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Kiantone Pipeline Corp - Decision, March 22, 1994

Decision, March 22, 1994

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1550

In the Matter

- of -

the Applications of

KIANTONE PIPELINE CORPORATION
P.O. Box 780
15 Bradley Street
Warren, Pennsylvania 16365

Pursuant to Environmental Conservation Law ("ECL") and Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR")
for permits to construct and operate pipelines for the transport of
crude and refined petroleum products in Cattaraugus and Erie Counties

DEC Project Number 9-9909-00017/00002-1

DECISION

March 22, 1994

Decision of the Commissioner

The Summary Hearing Report of Administrative Law Judge ("ALJ") Robert P. O'Connor in the matter of the applications of Kiantone Pipeline Corporation, an affiliate of United Refining Company, 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 of New York is hereby adopted as the Decision in this matter.

In this instance, lengthy discussions among Kiantone, the assigned Department Staff, the Village of Gowanda and The Nature Conservancy have resulted in a project which totally avoids any impacts on a unique natural area in western New York, the Deer Lick Nature Sanctuary, designated a National Natural Landmark by the U.S. Department of Interior due to its outstanding geological and ecological significance.

Additional discussions with representatives of the State Department of Agriculture and Markets, the New York Farm Bureau and the Erie County and Cattaraugus County Soil and Water Conservation Districts have resulted in agreements which will mitigate the impacts of pipeline construction on agricultural lands.

At the same time, and most importantly, several special conditions incorporated into the draft permit for this project are designed to avoid and/or mitigate to the extent practicable any adverse environmental impacts of the project on the Point Peter Brook Watershed which serves as the sole source of water supply for the Village of Gowanda, New York. The routing of the new pipeline will largely avoid the watershed and additional pipeline safety measures will be installed in the existing pipeline which traverses the watershed.

I note this project is economically important to western New York. The project will also have a positive impact on traffic safety and highway congestion by eliminating approximately 150 truck trips per day from the United Refining Company refinery in Warren, Pennsylvania to United's western New York distribution and sales points in the Buffalo area. Additionally, the northern terminus of the pipeline is at the former Ashland Oil, Inc. petroleum storage and distribution facility in the Town of Tonawanda, which has recently been acquired by United Refining Company. As an adjunct to this project and in concert with the Town of Tonawanda Waterfront Revitalization Plan, United will remove abandoned and deteriorating facilities to improve the aesthetic appearance of the waterfront area along the Niagara River.

In view of the foregoing and upon careful consideration of the record compiled in this matter, this Decision is effective upon service to the parties, whereupon the assigned Department Staff are directed to prepare a Final Environmental Impact Statement and the required findings statement in accordance with 6 NYCRR 617.9 and 617.10, and to finalize and issue the necessary permits for this project.

IN WITNESS WHEREOF, the Department of Environmental Conservation has caused this Decision to be signed and issued and has filed the same with all maps, plans, reports, and other papers relating thereto in its office in the County of Albany, New York this 22nd day of March, 1994.

For the New York State Department
of Environmental Conservation

_____________/s/_____________
By: LANGDON MARSH, ACTING COMMISSIONER

STATE OF NEW YORK
DEPARTMENT OF ENVIRONMENTAL CONSERVATION

50 Wolf Road
Albany, New York 12233-1550

In the Matter

- of -

the Applications

of

KIANTONE PIPELINE CORPORATION
P.O. Box 780
15 Bradley Street
Warren, Pennsylvania 16365

Pursuant to Environmental Conservation Law ("ECL") and Title 6 of
the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR")
for permits to construct and operate pipelines for the transport of crude and refined
petroleum products in Cattaraugus and Erie Counties

DEC Project Number 9-9909-00017/00002-1

SUMMARY REPORT

- by -

____________/s/_____________
Robert P. O'Connor
Administrative Law Judge

March 21, 1994

Proceedings

Application and Project Description

Kiantone Pipeline Corporation (the "Applicant" or "KPC"), an affiliate of United Refining Company, on April 20, 1990, 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.

