What Is Streamlining? 

A look at Montana’s political trend of the season: rewriting environmental laws in the name of the economy

While the Montana Legislature is poised to act on dozens of bills that would have impacts on the state’s natural resources and the environment, public-interest activists are keying on three main arenas—energy, mining, and Montana’s overarching Environmental Policy Act—because they have become targets of the state’s current political trend: streamlining.

Upheaval in the electrical-utility industry and uncertainty about supply and costs, first of all, are promoting calls to “streamline” a variety of regulations that govern the construction of generating plants and the fuels that power them.

Sen. Mack Cole, a Hysham Republican and chairman of the powerful Senate Energy and Telecommunications Committee, has just introduced a bill that would strip out generating plants from the Major Facility Siting Act, a proposal that conservationists are calling radical and alarming.

The siting act, initially adopted in the 1973 legislative session, was designed to ensure that large electrical generating plants were truly needed and that their construction would not unduly promote environmental degradation. The landmark law was prompted by predictions of numerous coal-fired generating facilities being built across the eastern part of the state, particularly in the Colstrip area.

Subsequent legislatures added numerous provisions to the siting act and declared that pipelines, electrical transmission lines, distribution centers, nuclear power plants, synthetic-fuel plants, geothermal facilities and many related accessories of the utility industry be covered by the law. Main functions of the act, as originally envisioned, include resource protection, a comprehensive review of the socioeconomic impacts of utility proposals, a coordinated permitting system and extensive public participation in the decision process.

Over the years, industrial interests have convinced their friends in government to weaken the siting act on multiple fronts. In 1975, for example, a waiver was inserted to allow certification proceedings to be stayed if an “immediate, urgent” need for a facility exists. In 1979, oil and natural gas refineries were exempted from the act, and in 1981, other waivers were granted for some facilities planning to locate in counties where previous large employers had ceased operations. In later sessions, lawmakers tinkered with the size of the plants and utility accessories covered by the law, eliminated a requirement that alternate sites be studied, shortened application reviews from 22 months to one year, and stripped out provisions requiring utilities to prove their projects were necessary and would serve the public interest.

In addition, the 1997 Legislature, as part of a major overhaul, eliminated the requirement that generating plants minimize adverse environmental impacts and instead required operators to incorporate “reasonable, cost-effective” mitigation for “significant” environmental damages, according to a history of the act prepared by the Montana Department of Environmental Quality (DEQ).

“It’s been whittled away for quite awhile,” observes Patrick Judge, a Montana Environmental Information Center (MEIC) lobbyist who specializes in energy issues.

Growing More Plants

Along with removing nearly all generating and power-conversion facilities from the siting act, Cole’s bill, Senate Bill 319, proposes to speed up state reviews for other utility projects, give DEQ more control over decisions and trim down appeal requirements. Cole says his bill is needed because the utility crisis now sweeping the West stems in large part from a shortage of generating plants. Making it easier to locate electrical plants in Montana will help keep the state ahead of the game, he contends.

“We’re not an island anymore,” says Cole, a member of the state’s Legislative Environmental Quality Council. “We’re finding that out pretty fast. Our supply and demand have kind of gotten out of balance.”

Cole is not alone in his thinking. Gov. Judy Martz and Senate President Tom Beck (R-Deer Lodge) are echoing the same sentiments.

“We must increase the supply of power through more generating facilities,” Martz said in her Jan. 25 State of the State address. “...We should unite, all of us, to look for ways to streamline the permitting process, allowing construction of new facilities to be built within a more reasonable time frame, but also within the parameters of our stringent environmental standards. The Major Facilities Siting law process can and should be faster, and we can more efficiently process permits under the Montana Environmental Policy Act,” also known as MEPA.

“Some people would have you believe deregulation of electrical utilities put us here,” Beck wrote last week in an op-ed piece distributed across the state. “It is not that simple. ... Unless supply is addressed, Montana will pay the price down the road and the restructuring process will not have a chance to succeed.”

