Northern Pass was a fatally flawed transmission project from the day it was announced eight years ago. Despite the strong objections of 29 of the 31 municipalities that the line would run through, businesses large and small along the proposed route and tens of thousands of people across the state, Eversource Energy pushed forward. As of last October Eversource had spent $249.5 million – a quarter of a billion dollars - on development costs, like engineering, attorneys’ fees, land purchases, advertising, public relations and countless consultants.
Now after a clearly reasoned, unanimous decision by the seven members of the state Site Evaluation Committee denying Northern Pass a site certificate, Northern Pass and Eversource are saying they are “shocked and outraged” and will appeal the SEC decision to the New Hampshire Supreme Court if the SEC doesn’t reconsider its decision. But Northern Pass does not have a strong appellate issue. Appealing the SEC’s decision is just throwing good money after bad.
In an interview shortly after the SEC decision Martin Murray, the spokesperson for both Northern Pass and Eversource NH (PSNH), stated three rationales for appealing: 1) the SEC should have continued to deliberate even after it was clear all seven members had found that Northern Pass had failed to prove it satisfied one of the four required criteria; 2) the SEC members did not correctly analyze the evidence; and 3) the SEC should have issued a certificate with conditions instead of denying the site certificate. All three are weak grounds for appeal.
First, let’s look at Northern Pass’s complaint that deliberations should have continued.
An applicant to obtain a site certificate for an energy facility in New Hampshire has the burden of proving that it meets all four criteria set forth in NH RSA 162-H:16, IV. You can read the exact language here, but in brief the four criteria are:
- The applicant has the financial, technical and managerial capability to construct and operate the facility;
- The facility will not unduly interfere with the orderly development of the region;
- The facility will not have an unreasonably adverse impact on aesthetics, historic sites, air and water quality, the natural environment, and public health and safety; and
- The facility is in the state’s public interest.
After hearing 70 days of oral testimony; receiving thousands of pages of pre-filed written testimony, 4,500 written comments from members of the public, thousands of exhibits, and final memoranda from Northern Pass, the Counsel for the Public, and many of the intervenors; and spending several days in the field looking at various locations the proposed transmission line would run through, the seven members began deliberating in public (picture a jury deliberating in public) on January 30th about the evidence and whether Northern Pass had satisfied its burden of proof.
The SEC took up the four criteria in the order they are listed in the statute, so they first deliberated about whether Northern Pass had the financial, technical and managerial capability to build and operate a 192-mile high voltage transmission line, 60 miles of which would be buried. After discussing the first criterion for a few hours, each of the seven members indicated they believed Northern Pass had met the burden of proof for that one, although the fact the SEC members expressed some doubt about the company’s managerial capability should have been a sign to Northern Pass’s lawyers and executives that getting SEC approval was not going to be as easy as they had been telling the Massachusetts Clean Energy RFP evaluators and Wall Street energy analysts for years.
The SEC then moved on the afternoon of the first day to begin deliberating the second criterion, undue interference with orderly development, and spent the entire next day deliberating about the evidence relating to that and whether the company had met its burden of proof. It was increasingly clear that all seven members had doubts about the case Northern Pass had presented on some aspects of orderly development, including the credibility of Northern Pass’s expert witnesses. I’m guessing Northern Pass now regrets putting up an expert who said only eleven homes along the entire 192-mile route would decrease in value and claimed that obstruction of views would not reduce the value of properties that didn’t directly abut the transmission line. Tell that to the people in New Hampshire whose property is assessed higher because of its views, the so-called view tax. It was clear to everyone except Eversource that this testimony was simply not credible.
On the third day of deliberations the SEC chair asked the other members if it would be helpful for each of them to say what their thinking was on whether Northern Pass had met its burden of proving the transmission line would not unduly interfere with orderly development in the region. One by one they each explained his or her thinking in great detail, and each ended their analysis by saying they didn’t think Northern Pass had met its burden of proof. This took the entire morning of the third day.
After lunch one of the members moved to deny Northern Pass a site certificate on the basis that it had failed to prove the project would not unduly interfere with orderly development in the region. All seven agreed with that motion, but two of them thought they should go on to deliberate the next two criteria so that a record could be made of their findings on those. Five of them didn’t think there was any point to that because Northern Pass had to satisfy all four criteria so they knew at that minute that a certificate would be denied. As one of the members said, “It’s a four-legged stool. If one of the legs is broken, the chair falls.” A substitute motion to end deliberations passed 5-2. Next all seven voted that Northern Pass had failed to meet its burden on orderly development and then unanimously voted to deny a site certificate.
It is inconceivable that the N.H. Supreme Court would find that the SEC made a reversible error by not wasting everyone’s time deliberating on the next two criteria for the sake of deliberating. The law is clear that Northern Pass had to satisfy all four criteria to get a site certificate. Look at the wording of the statute. It says “and” between the third and fourth criteria not “or.” And Northern Pass knows that. It was right there on their official Northern Pass website – until yesterday. Continuing to deliberate would only have been good for the myriad of Eversource lawyers who were getting paid by the hour.
Now let’s look at Northern Pass’s second complaint – that the SEC’s decision to deny the site certificate wasn’t supported by the evidence. This basis for appeal has even less merit than the endless deliberations one. The Supreme Court will only overturn a regulatory body’s findings if it was an abuse of discretion or arbitrary, capricious and unreasonable. The test is not whether the Supreme Court justices would have reached a different conclusion than the SEC members did. The SEC deliberated for almost two full days on the orderly development criterion, and it’s clear each member had thoroughly reviewed the volumes of evidence before voting. You can read the transcript here. I don’t know how Northern Pass can contend with a straight face that the SEC’s decision was arbitrary, capricious and unreasonable or an abuse of discretion.
On to their third complaint – that the SEC should have granted Northern Pass a site certificate with conditions instead of denying the certificate. Weak. The N.H. Supreme Court is not going to substitute its judgment for that of the SEC on this one either.
Northern Pass would probably include in an appeal a claim that the SEC chair had erred on some procedural decisions, such as a ruling on an objection to the relevance of a question posed to a witness. I was present for many of the evidentiary hearing days. The Chair bent over backwards to rule in Northern Pass’s favor on procedural issues. For an opponent of Northern Pass like me it was very frustrating that the Chair almost always ruled in Northern Pass’s favor. In any case, the Supreme Court would only overturn the SEC on these grounds if a procedural error impacted the outcome of the case. That’s just not going to happen.
Northern Pass may also challenge how long the SEC process took. But the reason it took so long is its application for a site certificate was deficient and the proposal so bad that it generated an unprecedented number of opposing parties in the proceeding. It would also be inconsistent to contend it was wrong for the SEC members to end deliberations so soon and that the SEC process took too long.
I understand that Eversource executives are upset and disappointed with the SEC’s decision, but that’s not what they were saying a few short months ago. During its 2017 Q3 investor call, Eversource’s Executive Vice President for Strategy and Business Development stated in response to a question about the status of Northern Pass “…we think from our long experience with the SEC process that it’s, quite frankly, long. It’s very judicious. It’s very comprehensive. But when it’s complete, it has always withstood legal challenge.”
Those were wise words a few months ago. What has changed? Only that the SEC rejected Northern Pass. I don’t see how it’s in their shareholders’ interest to spend more money appealing the SEC’s decision. And it’s not in the interest of the people and businesses of New Hampshire. An appeal would string out this saga for at least another year. It’s time to move on.