The Department's Region 9 Staff referred the proposed project to the Department's Office of Hearings on December 23, 1992, and on February 1, 1993, the case file was assigned to Administrative Law Judge ("ALJ") Robert P. O'Connor.

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 portion 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, 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.

In addition to the comments received during the legislative hearings, approximately 30 written comment letters were received and transmitted to the Applicant on March 29, 1993 for response in accordance with 6 NYCRR 624.7(a)(3), "if the Applicant has prepared the DEIS, it shall prepare a written response to comments received and shall file it as an exhibit to the hearing record. Other parties shall be afforded opportunity to contest the contents prior to the close of the hearing record."

Appearances

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 initially represented by Charles J. Hart, Esq., Village Attorney, Village of Gowanda, 27 East Main Street, P.O. Box 109, Gowanda, New York 14070, and subsequent to May 25, 1993, by Bruce W. Musacchio, Esq., Gowanda Village Attorney, 215 West Main Street, P.O. Box 230, Gowanda, New York 14070 .

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

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 remained to possibly require adjudication concerned 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 remained 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.

Upon hearing oral arguments regarding the potential issues, 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 Mr. Musacchio, 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. On June 10, 1993, I received another letter from Mr. Musacchio supplementing his original request for an adjournment.

Also on June 10, 1993, I issued my Rulings which identified an issue which might possibly require adjudication in future hearings, i.e. -- how to best avoid or mitigate the potential adverse impacts of the proposed project on the Point Peter Brook Watershed. I noted that any hearing held would be limited in scope to issues which fall into three topical headings. The areas of concern and the issues to be examined were 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.

I directed the Applicant to provide to the Service List all pertinent information, not already available in its application papers and the DEIS, relating to the above listed issues. I also directed 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. I noted that upon receipt of the information, I would establish a timetable for the other parties to submit their respective witness information, and further, I would set the schedule for the hearing.

As part of its study of alternatives to its preferred routing of the new pipeline parallel to the existing pipeline, the Applicant examined the proposal to reroute the pipeline construction to the east of Point Peter Brook Road. Any construction which extended 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 opposed any alternative pipeline route which would involve crossing the Sanctuary lands. Because of this opposition, the Applicant initially abandoned a route which would create a disturbance corridor through the nature preserve. However, in the event this route was now advanced as a potentially viable alternative, The Nature Conservancy requested it be granted party status.

In conjunction with these rulings, I granted full party status to the Village of Gowanda. Additionally, I granted limited party status to The Nature Conservancy for an explanation of the impacts of pipeline construction, operation and maintenance on its Deer Lick Nature Sanctuary which would be anticipated in the event the Point Peter Brook Road alternative became a preferred route for the KPC pipeline.

I set the date for any appeals of my Rulings as June 25, 1993, with any responses to such appeals due by July 2, 1993. On July 6, 1993, I received a June 24, 1993 letter from the Applicant confirming its June 23, 1993 telephone call to me and requesting an extension of the appeal deadline for one month in order to pursue opportunities for settlement with the parties regarding the disputed issues of fact related to the above noted topics of concern. Also on July 6, 1993, I granted the Applicant's request and encouraged resolution of the potential issues by negotiation if possible.

On July 29, 1993, I received a letter from the Applicant, noting that several negotiation sessions with the parties had been held and seeking an open-ended time frame to continue discussions to resolve the potential issues. On August 2, 1993, I extended the appeal deadline without date to allow continuation of the settlement discussions.

Throughout the late summer and early fall, I received various correspondence from the parties indicating that apparent progress was being made to settle this matter outside the hearing forum. On November 1, 1993, I received a letter from the Applicant indicating that agreement on an alternative route for the new pipeline had been reached by the parties. KPC represented in this letter, "that all objections by the Village are withdrawn."

