Bath Petroleum Storage, Inc. and EIL Petroleum, Inc. - Interim Decision, March 26, 1997
Interim Decision, March 26, 1997
STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1010
In the Matter
- of the -
Proposed permit modification of the State Pollutant Discharge Elimination System ("SPDES")
issued to BATH PETROLEUM STORAGE, INC., a subsidiary of EIL PETROLEUM, INC.
DEC Project No. 8-4624-00008/00001
March 26, 1997
INTERIM DECISION OF THE DEPUTY COMMISSIONER
Department Staff ("Staff") appeals to the Commissioner pursuant to 6 NYCRR 624.8 from the February 25, 1997 Rulings of ALJ Goldberger. Staff's appeal is supported by intervenor Coalition for Resources and Environment of the Southern Tier, Inc. ("CREST"). The Rulings found two issues for adjudication: (1) the change in industrial discharge classification; and (2) the requirement that respondent Bath Petroleum Storage, Inc. ("BPSI") submit information derived from a mass balance analysis. For the reasons given below, the appeals are dismissed and the case is remanded to the ALJ for further proceedings consistent with this Interim Decision.
Because Acting Commissioner Cahill served as the Department's General Counsel during the period in which this matter arose, the authority to decide this appeal has been delegated to Deputy Commissioner Gavin Donohue.
This is a Staff-initiated permit modification proceeding. Staff seeks to modify BPSI's SPDES permit relating to the discharge of brine from a liquified petroleum gas ("LPG") underground storage facility in Bath, Steuben County, New York. The permit authorizes a discharge to the Cohocton River. The permit limits the discharge to not more than 440,000 gallons per day ("gpd") and incorporates effluent limitations on total dissolved solids ("TDS"), total suspended solids ("TSS"), chlorides and pH. Staff maintains that BPSI's permit application represented that the discharge would be intermittent and would consist of brine resulting from "product displacement and cavern development control only." However, the ALJ's report indicates that in 1992, BPSI altered its operations to include solutioning of caverns to provide additional LPG storage capacity. BPSI does not deny this to be the case, and claims that the Department's Division of Water had been put on notice and did not object. Thereafter in 1996, Department Staff became concerned and concluded that BPSI should submit additional information with respect to its brine discharge, and met with BPSI to discuss its concerns. On November 5, 1996, Staff advised BPSI by letter that review of available and provided data indicates that both the discharge volume and frequency have significantly increased. Staff asserted that BPSI has exceeded the scope of the project as described in the SPDES permit application for the discharge. Accordingly, Staff initiated a permit modification pursuant to 6 NYCRR 621.14. By this modification, Staff upgraded its administrative classification of BPSI's permit from a Class 04 (non-significant) discharge to a Class 01 (significant minor) industrial discharger. According to Staff's November 5 letter, this change in the permit means that BPSI will be required to submit monthly discharge reports (DMRs), and to submit monthly reports which detail daily operating results. Staff supplied BPSI with a sample operating report that includes calculated downstream chloride and TDS concentrations in the receiving stream based on upstream and downstream discharge concentrations, in addition to daily monitoring data. This calculation is intended to aid in determining the volume of brine that may be discharged while maintaining instream concentrations in the receiving stream at or below applicable water quality standards after allowing an opportunity for mixing. Staff also provided BPSI with an electronic spreadsheet program to assist in calculating the allowable discharge. These requirements were imposed by the terms of Staff's permit modification to BPSI's current SPDES permit.
Staff's permit modifications also included a condition specifying that sample analyses must be conducted by a certified laboratory. BPSI does not contest this change to its permit.
Also, Staff's November 5, 1996 letter also requested BPSI to provide information to facilitate the Department's evaluation of the sufficiency of the permit. Staff stated that its authority to request such information is contained in conditions of the current permit. Staff's November 5 letter enclosed a Form 2(C) application package and stated that these forms "must be completed for the current discharge status." This package includes an instruction to conduct a mass balance analysis which is to show withdrawal, consumption, and disposal of all water in connection with BPSI's facility. Staff's letter went on to say that BPSI's Form 2(C) submittal was to be made for information purposes only, and was not meant to be submitted as an application for permit modification. Staff added that the "discharge of cavern development brine is not authorized until either: (1) Staff's evaluation is completed and [Staff] has determined that [no permit modification is] necessary, or (2) after a permit modification for the discharge of cavern development and control water becomes effective, if it is determined that a permit modification is necessary." The terms "cavern development" and "control", used in the last sentence of Staff's November 5, 1996 letter, and the phrase "product displacement and cavern development control", used in the 1984 permit application and on P. 1 of Staff's November 5, 1996 letter, need to be precisely defined and used. For purposes of this decision, the term "product displacement and cavern development control" is presumed to refer to water from ground water infiltration into storage caverns. The term "cavern development" water is understood to refer to water deliberately injected into the cavern in order to put salt into solution and enlarge the cavern for the purpose of increasing LPG storage capacity. In the event these terms are misinterpreted above, the parties should clarify them at the hearing.
BPSI, pursuant to 621.14(d) of 6 NYCRR, submitted a request for a hearing with respect to Staff's notice of intent to modify the permit. This was done by letter dated November 27, 1996, which included a statement of BPSI's reasons why the permit should not be modified. BPSI contended that no modifications should be made because: (1) the permittee has not violated the permit; (2) the modifications would decrease the permitted discharge and damage its business; (3) BPSI has not exceeded the scope of the project; and (4) the modification is intrusive, unnecessary, burdensome and arbitrary and capricious.
