Opinion
DOCKET NO. A-4536-09T3 DOCKET NO. A-4848-09T3
02-11-2013
IN THE MATTER OF THE PETITION OF PUBLIC SERVICE ELECTRIC AND GAS COMPANY FOR A DETERMINATION PURSUANT TO THE PROVISIONS OF N.J.S.A. 40:55D-19 (SUSQUEHANNA - ROSELAND TRANSMISSION LINE)
Aaron Kleinbaum argued the cause for appellants The New Jersey Highlands Coalition, the Sierra Club - New Jersey Chapter, Environment New Jersey, the New Jersey Environmental Federation and Stop the Lines (Eastern Environmental Law Center, attorneys; Kevin J. Pflug, William J. Schulte and Carol A. Overland (Legalectric, Inc.) of the Minnesota bar, admitted pro hac vice for appellant Stop the Lines, on the joint briefs). Brian O. Lipman, Deputy Attorney General, argued the cause for respondent New Jersey Board of Public Utilities (Jeffrey S. Chiesa, Attorney General, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel; Mr. Lipman, on the brief). Marc B. Lasky argued the cause for respondent Public Service Electric and Gas Company (Morgan, Lewis & Bockius LLP, attorneys; Mr. Lasky, Tamara L. Linde, Jodi L. Moskowitz (PSEG Services Corp.) of the District of Columbia and Connecticut bar, admitted pro hac vice, and David K. Richter, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad, Sapp-Peterson and Ostrer.
On appeal from the Board of Public Utilities, Docket No. EM09010035.
Aaron Kleinbaum argued the cause for appellants The New Jersey Highlands Coalition, the Sierra Club - New Jersey Chapter, Environment New Jersey, the New Jersey Environmental Federation and Stop the Lines (Eastern Environmental Law Center, attorneys; Kevin J. Pflug, William J. Schulte and Carol A. Overland (Legalectric, Inc.) of the Minnesota bar, admitted pro hac vice for appellant Stop the Lines, on the joint briefs).
Brian O. Lipman, Deputy Attorney General, argued the cause for respondent New Jersey Board of Public Utilities (Jeffrey S. Chiesa, Attorney General, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel; Mr. Lipman, on the brief).
Marc B. Lasky argued the cause for respondent Public Service Electric and Gas Company (Morgan, Lewis & Bockius LLP, attorneys; Mr. Lasky, Tamara L. Linde, Jodi L. Moskowitz (PSEG Services Corp.) of the District of Columbia and Connecticut bar, admitted pro hac vice, and David K. Richter, on the brief). PER CURIAM
In these consolidated appeals, appellants Environment New Jersey, New Jersey Highlands Coalition, Sierra Club - New Jersey Chapter, New Jersey Environmental Federation, and Stop the Lines challenge the April 21, 2010 order of the Board of Public Utilities (the Board), issued pursuant to N.J.S.A. 40:55D-19, that ordinances, regulations and other municipal requirements imposed under the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -163, shall not apply to the siting, installation, construction or operation of the New Jersey portion of a 500,000 volt (500 kV) upgrade of a transmission system from Berwick, Pennsylvania to Roseland, New Jersey (Project) proposed by Public Service Electric and Gas Company (PSE&G). The Board determined the Project was "reasonably necessary for the service, convenience and welfare of the public in order to enable PSE&G to continue to provide safe, adequate, and reliable service to its customers." The Board found the Project was reasonably necessary to avoid predicted violations of reliability standards for the electric transmission system. These violations and associated system overloads could, according to the Board, negatively affect the public welfare "in the form of significant damage to infrastructure, brownouts, or blackouts." We affirm.
The statute requires a finding that a development is "reasonably necessary for the service, convenience or welfare of the public." N.J.S.A. 40:55D-19 (emphasis added).
I.
We begin with a brief background. Pursuant to a provision of the Energy Policy Act of 2005, 16 U.S.C.A. § 824o, which Congress passed after the 2003 multi-state blackout, the Federal Energy Regulatory Commission (FERC) certified the North American Electric Reliability Corporation (NERC) to develop mandatory and enforceable reliability standards "to provide for the reliable operation of the bulk-power system[.]" 16 U.S.C.A. § 824o(a)(3). NERC thereafter adopted standards governing "bulk power systems" that included transmission facilities like PSE&G's that operated at 100 kV or higher. "Bulk power system" is a power system integral to an interconnected transmission network, and excludes local distribution facilities. 16 U.S.C.A. § 825o(a)(1). Failure to comply with NERC standards could result in monetary penalties. 16 U.S.C.A. § 825o(e).
