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Athens Generating Company, LP - Interim Decision, June 2, 2000

Interim Decision, June 2, 2000

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 WOLF ROAD
ALBANY, NY 12233-1010

In the Matter

- of -

an Application for a State Pollutant Discharge
Elimination System (SPDES) permit pursuant to
Environmental Conservation Law (ECL) Article 17
and Title 6 of the Official Compilation of
Codes, Rules and Regulations of the State of
New York (6NYCRR) Parts 750 et seq.

- by -

Athens Generating Company, LP
111 Washington Avenue
Albany, New York 12208

APPLICANT

DEC No.: 4-1922-00055/00001

SPDES No.: NY-0261009

INTERIM DECISION

June 2, 2000

INTERIM DECISION OF THE COMMISSIONER

Introduction and Background

This interim decision relates to appeals from a ruling by Administrative Law Judge (ALJ) Daniel P. O'Connell ("Ruling") rendered April 26, 2000. The ruling concerns the permit application filed by the Athens Generating Company, L.P. (the "Applicant" or "Athens Generating"), for a SPDES permit from the New York State Department of Environmental Conservation (the "Department").

In August 1998, Athens Generating applied for a Certificate of Environmental Compatibility and Public Need pursuant to Article X of the NYS Public Service Law (PSL) to construct and operate a 1080 megawatt (MW) combined cycle electric generating facility. The proposed facility would be located in the Town of Athens, Greene County on 150 acres. The site is located two miles west of the Hudson River. An access road would be constructed from Route 9W.

The proposed facility would consist of three Westinghouse 501 G (or equivalent) advanced combustion turbine generators (CTG), three heat recovery steam generators (HRSG), three steam turbine generators (STG) with associated balance-of-plant systems and facilities. The primary fuel would be natural gas. Low sulfur (0.05%) fuel oil would be used for back-up.

Athens Generating's application for a PSL Article X certificate also includes a request for a State Pollutant Discharge Elimination System (SPDES) permit. On average, the proposed facility would withdraw 4.2 million gallons per day (mgd) of process water from the Hudson River for cooling purposes. A portion of the cooling water would evaporate into the atmosphere. After treatment, the balance of the process water (0.67 mgd, on average) would be returned to the river. To transport the process water from the river to the proposed electric generating facility, Athens Generating would build an intake/discharge facility, or pumphouse, on the west shore of the Hudson River at about river mile 115.5.

The related PSL Article X hearing concerning the requested Certificate of Environmental Compatibility and Public Need commenced in March 1999. The presiding and associate examiners issued a joint recommended decision on September 3, 1999. Additional hearings convened on January 26 and 27, 2000. As of the date of this Interim Decision, a final determination on the requested certificate is pending.

In November 1999, NYS Governor Pataki signed legislation that amended PSL Article X and sections of ECL Article 17. These amendments, among other things, clarify the Department's authority to issue SPDES permits for new major electric generating facilities. The Staff from the NYS Department of Environmental Conservation (the "DEC Staff") reviewed Athens Generating's SPDES permit application, developed a draft SPDES permit, and prepared fact sheets. Consistent with applicable regulations, the Department also issued an Announcement of Public Comment Period, and Combined Notice of Complete Application, Public Hearing and Issues Conference (the "Announcement and Notice"), dated January 19, 2000. The Announcement and Notice stated that the evidentiary record from the related PSL Article X hearing concerning the proposed electric generating facility would be incorporated by reference into the record of the captioned proceeding (See, PSL §167(1)).

As provided for by the Announcement and Notice, legislative hearing sessions to receive comments from the public about the draft SPDES permit were held on February 28, 2000. On February 29, 2000, the ALJ convened an Issues Conference to consider proposed issues for adjudication and petitions for party status. In a joint petition dated February 24, 2000, Riverkeeper, Inc., Everett Nack, Robert H. Boyle, and a local community-based group called Stand Together Oppose Power Plants (STOPP) proposed issues for adjudication and requested full party status (collectively, "Riverkeeper"). In its petition dated February 25, 2000, Scenic Hudson proposed several issues for adjudication and requested full party status.

Several issues were proposed by Riverkeeper and Scenic Hudson. They include: (1) what is the best technology available ("BTA") for minimizing the potential adverse aquatic impacts associated with the cooling water intake structures, (2) the adequacy of proposed Gunderboom technology, (3) the Department's antidegradation policy and its applicability to the captioned matter, (4) the records of compliance for Athens Generating and its affiliates, and (5) the applicability of a cumulative impact analysis.

After the Issues Conference and the subsequent receipt of additional materials and arguments from the participants, the ALJ issued a Ruling on Proposed Issues for Adjudication and Petitions for Party Status dated April 26, 2000. The ALJ determined that the BTA issue was substantive and significant, and granted Riverkeeper and Scenic Hudson full party status. The ALJ concluded, however, that additional adjudicatory hearings were not necessary based on the information in the related PSL Article X hearing record, as well as the information presented at the Issues Conference. The ALJ denied all the other issues proposed by Riverkeeper and Scenic Hudson. DEC Staff, Riverkeeper, and Scenic Hudson filed timely appeals. Replies were timely received from Athens Generating, the DEC Staff, Riverkeeper and Scenic Hudson.

Standards for Adjudication

6 NYCRR §624.4(c) outlines the standards for determining an adjudicable issue. An issue is adjudicable if "it is raised by a potential party and is both substantive and significant." 6 NYCRR §624.4(c)(iii).

An issue is substantive if there is sufficient doubt about the Applicant's ability to meet the applicable statutory or regulatory criteria such that a reasonable person would inquire further. To determine whether an issue is substantive, the ALJ must consider the proposed issue in light of the application and related documents, the draft permit, the content of any petitions filed for full party status and amicus status, the record of the Issues Conference and any subsequent written arguments authorized by the ALJ. §624.4(c)(2); Matter of Adirondack Fish Culture Station, Interim Decision, August 19, 1999, affirmed in the Decision and Judgment In the Matter of Upper Saranac Lake Association, Inc., et al. v. John P. Cahill, Commissioner, et al., (Supreme Court, Albany Co., Index No. 6027-99), March 24, 2000.

