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AES Somerset, LLC

April 26, 2006

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

NOTICE OF LEGISLATIVE PUBLIC HEARING AND ISSUES CONFERENCE

Permittee: AES Somerset, LLC, 7725 Lake Road, Barker, New York 14012 Contact: Jon Reimann

DEC Permit ID No. 9-2938-00003/00002

Project Description: On February 21, 2006, staff of the Department of Environmental Conservation (&Department& or &DEC&) issued a Department Initiated Modification (&DIM&) of the current Title V air permit (Permit No. 9-2938-00003/00002) for the AES Somerset facility (&Facility&). The DIM was issued pursuant to 6 NYCRR 621.14 for the purpose of including in the Facility's current Title V permit a Special Condition from the Facility's 1999 Air State Facility permit related to the disposal of ammoniated waste generated by operation of the Facility's selective catalytic reduction (&SCR&) pollution control unit. The Facility's current Title V permit was issued on April 30, 2002, and will expire on April 30, 2007.

Existing Facility: AES Somerset is a 675 megawatt (&MW&) electric generating facility. The Facility combusts coal and petroleum coke as its primary fuels. Associated with the boiler is a coal handling system, a number 2 or kerosene oil system used for startup and flame stabilization, a limestone handling system, and other miscellaneous sources and activities related to the operation of an electric generating station.

Emission unit S00001 in the Title V permit consists of one boiler feeding steam to one turbine generator. The boiler, identified in the Title V permit as emission source B0001, is a Babcock and Wilcox balanced draft, single reheat, pulverized coal, dry bottom radiant boiler. The steam generator is designed for a maximum continuous rating of 4,845,000 lb/hr, 1005 degree Fahrenheit, and 2620 psig steam at the superheated outlet. The boiler has 48 burners in an opposed wall-fired configuration with a heat release rate of 76,400 Btu/hr/ft2 at maximum continuous rating. Emission source B0001 is equipped with an electrostatic precipitator (&ESP&) to control particulate matter emissions. The ESP is equipped with an energy management system that, based on feedback from the opacity monitor, adjusts the power levels in the precipitator to maintain the desired opacity. Sulfur dioxide (&SO2&) emissions are controlled by a flue gas desulfurization (&FGD&) system. Oxides of nitrogen (&NOx&) emissions are controlled through the use of low-NOx burners installed on the boiler, good combustion practices, and a SCR unit installed in front of the ESP. Emissions from unit S00001 exit the main 625-foot stack, emission point 00001. AES Somerset has two oil-fired auxiliary boilers, emissions sources B000A and B000B, each with a design heat input of 195 million Btu/hr. The auxiliary boilers are used to provide steam for a cold start of the main unit. The boilers are also used for heating the buildings and for maintaining essential equipment in a hot condition when the main boiler is not operating. These boilers burn number 2 fuel oil sometimes mixed with kerosene, with combustion gases exhausting at a 300-foot stack, emissions point 0001A. Other than a limit on the maximum sulfur content of 1.5% by weight, there are no specific controls on these small package boilers for SO2, NOx, or particulate matter emissions.

Existing Permits and Authorizations: AES Somerset has a Title V permit issued pursuant to Environmental Conservation Law (&ECL&) articles 1, 3 and 19 and 6 NYCRR part 201. The Facility also has a State Pollutant Discharge Elimination System (&SPDES&) permit issued pursuant to ECL article 17.

AES Somerset has a Certificate of Environmental Compatibility and Public Need issued by the New York State Siting Board pursuant to Article VIII of the Public Service Law.

DEC Staff's Position: Department staff contend that: pursuant to 6 NYCRR 201-6.6 (a) (2), it is mandatory that the Title V permit incorporate existing state requirements into the state-enforceable section of the permit, and the Special Condition in the 1999 Air State Facility permit previously issued to the Facility is such a requirement; the Special Condition arose out of a Memorandum of Understanding adopted by the New York State Board on Electric Generation Siting and the Environment in an April 26, 1999 Order Amending the Certificate of Environmental Compatibility and Public Need for the Facility; AES Somerset did not object to the inclusion of the Special Condition in the 1999 Air State Facility permit issued to the Facility, which authorized the construction and operation of the SCR; AES Somerset did not object to Department staff's negative declaration issued under the State Environmental Quality Review Act (ECL article 8 and 6 NYCRR part 617 [&SEQRA&]) that was issued in connection with the 1999 Air State Facility Permit; and the inclusion of the Special Condition in the Title V permit will correct an administrative oversight and eliminate any existing confusion over its applicability to the Facility.

The Special Condition provides as follows:

Ammoniated Waste produced during the operation of the SCR control equipment may be landfilled only in cells opened in the future that are designed and constructed in accordance with 6 NYCRR Part 360 in effect at the time of construction. Future operational activities at the landfill must conform/be updated to be in compliance with any pertinent regulatory changes that may occur pursuant to Part 360 or similar future applicable regulations. Any ammoniated waste shipped off-site must go to a disposal facility legally authorized to accept such waste in accordance with all federal, state or local regulatory requirements that may be applicable.

Permittee's Position: By letter dated March 7, 2006 AES Somerset objected to the inclusion of the Special Condition in its Title V operating permit, and has requested a hearing pursuant to 6 NYCRR 621.14 (d). AES contends that: Article VIII of the New York State Public Service Law, not SEQRA or Title V, governs landfilling activities at the Facility; there was no SEQRA condition in connection with the 1999 Air State Facility permit; the DIM fails to meet the requirements of 6 NYCRR 621.14 governing DIMs; the Air State Facility permit has no legal effect; no &ammoniated waste& is generated by the Facility in any event; and a provision regarding solid waste is not appropriate for a Title V permit and is otherwise not an applicable requirement under Title V.

