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Keyspan Energy Development Corporation - Decision, February 25, 2003

Decision, February 25, 2003

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
625 Broadway
Albany, New York 12233-1011

In the Matter

- of -

Application for a State Pollutant Discharge Elimination System permit pursuant
to Environmental Conservation Law (ECL) Article 17 and Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR)
Parts 750 et seq., and Air Pollution Control permits consisting of a Preconstruction
permit and a Certificate to Operate, pursuant to ECL Article 19 and 6 NYCRR Parts 200 et seq.,

- by -

KEYSPAN ENERGY DEVELOPMENT CORPORATION,

DEC No. 1-4726-01500/00001

DECISION

FEBRUARY 25 , 2003

Decision of the Commissioner

The attached Hearing Report by Administrative Law Judge ("ALJ") Kevin Casutto in the Matter of the Application of Keyspan Energy Development Corporation (the "Applicant") for permits to construct and operate a 250 megawatt (MW) combined-cycle electric generating facility on Spagnoli Road in the Town of Huntington, Suffolk County, New York, is hereby adopted as my Decision on the issue that was adjudicated in this matter, subject to my comments below.

The sole issue adjudicated in the DEC permit proceedings, in accordance with the direction set forth in my November 15, 2002 Interim Decision, concerned the sufficiency of the alternative sites analysis undertaken by the Applicant as required by 6 NYCRR 231-2.4(a)(2)(ii) ("Part 231"). Part 231 requirements are part of a regulatory scheme to control new sources of air pollution in areas that are in non-attainment for one or more criteria pollutants. Any review of alternative sites analyses undertaken in accordance with Part 231 must recognize its relation to this Non-Attainment New Source Review ("NSR") program and its goal of furthering attainment of the National Ambient Air Quality Standards ("NAAQS").

Upon my review of the record and the ALJ's hearing report, it is clear that there is ample evidence that the Applicant has conducted a thorough alternative sites analysis in accordance with the requirements set forth in Part 231. In particular, the project, as proposed at the Spagnoli Road site, will utilize control technologies, emission reduction credits and will result in the displacement of older generation facilities which will ensure that the project will meet or exceed all relevant federal and state air quality requirements. In contrast, the intervenor has failed to provide any affirmative evidence demonstrating that any of the proposed alternative sites, all of which are located in the same severe ozone non-attainment area, offered greater environmental benefits, particularly from an air quality standpoint.

As I am satisfied that the requirements of Part 231 have been met, I direct Staff to issue the pertinent permits consistent with this Decision and to provide such permits to the Siting Board consistent with Public Service Law Section 172.1.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: Erin M. Crotty, Commissioner

Dated: Albany, New York
February 25, 2003

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

625 Broadway
Albany, New York 12233-1550

In the Matter

- of -

Application for a State Pollutant Discharge Elimination System permit pursuant to
Environmental Conservation Law (ECL) Article 17 and Title 6 of the
Official Compilation of Codes, Rules and Regulations of the State of New York (6 NYCRR)
Parts 750 et seq., and Air Pollution Control permits consisting of a Preconstruction permit
and a Certificate to Operate, pursuant to ECL Article 19 and 6 NYCRR Parts 200 et seq., by

KEYSPAN ENERGY DEVELOPMENT CORPORATION,

DEC No. 1-4726-01500/00001

HEARING REPORT

- by -

____________/s/____________
Kevin J. Casutto
Public Service Law Article X Associate Examiner and
NYSDEC Administrative Law Judge

February 3, 2003

Proceedings

I. The Application and Project Description

In March 2002, KeySpan Energy Development Corporation (KEDC or the applicant) applied for a Certificate of Environmental Compatibility and Public Need pursuant to Article X of the New York Public Service Law (PSL)(1) and Air Pollution Control and State Pollutant Discharge Elimination System (SPDES)permits, to construct and operate a 250 megawatt (MW) combined-cycle electric generating facility (facility or project). The facility site is located on Spagnoli Road in the Town of Huntington, Suffolk County, New York. The proposed facility site is approximately 31.7 acres in area and is located on the south side of Spagnoli Road. The site is about one-half mile west of Route 110, in the southwest corner of the Town of Huntington, near the Nassau County-Suffolk County line.

The proposed facility would consist of a combustion turbine generator operating with a heat recovery steam generator, a steam turbine generator, an air-cooled condenser and associated balance-of-plant systems and facilities. The sole fuel would be natural gas. The applicant proposes to install an oxidation catalyst system to reduce emissions of carbon monoxide (CO) and volatile organic compounds (VOCs). In addition, the applicant proposes to use dry low-NOx combustors and Selective Catalytic Reduction (SCR) to control formation of nitrogen oxides (NOx) and associated emissions. The air emissions resulting from the turbines and generators will be vented through a single 195 foot high exhaust stack.

The facility's water supply requirements are projected to range from approximately 29 gallons per minute (gpm; 0.042 million gallons per day[mgd]) during fall, winter and spring operations, to approximately 54 gpm (0.078 mgd) during summer operations. Water supply for the facility would be provided from the South Huntington Water District (the Water District). Process and sanitary wastewater will be routed to the Bergen Point Sewage Treatment Plant. Stormwater from site runoff and secondary containment areas will be discharged to a refurbished infiltration basin. The entire facility area is zoned for light industrial and office use.

