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Freeport, Village of - Ruling, July 18, 2003

Ruling, July 18, 2003

STATE OF NEW YORK: DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

Village of Freeport Power Plant #2

Notice of Intent to Modify the Title V Permit of the NYS Department of Environmental Conservation

ISSUES AND RULING ON PARTY STATUS

DEC No. 1/2820-00358/00002

Summary

This ruling addresses the issues proposed for adjudication regarding the New York State Department of Environmental Conservation's (DEC Staff, Department) Notice of Intent to Modify the Title V permit of the Village of Freeport Power Plant #2 (Permittee, Village). The ruling also addresses the requests for party status made herein. The permit hearing procedures under Title 6 of the New York State Official Compilation of Codes, Rules and Regulations, Part 624, (6 NYCRR Part 624) govern the proceeding. The Village and the DEC Staff are parties to the hearing under the DEC permit hearing procedures. Two petitions for party status were filed, one by the New York State Public Interest Research Group (NYPIRG) and one by the Old Lindemere Civic Association of Merrick, Inc. (OLCA).

Upon my review of the record in this matter, I conclude that neither NYPIRG nor OLCA raised issues which meet the standards for adjudication as defined in 6 NYCRR 624.4(c)(iii). A total of fourteen issues were proposed for adjudication and each will be addressed in detail below. I am however granting the petitions for party status as both NYPIRG and OLCA have demonstrated an adequate environmental interest and both could make a meaningful contribution to the hearing record on the issue that will be adjudicated.

The Village has objected to the proposed modified permit and raised four issues. The only issues that may be adjudicated in this permit modification proceeding are those related to the basis for modification cited in the DEC Staff's Notice to the Village. 6 NYCRR 624.4(c)(8). When such issues are proposed for adjudication, the determination to require adjudication will be made pursuant to the standards set forth in section 624.4(c)(1).( 6 NYCRR 624.4[c][8]). The applicable standard in the case of the Permittee is "an issue is adjudicable if it relates to a dispute between the DEC Staff and the Village over a substantial term or condition of the draft permit." 6 NYCRR 624.4(c)(1)(i). Only one of the issues proposed by the Village meets this standard, the issue of the date that power plant #2 shall close. A hearing shall proceed on that issue only on August 13, 2003 at 9:00 a.m. at the Freeport Village Hall, 46 N. Ocean Boulevard, Freeport, New York.

Background

DEC Staff first sought to modify the Village's Title V air permit in August, 2001 by service of a Notice of Intent to Modify pursuant to 6 NYCRR Parts 201 and 621. This facility has two diesel engines and one turbine that have been operational since 1969. The Department is seeking to set emissions limits for the diesels and require stack tests for the turbine. The DEC Staff initiated the modification of the permit by serving the Notice along with a draft modified permit in August 2001 and publishing the Notice in the Environmental Notice Bulletin (ENB), an electronic publication of the DEC, and in Newsday. 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. The majority of speakers called for the immediate closing of the power plant. The OLCA was well represented at this hearing and many members spoke, requesting that the facility be closed as soon as possible.

NYPIRG filed the only petition for party status in the first modification proceeding. An issues conference had been noticed to be held on October 23, 2001. Immediately before the October 22nd hearing the 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. Sometime after that adjournment the DEC Staff and the Village began working with the EPA to discuss a modified permit for the power plant.

After approximately one year of discussions, the 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 the DEC Staff.(1) 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 1998 permit does not contain emissions limits for either.

The Village applied for a permit to construct and operate a new facility immediately adjacent to the existing structure containing the two diesel engines in 2002. It proposed to operate a new General Electric LM6000 Sprint simple cycle combustion turbine with nominal electrical power output of less than 50 MW.(2) 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, including DEC Staff engineer Matt Reis. Mr. Reis detailed the efforts to date of DEC Staff to modify the Village's Title V permit. He also advised the public at this hearing that DEC Staff was in favor of issuing the permit for the new facility but had not yet finalized the permit and conditions. The speakers were generally grateful that the existing power plant was being scrutinized and that the Department was looking 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, also at the Freeport High School. Approximately 12 people attended and 5 people spoke in addition to the DEC Staff. 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.

