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Owl Energy Resources, Inc. - Interim Decision, February 26, 1993

Interim Decision, February 26, 1993

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 WOLF ROAD
ALBANY, NEW YORK 12233-1550

In the Matter

- of -

the Application of OWL ENERGY RESOURCES, INC.
for permits to construct and to operate a solid waste management facility,
a variance from the provisions of 6 NYCRR 360-3.4(b)(2), a permit to construct
a modification of a stationary combustion installation and
a State Pollutant Discharge Elimination System (SPDES) permit
at Port Ivory on Western Avenue, Staten Island, New York.

DEC Project No. 2-6401-00073-00001-0

INTERIM DECISION

February 26, 1993

Interim Decision

This Interim Decision is in response to appeals filed to the rulings of Administrative Law Judge ("ALJ") William J. Dickerson dated October 30, 1992 in the matter of the applications of Owl Energy Resources, Inc. (the "Applicant" or "Owl"). The Applicant has applied to the Region 2 Staff of the New York State Department of Environmental Conservation (the "Department Staff" or "Staff") for several permits necessary in order to proceed with its proposed project. The project entails the purchase and modification of a wood-fired boiler to produce steam-generated electricity at a plant known as the Port Ivory facility on Western Avenue in Staten Island, New York, currently owned by the Procter & Gamble Manufacturing Company, Inc. ("P & G"). Owl will install a wet electrostatic precipitator ("wet ESP") to control emissions at the Port Ivory facility, which has not operated since September 1990. The project is described in greater detail in the ALJ's rulings.

For this project the Applicant requires a permit to construct and operate an air contaminant emission source pursuant to the Environmental Conservation Law ("ECL") Article 19 and Title 6 of the Official Compilation of the Codes, Rules and Regulations of the State of New York ("6 NYCRR") Parts 200 et. seq. The Applicant also needs a permit to construct and operate a solid waste management facility pursuant to 6 NYCRR Part 360 and a State Pollutant Discharge Elimination System ("SPDES") permit pursuant to 6 NYCRR Parts 750 et. seq. The Department Staff reviewed this project as the lead agency under the State Environmental Quality Review Act (ECL Article 8, 6 NYCRR Part 617, or "SEQRA") and issued a negative declaration. Therefore, no environmental impact statement was prepared.

The issues on appeal concern primarily the applicability to this project of 6 NYCRR Parts 219 and 231 regulating air contaminant emissions, and the validity of the Department Staff's SEQRA negative declaration. ALJ Dickerson ruled that the application must be resubmitted to Staff for review and processing pursuant to Parts 219 and 231. He also rescinded the negative declaration and directed Staff to re-evaluate the potential environmental impact of the project in relation to current conditions in the vicinity of the site, i.e. without considering any of the impacts of the facility's operation prior to shutdown in 1990. The Applicant and Department Staff have appealed these rulings, as well as the ALJ's direction that additional information be submitted with respect to the project's thermal discharges and noise effects. The intervenors, Staten Island Citizens for Clean Air ("SICCA") and Joseph Marotta, Chairman of Community Board No.1, have filed briefs generally in support of the ALJ's rulings and opposed to the appeals. In addition, SICCA has also appealed certain other aspects of the rulings.

The main issues to be resolved on these appeals concern pure questions of law -- the applicability of several regulatory provisions to the project, and the proper environmental baseline to be used in making the SEQRA determination. There are no substantive or significant underlying factual disputes affecting these legal issues. Therefore, it is appropriate to review the ALJ's rulings on these issues fully or de novo, in contrast to the more limited review of the ALJ's rulings on the existence of factual disputes giving rise to issues for adjudication (see Matter of Hyland Facility Associates, Interim Decision, August 20, 1992). Each of the legal issues raised by these appeals will be addressed in turn below.

Appeals of Applicant and Staff

Applicability of 6 NYCRR Part 219

The Applicant submitted its air permit application for this project pursuant to the requirements of 6 NYCRR Part 227, entitled Stationary Combustion Installations. The ALJ ruled that the project is also subject to the requirements of 6 NYCRR Subpart 219-2 ("Subpart 219-2"). By its terms, this Subpart only applies to municipal and private solid waste incinerators (6 NYCRR 219-2.1). Municipal and private solid waste incinerators are defined, in relevant part, to be facilities that engage in the combustion of municipal solid waste. Resolution of this issue thus turns on an analysis of whether the fuel proposed for the project constitutes municipal solid waste.

Owl proposes to burn fuel consisting of wood wastes including wood pallets, wood chips from trees, wood construction and demolition debris, and wood scraps from industries such as furniture manufacturers and lumber yards. The draft permit requires the waste wood fuel to be inspected to ensure that it consists only of wood which has not been painted or chemically treated.

"Municipal solid waste" is defined as "[a]ll materials or substances discarded from single and multiple family dwellings, and other residential sources; similar types of materials from institutional, commercial and industrial sources; . . ." (6 NYCRR 219-1.1(b)(6)). Since the proposed fuel does not originate from residential sources, the applicability of Subpart 219-2 depends on whether it consists of materials that are similar to those discarded from residential sources.

