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Freeport, Village of - Decision, November 26, 2003

Decision, November 26, 2003

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
625 Broadway
Albany, New York 12233-1550

In the Matter

-of-

the New York State Department of
Environmental Conservation Notice of
Intent to Modify the Title V Permit of

VILLAGE OF FREEPORT

DEC No.1-2820-00358/00002

DECISION

November 26, 2003

DECISION OF THE COMMISSIONER

The attached hearing report of Administrative Law Judge ("ALJ") Molly T. McBride that was issued September 29, 2003, in the matter of the New York State Department of Environmental Conservation ("Department") notice of intent to modify the Title V permit for the Village of Freeport, is hereby adopted as the decision in this matter, subject to my comments below.

Background

Department staff seeks to modify the Title V air pollution control permit ("Title V permit") issued to the Village of Freeport (the "Village") for the operation of its municipally-owned electric power generating plant known as Power Plant #2 ("PP2").

The Title V permit issued to the Village in 1998 for PP2 did not include legally applicable emission limits for particulate matter and oxides of nitrogen ("NOx"). Consequently, Department staff in 2001 initiated a modification of the Title V permit to incorporate those limits, together with other operating requirements. A notice of intent to modify the Title V permit was published in the August 1, 2001 Environmental Notice Bulletin.

Department staff and the Village subsequently attempted to negotiate the terms of a modified permit for PP2. No agreement was reached and a new notice of intent to modify the Title V permit was published in the February 5, 2003 Environmental Notice Bulletin. The February 5, 2003 notice set forth the new conditions to be incorporated into the Title V permit for PP2, including a new condition that would require PP2's two diesel engines ("diesels") to be decommissioned (shutdown)(a) on the date the Village commenced commercial operation of a new electric power generating facility (using an LM6000 simple cycle turbine), or (b) November 30, 2003, whichever date occurred first. Department staff selected the November 30, 2003 date based on the Village's assertion that its new electric power generating facility would be operational by that time.

ALJ McBride recommends in her hearing report that the Title V permit be modified as proposed by Department staff. Because the Village's new facility is not operational, PP2's diesels would thus be shut down on November 30, 2003. ALJ McBride's hearing report was issued on September 29, 2003 as a recommended decision for comment by the parties. Both the Village and Department staff filed comments. By letter dated October 23, 2003, the parties were provided an opportunity to reply to those comments. Replies were received from the Village, Department staff and jointly from the Old Lindenmere Civic Association and the New York Public Interest Research Group, Inc.

The Village, in its comments on the recommended decision, argues that PP2 be allowed to operate until the Village's new facility is operational. For the most part, the Village's comments reiterate arguments that were raised previously and which are addressed in the hearing report. Certain of these arguments are further discussed below.

Basis for Shutdown

The Department has the legal authority to set a shutdown date for PP2's diesels. Department regulations provide that a Title V air permit may be "modified, revoked, suspended, reopened and reissued, or terminated for cause." Section 201-6.5(a)(3) of title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR"). Section 621.14(a) of 6 NYCRR authorizes the Department, "upon [its own] initiative", to modify, suspend or revoke a permit on a number of grounds. The grounds for modification, suspension or revocation including noncompliance with applicable regulations relating to the permitted activity. See 6 NYCRR 621.14(a)(5).

The record indicates that PP2's diesels have not been in compliance with either the applicable emission limits for NOx, as set forth in subpart 227-2.4 of 6 NYCRR, or the applicable limits for particulate matter. The Village has not claimed that it would be without power following the shutdown of PP2's diesels. It has, however, indicated that the power it purchases following shutdown would be at a higher cost until its new facility is operational.

The compliance schedule that the Department proposed is reasonable. It did not demand immediate revocation of the permit for PP2, notwithstanding the facility's contravention of federal and state air requirements. By proposing a November 30, 2003 shutdown date, the Department afforded additional time to the Village to address the construction of a new facility. This was a generous accommodation in light of the circumstances.

I recognize and have taken into account the Village's efforts to maintain an adequate electric generating capacity, the economic benefit to the Village's ratepayers that results from PP2 being in an operational state (even if it is not used) until a new facility is in operation, the benefit to the Village of having PP2 available as an emergency backup in the event of a power outage or shortage, and the fact that currently PP2 operates only in limited circumstances.