The definition of "reliability standard" contemplates modifications of transmission systems to achieve reliability requirements, although it does not directly require such upgrades. A "reliability standard" includes "requirements for the operation of existing bulk-power system facilities, including . . . the design of planned additions or modifications to such facilities to the extent necessary to provide for reliable operation of the bulk-power system." 16 U.S.C.A. § 824o(a)(3). On the other hand, "the term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity." Ibid.
The PSE&G-owned transmission system in New Jersey is part of a larger regional transmission system that is operated, with FERC's approval, by PJM Interconnection, LLC, (PJM), an independent Regional Transmission Organization (RTO). PJM operates in all or part of thirteen states, including New Jersey, and the District of Columbia, and serves roughly fifty-one million customers. PJM is also responsible for planning the transmission system to assure compliance with applicable reliability standards.
As part of its planning activities, PJM determined the Project was needed as part of its Regional Transmission Expansion Plan process (RTEP), to avoid violations of reliability standards that PJM in 2008 projected would occur beginning in 2012. Through the RTEP, PJM analyzed and projected the electric supply needs of customers, and their future demands on the transmission system.
The forty-five mile long Project would follow an existing right-of-way of a 230 kV power line. The Project would run through sixteen municipalities, beginning in the west in Hardwick Township, Warren County, traveling east to Andover Township, Sussex County, then to Jefferson Township, Morris County, east to Montville Township, and south to its terminus in Roseland Borough, Essex County. The route would pass through the Delaware Water Gap National Recreation Area operated by the National Park Service ("NPS"), freshwater wetlands, the Picatinny Arsenal, the Kittatinny Mountains and the New Jersey Highlands Region. The Project also included the addition of switching stations in Jefferson and East Hanover Townships; however, in response to opposition in those townships, PSE&G proposed to place the switching stations in Hopatcong and Roseland. The Project's projected cost was $750 million.
PPL Electric Utilities (PPL) would construct the one-hundred-mile Pennsylvania upgrade, with an estimated cost of $900 million to $1.2 billion. The Project would take about two-and-a-half years to complete.
PSE&G filed its petition in January 2009, seeking an order under N.J.S.A. 40:55D-19, exempting it from local land use regulation. In addition to appellants, the Board granted motions for intervention to, among others, Parsippany, Byram, Andover, Hardwick, East Hanover and Montville Townships (Municipal Intervenors), and Montville Township Board of Education (Montville Board). Among others, the Municipal Intervenors, the Montville Board, appellants, and the New Jersey Rate Counsel actively participated in the Board's proceeding and opposed PSE&G's petition. Only appellants appeal.
II.
The Board credited PSE&G's showing that reliability violations would occur as early as 2012, and the Project was reasonably necessary to address those violations. In its initial filing, PSE&G relied on the 2008 RTEP, which identified twenty-three NERC violations — two Category A violations, and twenty-one Category B violations. Although not included in its original petition, the 2008 RTEP also included twenty-seven Category C violations. The Board described the three categories of standards as follows:
NERC Category A requires that, with all facilities in service, equipment thermal ratings and system voltage levels be within applicable limits and that the system be stable. To test for NERC Category A criteria violations, PJM evaluates the system with no contingencies.
NERC Category B requires that the system be evaluated with one facility removed from service, such as a transmission line, a transformer or a generator, the
purpose of which is to ensure that the system continues to be reliable even with the instantaneous outage of a transmission or generation component. This is referred to as the "n-1" criteria or single contingency test. For Category B load deliverability tests, PJM assumes emergency peak load conditions for the area being tested and normal peak load conditions for the rest of the system. For Category B generator deliverability test, PJM assumes normal peak load conditions for the entire system.
NERC Category C criteria require the system to be stable and within applicable equipment thermal ratings and system limits under a variety of multiple facility contingency events. One example of a Category C event would be the loss of one system element followed by system adjustments and then the loss of a second system element. Category C criteria also include events such as the loss of two circuits on a single tower line, known as "double circuit tower line contingencies." These are referred to as the "n-1-1" or the "n-2" criteria. In this proceeding, PJM has identified double circuit tower line contingencies that are the source of the Category C violations that contribute to the need for the line. Under the testing for this type of Category C violation, no system readjustments are permitted because both lines are removed from service at the same time. For Category C violations, PJM uses a normal peak load condition rather than an extreme peak load condition reflecting that such events are less likely to occur than Category B events and that these events are not necessarily tied to weather conditions.
[(Footnotes omitted).]
An update of the RTEP in 2009, called a "retool," reduced the projected violations in part because of the economic downturn and consequent reduction in electricity demand. Nonetheless, PJM projected Category B violations on two bulk power lines in 2012, and another three lines in 2013 to 2015, rising to thirteen overloaded lines by 2022. PJM also projected ten bulk transmission lines would be overloaded due to the outage of two lines located on a common structure, that is, a Category C violation, and an additional four lines by 2015.