Proceedings

Issues Conference

6 NYCRR Part 624 allows for participation at the issues conference by DEC Staff and the Permittee. Also, those seeking party or amicus status pursuant to 6 NYCRR 624.4 may participate. The Notice of Public Hearing directed that those seeking party or amicus status file a written request to the Administrative Law Judge (ALJ) by May 1, 2003. Petitions for party status were filed by NYPIRG and OLCA.

The DEC appeared at the issues conference by Franz Litz, Esq. and Michelle Crew, Esq. senior attorneys for the Department; the Village appeared by Paul V. Casowitz, Esq, of counsel to Sive, Paget & Riesel, attorneys for the Village and Hubert Bianco, Superintendent of Freeport Electric; Lisa Garcia, Esq. and Tracey Peel, Esq. appeared for NYPIRG; and Joseph Kralovich and Vincent Greco appeared for OLCA.

Modifications sought

The modified permit contains several modifications, with two central modifications. The 1998 permit for this facility did not set emissions limits for either particulate matter or NOx. This runs contrary to the Clean Air Act and New York law. The DEC Staff has acknowledged this error and is seeking to correct it by setting emissions limits for both. The other proposed modifications are: 1) a requirement to shut down the existing two Fiat diesel engines on the date the Village commences commercial operation of the proposed LM6000 turbine or November 30, 2003, whichever occurs first; 2) a requirement that, until such time as the diesels are taken out of service, the diesels shall not operate except in an emergency or consistent with the terms of an agreement between the Long Island Power Authority and the Village; 3) a requirement to conduct stack tests of the existing combustion turbine; 4) a required reduction of the allowable fuel sulfur content for all units at the facility covered by the Title V permit from 0.37% to 0.20%; and 5) a limit on the hours of operation for the existing Curtiss-Wright turbine to 130 hours per year.

Prior testing submitted to the Department shows that the diesels are exceeding the applicable emissions limits for both NOx and particulate matter. The current permit does not require testing on the turbine and the Department has no data on its performance. The modified permit calls for stack tests on the turbine and DEC Staff will review that data and take any appropriate steps to ensure it is in compliance as well.

The modified permit includes a required compliance schedule. The DEC Staff has stated that the facility can not come into compliance for these emissions limits and therefore the only way to bring it into compliance is to permanently decommission the diesels.

VILLAGE OF FREEPORT ISSUES

The Village has raised 4 issues in response to the modified permit.

1) The Department did not meet the standards of §621.14 and §201.6-5 in the Notice of Intent to Modify.

2) The alleged violations of the State Implementation Plan (SIP) have not been made clear by the Department.

3) The draft modified permit contains conditions that are not appropriate.(3) The Village objects to the following permit conditions: the requirement that it construct a new facility; the requirement that it limit its hours of operation pursuant to a contract it has entered into with the Long Island Power Authority (LIPA); the requirement for daily opacity monitoring; the particulate standard set for this facility, and the emissions limit for NOx Reasonably Available Control Technology (RACT) fails to note that the DEC Staff will consider alternative technology if/when the emissions limit can not be met.

4) The Village does not agree to November 30, 2003 as the latest date that the facility can operate. It wants to be operational until the LM6000 is operational.

6 NYCRR 624.4(c)(1)(i) identifies the standard for an adjudicable issue raised by the permittee. An issue is adjudicable if "it relates to a dispute between the department staff and the applicant over a substantial term or condition of the draft permit."

Issue One

The Village contends that the Department has not met the standards of § 621.14(a) and § 201.6-5 in its Notice of Intent to Modify. Specifically, section 621.14(a) identifies 5 grounds on which the Department may seek to modify a permit and the Village claims that the Notice issued by the Department fails to identify which of these grounds it is basing the request to modify. The Department contends that the basis for the permit modification is that the permit does not comply with the Clean Air Act and New York law in that it fails to contain the noted emissions limits. This is one of the grounds noted in section 621.14(a)(5).(4)

The DEC Staff states that not only were the requirements of the regulations met in the Notice of Intent to Modify that was served on the Permittee, the parties have been engaged in settlement discussions for over one year with the EPA discussing the future of this facility. During these discussions, the DEC Staff contends, the Village has repeatedly been made aware of why the modifications were being sought.

The DEC Staff began the modification process in 2001, at which time the Village was first formally advised of the DEC Staff's intentions to seek the modification. The DEC Staff argues that the Village has been aware of all of the reasons the modification has been sought over the course of the last two years.

