A federal appeals court has rejected a challenge to an environmental assessment of a $100 million construction subsidy for an ethanol plant in Michigan’s Upper Peninsula.
The U.S. Department of Energy (DOE) had assessed the project’s implications for forest resources, wetlands and air quality. That review “adequately supported its finding that the plant would not have significant impact on the environment,” the 6th Circuit Court of Appeals ruled.
But the court decision may prove to be a Phyrric victory because the project has stalled, perhaps permanently, because of changing circumstances, including withdrawal of the lead private investor and elimination of a federal mandate for cellulosic ethanol — ethanol made from wood projects.
“The project fell through,” said Sheila Gaines, the clerk of Kinross Township where the plant was to be built.
And Michael Shore, director of corporate communications for the Michigan Economic Development Corp. (MEDC), which had approved a state grant, said, “From our perspective this project is closed.”
The environmental controversy stems from an application by Frontier Renewable Resources for DOE funding for a plant to convert hardwood timber into ethanol.
The money would come from a federal program that subsidizes renewable energy projects. The program supports “biorefinery demonstration projects” to encourage DOE “to work with industry to develop ways to convert trees, crops and agricultural waste into energy,” the court said.
The biorefinery was to use 770 tons of wood chips daily as “feedstock” to produce 20 million gallons of what is known as cellulosic ethanol annually. It was designed to enable future expansion and potentially double its ethanol production.
Frontier’s website describes it as “a first-of-its-kind commercial-scale cellulosic ethanol facility.”
DOE drafted an environmental assessment, solicited public comments and issued a final assessment in 2011 that suggested several changes in plant operations, including a biomass boiler instead of natural gas boilers to generate power to run the facility. Its report of more than 400 pages found “no significant impact” on the environment and promised a grant of about $100 million, about one-third of the construction cost, the court said.
As a result, DOE determined that it didn’t need to prepare a full environmental impact statement.
The suit was filed by Larry Klein, who lives near the site and contends that pollution from the plant would harm his health, and the Sierra Club.
It contends that DOE didn’t follow the National Environmental Policy Act in conducting its assessment. Under that law, federal agencies must study environmental impacts of “major federal actions significantly affecting the quality of the human environment” in consultation with state and local agencies and the public.
A lower-court judge dismissed the case without trial.
In upholding that decision, the Court of Appeals said, “The agency’s environmental assessment adequately supported its finding that funding the plant would not have a significant impact on the environment.”
The decision written by Judge Jeffrey Sutton said DOE “considered the plant’s potential impacts on forest resources, threatened and endangered species, land use patterns, cultural resources, weather, air quality, soil quality, water quality, landfills, worker safety, noise, traffic, environmental justice and aesthetics.”
In taking a “hard look” at the project for the environmental assessment, the court said DOE consulted the U.S. Fish and Wildlife Service, the Michigan Department of Transportation and the Inter-Tribal Council of Michigan.
In its court brief, Frontier said, “The project will use the existing supply-chain of forest resources in Michigan’s Upper Peninsula in a way that is consistent with how these resources have been managed and harvested for well over 100 years.”
But Sierra Club forest ecologist Marvin Roberson called the promised federal grant “a boondoggle then and it’s even more of a boondoggle now.
“It takes so much wood that we thought it was a lousy use of our forest resources,” said Roberson, who is based in Marquette County.
“It’s not just an environmental issue or just an economic issue. Are we going to use a whole boatload of our resources and produce very little energy?” he said.
He also said the Sierra Club doesn’t oppose all biomass projects but feels “that wood-to-ethanol or wood-to electricity from standing live timber is generally a bad idea.” The organization supported a facility in Grayling, Mich., that converts woodchips and sawdust to electricity because those materials would otherwise be landfilled. .
However, the Court of Appeals took a different position. “There is a good reason, it turns out, for constructing this kind of plant in the Upper Peninsula of Michigan: There are a lot of trees there.”
It cited a number of findings from the DOE assessment:
- Given long-term net growth of nearby forests, the supply of trees “would continue to increase even with the added demand created by the plant,” and Frontier will encourage timber suppliers to use sustainable forestry practices;
- Any increase in air pollutants, particulates, nitrogen oxide, carbon monoxide and sulfur “would not exceed allowable levels”;
- The plant “would reduce net greenhouse gas emissions by 1.34 pounds of carbon dioxide equivalents per gallon of ethanol produced,” with a net reduction in greenhouse gas emissions of more than 25,000 tons annually;
- If a railroad corridor to the plant is needed, the Michigan Department of Environmental Quality (DEQ) would require the company to mitigate the loss of wetlands;
- DEQ will require Frontier to submit a soil erosion and sedimentation control plan incorporating “best management practices” to obtain a construction permit.
“In the end, the assessment concluded that the environmental impacts from the plant would be minimal in the short term and that, once the plant’s operations end, it could safely be decommissioned and the area returned to its pre-plant state,” the court said.
It rejected the challengers’ arguments that DOE inadequately considered other alternatives, such as different sites and supply systems for the plant.
MEDC’s Shore said his agency had awarded the project a $20 million Centers of Energy Excellence grant through the state’s 21st Century Jobs Fund.
Shore said Frontier later requested that its renaissance zone designation be revoked and returned $6.39 million of the grant after major investor Valero Energy Corp. withdrew from the project. A March 2014 MEDC report to Gov. Rick Snyder described Valero’s withdrawal as the loss of a significant strategic partner.”
Roberson said the Sierra Club doesn’t comment on potential litigation or appeals but said the new appeals court decision raises the issue of how little environmental assessment for projects is necessary under federal law.