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Consolidated Edison Company of New York, Inc. (East River) - Interim Decision, June 4, 2001

Interim Decision, June 4, 2001

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1010

In the Matter

- of -

Applications for: (1) 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 (6 NYCRR)
Parts 750 et seq., (2) a pre-construction Air State Facility permit
pursuant to ECL Article 19, and 6 NYCRR Part 201 and Subpart 231-2, and
(3) a Prevention of Significant Deterioration (PSD) permit pursuant to
Title 40 of the US Code of Federal Regulations (40 CFR) 52.21

- by -

Consolidated Edison Company of New York, Inc.

Case No. 2-6206-00012/000021

SPDES No.: NY-0005126

INTERIM DECISION

June 4, 2001

Interim Decision

Introduction and Background

This interim decision relates to appeals from the issues ruling of Administrative Law Judge (ALJ) Daniel P. O'Connell rendered on March 15, 2001. The ALJ's issues ruling arises from an application before the New York State of Environmental Conservation ("Department" or "DEC") for certain environmental permits sought by Consolidated Edisons ("Con Edison" or "Applicant") as part of its application for a certificate of environmental compatibility and public need pursuant to Article X of the Public Service Law ("PSL"). ALJ O'Connell's ruling was part of a joint ruling on issues prepared by ALJ O'Connell as the Associate Examiner and Presiding Examiners Rafael Epstein and Walter Moynihan.(1) Con Edison, the Manhattan Community Board No.3 and the East River Environmental Coalition ("CB3/EREC" or "Petitioners") filed their appeals of the ALJ's ruling on March 28, 2001.(2) Replies to the appeals were filed by Con Edison, the Petitioners and NYSDEC Staff on April 4, 2001.

Con Edison proposes a repowering project at its East River Generating Station located in Manhattan between East 13th Street and East 15th Street from the FDR Drive to Avenue C. The purpose of the repowering project is to decommission and remediate the Waterside Generating Station located at 700 First Avenue and East 38th Street. The Applicant seeks to construct and operate two General Electric dual fuel combustion 180 megawatt (MW) turbine generators (CTGs) and two heat recovery steam generators (HRSGs) that would produce a nominal electric generation capacity of 360 MW, and an estimated 3,000,000 pounds per hour of steam; the steam generated would replace the steam produced by the Waterside facility. The two proposed units will use non-interruptible natural gas, and in emergency situations, distillate oil. Water for steam production and other uses will be supplied by the New York City Department of Environmental Protection, Bureau of Water and Sewer Operations.

At present, the East River complex includes the East River Generating Station where the two proposed CTG/HRSG units would be located, and the South Steam Station, which consists of a series of boilers that produce steam for the Applicant's steam distribution system. In addition, the complex includes electric switchyards and a fuel oil storage facility.

This interim decision will address the appeals involving issues which arise within the context of federally delegated or approved environmental permitting authority to the Department as addressed by ALJ O'Connell in his ruling. All other matters raised in the appeals are before the New York State Board on Electric Generation Siting and the Environment (the "Siting Board" or "Board") concerning the PSL Article X application, PSC Case No. 99-F-1314.

Standards for Adjudication

The Department's standards for deciding what issues should be joined for adjudication are well settled. Clarification of those standards by the Commissioner has occurred over time to help guide the parties and the amended Department hearing rules promulgated effective 1994 provide additional guidance.(3) Nonetheless, given the advent of PSL Article X cases and related Department environmental permit hearings (see e.g. Matter of Ramapo Energy Limited Partnership, Commissioner Ruling, April 4, 2001), it is beneficial to restate the principles underlying the application of the Department's adjudicable issue standards.

Under the Department's permit hearing procedures, an issue is adjudicable if "it is raised by a potential party and is both substantive and significant." 6 NYCRR 624.4(c)(1)(iii). An issue is "substantive" if there is sufficient doubt about the applicant's ability to meet statutory or regulatory criteria applicable to the project, such that a reasonable person would require further inquiry. In determining whether such a demonstration is raised 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 party status, the record of the issues conference and any subsequent written arguments authorized by the ALJ. An issue is "significant" if it has the potential to result in the denial of a permit, a major modification to the proposed project or the imposition of significant permit conditions in addition to those proposed in the draft permit. 6 NYCRR 624.4(c)(2),(3).