§621.14(b) states: "The Department shall send a notice of intent to modify... to the Permittee by mail or personal service. The notice shall state the alleged facts or conduct which appear to warrant the intended action." The second Notice was served by the DEC Staff on the Permittee on February 3, 2003 along with the draft modified permit. Both documents clearly state the Department's position that the past stack tests have indicated that the facility is not in compliance with applicable emissions limits and that additional requirements needed to be added to the permit to assure compliance with state and federal applicable requirements. The DEC Staff has sufficiently identified the grounds under §621.14 for which the modification is based, noncompliance with the ECL and regulations of the Department related to permit activity. Also, I agree with the DEC Staff's argument that the Village has been engaged in this modification proceeding since 2001, and through that process, learned of the specific reasons for the Department initiated modification.

The Village also argues that §201.6-5 (Standard Permit Requirements) has not been met. Section 201.6-5 (i), entitled "Reopening for cause", allows for a Title V permit to be reopened and revised when it is determined that the permit contains a material mistake or when the department or administrator determines that the permit should be revised or reopened to assure compliance with applicable requirements. (There are other standards to reopen that are not applicable in this case.) The Village again claims that they are unable to decipher the grounds upon which the DEC Staff is basing the modification. I do not find this credible. This matter has been ongoing for 2 years. During those 2 years there were two Notices of Intent to Modify served on the Village by the DEC Staff. There were drafts of the modified permit provided to the Permittee. A total of three public legislative hearings have been held and at each hearing the DEC Staff has made a statement explaining why it is seeking to modify the permit, as well as how. Further, the Village, the DEC Staff and EPA have engaged in settlement discussions regarding this facility and its Title V permit. There is no way that the Village can be unclear about the reasons DEC Staff is seeking this modification. Quite simply, a mistake was made in 1998 and it is being corrected through the modification. The DEC Staff has communicated its position in this matter as thoroughly as possible based upon the number of public hearings held, length of time of the proceeding as well as the fact that settlement discussions were held for approximately one year.

Ruling: As noted above, section 624.4(c)(1)(i) requires an issue raised by the permittee to relate to a dispute over a substantial term or condition of the draft permit. This issue is not related to a term or condition of the draft permit and therefore, it does not meet this standard. Also, based upon the information furnished to the Village over the course of the past two years, I find that the Department has met the requirements of section 201.6-5(i) and section 621.14.

Issue Two

The Permittee's second proposed issue for adjudication is that the DEC Staff has not specified the alleged SIP violation in sufficient detail. At the issues conference, counsel for the Village stated the following: "There needs to be some explanation and specificity on what has occurred in this twenty year colloquy between the DEC Staff and the EPA that leads to a decision, as Mr. Reis testified to last night,(5) that in 2001 the Department decides that there is a problem with Freeport's permit." The Village contends that without this information it can not be properly prepared for this modification proceeding. I do not agree that the Village needs this information. More importantly, I find no legal authority for the Village's position that the DEC Staff must furnish this information. The Village has cited no legal authority for the DEC Staff to provide any more detail than it has. Also, this issue does not meet the standards for adjudication as defined in section 624.4(c)(1)(i) because it is not related to a substantial term or condition of the draft permit.

As DEC Staff has repeated throughout these proceedings, the permit issued in 1998 failed to include emissions limits for both particulate matter and NOx. To delve into the intra-agency discussions of the DEC Staff as well as the DEC Staff's discussions with the EPA to explore how they came to this point is not necessary. Parts 201 and 621 allow for a modification of a permit in a circumstance such as this and the DEC Staff is acting in accordance with those regulations.

Ruling: This issue does not meet the standards for an adjudicable issue.

Issue Three

The Village's third proposed issue is that the draft modified permit has conditions that do not relate to the alleged SIP violations concerning NOx and particulate emission limits as well as conditions that are beyond the Department's legal authority to impose on Freeport. There were five conditions that the Village objected to and raised as issues for adjudication, one was withdrawn at the issues conference.