KEDC contends that the proposed facility will be a state-of-the-art facility whose air emissions will be minimized to the extent attainable by available technology. Further, it is KEDC's view that, taken as a whole, the proposed facility actually is expected to deliver a net reduction in air emissions, both regionally and within the Town of Huntington. These net reductions are attributable to the projected displacement of existing electric generation emission sources, the agreed-upon addition of gas capability at KeySpan's existing Northport Unit 3, other emissions-reducing public benefit commitments and the purchase of emissions reduction credits.(2)

Procedural History

KEDC's Application for a PSL Article X certificate also included a request for a SPDES permit and Air Pollution Control permits (pursuant to 6 NYCRR Parts 201, 231 and 750, et seq.). The Staff of the N.Y.S. Department of Environmental Conservation (DEC Staff) reviewed KEDC's SPDES and air permit applications, and subsequently developed draft SPDES and air permits. The draft permits were issued under cover of letter dated April 2, 2002 (including an Air Title V permit, captioned 'Air State Facility Permit' pursuant to 6 NYCRR Parts 201 and 231, that also addresses the applicant's Air Title IV [acid rain] permit application [hereinafter, the draft Air permit(s)] and a draft Industrial SPDES permit).

The Legislative Hearing and Issues Conference

A DEC Combined Notice of Public Hearing and Issues Conference (the Notice) was published in the DEC's electronic Environmental Notice Bulletin and appeared as a legal notice in Newsday on April 3, 2002.

The Notice advertised a joint legislative hearing (public statement hearing) and issues conference pursuant to PSL Article X and the ECL. The Notice provided for a 34-day comment period, and advertised the schedule for a legislative hearing and an issues conference, to be held on a joint record with the related PSL Article X proceeding.

A legislative hearing was held on May 7, 2002 with sessions at 1:00 p.m. and 7:00 p.m. at the Auditorium at Old Bethpage Village, 1303 Round Swamp Road, Old Bethpage, New York. The joint issues conference was held on May 10, 2002 at One Penn Plaza, New York, New York. PSL Article X Presiding Examiner, Hon. Robert R. Garlin, and Hon. Kevin J. Casutto (as Associate Examiner) co-presided during this joint issues conference. Presiding Examiner Garlin led the discussion of the PSL Article X pre-hearing conference discussion of proposed adjudicable issues, and Associate Examiner Casutto led the discussion of proposed DEC issues. At the applicant's request, a briefing schedule was set with final filing due on May 28, 2002, later extended to May 30, 2002.

On June 21, 2002, the Associate Examiner issued a Rulings on Proposed Adjudicable Issues and Petitions for Party Status (Issues Ruling). The Issues Ruling identified no issues concerning the SPDES permit. With respect to the air permits, the Issues Ruling identified only one issue for adjudication, concerning the alternatives analysis performed by the applicant pursuant to 6 NYCRR 231-2.4(a)(2)(ii).

The Issues Ruling expressly limited the alternatives issue to the alternative sites considered by applicant in its Application pursuant to PSL Article X. Subsequently, the South Huntington Alliance for Responsible Energy Development, Arrow Electronics, Inc., Gilbert Displays, Inc. and Marchon Eyewear, Inc. (collectively, SHARED) appealed from six rulings of the Issues Ruling, including two rulings related to cumulative impact analysis of air emissions; one ruling related to alternatives; one ruling related to the Generation Purchase Right Agreement, dated June 26, 1997 (GPRA), between the Long Island Power Authority (LIPA) and Long Island Lighting Company (LILCO) and acknowledged by KEDC Generation, LLC; and two rulings related to the SPDES permit for the proposed facility.

The Interim Decision

All of the issues raised by SHARED on appeal were rejected by the DEC Commissioner in her November 15, 2002 Interim Decision (Interim Decision). The Interim Decision affirmed the Issues Ruling in all respects. Consequently, the only remaining adjudicable issue in the DEC component of this joint proceeding is the alternative sites issue identified in the Issues Ruling.

Associate Examiner Casutto convened a conference call on December 12, 2002, during which all parties agreed that no further hearings to receive evidence concerning the alternative sites issue were warranted. (Also during the December 12, 2002 conference call, the Examiners invited additional briefing on certain alternatives issues relating to the Article X proceeding). A Scheduling Memorandum dated December 13, 2002 (Scheduling Memorandum) set forth the questions to be addressed by the parties by brief.

The Scheduling Memorandum directed the parties to address whether the record satisfies the requirements of 6 NYCRR 231-2.4(a)(2)(ii), under the Borden-Con Edison East River three prong test.(3) Scheduling Memorandum at 2. See also Interim Decision at 7 (adequacy of applicant's site analysis to be adjudicated as recommended by ALJ). Briefs were timely received by electronic filing; the record closed on January 14, 2003 with receipt of paper copies of the briefs.

The Adjudicatory Issue

6 NYCRR 231-2.4(a)(2)(ii) states, in pertinent part, that an applicant shall:

submit an analysis of alternative sites, sizes, production processes, and environmental control techniques which demonstrates that benefits of the proposed source project or proposed major facility significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification within New York State . . . .(4)

Implementation of this requirement is not informed by any United States Environmental Protection Agency (EPA) or DEC interpretive guidance or regulations concerning the provision. There are "no express requirements concerning the particular contents of an alternatives analysis nor has EPA promulgated any regulations regarding this analysis interpreting this statutory language." DEC Case No. 2-6301-00647/00001, Application of Astoria Energy, LLC, Article X and DEC Part 624 Issues Rulings (issued May 24, 2001) at 14. However, the DEC Commissioner has adopted the three prong test originally set forth in a Louisiana state court decision interpreting similar, but not identical, requirements.(5)

As set forth in the Scheduling Memorandum, the three prong test adopted by DEC for determining whether the requirements of 6 NYCRR 231-2.4(a)(2)(ii) have been satisfied is as follows:

First, the applicant must show whether the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible. Second, the applicant must show whether a cost benefit analysis of the environmental impact costs balanced against the social and economic benefits of the project demonstrate that the latter outweigh the former. Lastly, the applicant must show whether there are alternative projects or alternative sites or mitigating measures which would offer more protection to the environment than the proposed project without unduly curtailing non-environmental benefits to the extent applicable.