Prior Department decisions establish that adjudication of issues occurs only where the ALJ has sufficient doubt about an applicant's ability to meet all statutory and regulatory criteria such that a reasonable person would inquire further (In the Matter of Hydra-Co. Generations, Inc., Interim Decision of the Commissioner, April 1, 1988) and where, in the ALJ's judgment, there is a reasonable likelihood that adjudication would result in amended permit conditions or project denial. In the Matter of Jay Giardina, Interim Decision of the Commissioner, September 21, 1990.

In situations where Department Staff has reviewed an application and find 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 burden 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). In fact, where DEC Staff and the applicant are not in disagreement over the terms and conditions of the proposed permit, the permit application and the draft permit prepared by 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 of the Commissioner, November 9, 1992. Thus, the burden on the intervening party in instances where Department Staff and the applicant agree on the terms and conditions of the permit is not a superficial one. See Matter of Citizens For Clean Air v. New York State Dep't of Envt'l Conservation, 135 A.D.2d 256, 260-261 (3d Dept. 1988)(court upheld burden imposed on potential interveners and further upheld the Commissioner's determination to exclude certain issues from adjudication).

While the intervenor's offer of proof at the issues conference need not be so convincing as to prevail on the merits, its offer must amount to more than mere assertions or conclusions. See id. "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 of the Commissioner, November 9, 1992. Conducting an adjudicatory hearing where "offers of proof, at best, raise uncertainties," or where such a hearing would "dissolve into an academic debate" is not the intent of the Department's hearing process. Matter of Adirondack Fish Culture Station, Interim Decision of the Commissioner, August 19, 1999, p. 8, citing In the Matter of AKZO Nobel Salt Inc., Interim Decision of the Commissioner, January 31, 1996.

Judgments about the strength of the offer of proof must be made in the context of the application materials, the analysis by Staff, draft permits and the issues conference record. Offers of proof submitted by a prospective intervenor may be completely rebutted by reference to any of the above, alone or in combination. In such a case, it would be a disservice to the applicant and the public at large to proceed any further with time consuming and costly litigation. See Matter of Bonded Concrete, Inc., Interim Decision of the Commissioner, June 4, 1990.

In this proceeding, environmental permit information is contained in the Article X application filing, the stipulation of studies to be undertaken by the Applicant, the draft permits and attendant information required by the Department. This information constitutes the Applicant's prima facie case for the Department's permits. See Matter of Athens Generating Company LP., Interim Decision, June 2, 2000, p. 4 citing, Sithe supra. See also, Matter of 4'Cs Development Corporation, ALJ Ruling, February 27, 1996; Matter of Waste Management of NY, LLC., Interim Decision, May 15, 2000. The application materials are available at the issues conference to assist the DEC ALJ in determining if there are issues requiring an adjudicatory hearing.

The ALJ's Ruling

In the ALJ's March 15, 2001 ruling on issues proposed for adjudication related to environmental permits (Ruling at 6-39), the ALJ found, inter alia, that the issue regarding site alternatives, pursuant to 6 NYCRR Part 231 (New Source Review in Nonattainment Areas and Ozone Transport Regions) was to be adjudicated based upon the offer of proof by CB3/EREC at the issues conference and the information concerning alternative sites contained in the Article X application filing. See, ALJ Ruling at 22-25; see also Application, Chapter 4, Description and Evaluation of Reasonable Alternatives to the Project; Application, Appendix L-Air Permit Application, L-F Environmental and Social Benefits Analysis. Regarding the proposed issues concerning particulate matter (PM) submicron 2.5, the ALJ specifically rejected any further inquiry related to it, citing the Commissioner's recent decision in the Matter of American Marine Rail, Interim Decision, February 14, 2001, ("AMR"). Ruling at 11-15. Further, as recounted below, the ALJ rejected issues proposed for adjudication regarding stack height, air modeling, additional control measures for certain boilers, and environmental justice. Ruling at 15-22, 31-37.