To be substantive, the issue cannot be based merely on speculation but on facts that can be subjected to adjudication. Matter of Concerned Citizens Against Crossgates v. Flacke, 89 AD2d 759 (3rd Dep't., 1982), aff'd, 58 NY2d 919 (1983). In addition, a substantive issue can be demonstrated by identifying a substantive defect or omission in the application materials. Matter of Oneida County Energy Recovery Facility, Interim Decision, July 27, 1982; Matter of Halfmoon Water Improvement Area, Interim Decision, April 2, 1982; Matter of Broome County Department of Public Works, Commissioner's Decision, June 11, 1984.

An issue is significant if the adjudicated outcome can result in permit denial, a major modification to the proposed project, or the imposition of significant conditions in addition to those proposed in the draft permit. §624.4(c)(3); Matter of Jay Giardina, Interim Decision, September 21, 1990.

Where the DEC Staff and the applicant agree on the terms and conditions of the proposed permit, §624 expressly provides that the burden of persuasion to show an adjudicable issue shifts to the intervenor:

(4) In situations where the department staff has reviewed an application and finds that a component of the applicant's project, as proposed or as conditioned by the draft permit, conforms to all applicable requirements of statute and regulation, the urden of persuasion is on the potential party proposing the issue related to such component to demonstrate that the issue is both substantive and significant. 6 NYCRR §624.4(c)(4). (Emphasis added).

While an intervener's offer of proof at the issues conference need not necessarily be so convincing as to prevail on the merits, its offer must amount to more than mere assertions or conclusions. Matter of Adirondack Fish Culture Station, Interim Decision, August 19, 1999, citing Matter of AKZO Nobel Salt, Inc., Interim Decision, January 31, 1996. "The purpose of adjudication is not simply to develop or refine information concerning the project but rather to aid in decision making." In the Matter of Sithe/Independence Power Partners, Interim Decision, November 9, 1992. Moreover, when the DEC Staff and an applicant are not in disagreement over the terms and conditions of the proposed permit, the permit application and the draft permit prepared by the DEC Staff are prima facie evidence that a proposed project will meet all of the relevant statutory and regulatory criteria. See, In the Matter of Sithe/Independence Power Partners, L.P., Interim Decision, November 9, 1992; see also, ECL §70-0119(1) and 6 NYCRR §624.4(c)(4).

Discussion

  1. Appeals of ALJ's Ruling on Party Status

    An issue of first impression has arisen in the Athens matter. It concerns the party status of intervenors in a Department hearing where the adjudication would arguably consider the same material facts already presented in a related PSL Article X proceeding.

    In his April 26, 2000 ruling, the ALJ held that Scenic Hudson and Riverkeeper "...filed acceptable petitions for full party status...as required by 624.5(b)(1) and (2)." (Ruling at 3). The ALJ further ruled that no additional adjudicatory hearings are necessary involving the potential impacts associated with the location, design, and capacity of the proposed cooling water intake structures on fishery resources. (Ruling, p. 20). The ALJ found the related PSL Article X adjudicatory hearing record, which included, inter alia, over 6000 pages of hearing transcript, 18 days of hearing, 366 exhibits, and numerous briefs on the pertinent issues (See, Ruling at 1 and 21 n. 71), in addition to multiple public comment periods and public hearings, a Board remand seeking additional information on alternative cooling technology and air emissions, and several pre-hearing conferences, was adequate to render the findings required to be made by the Commissioner on the draft SPDES permit. (Ruling at 42).

    DEC Staff and Athens Generating appeal that portion of the ALJ's Ruling granting full party status to Scenic Hudson and Riverkeeper. (Staff Appeal at 2, May 3, 2000 and Athens Generating Reply at 1-3, May 9, 2000). Staff argues that a substantive and significant issue does not exist as a matter of law. Staff cites to the hearing regulations at 6 NYCRR § 624.4(c)(2) requiring a review of information, such as documents, the draft permit, petitions for party status and the issues conference record in considering whether an issue exists for adjudication. (Staff Appeal, supra, at 3). Under Staff's analysis, an adequate record already exists in the Article X proceeding and therefore no issue is raised and party status must be denied.

    Athens Generating states that 6 NYCRR § 624.4(b)(2)and(5) reference the criteria for raising a factual dispute, and that where there is no need for further factual inquiry, in light of the entire record, an issue cannot be determined substantive. If an issue is not substantive an issue is not raised and party status must be denied. (Athens Generating Reply, supra, at 3).

    Scenic Hudson explains that Staff's argument confuses the decision on the merits with the decision of whether or not a substantive and significant issue exists. (Scenic Hudson Reply, at 7, May 9, 2000). Scenic Hudson asserts that the fact that the Article X hearing involved the very same issues means that the issue was substantive and significant.

    Upon my review, I agree with the ALJ's ultimate conclusion that further inquiry is not required, but disagree with the ALJ's finding that a substantive and significant issue relating to BTA was raised. I will address the substantive points of his ruling and other matters below, centering on the related prior Article X record information.

    Typically, we join an adjudicable issue through a closely related two-step process. We first identify the issue through an offer of proof. We then evaluate the offer and the available filed information. The evaluation is in the context of whether sufficient doubt is raised about the applicant's ability to meet the regulatory criteria such that a reasonable person would inquire further.

    The ALJ first determined that there was an issue about potential impacts of the cooling water intake structure on fisheries. The ALJ's reasoning turns on his intimate knowledge of the existing Article X record, in which he was the associate examiner. That record contains prodigious quantities of evidence directly on point to the SPDES matters exclusively under Department, not PSL Article X, SPDES authority.

    The obvious desirability for a joint government hearing in future Article X's aside, the ALJ's granting of party status in the Department's hearing to those who participated in the Article X proceeding, fails to strictly follow the Department's pre-adjudicatory hearing rules. His ruling misapplies the Department's regulatory standard by assuming the related Article X facts carried into this SPDES proceeding would automatically confer party status.