The record, however, demonstrates that PP2's diesels do not comply with applicable emission limits for NOx and particulate matter. This is a longstanding problem that the Village has not corrected. PP2's operation has also been the subject of widespread complaints about odor and noise. See Prefiled Testimony of Joseph Kralovich, at 1-2; Transcript of Public Hearing, May 7, 2003. In light of the inability of PP2 to comply with applicable emission standards and the environmental impacts associated with even its limited operation, an early shutdown date is justified.

Alternative Emission Limits

The Village argues that it should be given an opportunity to apply for a "variance" from the NOx and particulate matter emission limits.

With respect to NOx, a facility that does not comply with the applicable emission limits may seek to establish that it is not technically or economically feasible for it to comply with the regulatory limit and to request a higher unit specific emission limit. See 6 NYCRR 227-2.5(c). See also 6 NYCRR 227-1.2(c) (for particulate matter, an exception from the applicable standards may be granted where it can be demonstrated that emissions will not cause any applicable ambient air quality standard for particulates to be exceeded).

Prior to and during this administrative hearing process, the Village has had the opportunity to provide the information in support of alternative emission limits, but has failed to do so. As previously indicated, the Department first published a notice that it was proposing to modify the Village's Title V air permit in the August 1, 2001 Environmental Notice Bulletin. The subsequent notice, which included a proposed shutdown date, was published in the February 5, 2003 issue. Notwithstanding these two notices and the Village's interaction with the Department on the Title V permit over the past several years, there is nothing in the record to indicate that the Village has ever formally submitted an application to the Department for alternative emission limits for either NOx or particulate matter. ALJ McBride also notes in the hearing report that the Village failed to pursue this matter at the adjudicatory hearing.

Delays in Construction of the New Facility

The Village reiterates arguments that the proposed shutdown date fails to account for various delays encountered in the construction of its new facility, and that the Village has acted with diligence to construct the facility. The Village maintains that it needed to accommodate design changes, comply with requirements of the New York State Public Service Commission, and address the impact of PCB contamination at the new facility site. As a result, the Village's new electric power generating plant apparently will not be operational until, at the earliest, late April 2004. The delays, according to the Village, justify extending the shutdown date.

The arguments relating to delays encountered in the construction of the new facility have been fully addressed by ALJ McBride in the hearing report. Based on this record, the delays presented by the Village are insufficient to justify extending the shutdown date.

SEQRA Compliance

The Village, in its comments on the recommended decision, for the first time argues that the Department has "failed to comply with the [r]egulations implementing [the State Environmental Quality Review Act ("SEQRA")]". The Village cites 6 NYCRR 617.3(a) which provides that "[n]o agency involved in an action may undertake, fund or approve the action until it has complied with the provision of SEQR." The Village's argument is untimely and must be rejected.

Part 624 of 6 NYCRR establishes the procedures that govern the Department's adjudicatory hearings and the manner in which issues may properly be raised. To ensure fairness and the orderly consideration of issues, the regulations require that any and all potential issues are to be raised by the time of the issues conference. See 6 NYCRR 624.4 (b)(2) (ii), (iii) & (iv)(purpose of issues conference includes narrowing or resolving disputed issues of fact, hearing argument on whether disputed issues of fact that are not resolved meet the standards for adjudicable issues, and determining whether legal issues exist).

The regulations specifically provide that, where the Department is lead agency or where there has been no coordinated review, SEQRA issues are also to be raised by the time of the issues conference. See 6 NYCRR 624.4(c)(6)(i). Unless an issue is so raised and the Administrative Law Judge concludes that the SEQRA determination was irrational or otherwise affected by an error of law, the Administrative Law Judge will not disturb staff's SEQRA determination. 6 NYCRR 624.4(c)(6)(i)(a).