Appeal

Con Edison appeals the ALJ's ruling relating to the consideration of alternative locations in Manhattan for the projects. See Issues Ruling at 23-25. Specifically, Con Edison asserts that 6 NYCRR 231-2.4(a)(2)(ii) does not require consideration of alternatives other than those that would further the purposes of the Clean Air Act nonattainment program and contends that those alternative sites offered by Petitioners do nothing to advance those purposes. See Con Edison appeal at 1. Further, Con Edison contends the record demonstrates that it considered a range of alternatives that fully satisfies Part 231-2.4(a)(2)(ii). See supra at 9-10. It is noted that Con Edison also appeals the Presiding Examiners' ruling to adjudicate the related issue under Article X. See Con Edison appeal at 18.

Con Edison filed replies supporting the ALJ's ruling to exclude stack height, alternative pollution control measures for certain boilers and PM emissions.

CB3/EREC also appeal the ALJ's findings that there is no issue for adjudication regarding the Applicant's justification for not constructing good engineering practice ("GEP") stacks to replace Stacks 1 and 2, and regarding control measures for Boilers 60 and 70 and Stacks 3 and 4. In addition, CB3/EREC request that the Commissioner certify as an adjudicable issue the Applicant's alleged underestimation of the particulate matter emission rate, a matter Petitioners contend was raised in the issues conference but overlooked by the ALJ. Petitioners' appeal at 2-9. Petitioners also assert that the ALJ correctly held that alternative site analyses should be adjudicated.

Department Staff do not appeal the DEC ALJ's ruling. In reply, Department Staff filed responses to Petitioners' assertions about underestimating PM emissions, stack height, and alternative control measures. DEC Response at 2-12. Department Staff also opined that an environmental justice analysis as to alternative sites would be inappropriate, noting that the environmental justice analysis is limited to the Prevention of Significant Deterioration ("PSD") permit process. Id. at 12-13.

Discussion

Adjudication of "Alternative Sites" under NYCRR Part 231

On April 18, 2001 and at subsequent hearing days, the Applicant informed the examiners, and specifically the DEC ALJ, of its intention to adjudicate those DEC issues that the DEC ALJ held to be adjudicable (e.g. Part 231 "alternative sites") and forego DEC issues proposed for adjudication but rejected by the DEC ALJ until after the Commissioner decides the appeals (e.g. GEP regarding stack heights and alternative fuels issues). Under the Applicant's proposal, issues found by the DEC ALJ to be adjudicable, such as the sufficiency of the Applicant's Part 231 alternative sites analysis, would be adjudicated with the consent of the Applicant notwithstanding the Applicant's pending appeal before the Commissioner seeking to exclude such issues from adjudication. Additionally, as proposed by the Applicant and as adopted by the ALJ, any subsequent Commissioner's decision on the appeal of the issues ruling holding that the issue not be adjudicated would be clarified or corrected by a motion to strike the examined testimony. No party to the proceeding took issue with the Applicant's proposal and the examiners adopted the Applicant's proposal and convened an adjudicatory hearing on a number of issues, including "alternative sites" under Part 231.

Although I find no basis to disrupt the adjudication of issues that the ALJ found warranted adjudication, I disagree that issues the ALJ held to be adjudicable and which are the subject of appeals to the Commissioner can be adjudicated under the premise that should the Commissioner decide the issue was not adjudicable, the record of the matter already adjudicated is then stricken. In Department permit proceedings, the Applicant has the burden of proof to demonstrate that its proposal will be in compliance with all applicable laws and regulations. 6 NYCRR 624.9(b)(1). Only those issues necessary to decide whether the Applicant has met its burden of proof are adjudicated, and the Department's issues conference is the primary method for defining the environmental permitting issues in need of adjudication. 6 NYCRR 624.4(b).