The Board found "despite the changing nature of the violations, there has been competent evidence that reliability violations are still projected to occur as early as 2012[.]" The Board concluded that:
[t]he results of these violations and the associated potential system overloads could have significant negative impact on the public welfare of the citizens of this State in the form of significant damage to infrastructure, brownouts, or blackouts. . . . The fact that there have been three major blackouts related to transmission outages in the past 45 years in the Northeast necessarily puts the Board in a position of having to treat potential violations of reliability standards as far more than mere theoretical exercises.
The Board required PSE&G to notify it of the results of its full 2009 RTEP and 2010 RTEP, so the Board could take appropriate action if there were a substantial delay or change in projected reliability violations. The Board concluded that PSE&G had accounted for the economic recession in the March 2009 Retool, and projected drops in peak load. However, the Board did not anticipate that subsequent assessments would not disclose projected violations, obviating the need for the Project.
The Board found it inconsequential that PSE&G underestimated the drop, which, the Board noted in 2010, "turned out to be 1.9 percent" instead of the predicted 1.4 percent. "While the March 2009 Retool's load projection did understate the actual load reduction, the understatement is certainly not an indication of failing to take the economic recession into account."
With respect to PJM's source of econometric data, the Board found Moody's a reasonable source. The Board noted that PJM had validated Moody's econometric data with other sources, such as Global Insight. However, the Board said that "in the future, the Board and PJM may benefit from an analysis that incorporates a wider variety of econometric data."
The Board found PSE&G had considered, and justifiably rejected, alternatives to the Project, including upgrading or construction of different transmission lines; a different route for the Project; and alternatives that did not involve a transmission upgrade at all. With respect to transmission alternatives, PSE&G had considered a Brossard-Roseland 500 kV line and a Stanton-Roseland 230 kV line, but accepted PSE&G's showing that the former "would provide less relief on the identified overloaded facilities" and require outages during construction, and the latter "would have required construction of an entirely new line that would not have provided a sufficiently robust solution to the criteria violations[.]"
As for different routes for the Project itself, the Board found that PSE&G appropriately rejected two alternative routes, which would have resulted in greater environmental impacts, by crossing more forested land and wetlands, and more area within the Highlands Preservation Area. One alternative route, although along an existing right-of-way, would have required clearing vegetation along a nineteen-mile portion, reducing screening. Another alternative would have involved twenty-four miles of a new right-of-way. "With the principle that the Board is to consider the community zoning plans of affected communities, as well as the public interest, it is clear that locating the transmission lines almost entirely within the [right-of-way] is the most reasonable route."
With respect to non-transmission alternatives, the Board additionally found that PJM had no authority "to require new generation or demand response, and particularly cannot order it in specific locations." The Board determined generation and demand response were "market based," and could not be compelled. Nonetheless, the Board concluded that the RTEP accounted for "generation and demand response that have responded to the PJM markets."
In this sense, alternatives to transmission were considered because if enough generation and/or demand response responded to the PJM markets in the right places and at the right time, PJM would have modeled them into the RTEP and the projected reliability criteria violations would not have occurred. However, even assuming that demand response that was not modeled by PJM did show up prior to 2012, the Project will still be needed because . . . demand response cannot alleviate the Category C reliability criteria violations identified here.The Board credited PSE&G's evidence that: (1) solar photovoltaic projects would not avoid the need for the Project; (2) smart grid technology also would not reduce demand or consumption; and (3) efforts to increase electric generation within New Jersey were uncertain, and not significant enough to impact the projected need.
The Board added:
With that said, many of the criticisms made by the intervenors echo the suggestions made by the Board or its Staff over the past several years with respect to PJM's analyses. The Board has advocated that PJM give greater recognition to demand response and energy efficiency measures in its system planning and it appears that PJM has begun to do so. PJM has argued that, for purposes of planning, it can only recognize those measures that have effectively cleared the PJM auction. While this position may be
conservative, the Board believes that taking a conservative position in reliability transmission planning is reasonable in this instance.
With respect to the cost of the Project, the Board recognized that there existed uncertainty about the viability of PJM's current tariff governing new transmission projects of 500 kV or more. See Illinois Commerce Comm'n v. Fed. Energy Reg. Common, 576 F.3d 470, 474 (7th Cir. 2009) ("FERC [had] decided that all the utilities in PJM's region should contribute pro rata; that is, their rates should be raised by a uniform amount sufficient to defray the facilities' costs."); see also PJM Interconnection, L.L.C., 119 F.E.R.C. P 61,063 (2007) (adopting the pro rata cost allocation method), rehearing denied, 122 F.E.R.C. P 61,082 (2008). By contrast, the cost of new, smaller projects were borne by utilities "on the basis of the benefits that each utility receives from the facilities." Illinois Commerce Comm'n, supra, 576 F.3d at 474. The Court of Appeals, in a divided decision, rejected the tariff, holding that FERC could not impose costs of the new systems on utilities not directly served by the lines, unless those utilities derived more than trivial benefits from the new systems; and FERC had failed to establish that the new transmission systems generated sufficient system-wide reliability improvements to justify the tariff. Id. at 476-78. The case was remanded to FERC. Id. at 478.