Issues that are not raised in accordance with these procedures are untimely and are excluded from consideration. See, e.g., Matter of 4C's Development Corp., Decision of the Deputy Commissioner, January 22, 1998 (attempt to raise a new issue in closing briefs rejected as untimely); Matter of Town of Brookhaven, Interim Decision of the Commissioner, July 27, 1995 (attempt by local civic and community organizations to raise new issues in their appeal of issues ruling of the Administrative Law Judge rejected as untimely).

To allow issues to be raised by a party at any stage subsequent to the issues conference would result in serious inefficiencies in the permit hearing process. It is essential to the administrative process that issues be raised in a timely fashion so that those issues may be considered fully and in a manner that will not result in prejudice to the other parties.

The Village, which has been a party throughout this proceeding, utterly failed to raise the issue of SEQRA compliance in a timely fashion. The Village did not raise SEQRA compliance at the legislative hearing on the permit modification. It did not raise SEQRA compliance at the issues conference or at any other time during the process until the very end, that is, in its comments on the recommended decision.

The Village's last-minute attempt to inject a new argument undermines the very integrity of the adjudicatory hearing process. By its delay in raising the issue, the Village deprived the other parties of the opportunity to address questions relating to SEQRA compliance at the issues conference stage and deprived the Administrative Law Judge from considering the legal and factual considerations relating to that matter in her consideration of proposed issues following the issues conference. It also deprived the parties of the opportunity to address the issue in pre-filed testimony or at the adjudicatory hearing. Because the Village failed to timely raise the issue of SEQRA compliance in accordance with the established regulatory procedures established in 6 NYCRR part 624, it has waived the issue for review at this stage.

The Village concedes in its reply to comments that it did not raise this issue at an earlier time, but provides no justification for why the issue was not raised in a timely fashion. The Village was clearly on notice of Department staff's SEQRA determination concerning the proposed permit modifications.

In the notice published in the February 5, 2003 Environmental Notice Bulletin, Department staff indicated that it had been determined that the proposed permit modification was a Type II action under SEQRA.(1) This determination was publicly circulated three months prior to the commencement of the legislative public hearing on May 7, 2003 and the issues conference on May 8, 2003. The notice of intent to modify, which referenced the action as Type II, was introduced as Exhibit 1 at the issues conference. Issues Conference Transcript, at 7.

Moreover, the notice of supplemental legislative public hearing and issues conference dated March 12, 2003 (and which was introduced as Exhibit 3 at the issues conference) also stated that the permit modification was a Type II action. See Issues Conference Transcript, at 4, 8.

The Department's regulations allow for the raising of an issue subsequent to the issues conference in only a very limited circumstance. An issues conference "may be reconvened at any time to consider issues based on new information upon a showing that such information was not reasonably available at the time of the issues conference." 6 NYCRR 624.4(b)(1). No argument can be made that Department staff's SEQRA determination was "new information" at the time that the parties submitted comments on the recommended decision. The Department staff's SEQRA determination, through publication and distribution of notices that contained this information and the receipt of those notices as exhibits in the issues conference, was more than "reasonably available" to the Village from the very outset of this process. In light of the foregoing, Village fails to meet the section 624.4(b)(1) standard.

The Village's legal arguments on SEQRA are unavailing. The analysis here need go no further than the fact that the Village failed to timely raise a question regarding SEQRA in accordance with the Part 624 requirements that govern the permit hearing process.

Based on my review of the record, I direct that Department staff modify the Title V permit as had been proposed by Department staff and referenced in the February 5, 2003 issue of the Environmental Notice Bulletin, with one change. In light of the limited time between the issuance of this Decision and the proposed shutdown date of November 30, 2003, I am changing the shutdown date from November 30, 2003 to January 31, 2004. This change will allow the Village sufficient time to schedule for and complete the orderly shutdown of PP2's diesels.

