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Pilgrim Psychiatric Center (Mayflower Energy Partners, LLC) - Ruling, May 7, 1993

Ruling, May 7, 1993

STATE OF NEW YORK :DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter

of

the Application of MAYFLOWER ENERGY PARTNERS, L.P., for permits to
construct and operate an electric generating facility at
the Pilgrim Psychiatric Center, Town of Islip, Suffolk County

RULINGS OF THE ADMINISTRATIVE LAW JUDGE ON
PARTY STATUS AND ISSUES

DEC Project Nos. 1-4728-01116/0002-9
and 1-4728-01116/00003-9

Background and Brief Project Description

Mayflower Energy Partners, L.P. (the "Applicant") seeks permits to construct and operate the Pilgrim Energy Center, a 340 megawatt (MW) natural gas-fired, combined cycle electric generating facility. Two heat recovery steam generators would be employed. The combustion turbines would be able to burn natural gas or a back-up fuel, to consist of No. 2 distillate fuel oil (0.05 percent sulfur by weight). Process water would be supplied from four new wells to be drilled to a depth of about 125 feet. Each well would be able to pump a maximum of 525 gallons per minute (GPM). Maximum combined pumpage for the wells would not exceed 1,050 GPM.

As proposed, the project would supply the adjacent Pilgrim Psychiatric Center with 7 MW of electricity and 150,000 pounds of steam per hour. The rest of the generated electricity would be sold to the Long Island Lighting Company (LILCO) via an underground connection to the LILCO grid system at the New Highway substation in Smithtown. The gas pipeline would be built along the same route as the electrical connection.

The project proposal stems from a competitive solicitation, made in 1989, by the New York State Office of Mental Health (OMH), which operates the Pilgrim Psychiatric Center. Prompted by legislation encouraging energy performance contracts for terms of up to 35 years, OMH canceled plans to design, construct and operate its own cogeneration plant, and issued a request for proposals to build a third-party facility. The objective was for OMH to avoid the initial capital costs to build and the long terms costs to operate and maintain a power plant for the Pilgrim campus.

Among twelve proposals received, OMH chose Mayflower's 340 MW project as the best alternative to provide stream and electricity to the campus. OMH co-signed a letter of intent with the Applicant to develop the facility on the center property.

OMH describes the Pilgrim project as integral to its efforts toward modernizing the center campus. The project's steam will be used for heating and domestic hot water, and also in the air conditioning system. The project should also provide for the electrical needs of the Pilgrim campus at substantially discounted rates. OMH estimates that the project's energy benefit will save state taxpayers over $100 million during a 35-year period.

To construct and operate the facility, the Applicant is seeking a Prevention of Significant Deterioration ("PSD") permit (under 40 CFR 52.21), an Air Permit (under Environmental Conservation Law [ECL] Article 19 and 6 NYCRR Part 201), and a Long Island Wells Permit (under ECL Section 15-1527 and 6 NYCRR Part 602). Approvals are also needed for a major facility license for oil storage, and a registration certificate for the bulk storage of hazardous substances.

As lead agency under the State Environmental Quality Review Act ("SEQRA") (ECL Article 8), the Department of Environmental Conservation ("the Department" or "DEC") made a positive declaration, thereby requiring development of a draft Environmental Impact Statement ("EIS"). A draft EIS, dated November 1992, was submitted by the Applicant and accepted by DEC Staff. A combined Notice of Complete Application, Availability of Draft Permits, Completion of DEIS, and Approvability of PSD was published on November 11, 1992, in the DEC Environmental Notice Bulletin.

Legislative Public Hearing Session

A Notice of Public Hearing, dated February 12, 1993, was published in the Department's Environmental Notice Bulletin on February 17, 1993. It was published as a legal notice in Newsday on February 22, 1993, and in Suffolk County Life on February 24, 1993.

As announced in the notice, a legislative hearing for comments on the application and DEIS was held on April 7, 1993, at the Brentwood High School in Brentwood, Long Island. Fourteen people gave oral statements, seven at an afternoon session and seven at an evening session. No written comments were received in response to the hearing notice.

