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Pot, Power & Pollution: The Overlooked Impacts of Marijuana Legalization on Utilities and the Environment

April 17, 2014

Last month, Washington issued its first license for a legal marijuana grow operation under Initiative 502 ("I-502"), the marijuana legalization measure adopted by Washington voters in November 2012. A wave of additional operations will follow, as about 2,800 producers have applied for licenses to grow marijuana. While the implications of I-502 for the criminal justice system, land use, taxation and many other issues have been widely debated, the potentially significant changes in electricity and water use that are likely to follow from I-502's implementation have received almost no scrutiny. Nor have the important implications for environmental protection. Given the stakes, Washington utilities and environmental regulators should pay close attention to I-502 and the ongoing process of implementing the initiative.

At the outset, it is important to understand that the United States already produces huge amounts of cannabis. Official estimates suggest that U.S. production was somewhere in the range of 10,000 to 24,000 metric tons in 2001, making it America's largest cash crop by value. A more recent study suggests that production may actually be far higher - 69,000 metric tons. Given that marijuana production generally remains illegal, these estimates are highly uncertain. But there is little doubt that, as marijuana production comes out of the shadows and into the realm of legitimate business, power and water utilities will need to confront a number of serious and complex issues.

Implications for Electric Utilities
For electric utilities, legalization is a major concern because cannabis production, which generally relies on energy-intensive indoor growing operations, uses huge amounts of electricity. One recent study estimates that marijuana production may account for as much as 1% of the nation's entire electric consumption, accounting for a total bill of approximately $6 billion. In California, the numbers are even higher. Marijuana production in that state is estimated to use 3% of all electricity consumed there, equivalent to 9% of all residential electricity use.


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Washington Supreme Court Limits Recreational Immunity Statute

January 30, 2014

In a decision of great importance to major Washington landowners, including local governments, major private landowners such as forest products companies, and operators of water projects, the Washington Supreme Court today issued an opinion that may limit the state's recreational immunity statute. As a result of the decision, the immunity conferred by the statute is clouded in mixed-use situations, where access to land is granted for both recreational and other uses, such as transportation. Camicia v. Howard S. Wright Constr. Co., No. 85583-8 (issued Jan. 30, 2014).

First passed in 1967, the recreational immunity statute is intended to encourage landowners to open lands, as well as waterways associated with hydroelectric projects and similar facilities, to recreational users. The statute encourages recreational access by immunizing those landowners from liability for unintentional accidents where no fee is charged for recreational access.

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Okanagan Odyssey Goes On: Washington Supreme Court to Review Case Involving Condemnation of State Lands for Transmission Right of Way

November 12, 2013

The long litigation road walked by Okanogan County PUD to build a short transmission line has just gotten a bit longer. On November 7, the Washington Supreme Court granted review of a Court of Appeals decision concluding that Washington's Public Utility Districts have statutory authority to condemn state school lands if those lands have not been withdrawn for a particular purpose. As explained here, this is the latest development in Okanagan PUD's attempt to build a segment of lower-voltage transmission line covering roughly 35 miles between Pateros and Twisp. The PUD started planning the line in 1996 in order to maintain reliable electric service in Okanogan County.

The Supreme Court will review the Appeals Court's determination that Washington's PUD statute allows Okanogan PUD to condemn state school trust lands by authorizing PUDs to "condemn . . . public and private property . . . including . . . school lands" for transmission lines and other facilities "necessary or convenient" for the PUD to carry out its statutory purposes and the Department of Natural Resource's countervailing argument, based on its own statute, that school trust lands are not subject to condemnation. The question is important not just to PUDs, but also to other Washington municipalities such as cities, towns, and Port Districts, all of which have similar statutory condemnation authority. The Court will hear oral argument in late February of 2014, with a decision likely following several months thereafter.

If you have any questions about the Court of Appeals opinion discussed in this post, the Washington PUD statutes, condemnation, or Washington real property law, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group or Environment & Natural Resources practice group. These practice groups are consistently recognized as among the best, both nationally and in the Pacific Northwest. In addition, our Real Estate & Land Use practice group is recognized as one of the region's best and our partner Warren Daheim, who specializes in condemnation and eminent domain matters, was recently recognized as the best lawyer in the South Puget Sound region by South Sound Magazine.