Scheduling Memorandum at 1-2 (quoting Interim Decision at 7 (citing Issues Ruling at 11)).(6)

In this case, both the Issues Ruling and the Interim Decision, restricted the issue to inquiry regarding alternative sites. Issues Ruling at 12, Interim Decision at 7 ("since the ruling of the ALJ requiring adjudication was limited to alternative sites, the adjudication shall be confined solely to that issue and will not include other possible subjects of alternative analysis").

The applicant and DEC Staff, citing USEPA precedent, contend that petitioners challenging a CAA/Part 231 alternatives analysis bear a heavy burden of persuasion:

Our decisions have distinguished between instances where a permit issuer has failed to undertake an analysis required by the Clean Air Act, and instances where the analysis was performed but the issuer arrived at a conclusion that a petitioner disagrees with ... [W]hen an analysis has been performed and a determination made, those favoring a different outcome must show that the evidence "for" the outcome clearly outweighs the evidence "against" the outcome. That heavy burden is particularly appropriate where, as here, the nature of the decision to be made is inherently subjective.

In re: Campo Landfill Project, 1996 WL 344522 (EPA), *10-11, Order Denying Review in Part and Remanding in Part (June 16, 1996) (emphasis added; citation omitted)). See also DEC Case No. 2-6304-00024/00004, Application of KeySpan Energy, Part 624 Issues Ruling (issued Apr. 18, 2001) at n.6 (stating that EPA made clear in Campo that remand is likely only where alternatives analysis was not performed at all unless those favoring a different outcome "show how the evidence clearly outweighs the choice made"); Siting Board Case 96-F-1627, Application by New York Power Authority, Article X and DEC Part 624 Issues Ruling (issued July 19, 2001) at 11 (noting DEC Staff's position that applicants "bear a very low burden to demonstrate compliance with alternatives analysis" under 6 NYCRR 231-2.4(a)(2)(ii)).

In applying these standards in the analysis below, it is recommended that the Commissioner find that SHARED has not carried its burden of proof on this alternative sites issue.

Findings of Fact

The Potential and Real Adverse Impacts of the Proposed Facility

  1. The Spagnoli site lacks any evidence of freshwater wetlands. More importantly, the site is not connected to jurisdictional waters of the United States and lacks both hydric soils and wetland hydrology.
  2. Impact avoidance and mitigation features of the facility, include the following:
    1. Air resources: measures include operating under DEC air permit, Northport Unit 3 gas addition, CNG fleet conversion, Dix Hills Skating Rink conversion, individual pollution controls, use of Emissions Reduction Credits (ERCs), displacement of other, older generation facilities. See, Joint Stipulations, Air Resources Topic Agreement, §§ II and III.
    2. Land use: measures include lighting plan, fugitive dust control, compliance with fire prevention and building codes, noise absorption wall, low noise air-cooled condenser. See, Joint Stipulations, Land Use/Local Laws/Decommissioning Topic Agreement, §§ II and IV.
    3. Noise: measures include mufflers on construction equipment, restricted construction hours, compliance with OSHA requirements, temporary vent silencer on steam-blow vent during pipe clean out, silencers incorporated into safety valves, attainment of CNR rating of "C" or better during operation, low noise air-cooled condenser, sound transmission wall, operational noise evaluation report, low noise transformer. See, Joint Stipulations, Noise Topic Agreement, § II.
    4. Soils, geology, seismology and tsunami occurrence: measures include seismic design, location in area of low earthquake frequency. See, Joint Stipulations, Soils Geology, Seismology and Tsunami Occurrence Topic Agreement, §§ II and III.
    5. Terrestrial ecology: measures include landscaping plan and fugitive dust control; ecological impacts will be minimized due to lack of presence of endangered or threatened species or significant biological resources. See, Joint Stipulations, Terrestrial Ecology Topic Agreement, §§ II and III.
    6. Traffic and transportation: measures include on-site parking for construction personnel, coordination with traffic authorities, shift changes during off-peak hours, large truck deliveries scheduled during off-peak periods, minimal chemical deliveries, reduction of stack height, operating under applicable permits related to thoroughfare interference. Analysis showed no impact on overall Levels of Service at studied intersections during construction or operating periods; FAA determined no aviation impact. See, Joint Stipulations, Traffic and Transportation Topic Agreement, §§ II and III.
    7. Visual and cultural resources: measures include use of low glare architectural treatments, avoidance of water or steam injection in NOx controls, lighting plan, landscape development and maintenance plan, screening, landscaping, project design that minimizes visual impacts, unanticipated discovery plan. See, Joint Stipulations, Visual and Cultural Resources Topic Agreement, §§ II and III.
    8. Water resources: measures include compliance with effluent limitations imposed under SPDES permit, location of chemical storage facilities indoors (except aqueous ammonia), compliance with all chemical and waste handling requirements, implementation of Storm Water Pollution Prevention Plan and Spill Response Plan, utilization of air cooling to minimize water supply needs, absence of direct withdrawal or discharges from or to local groundwater resources; there will be no adverse impact on the Bergen Point Sewage Discharge Treatment Plant. See, Joint Stipulations, Water Resources Topic Agreement, §§ II and III.