For the New York State Department
of Environmental Conservation

/s/
By: Erin M. Crotty, Commissioner

Dated: Albany, New York
November 26, 2003

TO: Franz Litz, Senior Attorney
Michelle A. Crew, Associate Attorney
Division of Legal Affairs, 14th Floor
625 Broadway
Albany, New York 12233-1500

Paul D. Casowitz, Esq.
Sive, Paget & Riesel, P.C.
460 Park Avenue
New York, New York 10022-1906

Tracy Peel, Esq.
New York Public Interest Research Group Fund, Inc.
9 Murray Street, 3rd Floor
New York, New York 10007

Joseph Kralovich
President
Old Lindenmere Civic Association
61 Dobson Avenue
Merrick, New York 11566
Hubert M. Bianco
Superintendent of Electric Utilities
Freeport Electric, Inc.
Village of Freeport
220 West Sunrise Highway
Freeport, New York 11520

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
625 Broadway
Albany, New York 12233-1550

In the Matter

-of-

the New York State Department of
Environmental Conservation Notice of
Intent to Modify the Title V Permit of

VILLAGE OF FREEPORT

DEC No. 1-2820-00358/00002

HEARING REPORT

-by-

/s/
Molly T. McBride
Administrative Law Judge

September 29, 2003

PROCEEDINGS

This proceeding was initiated by the New York State Department of Environmental Conservation (DEC Staff, Department) to modify the Title V air permit issued to the Village of Freeport (Permittee, Village) to operate the electric generating facility commonly known as Power Plant #2 (PP2). DEC Staff commenced the proceeding in August, 2001 by service of a Notice of Intent to Modify pursuant to Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR) Parts 201 and 621. PP2 has two diesel engines and one turbine that have been operational since 1969. The Department is seeking to modify the permit to set emissions limits for the diesels, require stack tests for the turbine, and impose a compliance schedule that provides for the permanent decommissioning of the diesels by November 30, 2003.

The Notice of Intent to Modify and draft modified permit were published in the Environmental Notice Bulletin (ENB), an electronic publication of the DEC, and in Newsday in September, 2001. A legislative public hearing was held on the proposed modified permit on October 22, 2001 at Freeport High School, Freeport, NY. There were approximately 400 people in attendance and approximately 50 speakers. A majority of the speakers called for the immediate closing of the power plant. An issues conference had been noticed to be held on October 23, 2001. However, immediately before the October 22nd hearing DEC Staff indicated that it was seeking to make changes to the modified permit and requested an adjournment of the issues conference. The adjournment was granted. After the October, 2001 legislative hearing DEC Staff and the Village began negotiating the terms of a modified permit for the power plant. After approximately one year of discussions, DEC Staff was unable to reach an agreement with the Village with regards to the power plant's operation. As a result, a new Notice of Intent to Modify and Notice of Public Hearing were issued by DEC Staff in February, 2003.(2) This Notice and attached draft modified permit sought two paramount modifications, the insertion of emissions limits for particulate matter and oxides of nitrogen (NOx). The permit issued in 1998 for PP2 does not contain emissions limits for either. The draft modified permit also contained a provision that PP2 would be brought into compliance with the emissions limits by permanently decommissioning the diesels by November 30, 2003.

In 2002, the Village applied for a permit to construct and operate a new electric generating facility immediately adjacent to the existing structure containing the two diesel engines. It proposed to operate a new General Electric LM6000 Sprint simple cycle combustion turbine with nominal electrical power output of less than 50 MW.(3) The DEC Staff noticed a public hearing and public comment period on the Village's application at the same time as the second Notice of Intent to Modify.

A public hearing was held on both the second proposed modification and the permit application on March 12, 2003 at the Freeport High School. Approximately 15 people were in attendance and 4 people spoke. The speakers at this second hearing were generally grateful that operations at the existing power plant was being scrutinized and that the Department was seeking to close it.

Pursuant to 6 NYCRR 621.14(d) the Village requested a hearing on the DEC Staff=s second Notice of Intent to Modify. That request triggered the need to hold a third public hearing as well as an issues conference. By Notice dated March 12, 2003 a Notice of Supplemental Legislative Hearing and Issues Conference on the modified permit was published in the ENB and Newsday. This supplemental legislative hearing was held on May 7, 2003 at the Freeport High School. Approximately 12 people attended and 5 people spoke. The speakers all spoke against the diesels' continued operation. An issues conference was convened on May 8, 2003 at 9:00 a.m. at the Freeport Village Hall, 46 N. Ocean Avenue in Freeport, NY. An issues ruling was issued on July 18, 2003 identifying one issue for adjudication, whether the DEC Staff- imposed shut-down schedule in the draft modified permit is arbitrary because it is not linked to a reasonable schedule for commencement of commercial operations by the new facility. The ruling also granted party status to New York Public Interest Research Group (NYPIRG) and the Old Lindemere Civic Association (OLCA) and joined those two parties for the hearing.

