eastern PJM Region, and whether greenhouse gas emissions or costs of emissions should be considered. But the PUC noted that, in considering alternatives to the TrAIL Project, "the issue of costs is an important driver, as it should be." (PUC Op. at 36.) The PUC also agreed with the ALJs that economics were a consideration of TrAIL Co. in proposing the 502 Facilities, given that the record established that Project Mountaineer and an earlier version of TrAIL Project were proposed within the context of the west-to-east transfer enhancements. However, the PUC went on to state:

one cannot easily distinguish between transmission efficiency projects and reliability projects within a congested region. Removing congestion resolves reliability violations, and vice versa. There is nothing inherently wrong with removing reliability violations on a heavily congested line through construction of a new transmission line. Here, we find that the record establishes that the [502 Facilities are] needed to address reliability issues and [are] the best alternative available to achieve that result.The physical alternatives presented by ECC and discussed by the ALJs approach the problems in a piecemeal manner with no certainty that they will actually resolve the modeled problems. In addition, we agree with TrAIL Co.'s argument that the use of manual system adjustments to alleviate the modeled violations simply invites a host of additional system problems with attendant negative economic impacts.

(PUC Op. at 36 (bold emphasis added).) Accordingly, the PUC found that TrAIL Co. had satisfied its burden of proving a public need for the 502 Facilities, pursuant to Section 1501 of the Code and 52 Pa. Code § 57.76(a)(1), and granted TrAIL Co.'s exceptions two through five.

In its sixth exception, TrAIL Co. asserted that the ALJs erred in failing to find that the route selection process for the 502 Segment was reasonable. TrAIL Co. argued that the selection of the route and proposed rights-of-way (ROW) is a matter for the public utility in the first instance and will not be set aside unless the utility's exercise of its discretionary power is unreasonable. TrAIL Co. claimed that its route selection process for the 502 Segment was driven by the necessity of connecting the Pennsylvania portion of the 502 Segment with the West Virginia portion of the 502 Segment and that its selected route, which was the shortest and most direct route, was clearly beneficial to Pennsylvania and all of its residents.

(TrAIL Co. Exceptions at 20-21, R.R. at 1653a-54a.) ECC responded that the ALJs properly found the route selection process used by TrAIL Co. unreasonable and incomplete because TrAIL Co.'s Application did not discuss the merits of the route chosen or general descriptions of Routes D-H. Thus, according to ECC, TrAIL Co.'s Application did not satisfy the minimum requirements set forth in 52 Pa. Code § 57.72(c)(10), and the PUC should not have granted the Applications.

The PUC granted TrAIL Co.'s exception to the ALJs' rejection of its route selection for the 502 Segment, stating:

We are persuaded by TrAIL Co.'s assertions that its route selection was driven by routing criteria in adjacent jurisdictions. As repeatedly argued by TrAIL Co., the chosen route is the shortest route given this circumstance. Accordingly, we will grant TrAIL Co.'s exception regarding the route selection. Our grant of this Exception is predicated, in part, on TrAIL Co.'s commitments in its Exceptions, Appendix A, Items 8 and 11. . . .*fn7

(PUC Op. at 42-43.)*fn8

TrAIL Co. next challenged the ALJs' conclusion that TrAIL Co. did not make sufficient efforts to minimize the environmental impact of the proposed 502 Facilities. TrAIL Co. asserted that the record evidence showed that the proposed route for the 502 Segment has the least impact on the environment and resources. (TrAIL Co.'s Exceptions at 21-22; R.R. at 1654a-55a.) In response, ECC pointed out that TrAIL Co. failed to address the impact on surface and subsurface waters, despite knowing that the majority of the communities in the surrounding area drew their potable water supplies from such sources.

The PUC granted TrAIL Co.'s exception, with some conditions. In doing so, the PUC held:

The [PUC] takes its environmental obligations seriously and is very concerned about the lack of information in this Application. However, we are only approving the construction of the 1.2 mile segment known as the [502 Segment]. Because it is only 1.2 miles in length, there will be minimal impact on the environment. For this small segment of the line, we will grant TrAILCo's [sic] Exception and find that it has met its burden of proof relating to environmental concerns. Our finding on this issue is, in part, dependent on several commitments made by TrAILCo in Appendix A to its Exceptions, Items 13, 14 and 15. . . .*fn9

(PUC Op. at 46.) ECC now petitions this Court for review.*fn10

IV. Standing

As a threshold matter, the PUCargues that, because ECC is not aggrieved by the PUC's determination, ECC's petition for review should be dismissed for lack of standing pursuant to Pa. R.A.P. 501 (requiring that a party must be aggrieved in order to appeal). The PUC contends that, even though ECC filed a protest and TrAIL Co. to identify sources of ground water, including springs and wells, so as to avoid impacting those sources, we note that the PUC's regulations regarding HV lines, 52 Pa. Code §§ 57.71-57.76, do not require an applicant to identify sources of ground water. The regulation at presented evidence before the PUC, it is not automatically a party to the proceedings with a right to appeal the PUC's order. Arsenal Board of Trade v. Pennsylvania Public Utility Commission, 72 A.2d 612, 614-15 (Pa. Super. 1950). The PUC asserts that ECC is not aggrieved because ECC's protest was to TrAIL Co.'s Applications as a whole, and the record does not reflect any clear or direct interest with regard to the 502 Facilities in particular, which are the subject of the present appeal. The PUC argues that ECC does not have a direct or substantial interest in the PUC's approval of the 502 Facilities because it has not demonstrated any discernable direct or individualized interest that is greater than any other citizen.*fn11 See In re Hickson, 573 Pa. 127, 135, 821 A.2d 1238, 1243 (2003) (stating that a "substantial interest is an interest in the outcome of the litigation that is greater than any other citizen"). Further, the PUC asserts that ECC's evidence was devoid of specificity and failed to provide specific examples of the environmental effect on individuals. Therefore, the PUC argues that ECC's environmental concerns are not imminent but are potential, future concerns. Finally, the PUC argues that most of ECC's "generic" concerns were "significantly mitigated" by the conditions the PUC imposed on the construction of the 502 Facilities. (PUC's Br. at 16.) We disagree with the PUC that ECC lacks standing.