Balancing the Social and Economic Benefits of the Proposed Facility Against Its Costs

  1. Two primary benefits of the facility are the provision of an additional 250 MW of energy to Long Island and tax revenues that would accrue to the Town from this use of the site.
  2. Development of the proposed facility will result in many social and economic benefits, including the following:overall net air emissions reduction; enhanced reliability of Long Island electric system; facility consistency with State Energy Plan; introduction of low electricity production costs on Long Island, with resulting reduction in location-based marginal price of electric energy; approximately 350 construction jobs at any given time amounting to a total primary economic infusion into local economy during construction of $26 million; total direct and indirect economic benefits to Nassau and Suffolk Counties during operations (exclusive of property taxes or similar assessments) will be approximately $3 million per year; utilization of union workers when available; economic power incentive for development of biotechnology and high technology sector along Route 110 Corridor; property taxes to be set at $3.588 million assessed value, which translates into annual property tax revenues of over $5 million, sufficient to finance a rate decrease for neighboring property owners; conversion of existing Unit 3 at the Northport Power station from exclusively oil-fired to dual (oil and natural gas)-fired capability; assistance to support Huntington's efforts to convert a portion of its vehicle fleet to compressed natural gas fuel;installation of energy efficient, clean-burning natural gas microturbine at Dix Hills Skating Rink; grants to support revitalization of Huntington Station; rent free provision of site property for use as soccer fields; and measures to promote education and awareness of renewable energy technologies.

The Alternative Sites

  1. Visual impacts of construction of a new 250 MW facility at the Northport or Shoreham/Wading River sites would be only "incremental" to the existing electric generation facilities at those sites.
  2. The most important disadvantage associated with each of the alternative sites is interconnection costs. The estimated incremental interconnection costs for each of the alternative sites are orders of magnitude greater than the interconnection costs for the Spagnoli facility site.
  3. Disadvantages associated with the No-Build alternative include the loss of the proposed facility benefits pertaining to emissions reductions, reliability improvements and reductions in the on-Island wholesale price of electricity.
  4. The proposed Spagnoli Road site is significantly farther from residences than any of the alternative sites.
  5. At Northport, piping plovers and least terns nest and forage on the beach adjacent to the areas proposed by SHARED for siting the proposed facility. These species are endangered or threatened under State law.
  6. The Northport location identified as the "Area 2" alternative location for the proposed facility currently is used for Huntington soccer fields and is adjacent to Huntington's boat ramp and boat ramp parking lot. In addition, the proposed Area 2 location is too remote to economically take advantage of existing infrastructure.
  7. Use of the Northport alternative site is likely to engender significant opposition from the adjacent Village of Asharoken.
  8. At Port Jefferson, insufficient space is available to accommodate the proposed facility. Although removal of existing on-site structures could in theory provide needed space, the demolition necessary to accommodate a 250 MW facility at Port Jefferson would add an additional $25 million to the estimated facility cost.
  9. In addition, due to aerodynamic downwash from existing plant structures at the Port Jefferson site and the surrounding higher terrain, this site could require a stack of 300 feet or more, significantly higher than the stack associated with the proposed facility.
  10. Development of the proposed facility at Shoreham/Wading River would result in the loss of woodlands that have been undisturbed for at least 25 years.
  11. The Northeast woodlands area of the Shoreham/Wading River site is adjacent to mapped tidal marshlands.
  12. Similarly, the E.F. Barrett alternative site lies within 300 feet of mapped tidal wetlands.

Discussion

6 NYCRR 231-2.4(a)(2)(ii)

The Part 231 alternative sites analysis requires the parties to marshal the record evidence in support of their respective interpretations of Part 231, since this has not been done previously. Nonetheless, as the parties have noted, these subjects (mitigation, comparison of costs and benefits, and comparison of alternatives) have been addressed in other contexts in the joint hearing record and joint stipulations (although SHARED has not executed the stipulations). As stated above, KEDC bears a low burden to demonstrate compliance with the alternative sites analysis under 6 NYCRR 231-2.4(a)(2)(ii). SHARED bears a heavy burden since the nature of the decision regarding alternative sites is inherently subjective.

SHARED contends that KEDC should not be issued an air pollution control new source permit for this facility, because KEDC cannot meet its burden of demonstrating compliance with the regulatory requirements of 6 NYCRR 231-2.4(a)(2)(ii). KEDC, in SHARED's view, has not shown that the adverse environment impacts of the facility have been avoided to the maximum extent possible, that the social and economic benefits of the facility significantly outweigh its environmental costs or that there are no alternatives to the facility that would offer more environmental protection without curtailing its non-environmental benefits.

Following is a discussion of the 6 NYCRR 231-2.4(a)(2)(ii)/Borden-Con Ed East River three prong test.

  1. The Potential and Real Adverse Impacts of the Proposed Facility Have Been Avoided to the Maximum Extent Possible

    As noted, the first prong of the three-prong Borden-Con Ed East River test requires that "the applicant must show whether the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible."

    SHARED contends that the following adverse environmental effects have not been avoided to the maximum extent possible. First, SHARED contends that the proposed facility would violate the Zoning Code of the Town of Huntington (the Town) in several respects, and thus would be inconsistent with the Town's permitted land uses for the site and the area. Related to the zoning concern, SHARED argues that the facility would violate the Town's Comprehensive Plan and adversely change the character of the area.

    In addition, SHARED asserts that the facility would adversely impact federal wetlands on the site, which are important natural resources. But, the DEC Staff concluded that the Spagnoli site lacked any evidence of freshwater wetlands. See, Minutes of Evidentiary Hearing (Tr.) at 1798:2. More importantly, the U.S. Army Corps of Engineers found that the site is not connected to jurisdictional waters of the United States and lacks both hydric soils and wetland hydrology.