Statutory and Regulatory Provisions: The Department-initiated permit modification is being processed and this proceeding is conducted according to ECL article 1 (General Provisions), article 3, title 3 (General Functions), article 8 (SEQRA), article 19 (Air Pollution Control), and title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York (&6 NYCRR&) part 201 (Permits and Registrations), part 617 (SEQRA), part 621 (Uniform Procedures) and part 624 (Permit Hearing Procedures).

SEQRA Status: Department staff determined that this permit modification action is not subject to review under SEQRA because it is a Type II action pursuant to 6 NYCRR 617.5(c) (19), &official acts of a ministerial nature involving no exercise of discretion.& AES does not object to the Type II classification but contends that the DIM is a Type II action pursuant to 6 NYCRR 617.5 (c) (31), &interpreting an existing code, rule or regulation& and 6 NYCRR 617.5 (c) (35), &actions requiring a certificate of environmental compatibility and public need under article VII, VIII or X of the Public Service Law and the consideration of, granting or denial of any such certificate.&

Coastal Management: The New York State Coastal Management Program (Executive Law § 922) approved the Local Waterfront Revitalization Program (&LWRP&) for the Town of Somerset in June 2005.

State Historic Preservation Act (&SHPA&) Determination: The State Historic Preservation Act is not implicated in this permit action because the site does not contain any historic structures, nor is it located in an archaeologically sensitive area.

Document Availability: All filed documents, the proposed modified permit and other papers are available for inspection during normal business hours at: the Barker Free Library, 8706 Main Street, Barker, NY 14012; the Department's Region 9 Office, 270 Michigan Avenue, Buffalo, NY 14203-2999, attn: Steve Doleski or Doug Borschel, telephone (716) 851-7165; and the Department's Office of Hearings and Mediation Services, 625 Broadway, First Floor, Albany, NY 12233-1550, contact: James T. McClymonds, Chief Administrative Law Judge, telephone (518) 402-9003.

Legislative Public Hearing Sessions

Legislative Public Hearing: All persons, organizations, corporations or government agencies affected by this permit action are invited to comment on the DIM. For this purpose a legislative hearing to receive unsworn comments will be held on Monday, June 12, 2006 at 7 P.M. at the Barker Central School District Auditorium, High School Building, Herbert F. Ludwig Fine Arts Hall, 1628 Quaker Road, Barker, NY 14012. It is not necessary to file in advance to speak at the legislative hearing. Lengthy statements should be in writing and summarized for oral presentation. Reasonable time limits may be set for each speaker to afford everyone an opportunity to be heard. Equal weight will be given to both oral and written statements.

This location is reasonably accessible to persons with a mobility impairment. Pursuant to the State Administrative Procedure Act (&SAPA&), interpreter services shall be made available to deaf persons, at no charge, upon written request to the Administrative Law Judge named below at least five business days prior to the hearing.

Written Comments: Written comments may also be submitted at the legislative hearing or mailed provide they are received on or before 4:00 P.M. on Friday, May 26, 2006, at the Office of Hearings and Mediation Services at the address listed below.

Issues Conference: Pursuant to 6 NYCRR 624.4(b), a pre-adjudicatory hearing issues conference will be held at the Somerset Town Hall, 8700 Haight Road, Barker, NY 14012 on Tuesday, June 13, 2006 at 9:00 A.M. The purpose of the issues conference is to determine party status for any person who has properly filed a petition (defined below), and to define, narrow and resolve, if possible, the issues that are proposed as subjects for adjudication. The known issues include Department staff's legal basis and authority for the DIM. Other issues may be proposed for adjudication and must be both substantive and significant in accordance with 6 NYCRR 624.4 (c). Participation at the issues conference will be limited to Department staff, AES Somerset, and those persons requesting party status. It is important that any persons requesting party status appear or be represented at the issues conference in order that all proposed issues may be fully discussed.

Filing for Party Status: Persons seeking to participate in the issues conference and any subsequent adjudicatory hearing must file a petition (a written statement) explaining whether the request is for full party status or amicus status. For the required contents of petitions for full party status, see 6 NYCRR 624.5(b)(1) and (2). To determine whether an issue is substantive, see 6 NYCRR 624.4(c)(2), and to determine whether an issue is significant, see 6 NYCRR 624.4(c)(3). For the required contents of a petition seeking amicus status, see 6 NYCRR 624.5(b)(1) and (3).

All filings requesting party status must be received on or before 5:00 P.M. on Friday, May 19, 2006 at the Office of Hearings and Mediation Services, New York State Department of Environmental Conservation, 625 Broadway, First Floor, Albany, NY 12233-1550, attn: James T. McClymonds, Chief Administrative Law Judge (telephone: (518) 402-9003). Telefaxed petitions will not be accepted. Copies of the filing are to be sent at the same time and in the same manner to Department staff's counsel, Michelle Crew, Esq., Associate Counsel, 625 Broadway, 14th Floor, Albany, NY 12233-5500; and permittee's counsel, Robert J. Alessi, Esq., LeBoeuf, Lamb, Greene & MacRae, LLP, 99 Washington Avenue, Suite 2020, Albany, NY 12210-2820.

A copy of 6 NYCRR part 624 may be obtained from the Office of Hearings and Mediation Services, or from the Department's website.

James T. McClymonds
Chief Administrative Law Judge

Albany, New York
April 26, 2006

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