    The bottom line, however, is if there are no issues raised in the Department's issues conference, as overall found by the ALJ, then party status must be denied. I am constrained to reverse the ALJs' holding that party status be granted based upon the mere existence of water quality information in the related Article X record and commonality of parties. The corollary would be the same where a prospective party sought party status in a Department matter because it had standing in another case having the same or similar issues. Under the Department's rules, without having an issue for adjudication in matters before the Department, party status would be denied. Accordingly, it is a separate test apart from that party's involvement in prior related proceedings. In the instant case where party status is denied, the draft SPDES permit, as developed by Staff and agreed to by the applicant, would be issued unless there was a dispute between these two statutory parties.

    There is, however, no preclusion in using an already developed factual record to make a SPDES determination here. Adoption and use of that information is consistent with Department practice to avail itself to existing information in making a decision. 6 NYCRR § 624.4(c)(2). It is additionally noted that the Article X record is expressly incorporated by reference into this proceeding, as stated in the Department's hearing notice, and thus the information is available here for SPDES decision making. Accordingly, party status is denied. I now turn to the other matters on appeal.

  2. Clean Water Act Section 316(b) - "Best Technology Available"

    33 U.S.C. §1326(b) of the Federal Clean Water Act ("CWA") establishes a mandatory technology requirement for cooling water intake structures:

    Any standard established pursuant to section 1311 [CWA §301] . . . or section 1316 [CWA §306] . . . and applicable to a point source shall require that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact. 33 U.S.C. §1326(b), CWA §316(b).

    6 NYCRR §704.5 implements §316(b) as a water quality standard:

    The location, design, construction and capacity of cooling water intake structures shall reflect the best technology available for minimizing adverse environmental impact.

    Accordingly, cooling water intake structures must meet "best technology available for minimizing adverse environmental impact" with respect to their location, design, construction, and capacity. The requirements under Section 316(b) are implemented as conditions to a NPDES or SPDES permit in order to ensure compliance. U.S. Steel Corp. v. Train, 556 F.2d 822, 850 (7th Cir. 1977).

    In 1976, the EPA promulgated regulations to further advise permitting authorities and permit applicants regarding "best technology available." See, 41 Fed. Reg. 17387-90 (April 26, 1976). These regulations, formerly 40 C.F.R. Sections 402.10 - 402.12, were challenged and remanded to the EPA due to procedural deficiencies in their promulgation. Appalachian Power Co. v. Train, 566 F.2d 451 (4th Cir. 1977). EPA has not re-promulgated these regulations and has not issued any other guidance for permitting authorities in determining "best technology available" ("BTA"). See, Cronin, 898 F.Supp 1052.

    1. BTA Determinations Are Site Specific

      Federal courts have established that application of Section 316(b) is site specific. See, Hudson Riverkeeper Fund, Inc., v. Orange and Rockland Utilities, Inc., 835 F. Supp. 160, 165-166 (S.D.N.Y. 1993). Determining BTA for an individual facility is an "issue of fact", which turns on a variety of factors including, inter alia, cost, age of the facility, the number of fish killed, the additional energy, if any, needed to support improved technology, or other relevant concepts. Id., p. 166. In the absence of regulations, agency permit writers have the discretion to impose conditions "on a case by case basis, consistent with the statute, and a view that best available doesn't mean perfect. [cites omitted]." Id., p. 165; see also, In re Brunswick Steam Electric Plant, Decision of the General Counsel No. 41, EPA (June 1, 1976) ("best technology available under §316(b) may be imposed in NPDES permits, on a case by case basis"); In re Public Service Company of New Hampshire, 10 ERC 1257, 1260, 1261 (1977)("Seabrook") petition for review dismissed, Seacoast Anti-Pollution League v. Costle, 597 F.2d 306 (1st Cir. 1979)("Seacoast"). Additionally, the court in Appalachian Power, although invalidating EPA's §316(b) regulations for procedural deficiencies, stated that "we do not fault EPA for its point source by point source application". Appalachian Power Co., 566 F.2d at 457.

      The importance of employing a "point source by point source" application in making BTA determinations is plainly evident. In the absence of federal guidance on this issue, the Department's adoption of an application by application approach with respect to SPDES permits for power plants is not only lawful but reasonable. Without a regulation imposing a uniform national standard, permit writers must use their best professional judgment in deciding which technology meets the mandate of the statute in each separate case on its own merits. In other words, what might meet the BTA mandate for a new power plant on a site in the mid-Hudson Valley may not be appropriate in an entirely different setting. In any event, it is incumbent on the permit writer to make that determination on a case by case basis.

    2. Applying BTA

      Pursuant to CWA §316(b), a four step analysis determines whether "best technology available" is being utilized by any particular facility: (1) whether the facility's cooling water intake structure may result in adverse environmental impact; (2) if so, whether the 'location, design, construction and capacity of the cooling water intake structure reflects best technology available for minimizing adverse environmental impact'; (3) whether practicable alternate technologies are available to minimize the adverse environmental effects; and (4) whether the costs of practicable technologies are wholly disproportionate to the environmental benefits conferred by such measures. In re Brunswick Steam Electric Plant, Region 4, EPA (Nov. 7, 1977).

      In the instant case, the ALJ applied this standard and concluded that the proposed hybrid cooling system with a Gunderboom, as proposed in the draft SPDES permit, meets the BTA requirements inherent in CWA §316(b) and Part 704.5. (Ruling at 28-42). The ALJ's discussion of BTA - the location, design, and capacity of the hybrid cooling water intake structures - as well as the costs between the different cooling system technologies, is thorough and replete with references to testimony, briefs and exhibits from the Article X record and the Article X remand, as well as documents submitted in relation to the SPDES permit proceeding and issues conference.