The Board recognized that it was required to consider the Project's cost in determining whether to exempt it from local land use regulation under N.J.S.A. 40:55D-19. The Board concluded the Project was reasonably necessary, even if the Project's costs were allocated almost entirely to New Jersey, which would increase each residential customer's costs about $25.15 a year (before considering potential consumer savings from increased competitive supply), as opposed to being distributed under the challenged tariff among all PJM customers, which would increase customer costs about $3.60 a year.
The Board also rejected the argument that the Project should be rejected because it would create unsafe electric and magnetic fields (EMF). The Board did not explicitly find that EMF had an adverse impact on human health, although it noted the testimony of PSE&G's expert that scientific "studies have failed to either confirm or deny the existence of a causal link between EMF and adverse impacts on human health." The Board noted the absence of federal EMF standards, and no New Jersey standards in the area. The Board found the Project would comply with any applicable New Jersey standards, or the most rigorous standard from another State where a New Jersey standard did not exist. Thus, it found the Project's predicted 1.6 kV/m electric field at the edge of the right-of-way would comply with New Jersey's general standard of 3 kV/m, and the Project's predicted 4.5 kV/m electric field within the right-of-way would meet the Montana standard of 7 kV/m. As for magnetic fields, the Project's predicted 115 mG magnetic field at the edge of the right-of-way would comply with the 200 mG standard of Florida and New York, the only states with guidelines for magnetic fields.
The Board accepted PSE&G's projections of EMF, rejecting intervenors' arguments that PSE&G estimates were "misleadingly low" based on errors in assumptions. However, the Board stated it "share[d] the intervenors['] concerns that the estimates . . . should be shown to be accurate once the Project is fully operational." The Board ordered PSE&G to survey EMF readings to assure its predictions were correct and within the guidelines the Board considered. If the readings were "substantially greater than the estimated readings," then the Board would take appropriate action. In the final analysis, however, the Board concluded the Project "incorporate[d] reasonable efforts to manage EMF exposure."
The Board also rejected appellants' claim that the Project was really intended to promote coal and was part of Project Mountaineer, which appellants argued was a plan to improve west- east transmission facilities, and overcome various bottlenecks, to ease the movement of coal-generated electricity to the east. Appellants argue Project Mountaineer was contrary to federal and state energy policies and the public interest. The Board found:
First, the Board agrees with PSE&G that Project Mountaineer is not part of an agenda by either the FERC or PJM and was never advanced beyond a concept that was announced during a 2005 FERC technical conference. No intervenor has submitted any evidence to the contrary. Second, the Project has been demonstrated to be needed for reliability purposes, and not to import coal fired electricity. Maintaining reliability on the bulk transmission system is necessary for the Board to ensure that PSE&G can maintain safe, reliable, and adequate service in New Jersey[.]
The Board also rejected the argument it should deny the petition because the Project was at odds with the State's own Energy Master Plan (EMP), which set goals for increased reliance on renewable energy, energy efficiency, demand response measures, and planned for reduced peak loads in 2012. The Board concluded it was "not inconsistent to support the goals of the EMP, while . . . supporting the construction of transmission to address NERC reliability standards." The Board noted it was uncertain whether the EMP's goals would be met.
The Board also considered the Project's impact on greenhouse gas emissions. Specifically, the Board considered "leakage," which is the "increase in greenhouse gas emissions related to generation sources located outside of the State that are not subject to a state, interstate or regional greenhouse gas emissions cap or standard that applies to generation sources located within the State." N . J . S . A . 48:3-51. The Board was required to adopt by July 2009 "a greenhouse gas emissions portfolio standard to mitigate leakage or another regulatory mechanism to mitigate leakage applicable to all electric power suppliers and basic generation service providers that provide electricity to customers within the State." N.J.S.A. 48:3-87(c)(2). Although the Board had not adopted the standard when it issued its decision, it sought information about the Project's potential effect on greenhouse gas emissions. After considering various scenarios, the Board concluded the Project would cause an increase of less than .04 percent in overall carbon dioxide emissions from electric generation within PJM — presumably as customers purchase coal-generated electric transmitted over the Project's line, as opposed to electricity from other sources. The Board found the project "will not significantly increase overall CO2 emissions[.]"