Updated EPA Standard for Phase I Environmental Assessments On the Way

September 25, 2013

The U.S. Environmental Protection Agency ("EPA") is proposing that prospective purchasers of real property may use a revised standard (ASTM E1527-13) for determining whether to conduct Phase I Environmental Assessments of potential purchases. Because a Phase I Environmental Assessment is a key requirement for real property purchasers who wish to limit their exposure to potentially crippling liability for hazardous waste clean-up, the proposed regulation is important for real estate transactions at any site that may be contaminated.

The proposed regulation is the most recent development in the nation's long-running effort to address the problem of "Brownfields" by limiting and clarifying the exposure of real property developers and financiers who seek to re-develop contaminated properties. The effort began with the Small Business Liability Relief and Brownfields Revitalization Act of 2002, more commonly known as the "Brownfields Amendments." The Brownfields Amendments added language to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") to limit the liability of certain categories of real property purchasers, most importantly "bona fide prospective purchasers" ("BFPPs"). To qualify as a BFPP, the prospective purchaser must conduct "all appropriate inquiries" into the prior use and ownership of the property before taking ownership.

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Feds Propose Simplified Transmission Siting Process

September 5, 2013

The U.S. Department of Energy recently requested comment on a proposed "Integrated Inter-Agency Preapplication Process" for electric transmission projects that may simplify the notoriously difficult transmission siting process. If adopted as proposed in the DOE draft, the IPP would create a new opportunity for transmission project sponsors to meet with federal regulators and interest groups prior to formally submitting a transmission proposal in order to identify and avoid issues that have the potential to slow or stop a proposal.

The draft proposal envisions a series of four meetings in which a project proponent would meet with federal regulators with the aim of identifying potential constraints on the proposed route arising from environmental considerations, cultural and historical resources, military operations, protected areas, and similar considerations. The process would also identify alternative routes that could avoid or minimize such conflicts. In additional, the process would lay the groundwork for future permits by, for example, identifying the kinds of information the project proponent will need to provide and assigning the lead agency for NEPA evaulation and consultation under the National Historical Preservation Act.

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A Fair Wind Blows: Washington Supreme Court Rejects Challenge to Whistling Ridge Wind Project

August 30, 2013

Yesterday the Washington Supreme Court rejected a challenge to former Governor Christine Gregiore's approval of a 35-MW wind farm in Skamania County proposed by Whistling Ridge Energy, LLC. Gov. Gregoire approved the project following a lengthy administrative process conducted by the state's Energy Facility Site Evaluation Council ("EFSEC") and EFSEC's favorable recommendation to the Governor. The Court's decision is important because it helps define what energy developers must do to mitigate impacts when a project is located near, but not in, a protected area and has potential spillover effects on the protected area. In addition, the decision is important to renewable energy developers in Washington because they have the option of using EFSEC to obtain project approval, which may be especially important where strong local opposition is at odds with state and national goals regarding renewable energy development. The decision is also important to many other types of energy facilities subject to EFSEC jurisdiction, including electric and natural gas transmission projects, LNG facilities, nuclear plants, and large thermal power plants.

The dispute arose because the Whistling Ridge project is near, but not in, the Columbia River Gorge National Scenic Area. The environmental petitioners object to Whistling Ridge primarily because it may be seen from some parts of the Scenic Area, and therefore may interfere with the aesthetic values that the Scenic Area was designed to preserve. In response to these concerns, EFSEC reduced the number of windmills allowed at the project from 50 to 35, and required "micro-siting" to further reduce the aesthetic impacts of the project. With these mitigation measures, EFSEC recommended that Gov. Gregiore approve the project. Gov. Gregiore followed this recommendation.