Statements were made on behalf of OMH, describing how the project would benefit the Pilgrim campus. Other project proponents included local building trade interests; the Long Island Civic Association, which described itself as the largest business group on Long Island; and the president of the Brentwood school board. The Four Towns Civic Association spoke in favor of the project while also urging the Applicant to continue efforts toward purchase of an 88-acre parcel, currently owned by the Town of Islip, to be dedicated to the Edgewood state preserve.

Among arguments favoring the project, the following points were raised:

  • The project would create 350 jobs for more than two years of construction, plus 30 permanent jobs once it begins operation.
  • The project would pump more than $300 million into the recessed local economy, including $100 million from its construction payroll. It would generate badly needed school and property tax revenues.
  • The project's use of high-efficiency power generating equipment would reduce local air emission levels, as would the likely replacement of older, less efficient, and more polluting power generating resources now used by LILCO.
  • The use of natural gas would lessen state dependence of foreign oil.
  • The drawing of process water from a shallow contaminated on-site aquifer would hasten that aquifer's recharge from cleaner water sources.
  • Construction would involve removal of a coal and ash pile now located next to a decommissioned on-site boiler house.
  • Project completion would likely spur conversion of vacant campus buildings to new productive uses, including a housing and nursing complex for senior citizens.

Speaking against the project were the Long Island Power Authority (LIPA) and a civic group called Citizens for a Progressive Energy Policy, among others. LIPA's objections are discussed herein as proposed hearing issues, since they were also raised in its filing for party status. The main objections from other project opponents were that the facility, as proposed, is grossly outsized in relation to the energy needs of the Pilgrim campus, and is not needed by the greater Long Island community, which is served by LILCO.

Opponents said the project would likely mean large increases for LILCO ratepayers, who, it was argued, already pay the highest energy costs in the nation. It was argued that higher energy rates would likely drive more jobs out of Long Island than would be generated by the project. Also, it was argued that by using natural gas, the project would contribute to global warming, and that the project should not go forward at least until LILCO makes greater use of demand side management options, as a means of meeting capacity needs.

Even many project proponents expressed concern about LILCO rate increases which might be triggered by the project. Project supporters expressed the hope that by negotiation, LILCO and the Applicant might set a pricing term which would best serve the interests of LILCO customers.

Issues Conference

As announced in the hearing notice, I held an issues conference on April 8, 1993, at the Brentwood High School, Brentwood, Long Island. Participating at the issues conference were the Applicant, Department Staff, and representatives from two prospective intervenors, the Long Island Lighting Company (LILCO) and the Long Island Power Authority (LIPA).

The Applicant was represented by John W. Heiderscheit III, Esq., of Chadbourne and Parke, Washington D.C.

The Department Staff was represented by Keith Silliman, Assistant DEC Counsel, Albany, New York.

LILCO was represented by William J. Merritt, Esq., senior attorney, from its office in Hicksville, New York.

LIPA was represented by Richard P. Bonnifield, general counsel, from its office in Garden City, New York.

LILCO and LIPA made timely filings for party status which proposed certain issues for formal adjudication. No issues were proposed by either the Applicant or DEC Staff.

Prior to the conference DEC Staff prepared and released a draft permit with conditions for the project's construction and operation. At the conference it said the project could go forward in accordance with the permit terms. The Applicant concurred with and accepted the permit conditions.

During the course of the conference discussion, an additional permit condition was proposed by DEC Staff and accepted by the Applicant. This condition, which did not appear in the draft, provides that:

  1. Construction activities (other than site preparation activities) authorized by the permit shall not commence prior to the filing with the state Public Service Commission (PSC) of a valid sales contract for the sale of excess power from the Pilgrim Energy Center; and
  2. DEC Staff shall be provided promptly with a copy of the contract filed with the PSC.

