Legalectric

IT’S NOT IN THE PUBLIC INTEREST! WELL, DUH!

Yet another silver stake in the ugly, slimy heart of Excelsior Energy’s Mesaba Project — the coal gasification (IGCC) boondoggle that’s been haunting Minnesota for almost six years now. Today, the ALJ Recommendation has been released, and it also finds that that there’s no basis for moving forward.

Mesaba Phase II – ALJ Report

Here’s the bottom line, sans formatting glitches:

CONCLUSIONS OF LAW

The Minnesota Public Utilities Commission and the Administrative Law
Judges have jurisdiction over this matter pursuant to Minn. Stat. §§ 216B.08,
216B.1693, 216B.1694, and 14.50, Minn. R. 1400.5100-.8400, and to the extent not
superseded by those rules, Minn. R. 7829.0100-.3200.

The Commission gave proper notice of the hearing in this matter, has fulfilled all
relevant substantive and procedural requirements of law or rule, and has the authority to
take the action proposed.

Since the Project is an Innovative Energy Project under Minn. Stat. § 216B.1694, subd.
2(a)(4) and is therefore also as a Clean Energy Technology under Minn. Stat. §
216B.1693.

The Project and its technology do not satisfy the requirements of Minn. Stat. §
216B.1693(a) because the Project is not likely to be, a least cost resource, including the
costs of ancillary services and other necessary generation and transmission upgrades,
to provide 13% of the electric energy that Xcel supplies to its retail customers.

It would be contrary to the public interest for the Project to supply 13% percent of Xcel
Energy’s retail load starting in 2012.

This report has some choice nuggets, beyond listing “Wind on the Wires” as an Intervenor, such as this slap down of Excelsior when they tried again, for the eighthundredthousandth time, to enter evidence long after the record closed (I’ve made how many Motions trying to stop this? Amazing that the ALJ is not letting this slide by):

In summary, the ALJ concludes that the written testimony of Messrs. Cortez and
Weissman contained in Excelsior’s Offer of Proof is not admissible either to revisit
Phase 1 issues that have been referred to the Commission issues or to supplement
their prefiled testimony on the Phase 2 record. If the Commission should conclude that
the written testimony of Messrs. Weissman and Cortez is not repetitive but necessary
for resolving either Phase 1 or Phase 2 issues, it may wish to remand proceedings to
the ALJ for inclusion of that evidence in the record and to provide opposing parties with
an opportunity to present rebuttal evidence.

In this docket, as in the others, Excelsior submitted statements to show legislative intent, ones that I challenged with Motions to have them tossed out, and the ALJ summarily said, “NO THANKS” to Excelsior, not only giving them a lesson in statutory intent, but also a slap upside the head to their megalomaniacal entitlement notions:

First, the communications by the Governor and members of the Legislature that
Excelsior relies on are either irrelevant, inadmissible to establish legislative intent, or
both. In his May 23, 2003 letter, the Governor communicated to members of the Senate
a number of objections he had to H.F. 9, which the House had passed the day before
and had sent to the Senate for its consideration. The third paragraph of the
Governor’s letter stated:

The coal-gasification plant technology proposed for the Excelsior Energy
project will provide base-load power with clean emissions, helping pave the
way for a better future. The project also provides economic development
opportunities in a region of the state that has suffered significant job losses.
The project has merit and it should be encouraged, but not at the expense of
true renewable initiatives.”

The Governor’s letter sheds no light on his position on whether there should be an
expiration date for the proposed Minn. Stat. § 216.1693 and, if so, what that expiration
date should be. Moreover, even if the Governor’s letter is taken as an expression of his
desire for a long term power supply entitlement in Minn. Stat. § 216.1693 extending into
the indefinite future, the Legislature passed a bill on the following day that included the
explicit expiration date in Minn. Stat. § 216.1693(d), and the Governor subsequently
signed that amended version of the bill into law. Excelsior also relies on some more
recent statements by legislators, including some bill authors, as to what the Legislature
may have intended when it passed H.F. 9. However, comments and statements of
legislators, including authors, made after a statute has been passed “are inadmissible
for the purpose of construing a statute.”