III.
Appellants argue the Board applied the wrong legal standard in reviewing PSE&G's petition to proceed with the Project free of MLUL controls, and the record did not support the Board's critical findings. Appellants challenge the Board's finding that reliability violations would occur absent the Project, and that no alternatives adequately addressed those reliability violations. They also argue the Board erred in rejecting claims that the Project posed significant health, safety and environmental risks. As the Board recognized that the method for allocating the $750 million projected cost of the Project was not certain, appellants argued the Board's action was also premature and unjustified. Appellants also asserted the Project was designed not to serve the interests of New Jersey electric consumers, but to provide an outlet for coal-generated electricity from states to the West and South of New Jersey. Based on our review of the record and applicable law, we reject these arguments and affirm the Board's decision and order.
IV.
A.
We are guided by well-settled principles that apply to our review of the Board's regulatory decisions. With respect to factual findings, we will not substitute our judgment for the Board's, particularly when it involves exercise of the agency's expertise. In re Pub. Serv. Elec. & Gas Co.'s Rate Unbundling, Stranded Costs & Restructuring Filings, 167 N.J. 377, 384 (2001) ("PSE&G Rate Unbundling"). We review the Board's findings to determine if they are accompanied by "'reasonable support in the evidence.'" In re Jersey Cent. Power & Light Co. Petition, 85 N.J. 520, 527 (1981) (JCP&L) (quoting In re N.J. Power & Light Co. , 9 N.J. 498, 509 (1952)). Put another way, "'[a]ny review of the facts must be confined to the question of whether they are supported by substantial evidence, i.e., such evidence as a reasonable mind might accept as adequate to support a conclusion.'" In re Pub. Serv. Elec. & Gas Co., 35 N.J. 358, 376 (1961) (PSE&G) (quoting In re Hackensack Water Co., 41 N.J. Super. 408, 418 (App. Div. 1956) (Hackensack); see also N.J.S.A. 48:2-46 (stating the Superior Court Appellate Division may set aside any Board order "when it clearly appears that there was no evidence before the board to support" it).
As for interpretation of law, we are "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Mayflower Sec. Co. v. Bureau of Sec, 64 N.J. 85, 93 (1973); see also In re Application of Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008) (stating "it is the responsibility of a reviewing court to ensure that an agency's administrative actions do not exceed its legislatively conferred powers"); A.Z. v. Higher Educ. Student Assistance Auth., 427 N.J. Super. 389, 394 (App. Div. 2012) ("We shall reverse an agency decision that 'violate[s] express or implied legislative policies[.]'") (quoting Shim v. Rutgers - The State Univ. of N.J., 191 N.J. 374, 384 (2007)). Nonetheless, we generally defer to an agency's interpretation of its own statute when it involves technical matters within its expertise, A.Z., supra, 427 N.J. Super. at 394, or its interpretation involves a permissible construction of an ambiguous provision, Matturri v. Bd. of Trs. of Judicial Ret. Sys., 173 N.J. 368, 381-82 (2002), particularly because "[t]he grant of authority to an administrative agency is to be liberally construed to enable the agency to accomplish the Legislature's goals[.]" PSE&G Rate Unbundling, supra, 167 N.J. at 384 (citation and quotation omitted).
The Board's rulings are entitled to "presumptive validity." JCP&L, supra, 85 N.J. at 527 (referring to Board's rate-making rulings). We ultimately assess whether the Board's action was "arbitrary, capricious, unreasonable, or beyond the agency's delegated powers." In re Petition of N.J. Am. Water Co., 169 N.J. 181, 188 (2001) (quotation and citation omitted); see also PSE&G, supra, 35 N.J. at 376 (stating the court concerns itself with whether the Board's decision violates Constitutional or legislative standards and "'whether there has been fraud, bad faith, or manifest abuse of discretion in the sense of unjustly discriminatory, arbitrary or capricious action'") (quoting Hackensack, supra, 41 N.J. Super. at 418).
B.
Applying these principles, we consider first appellants' argument the Board misapplied the legal standard governing its review of PSE&G's petition. Appellants argue the Board misapplied pre-1975 precedent, which, they assert, has been superseded by intervening statutory amendments. They also argue the cases are distinguishable because the need for the projects in those cases was not contested, and the cases pertained to narrow disputes between a single municipality and a public utility, as opposed to the broad public interest implicated by an extensive project. We disagree.
