Duke Energy Fine for Bird Kills is All Show, No Substance

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Duke Energy turbineLast week’s punishment/settlement between the Department of Justice and Duke Energy over bird deaths caused by its wind turbines gives evidence that the Obama administration needed a scapegoat, to defuse accusations that it applies a double-standard in enforcement of wildlife laws.

The Friday before Thanksgiving both parties announced that Duke would pay $1 million for the deaths of more than 160 birds that are protected by the Migratory Bird Treaty Act. The incidents occurred over the last four years at two Wyoming sites operated by the utility’s Duke Energy Renewables subsidiary.

“This case represents the first criminal conviction under the Migratory Bird Treaty Act for unlawful avian takings at wind projects,” said Robert Dreher, acting assistant attorney general for the Justice Department’s Environment and Natural Resources Division, in a statement.

That’s nice. The problem is the timing of the action coincided with a response by the Justice Department to Republican Sens. David Vitter (La.) and Lamar Alexander (Tenn.). The delayed reaction came ten months after they challenged Attorney General Eric Holder over an obvious double standard, in which fossil-fueled energy producers have been penalized for killing birds, while wind energy was allowed to apply for permits to kill bald eagles and other protected birds.

“It appears the Justice Department is hand-picking which migratory bird mortality cases to pursue with an obvious preference of going after oil and gas producers,” said Vitter in a January 30 statement. “For example, while three oil and gas companies are facing fines for killing birds, a wind energy company is applying for permits to kill up to fifteen bald eagles. We obviously don't want to see any indiscriminate killing of birds from any sort of energy production, yet the Justice Department’s ridiculous inconsistencies begs questioning and clarity.”

The senators waited, and waited, and waited for an answer. By mid-May they had still not received one, but again publicly questioned the administration’s policy as the U.S. Fish and Wildlife Service informed wind operator Terra-Gen Power that they would not be subject to prosecution for killing California condors, another protected species.

“Basically, the federal government has issued a condor hunting permit to big wind companies,” said Sen. Alexander in May. “Federal law designed to protect a species from extinction doesn't distinguish between oil and gas companies and wind farms. Equal protection of the law means laws should be enforced evenly, and it’s wrong for the Department of Justice to enforce the law against oil and gas companies but not against wind companies.”

Two days after the Senator’s joint criticism, House Committee on Natural Resources Chairman Doc Hastings (R-Wash.) requested extensive documentation from the Fish and Wildlife Service about its decision-making regarding the enforcement of the Migratory Bird law and the Bald and Golden Eagle Protection Act, and asked for a response by May 30. After five months the agency had not responded with the information and Hastings accordingly slammed Director Daniel Ashe in a follow-up letter on November 4.

Finally, two days before the settlement with Duke Energy was announced, the Justice Department answered Sens. Vitter and Alexander about their January inquiry. Deputy Assistant Attorney General Elliot Williams told the senators there has been no double standard in enforcement of the wildlife laws.

“Violations of the (Migratory Bird Treaty Act) are referred to the Department only when companies fail to make good-faith efforts to avoid, minimize, and mitigate avian take,” Williams wrote.

Nevertheless the delay – and then the sudden confluence of Justice’s answer to the senators and the announcement of the Duke settlement – gives the strong impression that Fish & Wildlife and the government lawyers wanted a “scalp” to show the senators that they are evenhanded in their pursuit of the law. But Vitter, for one, wasn’t buying it.

“It looks like DOJ is making an example out of this particular case to shift the focus away from the Administration’s bias of using the Migratory Bird Treaty Act to go after oil, gas and other businesses,” he said in a statement on Monday. “The instances of wind energy’s favoritism have been so egregious under this Administration, and DOJ’s settlement and response still don’t explain the Administration’s obvious bias.”

How biased? An independent study published by the Wildlife Society Bulletin, cited by the Daily Caller, found that 573,000 birds and 888,000 bats are killed by wind projects in the U.S. every year. And according to the Fish and Wildlife Service’s own analysis, the number of birds killed is 440,000 per year, National Review reported. With those kinds of numbers it’s hard for Justice Department to make a serious case for no prosecutions under the migratory bird law.

So Duke Energy, the nation’s largest publicly owned utility and a close friend of the administration, was an obvious “offender” that could afford to step forward and take a hit for the overall cause of wind energy – after all, $1 million is pocket change for the company that lives and breathes regulatory favoritism.

As NLPC has reported, Duke has been on a wind (and solar) project-buying spree for years. The utility, which sells its “retail” power to customers in the Carolinas, Ohio, Indiana, Kentucky and Florida, has been building up its renewable resources for its wholesale energy delivery as well. The company, in part, benefits from the existence of renewable energy mandates in about 30 states, and lobbyists helped form North Carolina’s standard which requires Duke to generate 12.5 percent of its power from renewables by the year 2021.

The stimulus also provided handsome subsidies for Duke Energy renewable projects, with the Department of Energy providing a $22 million grant for Duke’s Notrees Windpower Project in Texas, more than half the estimated $43.6 million cost for the 20-megawatt energy storage experiment. And DOE also came through with $204 million under the Recovery Act for Duke’s smart grid projects in the Midwest and in the Carolinas.

Duke followed with solar and wind energy projects that it has either purchased or launched, after announcements in 2007 in Ohio (“Duke Energy Ohio to ‘Go Green’”), Indiana and the Carolinas that the company was seeking bids from providers of renewable power. “Duke Energy is interested in talking with potential suppliers about purchased power agreements, purchasing a generating facility, or purchased power agreements with the option to buy the facility,” a company press release said.

The buying bender of wind and solar projects immediately followed: 100 wind turbines from GE and 1,000 megawatts of wind assets in Texas (Dec. ’07); a 20-year commitment to buy solar power from SunEdison (May ’08); the purchase of wind company Catamount Energy (June ’08); and so on. Hardly a month has gone by since where Duke doesn’t announce some new purchase of solar or wind resources, including this past week.

Mandates and subsidies aren’t the only things that make the economics of wind energy extremely profitable for Duke. As Glenn Schleede, a former Atomic Energy Commission official, has detailed in the past, utilities invested in wind and solar reap an array of financial breaks including “Five-Year Double Declining Balance Accelerated Depreciation,” which frees up massive amounts of tax-free cash from capital investments, and also reduces corporate income taxes. Duke also has benefited from the Federal Production Tax Credit, Investment Tax Credits or Production Tax Credits, additional state subsidies for utilities, and other Department of Energy subsidies such as research and development grants and contracts. As Schleede said, this transfers “hundreds of millions of dollars annually from the pockets of ordinary taxpayers and electric customers to a few large corporations that own wind farms….”

If there is any doubt left about Duke’s cash flow thanks to renewables, recently departed CEO James Rogers told energy expert Robert Bryce in mid 2011 that wind subsidies enabled the utility to earn returns on equity of 17 to 22 percent.

So clearly, with wind energy bringing in so much money, a $1 million token fine over less than 200 bird deaths is not going to affect Duke Energy. The Charlotte-based utility frittered away at least ten times that much as a host of the Democratic National Convention last year.

Last week, writing for the Wall Street Journal, Bryce suggested the action by the Justice Department might mean the “green bubble” is about to burst with possibly more actions coming. But it’s hard to imagine the Obama administration doing much more of significance on that front after it has poured billions of dollars into the expansion of renewables via grants, loans and subsidies.

Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.