        Fl L E
        IN CLERKS OFFICE


  . DATE     FEB 2 7 201G4       2
IUPREME COURT, STATE OF WASIIIG'ftlN




~rJ- I
 CHIEFJUB




          IN THE SUPREME COURT OF THE STATE OF WASHINGTON


       PT AIR WATCHERS; NO
       BIOMASS BURN; WORLD
       TEMPERATE RAINFOREST                                   No. 88208-8
       NETWORK; OLYMPIC                                        En Bane
       ENVIRONMENTAL COUNCIL;
       and OLYMPIC FOREST                                 Filed FEB 2 7     2014
       COALITION,

                           Appellants,

                 v.

        STATE OF WASHINGTON,
        DEPARTMENT OF ECOLOGY;
        and PORT TOWNSEND PAPER
        CORPORATION,

                           Respondents.


                J.M. JOHNSON, J.- In this case, we are asked to consider whether the

      Department of Ecology (Ecology), in determining that no environmental

      impact statement (EIS) was necessary for a proposed energy cogeneration
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




project, failed to adequately consider the effects of carbon dioxide emissions

and demand for woody biomass from the state's forests.                   We are also asked

to consider whether the project is exempt from the EIS requirement as part of

an energy recovery facility that existed before January 1, 1989. Ecology

adequately reviewed the relevant information in determining that the project

would not have significant impacts on the environment, and the project is

exempt from the EIS requirement as part of an energy recovery facility that

existed before January 1, 1989. We affirm the Pollution Control Hearings

Board (Board).

                              FACTS AND PROCEDURAL HISTORY

        Respondent Port Townsend Paper Corporation (PTPC) owns and

operates a kraft pulp and paper mill in Port Townsend, WA. The mill burns

fossil fuel and woody biomass 1 to produce steam for use in its pulp and paper-

making processes. In May 2010, PTPC applied to Ecology for a notice of

construction (NOC) permit allowing it to construct a new cogeneration project



1
  "Biomass" includes "residual branches, needles, and tree tops (slash) left over from
ongoing logging operations; products of pre-commercial thinning (small saplings from
overcrowded young forests); tree stems and tops thinned from forests that are at risk from
wildfires, insects or diseases (forest health treatments) that are not currently utilized; clean,
untreated wood construction and demolition waste (that would otherwise have gone to the
landfill); and unused materials from lumber mills, such as sawdust, shavings, chips or
baric" Administrative Record at 414.


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PT Air Watchers, eta!. v. State of Wash., Dep 't of Ecology, eta!., No. 88208-8




at the existing mill. The project at issue will minimize the burning of fossil

fuel, increase the burning of woody biomass, and add an electrical turbine to

one of its steam boilers. The project will increase the firing efficiency in the

mill's power boiler 10 (PB 10) in order to burn primarily woody biomass to

produce the increased steam for a new steam turbine. The project will add up

to 25 megawatts of electrical generating capacity to the mill, which will sell

some of this electricity to the power distribution system. Increased firing in

PB 10 will result in increased emissions of some pollutants, including carbon

dioxide. Administrative Record (AR) at 260.

       Ecology reviewed PTPC's NOC application under the State

Environmental Policy Act (SEPA), chapter 43.21C RCW. On September 24,

2010, Ecology issued a determination ofnonsignificance (DNS) and opened

a public comment period until October 8, 2010. AR at 496. On October 22,

2010, Ecology issued NOC Order No. 7850, approving construction of the

project. AR at 497.

        PT Air Watchers and a number of other environmental groups

(collectively PT Air Watchers) timely appealed the NOC and underlying

SEP A DNS to the Board. The appeal focused on whether Ecology erred in

failing to consider the environmental impacts from the increased carbon



                                                3
PTAir Watchers, eta!. v. State ofWash., Dep'to.fEcology, eta!., No. 88208-8




dioxide emissions resulting from burning woody biomass in order to generate

energy. The appeal also concerned the environmental impacts on Northwest

forests that may result from the increased demand for woody biomass needed

to generate the energy. Finally, PT Air Watchers challenged Ecology's failure

to require preparation of an EIS.