An adjudicatory hearing was held on September 3, 2003 at the Freeport Village Hall. The Village appeared with counsel, Sive, Paget and Riesel, Paul D. Casowitz, Esq. and Jay P. Eversman, Esq., of counsel; the Department appeared by attorneys Franz T. Litz and Michelle A. Crew; and NYPIRG and OLCA appeared by Tracy Peel and Joseph Kralovich.

APPLICABLE REGULATORY PROVISIONS

The Department's Notice of Intent to Modify states that the Department is seeking to modify the 1998 Title V permit "to assure compliance with state and federal applicable requirements." 6 NYCRR 621.14(a)(5) provides for a Department initiated modification if there is noncompliance with any provisions of the ECL or regulations of the Department related to the permitted activity. The Permittee submitted stack tests for this facility which indicated that the diesels were operating in violation of the state and federal emissions limits for oxides of nitrogen (NOx) and particulates. The existing permit had no emissions limits for either NOx or PM which is contrary to the Clean Air Act (CAA) and New York State statues and regulations. The Clean Air Act requires all permits to include, among other things, enforceable emissions limitations and standards and a schedule of compliance. (CAA '504[a]). The draft permit sets particulate emissions limits at 0.10 lbs. per million Btu(4) and NOx emissions at 9 grams per brake- horsepower per hour pursuant to 6 NYCRR 227-2.4 and has a schedule of compliance.

Pursuant to 6 NYCRR 624.9(b) the Department has the burden of proof to show that the modification is supported by a preponderance of the evidence.

POSITION OF THE PARTIES

Permittee

The Permittee contends that PP2 should not be decommissioned before the new LM6000 turbine is operational. The Permittee notes that several different factors have resulted in delays in the construction of the new facility and because of those delays, the decommissioning should be delayed as well. The Permittee has agreed to the permanent decommissioning as soon as the LM6000 is operating.

Department

DEC Staff contends that the lack of emissions limits for NOx and particulates in the 1998 permit must be corrected and, therefore, the permit must be modified. Past stack tests submitted to the Department indicate that the facility cannot meet the applicable emissions limits and therefore DEC Staff has modified the permit to established the only possible means of compliance, decommissioning. DEC Staff chose the decommissioning date after it received a schedule from the Village indicating that the new facility would be operating by that date. Although the Permittee has now encountered problems that are delaying the new project, DEC Staff stated that the Permittee could have avoided these delays and, therefore, it will not extend the time of operation for the diesels.

ISSUE FOR ADJUDICATION

As indicated above, one issue was identified for adjudication, the closing date for PP2.

DISCUSSION

DEC Staff commenced the modification proceeding to correct a mistake made when the 1998 Title V air pollution control permit was issued to the Village. That permit failed to set emissions limits for two contaminants, NOx and particulates. It is agreed by all parties that this omission is an error that requires correction. There does not appear to be a dispute as to how to correct this mistake and there is no dispute as to the applicable emissions limits. The Clean Air Act requires a permit to set emissions limits and craft a compliance schedule to bring a facility into compliance with those limits. DEC Staff, in the modified permit, set emissions limits and established a compliance schedule.

At the adjudicatory hearing there was no argument raised as to other means of bringing the facility into compliance other than shutting it down. No proof has been offered that the diesels could be equipped in some way to bring them into compliance. Although the Village argued at the issues conference that it should be provided an opportunity to seek a variance from the applicable emissions limits, that argument was not pursued at the adjudicatory hearing and I am not aware of any variance request having been made.

The only remaining dispute is what date PP2 should be permanently decommissioned. The modified permit has set November 30, 2003 as the shutdown for the 2 diesels. It is acknowledged by DEC Staff that the November 30th date was arrived at after the Village indicated that it expected the LM6000 to be operational by that date. However, the Village has encountered some delays and the LM6000 will not be operational by that date. In fact, according to the testimony presented at the hearing, the earliest this facility will be operational is late April, 2004 and it may very well be later than that date.