      In my view, no further inquiry on BTA is needed given this comprehensive administrative record. While parties may disagree with the ALJ's conclusions, there is no basis to suggest the BTA issue did not receive adequate consideration. Holding an adjudicatory hearing to foster academic debate or to simply refine or supplement an existing and sufficient base of information is not the intent of the Department's hearing process.

      The Gunderboom System

      In finding that the hybrid cooling system plus Gunderboom satisfies BTA requirements, the ALJ provided an account of the Gunderboom, an additional mitigative measure agreed to by Athens Generating. (Ruling at 32-38). The Gunderboom is essentially an elongated structure that fits over the cooling water intakes with side panels made of a filter fabric which reduces impingement and entrainment. The panels of the Gunderboom are to be cleaned by an air bubble system.

      The record indicates that a Gunderboom system, albeit after a tempestuous beginning, was successfully deployed in 1999 around unit 3 at the Lovett Generating Station located on the west shore of the Hudson River at Tompkins Cove, Rockland County, New York. Staff with direct experience with the Gunderboom testified that the Gunderboom technology is a proven technology. Merely because a technology like the Gunderboom is relatively new does not render it unacceptable; the Department has an obligation to pursue new technologies, and Staff testified to that effect in the Article X remand. (Tr. 6217, 6359-6360).

      Notwithstanding the mitigation potential of the Gunderboom and the optimism of Staff as to its deployment here, I find that based on the record before me, the application of Gunderboom technology at this site is a bit premature. The efficacy of the Gunderboom is supported by one successful deployment last year involving a different site and a different application, namely a retrofit to a 45 year old facility consisting of five fossil fuel fired steam turbine electric generating units. Moreover, an examination of the record and the draft SPDES permit indicates there is an abundance of information regarding deployment of the Gunderboom still needed from Athens Generating for consideration by the Department. Such information includes, inter alia, assorted drawings and schematics of the Gunderboom configuration and the facilities and structures to be installed as part of the Gunderboom system, descriptions of how deployment of the Gunderboom would take place, descriptions of the maintenance and support systems, a contingency plan in the event of failure and biological monitoring programs. (IC, Exhibit 2C at 9-12). The March 3, 2000 submission from Athens Generating contains only a "concept design for a Gunderboom installation" and two drawings of that concept design. Accordingly, I find there is insufficient evidence in this administrative record to conclude that the Gunderboom technology is suitable for this project at this location.

    3. Dry Cooling Technology

      The case by case treatment of BTA application and the comprehensiveness of this administrative record allows for consideration of cooling water intake technologies other than wet or hybrid cooling. On appeal, intervenors in the case at bar contend that dry cooling technology is the best technology available for cooling water intake structures and that the ALJ erred by holding that hybrid cooling with a Gunderboom meets BTA. (Scenic Hudson Appeal at 18-25; Riverkeeper Appeal at 4-11).

      Preliminarily, I find that the issue properly before me is much narrower than the intervenors assert. The issue as framed by the intervenors implies that should I find that dry cooling technology is BTA for cooling water intake structures, dry cooling is the only acceptable BTA for cooling water intake structures. This view is misguided. Given the site specific nature of BTA determinations, the veritable issue before me is whether the application of dry cooling technology for this project at the proposed location satisfies BTA.

      As a threshold matter, the Commissioner possesses the power to review and reject an ALJ's findings. The report of a hearing officer or an administrative law judge is a recommendation, and only a recommendation, to the head of the agency responsible for the final decision. Simpson v. Wolansky, 38 N.Y.2d 391, 394 (1975). A recommended decision is "merely advisory in nature" (Sil-Tone Collision, Inc., v. Foschio, 63 N.Y.2d 406, 411 [1984]), and "a preliminary step in the decision-making procedure." American Cyanimid Co. v. Public Serv. Commission, 88 A.D.2d 1063, 1064 (3d Dept 1982). An ALJ's findings are "always subject to de novo review by administrative appeal to the Commissioner." See Sil-tone, 63 N.Y.2d at 411; see also, 6 NYCRR §624.13.

      Upon a careful review of the administrative record, I find that the application of dry cooling technology for this project meets the standards articulated under CWA §316(b) and 6 NYCRR §704.5. Dry cooling is preferable here for reasons directly related to §316(b). I render this conclusion with the caveat that given the application-specific nature of a §316(b) determination, my finding should not be construed to mean that hybrid cooling with a Gunderboom could not constitute BTA elsewhere at another location with a different set of facts.

      1. Water Usage

        One of the principal components of a BTA analysis is whether the "capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact." CWA 316(b); 6 NYCRR §704.5. The term "capacity" as used in Section 316(b) means "the volume of water withdrawn through a cooling water intake structure." In re Brunswick Steam Electric Plant, Decision of the General Counsel No. 41, supra. The General Counsel concluded that "Congress sought to give EPA authority to regulate the volume of water withdrawn through cooling water intake structures, and that Congress was concerned that EPA should do so where necessary to protect aquatic communities." Id.

        In this proceeding, a variety of cooling technologies were proposed by the Applicant, considered by Staff, and commented on by the intervenors and the general public. The type of cooling water intake structure employed at a power plant has enormous environmental implications, particularly insofar as fish mortality is concerned. When water is withdrawn from the river, entrainment occurs as smaller organisms including larval fish and fish eggs are carried along with the intake water through the screens and into the cooling system where they are damaged or killed. Impingement occurs when larger organisms, like fish, are caught against the screens by the force of the intake water flows and may either suffocate or become injured.

        Once-through cooling, which withdraws 400 million gallons per day ("mgd"), with an average flow 277,778 gallons per minute ("gpm") was appropriately never considered viable in this application. Closed cycle cooling technologies, which use dramatically less water than once-through cooling were considered. Those technologies consisted of a wet evaporative cooling tower, hybrid cooling and dry cooling. At present, the draft SPDES permit limits water intake to an average of 4.2 mgd (2,917 gpm) and a maximum of 7.5 mgd (5,208 gpm). See, IC Exhibit 2C, p. 6. In comparison, a dry cooling system would withdraw only 0.18 mgd, significantly less water than a hybrid cooling system. See, PSL Article X Exh. 19 at 4-14; Exh. 274; Tr. 4711; In my view, while the hybrid cooling is a monumental improvement over once-through cooling with respect to water usage, I cannot discount the uncontroverted facts that application of dry cooling would use markedly less water and reduce the adverse effects of entrainment, thereby minimizing adverse environmental impacts to a greater degree than a hybrid cooling system.