       All parties filed motions for summary judgment. On May 10, 2011, the

Board issued an order granting summary judgment to PTPC and Ecology on

the primary issues in the underlying appeal. AR at 1516-41. PT Air Watchers

then filed a timely petition for review under the Administrative Procedure Act

(APA), chapter 34.05 RCW, to the Thurston County Superior Court on three

SEPA-related issues. On April 10, 2012, the superior court denied PT Air

Watchers' petition for review, upholding the Board's order granting summary

judgment. PT Air Watchers then appealed to Division Two of the Court of

Appeals, which certified the matter to this court pursuant to RCW 2.06.030.

Certification was accepted on December 31, 2012.

                                           ISSUES

       1.     Did Ecology and the Board correctly consider the legislative

policy behind RCW 70.235.020(3) in concluding that greenhouse gas

emissions from the project would not have significant environmental impacts?



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PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




       2.      Did Ecology and the Board correctly conclude that the project

would not result in adverse impacts to forest resources?

       3.      Did Ecology and the Board correctly conclude that an EIS is not

required under RCW 70.95.700?

                                     STANDARD OF REVIEW


1.     APA Standard ofReview

        The APA governs judicial review of the Board's decision. Port of

Seattle v. Pollution Control Hr'gs Bd., 151 Wn.2d 568, 587, 90 P.3d 659

(2004). Under the APA, "The burden of demonstrating the invalidity of

agency action is on the party asserting invalidity." RCW 34.05.570(l)(a).

"We accord deference to an agency interpretation of the law where the agency

has specialized expertise in dealing with such issues, but we are not bound by

an agency's interpretation of a statute." City ofRedmond v. Cent. Puget Sound

Growth Mgmt. Hr'gs Bd., 136 Wn.2d 38, 46, 959 P.2d 1091 (1998); see also

Port of Seattle, 151 Wn.2d at 587 ("[I]f an ambiguous statute falls within the

agency's expertise, the agency's interpretation of the statute is 'accorded great

weight, provided it does not conflict with the statute."' (quoting Pub. Uti!.

Dist. No. 1 of Pend Oreille County v. Dep 't ofEcology, 146 Wn.2d 778, 790,

51 P.3d 744 (2002))). The Board's order should be upheld unless we find that



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PT Air Watchers, eta!. v. State of Wash., Dep 't of Ecology, eta!., No. 88208-8




the Board erroneously interpreted or applied the law, or the Board's order is

not supported by substantial evidence. RCW 34.05.570(3)(d), (e).

2.     SEPA Standard ofReview

       SEP A establishes a process for evaluating the reasonably foreseeable

environmental consequences of proposed projects. Here, we are considering

Ecology's threshold determination that the project will not have significant

impacts and that an EIS is not required. This determination is based on an

environmental checklist (checklist) prepared by the project applicant. WAC

197-11-315, -330 ("An EIS is required for proposals for legislation and other

major actions significantly affecting the quality of the environment."). Ifthe

checklist reveals that a project will not have significant impacts, Ecology

issues a DNS and the environmental review is over, allowing the project to

proceed. WAC 197-11-340.

        Ecology's threshold SEPA determinations are entitled to substantial

weight. RCW 43.21C.090; Norway Hill Pres. & Prot. Ass 'n v. King County

Council, 87 Wn.2d 267, 275, 552 P.2d 674 (1976) (recognizing that the

"clearly erroneous" standard of review is appropriate in this context). We

must affirm unless we are "'left with the definite and firm conviction that a

mistake has been committed."' Ancheta v. Daly, 77 Wn.2d 255, 259-60, 461



                                                 6
PT Air Watchers, eta!. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




P.2d 531 (1969) (quoting United States v. US. Gypsum Co., 333 U.S. 364,

395, 68 S. Ct. 525, 92 L. Ed. 746 (1948)).