We begin with a review of N.J.S.A. 40:55D-19, which authorizes the Board to exempt a public utility's development that spans multiple municipalities, from local zoning ordinances and regulations if the Board deems the development "reasonably necessary for the service, convenience or welfare of the public." Although the statute was enacted in 1975, L. 1975, c. 291, § 10, and amended in 1999, L. 1999, c. 23, § 58, it has its roots in the State's original Zoning Enabling Act, L. 1928, c. 274, which was codified until 1975 at N.J.S.A. 40:55-50. The pre-1975 statute provided that local zoning ordinances or regulations would not apply to a public utility's building or structures if the Board decided, upon the utility's petition, "that the present or proposed situation of the building or structure in question [was] reasonably necessary for the service, convenience or welfare of the public." L. 1928, c. 274, § 10, formerly codified at N.J.S.A. 40:55-50, repealed by L. 1975, c. 291, § 80. "[T]he public utility could elect either to make application to the local agencies for approval of a public utility structure or use, or could in the alternative apply directly to the Board[.]" Cox & Koenig, N.J. Zoning & Land Use Administration, 21-7.1 (2012).
The provision was first construed in Hackensack, supra, 41 N.J. Super. at 419. The Court in PSE&G, supra, 35 N.J. at 376-77, then largely adopted that statutory construction:
We need not fully repeat the rationale developed in Hackensack, but it may be well to recapitulate briefly the criteria of interpretation there laid down:See also In re Petition of Monmouth Consol. Water Co., 47 N.J. 251, 261-63 (1966) (Monmouth) (holding that even where the Board finds the deviation from the zoning ordinance is sufficiently necessary for the public convenience and welfare, the Board must consider measures to mitigate impacts on local residents served by zoning ordinance).
1. The statutory phrase, "for the service, convenience and welfare of the public" refers to the whole "public" served by the utility and not the limited local group benefited by the zoning ordinance.
2. The utility must show that the proposed use is reasonably, not absolutely or indispensably, necessary for public service, convenience and welfare at some location.
3. It is the "situation," i.e., the particular site or location (here the
railroad right of way, as the Board said), which must be found "reasonably necessary," so the Board must consider the community zone plan and zoning ordinance, as well as the physical characteristics of the plot involved and the surrounding neighborhood, and the effect of the proposed use thereon.
4. Alternative sites or methods and their comparative advantages and disadvantages to all interests involved, including cost, must be considered in determining such reasonable necessity.
5. The Board's obligation is to weigh all interests and factors in the light of the entire factual picture and adjudicate the existence or non-existence of reasonable necessity therefrom. If the balance is equal, the utility is entitled to the preference, because the legislative intent is clear that the broad public interest to be served is greater than local considerations.
We are unpersuaded by appellants' attempt to distinguish PSE&G, supra, Hackensack, supra, and Monmouth, supra, on the ground they were decided under the old law. The 1975 Municipal Land Use Law retained the standard for overriding municipal zoning: the public utility's proposed use must be "reasonably necessary for the service, convenience or welfare of the public." L. 1975, c. 291, § 10. One change, which is of no moment to this case, required a public utility proposing an intra-municipal project to first seek local approval, and then appeal to the Board. Cox and Koenig, supra, 21-7.2; see L. 1975, c. 291, § 10 (stating "a public utility, as defined in R.S. 48:2-13" may appeal to the Board if "aggrieved by the action of a municipal agency through said agency's exercise of its powers under this act [MLUL]"). However, multi-municipal developments, as proposed here, would still be the subject of a direct petition to the Board. Cox and Koenig, supra, 21-7.2.
The MLUL provision dealing with multi-municipal developments states:
This act or any ordinance or regulation made under authority thereof, shall not apply to a development proposed by a public utility for installation in more than one municipality for the furnishing of service, if upon a petition of the public utility, the Board of Public Utilities shall after hearing, of which any municipalities affected shall have notice, decide the proposed installation of the development in question is reasonably necessary for the service, convenience or welfare of the public.
[L. 1975, c. 291, § 10, codified at N.J.S.A. 40:55D-19.]
The 1928 law referred to a building or structure "reasonably necessary" for the public's "service, convenience or welfare" as does the 1975 provision addressing multi-municipality developments (emphasis added). However, the MLUL language addressing intra-municipal projects inexplicably drops the "reasonably" modifier. See L. 1975, c. 291, § 10 (referring to a finding that the use "is necessary for the service, convenience or welfare of the public"). We discern no substantive change, but need not decide the issue, as this case involves the provision on multi-municipal developments, where the "reasonably necessary" formulation is retained.