Issue Three(a)

One condition of the draft modified permit is that the diesels' operation will be limited to times specified in a contract/letter agreement entered into by the Village and the Long Island Power Authority (LIPA). I have not seen this contract but the parties report that the contract provides for LIPA to supply power to the Village of Freeport upon the condition that the Village operate the diesels only when requested by LIPA and only when emergency conditions exist. The Village agreed at the issues conference that limiting the operation of the diesels to emergencies until they are decommissioned is an acceptable condition. The Village objects to what it interprets as a requirement that it have a contract with LIPA to operate under emergency conditions only. The DEC Staff has agreed that the goal was to limit the hours of operation, not compel an agreement between LIPA and the Village and has agreed to reword the condition to provide for the same limitations as in the agreement but remove all reference to the LIPA contract. All parties were satisfied with this resolution.

3a Ruling: This issue has been resolved between the parties.

Issue Three(b)

The second condition objected to by the Village relates to the permit condition that a new LM6000 simple cycle turbine be in operation by November 30, 2003. The Village applied for and was issued a permit to construct and operate a new gas turbine facility. Department Staff stated its intent in referencing this turbine in the permit conditions was to have the existing diesels cease operation when the new facility is operational or by November 30, 2003, whichever occurs first. According to the DEC Staff, the reference to the new facility was not meant to compel it to be in operation by November 30, 2003. It was simply to serve as a date for the decommissioning of the diesels. The DEC Staff has agreed to reword this condition also to provide for the diesels to cease operation when the new facility is operational or by November 30, 2003, whichever occurs first and remove any requirement that the new facility be operational by a certain date.

3b Ruling: This issue has been resolved between the parties.

Issue Three(c)

The Village objects to the opacity monitoring condition. The draft modified permit includes a condition that there be daily opacity monitoring. The facility will not be operational daily and, therefore, daily testing is unnecessary. Department Staff conceded that its intent was for monitoring to occur when the facility is operating and has agreed to reword the language that the testing occur when it is operating.

3(c) Ruling: This issue has been resolved between the parties.

Issue Three(d)

The Village has objected to the emissions limits in the draft permit for particulate matter and NOx. The draft permit sets particulate emissions limits at 0.10 lbs. per million Btu(6) and NOx emissions at 9 grams per brake horsepower-hour pursuant to 6 NYCRR 227-2.4.

NOx limit: The Village has two arguments with respect to the NOx limit. First, it contends that with respect to the emissions limit for NOx, 6 NYCRR 227-2.4 (f) expressly provides for the Department to consider alternative technologies when the emissions limit cannot be met. Because the existing permit does not have a specific emission limit for NOx, then the DEC Staff must have approved the alternative technology in place at the facility when it issued the 1998 permit. The DEC Staff counters that section 227-2.4(f) requires it to identify a specific limit even if it exceeds the 9 grams limit and no specific limit is established in the existing permit, the Department must modify the permit to correct this mistake.

As to what alternative technology may have been approved by the DEC Staff in 1998, no offer of proof was made by the Village. I will not make any assumption that the DEC Staff accepted an alternative technology and intended to allow a higher emissions limit. DEC Staff is correct that section 227-2.4(f) requires a specific limit even if a variance is granted and no limit is established in the 1998 permit.

The Village also argues that the Department should not set limits without first considering alternative technology as provided for in Part 227. The DEC Staff acknowledges that Part 227 allows it to consider alternative control technology when the emissions limit can not be met and notes the Village must make "a clear and convincing demonstration that the control employed is RACT."(7) However, the issue is: can DEC Staff set emissions limits without first considering alternative control technology.

The Village argues that by setting a specific limit in the modified permit it is precluded from seeking a variance. (No legal authority was provided) I do not agree. Neither the regulations nor the Clean Air Act state this. The Village is free to apply for a variance from the specific emissions limits. I have found no authority requiring the Department to wait until that variance issue is decided before it sets specific limits. If a permit is being issued, it must contain specific emissions limits. The Clean Air Act requires all permits to include, among other things, enforceable emissions limitations and standards and a schedule of compliance. (Clean Air Act §504[a]) The limits can not be waived or put on hold while the Village applies for a variance.

Ruling: With respect to the emissions limits for NOx and the variance question, I find, as a matter of law, that the Clean Air Act and New York's SIP require permits to contain specific limits. Those limits are missing and the Department is well within its authority to seek a modification to correct that error. No additional useful information could be furnished on this issue if it were to proceed to a hearing. This matter is a question of law, not fact, and is best resolved now. The issues does not meet the standards for adjudication.