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Washington Supreme Court: Water Pollution Control Act Covers Non-Point Pollution, Takings Claim Rejected

August 15, 2013

The Washington Supreme Court today issued an opinion reading the state's Water Pollution Control Act ("WPCA") broadly to cover non-point sources and concluding that the Washington Department of Ecology ("Ecology") is authorized to issue orders to control non-point sources even without definitive proof that the non-point source is a direct cause of water pollution. The Court also rejected a claim of an unconstitutional "taking" for lack of a sufficient evidence. The opinion substantially strengthens Ecology's hand in dealing with non-point sources, and may result in stronger enforcement action aimed at, for example, requiring landowners to implement "Best Management Practices" to help control non-point pollution. (Lemire v. State of Washington, Dept. of Ecology, No. 87703-3 (issued Aug. 15 2013)).

The case arises from a lengthy dispute between Ecology and Columbia County rancher Joseph Lemire concerning pollution in Pataha Creek, which runs through Lemire's property. Ecology identified Pataha Creek as polluted under the state's water quality assessment, which is required under the federal Clean Water Act. In a 2003 evaluation of Columbia County's watersheds, Ecology and the Columbia Conservation District identified conditions on Lemire's ranch that were detrimental to water quality. These included, for example, overgrazing, damage to riparian vegetation, and excrement in the riparian zone, which Ecology believes likely contributed to high water temperatures, reduced dissolved oxygen, damage to aquatic life, and the presence of pathogens in the water. To remedy these problems, Ecology recommended measures such as construction of fences to exclude cattle from the riparian zone and off-stream watering troughs. Eventually, after unsuccessfully negotiations with Lemire, Ecology ordered him to implement these measures, relying on the WPCA to justify its action.

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Please Join Us June 6 in Tacoma for Re-Using Contaminated Lands Conference

May 16, 2013

We invite you to join us June 6 in Tacoma for a conference entitled "Re-Using Contaminated Land: Transactions & Technologies." The conference will address the legal and technical aspects of "brownfields" development. Gordon Thomas Honeywell is proud to be a premiere sponsor of the conference. The agenda and other information is available here.

Whatcom Wind Whipsawed: County Council Adopts Ordinance Effectively Banning Wind

November 21, 2012

In another troubling example of growing local opposition to renewable energy development, the Whatcom County Council has adopted a new ordinance that restricts large wind generators (above 50 kW capacity) to County lands zoned for heavy-impact industrial uses. Because the County's best wind resources are located along windy ridges, rather than in low-elevation industrial areas, the ordinance effectively bans new utility-scale wind power development in Whatcom County.

The ordinance is the product of a lengthy public process in Whatcom County, initiated by neighbors' reactions against a 2010 proposal to build a community-owned wind turbine on Squalicum Mountain. The new ordinance replaces a 2008 ordinance that allowed construction of wind turbines across much of the County. The new ordinance is part of a disturbing trend of organized opposition to renewable energy development, at least some of which appears to be funded by the fossil fuel industry.

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Just When You Thought It Was Safe To Go Near The Wires: Washington Supreme Court Accepts Review of EMF Damages Case

August 29, 2012

Many in the electric utility industry thought that the threat of liability arising from human exposure to Electromagnetic Fields ("EMF") had been put to rest years ago. The Washington Supreme Court, however, recently accepted review of a case that will decide whether lawsuits claiming damages from EMF exposure will be entertained in Washington courts despite the nearly unanimous rejection of such suits in other states. Because EMF is associated with almost all electric equipment, the case has potentially enormous consequences for Washington's electric utilities, as well as other industries that use electric or electronic equipment in almost any form, ranging from housing to telecommunications. Because the Court has accepted review of the plaintiffs' claims of inverse condemnation based on EMF exposure on their properties, the case also has serious implications for cities, counties, and other government agencies that may become involved land use decisions allowing the construction of substations, distribution and transmission lines, and other electric utility infrastructure.

The case arises from construction of a new substation by Puget Sound Energy ("PSE") in a residential neighborhood of Kirkland, Washington. PSE requested, and Kirkland granted, relatively modest zoning variances to allow construction of the substation. The Plaintiffs, owners of property adjacent to the substation, then brought suit against PSE under theories of trespass and nuisance, claiming that a "reasonable fear" of EMF radiation from the substation caused reduction of their property values. Plaintiffs also sued the City of Kirkland claiming that Kirkland's approval of the zoning variances reduced their property value and therefore amounted to an inverse condemnation of their property.

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