…

Finally, Excelsior argues that any interpretation of Minn. Stat. § 216B.1693(d)
other than its own would defeat the purpose of the statute, undermine the legislative
intent behind the law and eliminate the intended effect of the statute, “which is to
encourage the development of IGCC plants to serve Minnesota’s need for base load
power.” In other words, Excelsior argues that there is no reasonable explanation for
having the statute and the entitlement and obligation that it creates expire on January 1,
2012. The ALJ also disagrees with that analysis. In its Phase 2 argument, Excelsior
proposes that Minn. Stat. § 216B.1693 evidences a legislative “intent to enable clean
energy technology to establish to establish a foothold in Xcel’s generation
portfolio . . . .” In the ALJ’s view that proposition is only partly correct. First of all, by
enacting Minn. Stat. § 216B.1693, the Legislature did not guarantee clean energy
technology a foothold in Xcel’s generation portfolio; it only provided clean energy
technology an opportunity for such a foothold if other statutory conditions could be met.
Second, the plain language of Minn. Stat. § 216B.1693(d) indicates that Legislature only
offered an opportunity for a foothold in Xcel’s generation portfolio that would be
available until January 1, 2012, about eight and one-half years from the date of
enactment. If Excelsior or other potential IGCC providers could not avail themselves of
the opportunity before then, it would be necessary for them to return to the Legislature
and seek reenactment. That is a legislative intent that is consistent with the plain
meaning of Minn. Stat. § 216B.1693(d).

(Footnotes excised) Hey, Excelsior, is it clear? “…[T]he Legislature did not guarantee clean energy
technology a foothold in Xcel’s generation portfolio; it only provided clean energy
technology an opportunity for such a foothold if other statutory conditions could be met. ” You’re not meeting the conditions — you’re outtahere!

There’s a cute little footnote on p. 33:

110 The ALJ notes that the evidence establishes the Excelsior is scheduled to
complete neither Mesaba Unit 1 nor Mesaba Unit 2 prior to January 1, 2012,
when the CET Statute’s power supply entitlement expires.

So take that, Excelsior!

And would you agree, Mr. Micheletti, that this accurately characterizes your position:

Stolen from AP – Firefighters rescue donkey trapped in well in Western Minnesota 

Rumor has it that Chuck Michaels has departed Short Elliot Hendrickson, or at least projects on the Range, i.e., MSI, and Excelsior Energy’s doomed and crashing Mesaba coal gasification plant? Where’s Clarence??? Can it be? I noticed my SEH hits had dropped… so it must be?!?!? Well… now who do I pick on? Who will be held accountable for all these goofy infrastructure ideas?

Dumped coal fly ash at Pigeon Point, taken yesterday.

Coal Fly Ash… dumping it, using it for purposes we’re not aware of… It’s happening everywhere. I think that’s what’s sitting outside the USG ceiling tile plant just south of Red Wing. Coal fly ash is not regulated, it’s deemed “not hazardous” though it’s just a semantic obfuscation of the character of the stuff. In Minnesota there are regulations, but the regulations are about what you CAN use coal fly ash for, and not addressing the components of coal fly ash. Here’s the run down for Minnesota, where coal fly ash can be combined with dirt in a feedlot to “stabilize” the soil… STABILIZE???

“Feedlots Stabilizing with Coal Ash”

From a report, “Engineering and Environmental Specifications of State Agencies for Utilization and Disposal of Coal Combustion Products: Volume 2 – Environmental Regulations” you can learn how this is addressed by each state. In Minnesota:

Minnesota
Under Minnesota regulations, fly ash, bottom ash, slag, and flue gas emission control waste generated from the combustion of fuel which is at least 51% coal or other fossil fuel and the balance of the fuel does not contain hazardous waste is exempt from regulation as hazardous waste, MINN. R. 7045.0120(1)(F).

Minnesota regulations provide that CCB, when used in accordance with MINN. R. 7035.2860, have a standing beneficial use determination. A standing beneficial use determination means the generator or end user of a material can do so in accordance with applicable rules without contacting the agency. Standing beneficial uses for coal ash include:

• Coal combustion slag when used as a component in manufactured products such as roofing shingles, ceiling tiles, or asphalt products.
• Coal combustion slag when used as a sand blast abrasive.
• Coal combustion fly ash as defined by ASTM C618 when used as a pozzolan or cement replacement in the formation of high-strength concrete.
• Coal combustion fly ash or coal combustion gas scrubbing by-products when used as an ingredient for production of aggregate that will be used in concrete or concrete products. This does not include use in flowable fill.
MINN R. 7035.2860(4)(K), (L), (M), (N).