As noted above, the Pilgrim Energy Center is expected to generate 340 MW of electricity. The Pilgrim Psychiatric Center will receive 7 MW and the remainder will be sold to LILCO. This will be done pursuant to the federal Public Utility Regulatory Policies Act of 1978 ("PURPA"). PURPA requires utilities to purchase electric energy from qualifying facilities, but ensures the utilities a rate that is (1) just and reasonable to its consumers and (2) in the public interest. PURPA does not require a utility to pay more than its "avoided costs" for purchased electricity (18 CFR 292.304), as determined by state regulatory authority (in this case, the PSC). "Avoided costs" are defined as "the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from such qualifying facility. . . such utility would generate itself or purchase from another source" [18 CFR 292.101(b)(6)].

On September 30, 1991, the PSC ordered LILCO into a contract with the Applicant. The contract was priced using a 1989 schedule of long run avoided costs (LRACs). LILCO signed the contract under protest in October, 1991. It then appealed the PSC order. The order was annulled on April 27, 1992, by a decision of State Supreme Court Justice F. Warren Travers. Judge Travers found that PSC had determined in November, 1990, that the 1989 LRACs were overstated; therefore, he ruled these LRACs could not be used in a decision, made in September, 1991, to figure the contract rate. Judge Travers said the authorization for use of the 1989 rates was in violation of PURPA since it was not just and reasonable nor in the public interest.

The Applicant appealed the judge's decision and the case is now pending in the Appellate Division. The effect of the decision was to rescind the Applicant's contract with LILCO, pending establishment of a new pricing term. At the issues conference, LILCO and the Applicant said proposals were being exchanged for a possible contract settlement. LILCO said DEC should defer any permit decisions until a contract rate is established. The Applicant disagreed, saying the matter could be decided based on the existing record.

LILCO says that without knowing the contract rate, any analysis of whether the proposed facility meets the requirements of the State Energy Plan, as required by SEQRA, would be entirely speculative. The plan lists four long-range state energy planning objectives, one of which is to reduce consumer costs for energy.

At the present time, it is not known what rate will be set in LILCO's contract with the Applicant. That will be decided by negotiation, at a rate LILCO consents to, or by the PSC (with review by the courts), at a rate that must by law be just and reasonable, and in the public interest. DEC lacks jurisdiction to set a contract rate; it lacks expertise to establish what rate would be appropriate. At any rate, SEQRA review is anticipated to proceed at an early stage of project development [see 6 NYCRR 617.1(c)] and need not be deferred until contracts are established.

For these reasons, I am not withholding rulings on the issues proposed by LILCO and LIPA. If these issues require adjudication, they should be heard and decided now.

Standards for Determining Issues

An issues conference is held to determine (1) what, if any, issues require adjudication; and (2) who should participate at an adjudicatory hearing, should issues be identified and a hearing therefore be required.

Pursuant to 6 NYCRR 624.6(c), the Administrative Law Judge ("ALJ") shall determine what issues require adjudication based upon whether an issue proposed is "substantive and significant." The Commissioner has ruled that "once the application and supporting documents are reviewed by the Department Staff, Staff's determination that the project can be approved under the conditions in the draft permits constitutes a prima facie case in support of the application, assuming the applicant . . . accepts all draft permit conditions" (In the Matter of Sithe/Independence Power Partners, L.P., Interim Decision of the Commissioner, November 9, 1992). Prospective intervenors then have the burden of going forward to demonstrate that substantive and significant issues exist (In the Matter of Bonded Concrete, Inc., Interim Decision of the Commissioner, June 4, 1990).

A "substantive" issue is one not based on mere speculation but on facts that can be subjected to adjudication [In the Matter of Concerned Citizens Against Crossgates v. Flacke, 89 AD2d 759 (3d Dept., 1982), aff'd. 58 NY2d 919 (1983)]. A "significant" issue is one whose resolution can result in permit denial or the imposition of significant conditions (In the Matter of NYC Dept. of Environmental Protection, Chelsea Pump Station, Third Interim Decision of the Commissioner, October 6, 1988; and In the Matter of St. Lawrence County, Third Interim Decision of the Commissioner, April 30, 1990).