Particulate matter limit: The Village objected to the particulate limit in the draft permit. The Clean Air Act sets the limit for particulate matter emissions from this source at 0.10 lbs per million Btu/hour of heat input. New York State included in its SIP a particulate limit of 0.20 lbs per million Btus. The SIP must be approved by the EPA to be in effect. There is no dispute among the parties that the EPA did not approve this higher limit for particulate matter. Therefore, the limit that is applicable is the limit found in the Clean Air Act, 0.10 lbs. per million Btus.

The Village, in its post-issues conference brief, argues that applying this limit is a selective and discriminatory policy directed against the Village. The Village points to the fact that although New York has been aware that the EPA rejected the higher particulate standard, it has not acted to amend its regulations to set the lower limit. The Village has interpreted this to mean that the Department's policy is to accept a higher limit and the Village can meet this higher limit with regards to the diesels. However, at the issues conference, counsel for the Village acknowledged that the 0.10 limit for particulate matter does apply to the diesels. "We are not challenging that the Clean Air Act applies." (Issues Conference Transcript at p. 56) The Village also acknowledged at the issues conference that it can not comply with this limit. The Village is seeking more time to either apply for a variance or explore means of coming into compliance and is challenging the permit to get that additional time.

3d Ruling: While the Village has raised a dispute with a substantial term or condition of the permit (emissions limits), this issue is a question of law and not fact. There are no emissions limits for particulate matter or NOx in the current permit. The Clean Air Act requires specific emissions limits. Clean Air Act §504(a). The Department must modify the permit to include these limits. The Village may apply for a variance after specific limits are in the permit. There are no further facts that could be garnered at a hearing to assist in the resolution of this issue. It is simply a question of law. The facts are clear, the existing permit has no emissions limits for the diesels and the Clean Air Act and New York regulations require limits in the permit. This issue does not meet the standards for adjudication.

Issue Four

The Village proposes as its final issue that the DEC Staff- imposed shut-down schedule is arbitrary because it is not linked to a reasonable schedule for commencement of commercial operations by the new facility. The Village has been issued a permit to construct and operate a new gas turbine facility. The draft modified permit contains a condition that the diesels cease operating when the new facility is operational or November 30, 2003, whichever occurs first. The Village has stated that the new facility will not be operational by November 30 and it wants to keep the diesels in operation until such time as the new facility is operational. The DEC Staff stated that it was being generous with the Village in allowing it to operate through November 30, 2003 which would take them through the time of highest electric demand (summer), the time it would most likely be called upon to operate.

The Village has submitted stack tests for the diesels dating back many years that show that the diesels are exceeding the emissions limits for particulate matter and NOx allowed for in the Clean Air Act and New York's implementing regulations.

The Department has the authority for and the responsibility of ensuring that the Clean Air Act is being complied with by facilities in New York. The Village's plant is not in compliance. The Department must include a compliance schedule in the permit and the compliance schedule in this draft modified permit calls for the facility to close by November 30, 2003. The Village acknowledges it can not bring the plant into compliance with respect to particulate matter and may not be able to with NOx.

To its credit the Village is not opposing the closing of the power plant, only the date of closing. The Village, is however, seeking additional time to operate so that it can bring the new facility into operation before closing the existing plant. The Village also argues that it is seeking this extension of time to operate so that it has more time to apply for a variance or impose control technology if a variance is denied.

Ruling 4: I find that this issue meets the standards for adjudication as defined at 624.4(c)(1)(i) as it relates to a dispute between DEC Staff and the Permittee over a substantial condition of the draft modified permit. This issue will proceed to hearing.

Petitions for Party Status

Standards for identifying issues for adjudication and party status

The purpose of the issues conference is to obtain sufficient information to determine who should be afforded party status and whether substantive or significant issues exist which require adjudication. The ALJ shall make a determination of party status pursuant to 6 NYCRR 624.5(d). The ALJ shall make a ruling on the request based upon a finding that the petitioner has raised a substantive and significant issue or that the petitioner can make a meaningful contribution to the record regarding a substantive and significant issue raised by another party and a demonstration of an adequate environmental interest. 6 NYCRR 624.5(d)(1)(i). The petition for party status must also meet the requirements of 6 NYCRR624.5 (b) which details the required contents of the petition.