Cole says it makes sense to him for Montana to capitalize on the opportunity to provide more electricity, both for in-state users and regional consumers. But the industry, he says, has let it be known that the facility siting law dampens their enthusiasm for building new plants here.

“The siting act is not necessarily an environmental bill at all,” Cole contends. “It’s more of a permitting bill. Where we put a generating plant is going to depend on no small scale on where the person who puts it in wants to put it. I’d just as soon have the plants built in Montana so we get the jobs, rather than them being built somewhere else.”

Cole, a former federal Bureau of Indian Affairs official, says he thinks the siting act, among others, is ripe for revision. Generating projects would still get plenty of review if they’re exempted from the siting law, he says, because permitting functions are already covered by MEPA.

“There was probably some justification for it at the time,” Cole says of the utility-siting statute. “But I think it’s important to look at our laws every once in a while. A law made in the 1970s may not fit now.”

But Judge, the MEIC lobbyist, says there’s no clear evidence that more power plants are needed in Montana, especially considering that 47 percent of the electricity already produced in the state is exported to out-of-state consumers.

“We think it’s kind of a ruse to take attention away from deregulation and put it on an absence of generating capacity, which doesn’t exist here in Montana,” Judge says. “We have plentiful power here. We don’t need new plants.”

Judge also notes that electrical generating plants are deemed to be the top U.S. contributors to global warming. Building new facilities that are not needed will only exacerbate the problem, he contends.

Along with exorcising power plants from the siting act, Judge says Cole’s proposal to further cut timelines for environmental and economic reviews for other energy-related projects is shortsighted.

“The state may not be able to do a thorough job” if review periods are tightened, he says, and that could prompt challenges under Montana’s constitutional right to a clean and healthful environment, which was broadened by the Montana Supreme Court in 1999.

“If it gets all tied up in court, things could get delayed,” which is the exact opposite action reform advocates want, Judge says. “We don’t think they can do a good job in a short time.”

Cooking with Coal

Hand in hand with Cole’s proposal is a bill by Sen. Ken Miller (R-Laurel) that would cut the state’s severance tax for Montana-mined coal used in new in-state generating plants.

At a hearing last week, Miller said his Senate Bill 134 would spark new tax revenue, help attract new electrical plants and create new jobs.

Opponents, including Judge and Suzanne Davis of the Billings-based Northern Plains Resource Council, warned that cutting the tax and pushing for new coal-fired plants would affect local governments, create more pollution, and lead the state even further away from developing alternative energy sources.

Montana’s coal severance tax was established in 1975 at 30 percent, the highest in the nation. Industry leaders later persuaded lawmakers to trim the assessment to 15 percent, where it still stands. Under Miller’s proposal, in-state producers providing coal to local plants would only pay a 5 percent severance tax. The bill, some opponents argue, is patently unfair because it creates an inequitable situation for other coal producers and consumers.

Also in the works are a number of draft proposals that would provide other tax breaks for new generating plants. Sen. Mike Taylor (R-Proctor) is waiting to sponsor the Montana Energy Relief Act, and Sen. Mike Sprague (R-Billings) has requested a bill to “expedite coal-fired generating plants.” No details of either proposal have been released.

Legislative records show Rep. Steve Gallus (D-Butte) wants to add natural gas-fired generators to the facilities covered by the siting-act law, while Sen. Ken Toole (D-Helena) proposes to include plants based on their output of sulfur dioxide and nitrogen oxide. Rep. Chris Kaufmann (D-Helena) is proposing a bill to set carbon dioxide standards for generating plants.

Also in the air pollution category is a bill by Sen. John Bohlinger (R-Billings) that would create new sulfur-dioxide control plans. But Bohlinger’s SB 126, aimed at the industrial corridor between Laurel and Billings, will not likely become law—it’s already been tabled by the Senate Natural Resources Committee.