As a result, this hearing was initiated. As ALJ Goldberger's Report states, a legislative hearing was held on February 13, 1997, followed by an issues conference. In addition to BPSI and Staff, party status was granted to Intervenor CREST. As above noted, the ALJ found two issues for adjudication. Staff and CREST appeal her Rulings, contending that neither issue relates to a "substantial term or condition" of the permit and that adjudication is not warranted (See 6 NYCRR 624.4(c)(1)(i)). They argue that the Commissioner should dispense with the hearing and direct BPSI to comply with the terms of the Staff-initiated permit modification of November 5, 1996. BPSI filed a letter brief opposing the appeal and supporting the ALJ's Rulings.
I will not disturb the ALJ's Rulings. While Staff may now argue that the contested permit terms are not "substantial" within the meaning of 6 NYCRR 624.4(c)(1)(i), they were apparently of sufficient substance to warrant Staff's initiation of this proceeding. The permittee believes they are "substantial."
With respect to the first issue, reclassification, ALJ Goldberger required the parties to submit briefs on the legal issue whether, under the Division of Water Technical and Operational Guidance Series (1.2.2), a discharge must contain priority pollutants prior to a reclassification to  significant minor industrial discharger. Those briefs have been received. Upon review of them and the TOGS guidance, I agree with Staff and CREST that a reclassification to significant minor is not precluded by an absence of priority pollutants. The TOGS provide in Part II that non-significant permits are those determined by the Regional Water Engineer to pose a minimal water quality risk and not containing limitations for priority pollutants. While the Staff does not argue whether or not BPSI's discharge contains priority pollutants, the Staff does maintain that the facility's current processes may pose more than a minimal water quality risk. Significant minor permits are permits other than those identified as "major" or as "non-significant" by the Regional Water Engineer.
The ALJ also found that there should be a fact-finding hearing on whether the facility had altered its processes to such a degree that the discharge's risk to water quality is no longer minimal. I see no reason to upset the ALJ's judgment on this point. The record would be benefitted by development of facts as to the water quality impacts of BPSI's discharge and whether BPSI has altered its processes so as to increase those impacts.
The second issue, relating to the reasonableness of applying the mass balance formula to BPSI, should be determined on the basis of the record after BPSI has had an opportunity to be heard.
Each of these issues is discussed further below.
Change from Non-Significant to Significant Discharger
Staff states that the change in the BPSI permit classification from non-significant to significant is an internal administrative matter, entirely within Staff's discretion. Therefore, Staff argues that this change is not worthy of adjudication. But the ALJ concluded differently. I see no reason to alter her conclusion (See 6 NYCRR 624.8(b)). In essence, the question is whether Staff acted reasonably when it reclassified BPSI's permit. On the face of it, Staff appears to have a rational basis for the change in classification. Staff appears to have evidence giving rise to a concern that BPSI is discharging brine derived from expansion of caverns, in addition to water derived from routine ground water infiltration, thereby apparently exceeding the scope of the project as described in the application. This would appear to justify Staff's determination to change its administrative classification and to obtain information about the discharge's impact on the receiving stream.
On the other hand, the permittee asserts that the Staff-initiated change has untoward consequences. BPSI's argument that there is no change in risk to water quality can be developed on the record. The ALJ will consider BPSI's presentation on this question, as well as Staff's response, prior to making a recommendation to the Commissioner.
The purpose of requesting BPSI to do a mass balance is to provide Staff with information as to whether BPSI's discharge is causing or contributing to water quality standards exceedences in the Cohocton River. Staff maintains that it has authority to obtain this information by reason of the General Conditions in BPSI's unmodified permit. BPSI disputes that the mass balance is the appropriate vehicle to provide Staff with information necessary to evaluate the discharge. BPSI's brief on this appeal states that there are better ways to evaluate the question whether the permit limitations are being met and that water quality standards are being maintained. While BPSI does not describe what the better methods are in its papers thus far, it proposes to submit proof in support of its contention. It shall have its opportunity to do so at the hearing.
It should be noted, however, that a mass balance analysis is hardly a "theoretical" or "unsubstantiated technique," as BPSI argues. It is a standard approach. Accurately done, it should help to provide a snapshot of the receiving water quality impacts within the time frame of the analysis.
While I will allow the hearing to proceed on the issues identified by the ALJ, and deny the appeals, I do so because this is a Staff-initiated permit modification case to which the permittee takes exception. In an initial licensing in which Staff and an applicant agreed on the terms of a draft permit, the issues raised in this case would not appear to be substantive or significant. In a contested permit modification setting, however, the substantive and significant test is inapplicable (See 6 NYCRR 624.4(c)(1)(i)). The permittee in this case asserts that its operations will be adversely impacted. It maintains that it is in compliance, and that no purpose is served by the modifications at issue. It is appropriate therefore for the permittee to be allowed to make its case.
On the other hand, I should add that the record thus far appears to support the Staff's position on both issues identified by the ALJ. While Staff continues to have the burden of proof and of going forward in support of its position on the record at hearing, the permittee should be advised that Staff appears to be capable of presenting a prima facie case for the granting of the relief sought. While it would be inappropriate for such relief to be granted at this preliminary stage of the proceeding, contrary to Staff's and Intervenor's contention, BPSI will need to overcome Staff's anticipated case with meaningful, relevant evidence and legal argument in order to prevail.
Therefore, I direct that this matter be remanded to ALJ Goldberger for further proceedings consistent with this Interim Decision.
For the New York State Department
of Environmental Conservation
By: Gavin J. Donohue
Dated: Albany, New York
March 26, 1997