Sierra Club–Grand Canyon Chapter v. Arizona Corporation Commission

Arizona’s Renewable Energy Standard and Tariff (REST) rules required public-utility corporations to satisfy annual renewable-energy requirements by obtaining credits for energy derived from eligible renewable-energy resources. The Arizona Corporation Commission (the commission) (defendant), a state administrative agency, was authorized to adopt pilot programs that established technologies as eligible renewable-energy resources. The commission was also authorized to waive compliance with the REST rules for good cause. Mohave Electric Cooperative, Inc. (Mohave) asked the commission to (1) recognize as a pilot program a proposed waste-to-energy (WTE) facility that burned municipal solid waste to generate electricity, or (2) waive the REST rules for the proposed facility. Commission staff believed that a WTE facility could benefit Arizona’s utility infrastructure and that those benefits outweighed any potential negative consequences. Staff suggested that the commission deny pilot-program status to the WTE facility but grant a good-cause waiver of the REST rules that would treat 75 percent of the energy produced by the facility as credit-eligible. The commission held hearings on Mohave’s application and received testimony and evidence regarding the proposed facility’s fuel supply. Commission staff testified that Mohave had presented data showing that the WTE facility would burn waste composed of 95-percent-biogenic material. Staff calculated that burning 95-percent-biogenic waste would result in biogenic materials contributing 91 percent of the energy to the process and nonbiogenic materials contributing 9 percent. Commission staff had originally recommended granting the waiver for 75 percent of the energy because they thought 95-percent-biogenic waste seemed high compared to waste from other WTE facilities nationwide. However, staff testified that a waiver level of 90 percent was also reasonable and within an acceptable range based on waste samples provided by Mohave. The commission ultimately decided to (1) grant pilot-program status and (2) grant credits for 90 percent of the energy produced by the proposed WTE facility. The Sierra Club–Grand Canyon Chapter (plaintiff) challenged the commission’s decision in Arizona state superior court. The court vacated the decision, concluding that (1) the WTE facility did not qualify for pilot-program status because the REST rules did not allow municipal solid waste as an eligible renewable-energy resource, (2) good cause was not shown for waiving the REST rules, and (3) no credible evidence was presented supporting the commission’s determination that 90 percent of the energy from the WTE facility was credit-eligible. The commission appealed.