An applicant cannot propose adjudication of an issue that it is seeking to exclude from adjudication in an appeal pending before the Commissioner, and simultaneously preserve a right to reverse course and strike testimony and portions of the record relevant to that issue as if it never existed should the Commissioner render a ruling in the Applicant's favor. An applicant proceeds at its own risk; if it proposes or consents to adjudication of an issue it is contemporaneously challenging and a record on that issue is developed, the applicant has effectively waived its right to contest whether adjudication of that issue should occur. This principle is required to preserve the basic fairness of the Department's hearing process and to assure administrative efficiency. 6 NYCRR Part 624, Introduction, note.

Therefore, I find that the adjudication of the issue of "alternative sites" under Part 231 at the Applicant's request waives the Applicant's right to a Commissioner's determination on whether such issue should be adjudicated, and deem withdrawn the Applicant's appeal to the Commissioner on that issue. Following below is a discussion of the issues proposed for adjudication by Petitioners but rejected by the DEC ALJ.

Underestimation of the PM Emission Rate

CB3/EREC contends in its appeal that the Applicant underestimated the PM emission rate for the repowering project and that the issue requires further inquiry. At the outset, Petitioners failed to raise this issue in its petition for party status as required by the applicable permit hearing procedures. 6 NYCRR 624.5(b)(1)(v), 624.5(b)(2)(i).

In my discretion, however, I have reviewed CB3/EREC's assertion and find it to be without merit. PM10 emissions are comprised of a broad class of chemically and physically diverse substances and their sources are diverse. The PM10 emission rate is composed of many factors including vendor guarantees, engineering assumptions, control requirements and control equipment, and thus different emission rate projections for different projects are not unusual.

Here, the total PM10 limit set forth in the draft permit reflects an agreement by the Applicant to comply with the terms of the draft permit. Such permit terms and conditions are prima facie evidence of compliance with applicable requirements and regulations. See Matter of Akzo Nobel Salt, Inc., Interim Decision of the Commissioner, January 31, 1996; 6 NYCRR 624.4(c)(4). Petitioners do not contest the basis of the calculations in support of the PM emission rate for this project, but suggest that PM10 rates for other projects under review raises an adjudicable issue for this proceeding. IC at 172-173. Reference to the PM10 limits in permits for other proposed major electric generating facilities is not, however, evidence that the PM10 emission limit proposed by the Applicant and accepted by DEC for this facility is inappropriate. Moreover, because the proposed facility is in a PM10 nonattainment area, the emission limit is governed by the Lowest Achievable Emission Rate ("LAER") requirement. See 6 NYCRR 231-2. The emission rates for the other projects referred to by Petitioners is determined by the less stringent Best Available Control Technology ("BACT") of the PSD attainment regulations. Hence, differences in emission rates between facilities are not unusual, particularly since the former has to meet a more restrictive emission rate.

Good Engineering Practice (GEP)

Petitioners also contend that the ALJ erred by finding there was no adjudicable issue as to whether GEP stacks are required. The ALJ thoroughly addressed this proposed issue. Ruling at 15-18. The ALJ found that the Applicant's justifications for not increasing the height of the four stacks including, inter alia, the results of the cavity analysis and aesthetic impact, did not raise an adjudicable issue. I agree.

Consistent with DEC's Air Guide-26, which sanctions a case-by-case approach, the results of the cavity analysis show that a downwash effect would not occur with the existing stacks at their current height and Petitioners do not contest those results. The Applicant's calculations of the maximum cavity height also show that there would be no cavity impacts. Additionally, DEC Air Guide-26 allows the GEP stack height to be minimized to reduce the aesthetic impact. See Air Guide-26 at 4. Reliance on minimizing aesthetic impacts as a basis to reduce a stack less than GEP height due to visual impacts concerns is not unprecedented. See Application by Athens Generating Company, L.P., State of New York Board on Electric Generation Siting and the Environment, Case No. 97-F-1563, June 15, 2000. Finally, the Applicant's reliance on engineering issues as a consideration for retaining the existing stacks is also appropriate. See Air Guide-26 at 4. In sum, I find the ALJ's interpretation of Air Guide-26 rational and agree with his conclusion that no adjudicable issue as to GEP stack heights was raised.