Proposed Issues for Adjudication

  1. The Applicant has not demonstrated that its proposed electric generating facility will satisfy electric generating capacity needs or other electric system needs in a manner reasonably consistent with the most recent state energy plan [ECL 8-0109(2)(h)].
  2. Given projected adverse impacts on the environment, the project is not needed and therefore should not receive SEQRA approval.
  3. The project is not justified by the "public necessity" as required for issuance of a Long Island wells permit [ECL 15-1527].
  4. The range and discussion of alternatives in the Draft Environmental Impact Statement (DEIS) is inadequate as a basis for making SEQRA findings.

Issue No. 1 - - Consistency with the State Energy Plan

In 1992, SEQRA was amended to provide that in the case of an electric generating facility, the project EIS "shall include a demonstration that the facility will satisfy electric generating capacity needs or other electric system needs in a manner reasonably consistent with the most recent state energy plan" [Ch. 519, Laws of 1992, Section 7; amending ECL 8-0109(2)(h)].

There was some dispute at the issues conference as to what this amendment requires. LILCO and LIPA both argue that it requires DEC to make findings. Department Staff disagrees, saying it requires only that the issue be discussed.

The Applicant argues that the required demonstration was made as part of its draft EIS, which was accepted by DEC Staff. It said DEC is not obliged to make findings, although if it has to, the requisite showing has been made.

As authority for their positions, all parties cited the Commissioner's interim decision, dated November 9, 1992, In the Matter of Sithe/Independence Power Partners, L.P. That matter also involved a permit application for a natural-gas fired, combined cycle electric generating facility. In his decision (at page 3), the Commissioner described ECL 8-0109(2)(h) as a potential source of authority that would require a need showing. Addressing that showing, he said "the need for the project was documented in the draft EIS and was found acceptable by Staff. With respect to the state energy plan, the draft EIS provides a showing of how the project would satisfy electric system needs other than those related to generating capacity. It shows how the project is consistent with the plan's basic goals of economic competitiveness, environmental quality, energy security, and public health and safety. The draft EIS shows how each of these goals is related to the project's design and function. The Applicant is under no obligation to provide further proof in satisfaction of amended ECL 8-0109(2)(h) unless the Intervenors make a substantive offer placing compliance with the requirements of that provision in doubt" (Sithe, page 4) (emphasis added).

I read this decision as stating that where an adequate offer is made, compliance with ECL 8-0109(2)(h) may become a matter for adjudication. Under existing standards, this could occur only where compliance would raise a "significant" issue: in other words, one that might affect the permitting decision. That the DEC must make findings based on ECL 8-0109(2)(h) is implied by the Sithe decision, although not stated explicitly.

In its draft EIS, the Applicant writes (at page I-31) that there are several reasons why its project is needed. These needs are not framed explicitly with reference to the state's electric system, although the same things that advance the public need for the project [which must be discussed in the EIS, pursuant to 6 NYCRR 617.14(f)(1)] also advance the needs of the electric system generally. Here the Applicant seems to concede there is no need at the present time for additional electric generating capacity. Instead, its claims are based on other system needs: most precisely, the need for electric generating facilities that, compared with those now in use, are more modern, reliable, and efficient, and that are also less polluting. The EIS states there is a need to improve the efficiency of electric generating capacity, and to decrease the nation's dependence on foreign oil (in this case, by the use of domestic natural gas).

Apart from its discussion of need, the EIS contains a four-page section addressing the project's consistency with the state energy plan. The plan has four long-range objectives (energy efficiency, improved air quality, fuel diversity, and reasonable energy prices), each of which is discussed in relation to the project. The EIS demonstrates how the project is consistent with these objectives and, on the issue of fuel diversity, will help the state meet a particular target: to increase the cost-effective and efficient use of natural gas by at least 50 percent by the year 2008.