In 1999, as part of the Electric Discount and Energy Competition Act (EDECA), which was designed in part to promote the development of a competitive market for energy generation, the MLUL provision was amended again, but again without impacting the standard governing PSE&G's petition. The 1999 change addressed the impact of local zoning on an intra-municipal project of an electric power generator, as distinct from public utilities. The Board was empowered to review and override a municipal zoning action if it finds
the present or proposed use by the public utility or electric power generator of the land described in the petition is necessary for the service, convenience or welfare of the public, including, but not limited to, in the case of an electric power generator, a finding by the board that the present or proposed use of the land is necessary to maintain reliable electric or natural gas supply service for the general public and that no alternative site or sites are reasonably available to achieve an equivalent public benefit[.]See Statement to Assembly Bill 16 (1999) (stating that section 58 was intended to allow an electric power generator to appeal to the Board if its facility is "necessary to maintain reliable electric or gas supply service for the general public and that no alternative site or sites are reasonably available to achieve an equivalent public benefit"). As is evident from the plain language of EDECA, the required showing that the land use "is necessary to maintain reliable . . . service" and "no alternative site or sites are reasonably available to achieve an equivalent public benefit," applies only to electric power generators. In sum, the intervening legislative changes do not undermine the standard set forth in PSE&G, supra, and Hackensack, supra.
[L. 1999, c. 23, § 58 (emphasis added).]
Nor did the Board misapply the cases by granting a presumption that favored PSE&G by presuming that its interests necessarily coincided with the public interest. Rather, the Board correctly noted that in the event the interests of the affected municipalities and the interests of PSE&G's customers were equal, "PSE&G should be entitled to preference because the legislative intent is clear that the broad public interest to be served is greater than local considerations." In so concluding, the Board correctly applied governing law.
The Board's obligation is to weigh all interests and factors in the light of theSee also Hackensack, supra, 41 N.J. Super. at 425 ("The board's obligation is to weigh all the interests, even though when they are found to be equal or nearly so the utility is entitled to the preference.").
entire factual picture and adjudicate the existence or non-existence of reasonable necessity therefrom. If the balance is equal, the utility is entitled to the preference, because the legislative intent is clear that the broad public interest to be served is greater than local considerations.
[PSE&G, supra, 35 N.J. at 377.]
"Public" means the "'public' served by the utility[,]" in contrast to "the limited local group benefited by the zoning ordinance." PSE&G, supra, 35 N.J. at 376-77. Appellants argue we should now construe the term "public" even more broadly, to encompass "the public interest and public policy of the entire State," and they contend that the interest of this broader public is against the Project and should predominate. We find no basis to depart from the Court's well-settled interpretation of the statute. See, e.g.. In re Educ. Ass'n of Passaic, Inc., 117 N.J. Super. 255, 261 (App. Div. 1971) (stating it is not the function of the intermediate appellate court to alter the rule decided by our court of last resort), certif. denied, 60 N.J. 198 (1972). In any event, we discern no instance where the Board determined that the interests of the public served by PSE&G were in equipoise with the interests served by the local zoning ordinances, triggering the preference. Nor did the Board consider only the interests of those who might use PSE&G's services. The Board considered broader environmental impacts, such as leakage, as well as the State-wide interests in reliable electric service.
Nor are we persuaded that Monmouth, supra, PSE&G, supra, or Hackensack, supra, have less relevance to the instant matter because the utility's need for additional capacity in those cases was uncontested. See Monmouth, supra, 47 N.J. at 256 (stating "[n]o one in the case question[ed] the need and desirability" of the water tank and pumping station to serve explosive population growth); PSE&G, supra, 35 N.J. at 368 (referring to the "obvious need" for power lines that the locality determined, in its local ordinance, should be buried); Hackensack, supra, 41 N.J. Super. at 417 (noting that borough "did not seriously attack the company's claim of need for additional facilities of some kind"). Although the Project's need was not challenged, the PSE&G Court considered proof of need in developing its standard, and assigned to the utility the burden to show need. "The utility must show that the proposed use is reasonably, not absolutely or indispensably, necessary for public service, convenience and welfare at some location." PSE&G, supra, 35 N.J. at 377.
C.
We turn to appellants' other challenges to the Board's decision, which involve the Board's application of the five criteria set forth in PSE&G, supra, 35 N.J. at 376-77.
Appellants argue the Board acted arbitrarily and capriciously in approving the project without knowing the share of the $750 million cost New Jersey consumers would bear. They argue costs may exceed the benefits enjoyed by New Jersey consumers, because New Jersey consumers "may see very little of the benefits from the Project because the power transmitted over the lines may ultimately benefit New York." We are unpersuaded.
The Board fulfilled its obligation to consider cost in determining reasonable necessity. PSE&G, supra, 35 N.J. at 377. The Board recognized the uncertainty created by the remand in Illinois Commerce Comm'n, supra. Yet, the Board concluded that even if New Jersey consumers ultimately bear the Project's full costs — a little over $2 a month — it was still reasonably necessary given the benefit to consumers. The Board found, with sufficient support in the record, that the Project would avoid reliability violations, and consequent brownouts and blackouts and damage to the infrastructure.
