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Dynegy Northeast Generation, Inc. (Danskammer Generating Station) - Ruling, November 21, 2003

Ruling, November 21, 2003

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

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 704 and 750 et seq. by

Dynegy Northeast Generation, Inc.,
On behalf of Dynegy Danskammer, LLC,
PERMITTEE/APPLICANT
(Danskammer Generating Station)

RULING ON PROPOSED LEGAL ISSUES
FOR BRIEFING

DEC No.: 3-3346-00011/00002
SPDES No.: NY-0006262

November 21, 2003

Permittee/Applicant and Facility Description

Dynegy Northeast Generation, Inc. (Permittee/Applicant) is the successor-in-interest to the Danskammer generating station (the Facility), which was formerly owned by the Central Hudson Gas & Electric Co. The Facility consists of four steam turbine units with a total net generating capacity of 491 megawatts. Units 1 and 2 burn either natural gas or oil, and Units 3 and 4 burn either coal or natural gas. The Facility is located on the west shore of the Hudson River at 992-994 River Road in the Town of Newburgh, Orange County (the Site). The Facility uses a once through cooling system, and draws water from the Hudson River for that purpose via an intake canal. Traditionally, the Facility has been used to generate electricity during times of peak demand.

Proceedings

As provided for in the Notice of Issues Conference dated September 5, 2003, which appeared in the Department's Environmental Notice Bulletin (ENB) and in the Times Herald-Record on September 10, 2003, an Issues Conference convened on October 29, 2003 at 10:00 a.m. at the Newburgh Town Hall. Administrative Law Judges Maria E. Villa and Daniel P. O'Connell presided.

As provided by the Notice of Issues Conference, Riverkeeper, Inc., Scenic Hudson, Inc., and the Natural Resources Defense Council (collectively, Riverkeeper) timely filed a joint petition for full party status and attachments with a cover letter dated October 14, 2003. Representatives for the Permittee/Applicant, Department Staff and Riverkeeper attended the Issues Conference. Permittee/Applicant appeared by Robert J. Alessi, Esq., from the law firm of LeBoeuf, Lamb, Greene & MacRae, LLP, Albany, NY. Department Staff was represented by Mark D. Sanza, Esq., Associate Counsel. David Gordon, Esq., appeared for Riverkeeper.

At the conclusion of the Issues Conference, Permittee/Applicant requested permission to file a brief concerning legal issues. I reserved on this request and asked Permittee/Applicant to provided me with a list of the proposed legal issues. Upon receipt the list, the other Issues Conference participants were provided with an opportunity to respond.

In a letter dated November 7, 2003, Permittee/Applicant proposes three issues for briefing. They are:

  1. Whether the Department has the legal authority to order a technology change to Danskammer's cooling water intake structure in the context of this SPDES permit review process under: (a) 6 NYCRR 704.5, or (b) 33 USC 1326(b);
  2. What are the appropriate legal standards to apply in making a 33 USC 1326(b) "best technology available for minimizing adverse environmental impacts" determination; and
  3. Whether ECL articles 3, 8 or 15 require the Department to consider the benefits of its proposed modification, and to balance the social and economic value of Danskammer to the State, regional and local economies and the welfare of the people of New York.

Citing 6 NYCRR 624.4(c)(6)(i)(a), Permittee/Applicant also requested the right to submit supplemental briefs on issues related to Staff's negative declaration and Staff's determination not to require the preparation of a draft environmental impact statement (EIS) for the pending Danskammer SPDES permit application.

Staff responded in a letter dated November 12, 2003. According to Staff, none of the proposed legal issues need to be briefed at this point in the proceeding. Staff provided brief comments about each proposed legal issue.

Subsequently, by letter dated November 14, 2003, Permittee/Applicant replied to Staff's November 12, 2003 letter. In pertinent part, the stated purpose of Permittee/Applicant's November 14, 2003 letter is "to identify and articulate the reasons why briefing is necessary at this time." Permittee/Applicant maintained that legal issues exist that need to be briefed now.

In a letter dated November 18, 2003, Riverkeeper responded to Permittee/Applicant's letters dated November 7 and November 14, 2003. According to Riverkeeper, no legal issues need to be briefed now. Riverkeeper requested that Permittee/Applicant's November 14, 2003 letter not be considered because I did not authorize it. In an e-mail circulated to all Issues Conference participates, Staff also requested that I not consider the arguments offered in Permittee/Applicant's November 14, 2003 letter.

Discussion and Ruling

Upon review of the correspondence related to Permittee/Applicant's proposed legal issues, I have determined that briefs with respect to proposed legal issues 1, 2 and 3, as identified above, are not necessary at this time. The parties will have an opportunity to submit legal arguments about these questions at the end of the proceeding in closing and reply briefs. No further submissions concerning proposed legal issues 1, 2 and 3 are authorized at this time.

From its correspondence, it appears that Permittee/Applicant disputes Staff's SEQRA determination and seeks review of the determination now as authorized by 6 NYCRR 624.4(c)(6)(i)(a). I note that Permittee/Applicant filed a petition with Supreme Court, Albany County, dated October 24, 2003 pursuant to CPLR article 78 requesting judicial review of Staff's June 23, 2003 SEQRA determination related to the captioned application. In the CPLR article 78 petition, Permittee/Applicant asks the court to annul the June 23, 2003 negative declaration, and direct the Department to prepare an environmental impact statement. Permittee/Applicant's pending CLPR article 78 petition and its concerns about the negative declaration were discussed at the Issues Conference.

The Issues Conference participants may brief the question of wether Staff's June 23, 2003 negative declaration concerning the Danskammer facility is irrational or otherwise affected by an error of law. I consider this legal question to be a threshold issue because if I remand the action to Staff for a redetermination, then the pending application would not be considered complete until Staff makes a redetermination (see 6 NYCRR 617.3[c]). Moreover, if upon remand, Staff redetermines that a draft EIS is necessary, the procedures outlined in 6 NYCRR part 617 for the preparation and review of the DEIS must be followed before these proceedings may continue.

The briefing schedule shall be as follows. Briefs will be due by December 19, 2003. Replies are authorized and will be due by January 16, 2003. In setting this schedule, I have considered the intervening holiday period that extends from about December 20, 2003 to January 3, 2004. As outlined in Permittee/Applicant's letter dated November 14, 2003, the Issues Conference participants have agreed to serve all future submission, such as the briefs and replies authorized herein, simultaneously on all parties via hand delivery, electronic mail or facsimile, with a copy to follow via overnight mail.

Upon receipt of all timely filed briefs and replies, the record of the Issues Conference will be complete, and I will prepare a ruling consistent with the requirements outlined in 6 NYCRR 624.4(b)(5).

__________/s/_____________
Daniel P. O'Connell
Administrative Law Judge

Dated: Albany, New York
November 21, 2003

To: Attached Service List dated November 20, 2003

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