      2. Costs

        An additional §316(b) factor persuading me that dry cooling technology is appropriate for this project relates to the cost differences between the hybrid plus Gunderboom system and a dry cooling system. Costs are an acceptable consideration in determining whether the intake design reflects the best technology available. Seacoast Anti-Pollution League, 597 F.2d at 311. In Seabrook, the decision underlying Seacoast, the EPA Administrator approved a cooling water intake structure for a nuclear power plant in Seabrook, New Hampshire. The Administrator determined that other locations for the intake structures might slightly reduce impacts on smelt and flounder, but that the cost of the different locations would be "wholly disproportionate to the environmental benefit to be gained." Seabrook, 10 ERC at 1261.

        Significantly, the "wholly disproportionate" standard is not a simple cost/benefit analysis.

        Section 316(b) provides flatly that cooling water intakes shall "reflect the best technology available for minimizing adverse environmental impact." Unlike Sections 301 and 304, Section 316(b) determines what the benefits are and directs the Agency to require use of "best technology available" to achieve them. There is nothing in Section 316(b) indicating that a cost benefit analysis should be done, whereas with regard to "best practicable control technology currently available" and "best available technology economically achievable" Congress added express qualifiers to the law indicating a requirement for cost/benefit analysis. Indeed, but for one bit of legislative history, there would be no indication that Congress intended costs to be considered under Section 316(b) at all. I find, therefore, that insofar as the RA's decision may have implied the requirement of a cost/benefit analysis under Section 316(b), it was incorrect.

        However, the RA may have meant only that some consideration ought to be given to costs in determining the degree of minimization to be required. I agree that this is so - otherwise the effect would be to require cooling towers at every plant that could afford to install them, regardless of whether or not any significant degree of entrainment or entrapment was anticipated. I do not believe that it is reasonable to interpret Section 316(b) as requiring use of technology whose cost is wholly disproportionate to the environmental benefit to be gained. Seabrook, 10 ERC at 1261.

        Thus, in determining BTA, a lone finding that the costs outweigh the environmental benefits to be gained is insufficient; instead, a finding must be made that the costs are "wholly disproportionate" to the environmental benefits to be gained. This more rigorous standard gives presumptive weight to the value of environmental benefits and places the burden on a permit applicant to demonstrate that the relative costs are unreasonable.

        Upon applying these principles here, I find that the costs of dry cooling in comparison to the costs of hybrid cooling are not wholly disproportionate to the environmental benefits to be gained. As the ALJ noted, the proper costs comparison is between dry cooling and hybrid cooling because these are the options under consideration. The total costs are the estimated cost over an assumed 20 year project life. The total costs for a dry cooling system exceed the costs for a wet system by a range of $55.5-$66.0 million. (Tr. 6170-6171; PSL Article X Exh. 360). The total costs for a hybrid cooling system exceed the costs of a wet system by $22 million. (PSL Article X Exh. 274 (Table 2)). Thus, dry cooling costs (without a Gunderboom) exceed the costs of hybrid cooling by approximately $38.75 million over 20 years, or $1.9 million per year for 20 years. In view of the minimized impact to aquatic organisms arising from application of dry cooling technology and the relatively insignificant increase in the total cost of the facility from application of dry cooling, I do not find the costs of dry cooling to be "wholly disproportionate" to the environmental benefits to be gained.

      3. Location, design and construction

        CWA §316(b) also provides that the "location, design [and] construction" of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.

        As for the "location" factor, the intervenors contend that the SPDES permit should be denied because the proposed cooling water intake structures and the outfall would be located "near" or in the "vicinity" of "significant habitat areas" designated by the New York State Department of State ("DOS"). I disagree and concur with the ALJ's findings. (Ruling at 30-31). Accepting intervenors' argument would render "significant habitat area" designations by DOS meaningless. In any event, because of the reduced water withdrawal associated with the application of dry cooling, there would be a minimal impact on nearby aquatic organisms.

        With respect to the BTA "design" requirement, that feature primarily concerns mitigation designs to reduce the fisheries impacts of the cooling water intake structure, particularly the fish losses due to both entrainment and impingement. In this proceeding, as the ALJ noted, the Gunderboom is the mitigation design that received the most attention. However, since the Gunderboom was presented for use in conjunction with hybrid cooling and is not contemplated for use with dry cooling, there is no "design" issue here. Moreover, no party raised a design issue regarding dry cooling.

        As for the "construction" of the proposed cooling water intake structures, I concur with the ALJ. (Ruling at 26 and 42). No issue has been proffered with respect to the subject SPDES application that is related to the construction of the pumphouse, the cooling water intake structures and the outfall.

        For the foregoing reasons, I conclude that the capacity of the cooling water intake structures at the proposed facility should be reduced to minimize environmental impacts further. Accordingly, the conditions of the draft SPDES permit shall be revised to limit the capacity to 0.18 mgd. (IC Exhibit 2C, Additional Requirements 1(1)(d), page 6 of 19). In addition, those conditions in the draft SPDES permit related to the development, installation and operation of the Gunderboom are no longer necessary and should be eliminated.

  3. Antidegradation

    Intervenors have also raised the issue of whether the State's federally approved water quality antidegradation policy, which is set forth in NYS DEC Organization and Delegation Memorandum No. 85-40 ("O&D Memo"), dated September 9, 1985, may be appropriately applied to PSL Article X applications. (Riverkeeper Appeal at 12-16, May 3, 2000; Scenic Hudson Appeal at 25-28, May 3, 2000). This issue was discussed at considerable length in the ALJ's Issues Ruling. (Ruling at 42-49).