On November 2, 1993, however, the Department Staff informed me of potential opposition to the proposed reroute by one of the landowners along the new route, The Plateau Recreation Area, Inc. The Staff also transmitted revised language for special conditions #1 and #43 in the draft permit. On November 8, 1993, I received a letter from The Plateau Recreation Area, Inc., suggesting that the pipeline should be routed along the right-of-way on the east side of Point Peter Road. On November 12, 1993, I received a letter from the Applicant stating that the planned pipeline route avoided the Plateau Recreation Area property and was, in fact, located within the Point Peter Road right-of-way.

The Department Staff, on November 22, 1993, consented to the proposed reroute along the Point Peter Road right-of-way, provided that Allen Springs Brook either be crossed in the dry or by pumping the stream flow around the work area. The Staff suggested the matter could be remanded to it for the preparation of an FEIS, findings statement and final permits.

On November 29, 1993, I received a copy of a letter from The Nature Conservancy acknowledging that the Applicant had successfully rerouted the proposed pipeline to avoid intrusion into the Deer Lick Preserve. By this acknowledgment, The Nature Conservancy implicitly ended its participation in the proceeding.

On December 14, 1993, I received formal notification from the Village of Gowanda that it had reached an agreement on the alternative routing of the Applicant's new pipeline to further remove the pipeline from the area of the Village's Point Peter Reservoir. Accordingly, the Village withdrew its requests for a hearing and for party status in the proceeding.

On January 7, 1994, the Department Staff wrote to me, seeking expeditious treatment of the application and transmitting several new (to the ALJ) proposed changes to the draft special permit conditions which had been forwarded to the Staff by the Applicant.

Following receipt of this letter from the Staff, by my letter to the parties, I reminded the Applicant on January 14, 1994 of its obligation to formally respond to the comments on the applications and DEIS which had been received in March 1993. I particularly noted that several of the substantive comments regarding public water supply safety which had earlier been raised by the Cattaraugus County and New York State Health Departments over the contingency measures for the existing pipeline had not been adequately addressed in any of the post issues conference materials which had been transmitted to me. I also noted that the Department Staff would need to modify the draft permit in order to properly reflect the agreements among the parties.

I further noted that upon confirmation that all of the issues which had been previously raised were satisfactorily resolved, I would immediately transmit my Hearing Report to the Commissioner recommending the proceeding be remanded to the Staff for preparation of the FEIS, findings statement and issuance of the permits for the project.

In response to my January 14, 1994 letter, I received a February 4, 1994 letter, with various attachments, from KPC on February 7, 1994. These materials provided the Applicant's written response to the substantive comments on the DEIS which had been received from governmental agencies and the public during the legislative hearing process in March 1993. The Applicant's letter also addressed the concerns over public water supply safety in Gowanda's Point Peter Brook Watershed which had earlier been expressed by the Cattaraugus County and New York State Health Departments.

On February 22, 1994, the Department Staff transmitted a "final" draft permit to the parties and requested clarification from the Applicant regarding two items in the KPC February 4, 1994 letter. The Applicant responded on February 25, 1994, accepting the terms of the draft permit.

On March 7, 1994, I received from the Department Staff the draft permit and a letter requesting the matter be remanded to Staff for final processing and permit issuance, if I, and subsequently the Commissioner, found all issues to be satisfactorily resolved. On March 7, 1994 I returned the draft permit to the Staff for correction of several typographical and grammatical errors. The Staff returned a final, clean version of the draft permit to me on February 14, 1994.

I have carefully reviewed the draft permit in accordance with the DEC Commissioner's Organization and Delegation Memorandum #85-13, Effect of Stipulations on Decision-Making in Permit and Enforcement Hearings. It is my determination that the draft permit, as now conditioned, satisfactorily resolves all potential issues regarding the construction and operation of the proposed project. In particular, the special conditions in the draft permit adequately address the potential for adverse environmental impacts occurring in the Point Peter Brook Watershed which serves as the Village of Gowanda public water supply.

Therefore, I am hereby forwarding the draft permit, along with this Summary Report, to the Commissioner, recommending adoption of the permit with its special conditions and approval of the project. I further recommend this matter be remanded to the Department Staff for final processing of the application, preparation of a final environmental impact statement and findings statement, and issuance of the permit.

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