                                           ANALYSIS

1.     Ecology and the Board Correctly Considered the Legislative Policy
       behind RCW 70.235.020(3) to Conclude that Greenhouse Gas
       Emissions from the Project Would Not Have Significant Environmental
       Impacts

       As the first step in a SEP A analysis, the SEP A lead agency must make

a threshold determination concerning whether an EIS is required. WAC 197-

11-310(1), -797. If the agency determines that the probable effect of the

action is significant, the agency issues a determination of significance (DS)

and requires an EIS.         WAC 197-11-360(1); RCW 43.21C.030(c) (SEPA

requirement of preparation of an EIS for all "major actions significantly

affecting the quality of the environment."). If the agency determines that the

probable effect of the action is not significant, the agency issues a DNS and

an EIS is not required. WAC 197 -11-340( 1). "The SEP A policies of full

disclosure and consideration of environmental values require actual

consideration of environmental factors before a determination of no

environmental significance can be made." Norway Hill, 87 Wn.2d at 275.

Furthermore, a DNS must be "based upon information reasonably sufficient

to evaluate the environmental impact of a proposal."                    Moss v. City of

                                                 7
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




Bellingham, 109 Wn. App. 6, 14,31 P.3d 703 (2001).

       PT Air Watchers claims that the DNS was improper because the release

of greenhouse gases, including carbon dioxide, can have a significant impact

on the human and built environment. Ecology concedes that increasing the

amounts of carbon dioxide in the atmosphere would have an adverse effect on

the environment.        Resp't Dep't of Ecology's Resp. Br. at 10.                  Ecology,

however, argues that PT Air Watchers' concern is misplaced because the

project will actually decrease the amount of carbon dioxide in the atmosphere.

        The purported decrease in carbon dioxide results from the decreased

amount of fossil fuel PTPC will burn as a result of the project. PTPC will

bum 1.8 million fewer gallons of fossil fuel per year. AR at 397. The

respondents acknowledge that the burning of biomass, like the burning of

fossil fuel, emits carbon dioxide into the atmosphere. However, they contend

that the burning of biomass does not add to the total amount of carbon dioxide

in the atmosphere. Biomass is part of the earth's carbon cycle, where plants

take in carbon dioxide from the atmosphere and then release it when they

decay or die. AR at 408. Biomass naturally releases this carbon dioxide if

left on the forest floor to decompose. Forest fires and slash burning also

release the carbon dioxide stored in biomass. In contrast, fossil fuels are not



                                                  8
PTAir Watchers, eta!. v. State ofWash., Dep'to.fEcology, eta!., No. 88208-8




part of the earth's carbon cycle. AR at 272. Fossil fuels release carbon

dioxide into the earth's atmosphere only when they are burned. Id. When

fossil fuel is replaced by biomass fuel, the new carbon dioxide that would

normally be emitted from fossil fuel is replaced by carbon dioxide that will be

emitted into the atmosphere regardless of whether the biomass is burned. I d.

The respondents contend that, in this way, the replacement of fossil fuel with

biomass fuel decreases the total amount of carbon dioxide in the atmosphere.

Id.

       a.      Ecology's Consideration ofRCW 70.235.020(3)

       In support of this argument, Ecology and PTPC point to RCW

70.235.020(3), which provides, "Except for purposes of reporting, emissions

of carbon dioxide from industrial combustion of biomass in the form of fuel

wood, wood waste, wood by-products, and wood residuals shall not be

considered a greenhouse gas as long as the region's silvicultural sequestration

capacity is maintained or increased." 2 In implementing this legislation, it was

the intent of the legislature that the state would "(a) [l]imit and reduce

emissions of greenhouse gas . . . ; (b) minimize the potential to export



2
  "Silvicultural sequestration capacity" is the capacity of forest structures to store carbon
dioxide. The record suggests that the Northwest's silvicultural sequestration capacity is
currently being maintained or increasing.