    New York's antidegradation policy relies generally upon the SPDES permitting process and stream classification system for its implementation. Riverkeeper argues that since state law prohibits the application of the SEQRA to the review of major electric generating facilities subject to the certification process, that the non-application of SEQRA is inconsistent with the state's antidegradation policy. (Ruling at 43). This argument is without merit.

    The State's longstanding policy, as approved by EPA, has been that "[t]he antidegradation policy is implemented through a series of general and special laws such as Article XIV of the State Constitution . . . Article 17 of the Environmental Conservation Law . . . [and] Agriculture and Markets Law, Article 25-AA" etc. (See, O&D Memo, p. 2). (Emphasis added). Clearly, the express statutory references in the O&D Memo are illustrative and not intended to be exhaustive. The SEQRA exemption cited by Riverkeeper is simply intended to eliminate duplicate environmental reviews. See, 6 NYCRR §617.5(c)(35). Indeed, a careful review of Article X indicates that the environmental review provided for under Article X is as rigorous and thorough, and even more stringent in certain aspects, than a SEQRA review. For example, under Article X, the functional equivalent of an environmental impact statement (EIS) is mandated in every case, whereas under SEQRA, an EIS would only be required in cases where a "positive declaration" or "determination of environmental significance" has been made.

    Additionally, under SEQRA, DEC as lead agency must determine whether any proposed action will have a "significant" adverse impact on the environment. If an action is considered to be significant, an EIS must be prepared and accepted by DEC. Based upon a review of the information in the application, the EIS, the public comments, as well as the ALJ's report (if a hearing is warranted), DEC determines whether a lowering of water quality would occur and would be allowable. By way of comparison, under the Article X process, the project significance is presumed by statute and, as noted above, an equivalent to the EIS is mandated in all cases. Furthermore, as with the SEQRA process, based upon information contained in the Article X application, the public response, and the associate hearing examiner's report, DEC determines whether a proposed lowering of water quality would occur and would be allowable. In either case, the state's antidegradation policy is implemented through the permitting process, the environmental impact analysis, and the entire environmental record. If the existing quality of the water exceeds levels necessary to support recreation and propagation of fish, shellfish and wildlife, and the record demonstrates that there will be a lowering of water quality, then the DEC must find that such lowering is necessary to accommodate important social and economic development in the area where the waters are located.

    It is well recognized that the water quality of the Hudson River is at a high enough level to support propagation of fish, shellfish, and wildlife and recreation. As discussed in my determination concerning "best technology available," the selection of dry cooling technology for this facility will minimize potential adverse environmental impacts. Furthermore, the administrative record in this case demonstrates that there will be no degradation to the Hudson River with respect to either water quality or water quantity. The extremely small amount of water required to operate this facility is environmentally insignificant and wholly de minimis. Therefore, I concur with the ALJ's conclusions that the proceedings relative to this project demonstrate that the proposed facility would not degrade the water quality of the Hudson River, and that it will not cause or contribute to a violation of a water quality standard.

    Pursuant to the State's antidegradation policy, a determination that a lowering of water quality will occur is a prerequisite to any further application of such policy. Accordingly, I also find that because no lowering of water quality will occur, for purposes of this analysis, it is not necessary to balance the potential adverse environmental impacts of the proposed facility against its social and economic benefits. Based upon the foregoing analysis, I conclude that the proposed project complies with the State's federally approved antidegradation policy.

  4. SEQRA

    Staff and Scenic Hudson also raise arguments related to the ALJ's ruling (Ruling at 49-52) concerning SEQRA and "cumulative impacts" matters. (Staff Appeal at 8-10; Scenic Hudson Appeal at 28-31, and Reply at 17-22, May 9, 2000). Pursuant to PSL §172(1), the Department is required to "follow procedures established in [Article X, as amended] to the extent that they are consistent with federally delegated or approved environmental permitting authority." Pursuant to PSL §168(2)(b), the environmental review must consider "the nature of the probable environmental impacts, including an evaluation of the predictable adverse and beneficial impacts on the environment and ecology, public health and safety, aesthetics, scenic, historic and recreational value, forest and parks, air and water quality." Pursuant to PSL §168(c) there must be a finding that the facility:

    (i) minimizes adverse environmental impacts, considering the state of available technology, the nature and economics of such reasonable alternative as are required to be examined pursuant to [PSL §164(1)(b)], the interest of the state with respect to aesthetics, preservation of historic sites, forest and parks, fish and wildlife, viable agricultural lands, and other pertinent considerations, (ii) is compatible with public health and safety, (iii) will not be in contravention of water quality standards or be inconsistent with applicable regulations of the department of environmental conservation, or in case no classification has been made of the receiving waters associated with the facility, will not discharge any effluent that will be unduly injurious to the propagation and protection of fish and wildlife, the industrial development of the state, and public health and public enjoyment of the receiving waters, (iv) will not emit any pollutants to the air that will be in contravention of applicable air emission control requirements or air quality standards, (v) will control the runoff and leachate from any solid waste disposal facility, and (vi) will control the disposal of any hazardous waste.

    Furthermore, pursuant to PSL §168(d), the facility must be "designed to operate in compliance with applicable state and local laws and regulations issued thereunder concerning, among other matters, the environment, public health and safety . . ."

    The environmental review standard articulated by PSL §168 is broad and as comprehensive as a SEQRA review. I find the Article X environmental review process to be fully consistent with the State's federally approved SPDES program, and as such, the Department is directed by PSL §172(1) to follow the Article X procedures for environmental review.