    Next, SHARED asserts flaws in KEDC's visual impact analysis, contending that the analysis contains an inaccurate description of the character of the surrounding area, a flawed use of the Visual Resources Assessment Procedure, fails to adequately evaluate the visible plume that would be emitted by the smokestack and failure to provide architectural drawings and a landscape plan. With respect to the latter item, SHARED concludes that the applicant cannot meet its burden of showing that such impacts would be mitigated to the maximum extent possible since no drawings or plans were submitted.

    SHARED's final contention is that the facility would likely lead to an exceedence of the PM-2.5 National Ambient Air Quality Standards in the surrounding facility area and cause adverse health impacts that remain unaddressed, and thus would not be mitigated.

    In sum, SHARED contends that KEDC has failed to demonstrate that these adverse environmental impacts would be avoided to the maximum extent possible, and therefore the first prong of the Borden-Con Ed East River test has not been satisfied. The facility, in SHARED's view, therefore must be denied an air pollution control new source permit.

    However, KEDC and DEC Staff have identified environmental impact avoidance and mitigation features of the facility, including the following:

    1. Air resources: measures include operating under DEC air permit, Northport Unit 3 gas addition, CNG fleet conversion, Dix Hills Skating Rink conversion, individual pollution controls, use of Emissions Reduction Credits (ERCs), displacement of other, older generation facilities. See, Joint Stipulations, Air Resources Topic Agreement, §§ II and III.
    2. Land use: measures include lighting plan, fugitive dust control, compliance with fire prevention and building codes, noise absorption wall, low noise air-cooled condenser. See, Joint Stipulations, Land Use/Local Laws/Decommissioning Topic Agreement, §§ II and IV.
    3. Noise: measures include mufflers on construction equipment, restricted construction hours, compliance with OSHA requirements, temporary vent silencer on steam-blow vent during pipe clean out, silencers incorporated into safety valves, attainment of CNR rating of "C" or better during operation, low noise air-cooled condenser, sound transmission wall, operational noise evaluation report, low noise transformer. See, Joint Stipulations, Noise Topic Agreement, § II.
    4. Soils, geology, seismology and tsunami occurrence: measures include seismic design, location in area of low earthquake frequency. See, Joint Stipulations, Soils Geology, Seismology and Tsunami Occurrence Topic Agreement, §§ II and III.
    5. Terrestrial ecology: measures include landscaping plan and fugitive dust control; ecological impacts will be minimized due to lack of presence of endangered or threatened species or significant biological resources. See, Joint Stipulations, Terrestrial Ecology Topic Agreement, §§ II and III.
    6. Traffic and transportation: measures include on-site parking for construction personnel, coordination with traffic authorities, shift changes during off-peak hours, large truck deliveries scheduled during off-peak periods, minimal chemical deliveries, reduction of stack height, operating under applicable permits related to thoroughfare interference. Analysis showed no impact on overall Levels of Service at studied intersections during construction or operating periods; FAA determined no aviation impact. See, Joint Stipulations, Traffic and Transportation Topic Agreement, §§ II and III.
    7. Visual and cultural resources: measures include use of low glare architectural treatments, avoidance of water or steam injection in NOx controls, lighting plan, landscape development and maintenance plan, screening, landscaping, project design that minimizes visual impacts, unanticipated discovery plan. See, Joint Stipulations, Visual and Cultural Resources Topic Agreement, §§ II and III.
    8. Water resources: measures include compliance with effluent limitations imposed under SPDES permit, location of chemical storage facilities indoors (except aqueous ammonia), compliance with all chemical and waste handling requirements, implementation of Storm Water Pollution Prevention Plan and Spill Response Plan, utilization of air cooling to minimize water supply needs, absence of direct withdrawal or discharges from or to local groundwater resources; there will be no adverse impact on the Bergen Point Sewage Discharge Treatment Plant. See, Joint Stipulations, Water Resources Topic Agreement, §§ II and III.
  2. Balancing the Social and Economic Benefits of the Proposed Facility Against Its Costs

    This prong essentially requires KEDC to quantify the costs and benefits of the proposed facility. SHARED argues that KEDC has failed to quantify the costs and benefits of the facility, and therefore, in SHARED's view, the record lacks critical information necessary to evaluate the facility's compliance with 6 NYCRR 231-2.4(a)(2)(ii).

    KEDC has identified two primary benefits of the facility; the provision of an additional 250 MW of energy to Long Island and tax revenues that would accrue to the Town from this use of the site. But, SHARED counters that these benefits would be outweighed by unmitigated adverse environmental impacts of the facility. With respect to the provision of 250 MW of additional power to Long Island, SHARED asserts that there are alternative sites from which the power could be generated that would avoid the adverse environmental impacts associated with the Spagnoli facility site. In addition, SHARED contends that a number of significant adverse environmental impacts of the facility, including impacts to the Town's Zoning Code, the Comprehensive Plan, and noise, air quality, health and visual impacts -- are adverse impacts with no concomitant benefits.

    Next, SHARED asserts that KEDC failed to quantify the economic and socioeconomic consequences of the facility that would likely result from the fundamental change in the character of the area from office park/commercial/light industrial to heavy industrial. In SHARED's view, siting the facility at the Spagnoli Road site would transform the area from an office district into a heavy industrial/manufacturing district. SHARED concludes that on Spagnoli Road, Arrow Electronics, Marchon Eyewear, Gilbert Displays and other high-quality office uses would leave, resulting in a loss of millions of dollars in real estate and income tax revenues to the community.