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PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




pollution, jobs, and economic opportunities; and (c) reduce emissions at the

lowest cost to Washington's economy, consumers, and businesses." RCW

70.235.005(3). Among other things, the statute lists concrete greenhouse gas

emissions reduction goals and timelines. RCW 70.235.020(1).

       Here, the checklist specifically invoked RCW 70.235.020, which

demonstrates the legislature's preference for the burning of woody biomass

over the burning of other fuels. The checklist also indicated that, as a result

ofthe project, PTPC would decrease the amount of fossil fuels burned by 1.8

million gallons per year.          AR at 397.         Given this information, it was

appropriate for Ecology to assume that the project will decrease the total

amount of carbon dioxide in the environment from PB 10. SEP A does not

require a statement of the exact amount of carbon dioxide that would be

released as a result of the project. Furthermore, courts afford deference to the

agency's interpretation of law where the agency has specialized expertise in

the field. City of Redmond, 136 Wn.2d at 46.

        We note the legislative preference in RCW 70.235.020(3) is a

legitimate reference point for a lead agency's consideration, see WAC 197-

11-315(6), but cannot be read as determinative of any particular project's

impact on the environment. First, whether an emission is classified as a



                                                 10
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




greenhouse gas depends on its impact on the climate, 42 U.S.C.

§ 7545(o)(l)(G), but "[c]limate" is only one of many elements of the

environment to be considered, WAC 197 -11-444(1 )(b )(iii). Second, a lead

agency has the authority under SEPA to reach independent, project-specific

determinations, and that authority is not limited by RCW 70.235.020(3)-

chapter 70.235 RCW specifically provides it does not limit any agency's

preexisting authority unless it specifically purports to do so.                     RCW

70.235.020(l)(c), .900.

        Had Ecology and the Board entirely ignored the impact of greenhouse

gas emissions from woody biomass incineration, as PT Air Watchers asserts,

we might reach a different result. However, the record demonstrates that this

is not the case presented. The opportunity to present conflicting, project-

specific, scientific information was amply provided. Ecology accepted public

comments, AR at 33, which is a step not even required by statute. RicHARD

L. SETTLE, THE WASHINGTON STATE ENVIRONMENTAL POLICY ACT: A LEGAL

AND   POLICY ANALYSIS §13.01[4], at 13-37 (2013) ("While neither written

findings and conclusions nor public hearings are required, unless perhaps

imposed by agency SEP A procedures, they frequently are volunteered and

tend to enhance public and judicial respect for the threshold determination."



                                                 11
PT Air Watchers, eta!. v. State of Wash., Dep 't of Ecology, eta!., No. 88208-8




(footnotes omitted)).       The Board considered a wealth of information in

rendering its summary judgment decision. Clerk's Papers at 17-18 (listing, in

the Board's summary judgment order, the extensive briefing and attachments

considered).      PT Air Watchers did not present sufficient conflicting

information to create a genuine issue of material fact precluding summary

judgment.

       In this case, Ecology properly considered RCW 70.235.020(3) in

performing its threshold SEPA analysis. We recognize Ecology's specialized

expertise in this field and defer to this reasonable interpretation of the statute

that is consistent with its plain language. We hold that Ecology and the Board

properly considered the legislative policy behind RCW 70.235.020(3) in

concluding that greenhouse gas emissions from the project would not have

significant environmental impacts.

       b.      Sufficiency of Checklist and DNS

       PT Air Watchers asserts that the checklist and DNS did not contain

sufficient information for Ecology to evaluate the impacts from carbon

dioxide emissions that will result from the project.

        The checklist, however, properly addressed these Issues, including

emissions of greenhouse gases from the increased transportation of biomass.



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PTAir Watchers, eta!. v. State ofWash., Dep'tofEcology, ·eta!., No. 88208-8




PTPC provided an estimate for the additional truck routes needed to transport

the biomass as well as an estimate of the required fuel. AR at 405, 557. The

fact that PTPC did not provide specific carbon dioxide emissions estimates is

irrelevant. The information provided was sufficient to evaluate the general

change in greenhouse gas emissions. In sum, it was reasonable for Ecology

to conclude that the additional fuel needed to transport the biomass would not

have a significant impact on the environment.