    I disagree with the ALJ's conclusion that the exemption of PSL Article X actions from SEQRA (as being "type II" actions under 6 NYCRR §617.5(c)(35)) exceeds the scope of the statute. ECL §8-0111(5) expressly excludes Article X actions from the requirement to prepare environmental impact statements (EIS). It is clear that the purpose of this exclusion is to prevent Article X projects from being subjected to redundant environmental review. By exempting Article X actions from the EIS requirement, ECL §8-0111(5) effectively exempts such actions from all the steps precedent to the preparation of an EIS including scoping, the determination of lead agency, the determination of project significance, findings statement, etc. Since the EIS is the heart of SEQRA, to attempt to limit the SEQRA exemption as being applicable only to the EIS requirement serves no legitimate purpose. Once the EIS requirement is removed from the SEQRA process, there is little to be gained from attempting to salvage miscellaneous components of the SEQRA process. This is especially so where the Legislature has provided for an extensive environmental review process under Article X. Therefore, pursuant to ECL §8-0111(5), the Part 617 regulations properly define Article X projects as "type II" actions which are wholly exempt from SEQRA review.

    Pursuant to 6 NYCRR §617.(5)(a), "[a]ctions or classes of actions identified [as type II] are not subject to review under [Part 617]." Likewise, 6 NYCRR §617.3(f) provides that "[n]o SEQR determination of significance, EIS or findings statement is required for actions which are type II." In light of such plain language, it is inappropriate to narrowly interpret the Part 617 exclusion of Article X facilities from the requirements of SEQRA as being limited to the requirement to prepare an EIS. See generally, In the Matter of Hazan v. Howe, 214 A.D.2d 797 (3rd Dept. 1995)(holding that type II actions are exempt from all SEQRA determinations and process); see also, Citizens for Energy v. Cuomo, 159 A.D.2d 141 (3rd Dept. 1990)(holding that SEQRA review is not required for type II action) affirmed 78 N.Y.2d 398 (1991), rearg. den. 79 N.Y.2d 851 (1992). Accordingly, I find that the type II exemption for Article X projects is reasonably construed to completely exclude such projects from review under Part 617.

    The case law cited by Scenic Hudson does not contradict the conclusions reached herein. In Friedman v. Adirondack Park Agency ("APA"), 165 A.D.2d 33, 36 (3rd Dept. 1991), app. den., 78 N.Y.2d 853 (1991), the court held that "[n]otwithstanding the fact that there was no requirement for an EIS for the instant application, [the APA] was correct in examining all factors of this project as well as others proximately located to evaluate the cumulative impacts." The court then cited Executive Law §805(4)(a), which lists a broad range of factors for the APA to consider in determining whether there exists a potential adverse impact. Thus, the court held that Executive Law §805(4)(a) must be read harmoniously with the "policies" underlying SEQRA and that the APA had independent authority under the Executive Law to consider issues such as cumulative impacts. Id.; see also, Matter of Essex County, Interim Decision of the Commissioner, March 20, 1996 ("[t]he APA's review is the functional equivalent of a SEQRA review").

    Contrary to Scenic Hudson's argument, Friedman does not stand for the proposition that SEQRA procedures must be mechanically applied even where an alternate environmental review procedure has been provided for by the legislature. Friedman provides that where the legislature provides for an environmental review process other than SEQRA (i.e. Article 27 of the Executive Law, or Article X of the Public Service Law), such other process must be construed to be at least as rigorous as SEQRA and such other process shall be applied in lieu of SEQRA. As stated above, Article X provides for an environmental review process as stringent and thorough as the SEQRA process.

    However, I concur with the ALJ's conclusion that the potential cumulative impacts that the proposed facility may contribute to have been fully considered. (Ruling at 52). The requirement to consider "the nature of the probable environmental impacts" contemplates an evaluation of all significant impacts, including cumulative impacts. Therefore, because Article X provides for an environmental review standard that is consistent with the State's federally approved SPDES program, PSL §172(1) requires that the Department employ the review process provided for in Article X. In this case, the Article X record contains sufficient analyses "with respect to water quality and potential impacts on fisheries resources that take into account the effects of existing cooling water intake structures, and discharges to the Hudson River." Id. As stated by the ALJ, the "water quality analyses . . . show that thermal and chemical discharges from the proposed facility would comply with established effluent limitations and would not contravene current water quality standards, thereby preserving existing uses of this portion of the Hudson River."

    I also agree with the ALJ's determination that additional studies about the potential impacts that the Athens facility may have in combination with future proposed projects are not necessary. I find no basis in the record for requiring further cumulative impact analyses of power plants that do not yet exist, and, in fact, may never exist.

  5. Record of Compliance

    Increasingly, record of compliance concerns are the focus of intervening groups seeking to adjudicate an applicant's or affiliate's compliance history in the Department's hearing process. As discussed previously, prior Department decisions and its regulatory scheme articulate the standards to join an issue for adjudication. Without exception, all proffers of proof as to the adjudicability of a proposed issue are evaluated to decide whether further inquiry is required. Record of compliance matters must be treated in the same manner as any other complex technical or scientific issue proposed for adjudication. Previous administrative decisions consistently provide that in instances where the Department Staff and the applicant agree on the terms and conditions of the permit, the burden of persuasion shifts to the intervenor to raise an adjudicable issue. See, 6 NYCRR § 624.4(c)(4).

    In the ALJ's Ruling on record of compliance ("ROC") issues (Ruling at 52-67), the ALJ relied upon the guidance provided in the ROC Enforcement Guidance Memorandum (EGM) issued August 8, 1991, and revised February 1993, to evaluate the information proffered. The ROC EGM advises that the suitability of an applicant to receive a Department permit must be considered. The focus of the review is to assure that the Department can rely upon the applicant to comply with the terms and conditions of the permit. Matter of American Transfer Co., Interim Decision of the Commissioner, February 4, 1991.

    The ALJ properly noted that the ROC EGM must be applied on a case by case basis. (Ruling at 64; ROC EGM at 1). He considered the applicant's compliance history and also applied the ROC EGM tests of "substantial interest" or "high managerial relationship" to determine whether other entities in which the applicant holds an interest would disqualify Athens Generating from receiving a Department SPDES permit. The ALJ reviewed Athens Generating's relationship with its parent, its parent's subsidiaries, and affiliates. (Ruling at 52-62). He also evaluated the tendered offers of proof. (Ruling at 62-67).