The Department has the burden of proof in this proceeding. It produced no witnesses but did introduce into evidence the permits recently issued for 4 similar power plants. These permits were offered by DEC Staff to show that the typical construction schedule for a facility like the one the Village is seeking to construct is 6-7 months. The Village stipulated that these were typical time frames and the Department rested.

The Village presented four witnesses, Hubert Bianco, Superintendent of Freeport Electric; Paul Grosser, President of P.W. Grosser, the environmental engineers hired by the Village for this project; James H. Slack a senior program manager for ENSR which is providing air quality and multi disciplinary consulting services to the Village; and Peter A. Bender, Associate Vice President for the engineering consulting firm responsible for the planning, design and construction of this new facility.

The Village's position is that it agrees to the permanent decommissioning of the diesels but opposes the shut down prior to the new facility being in operation. It argues that unforeseen delays have slowed the construction of the new plant and, as a result, the old plant should continued operating.

The delays encountered by the Village occurred in 2002 and 2003. The first delay was due to problems with hiring a contractor. Initially, the Village considered having two new electric power generating facilities constructed. The demand for power on Long Island had increased and in 2000 the Long Island Power Authority (LIPA) began the process of siting turbines on Long Island. Freeport participated in this project with the intent of entering into a contract with a private developer to construct 2 facilities on the site of PP2. Hubert Bianco, Superintendent of Freeport Electric described the Village's intentions as seeking a "turnkey" operation. They wanted to contract with a private developer to build both facilities and then sell one facility to the Village for its use and operation. (Bianco p. 6-7) For various reasons, this project turned out not to be possible. (Bianco p. 10) The Village then turned its attention to constructing its own facility and put the project out to bid. The Village chose what is called a "design build approach" for the project. Rather than hiring one contractor to design and then going to bid again for other phases of the project, the Village chose to bid the whole project at once and award a contract to one developer who would both design it and build it. The intention was that this would save time overall. (Bianco p. 11) This went to bid for the first time in July, 2002. Eventually the project had to be re-bid due to problems with the low bidder and changes to the project. The project went to bid for the second time in October, 2002. After this second bid went out the Village encountered additional problems. A private developer had contracted with the Village to build a private facility on the site of PP2. That facility would have generated rental income for the Village that was to have been used to construct the Village's facility. Also, the private developer and the Village were intending to share in the costs of and responsibility for construction of the transmission lines. However, this private developer cancelled its project and in January, 2003 a third bid document was issued by the Village in 2003 to reflect the changes in the project again.

A contract was awarded in April, 2003 to construct the Village's LM6000 facility and all related gas and electric transmission lines. Despite all of the delays encountered by the Village up to that point, it was still possible at that time to have the new facility operational by November 30, 2003.

The Village contends now that two major problems occurred in 2003 that make it impossible to have the new facility on line by November 30th. The new project requires installation of gas and electric transmission lines. The Public Service Commission (PSC) is the state agency responsible for permitting these types of projects. The permits for the gas and electric transmission lines were not issued until late July, 2003 and this delayed the project. Also, the new facility is being constructed on the site of a former landfill and PCB contamination at the site must be cleaned up before construction can begin and this clean up has caused further delay. Although the Village learned of PCBs on the site in 1992, it was not until after July, 2003 that Village became aware of the extent of the contamination.

DEC Staff counters the Village's excuses by arguing that the Village's actions caused the delays and they should not benefit from that. DEC Staff presented evidence at the hearing that the Village did not promptly respond to requests of the PSC for information supplementing the permit applications. DEC Staff presented 2 letters from the PSC dated November 22, 2002 and February 14, 2003. The November letter to Mr. Bianco asks for additional information in several areas. In the February letter the PSC states that the Village did not respond to the November letter for over two months and that some information was still missing. The Department's contention is that had the Village promptly addressed the PSC's inquiries, the permits could have been issued sooner.