The Petitioners' reliance on the SCREEN3 model is also misplaced. The SCREEN3 model is not recommended by USEPA or DEC for permitting purposes; EPA has developed a more refined model (ISC-SCT3), which the Applicant employed, that has substantively revised the technical aspects of SCREEN3 modeling. See USEPA's Guidelines on Air Quality Models, 40 CFR Part 51, Appendix W; DEC Air Guide-26 ("[t]he use of screening models followed by refined analyses is the preferred EPA procedure").

Alternative Fuels in Boilers 60 and 70

Petitioners contend further that the ALJ erred by not finding that control measures for Boilers 60 and 70 and associated Stacks 3 and 4 constituted an adjudicable issue. The ALJ ruled that the air emissions from Boilers 60 and 70 were "not part of, and therefore not relevant to, the Applicant's pending air permit applications or the related PSL Article X certificate application." Ruling at 21-22. I agree. The Applicant properly analyzed the air quality impacts of the proposed two turbine plan. The analysis demonstrated that the project would have insignificant impacts and would also result in a net air quality benefit in the non-attainment area surrounding the community.

Additionally, the case relied on by Petitioners does not support imposing restrictions on boilers separate from the project. See Matter of the Applications of Con Edison regarding Ravenswood Unit 3 and Arthur Kill Units 2 and 3, 1983 WL 166627 (September 14, 1983). The special fuel limitation granted Con Ed for their Ravenswood facility to burn 1.5% sulfur content oil was a prerequisite to a coal conversion application filed subsequently by Con Edison. The requirement was imposed because, at that time, Manhattan was in non-attainment of the annual SO2 standard. In order to allow burning of the higher sulfur content fuel, Con Edison had to offset its SO2 impacts by the measures imposed. The 1990 Clean Air Act amendments, which established the need to secure offsets, require that the offset sources have registered emission reduction credits ("ERCs"). Here, the Applicant has chosen to use the ERCs available from three of their facilities for their net quality air benefit demonstration; 6 NYCRR Part 231-2 does not prescribe the specific offsetting sources. Contrary to Petitioners' interpretation, the 1983 decision does not require Con Edison commit to certain usages of natural gas; the crux of the 1983 decision was to require Con Ed to obtain the offsets that are now a regulatory requirement.

Miscellaneous

PSD Permitting

Department Staff state in their response that the examiners correctly ruled that an environmental justice analysis is limited to the PSD process. DEC Response at 12-13. Although Petitioners' appeal of that issue is not directly before the Commissioner, invoking the scope of the PSD permitting program compels me to provide guidance on this issue.

Executive Order 12898 issued February 11, 1994 by former President Clinton serves as the legal authority requiring federal agencies to identify and address disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations in the United States. In a letter received by the DEC, dated March 23, 2000, USEPA Region 2 stated, "Pursuant to Executive Order 12898, the [PSD permit] applicant should perform an environmental justice analysis as part of the PSD application in order to assess whether there is a disproportionately high and adverse impact on minority or low-income communities." The letter was sent to DEC since, in New York, DEC is authorized to act as EPA's agent and to implement the federal PSD regulations at 40 CFR Subpart 52.21 on behalf of EPA. The resulting PSD permit is a federally enforceable permit.

In light of USEPA Region 2's directive that future PSD permit applications include an environmental justice analysis, former Commissioner Cahill wrote to USEPA Region 2 Administrator on August 28, 2000 expressing concern about implementing the directive and requested further assistance and guidance. To date, no formal written guidance has been given to the DEC. The foremost concern of the DEC, as expressed in the August 28, 2000 letter, is that Executive Order 12898, which provides the basis for the USEPA environmental justice analysis requirement, is a federal directive that does not apply to the States. In the absence of any legal authority requiring the state to identify and address disproportionately high and adverse impacts on minority or low-income communities and in the absence of federal or state guidance as to the scope of environmental justice, it reasonably follows that the applicability of environmental justice to this matter is limited to consideration of that issue in the context of PSD permitting.