Substantive and significant are defined at 6 NYCRR 624.4(c)(2) & (3). 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. 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. "The offer of proof can take the form of proposed testimony, usually that of an expert, or the identification of some defect or omission... an intervener must make a credible showing that such a defect is present and likely to affect permit issuance in a substantial way. In all such instances a conclusory statement without a factual foundation is not sufficient to raise issues." (In the Matter of Halfmoon Water Improvement Area, Decision of the Commissioner dated April 2, 1982).

A. OLCA PETITION

OLCA filed a petition for party status that failed to identify any issues for adjudication. However, at the issues conference a request was made to amend the petition and the request was granted over the objection of the Permittee. OLCA then proposed three issues for adjudication.

(1) The charter that created Freeport Electric should be reviewed to see if it grants the authority to the Permittee to sell electricity it generates outside of the Village.

(2) The Village's 1996 Flood Plain Management Plan can not be followed if the plant continues to operate where it is located.

(3) OLCA or another group/person should be charged with the duty of overseeing the plant operation to ensure compliance because the Permittee has not been conducting itself in a proper manner.

Issue one

OLCA has raised the question of whether the charter that created the Permittee authorizes the Permittee to sell power to those outside the Village of Freeport. OLCA represents that this charter was issued in the 1800's. The group has been attempting to get a copy of the charter for a number of years but has not been successful. It is acknowledged by the Permittee that the Village sells the electricity it generates to LIPA and that the power is not used solely for the benefit of the Village residents.

I have not seen the charter and do not know what restrictions it may place on the Permittee. I do not have any authority to review this issue because it does not relate to the basis for permit modification as detailed in the Notice of Intent to Modify. It is not related to the modifications sought by DEC Staff. The DEC Staff is not seeking to limit, restrict, or direct the Permittee on the use of the electricity that is generated.

Ruling: This issue does not meet the standards for an adjudicable issue.

Issue two

According to OLCA the Village of Freeport created a Flood Plain Management Plan in 1996 "in order to get a better rate on flood insurance for businesses and residences." The plan is to minimize storm damage in the event of a hurricane or other serious, but less significant storm. The DEC Staff responded to this by stating the issue is best addressed in the State Environmental Quality Review (SEQR) process for the new facility. The Village of Freeport was lead agency in the SEQR review for the Village's permit application and issued a Negative Declaration in June, 2002.

This permit modification proceeding is a Type II action as defined in 6 NYCRR 617.5 and is not subject to review under the SEQR Act. Also, this issue is beyond my authority as well. It is not related to the permit modifications that the DEC Staff is seeking and I have no authority to review this question.

Ruling: This issue does not meet the standards for an adjudicable issue.

Issue Three

The third issue proposed is one related to past practices of the Permittee. OLCA represents that the Permittee has not always acted in accordance with the terms of the existing permit and, because of that, there should be someone who monitors its actions to ensure compliance or bring violations to the Department's attention. OLCA stated that the Permittee has lied to the DEC and to other state agencies with regards to this plant. The Village countered that no specifics were given by OLCA in making these assertions.

OLCA has not identified anything specifically that was done by the Permittee that was in violation of the current permit. It cited examples of residents of the Freeport area "watching over" the power plant and reporting its observations to DEC Staff. Certainly they may continue this informal, unofficial oversight of the facility. However, this does meet the standards of an adjudicable issue as it does not related to the basis for the modification and does not create sufficient doubt about the applicant's ability to meet statutory or regulatory criteria applicable to the project or have the potential to result in permit denial, major modification to the project or imposition of significant conditions.

Ruling: This is not an issue that meets the standards for adjudication.

I do not find that any issue proposed by OLCA requires adjudication.

B. NYPIRG PETITION

NYPIRG proposed fourteen issues for adjudication in its petition for party status. At the issues conference, NYPIRG withdrew five of those issues without discussion. I will now address the remaining nine issues.

Issue One

NYPIRG proposed the issue that the federally approved particulate emission rate be included in the modified permit. The DEC Staff has included this in the modified permit and in fact, it is one of the key modifications. NYPIRG indicated at the Issues Conference that this issue was raised to avoid the lower limit of 0.2 lbs. per million Btus from being put in the permit. As addressed above, this 0.2 limit set by New York in its SIP was not approved by the EPA and as such, the federal limit of 0.1 lbs. is the only applicable limit.