    Additionally, SHARED contends that the light industrial and office facilities in the project area represent investments by property owners of tens of millions of dollars in reliance upon the continuance of the existing zoning, which would not likely be recouped in the event of a sale of any of these facilities after approval of the facility.

    However, the record shows that development of the proposed facility will result in many social and economic benefits. The applicant and DEC Staff have identified the following social and economic benefits of the proposed facility:

    1. overall net air emissions reduction(7);
    2. enhanced reliability of Long Island electric system(8);
    3. facility consistency with State Energy Plan(9);
    4. introduction of low electricity production costs on Long Island, with resulting reduction in location-based marginal price of electric energy(10);
    5. approximately 350 construction jobs at any given time amounting to a total primary economic infusion into local economy during construction of $26 million(11);
    6. total direct and indirect economic benefits to Nassau and Suffolk Counties during operations (exclusive of property taxes or similar assessments) will be approximately $3 million per year(12);
    7. utilization of union workers when available(13);
    8. economic power incentive for development of biotechnology and high technology sector along Route 110 Corridor(14);
    9. property taxes to be set at $3.588 million assessed value, which translates into annual property tax revenues of over $5 million, sufficient to finance a rate decrease for neighboring property owners(15);
    10. conversion of existing Unit 3 at the Northport Power station from exclusively oil-fired to dual (oil and natural gas)-fired capability(16);
    11. assistance to support Huntington's efforts to convert a portion of its vehicle fleet to compressed natural gas fuel(17);
    12. installation of energy efficient, clean-burning natural gas microturbine at Dix Hills Skating Rink(18);
    13. grants to support revitalization of Huntington Station(19);
    14. rent free provision of site property for use as soccer fields(20); and
    15. measures to promote education and awareness of renewable energy technologies. It is recommended that the Commissioner find that the environmental and other benefits of the proposed facility outweigh any adverse environmental impacts from the facility, which will be subject to extensive mitigation measures.

    These benefits, as detailed in the Joint Stipulations, outweigh the environmental costs associated with this proposed facility. See Joint Stipulations, Public Interest Topic Agreement (listing public benefit commitments) and Air Resources Topic Agreement § IV.H (proposed facility's benefits significantly outweigh any adverse environmental and social costs).

  3. The Alternative Sites

    The comparative benefits and disadvantages of each of the alternative sites already has been litigated in other contexts in the proceeding. See, Tr. at 1866:3-2185:15; 2552:17-2972:2. With respect to the provision of 250 MW of additional power to Long Island, SHARED asserts that there are alternative sites from which the power could be generated that would avoid the adverse environmental impacts associated with the Spagnoli facility site.

    In addition, SHARED contends that KEDC acknowledges construction of the Spagnoli facility would create a new visual impact, yet KEDC fails to evaluate the visual impacts siting the facility at one of the alternative sites. Citing the testimony of DPS Staff witness Andrew Davis (and SHARED witness testimony), SHARED asserts that visual impacts of construction of a new 250 MW facility at the Northport or Shoreham/Wading River sites would be only "incremental" to the existing electric generation facilities at those sites. (Tr. at 902-04.) But, this ignores other impact comparisons between Northport (or Shoreham/Wading River) and the Spagnoli site.

    In response, KEDC contends that the most important disadvantage associated with each of the alternative sites is interconnection costs; the estimated incremental interconnection costs for each of the alternative sites are orders of magnitude greater than the interconnection costs for the Spagnoli facility site.

    These cost differentials alone strongly militate toward a finding that the proposed site is superior to any of the alternatives. Moreover, KEDC as a private entity cannot be compelled to construct the facility at any of the alternative sites at issue. In fact, KEDC contends that pursuit of such alternatives is not economically feasible due to the interconnection costs. Disadvantages associated with the No-Build alternative include the loss of the proposed facility benefits pertaining to emissions reductions, reliability improvements and reductions in the on-Island wholesale price of electricity. Furthermore, the proposed Spagnoli Road site is significantly farther from residences than any of the alternative sites(21).

    Factors other than cost and proximity to residences also weigh against consideration of the alternative sites. Following is a discussion of site specific factors for each alternative site:

    Northport

    At Northport, piping plovers and least terns nest and forage on the beach adjacent to the areas proposed by SHARED for siting the proposed facility. These species are endangered or threatened under State law.

    The Northport location identified by SHARED as "Area 2" as an alternative location for the proposed facility currently is used for Huntington soccer fields and is adjacent to Huntington's boat ramp and boat ramp parking lot. In addition, the proposed Area 2 location is too remote to economically take advantage of existing infrastructure.

    Lastly, use of the Northport alternative site is likely to engender significant opposition from the adjacent Village of Asharoken. Such opposition likely would express concerns regarding visual impacts of locating a 250 MW facility at this location. See Tr. 902:14-903:1 (Davis Testimony).

    Port Jefferson

    At Port Jefferson, insufficient space is available to accommodate the proposed facility, as SHARED recognizes. See Tr. at 905:14-19 (Davis Test.); see also, Tr. at 2758:11-12 (Gilmour Test.). Although removal of existing on-site structures could in theory provide needed space, KEDC estimates that the demolition necessary to accommodate a 250 MW facility at Port Jefferson would add an additional $25 million to the facility cost.(22) In addition, KEDC states that due to aerodynamic downwash from existing plant structures and the surrounding higher terrain, this site could require a stack of 300 feet or more, significantly higher than the stack associated with the proposed facility.