Messing with MEPA

“The leadership has made it clear that they see the siting act and MEPA as the biggest impediments to improving the poor economy in Montana,” observes Anne Hedges, another environmental information center lobbyist. “Industry doesn’t like what’s in the rules.”

MEPA, enacted in 1971, closely mirrors the National Environmental Policy Act, which requires systematic reviews of federal actions that could have negative impacts on air, land and water quality. The most well-known provision of both the state and federal statute is the requirement that environmental assessments or environmental impact statements be prepared before many development decisions are made. The process involves extensive public involvement and typically looks at a variety of options ranging from no action to preferred alternatives. The process also identifies potential actions for mitigating related environmental degradation.

MEPA covers a wide variety of activities, including the licensing of game farms, state timber sales, the creation of new state recreational access sites, the transplanting of non-native fish, air and water permits for mining operations, oil and gas permits, some highway projects, subdivision reviews, hazardous and solid waste disposal, public water and sewage treatment projects, state land lease permits and land acquisition, among others.

At the state level, MEPA has undergone multiple changes over the years, and most of the alterations have weakened the statute, conservationists say. MEPA reformists, however, contend the law is still too restrictive and often results in costly litigation, stalled or canceled projects and prolonged bouts of bureaucratic indecision.

One of the biggest changes occurred in 1995, when legislators inserted language that says the state must “recognize the right to use and enjoy private property free of undue government regulation.” Other amendments have created nearly a dozen statutory exemptions from the act and make it tougher to challenge agency decisions, especially in the courts.

Along with approving further limitations to court challenges, the 1999 Legislature mandated an 18-month study of the act, aimed at uncovering its flaws and developing a plan to improve its efficiency.

The 180-page report, completed in November, outlines concerns from the agencies that implement the law, complaints from affected private parties and its litigation and legislative history. The study also looked at similar environmental laws in other states to see how well they’re working.

Study participants, which included legislators, a utility attorney, a top Plum Creek Timber planner and a member of the environmental community, concluded that some timelines should be altered to improve public involvement and that better interagency coordination is needed to ensure that some reviews are completed in a shorter time frame. Overall, however, the report shows no major flaws. It also notes that MEPA has generally “resulted in state agencies making legally defensible decisions.”

“There isn’t a problem,” says Hedges. “They couldn’t find one.” Still, she says, industrial interests want the act narrowed further in the name of promoting jobs and strengthening the state’s economy.

“Instead of looking for real answers, they’re looking for scapegoats, and this is just a comfortable one for them,” Hedges maintains. “Considering all the past amendments, you’d think we’d see some [positive economic] changes by now if that was the answer, but it’s truly not.”

Hedges and Janet Ellis, executive director of the Montana chapter of the Audubon Society, say the next target is MEPA fees, definitions and administrative rules governing time frames. Several bills dealing with these issues are pending this session. Joint Resolution 3, introduced by six legislators, calls for another study to be conducted on the intricacies of the law. A draft bill requested by House Majority Leader Paul Sliter (R-Somers) calls for “clarifying the intent” of MEPA, while a proposal by Sen. Lorents Grosfield (R-Big Timber) entails the inclusion of more economic considerations in environmental permitting.

According to Ellis, hardrock mining interests, which often must complete environmental reviews under both federal and state law, want to be able to combine the reviews as much as possible.

“Industry has indicated it has problems with a number of things,” she says. “They hate the fact that many MEPA lawsuits are being won by environmentalists. But MEPA is a good law. If they stop MEPA short, there will likely be more actions in court.”

Making Bonding More Binding

Conservationists are heralding a bill by Rep. Matt McCann (D-Harlem) that would strengthen the state’s bonding requirements for at least some metal mines. McCann’s HB 69 gives state agencies more flexibility when determining bond amounts and forfeiture rules and would set up an additional 10 percent contingency bond—which could be retained for 10 years—to cover unforeseen circumstances in mine clean-up operations. Filing fees would also be increased under the measure, which includes controls on small mining ventures that have been exempted from past reclamation rules.