Ruling: This issue has been adequately addressed by DEC Staff in the modified permit and has been addressed.

Issue Two

NYPIRG raised as its second issue that the permit must contain the 9 grams per brakehorse-power limit for NOx. As noted above, that is already contained in the modified permit.

Ruling: This issue has been resolved.

Issue Three

NYPIRG raises as a third issue that the modified permit, as written, allows the diesels to operate out of compliance until they are decommissioned. NYPIRG questions why there is no compliance schedule in place until the diesels shut down. Although this issue was raised by NYPIRG in its petition for party status, NYPIRG backed away from this position at the issues conference. It is acknowledged by DEC Staff that the diesels can not come into compliance and therefore, the DEC Staff has established a compliance schedule requiring a shut down of the diesels in a few months.

The Clean Air Act requires the Department to include a compliance schedule in the permit. Clean Air Act §504(a). Because there is a compliance schedule set by the DEC Staff that is rational and addresses the noncompliance within months, NYPIRG's objection is without merit.

Ruling: This issue does not meet the standards for an adjudicable issue.

Issue Four

NYPIRG has proposed as an issue that the DEC Staff should be seeking the immediate shut down of the facility because it can not come into compliance. However, at the issues conference NYPIRG indicated several times that it would compromise on the request for immediate shut down and accept that the DEC Staff is seeking a shut down in the very near future.

Ruling: This issue has been resolved.

Issue Five(a)

NYPIRG has proposed that the modified permit, as written, does not ensure permanent decommissioning of the diesels once they are shut down. The DEC Staff and the Village agreed to work out language that clearly indicates that once decommissioned, these diesels will never operate again.

Ruling Five(a): Based upon the statements made by the Village that it will not seek to operate the diesels again once they are decommissioned, and based upon the DEC Staff's statements that it will reword the permit language to make it more concrete that the diesels are permanently decommissioned, I find that the issue, as proposed, has been resolved.

Issue Five(b)

NYPIRG objects to the modified permit's failure to require sufficient testing. NYPIRG has requested more stringent opacity testing than provided for in the draft modified permit. NYPIRG proposes that the facility be required to install continuous emissions monitors and continuous opacity monitors. The Village objects to this more stringent testing. The DEC Staff's position is that because this facility will be operating on an emergency basis only, and because it will be in operation for only a few more months, this type of testing is unnecessary. The condition as written in the draft permit requires that the stacks or vents be observed once per day for visible emissions during daylight hours and the observations be recorded in a logbook. If any visible emissions are observed for two consecutive days, then a Method 9 analysis must be conducted within two days of the occurrence and the results recorded in the logbook. The operator is also required to contact the Regional Air Pollution Control Engineer within one business day if the opacity standard is contravened.

The parties acknowledge that the diesels do not meet the applicable emissions limits for particulate matter and NOx. It is also agreed that the diesels should be decommissioned. The DEC Staff proposes that this facility operate on only a very limited, emergency basis and that the diesels be decommissioned by November 30, 2003 or when the new facility is operational. That is less than 5 months from now. The DEC Staff's position on testing seems quite reasonable and practical.

Ruling Five (b): The issue, as raised by NYPIRG does not met the standards for an adjudicable issue as defined in section 624.4(c)(iii) because is not substantive nor significant. The DEC Staff has drafted a permit condition that complies with New York statutes and regulations and the Clean Air Act. The DEC Staff has the trained personnel to make the determination which permit condition should be included to meet the statutes and regulations. The condition is rational and consistent with the statutes and regulations.

No offer of proof was made by NYPIRG as to why the testing proposed by the DEC Staff was not sufficient. As noted above, "a conclusory statement without a factual foundation is not sufficient to raise issues." (Matter of Halfmoon Water Improvement Area, Decision of the Commissioner dated April 2, 1982). Accordingly, I do not find the issue meets the standards for an adjudicable issue.