Former 40 CFR § 124.71(c)

The March 15, 2001 Ruling references 40 CFR 124.71(c) in the discussion concerning the ALJ's holding that the Applicant's environmental justice analysis was excluded as an issue for adjudication. Ruling at 36. The exclusion of this proposed issue is not the subject of any appeal before me. For clarification, however, I find it necessary to correct the reference to a regulation that is no longer in effect.

Effective July 1, 2000, 40 CFR Part 124 was amended to remove Subparts E and F, as well as Appendix A. A notice of the proposed amendments to Part 124 appeared in the Federal Register on May 15, 2000. See 65 Fed. Reg. 30886-01; 2000 WL 574702 (F.R.). The purpose of these amendments was to "further streamline" National Pollutant Discharge Elimination System (NPDES), Resource Conservation and Recovery Act (RCRA) and PSD permitting procedures. Id. The amendments removed regulatory elements, including, conducting formal evidentiary hearings on NPDES permit conditions contained in 40 CFR Part 124, Subpart E. See 65 FR 30896. Subpart E had included §124.71, which expressly prohibited PSD permits from being the subject of an adjudicatory hearing. See former §124.71(c).

Although the provision that expressly prohibits PSD permits from being the subject of an adjudicatory hearing has been removed from 40 CFR Part 124, the amendments do not change the disposition of the March 15 ruling. Based on the discussion in the Federal Register, supra, concerning the processing of NPDES and RCRA permit applications, adjudicatory hearings about PSD permit applications are not authorized. An amendment to Part 124 which finds that adjudicatory hearings for NPDES permits are "unnecessary" [65 FR 30896] cannot be reasonably interpreted to mean that adjudicatory hearings for PSD permits are now necessary, particularly when adjudicatory hearings had been prohibited in the past. See also Matter of Ramapo Energy Partnership, Commissioner Ruling at 6-7, April 4, 2001.

Conclusion

For the above stated reasons, I affirm the DEC ALJ's findings that the issues relating to underestimation of PM10 rates, GEP stack heights and air modeling, and alternative fuels for Boilers 60 and 70 are not adjudicable. As for the adjudication of "alternative sites" under 6 NYCRR Part 231-2, since the adjudication of that issue has occurred at the Applicant's request, that issue is deemed withdrawn from consideration on appeal.

For the New York State Department
of Environmental Conservation
_____________/s/_____________
Erin M. Crotty, Commissioner

Dated: Albany, New York
June 4, 2001

1. PSL Article X directs the presiding examiner to issue an order identifying the issues to be addressed at the PSL Article X hearing. Similarly, 6 NYCRR 624.4(b)(5) instructs the DEC associate examiner to rule on requests for full party status and to determine which issues satisfy the requirements for adjudication of issues as set forth in 624.4(c).

2. The New York State Department of Public Service staff ("NYSDPS staff") filed an appeal to the Siting Board opposing the Presiding Examiners' ruling holding that health risk issues should be joined in the Article X proceeding, as did the Staff of the Department. Petitioners appeal the portion of the Presiding Examiners' ruling to the Siting Board which rejected additional control measures on certain boilers, environmental justice and noise issues.

3. See 6 NYCRR Part 624, Introduction, note: "This part provides a detailed explanation of the public hearing process which is sometimes necessary to make a determination on permit applications submitted to the department, and on which agreement among parties involved cannot be reached otherwise. The principal function of the hearing is to resolve disputed issues of fact. It is the policy of the department to ensure that the public hearings it conducts provide a fair and efficient mechanism for the development of a factual record for the decision on a permit, and to that end, that all statements and testimony be relevant and directed toward achieving that goal."

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