No one from the PSC testified at the hearing to confirm or deny that the Village's actions contributed to the delay in the permits being issued. Mr. Bianco was questioned about the length of time between the PSC letter and the Village's response but gave no indication as to why it took over 60 days to respond to the first PSC request and what efforts the Village made to respond to the second request.

The second delay has been caused by PCB contamination at the site. PP2 is located on a former landfill which closed decades ago. In 1992 and 1993 the Village constructed a containment system for the oil storage at the site. This project required soil sampling and the sampling uncovered PCB contamination at the site. The majority of the sampling that took place in 1992 and 1993 involved areas away from the current construction site. The PCB contamination found was at lower levels and the site was remediated with DEC approval.

Mr. Bianco was the Supervisor of Freeport Electric in 1992 and 1993 and worked closely with the PCB issue then. He was questioned at length as to what follow up the Village did with regards to this between 1993 and 2003. Mr. Bianco testified that they did no further soil sampling until 2003. Upon questioning by Mr. Litz, he also testified that the Village determined to build a new facility on the contaminated site as early as 1998. (Bianco p.5) He offered no explanation as to why the Village did not undertake any other soil sampling or why it did not consult the DEC about the site and its contamination until 2003. DEC Staff produced a March 17, 1994 letter to Mr. Bianco from the DEC Region 1 office. That letter advised the Village that it needed to get DEC approval prior to the handling of relocation of soil at this site. The Village was on notice as early as 1994 that the Department had to approve the soil removal that would be necessary as part of any construction at the site. Knowing this, the Village did not take any advance steps to get DEC approval for the soil removal. The Village now claims that this issue has been a major cause of the delay of the project. DEC Staff again contend that the Village's actions directly caused the delay.

The DEC Staff recently requested more soil sampling at the site and that sampling shows varying levels of PCB contamination. Levels as high as 50 ppm or greater have been encountered. PCB contamination at those levels are under the exclusive jurisdiction of the US Environmental Protection Agency (EPA). The Village has been working with the EPA to get a clean up plan approved. As of September 3, 2003, no plan had been approved. Mr. Bianco testified that the majority of construction is being done in areas with lower levels of PCBs. He stated that clean up in those areas was would possibly begin the week of September 10, 2003. The Village anticipated that construction could begin 30 days after the start of the clean up. Mr. Bianco contended that this part of the project could go forward while the Village continues to develop an acceptable remediation plan with the EPA to address the higher PCB concentrations.

Mr. Grosser's firm conducted the soil testing that was completed in 1992 and 1993. Mr. Grosser did not believe that more soil testing would be necessary for the construction of the new plant based on how extensive the earlier testing had been. (Grosser p. 28) However, as part of the new construction project, a new soil management plan had to be submitted to the Department. That plan resulted in DEC Staff requesting additional soil sampling in July, 2003 and, as noted above, that sampling uncovered significant PCB contamination at the site. Mr. Grosser agreed that it was prudent of DEC to request this additional sampling based upon the significant contamination revealed. (Grosser p.33)

Mr. Slack testified about the National Ambient Air Quality Standards (NAAQS) and stated that he contended that his modeling shows that this plant does not exceed those standards. (Slack prefiled p. 5). The key issue here is not NAAQS but that the facility is not meeting emissions limits for NOx and particulates. Mr. Slack was not aware that the emissions limits that the Department has proposed in the modified permit are not being met by the diesels.

Mr. Bender has significant experience in the design and construction of power plants. He confirmed that 6-7 months from the start of construction is the typical completion schedule. (Bender prefiled p.5). He also noted that many unforeseen complications can occur that slow the construction. He acknowledged that the PCB contamination has stopped work on the foundation. According to Mr. Bender, other risks of delay are still present, fire, flood, accidents, strikes and similar events can all slow a project. Mr. Bender produced a schedule his company prepared that estimated the completion of construction and operation as April 29, 2004. Under questioning, he stated that the proposed completion date is not necessarily reliable and would more likely be later than that than earlier. He even suggested that it could take a month longer. (Bender p. 12) Any delay in the EPA approval of a clean up plan would cause additional delay in the project. (Bender p. 13) Mr. Bender provided a realistic assessment of the construction schedule and its uncertainties.