    The ALJ concluded there was a substantial interest in and a high managerial connection between the California utility Pacific Gas and Electric Company and the US Generating Company (now the PG&E Generating Company) from the late 1980's until January 1997. (Ruling at 65). Before 1997, the US Generating Company was a directly owned subsidy of the parent California utility Pacific Gas and Electric Company. Given the disconnect between these two companies after 1997 due to the Affiliate Rules of the California Public Utilities Commission, the ALJ focused on the preceding late 1980's to early 1997 period to evaluate offers of proof on fitness. The ALJ determined that the record of compliance 'substantial interest' and 'high managerial connection' would not lead to either permit denial or modification of the draft SPDES permit.

    The ALJ found that the only affiliate with serious compliance problems was the regulated California utility Pacific Gas & Electric Company and he recounted those in his ruling. Thereafter, the ALJ looked at New York affiliates in Syracuse and Selkirk and in New Jersey, and found they did not have regulatory compliance problems. Accordingly, the ALJ balanced the track record of those companies compared to the regulated California utility and found, on balance, the favorable local compliance history outweighed the alleged behavior of the California utility Pacific Gas and Electric Company.

    Scenic Hudson asserts that the corporate layers insulating the applicant from PG&E Corporation and PG&E Generating Company are mere shells that overlap in ownership and management, making it apparent that individuals who directly manage the PG&E Company sit in a position to control the Applicant directly. (Scenic Hudson Appeal, supra, at 37). Scenic Hudson states the entities are all united in ownership and operation, and the actions of one may be considered when evaluating the fitness of another. (Scenic Hudson Appeal, supra, at 39).

    Staff asserts that an actual connection in managerial control between the affiliates upon which a substantial interest or common high managerial relationship can be based was not shown. Moreover, in Staff's view, no additional measures need to be incorporated in Athens Generating's draft SPDES permit based on any record of compliance concern. (Staff Response at 22, May 10, 2000).

    Athens Generating argues that the California Public Utility Commission rules prevent Pacific Gas and Electric Company and its officers and directors from having any role in the management of PG&E Generating Company or Athens Generating, and vice versa. (Applicant's Response at 29, May 9, 2000). Athens Generating also asserts, arguendo, Scenic Hudson and Riverkeeper did not tender an offer of proof that would meet the § 624.5(b)(2) regulatory standard and, therefore, their submission to raise a record of compliance issue is insufficient as a matter of law.

    A recent decision validates the methodology applied by the ALJ here. See, Matter of Waste Management of New York, LLC., Interim Decision of the Commissioner, May 15, 2000 (hereinafter "WMNY"). WMNY established the analytical procedure and framework in which to apply ROC issues in Departmental proceedings. WMNY placed the initial emphasis on the permit applicant's regulatory compliance in New York as a starting point for the analysis of ROC issues. In the event the intervenor's objections concern out-of-state affiliates, the ROC focus then shifts to whether the affiliate substantially controls or is responsible for the local company's day-to-day operations. See, WMNY, supra, at 8.

    In the instant case, the ALJ evaluated the records of compliance history for two New York affiliates related to the applicant and two affiliates in New Jersey, and compared them with the California-regulated utility Pacific Gas and Electric Company. He found the records of compliance for the New York and New Jersey affiliates to be unremarkable, as did Staff. The seemingly most serious transgressions rest with the California-regulated utility Pacific Gas and Electric Company. The compliance information submitted by Scenic Hudson and Riverkeeper regarding that California utility's compliance at its Diablo Canyon facility was evaluated by the ALJ but was found to be unpersuasive. The offer of proof submitted on this California utility consisted of newspaper accounts and two consent orders under which no adjudication of wrongdoing occurred, and which included a non-admission clause as well as other anecdotal information that is not sufficiently reliable. The sum of this information is inadequate to raise an issue for adjudication. 6 NYCRR § 624.5(b)(2).

    In affirming the ALJ's ruling on compliance history, I conclude there is insufficient doubt about Athens Generating's ability to meet the pertinent statutory or regulatory criteria. The offers of proof presented by Scenic Hudson and Riverkeeper fail to persuade me that Athens Generating's compliance decisions or day-to-day operations would be influenced by the parent or any affiliate leading to non-compliance in New York. I find the remaining ancillary comments in the appeals on this topic to be without merit.

  6. Miscellaneous

    Finally, I note in passing an additional benefit of application of dry cooling technology at this location, namely the absence of any visible plumes. Although the record indicates that proposed hybrid cooling system is wider and 18' taller, there would be approximately 104 daylight hours of plumes that could not be abated by the dry sections (where the temperature is less than 20 F and the relative humidity is greater than 85%). Conversely, with a dry cooling system, where steam from the generating units is piped directly to an air-cooled condenser with fans that blow air continuously across the condenser coils, no thermal plumes or steam cloud are emitted.

    Another ancillary benefit of a dry cooling system for this project is the reduced dependency on water from the Hudson River. The environmental, economical, historical and cultural significance of this remarkable body of water is well documented, and most recently evidenced by the selection of the Hudson River as one of the first 10 rivers designated by the President as an American Heritage River.

  7. Conclusion

    I have reviewed the remaining appeals to the ALJ's Rulings and find no reason to overturn the ALJ's findings on these other matters.

    It is clear from the conclusions reached on each of the substantive topics addressed above that no further Departmental review is required to render a decision pursuant to the ECL and the applicable regulations. As the foregoing analyses makes clear, the extensive Article X record, incorporated by reference into this proceeding, and all record information obtained and reviewed pertaining to the instant SPDES matter, sufficiently meets the applicable statutory requirements for final decision making. I find the SPDES permit can be issued, subject to the comments made in this Interim Decision.

    Accordingly, I direct Staff to issue the SPDES permit as modified above, ten days hence from the date of this Interim Decision.

For the New York State Department
of Environmental Conservation

/s/
By: John P. Cahill, Commissioner

Dated: Albany, New York June 2, 2000

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