I conclude that the fuel proposed for the Owl project cannot reasonably be characterized as similar to wastes discarded from residential sources. The solid waste to be burned at the facility is relatively uniform and free from contamination. This wood waste is not the type that is discarded from residential sources. Such residential wastes are characteristically mixed, consisting of substantial quantities of garbage (food wastes), paper, glass, plastics and metals, in addition to minor amounts of wood. The regulations themselves make it obvious that they are designed to address emissions expected from combustion of a typical mixed municipal stream, rather than the relatively homogeneous emissions expected from combustion of unpainted and untreated waste wood.

I conclude that Subpart 219-2 is not applicable to the proposed project since it will not burn municipal solid waste. The Applicant will not be required to apply for a permit pursuant to Subpart 219-2.

Staff Request for Clarification

Staff have indicated that even if the fuel for the proposed facility were found to be "municipal solid waste," Subpart 219-2 would still not be applicable in their view because the regulation only applies where the proposed action would result in an increase in pollution. Where the proposed action consists of a request to add pollution control equipment and the permit for the facility predates the effective date of Subpart 219-2, the requirements of that regulation should not apply. They point out that the effect of making Subpart 219-2 applicable to such facilities will be to discourage upgrades. However, Staff interpret the ALJ's ruling to require a contrary result and they request that this matter be clarified regardless of whether it affects the outcome of this case.

Although, given my conclusions above, Staff's position only raises a hypothetical question, Staff have demonstrated that it is in the public interest to clarify this question for future applications.

This issue is governed by the general rule established in 6 NYCRR 201.8. That regulation establishes the parameters under which voluntary replacement or upgrading of pollution control equipment could be accomplished without subjecting the facility to the emission standards for new or modified sources. Thus if all the conditions in section 201.8 were met, the facility in the hypothetical situation would be subject to either Subpart 219-5 or Subpart 219-6, depending on its location, rather than Subpart 219-2.

Applicability of 6 NYCRR Part 231

ALJ Dickerson ruled that the Owl project, although exempt from the emissions offset provisions of 6 NYCRR Part 231 ("Part 231") as a resource recovery facility, remained subject to other provisions of Part 231 governing new source review in nonattainment areas. The Applicant and Staff contend that Part 231 does not apply to this project.

The sole issue concerning the applicability of Part 231 is whether or not the project is properly characterized as a modification to an existing major facility. Put more simply, since there is no question about whether the Port Ivory facility is a major facility as defined in Part 231, the issue is whether the project is properly considered to be an existing source. In such a case, only the additional annual actual emissions, i.e. those in excess of annual actual emissions from the prior operations of the Port Ivory facility, would be considered in determining Part 231 applicability. "Annual actual emissions" reflect the maximum loading of pollutants that could legally be emitted by the facility. They are defined in Part 231 to include the annual emissions, including fugitive emissions, of an air contaminant from a facility after control equipment has been applied and based on continuous operation at maximum capacity (6 NYCRR 231.1(b)(4), emphasis added). Most facilities operate on a more limited basis. Since, under that scenario, the additional annual actual emissions would be less than the de minimus limits contained in section 231.9 (in fact, the annual actual emissions for the project would be less than from the prior operations at Port Ivory), Part 231 would not be applicable (see 6 NYCRR 231.2(a)(3)).

On the other hand, if by virtue of the discontinuous operation of the Port Ivory facility the project is properly characterized as a new facility, no consideration would be given to prior emissions and the entire annual actual emissions from the plant would need to be considered in determining Part 231 applicability. Since the project is located in a non-attainment area for carbon monoxide and ozone and the total annual actual emissions exceed the 100 tons per year limit for the relevant pollutants, Part 231 would apply (see 6 NYCRR 231.2(a)(4)).

In deciding whether the facility is an existing source, the determinant is not whether it physically exists but whether it is entitled to be permitted using the standards applicable to existing sources. The proposed project involves both the reactivation of a previously operating source and the upgrading of that source's pollution control equipment. As such, whether the proposed project should be subject to the standards applicable to existing sources is governed by 6 NYCRR 201.8 and 201.9. Unless the conditions in both of these regulations are satisfied, the facility would be subject to the standards for new emission sources.

The facts of this case demonstrate that the facility is not entitled to be treated as an existing source because 6 NYCRR 201.9 only applies where the facility was in compliance with emission standards at the time of its voluntary shutdown. The stack testing that was done shortly after shutdown, but under conditions intended to simulate operating conditions, showed the facility to be out of compliance with permissible emission limits for particulates and lead. In fact, as a condition for recommencing operation, the U.S. Environmental Protection Agency ("USEPA") has required that the facility add pollution controls.