Materials that are beneficially reused are not exempt from storage standards set forth in MINN. R. 7035.2855. The storage design standards are intended to prevent contaminants from migrating into ground or surface waters and prevent nuisance conditions from occurring on the storage facility. The Minnesota Pollution Control Agency will consider proposed beneficial uses not listed as a standing beneficial use on a case-by-case basis. To be considered a beneficial use, the
material:

• May not be special actively accumulated.
• Must be characterized in accordance with R. 7035.2861.
• Must be an effective substitute for an analogous material or a necessary ingredient in a new product.
• Will not adversely impact human health or the environment.
• Is not used in quantities that exceed accepted engineering or commercial standards.

Minnesota Pollution Control Agency, 520 Lafayette Road North, St. Paul, MN 55155-4660.
Contact: Matt Herman, (651) 296-6603; Web Site: www.pca.state.mn.us.
The above is from the University of North Dakota (coal country, remember?), which is home of the Coal Ash Research Center.

There’s a federal EPA docket open on this, click below for docket:

EPA Coal Combustion Data Docket

To get to the docket, copy this docket number:

EPA-HQ-RCRA-2006-0796

and click on this “regulation” link and fill out, specify search “EPA” and that you’re looking for a docket, and paste the docket number in. Here’s the link to click:

CLICK HERE TO SEARCH FOR EPA DOCKET

In Delaware, they’re proposing sending fly ash and sewage sludge to a dump that’s been “closed” but at which they’re dumping, and worse, “Part of the design requires the use of thousands of “wick” drains around the site to quickly draw liquid from the surface of the disposal area into underlying aquifers.” It’s located on the banks of the Delaware River… WHATEVER ARE THEY THINKING????

You can find Delaware’s take on regulation (and lack thereof) in that UND report, “Engineering and Environmental Specifications of State Agencies for Utilization and Disposal of Coal Combustion Products: Volume 2 – Environmental Regulations” at page 15.

There’s a hearing tonight about DNREC’s role in dumping fly ash and sewage sludge, that’s TONIGHT, at the Rose Hill Community Center located at 19 Lambson Lane in New Castle, Delaware, at 6:00 PM.

From Alan Muller, Green Delaware, some questions to ask:

• What is DNREC’s role?

• What does DNREC plan to do about this?

• When are they going to really CLOSE the dump?

• What are they going to do to clean it up?

• Where’s the criminal investigation of this dumping in a closed dump?

From the News Journal:

Old dump at port eyed for tons of ash
Key contractor for job has record of offenses

By JEFF MONTGOMERY, The News Journal
Posted Friday, August 31, 2007

Wilmington and federal officials are considering a multimillion-dollar deal that would send 2 million tons of power plant fly ash and sewage sludge to a closed dump near the Port of Wilmington.

The proposed agreement — which could be finalized as early as next month — drew protests from some environmental groups concerned about threats to the river and groundwater posed by huge volumes of ash coming from coal-burning power plants.

State environmental officials questioned other aspects of the plan — including the sheer amount of ash. The material would be deposited in a series of 300-foot-wide berms near the river to create a 10-foot-deep, 110-acre storage bowl.

“We’re still looking at what regulatory oversight we have, and if there are additional controls that we might like to exercise,” said David Small, deputy secretary of Delaware’s Department of Natural Resources and Environmental Control.

A key contractor for the project, Headwaters/VFL Technologies, was fined $100,000 earlier this month for a string of environmental offenses, with dozens of other violations still under review.

Headwaters would be the sole contractor under the proposed three-year job that could be worth more than $50 million in gross revenues, based on current industry-reported prices for disposal of ash.

“We’re working to finalize a draft … and we’ll hopefully issue the final agreement with the city of Wilmington on Sept. 21,” said Charles J. Myers, project manager for the Army Corps of Engineers.

In April, a Wilmington official said that the city had retained an engineering company to design a reopening of the dump, a dredge spoils site near the mouth of the Christina River. Head-waters/VFL would spend an estimated $3.5 million to build berms needed to contain the spoils “at no cost to the corps” in exchange for a city right to use stabilized sludge for construction material.