According to the draft EIS, the project will meet the needs of Pilgrim Psychiatric Center for a new, reliable source of steam, and for a more economic supply of steam and electricity, to make the center an appropriate choice for facility consolidation. The EIS states that these needs will be met in accordance with the long- range planning goals of the state energy plan, one of which is to improve the energy efficiency of state buildings by 20 percent. This improved efficiency is projected as the result of the project's use of waste energy to produce steam that will supply virtually all of the center's heating and cooling requirements.

In its filing for party status, LILCO challenges the need for this project as well as its consistency with the state energy plan. It has pre-filed testimony from Adam M. Madsen, its vice president of corporate planning. Should a hearing be held, Madsen would testify that the project is not needed to meet LILCO's capacity requirements. He would say that based on current projections, LILCO will not need new generating capacity for at least a dozen years, and that when a need arises, it will have many options from which to choose.

LIPA agrees there is no present capacity need, adding that when one develops, it would better be served by a similar project derived from the abandoned Shoreham nuclear power station. Unlike LILCO, LIPA offered no pre-filed testimony, but named Daniel Feit, its director of resource planning, as a potential hearing witness on electric system needs, and on the benefits of a Shoreham conversion, which LIPA is now considering.

Should a hearing be held, Mr. Madsen's testimony (for LILCO) and Mr. Feit's testimony (for LIPA) might be relevant to assess what need may exist for new electric generating capacity. On the other hand, this issue is largely irrelevant, since to make its demonstration, the EIS is weighted toward other system needs, as described below, in relation to the state energy plan.

Energy efficiency. The EIS states that combined cycle cogeneration is one of the most efficient ways to create electricity because a high percentage of the fuel's heating value is used to produce energy. The EIS states that the best LILCO oil- fired plant requires 20 percent more fuel than would be needed by this project to produce the same amount of electricity. LILCO did not challenge this figure and its argument that the project would discourage conservation (by creating an energy glut) is irrelevant to the fuel-efficiency claim.

Improved air quality. The EIS states that the project will improve air quality since it will displace power from existing LILCO oil-fired plants, which are alleged to have much higher emissions. The EIS states that operation of the project will result in a decrease of sulfur dioxide and nitrous oxide emissions, thereby improving air quality. LILCO disputes the degree to which these reductions will occur, but not the underlying premise (i.e., that natural gas is less polluting than oil).

Fuel diversity. The EIS states that the project's use of natural gas will diversify the fuel supply for LILCO, which now uses oil for more than 60 percent of its annual generation. The EIS states that construction and operation of the project will result in reduced consumption of foreign oil, improve the nation's balance of payments, provide a buffer against steep energy price increases, and lessen the nation's reliance on potentially vulnerable energy sources. LILCO argues that, if approved, the project will likely begin operations in 1996. At that time LILCO claims it will rely on oil for less than 20 percent of its energy requirements, with the remainder evenly spread among gas, oil, coal, nuclear and renewables (including hydropower, and waste-to-energy processes). LILCO acknowledges the project will provide a fuel diversity benefit but denies it will be significant.

Reasonable energy prices. The EIS notes that the Applicant's contract rate with LILCO was set in accordance with PURPA's principle that the rate be (1) just and reasonable for the utility's consumers and (2) in the public interest. The contract rate was set by the PSC and later nullified by a decision of the State Supreme Court, as noted earlier in this ruling. LILCO calculates that under the pricing from the now-cancelled contract, its customers would pay a penalty of more than $600 million during the first five years of this project's operation. This penalty is calculated as the difference between LILCO's lower cost to purchase or produce energy versus the cost for energy under the now-rescinded contract. According to LILCO, the penalty is such that it would increase LILCO's rates between five and six percent.

The perceived increase in energy prices, projected by virtue of this project, is the main basis for LILCO's argument that the project will not meet system needs in a manner consistent with the energy plan. There are two major problems with this analysis: (1) It is premised on a contract rate that the court has annulled; and (2) It ignores the role of PURPA in ensuring that any future established rate be just and reasonable for LILCO's consumers, and in the public interest. DEC lacks jurisdiction and expertise to decide what energy prices are reasonable for electric consumers. As there is already a mechanism to ensure consumer protection, this aspect of the energy plan need not concern DEC in assessing whether, for purposes of SEQRA, the project meets electric system needs.