Further reinforcing the decision not to treat the facility as an existing facility is the fact that the projected emissions are appreciably greater than those of the P&G facility which are contained in the most recent statewide inventory of pollution sources. The Clean Air Act (42 U.S.C. 7401 et. seq.) establishes the framework for reducing pollution loadings in air quality control regions that are not attaining national ambient air quality standards. Fundamental to this framework is the inventory of air emission sources which is required by the Clean Air Act Amendments of 1990 (Pub. L. 101-549). The inventory establishes baseline annual emissions for facilities of each priority pollutant. This inventory is based upon the amount of pollutants emitted in the calendar year by facilities, given their hours of operation in 1990. This inventory is not based on the "actual annual emissions" as defined in Part 231.

In the 1990 inventory prepared by New York State and submitted to the USEPA as part of the required State Implementation Plan, the facility is credited with emitting 1 ton of hydrocarbons ("VOCs"), 8 tons of nitrogen oxides ("NOx") and 2 tons of carbon monoxide ("CO") on an annual basis. These emissions are less than typical for a full year of operation of P&G's Port Ivory facility because the facility only burned #2 fuel oil during 1990 and did not operate for the entire year. The application for the proposed facility projects the emission of 195 tons of VOCs, 475 tons of NOx and 355 tons of CO on an annual basis. Given the magnitude of the increase in emissions it cannot be said that the proposed facility is equivalent to continuation of the existing facility.

For the above reasons, I conclude that this facility is subject to the provisions of Part 231. The Applicant will need to revise its application to demonstrate compliance with that Part.

SEQRA Negative Declaration

ALJ Dickerson found the Department Staff's SEQRA negative declaration legally insufficient and rescinded it, remanding the application to Staff for a new determination of significance. His ruling was based on his finding that the Staff used an incorrect "baseline" in assessing the potential environmental impacts of the facility, particularly with respect to air quality. The Applicant and the Staff contend that the negative declaration was properly rendered in accord with SEQRA procedures and regulations.

ALJ Dickerson held that in measuring the extent of potential environmental impacts of the project, the impacts of the plant's operation should be compared with a scenario where the plant is not operating rather than with one in which the plant was operating under its prior permits. This approach is philosophically similar to that taken in his analysis of the applicability of Part 231.

It is the regulatory requirements which trigger SEQRA review. Therefore, in determining whether impacts of facilities that are temporarily closed should be considered as part of the environmental baseline for purposes of making an initial determination under SEQRA, it is appropriate to inquire if the regulatory requirements governing the issuance of permits have a mechanism for resolving the question of whether the facility may be permitted under existing facility standards. If so, that mechanism should also be used to determine whether the impacts of the pre-existing facility should be considered as part of existing environmental conditions for SEQRA purposes.

Here, as stated above, this facility is not entitled to be permitted under existing facility standards. Therefore, I concur with ALJ Dickerson's conclusion that the Staff's initial SEQRA determination of significance was in error as a matter of law because it improperly considered the pre-1990 emissions of the plant as part of the background environmental conditions.

Given the additional loading of pollutants CO, VOC and NOx, and the fact that the facility is located in a non-attainment area for CO and ozone, I conclude that the operation of this facility may have a significant impact on the environment. Accordingly, a draft environmental impact statement ("DEIS") will need to be prepared which addresses these potential impacts and ways to mitigate them.

This determination does not affect the status of the application as complete under the Uniform Procedures Act (ECL Article 70) and its implementing regulations, 6 NYCRR Part 621. However, the DEIS constitutes new information and analysis which must be provided to the record of this proceeding in order to be able to render a decision. While the Part 231 regulations do not require offsets for resource recovery facilities nor do they require addressing NOx in areas that are in non-attainment for ozone, the DEIS must identify these potential impacts and measures to further mitigate them. It should do so in the context of social, economic and other considerations.

Noise and Other Issues

ALJ Dickerson also requested that additional information be provided to confirm the project's compliance with noise and sound level standards of 6 NYCRR 360-1.14(p). That information has now been provided and confirms that compliance with this regulation does not raise a substantive or significant issue.

SICCA Appeals

SICCA appeals two aspects of ALJ Dickerson's ruling. The first is the failure to make Owl's alleged submittal of selective and misleading information an issue for adjudication. The second is the ALJ's exclusion of emission offsets from consideration.

The first issue appealed by SICCA need not be adjudicated. SICCA has only provided conclusory statements regarding this proposed issue. The rebuttal from the Applicant leaves no doubt that no further inquiry on this issue is required.

With respect to the second issue, as stated above, ALJ Dickerson correctly pointed out in his rulings that existing regulations exempt resource recovery facility from the offset requirements of Part 231.

Summary and Conclusion

I find that Subpart 219-2 is not applicable to this facility as it is not a private solid waste incinerator as defined therein. The ALJ's ruling with respect to the applicability of the regulation is therefore reversed. All other rulings of the ALJ are upheld consistent with this Interim Decision.

The Applicant shall supplement its application to demonstrate compliance with the provisions of Part 231 and shall prepare and submit a DEIS. Upon acceptance of these new submittals by the Staff, notice shall be given to the parties and they shall be given a reasonable opportunity to review them. After such period, the hearing shall be resumed.

IN WITNESS WHEREOF, the Department of Environmental Conservation has caused this Interim 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 26th day of February, 1993.

_____________/s/_____________
THOMAS C. JORLING, COMMISSIONER

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