William S. Montgomery, chief of staff to Wilmington Mayor James M. Baker, said late Thursday he was unaware of schedules under the agreement. Montgomery also said the city does not know how much Headwaters earns under its subcontract for managing the 50,000 tons of treated sewage — called sludge — produced by the northern Delaware wastewater plant annually.

“We’re not trying to do anything other than find uses for our sludge, so we don’t have to drop it in its unadulterated form in the landfill,” Montgomery said.

Under the process, Headwaters mixes treated sewage sludge with fly ash from power plants. While officials have long considered the mixture safe, questions have been raised recently about its toxicity and its effect on the environment.

“Unbelievable! The materials are loaded with toxins and infectious agents and they want, in effect, to dump it in the river,” said Alan Muller, who represents the environmental group Green Delaware.

Part of the design requires the use of thousands of “wick” drains around the site to quickly draw liquid from the surface of the disposal area into underlying aquifers.

The project has surfaced amid a widening national debate over environmental risks associated with coal combustion wastes. The Environmental Protection Agency this month released new data on potential cancer and ecological risks posed by mismanagement of fly ash and other power plant residues.

Burnt coal contains an assortment of heavy metals and other toxic compounds, but currently is regulated as a non-hazardous waste. Most of the 120 million tons generated annually now goes to landfills.

And Wilmington has emerged as a regional destination for fly ash and other products.

Ingredients for the Headwaters/VFL process include incinerator ash and dusts from refineries and a metal processing plant. Most of the material comes from out of state power plants.

Delaware Solid Waste Authority is demanding the right to review the plan, noting that it owns 56 acres involved in the proposal.

Contact Jeff Montgomery at 678-4277 or jmontgomery@delawareonline.com.

FINALLY I’m getting around to posting the latest from the Grand Rapids Herald Review.  In the first, someone’s not happy about CAMP, an effective group opposing the Mesaba Project:

A different kind of wind power

Herald Review
Last updated: Wednesday, August 29th, 2007 10:45:48 AM

Editor:

I recently had a conversation with one of these C.A.M.P. fellows. He informed me that this wind power was the only answer to our energy needs. I said I agreed that wind power was probably a good thing, but from my observations and from everything I had read on the subject, the wind did not blow all of the time. Normally in the evenings and at night the wind dies down, so we would still need back-up power as industry, business, both small and large and almost everybody else in this day and age needs constant power 24 hours a day. He then informed me that I was just plain misinformed and that these wind turbines produced power 24 hours a day, seven days a week and 365 days a year where they were being built.

Later that day when I was contemplating what this fellow had expounded, I got to thinking, you know what this fellow said could probably be true if he would just round up the rest of his C.A.M.P. buddies and take them out and they could all pitch their tents around one of these wind energy farms because they all really do produce a lot of wind.

Frank Hendricks
Bovey

Project teaches an expensive lesson

Herald Review
Last updated: Friday, August 24th, 2007 04:34:25 PM

By Aaron Brown

When it comes to “job creation” projects in this region, most Iron Rangers take a well-worn wait and see attitude. After all, big shots have promised economic diversification since the beginning of our economy. We’ve seen a defunct chopsticks factory, tech centers that became defunct telemarketing centers and a decade-long attempt to turn our local peat bogs into fuel. Our hopes have been raised, dashed, raised and dashed again.

We’ve seen some success, yet today natural resources like taconite and wood products still provide the backbone of our local economy. No one has figured out how to solve that problem. We’ve survived because our unique state agency – Iron Range Resources – draws many millions each year in taconite taxes (in lieu of the property taxes that mines used to pay to our towns and schools) to build our communities and stimulate economic development.

The leaping and lurching nature of our economy produces either great victories or great failures. In 2001 and the years after, many leaders were almost in despair over the shutdown of several local mines, including the permanent closure of LTV. It was at this time that local officials on the IRR board gave or loaned almost $10 million to a group of lawyers and lobbyists calling themselves Excelsior Energy. It was an act of unmitigated trust in a company that has never produced a single kilowatt of power.