       SEP A does not require the reporting of specific emissions. Instead, the

agencies must assess environmental impacts.            RCW 43.21C.030(2)(c)(i);

WAC 197-11-060, -330(1). Here, the assessment of environmental impacts

was effectively carried out without listing specific estimates of emitted

pollutants. Therefore, PTPC was not required to report estimates in its SEPA

checklist. See Residents Opposed to Kittitas Turbines v. State Energy Facility

Site Evaluation Council, 165 Wn.2d 275, 312, 197 P.3d 1153 (2008) (holding

that the final environmental impact statement in question "served its function

of presenting 'decisionmakers with a reasonably thorough discussion' of the

visual impacts of the project," even though it did not list a specific option as

a potential mitigation measure (internal quotation marks omitted) (quoting

Klickitat County Citizens Against Imported Waste v. Klickitat County, 122



                                              13
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




Wn.2d 619, 633, 860 P.2d 390, 866 P.2d 1256 (1993))).

       The record indicates that Ecology engaged in a reasoned assessment of

the environmental impacts of the proposed project. Ecology's interpretation

and consideration of RCW 70.235.020(3) was reasonable, and the checklist

and DNS contained sufficient information to weigh the environmental impacts

of the project. Accordingly, we hold that Ecology correctly concluded that

greenhouse gas emissions from the project would not have significant

environmental impacts.

2.      Ecology and the Board Correctly Concluded That the Project Would
        Not Result in Adverse Impacts to Forest Resources

        PT Air Watchers claims that the SEP A checklist and the DNS were

inadequate for failing to consider the impacts of removing biomass from

Northwest forests. They contend that Ecology's analysis failed to explain the

effects of increased competition for forest wood waste and how that could

affect forest health.

        In issuing the DNS, Ecology relied on the fact that the project would

have to comply with other state and federal laws and regulations that ensure

that the removal of biomass from forest lands does not adversely affect forest

lands or endangered species. Washington's Forest Practices Act, ch. 76.09

RCW, includes the removal of biomass from forests as a regulated forest

                                                 14
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




practice. WAC 222-16-010 ("'Forest practice' means any activity conducted

on or directly pertaining to forest land and relating to growing, harvesting, or

processing timber, or removing forest biomass."). Washington also has a

variety of regulations concerning the removal of biomass, including a

permitting process. Permits are issued only if the applicant can demonstrate

compliance with the forest practice rules designed to protect the ecosystem.

       Finally, PT Air Watchers' argument that the project may lead to cutting

trees solely for the purpose of providing fuel for the project fails to take into

account that PTPC does not plan to harvest new wood. See AR at 365. An

agency does not have to consider every conceivable environmental impact

when making its threshold SEP A determination, and certainly not a potential

impact that is not permitted by the NOC order.

        Because PTPC does not plan to cut down new sources of wood for the

project, Ecology did not need to consider the impact of such actions on

Northwest forests. Ecology ultimately determined that the project would not

have a significant impact on the environment, which should be accorded

substantial weight. See RCW 43.21C.090. We hold that Ecology correctly

concluded that the project would not result in adverse impacts to forest

resources.



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PT Air Watchers, eta!. v. State of Wash., Dep 't of Ecology, eta!., No. 88208-8




3.     Ecology and the Board Correctly Concluded That an EIS Is Not
       Required under RCW 70.95.700

       In addition to their arguments regarding RCW 70.235.020(3), the

sufficiency of the checklist and DNS, and the project's effect on forest

resources, PT Air Watchers contends that an EIS is required pursuant to a

separate statutory provision.        RCW 70.95.700 provides, "No solid waste

incineration or energy recovery facility shall be operated prior to the

completion of an environmental impact statement .... This section does not

apply to a facility operated prior to January 1, 1989, as a solid waste

incineration facility or energy recovery facility burning solid waste." "Energy

recovery" 1s defined as "a process operating under federal and state

environmental laws and regulations for converting solid waste into usable

energy and for reducing the volume of solid waste." RCW 70.95.030(7).