While the Village argued against the closure of the diesels before the new plant is operational, it provided little information as to what the ramifications are for the Village if it is not able to supply any electric power for a period of time. Mr. Bianco testified that the Village would have to purchase power from other sources on Long Island and pay the increased costs of that power. If the Village was unable to purchase power on Long Island it would have to go into deficiency auction and be subject to the market price. (Bianco p. 72) It is likely that this would mean higher utility rates for the Village customers for a period of time. There is nothing in the record to indicate that the Village could be left without power because of a shut down of the diesels.

FINDINGS OF FACT

  1. The Village of Freeport owns and operates an electric power generating facility known as Power Plant #2 located on Buffalo Avenue, Freeport, New York.
  2. PP2 operates 2 diesels engines and one turbine.
  3. The Department issued a Title V air pollution control permit to PP2 in 1998. The permit failed to set emissions limits for NOx and particulates.
  4. The failure to set emissions limits in the 1998 permit violates the federal Clean Air Act and New York regulations.
  5. The Village has submitted stack tests for the diesels. These stack tests have shown that the diesels are exceeding the emissions limits for both NOx and particulates applicable for this facility.
  6. The Department initiated a modification proceeding to modify the Title V permit to include emissions limits for NOx and particulates and to set a compliance schedule with those emissions limits.
  7. The Department proposes to bring PP2 into compliance by permanently decommissioning the diesels by November 30, 2003.
  8. The Village has applied for permits to construct and operate an electric power generating facility next to PP2. The proposed facility will utilize an LM6000 simple cycle turbine.
  9. The Village advised the Department that the new facility would be operational by November 30, 2003.
  10. The Village installed a containment system at the site of PP2 in 1993. During the permitting phase of that project soil sampling was performed and PCB contamination was detected on the site.
  11. The Department sent a letter to the Village on March 17,1994 advising the Village that the Department would have to approve any soil removal at the site.
  12. The Village did not consult the Department about additional soil sampling or seek approval for soil removal plans related to construction at the site until 2003.
  13. The Department issued a permit to the Village on May 22, 2003 for the new LM6000 facility.
  14. Construction was begun on the new facility after the permit was issued but had to be stopped when soil sampling revealed high levels of PCB contamination at the site.
  15. PCB contamination as high as 50 ppm has been found at the site. The EPA has exclusive jurisdiction over PCB contamination of 50 ppm or higher.
  16. The Department and the Village have agreed upon the clean up of PCB contamination below 50 ppm. The EPA, as of September 3, 2003, has not approved a clean up plan for the higher concentrations at the site.
  17. The LM6000 facility will not be operational until April 29, 2004 or later.

CONCLUSIONS OF LAW

1) 6 NYCRR 227-2.4 establishes emissions limits for both NOx and particulates for facilities operating in New York State. Those limits are applicable to PP2.

2) The Clean Air Act requires all Title V permits to contain enforceable emissions limits and standards for NOx and particulates as well as a compliance schedule.

3) The failure to set emissions limits in the 1998 permit violates the federal Clean Air Act and New York regulations.

4) The Department has the authority to modify a permit that is not in compliance with any provisions of the ECL or regulations of the department related to the permitted activity.

5) The Department has met its burden of proof by a preponderance of the evidence.

RECOMMENDATION

I recommend that the permit be modified as proposed by DEC Staff and that the modification be referred to DEC Staff for final processing.

1Type II actions "have been determined not to have a significant impact on the environment or are otherwise precluded from environmental review." 6 NYCRR 617.5(a). No SEQR determination of significance, environmental impact statement or findings statement is required for actions that are Type II. 6 NYCRR 617.3(f).

2 The Notice of Intent to Modify issued in 2001 was withdrawn by the DEC Staff.

3 The Department issued the permit for this facility in May, 2003.

4 New York's current particulate limit is 0.2 lbs. per million Btus. 6 NYCRR 227-1.2(a)(2). However, the EPA rejected this emission rate as inconsistent with the federal standard for particulate matter emissions and therefore, the federal standard of 0.10 lbs. per million Btus is the applicable rate.

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