If a party is not adversely affected in any way by the determination being challenged, the party is not aggrieved and, thereby, has no standing to obtain a judicial resolution of the challenge. William Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 192, 346 A.2d 269, 280 (1975). "[I]t is not sufficient for the person claiming to be 'aggrieved' to assert the common interest of all citizens in procuring obedience to the law." Id. at 192, 346 A.2d at 280-81. In order to be aggrieved, a party must have a substantial interest in the subject matter of the litigation, the interest must be direct, and the interest must be immediate. Id. The substantial interest requirement means that "there must be some discernable adverse effect to some interest other than the abstract interest of all citizens in having others comply with the law." Id. at 195, 346 A.2d at 282. A direct interest "means that the person claiming to be aggrieved must show causation of the harm to his interest by the matter of which [the person] complains." Id. Finally, the interest must "be 'immediate' and 'not a remote consequence of the judgment.'" Id. at 197, 346 A.2d at 283 (quoting Keystone Raceway Corp. v. State Harness Racing Commission, 405 Pa. 1, 7-8, 173 A.2d 97, 100 (1961)).

An association may have standing as a representative of its members. Tripps Park v. Pennsylvania Public Utility Commission, 415 A.2d 967, 970 (Pa. Cmwlth. 1980). Thus, as long as an organization "has at least one member who has or will suffer a direct, immediate, and substantial injury to an interest as a result of the challenged action[, i.e., is aggrieved, the organization] has standing." Parents United for Better Schools v. School District of Philadelphia, 646 A.2d 689, 692 (Pa. Cmwlth. 1994) (PUBS). For example, in PUBS, this Court held that a group of individuals, including parents of high school students,incorporated to challenge the implementation of a new school district policy making condoms available at school-based health clinics upon request of high school students, had standing because at least one of its members would be aggrieved by the school district's actions. Id. Similarly, in Tripps Park, we held that an organization of Pennsylvania Gas and Water Company customers and ratepayers, had standing "even in the absence of injury to itself . . . solely as the representative of its members." Tripps Park, 415 A.2d at 970.

A review of ECC's protest (see R.R. at 448a-82a), and the list of its members, clearly reveals that ECC has standing to appeal the PUC's determination. ECC has at least sixteen members that are located in and around the area in which the 502 Facilities, including the potentially 200-foot tall 502 Segment, will be located. Nine of ECC's members are located within the proposed ROWs for the 502 Facilities. (TrAIL Co.'s Ex. AJF-1 at 3 (describing the path and ROWs for the 502 Facilities), R.R. at 425a; TrAIL Co.'s Ex. AJF-3 at 1-3 (listing property owners within the ROW, including the nine ECC members), R.R. at 430a-47a.) Further, ECC members testified as to the impacts the siting, construction, operation, and maintenance of the 502 Facilities would have on them, their properties, their businesses, and their communities. (Testimony of various ECC members, R.R. at 1163a-1236a.) Additionally, ECC members include affected ratepayers. The ECC and its members, some of whom own property within the ROWs for the 502 Facilities or are affected ratepayers, have an interest in the PUC's determination that is more than just the interest shared by all citizens to prevent the construction of a HV transmission line. See Tripps Park, 415 A.2d at 970 (holding that affected ratepayers are aggrieved). Moreover, the harm alleged by the ECC on behalf of its members, including increased rates and decreased property values, is directly caused by the PUC's approval of TrAIL Co.'s 502 Facilities Applications. Finally, the interests alleged to be harmed, particularly the ratepayer objections given TrAIL Co.'s own evidence showing that the construction and maintenance of the 502 Facilities will result in higher rates for Pennsylvania ratepayers, (ECC's Br. at 22-23), are not a remote consequence of the PUC's judgment. Accordingly, ECC has members that are aggrieved by the PUC's authorization of the 502 Facilities and, consequently, ECC has representative standing to bring this appeal.*fn12 PUBS; Tripps Park.

V. Approval of TrAIL Co.'s HV Transmission Line Applications for the 502 Facilities

A. Overview of Law Applicable to HV Transmission Line Applications

The PUC requires applicants to meet certain regulatory standards before it will grant approval for HV transmission lines, like the 502 Segment. The PUC's regulations set forth, inter alia: (1) the procedures for applying for approval of an HV line-52 Pa. Code § 57.72; (2) the procedures for hearings on HV line applications-52 Pa. Code § 57.75; and (3) what the PUC must consider when deciding whether to approve or deny an HV line application-52 Pa. Code § 57.76(a). These regulations, and 52 Pa. Code § 57.76 in particular, represent a codification of the review required by article I, section 27 of the Pennsylvania Constitution.*fn13 Re Proposed Electric Regulation, 49 Pa. P.U.C. 709, 712 (1976) (stating that "the review required by article I, section 27 is being incorporated into our siting regulation"). The regulation at 52 Pa. Code § 57.76(a) states, in relevant part, that the PUC will not grant the application, either as proposed or as modified, unless it finds and determines as to the proposed HV line:

(1) That there is a need for it.

(2) That it will not create an unreasonable risk of danger to the health and ...


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