Issue Five(c)

NYPIRG proposes that the permit does not require immediate stack tests for the diesels and that it should. NYPIRG acknowledges that the permit does require stack tests for the turbine. Based upon the fact that the diesels are being shut down, NYPIRG made an offer to withdraw this issue if the Permittee agreed to the November 30th shut down. While the Permittee does not agree to this date, I do not find that the issue, as proposed by the Permittee is adjudicable. DEC Staff indicated that they reviewed the matter and found the testing they called for to be adequate. The expertise of the DEC Staff is acknowledged and I defer to that expertise as there reasoning is rational in light of the Department's position that the diesels be shut down by November 30, 2003 or when the new facility is operational.

Ruling: The issue does not meet the standards for adjudication.

Issue Five(j)

This issue objected to the permit condition language regarding fuel. The modified permit requires a low sulphur content fuel to be used. NYPIRG questioned the lack of monitoring regarding this condition. At the issues conference the DEC Staff further explained the language in the permit and pointed out where it does require testing of the fuel to be used. NYPIRG was satisfied with that clarification. I deem the issue withdrawn.

Issue Five(k)

NYPIRG asked that the contract between the Permittee and LIPA be attached if the DEC Staff referenced it as a condition. However, it was agreed during the issues conference that the DEC Staff was removing all language regarding that contract and rewriting the condition to set the hours of operation to comply with the language in that contract. Therefore, I deem this issue withdrawn.

For the reasons stated above, the issued proposed by OLCA and NYPIRG do not meet the standards for adjudicable issues.

Ruling on party status

There is one issue that will be adjudicated, the date the diesels at power plant #2 are shut down. NYPIRG conceded that many of the issues it proposed would be withdrawn if the facility does close by November 30, 2003. I believe that NYPIRG can make a significant contribution at the hearing on this issue and am granting its petition for party status. In addition to contributing to the record at the hearing, NYPIRG has demonstrated an adequate environmental interest. It stated that it has members that reside in the area of this facility. Also, the experience and knowledge of NYPIRG will be beneficial at the hearing.

OLCA has demonstrated an adequate environmental interest, its members are those who are affected most directly by the continued operation of this facility. Also, OLCA's work over the years, monitoring this facility and obtaining records, could prove beneficial as it may have information about this facility that the Department is not aware of. DEC Staff acknowledged that OLCA was instrumental in the Department initiating the modification proceeding in 2001. In light of this, I am granting OLCA's petition for party status as well.

Consolidation of parties with similar viewpoints and input is provided for in 6 NYCRR 624.8(b)(xi), and serves to make the hearing process more efficient. DEC Staff proposed consolidating the two intervenors as their interests are closely related. OLCA is not represented by counsel and NYPIRG is. NYPIRG is experienced in DEC hearings having participated in many Department hearings. I believe that OLCA would benefit by being assisted at the hearing by NYPIRG and therefore I am consolidating the two intervenors.

APPEALS

Pursuant to 6 NYCRR 624.6(e)and (g),and 6 NYCRR 624.8(d), these rulings on party status and issues may be appealed in writing to the Commissioner. Appeals are due by July 31, 2003. Replies are due by August 11, 2003.

Any appeal must be received at the office of the Commissioner no later than 4:00 P.M. on the date specified, at the following address: Commissioner Erin M. Crotty, NYS Department of Environmental Conservation, 625 Broadway, Albany, New York 12233-1010.

The parties are to transmit copies of any appeals to all persons on the service list at the same time and in the same manner as they are sent to the Commissioner. Two copies should be served on the Administrative Law Judge. Service by fax is not authorized.

Appeals should address these rulings directly, rather than merely restating a party's contentions. Pursuant to 6 NYCRR 624.8(d)(7), there will be no adjournment of the hearing during appeal except by permission of the ALJ.

/s/
Molly T. McBride
Administrative Law Judge
Albany, New York

July 18, 2003

To: Service List

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

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

3. An additional issue was proposed concerning the low sulfur oil condition in the draft modified permit but, this issue was withdrawn by the Village.

4. One of the five grounds is that the permit is not in compliance with previously issued permit conditions, orders of the commissioner, any provision of the ECL or regulations of the department related to permit activity. [6 NYCRR 621.14(a)(5)]

5. 5Matt Reis, DEC Staff engineer spoke on behalf of the Department at a legislative hearing the evening before the issues conference.

6. 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.

7. Section 227-2.4(f) Note: "When utilizing an alternative technology, a clear and convincing demonstration that the control employed is RACT, including technical and economic advantages to combustion modifications, must be made to the department."

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