While environmental activists contend the bill’s not perfect, it does represent substantial improvement, says MEIC mine specialist Bonnie Gestring. Amendments to put more teeth in the measure are now being drafted, she says. The first hearing on HB 69, which would apply only to new mining permits, is tentatively set for Feb. 5 before the House Natural Resources Committee.

McCann’s bill was prompted by a recent Legislative Fiscal Division report that shows the state has an “identifiable liability” of $24.6 million because of mining companies not being required to post adequate bonds to cover environmental damage and reclamation costs. More than $10 million of the liability, the report says, stems from bonding shortfalls at the Zortman-Landusky mine complex southwest of Malta.

The Canadian company that operated the mine, Pegasus Gold Corp. and its subsidiary, Zortman Mining Inc., declared bankruptcy in 1998, leaving the state with an estimated $7.1 million bonding shortfall. Total reclamation costs at Zortman were estimated at $70.5 million in 1998, according to DEQ figures.

At the CR Kendall Mine near Lewistown, which posted an initial bond of $1.8 million, state officials say an additional $13.5 million will be needed to deal with surface and groundwater contamination. The mine’s owner, Colorado-based Canyon Resources, is challenging the figure.

“There’s some major flaws in the law and [HB 69] will fix many weaknesses,” Gestring says. “Right now, the state bonds more accurately to surface disruption than to water quality. Water quality is much more difficult.”

A similar bill, which deals with bonding requirements for sand and gravel pits, has been introduced by Rep. Ron Erickson (D-Missoula). His HB 299 requires that bonding must cover the estimated costs of reclamation, as well as the potential cost to state agencies or other parties to carry on reclamation if the mining company goes broke or the mine is otherwise abandoned. An initial hearing on the bill took place last week.

Meanwhile, Sen. Jon Ellingson (D-Missoula) wants the Legislature to be on record supporting a “long-term solution” while dealing with contaminated mine sediments impounded by Milltown Dam on the Clark Fork River. His proposed joint resolution calls on the federal Environmental Protection Agency to embark on a final clean-up plan that “will eliminate current and future damages to the ecosystem and eliminate or reduce any costs to the present and future citizens of Montana.”

Bills Upon Bills

Also on the legislative table are a number of other environmental measures awaiting public scrutiny.

For example, Rep. Rick Laible (R-Victor) is proposing a joint resolution requiring DEQ to study how forest-fuel reduction, primarily through open burning, can be accomplished under the state’s air quality laws.

Laible says controlled burns can reduce the potential for catastrophic wildfires, but “agency restrictions may inadvertently contribute to the buildup of forest and wildland fuels.” Laible wants the department to study whether “a more flexible” open-burn policy can be wedded with “limited degradation of air quality.”

Activists say they’re keeping an eye on a proposal by Sen. William Crismore (R-Libby) that would force conservation groups and other parties to pay cash up front for the “preservation or non-use” of school trust lands. The measure states that trust land designated as a “natural area,” as “open space,” or set aside for old-growth preservation, wildlife management or as “an example of native prairie or native habitat or as an example of a native plant community” must be secured with cash funding based on the full-market value of the property. Crismore, a logging contractor, is forwarding the bill on behalf of the wood products industry.

Rep. John Bruggeman (R-Polson) has requested a draft bill to urge state opposition to former President Clinton’s roadless initiative for national forests, which protects millions of acres of federal land from development. Rep. Aubyn Curtiss (R-Fortine) wants to encourage a multi-state revolt against the initiative.

On the other side of the spectrum, records show Rep. Joey Jayne (D-Arlee) wants to increase tree planting on school trust lands, and Rep. Jim Shockley (R-Victor) would add a special natural resources prosecutor to the state attorney general’s staff. Rep. Doug Mood (R-Seeley Lake) may sponsor a referendum bill regarding newspaper recycling, while Rep. Tom Facey (D-Missoula) has requested legislation to encourage the use of recycled glass.

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