    The Shoreham/Wading River and E.F. Barrett Sites

    Development of the proposed facility at Shoreham/Wading River would result in the loss of woodlands that have been undisturbed for at least 25 years. The Northeast woodlands area of the site identified by SHARED for development is inferior to the Spagnoli site because it is adjacent to mapped tidal marshlands. Similarly, the alternative site proposed by SHARED at the E.F. Barrett site lies within 300 feet of mapped tidal wetlands.

    Repowering Alternatives

    SHARED argues that consideration of alternative sites under 6 NYCRR 231-2.4(a)(2)(ii), includes consideration of repowering existing facilities as an alternative to the present proposed facility. However, consideration of 'repowering alternatives' goes beyond the limited 'alternative sites' issue identified in the Issues Ruling and the Interim Decision. During the DEC issues conference, SHARED did not identify repowering as an issue, but only alternative sites.

    In the Interim Decision (and in the Issues Ruling), the issue identified for adjudication explicitly was limited to consideration only of alternative sites, not repowering and alternative sites. Therefore, consideration of repowering alternatives must be rejected because it is not an issue joined for adjudication. However, even if repowering alternatives were considered, as discussed below, SHARED has not demonstrated that these alternatives are superior projects to the present proposal. Therefore, SHARED's repowering alternatives should in any event be rejected by the commissioner.

    Next, SHARED argues that a comparable or even greater quantity of additional power could be obtained by repowering at one or more of the alternative sites owned or controlled by KEDC on Long Island. For example, SHARED contends that it would be feasible to generate a total of 770 MW by repowering an existing unit at KEDC's Northport facility, yielding an increment of 385 MW above the existing generation of that unit. (Tr. at 2731-32). But, as discussed above, siting the facility at Northport would cause additional adverse impacts to endangered species and/or also adversely impact the Town's recreational activities.

    The Brookhaven Facility

    Finally, in SHARED's view, a greater quantity of additional power than that proposed by KEDC would be provided to the Long Island electricity market from the recently certified Brookhaven Energy Project (Brookhaven; a 580 MW facility). SHARED contends that LIPA can only support one of these two proposed new facilities through LIPA's entrance into a long-term power purchase agreement that would enable the developers to obtain necessary financing to construct the facility. SHARED concludes that if LIPA supports the Spagnoli facility, it follows that Brookhaven would not be constructed, resulting in a loss of the additional 330 MW that otherwise would have been provided to the Long Island power capacity by the proposed Brookhaven facility.

    However, SHARED's contention about LIPA's support of these projects is speculative. Speculation regarding possible marketplace scenarios cannot provide a basis for denying this applicant a permit. At present, LIPA has not withdrawn its support for this project. Instead, these possible marketplace scenarios are KEDC's to consider in going forward with the permit application.

Conclusions of Law

  1. Implementation of 6 NYCRR 231-2.4(a)(2)(ii) is not informed by any United States Environmental Protection Agency (EPA) or DEC interpretive guidance or regulations concerning the provision. There are "no express requirements concerning the particular contents of an alternatives analysis nor has EPA promulgated any regulations regarding this analysis interpreting this statutory language." DEC Case No. 2-6301-00647/00001, Application of Astoria Energy, LLC, Article X and DEC Part 624 Issues Rulings (issued May 24, 2001) at 14. However, the DEC Commissioner has adopted the three prong test originally set forth in a Louisiana state court decision interpreting similar, but not identical, requirements. See, Save Ourselves, Inc. v. Louisiana Environmental Control Comm'n and the Louisiana Dep't of Natural Resources, 452 So.2d 1152 (La. 1984); Matter of Rubicon Inc., 670 So.2d 483 (La.App. 1st Cir. 1996) (cited in EPA Case 6-01-1, Matter of Operating Permit, Formaldehyde Plant, Borden Chemical, Inc., Administrator's Ruling (issued Dec. 22, 2000) (Borden) at 37-38).
  2. The three prong test adopted by DEC for determining whether the requirements of 6 NYCRR 231-2.4(a)(2)(ii) have been satisfied is as follows. First, the applicant must show whether the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible. Second, the applicant must show whether a cost benefit analysis of the environmental impact costs balanced against the social and economic benefits of the project demonstrate that the latter outweigh the former. Lastly, the applicant must show whether there are alternative projects or alternative sites or mitigating measures which would offer more protection to the environment than the proposed project without unduly curtailing non-environmental benefits to the extent applicable. See, Scheduling Memorandum at 1-2 (quoting Interim Decision at 7 (citing Issues Ruling at 11)); see also, Siting Board Case 99-F-1314, Application of Consolidated Edison Company of New York, Inc., Recommended Decision (issued June 28, 2001) at 62; Borden at 37-38.
  3. A petitioner challenging a Clean Air Act/Part 231 alternatives analysis bears a heavy burden of persuasion. In re: Campo Landfill Project, 1996 WL 344522 (EPA), 10-11, Order Denying Review in Part and Remanding in Part (June 16, 1996)[Our decisions have distinguished between instances where a permit issuer has failed to undertake an analysis required by the Clean Air Act, and instances where the analysis was performed but the issuer arrived at a conclusion that a petitioner disagrees with . . . [W]hen an analysis has been performed and a determination made, those favoring a different outcome must show that the evidence "for" the outcome clearly outweighs the evidence "against" the outcome. That heavy burden is particularly appropriate where, as here, the nature of the decision to be made is inherently subjective.] See also DEC Case No. 2-6304-00024/00004, Application of KeySpan Energy, Part 624 Issues Ruling (issued Apr. 18, 2001) at n.6 [EPA made clear in Campo that remand is likely only where alternatives analysis was not performed at all unless those favoring a different outcome "show how the evidence clearly outweighs the choice made"]; see also, Siting Board Case 96-F-1627, Application by New York Power Authority, Article X and DEC Part 624 Issues Ruling (issued July 19, 2001) at 11 [noting DEC Staff's position that applicants "bear a very low burden to demonstrate compliance with alternatives analysis" under 6 NYCRR 231-2.4(a)(2)(ii)].
  4. The Applicant has shown that the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible.
  5. The social and economic benefits of the project outweigh the costs of the project. It is recommended that the Commissioner find that the environmental and other benefits of the proposed facility outweigh any adverse environmental impacts from the facility, which will be subject to extensive mitigation measures.
  6. The record in this proceeding demonstrates that benefits of the proposed Spagnoli facility significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification within New York State.
  7. KEDC as a private entity cannot be compelled to construct the facility at any of the alternative sites at issue.
  8. Consideration of 'repowering alternatives' goes beyond the limited 'alternative sites' issue identified in the Issues Ruling and the Interim Decision. In the Interim Decision (and in the Issues Ruling), the issue identified for adjudication explicitly was limited to consideration only of alternative sites, not repowering and alternative sites. Therefore, consideration of repowering alternatives must be rejected because it is not an issue joined for adjudication.
  9. Even if repowering alternatives were considered, arguendo, SHARED has not demonstrated that these alternatives are superior projects to the present proposal. Therefore, SHARED's repowering alternatives should in any event be rejected by the commissioner.
  10. SHARED's contention about LIPA's support of the Brookhaven and Spagnoli projects is speculative. Speculation regarding possible marketplace scenarios cannot provide a basis for denying this applicant a permit. At present, LIPA has not withdrawn its support for this project. Instead, these possible marketplace scenarios are KEDC's to consider in going forward with the permit application.

