This was originally published by The Frontier Institute

Key Points: 

• The proposed Coyote Wind Project would have created jobs, generated tax revenue and provided a substantial new supply of wind energy for more than 27,500 homes.
• After the DNRC performed extensive research and analysis, neighbors who opposed the project brought legal action arguing it violated MEPA.
• The court ruled against the DNRC, halting the project until further MEPA analysis could be performed.
• The uncertainty and litigation delays from the permitting process ultimately caused the entire project, including the portion on private land, to be jettisoned.

Background:

Under the direction of the Land Board, the Montana Department of Natural Resources & Conservation (DNRC) is the agency responsible for “selecting, exchange, classification, appraisal, leasing, management, sale, or other disposition of the state lands.” The DNRC is required to facilitate the “highest development of state-owned lands in order that they might be placed to their highest and best use and thereby derive greater revenue for the support of the common schools, the university system, and other institutions benefiting therefrom, and that in so doing the economy of the local community as well as the state is benefited as a result of the impact of such development.”

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To achieve these goals, the DNRC has begun pursuing opportunities for revenue generation through wind power projects. Starting in May 2004, a study was conducted on State Trust land across Montana to identify the optimal locations for wind energy development. The study used 12 factors, including environmental impacts on bird populations, to compare potential sites. Based on these criteria, the study identified State Trust land north of Springdale as the second-best site for wind energy development in Montana. As a result, in 2005, the DNRC issued a request for proposals to develop wind power at this location.

Two long-time landowners adjacent to the State Trust land, Richard Jarrett and Alfred Anderson, had spent the previous decades seeking to develop a wind project on their property. Both eagerly offered to include their property in the project. Coyote Wind was the successful bidder for the State Trust land project, opting to build wind turbines on the state parcel as part of a larger project on the property of Jarrett and Anderson.

In the summer of 2008, the DNRC began its scoping process under MEPA. By 2009, the DNRC released a 419-page Draft Environmental Impact Statement (DEIS) detailing the project. In the DEIS, the DNRC prepared two alternative courses of action. The Proposed Action alternative analyzes the environmental effects of constructing the wind farm on the school trust land as part of the overall project that also includes adjoining private land. The No Action alternative analyzes the wind farm on private land only, with no wind turbines located on the school trust land. The reason for a No Action alternative, which would still have wind energy development on private lands, is because the DNRC “has no authority to make any decision regarding the use of private lands.”

The State land would hold 8 wind turbines, generating 14.4 MW of power, while the portion on private property would hold 36 turbines, generating 64.8 MW of power. Together, the entire project would generate 79.2 MW, or 252.1 GW annually (after accounting for capacity factor and system losses). After accounting for average residential electric use in Montana, the Coyote Wind Project would power more than 27,500 homes.

It was estimated that the total project would increase county property tax revenue by anywhere from $930,000 to $1.21 million annually. If the full project were implemented, it would create 400 temporary construction jobs and 4 permanent jobs.

The DEIS also included extensive studies on noise impact, light impact, impact on wildlife, potential impact on property values, viewshed impact, and the potential for ‘ice throws’. Below is an image used to demonstrate the visual impact of the project.

In November 2009, the DNRC published a Final Environmental Impact Statement (FEIS). After receiving comments, the FEIS included an additional 264 pages of analysis and changes to the original DEIS to address those concerns.

In December 2009, the DNRC issued a Record of Decision recommending the approval of Coyote Wind’s bid. In January 2010, the State Land Board followed this recommendation and authorized the DNRC to enter into the wind power lease with Coyote Wind.

Lawsuit:

In March 2010, a different group of neighbors to the proposed project, brought a court action against the DNRC arguing it violated the Montana Environmental Policy Act (MEPA). Specifically, they argued the DNRC violated MEPA by:

1. failing to properly adopt the FEIS; 
2. failing to appropriately consider alternatives;
3. failing to give rational consideration to certain environmental impacts; 
4. failing to properly consider cumulative impacts; and 
5. failing to consider significant new information. 

During the court action, 1,060 pages of administrative records were submitted. 

The court primarily found issue with the MEPA analysis for the following 3 reasons:

• The Court found fault with the No Action Alternative. The Court agreed that even though the DNRC doesn’t have the “jurisdiction, power, or ability to implement a particular alternative,” it “does not excuse analysis of the alternative.” Effectively, meaning that the No Action Alternative should have performed an analysis that pretended that the plan for the wind farm on private property was non-existent. 
• The Court found fault with the DNRC opting to defer much of the transportation impact analysis to the county, which would ultimately approve the transportation plan.
• The Court found fault with the MEPA analysis for failing to accurately disclose revenue from an Oil and Gas Lease on the proposed location.

On October 5, 2011, it was ruled that, for the above-stated reasons, the DNRC violated MEPA when approving the Coyote Wind Project. The project lease was halted and remanded back to the DNRC for additional investigation and reporting under MEPA.

The Impact:

While on the surface it appears that the DNRC had to simply go back and reanalyze the issues the court found, then the project could begin, that is far from the reality. As the general manager of Park Electric Cooperative pointed out during a public hearing on the Coyote Wind project, “the cost to build generation in this country is extremely expensive; the environmental processes, the cost of construction, the legal issues associated with it.”

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Delays from MEPA-fueled litigation have significant consequences. While the MEPA litigation had no direct impact on the private portion of the project, court documents show that the financial burden from the delays, coupled with the threat of additional litigation from neighbors determined to stop the project, became too expensive, leading to the cancellation of the entire project, including the portion on private land.

But after years of time and money, why would a seemingly minor lawsuit kill an entire wind project? There are three reasons.

1. With the State Trust land portion called into question, the entire project’s economic viability was put into doubt. The court pointed this out when they said, “Whether Coyote Wind’s larger project would be economically viable without including development on the State Parcel is a disputed factual question that cannot be resolved by summary judgment.” The subsequent cancellation of the entire project, following litigation over the state land portion, answered the viability question.
2. The “hard look” at potential impacts of state action required by MEPA is extremely open-ended, meaning that opponents to a project can simply continue to litigate a MEPA analysis until a project becomes financially impossible. Even with a new revised analysis, the stark opposition to the project by neighbors signaled that they would continue to litigate the project. This was proven right when nearly a decade later the same neighbors litigated another proposed wind project at the same location. 
3. The threat of further litigation would push agencies to try and create a ‘litigation proof’ analysis. Litigation proofing an analysis would mean considerable more time spent in the permitting process, and thus further calling into question a project’s financial feasibility.

Conclusion:

After 7 years of extensive research, planning, permitting and subsequent litigation, the Coyote Wind Project was stopped – not because it failed to meet substantive environmental regulations, but because of frivolous procedural concerns.

Regardless of perspective, our current permitting process and the litigation it fosters undoubtedly led to the demise of the Coyote Wind project.

Tanner Avery is the Director for New Frontiers at the Frontier Institute.

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.