On Aug. 2, the Minnesota Public Utilities Commission voted to reject the power purchase agreement needed by this startup company to build Excelsior’s Mesaba Energy Project. The project is a large proposed power plant near Taconite that promises experimental new coal technology that would burn cleaner than traditional coal-fired plants. While commissioners endorsed the technology, they declared the proposal to be far too expensive and risky. They ordered Excelsior to continue negotiating with the big utilities to fix the problems, but those utilities have no reason to change their longstanding opposition.

Excelsior Energy gambled – almost successfully – that authorities would blindly accept a project that brought jobs and the promise of cleaner energy production to the Iron Range. But, in reality, this project failed the people.

Excelsior and many local, state and federal leaders of both parties failed to make a plan that would produce energy at a competitive price. They failed to honestly explain or question the logistical difficulties of building a large experimental coal gas plant in a place hundreds of miles from the necessary coal mines, carbon sequestration sites, and markets that need the power right away. Worse yet, Excelsior took subsidized loans and grants from the Iron Range people and used it to cover nearly all of their corporate spending.

Public documents from Iron Range Resources show how Excelsior is spending the $9.5 million Iron Range Resources loan from 2003 to present. It would appear that for years the loan funded nearly every aspect of the business – payroll, offices furnished with expensive décor, right down to their subscription to the “Wall Street Journal.” It seems there’s very little private money in this project at all. In addition, both the IRR and federal government have given millions in grants while the state provided many unprecedented shortcuts in environmental and regulatory laws.

The outcome of Excelsior’s spending of public funds is murky. Hundreds of thousands of dollars from the IRR loan went to consulting firms and legal offices in the Twin Cities – literally too many to list here. Certainly, much of that paid for legitimate expenses, but we have no accounting for how that money was spent or who exactly benefited from the spending. Or for that matter, who pays for the many Excelsior lobbyists who patrol the halls of the State Capitol each session.

I know who this spending doesn’t benefit: the people of the Iron Range. This project is a combination of the worst parts of socialism and capitalism. It relies on public money to survive while protecting a private company from market forces.

Excelsior officials will say that the IRR loan has a high interest rate and that they intend to pay it back. But the actual loan agreement is the legal equivalent of Swiss cheese, full of delicious holes. Furthermore, Excelsior is banking on getting PUC approval this year to receive generous federal tax credits. They also need the agreement to open federal loan guarantees so they can continue spending money. In reality, Excelsior probably won’t get PUC support this year for an Iron Range plant, despite what their officials say in the media. The whole project is and always was a long shot. Our state leaders should have created more protections for the money and the possibility of the company’s failure or alteration of their original proposal. Instead many accepted legal campaign donations from Excelsior’s lobbyists while giving the green light to any shortcut, regulatory change or funding request they were presented.

We Iron Rangers allowed the desperation of the early 2000s create this ugly, expensive mess. This “company” has spun the many virtues of coal gasification while, from day one, lacking the money necessary to build the super-clean, super-efficient plant implied. Everybody’s power bill goes up a little if the plant works, a lot if the plant fails (another risk in this new technology). My biggest fear is not a new power plant on the Iron Range, but a failed project. This project was always a tremendous risk. Anyone with Google could have found that out for themselves in 2002.

I know this is a complicated issue. We need jobs. We will, eventually, need more energy production in northern Minnesota. We shouldn’t do it this way. The Mesaba project, while claiming innovative technology, is actually just an innovative way to shield entrepreneurs from risk. Government should regulate and, when appropriate, aid private industry; they shouldn’t provide nearly all the startup capital. In short: Excelsior Energy’s proposal remains a risky boondoggle.

The people of the Iron Range deserve better. With a new, focused effort on homegrown economic diversification and infrastructure improvements, we can show the world what the word “innovation” really means. It’s up to the people who live here to take renewed interest in making the Iron Range open and competitive in the modern economy. We’ve just learned a very expensive lesson in what not to do ever again. I hope.

Aaron J. Brown is a columnist for the Hibbing Daily Tribune, a Superior Publishing Corporation newspaper. E-mail him at aaronjbrown@yahoo.com.

More as it becomes available, but here’s the Agreement, just out today, and the Press Release from BS:

Nope, it’s too big to scan the whole thing in… grrrrrrr. So I’m scanning in the guts and not the exhibits for posting:

Settlement Agreement – Big Stone Partners and Minnesota Dept. of Commerce

And here’s the Big Stone Partners press release about it:

Settlement Agreement – Press Release

The big question now is what will the other Intervenors do? There’s the enviro Intervenors, MCEA, representing themselves, the Waltons, Fresh Energy and Union of Concerned Scientists. And then there’s lil’ ol’ moi, representing mncoalgasplant.com, an intervention limited by the ALJ to only those issues pertaining to Excelsior Energy’s Mesaba Project. Oh, this does get complicated, doesn’t it!

For the full Big Stone II docket, go to www.puc.state.mn.us and then to “eDockets” and then to “Search Documents” and then search for 05-619.

Here’s the STrib article — will someone explain to me why Sen. Ellen Anderson is suprised about this?  Goodpaster “doesn’t understand?”  Give me a break…  Pawlenty’s supported it all along, and it was exempted from the “Global Warming” bill, DUH, wake up:

Minnesota has deal on coal power plant

A deal between utilities and the Minnesota Commerce Department swings support to building a $1.6 billion coal-fired power plant in South Dakota. Environmentalists say that’s the last thing Minnesota needs, and they’re accusing the governor of a flip-flop.

By Mike Meyers, Star Tribune

Last update: August 31, 2007 – 8:19 PM
The Minnesota Commerce Department Friday unveiled a pact with utilities that could smooth the way to build a $1.6 billion, coal-fired power plant in South Dakota, on the border 175 miles west of Minneapolis.

A top Minnesota official said the deal will reduce mercury pollution, find ways to offset greenhouse gas emissions and ensure that rural Minnesota gets the power it needs.

But foes of Big Stone II accused the Pawlenty administration of suddenly shifting course and supporting a plant that’ll release 4.7 million tons of carbon dioxide into the environment every year for the next half-century.

“I’m just spitting mad,” said state Sen. Ellen Anderson, DFL-St. Paul. Hours before, she had introduced Gov. Tim Pawlenty to a group of children at the State Fair, hailing him as an environmental champion. “I’m outraged the governor has turned around and flip-flopped on this coal plant and is supporting it now.”

But Pawlenty’s point man on the Big Stone II agreement said the governor’s environmentalist credentials are underscored in the deal.

The agreement with the utilities that want to build Big Stone II includes a requirement that they offset the emission of greenhouse gases, offering the utilities nine options for doing so, said Edward Garvey, deputy commissioner of energy and telecommunications at the Minnesota Department of Commerce.

“The agreement between the [Commerce Department] and the Big Stone II owners resolves issues related to project costs, mercury emissions, water use, energy conservation, renewable energy,” the agency said in a statement.

Pawlenty earlier this year championed and signed new laws setting strict limits on greenhouse gas emissions and mandating that utilities use more renewable energy. Garvey said the deal on Big Stone II advances those goals.

“This is the first and only carbon offset applied to a new facility that we know of in the country,” said Garvey, who in January wrote a letter outlining problems with Big Stone II — from carbon dioxide emissions to the source of water for cooling towers to electricity rates. The letter said the proposal at the time was unacceptable but left the door open to talks.

All of those objections, Garvey said, are answered in a 17-page agreement reached in talks between state commerce officials and a consortium that includes Otter Tail Power, Central Minnesota Power, Great River Energy and the Southern Minnesota Municipal Power Agency. They already operate another coal plant, Big Stone I, next to the Big Stone II site.

Opponents skeptical

Opponents of Big Stone II were skeptical that the Pawlenty administration did anything but side with utility interests, however.

“This seems to be a political response when the governor’s own analysts found the plant should not go forward,” said William Grant, associate executive director of the Isaak Walton League, a national environmental group with an office in St. Paul.

“To me, this is a case where the higher-minded principles the governor announced a few months ago have now been trumped by realities of the economic interests that want this project to go forward,” Grant said.

Beth Goodpaster, lawyer for the Minnesota Center for Environmental Advocacy, said Pawlenty is doing an about-face on fighting global warming in the Big Stone II deal.

“It’s the hypocrisy of the Pawlenty administration, talking about the new direction of creating jobs and economic vitality with clean energy,” she said. “To say you have to help the rural economy with a coal plant, I just don’t understand at all.”

Mike Meyers • 612-673-1746

Mike Meyers • meyers@startribune.com