"Solid waste" is defined as "all putrescible and nonputrescible solid and

semisolid wastes including, but not limited to, garbage, rubbish, ashes,

industrial wastes, swill, sewage sludge, demolition and construction wastes,

abandoned vehicles or parts thereof, and recyclable materials."                   RCW

70.95.030(22).

        Although Ecology does not classify wood fuels as solid waste, PB 10

has been burning some solid wastes, including primary sludge, from the


                                                16
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




process wastewater treatment plant for approximately 30 years. AR at 223,

240. Because PB 10 is an energy recovery facility that burns at least one fuel

classified as solid waste (sewage sludge), it is subject to RCW 70.95.700. An

EIS is required unless PB 10 falls under the exception to the statute for

facilities operated prior to January 1, 1989.

       Ecology asserts that because PTPC constructed and operated its two

steam generating units before January 1, 1989, the exception in RCW

70.95.700 applies. PT Air Watchers, however, argues that PB10 was not used

as an energy recovery facility prior to January 1, 1989, because the facility

has not previously been used for generating electricity that may be sold to

outside parties. Therefore, they contend that the exception does not apply.

PT Air Watchers' argument is unpersuasive.

        PB 10 was installed in 197 6 and has been burning wastewater residuals

and biomass since that time. AR at 782, 792. PB 10 will continue to burn

wastewater residuals and biomass after the project is complete. These fuels

are combusted to produce steam to support the mill operations and produce

power. AR at 782. Here, PT Air Watchers cannot meet its burden of proving

that solid waste was not burned in PB 10 for the purposes of energy recovery

prior to 1989. Instead, they argue that modifications to an existing energy



                                                 17
PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, et al., No. 88208-8




recovery facility trigger the requirements of RCW 70.95.700. This is not a

persuasive reading of the statute. Energy recovery relates to converting solid

waste into usable energy, not just producing electricity that may be sold to

outside parties. This project does not involve the construction of a new solid

waste or energy facility. It simply modifies the combustion units that have

been in operation since before January 1, 1989.

        Furthermore, PT Air Watchers' reading of the statute would render the

exemption meaningless. SEP A review for an existing energy recovery facility

is triggered only by some action modifying the facility.                   Under PT Air

Watchers' reading of the statute, any action modifying an existing facility

would be ineligible for the exemption and would require an EIS. Therefore,

the exemption for existing facilities could never apply. "A fundamental canon

of construction holds a statute should not be interpreted so as to render one

part inoperative." Davis v. Dep 't ofLicensing, 137 Wn.2d 957, 969, 977 P.2d

554 (1999). PB10 is an energy recovery facility that burns solid waste and

has been operating since before 1989, so the exemption in RCW 70.95.700

applies. Accordingly, we hold that the Board correctly concluded that an EIS

is not required under RCW 70.95.700.




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PT Air Watchers, et al. v. State of Wash., Dep 't of Ecology, eta!., No. 88208-8




                                         CONCLUSION


       Based on a reasonable interpretation of RCW 70.235.020(3) and

sufficient information contained in the checklist, Ecology engaged in a

reasoned assessment of the environmental impacts of the proposed project.

We hold that Ecology and the Board correctly concluded that greenhouse gas

emissions from the project would not have significant environmental impacts.

We further hold that Ecology and the Board correctly concluded that the

project would not result in adverse impacts to forest resources.                   Finally,

because PB 10 is an energy recovery facility that has been burning solid waste

since before January 1, 1989, we hold that Ecology and the Board correctly

concluded that an EIS is not required under RCW 70.95.700. We accordingly

affirm the Board's decision.




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PT Air Watchers, eta!. v. State ofWash., Dep'tofEcology, et al., No. 88208-8




       WE CONCUR:




                                             20
