In July 2003, the Public Service Commission of Wisconsin (PSCW) and the state's Department of Natural Resources (DNR) issued their final Environmental Impact Statement (EIS) for the Elm Road Generating Station. The EIS was conducted under guidelines of the Wisconsin Environmental Policy Act (WEPA), which are modeled on the federal National Environmental Policy Act (NEPA) guidelines. The agencies' decision to conduct an EIS was not the result of an evaluation and conclusion that the project's potential environmental impacts are significant. Rather, it was dictated by the PSCW's rules that require an EIS for any project involving the construction of an "electric generation facility fueled by coal."

The EIS considered background and regulatory requirements, costs and financing issues, the need for baseload capacity in Southeastern Wisconsin, alternatives to the proposed project, fuel diversity perspectives, the proposed sites and technologies, air emissions, water resources, solid and hazardous waste disposal and remediation, land resources, and community impacts. The EIS also provided a worst case analysis of the economic and environmental impacts that could result from the construction of a new power plant and its associated facilities. The EIS, however, was not an agency decision about the project and did not make recommendations about approval.

The EIS was just one step in the process. Public and technical hearings followed in August and September of 2003. The agencies gave careful consideration to the more than 270 individuals that provided written comments on the ERGS draft EIS.

In November 2003, the PSCW issued an order approving parts of the proposed project. The Commission:

• Determined that additional power plants were necessary to meet the continued growth in demand for electricity.
• Determined that coal was the most cost-effective, technically feasible option for the additional generation.
• Approved the two Super Critical Pulverized Coal (SCPC) units;
• Did not approve the proposed Integrated Gasification Combined Cycle (IGCC) unit due to cost and technology concerns.
• Required the company to acquire a minimum 55 megawatts (MWs) of additional conservation.
• Acknowledged our commitment to add several hundred more MWs of renewable energy sources, resulting in about 5% of our energy needs supplied by renewable resources. (This is two times more than the standard set forth in Wisconsin law.)

On November 29, 2004, a Dane County Circuit Court vacated the PSCW's approval of our project and sent the case back to the Commission for additional proceedings. While we were disappointed with the decision, we were encouraged that the Court reaffirmed the need for the power and upheld the sufficiency of the state EIS.

The PSCW, DNR, and Wisconsin Energy filed motions for direct, expedited appeal of the decision with the Supreme Court of Wisconsin. On January 5, 2005, the Supreme Court of Wisconsin granted the motion in a 5-1 vote. Briefs were filed in February and oral arguments were held on March 30, 2005.

On June 28, 2005, the Supreme Court of Wisconsin reversed the Dane County Circuit Court's November 2004 decision and reinstated the Public Service Commission's final decision and order in all respects involving construction of the Oak Creek Power Plant expansion. It was a 4-2 decision with Justice Crooks not participating. Justice Bradley dissented and was joined by Chief Justice Abrahamson.

Air Permit
The DNR issued the Air Pollution Control and Construction Permit on January 14, 2004. After a thorough review, the DNR determined that the project meets applicable criteria for permit approval, including both the emission limits and the ambient air quality standards. The permit provides authorization for the construction and initial operation of the new units in Oak Creek.

In February 2005, a Wisconsin Administrative Law Judge issued a decision affirming the DNR’s issuance of the Air Pollution Control and Construction Permit. In the decision, the Judge found that DNR did not err on any of the grounds raised by the opponents.

Summary of the findings include:

• The analysis done by the DNR complied with all applicable requirements of state law.    
• The DNR was not required to include the integrated coal gasification combined-cycle (IGCC) process in the analysis for the supercritical pulverized coal units.    
• Alternative sites, sizes, production processes and environmental control techniques were properly considered in the analysis.    
• Environmental and social costs were weighed against the benefits of the project.    
• The DNR reasonably determined that all We Energies facilities in Wisconsin were in compliance or on a schedule for compliance.

On February 22, 2005, Clean Wisconsin and S.C. Johnson filed a lawsuit with the Dane County Circuit Court seeking judicial review of that decision.

The Dane County Circuit Court dismissed on Sept.16, 2005, the appeal of an administrative law judge's decision, affirming the DNR’s issuance of the Air Pollution Control and Construction Permit for the Oak Creek expansion. All parties to this action agreed to the dismissal, including Clean Wisconsin and the Sierra Club. This dismissal is the final resolution of all legal challenges to the WDNR air permit.

Chapter 30 Permit
In November of 2004, the DNR issued a Chapter 30 permit for the proposed project. The issuance of this permit followed a contested case hearing held August 23-25, 2004. The Chapter 30 permit provides authorization for:

• Placing fill on the bed of Lake Michigan for the purposes of dock extension;
• Placement of an intake and discharge structure;
• Dredging material from the bed of Lake Michigan;
• Placing bridges and culverts over navigable streams for the purposes of railroad expansion and road construction; and
• Mitigating wetland impacts.

In March 2005, the Dane County Circuit Court dismissed an appeal of the Chapter 30 permit based on improper filing procedures by S.C. Johnson and Sierra Club.

The opponents have filed an appeal seeking review of the Court’s decision to dismiss.

Wisconsin Pollutant Discharge Elimination System (WPDES) Permit
On March 30, 2005, the DNR reissued a WPDES permit for the project. The DNR has determined that the proposed cooling water intake structure and water discharge meet regulatory requirements, including the new federal Clean Water Act 316(b) rules, and that the WPDES permit should be reissued for the expanded facility subject to specific limitations and conditions. This determination was reached following extensive consultation among the DNR, EPA headquarters and EPA Region 5.

On April 26, 2005, Clean Wisconsin and SC Johnson filed a lawsuit with the Dane County Circuit Court challenging the DNR’s decision to reissue a WPDES permit. Also, on May 12, 2005, DNR granted the request for a contested case hearing filed by Clean Wisconsin, Sierra Club, and several individuals.

In Sept. 2005, the challenge filed with Dane County Circuit Court was dismissed. The DNR’s contested case hearing regarding the permit is scheduled for early March 2006.

Army Corps of Engineers Permit
The Army Corps of Engineers issued its permit on May 18, 2005. This permit authorizes construction of facilities that impact wetlands and waterways. The Corps conducted an Environmental Assessment (EA), and concluded that an Environmental Impact Statement (EIS) is not required, determined that the project complies with its Clean Water Act 404(b)(1) Guidelines, and determined that the project is not contrary to the public interest.

Opponents have the option to challenge the Army Corps permit in federal court.