Appellants argue the Board's finding the line was needed for reliability reasons was based on incorrect projections of energy use, and the Board arbitrarily ignored its own finding regarding the limitations of the econometric data that PJM used. We disagree. The Board found reasonable PJM's use of Moody's econometric data, validated by other sources. Its finding was compatible with its observation that "in the future, the Board and PJM may benefit from an analysis that incorporates a wider variety of econometric data." The Board also concluded, with sufficient record support, that PJM considered the economic downturn in its analyses, noting that the 2009 retool was premised on a drop in peak demand.
We also reject appellants' assertion that the Board failed to consider transmission and non-transmission alternatives. Mindful of our standard of review, we shall not substitute our independent judgment for the Board's where there is sufficient evidence supporting its findings. PSE&G, supra, 35 N.J. at 376. We discern sufficient evidence in the record of the Board's alternatives analysis. Regarding transmission alternatives, the Board credited testimony presented by PSE&G that building the Project would have the least impact on land use and the environment because it would be constructed in the existing right of way. The alternative lines — Brossard-Roseland and Stanton-Roseland — had distinct drawbacks. A PSE&G witness testified that upgrading conductors on existing lines would be an inadequate fix for the reliability violations that PJM had predicted.
Sufficient evidence also supported the Board's findings that non-transmission alternatives — such as demand response programs, new local generation, and energy efficiency measures — were no substitute for the Project. The Board credited PSE&G witnesses who testified that PSE&G did consider alternatives to the Project but concluded they were uncertain and inadequate, and would not effectively remedy the reliability violations, particularly the Category C violations.
In challenging the Board's conclusions regarding EMF impacts, appellants essentially argue that their expert was more credible than PSE&G's. However, we defer to the Board's assessment of the credibility of the competing witnesses on the health effects of EMF. The Board accepted the projections of electric and magnetic fields and determined they complied with New Jersey standards where applicable, and the most rigorous standards promulgated by other states where New Jersey standards did not exist. We shall not disturb the Board's finding. Moreover, the Board intended to monitor the issue. It required PSE&G to report actual EMF levels, and committed to take appropriate action if the levels exceeded those projected.
Finally, we reject appellants' argument that the Board capriciously disregarded evidence that the Project is a component of Project Mountaineer, which appellants assert was designed to export coal-generated electricity to the Northeast, and is not an effort to address reliability violations in New Jersey. Aside from evidence of a conference in 2005, appellants have presented no evidence that PJM was motivated by a desire to serve the interests of coal-generated electricity providers, as opposed to addressing projected reliability violations that would involve enhancing the transmission of energy from areas to the west of New Jersey.
The Pennsylvania Public Utility Commission addressed Project Mountaineer in the course of approving another high voltage transmission line in the PJM region. That line, also, was designed to address reliability violations and congestion problems. The commission described Project Mountaineer, not as a pretext for coal-generated electricity exports, but as an "approach through which PJM could identify a comprehensive plan to increase the transfer of electricity from the western part of the PJM Region to the eastern part of the PJM Region." Energy Conservation Council of Pa. v. Public Util. Comm'n, 995 A.2d 465, 469 (Pa.Commw.Ct. 2010); see also Illinois Commerce Comm'n, supra, 576 F.3d at 479, n.7 (Cudahy, J., dissenting in relevant part, and concurring in part) ("Project Mountaineer is a plan to construct hundreds of miles of 500 and 765 kV linkages between eastern and western PJM. The PJM literature . . . indicates that Project Mountaineer was a response to the nearly 200% increase in congestion costs from 2004 to 2005."); PJM Interconnection, LLC, Potomac-Appalachian Transmission Highline, L.L.C., 141 F.E.R.C. P 61,177 (2012) (stating the Potomac-Appalachian Transmission Highline or PATH project "was originally introduced by PJM in May 2005 at a Commission technical conference as Project Mountaineer - a major east-to-west transmission corridor").
Although PJM had supported the PATH project as a solution to reliability problems, it deferred it in light of "actual and forecasted decreases in load" resulting from the economic downturn, and ultimately terminated the project. "In 2011 PJM . . . concluded that due to decreasing customer load growth, increasing participation in demand response, and the expected addition of new generation in the region, the need for the PATH Project no longer existed throughout PJM's 15 year planning horizon." Id. at 61,884. The owners of the project are seeking recovery of the abandoned costs of the project. Id. at 61,883.
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We find sufficient credible evidence in the record to support the Board's finding that the Project was prompted by, and justified by, a genuine effort to avoid violations of reliability standards, as opposed to a pretext to find expanded markets for coal-generated electricity.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION