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Kiantone Pipeline Corp - Ruling, June 10, 1993

Ruling, June 10, 1993

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of

the Applications of
KIANTONE PIPELINE CORPORATION
P.O. Box 780, 15 Bradley Street
Warren, Pennsylvania 16365
for permits to construct and operate pipelines for the transport of crude and
refined petroleum products in Cattaraugus and Erie Counties pursuant to
the Environmental Conservation Law ("ECL") and Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR")

RULINGS OF THE ADMINISTRATIVE LAW JUDGE
ON
PARTY STATUS AND ISSUES

DEC Project No.

9-9909-00017/00002-1

Project Description

Kiantone Pipeline Corporation (the "Applicant" or "KPC"), an affiliate of United Refining Company, has applied to the New York State Department of Environmental Conservation (the "Department" or "DEC") through the Department's Region 9 offices in Buffalo and Olean for various DEC permits in conjunction with its proposal to install 65 miles of new 16 inch diameter crude oil transport pipeline in New York State, from its existing storage facility in West Seneca, Erie County to the New York/Pennsylvania border in the Town of South Valley, Cattaraugus County. The new pipeline would then continue 13 miles south to the United refinery in Warren, Pennsylvania. The new pipeline would be installed primarily within the right-of-way for the Applicant's existing 12.75 inch pipeline and would be located adjacent to and parallel with the existing pipeline. The existing 12.75 inch pipeline which currently transports crude oil in a southerly direction would be converted to carry finished petroleum products (gasolines and fuel oils) from the United refinery in Warren, Pennsylvania in a northerly direction to the West Seneca facility.

The route of the existing 12.75 inch and proposed 16 inch pipelines traverses, from north to south, the Towns of West Seneca, Orchard Park, Hamburg, Boston, Eden, North Collins and Collins in Erie County and the Towns of Persia, New Albion, Leon, Conewango, Randolph and South Valley in Cattaraugus County.

The Applicant also proposes to install 20 miles of new 10.75 inch pipeline to carry refined petroleum products from its West Seneca storage facility to the former Ashland Oil, Inc. petroleum storage and distribution terminal on River Road in the Town of Tonawanda, which has recently been purchased by United Refining Company. The new 10.75 inch pipeline would be installed primarily within power line rights-of-way which would be leased from Niagara Mohawk Power Corporation.

The route of the proposed 10.75 inch finished products pipeline traverses, from south to north, the Towns of West Seneca, Cheektowaga, Amherst and Tonawanda in Erie County.

The Applicant's proposals to construct and operate pipelines for the transport of crude and refined petroleum products in Cattaraugus and Erie Counties are herein collectively referred to as the "Project".

The Department's Region 9 Staff, as Lead Agency, identified the proposed Project as a Type I Action which may have a significant effect on the environment. Pursuant to Environmental Conservation Law ("ECL") Article 8 (Environmental Quality Review) and Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") Part 617 [State Environmental Quality Review ("SEQR")], the Department Staff issued a Positive Declaration on August 17, 1990 and required preparation of a Draft Environmental Impact Statement. A DEIS was prepared by the Applicant and was accepted by the Department's Region 9 Staff on November 13, 1992 as being adequate for public review.

Permits Required

1) A Stream Disturbance Permit is required for installing the pipeline across certain streams. 2) A Freshwater Wetlands Permit is required for installing the pipeline across regulated wetlands and their associated 100 foot wide adjacent areas. 3) A Temporary Revocable Permit is required for installing the pipeline across state-owned reforestation land. 4) A Water Quality Certification is required for filling activities associated with the installation of the pipeline through streams and wetlands.

The Department's Region 9 Staff prepared draft permits for the project which were available for public review at the legislative hearings listed below.

A Coastal Consistency Determination pursuant to Title 19 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("19 NYCRR") Part 600 must be included in the State Environmental Quality Review Findings Statement, since the project includes lands located within the Town of Tonawanda's and Horizon Waterfront Commission's Local Waterfront Revitalization Plan area.

The Applicant may require additional approvals and permits from other federal, state and local jurisdictions prior to commencing the project. Note that the above listed permits are only for the portion of the project located within New York State and do not include any approvals or permits required for the Pennsylvania ortion of the project.

Legislative Public Hearings

A Combined Notice of Public Hearing, Acceptance of Draft Environmental Impact Statement ("DEIS"), and Complete Application was published in the Buffalo News, the Tonawanda News, the Gowanda Evening Observer, and the Jamestown Post-Journal on February 15, 1993, in the Department's Environmental Notice Bulletin on February 17, 1993, and in the Randolph Register on February 24, 1993.

On March 9 and 10, 1993, Administrative Law Judge ("ALJ") Robert P. O'Connor conducted Legislative Public Statement Hearings, respectively, in Gowanda, Cattaraugus County, New York and West Seneca, Erie County, New York to receive comments on Kiantone's DEIS and applications for the necessary project permits.

In aggregate, approximately 106 people, other than representatives of the Applicant and assigned Department Staff, attended the two hearings. Seventeen persons presented statements for the record concerning the Applicant's proposals. The record remained open until the close of business on March 25, 1993 for the receipt of additional written statements.

Issues Conference

An Issues Conference to consider requests for party status and potential issues for adjudication was held in Hamburg, New York on March 11, 1993. As a result of discussions among the various participants at the Issues Conference, most of the issues which had originally been raised for potential adjudication were resolved.

The only issues which might require adjudication concern the potential impacts of the proposed routing of the new 16" crude oil pipeline within the right-of-way of and adjacent to the existing 12.75" pipeline through the Point Peter Brook Watershed which serves as the sole source of public water supply for the Village of Gowanda. There remain disputed issues of fact regarding the alternatives considered by the Applicant and the mitigating measures which are necessary to protect the Village of Gowanda water source.

At the Issues Conference, the Applicant was represented by Marshall A. Staunton, Esq., General Counsel, Kiantone Pipeline Corporation and United Refining Company, P.O. Box 780, 15 Bradley Street, Warren, Pennsylvania 16365.

The Department Staff was represented by Keith G. Silliman, Esq., Assistant Counsel in the Department's Division of Legal Affairs, Room 608, 50 Wolf Road, Albany, New York 12233-1500.

The Village of Gowanda was represented by Charles J. Hart, Esq., Village Attorney, Village of Gowanda, 27 East Main Street, P.O. Box 109, Gowanda, New York 14070.

Pursuant to 6 NYCRR 624.4(a), the Applicant and the assigned Department Staff are automatically parties to the proceeding. The Village of Gowanda has applied for full party status in this matter.

Upon hearing oral arguments regarding the potential issue, in an Order dated March 23, 1993, I established a timetable for detailed written submissions from the above participants to address the proposed issue of pipeline routing. Following the initial submissions of the prospective parties, the Village subsequently requested an extension of time for the submission of additional comments. I granted the Village's request for an extension of time to make its submittal.

The Village submitted comments on March 25, 1993, followed by submissions from the Applicant and the Department Staff on April 8 and 9, 1993, respectively. Supplementary comments were submitted by the Village on April 30, 1993 and by the Applicant and Department Staff on May 7, 1993.

On June 2, 1993, I received a letter from Bruce W. Musacchio, Esq., 215 West Main Street, P.O. Box 230, Gowanda, New York 14070 (telephone: 716-532-3351), advising that effective May 25, 1993 he had been appointed as Village Attorney for the Village of Gowanda. Mr. Musacchio sought a 60 day adjournment of any proceedings in this matter to prepare the Village's case.

The Issue Proposed for Adjudication

As noted above, the existing KPC pipeline currently carries Canadian crude oil from the Applicant's storage facility in West Seneca, New York in a southerly direction to the United Refining Company refinery in Warren, Pennsylvania. Refined petroleum products, i.e. - gasoline, kerosene, fuel oils, etc., which are destined for United's New York State distribution and sales points in the Buffalo area are currently transported from the Warren refinery via approximately 150 truck trips per day.

Since, at this point, the issues which have been proposed for adjudication relate only to potential impacts on the watershed, all further discussion of the "project" in these Rulings is limited to that portion of the project which lies in the Town of Persia, Cattaraugus County, New York, between Cattaraugus Creek on the north and the KPC Broadway booster pumping station on the west side of Broadway Road, approximately one mile south of Skinner Hollow Road (a/k/a Skinner Road).

The project proposed by the Applicant is actually two separate actions. The first is the installation of a new pipeline in the ground adjacent to and parallel with the existing pipeline. The new pipeline would have approximately half again the capacity of the existing pipeline. (The existing 12.75" pipeline carries approximately 2 million gallons of crude oil per day; the new 16" pipeline would carry approximately 3 million gallons of crude oil per day.) The same material would be transported within the new line; thus, the characteristics of the material and the risks involved with its transport would be the same. In the event of a pipeline accident or failure, however, the quantity of material which could potentially enter the environment would be significantly larger.

The second action proposed by the Applicant is to clean the existing pipeline and convert it for northbound flow of refined petroleum products from the Warren refinery to the Buffalo area, thereby eliminating the approximately 150 daily vehicular trips. This action would involve a new use of a pipeline which has been in the ground for 22 years to carry new products with different risk factors. The capacity would remain the same, approximately 2 million gallons of product per day.

-- The Village of Gowanda Concerns

There is no dispute that the route of the existing KPC pipeline traverses the Point Peter Brook Watershed for a distance of approximately 2.6 miles, nor that the watershed is the sole source of supply of approximately 500,000 gallons per day of drinking water for the Village of Gowanda and its more than 3,100 inhabitants. When the existing pipeline was constructed in 1971, the Village of Gowanda did not use the Point Peter Brook Watershed as the source of its drinking water. Approximately ten years after the pipeline was constructed, in the early 1980's, the wells upon which the Village had been relying for water supply were found to contain elevated levels of barium. Surface water from the Point Peter Brook Watershed was then used to supplement the well water and dilute the barium content to a level acceptable to the State Health Department.

Following unsuccessful efforts by the Village to develop new groundwater sources of supply which would meet the Health Department drinking water standards, the Village, although aware of the route of the existing pipeline, decided its only feasible option was to develop the Point Peter Brook Watershed as its primary source of supply. In recent years, the Village has expended approximately $1.5 million in improving and upgrading its water supply system using the watershed as its sole source of supply. Being a surface water source, however, puts the Point Peter Brook Watershed at considerably more risk from environmental contaminants than the Village's previous well supplies.

The Village has raised concerns regarding the potential impacts the project may have on its water supply. Excavation for installation of the new pipeline could disturb the existing pipeline sufficiently to cause leakage in the 22 year old pipe. A small leak attributed to corrosion has already occurred in the existing pipeline within a few miles of the Point Peter Brook Watershed. In 1990 in the Town of Eden, Erie County, local residents discovered a spill of approximately 1,000 gallons of crude oil. This leak was not detected by KPC personnel or by the firm's monitoring procedures. While minimal environmental damage resulted from the Eden leak, a similar spill within the Point Peter Brook Watershed could seriously impact Gowanda's only source of drinking water.

Secondly, the Village theorizes that the conversion of the existing pipeline to carry finished products, which by their nature are less viscous and more volatile than crude oil, will increase the risk to its water supply in the event of a leak and spill. This risk will be further enhanced in the northeasterly portion of the watershed where the pipeline route crosses very permeable sand and gravel deposits.

The Village contends that the remoteness of the pipeline route through its watershed, combined with the rugged terrain, would inhibit a timely response to a leak or spill incident. Even after being responded to, these factors would prevent a complete and proper cleanup, such that the Village's water supply would suffer adverse impacts.

The Village has further noted that KPC has unsuccessfully attempted on at least three occasions in the past two years to run an advanced internal inspection tool, known as a corrosion detection "pig," using the best available magnetic flux leakage technology, through the existing pipeline. Due to mechanical failure of the device early in each of the inspection runs, the pig was returned to its manufacturer in Germany for repair and modification. Another attempt to inspect the existing pipeline for corrosion is currently proposed for the summer of 1993, but as yet no recent internal corrosion inspection has been completed on the pipeline.

To mitigate the potential impacts of the pipeline on the Point Peter Brook Watershed, the Village has proposed that KPC reroute the pipelines either to pass outside of the watershed or to provide a route within the watershed which would afford greater protection to the Village water supply in the event of a spill or pipeline failure. The Village has suggested that a reroute to better protect the sole source of water supply for 3,100 plus persons is at least as well justified as the Department Staff's requirement that KPC reroute the pipeline to mitigate the impacts to waterfowl and water quality related to construction and potential spills in the Conewango Wetland (Freshwater Wetland RA-3) farther south in Cattaraugus County.

The Village's primary alternative route proposal for the pipelines is along the east side of Point Peter Road. Noting that this reroute would not completely remove the pipelines from the watershed, the Village has suggested this route is analogous to the route change for the Conewango Wetland, in that, "The alternative will not totally avoid the wetland, but it will use the existing Swamp Road as a safety berm and potential containment area." (KPC DEIS @ Appendix O-4.) In the instance of the Point Peter Brook Watershed, Point Peter Road would provide the safety berm and potential containment area. Additionally, this proposed alternative would allow KPC to utilize the existing stream crossing point on Cattaraugus Creek.

The Village also proposed an alternative route along the east side of Broadway Road which would take the pipelines completely out of the watershed. The Broadway Road route would pass through a residential area and would potentially require a new and much more difficult crossing of Cattaraugus Creek.

In its initial brief, the Village also suggested the danger to its water supply could be protected against by double casing of the pipeline. While not mentioned in the alternatives proposed by the Village in its reply brief, this suggestion remains as a potential mitigation measure.

The Village further suggested that the Applicant should obtain approval of the New York State Department of Health for a system which would provide emergency treatment of the Gowanda water supply in the event of a pipeline leak or spill within the Point Peter Brook Watershed. A favorable Health Department determination would be necessary prior to implementing any emergency water treatment or providing any alternative water supplies for public consumption.

As an final option, the Village requested the Applicant investigate and develop either new alternative groundwater sources of supply for the Village or provide acceptable treatment for barium removal from the groundwater wells previously used by the Village. In either case, approval of the supply by the State Health Department would be required prior to use as a public water supply.

-- The Applicant's Mitigation Proposals

The Applicant understands the sensitivity of the watershed area and has discussed several proposals of its own which it believes are sufficient to mitigate any impacts of its pipeline construction and operation within the Point Peter Brook Watershed. The Applicant has examined the proposal to reroute the pipeline construction to the east of Point Peter Brook Road. Any construction which extends beyond the boundaries of the Town of Persia road right-of-way would cause the pipeline to traverse lands of the Deer Lick Nature Sanctuary owned and operated by The Nature Conservancy. This 400 acre site has been designated as a National Natural Landmark by the U.S. Department of the Interior, National Park Service on the basis of the site's geological and ecological significance. The Nature Conservancy opposes any alternative pipeline route which would involve crossing the Sanctuary lands. Because of this opposition, the Applicant abandoned a route which would create a disturbance corridor through the nature preserve. In the event this route is now to be advanced as a potentially viable alternative, The Nature Conservancy has requested it be granted party status.

The Applicant also evaluated an alternative route which would parallel the east boundary of Point Peter Brook Road, but which would remain within the road right-of-way. Noting that this route would still be within the Point Peter Brook Watershed, the Applicant also was counseled by its consultants against using the road right-of-way for reasons of safety and increased risk of damage to the pipe from third party excavations, the leading cause of pipeline accidents.

The Applicant further investigated the alternative which would take the pipeline route out of the watershed along Broadway Road. However, following its evaluation, the Applicant rejected this route because of the very difficult crossing of Cattaraugus Creek which would be required unless the pipeline again entered the watershed to join with the existing pipeline to cross the Creek at its current location.

Based on its evaluation of the above alternatives, the Applicant decided to pursue its current proposal, i.e. - use of the existing pipeline right-of-way through the Point Peter Brook Watershed. With respect to its proposal, the Applicant has examined numerous alternatives related to leak protection, leak detection, clean up response and remediation and emergency water treatment and supply.

The Applicant has committed to the use of the best available technology to prevent leaks and provide leak protection along the pipeline route. KPC now uses a ground bed type induced current cathodic protection system with a coal tar enamel external coating on the existing pipe to protect against exterior corrosion which could result from galvanic action. KPC conducts regular testing of its cathodic protection system and in areas where it finds anomalies in its test results, sections of pipe are excavated, checked for coating coverage and signs of corrosion, and, if necessary, repaired. KPC believes this type of cathodic protection and high quality exterior coating provides the best possible corrosion protection system available. Although the coating material for the new pipeline has not been finalized, the Applicant proposes to use a similar corrosion protection system, but with an additional extra outer coating on the pipe within the watershed, in its new construction.

KPC does not favor the Village's suggestion that the pipeline, if continued to be routed through the watershed, should be double cased or employ double containment technology. Arguments against the use of a double containment piping system are that leak detection and repair of the carrier pipe are more difficult than with a single coated pipe system and that the double containment interferes with the cathodic protection system used to minimize corrosion of the carrier pipe.

KPC has stated it will also implement regular internal inspections of the pipeline, although as noted above, it has yet to successfully complete a recent inspection of the existing line with an advanced technology internal inspection pig. While corrosion of the interior surface of high strength carbon steel pipelines is typically not a problem with the inherently non-corrosive crude oil which KPC receives through its pipeline, refined products are corrosive and pose more of a threat to the integrity of the pipeline interior surface. Petroleum based corrosion inhibitors will be injected into United's refined products such as gasoline and fuel oil prior to their introduction into the transmission pipeline. KPC has stated that no other measures are necessary to prevent internal corrosion in its pipeline.

The Applicant has acknowledged that despite all the precautions which it can take in designing, constructing and operating its pipeline, leaks will occasionally occur. The predominant methods of leak detection noted by the Applicant are (a) reporting by neighbors or public, (b) pipeline patrolling, (c) volume analysis and (d) minimum pressure alarms.

Since the area of the watershed which the pipeline traverses is remote and uninhabited, KPC cannot rely on having any leaks reported by neighbors or the public. KPC does conduct regular aerial surveillance of the pipeline, but only on a weekly or biweekly basis (conflicting frequency of flights on KPC DEIS pp. 1-40 and 1-43). In areas where the pipeline is accessible, KPC employees drive along various sections of the route almost daily. However, no information was presented regarding how frequently KPC employees traverse the inaccessible portions of the route within the watershed.

On its existing pipeline, KPC does a daily balance of the metered volume of crude oil entering and leaving the system. By identifying irregularities between inflow and outflow, this method is useful for detecting large leaks, but it does not provide for quick detection, and its utility in identifying pinhole or small leaks may be limited. A volume analysis would be conducted on the new pipeline and also would be continued when the existing line is converted for finished products. The Applicant is exploring the opportunity for tieing in the volume analysis procedures with its computer control system.

KPC also uses pressure monitors at its West Seneca storage terminal and at its Broadway Road booster pumping station in conjunction the existing pipeline. If a large leak were to occur, the pressure in the pipeline would drop and the pressure monitors would activate alarms in the KPC control room in Warren, PA. The control room is staffed at all times, and the KPC staff can shut down the pipeline and dispatch response crews.

New technologies for leak detection have recently been developed, but are not in widespread use. These technologies are being evaluated by the Office of Pipeline Safety, U. S. Department of Transportation prior to proposing regulations. The Applicant acknowledged at the Issues Conference that it has not yet selected any one leak detection system for implementation on this project. Moreover, the systems discussed above, while perhaps well suited to detect major leaks, are not designed to identify small leaks which, over an extended period of time in a remote area such as the watershed, could release undetected significant quantities of crude oil or refined products into the environment.

In the event of a leak or spill, the Applicant would depend on its local employees, who are trained in emergency response, to go to the pipeline and close block valves which would isolate the watershed area pipeline segment. KPC estimates its employees could respond and close these block valves within a half hour of notification of an incident. KPC anticipates the installation of new block valves to further isolate sections of the pipeline in the area of the watershed and also new check valves to ensure one-way flow of materials through the lines in this area.

The Applicant contends that, contrary to the Village's assertion, access to the pipeline is easily obtained over the pipeline right-of-way and via a variety of roads or trails which provide access from Point Peter Brook Road. The Applicant also contends that, in the event of a spill, the hilly terrain would actually serve to contain the flow of petroleum products and restrict its migration, thus making clean up operations easier.

KPC has designed an underflow weir system to allow the control, diversion and skimming of any hydrocarbons which might enter the Allen Springs area or the Point Peter Brook area of the watershed. KPC contends this system will avoid or at least minimize any potential pollution of the Village's water supply and will facilitate and shorten the time necessary for cleanup of any petroleum products. With the Village's concurrence, KPC seeks to install this weir system at the same time it commences construction of the new proposed pipeline.

KPC has located spill response equipment and tools at the Gowanda Reservoir for use by its employees. In addition, the Applicant has offered to train Gowanda personnel in oil spill response procedures.

KPC would also implement a water characterization study within the Point Peter Brook Watershed. This study would include quarterly collection and analysis of samples.

In March 1991, the Applicant proposed the development of a detailed contingency and emergency response plan, including provisions for an emergency supply of potable water, in the event of a pipeline leak or spill in the watershed. The emergency supply would consist of potable water which KPC would truck to the Village for two to three days immediately following a leak or spill incident, or until a KPC contractor could provide and make operational the equipment necessary for emergency water treatment. A potential contractor of KPC, OHM Corporation, has indicated that equipment involving air stripping and carbon adsorption can be used to treat the water supply in the Gowanda Reservoir to meet New York State Department of Health drinking water standards until the spill is completely cleaned up and remediated. Emergency treatment would cease when the Gowanda Reservoir had recovered to its raw water quality prior to the spill.

Other options for an emergency source of water supply for the Village were mentioned by the Applicant, but were not thoroughly explored for lack of feasible interconnection with the Village water supply system at the present time. These options included the potential of connecting with an extension of the Seneca Nation of Indians' Waterline Project and/or with an extension of the Erie County Water Authority Intercommunity System.

In sum, the Applicant believes it has adequately and appropriately addressed all potential contingencies and there are no issues which are substantive and significant enough to require adjudication.

-- The Department Staff's Draft Permit

It is the Department Staff's opinion that the Applicant has adequately addressed the protection of the Gowanda water supply system and that the routing of the pipeline, as proposed, is the most reasonable alternative. With that premise in mind, the Staff prepared a Draft Permit with 58 Special Conditions, of which Conditions 40 through 46 specifically address the route of the pipeline through the Point Peter Brook Watershed.

The Staff's conditions for permit issuance call for, among other requirements: a) the Applicant to conduct a preconstruction meeting with the Village prior to construction in the watershed; b) the spill response equipment and weir system proposed by the Applicant to be installed prior to construction activities in the watershed; c) the new block valve on the existing pipeline to be installed prior to construction in the watershed; d) preparation of the Detailed Contingency Plan and Water Treatment System Design prior to expiration of the permit; e) copies of all reports for the Water Characterization Study and Magnetic Flux Pig Study to be provided to the Village; and f) the Applicant to provide written confirmation of completion of all its proposed design and construction mitigation measures to the Staff.

Last among the Staff's conditions pertaining to the watershed is a requirement that, prior to the expiration of the permit, the Applicant negotiate and execute a legally binding agreement with the Village to establish KPC's obligations regarding implementation of its proposed "Integrated Spill Contingency Plan for Gowanda." In the event such an agreement cannot be reached, the Applicant must provide documentation to the Staff that it negotiated in good faith and failure to reach an agreement was not its fault.

The Applicant does not oppose any of the conditions proposed by the Staff in its Draft Permit.

In its post-Issues Conference briefs, the Staff noted its concerns regarding the environmental impacts of the alternative routes suggested by the Village and indicated the Point Peter Brook Road route would be preferable to the Broadway Road route, but also noted that The Nature Conservancy should have the opportunity to comment on this alternative.

Additionally, the Staff reaffirmed that the New York State Department of Health ("DOH") is responsible for regulating the treatment and quality of public water supplies and that the Staff proposed permit condition regarding the Applicant's contingency plan and water treatment system [see "d)" above or Condition No. 43 in the Draft Permit for full text] was intended to ensure the Applicant submitted a specific plan and design for review and approval by the Health Department.

Based upon the available information, the Staff believes the Applicant has adequately addressed the impacts, alternatives and mitigation measures related to the proposed project and there are no issues which warrant adjudication.

-- Concerns of the Health Agencies

Although no health agencies have specifically requested party status in the instant case, letters in opposition to the proposed project were submitted by John T. Kociela, P.E., Director of Environmental Health Services for the Erie County Department of Health; Eric W. Wohlers, P.E., Director of Environmental Health for the Cattaraugus County Health Department; and Daniel E. Serrell, P.E., Associate Sanitary Engineer, Bureau of Public Water Supply Protection, State of New York Department of Health. (Note: The Village of Gowanda straddles Cattaraugus Creek and is situated in both Erie and Cattaraugus Counties.) Both Mr. Wohlers and Mr. Serrell have been proposed as expert witnesses to testify on behalf of the Village of Gowanda.

The Cattaraugus County Health Department (the "County") has identified what it considers increased risks to the watershed, of not only adding a new pipeline along the KPC right-of-way, but also of introducing refined products which are less viscous and more volatile than crude oil to the watershed. It also contends the potential for a leak increases with the age of the pipeline. The County noted the unavailability of any internal inspection data for the existing pipeline due to failure of the pig testing to date.

The State Health Department specifically contests the Applicant's statements regarding the viability of emergency water treatment systems, regarding the methodology proposed, the time necessary to initiate treatment of the contaminated source and the time required to treat that source to reduce the maximum contaminant levels ("MCL's") of hydrocarbons to allowable drinking water standards. DOH personnel, with expertise in the field of potable water supply treatment, believe the Applicant's proposals in this regard are unrealistic, and in the event of reservoir contamination by petroleum products, the Gowanda Reservoir would be unusable for an extensive period of time. Furthermore, they contend that a pipeline leak in the area of the watershed where the pipeline traverses approximately one mile of sand/gravel soils would have potentially catastrophic consequences on the watershed.

DOH personnel recommend the only acceptable alternative for the supply of potable water in the event of a spill within the Point Peter Brook Watershed is a alternative source of water supply which can provide approximately 500,000 gallons per day to the population served by the Village of Gowanda water system.

Rulings on Issues

One of the purposes of the State Environmental Quality Review Act, as set forth in ECL 8-0101, is "to promote efforts which will prevent or eliminate damage to the environment and enhance human and community resources. . .".

ECL 8-0103(7) states: "It is the intent of the legislature that the protection and enhancement of the environment, human and community resources shall be given appropriate weight with social and economic considerations in public policy. Social, economic, and environmental factors shall be considered together in reaching decisions on proposed activities." The implementing regulations for SEQR in 6 NYCRR 617.1(d) further note: "Accordingly, it is the intention of this Part that a suitable balance of social, economic and environmental factors be incorporated into the planning and decisionmaking processes of State, regional and local agencies. It is not the intention of SEQR that environmental factors be the sole consideration in decisionmaking."

Pursuant to 6 NYCRR 617.9(c), any involved agency contemplating a proposed action which has been the subject of an environmental impact statement cannot approve such action until the agency has made an explicit finding that, consistent with social, economic and other essential considerations from among the reasonable alternatives thereto, the action will avoid or minimize to the maximum extent practicable the adverse environmental effects revealed in the environmental impact statement process. Additionally, in accordance with 6 NYCRR 617.9(d), the agency cannot disapprove the proposed action without preparing a written findings statement which has thoroughly considered the reasonable alternatives and then determined that adverse environmental impacts cannot be avoided or minimized to the maximum extent practicable.

In the instant case, there are factual questions regarding several of the alternatives and operating procedures which have been proposed by the Applicant as mitigation for its chosen route through the Point Peter Brook Watershed. Through its offers of proof, combined with the submissions of the Cattaraugus County Health Department and the State Health Department, the Village of Gowanda has raised issues which warrant a further examination of alternatives and mitigating conditions necessary to protect the integrity of the only source of water supply for the Village of Gowanda.

The principal function of an adjudicatory hearing is to resolve disputed issues of fact. As cited above, SEQR requires a thorough examination of the reasonable alternatives to a proposed action to ensure that any potential adverse impacts are avoided or mitigated to the maximum extent practicable. Therefore, I am ordering an adjudicatory hearing be held in this matter to consider the issue of how to best avoid or mitigate the potential adverse impacts of the proposed project on the Point Peter Brook Watershed. The hearing will be limited in scope to issues which fall into three topical headings. These areas of concern and the issues to be examined are as follows:

Leak Detection and Spill Prevention the integrity of the existing pipeline, including the results of a magnetic flux pig internal inspection, the potential for internal corrosion from refined products, and the risks associated with a leak or spill of refined products vs. crude oil; the potential for damage to the existing pipeline due to any construction activities for the new pipeline; the available leak detection technologies, including capabilities for identifying small leaks, which could be applicable for this project; the benefits and/or disadvantages of a double containment piping system within the watershed, both for the new pipeline and potentially for replacement of the existing pipeline;

Alternative Routing the potential impacts, both on the pipeline and to the surrounding environment, of alternative routes for the pipeline, particularly routes on the east side of Point Peter Brook Road, either along the road right-of-way or farther to the east which could involve the Deer Lick Nature Sanctuary, and also to include the potential for relocating the existing pipeline to an alternative location;

Response and Remediation the terrain, soils, accessibility and other environmental factors along the route of the existing pipeline right-of-way within the watershed which would assist or impede the response to and cleanup of a petroleum leak or spill; the design, location and capabilities of the Applicant's proposed underflow weir system for control, diversion and skimming of hydrocarbons in the watershed; and the various contingencies which the Applicant would employ to provide an emergency supply of potable water for the Village of Gowanda in the event of contamination of the watershed, including, but not limited to potential use of air stripping and carbon adsorption equipment, time to set up, and time necessary to treat polluted water to achieve NYSDOH drinking water standards, and potential for developing or connecting to an alternate source of supply.

A proper adjudication of the above issues will likely depend upon the Applicant's collection and development of specific technical information and the availability of expert witnesses for the Applicant. Therefore, I direct the Applicant to provide to the Service List at the earliest opportunity all pertinent information, not already available in its application papers and the DEIS, relating to the above listed issues upon which it intends to rely in the presentation of its direct case. I also direct the Applicant to provide to the Service List a list of the witnesses, with curriculum vitaes, whom it proposes for each of the above listed issues, along with an outline of each witness's direct testimony.

Upon my receipt and review of the above information, I will establish a timetable by which the parties shall submit to the Service List a list of their respective witnesses, with curriculum vitaes, and an outline of each witness's direct testimony. Simultaneously, with input from the parties, I will schedule the adjudicatory hearing.

Once the adjudicatory hearing is commenced, I anticipate going forward on a day-to-day Tuesday morning through early Friday afternoon schedule, subject to modification depending on special circumstances. The order for presentation of cases will be Applicant first, followed by the Department Staff, and then the Intervenors. At least one day during the hearing will be reserved for a field trip for the parties, and their witnesses as appropriate, to jointly observe the existing pipeline right-of-way through the Point Peter Brook Watershed, the reservoir and water treatment plant areas, and the several alternative routes which have been proposed.

In conjunction with the above rulings, I am granting full party status to the Village of Gowanda. Additionally, I am granting limited party status to The Nature Conservancy for an explanation of the impacts of pipeline construction, operation and maintenance on the Deer Lick Nature Sanctuary which it would anticipate in the event the Point Peter Brook Road alternative becomes a preferred route for the KPC pipeline.

Appeals

Pursuant to 6 NYCRR 624.4(f) and 624.6(d), these Rulings on party status and issues may be appealed in writing to the Commissioner within three business days of receipt of the Rulings. In recognition of the technological complexity of the issues involved in these Rulings, as well as the request of the newly appointed Gowanda Village Attorney, I am hereby extending the period during which appeals may be filed.

Any appeals must be received at the office of Commissioner Thomas C. Jorling (NYSDEC, Room 604, 50 Wolf Road, Albany, New York 12233-5500) no later than June 25, 1993. Additionally, responses to the initial appeals will be allowed. All responses must be received as above no later than July 2, 1993.

The parties shall ensure transmission of all appeal and reply papers to me and all others on the amended Service List at the same time and in the same manner as transmission is made to the Commissioner. Please make note of the enclosed amended Service List.

_____________/s/_____________
ROBERT P. O'CONNOR
ADMINISTRATIVE LAW JUDGE

Dated: Albany, New York
June 10, 1993

To: Service List (enclosed)

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