Recommendation

In view of the above discussion, and considering the record as a whole, it is recommended that the DEC Commissioner determine that SHARED has not carried its heavy burden of showing that the evidence in favor of an alternative site clearly outweighs the evidence against the Spagnoli facility site. The Commissioner should remand this matter to DEC Staff for further processing and issuance of the air and SPDES permits.

1 See Department of Public Service Case No. 01-F-0761, Application by KeySpan Energy Development Corporation for a Certificate of Environmental Compatibility and Public Need to Construct and Operate a Nominal 250 Megawatt Combined Cycle Combustion Turbine Electric Generating Facility in the Town of Huntington, Suffolk County, New York.

2 See Joint Stipulations, dated November 18, 2002 (Joint Stipulations), Air Resources and Public Interest Topic Agreements.

3 Matter of Operating Permit, Formaldehyde Plant, Borden Chemical, Inc. (Borden), USEPA Administrator's Ruling, Case No. 6-01-1 (December 22, 2000); In the Matter of Consolidated Edison Company, New York State Board on Electric Generation Siting and the Environment, Recommended Decision, June 28, 2001, Case No. 99-F-1314.

4 See also, Clean Air Act (CAA) § 173(a)(5), 42 U.S.C. § 7503(a)(5). The New York provision codifies the CAA requirement "in order to comply with CAA directives related to [DEC's] permitting responsibilities under the CAA." Interim Decision at 6.

5 See, Save Ourselves, Inc. v. Louisiana Environmental Control Comm'n and the Louisiana Dep't of Natural Resources, 452So.2d 1152 (La. 1984); Matter of Rubicon Inc., 670 So.2d 483 (La.App. 1st Cir. 1996) (cited in EPA Case 6-01-1, Matter of Operating Permit, Formaldehyde Plant, Borden Chemical, Inc., Administrator's Ruling (issued Dec. 22, 2000) (Borden) at 37-38).

6 See also, Siting Board Case 99-F-1314, Application of Consolidated Edison Company of New York, Inc., Recommended Decision (issued June 28, 2001) at 62; Borden at 37-38.

7 See, Joint Stipulations, Air Resources Topic Agreement, § I.D.1and Publicc Interest Topic Agreement, § III.A.

8 See, Joint Stipulations,Electric Transmission Facilities Topic Agreement, § III.A and Public Interest Topic Agreement, § III.E.

9 See, Joint Stipulations, Public Interest Topic Agreement, § III.B and Reasonable Alternatives Topic Agreement, § III.

10 See, Joint Stipulations,Public Interest Topic Agreement, § III.C.

11 See, Joint Stipulations,Public Interest Topic Agreement, §§ III.F.1 and 2.

12 See, Joint Stipulations,Public Interest Topic Agreement, § III.F.3.

13 See, Joint Stipulations,Public Interest Topic Agreement, § III.F.4.

14 See, Joint Stipulations,Public Interest Topic Agreement, § III.F.5.

15 See, Joint Stipulations,Public Interest Topic Agreement, § III.F.6; see also, Hearing Exhibit 1 § 12.7.2.

16 See, Joint Stipulations,Air Resources Topic Agreement, § II.B.

17 See, Joint Stipulations,Air Resources Topic Agreement, § II.C.

18 See, Joint Stipulations,Air Resources Topic Agreement, § II.D.

19 See, Joint Stipulations,Public Interest Topic Agreement, § III.F.7.

20 See, Joint Stipulations,Public Interest Topic Agreement, § III.F.8.

21 See Hearing Exhibit 4 (Spagnoli Road stack would be 3800 feet from nearest residences; the corresponding distances for the alternative sites are Shoreham/Wading River: 450 feet; E.F. Barrett: 550 feet; Northport: 1600 feet; Port Jefferson: 400 feet).

22 Hearing Exhibit 1 § 16.3.2.

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