According to ECL 8-0109(2)(h), the project must meet electric system needs in a manner "reasonably consistent" with the state energy plan. Weighed against the plan's four objectives, as noted above, an adequate showing has been made. This showing is not called into doubt by the proposed testimony from LILCO or by LIPA's offer to prove that the conversion of Shoreham would be a more consistent alternative. The Shoreham conversion is at this point wholly speculative, and even if it does move forward, the issue should not be resolved on a comparative basis.

The draft EIS contains an adequate demonstration that the project, as now proposed, will meet electric system needs in a manner reasonably consistent with the state energy plan. Therefore, no issue is raised for adjudication.

Issue No. 2 - - Need in Relation to Environmental Impacts

In his Sithe decision (at page 3), the Commissioner writes that there are two separate potential sources of SEQRA authority that would require a need showing. One is ECL 8-0109(2)(h), which is discussed above. The other is more general, where public need would favor permit issuance, despite significant environmental impacts which could not be mitigated or avoided.

At the issues conference, LIPA argued that the project would have environmental impacts by virtue of its placement over the sensitive Long Island aquifer. The installation of oil storage facilities, as a project-related component, was also posed as having possible adverse impacts.

LIPA's concerns fail to raise an issue as they were expressed in a conclusory manner and were not supported by an offer of proof from a qualified witness.

In addition, LIPA argues that the mere construction of this project would have environmental impacts, and that these impacts must be weighed against the need for the project. These impacts were not described at the conference except in relation to the site disturbance which is inherent to any construction project.

LIPA argues that the conversion of Shoreham to a facility similar to that proposed by the Applicant would be more environmentally benign, since it would involve the modification of an existing facility, rather than the construction of a new one. This argument is irrelevant since the decisions on this project should not be made on a comparative basis, especially in relation to an alternative that is still being evaluated and may never go forward.

The EIS already contains a discussion of public need for this project, as is required by 6 NYCRR 617. As a matter of law, this need would become a hearing issue only if it were shown that the project had some significant environmental impact which could not be mitigated or avoided. [In the Matter of Hydra-Co. Generations, Inc., Interim Decision of the Commissioner, April 1, 1988.] No such offer was made; therefore, there exists no issue to litigate.

Issue No. 3 - - Public Necessity for a Long Island Wells Permit

Pursuant to ECL 15-1527, the Applicant requires a permit for the construction of four new wells to supply process water for the project's operations. This is because their pumping capacity would be greater than 45 gallons per minute (GPM). Each of the wells would be able to pump up to 525 GPM; maximum combined pumpage for the wells would be authorized up to 1,050 GPM.

ECL 15-1527(2) subjects well permit applicants to the provisions of Article 15 relating to persons or public corporations who propose to supply water to inhabitants of a municipal corporation or other civil subdivision of the state. One of these provisions requires DEC, as part of its permitting decision, to determine whether a proposed project is justified by the "public necessity" [ECL 15-1503(2)]. The Department shall "vigorously apply" this section in its decision-making on Long Island well permits, according to ECL 15-1527(4)(g).

In its filing for party status, LILCO says the Pilgrim project is not justified by the "public necessity" because it is grossly oversized in relation to the steam and electricity needs of the psychiatric center. LILCO's argument fails to note that among twelve different proposals, the one now proposed was chosen by OMH on the basis of center needs. The Applicant's 340 MW facility is the largest of three proposals it submitted to OMH. It was chosen because it would best afford efficiency and economy of scale, allowing the facility to employ extensive and costly environmental mitigation measures, while still providing maximum benefits to OMH. This should also be considered as part of the public need for a project of this size.

Under my questioning, LILCO acknowledged making no offer that the project (including the wells that are proposed) would cause any adverse environmental impact. LILCO conceded making no claim that some other source be used for process water.

The Applicant notes correctly that absent some "valid reason" to conserve the water this project would withdraw, no "rational basis" exists for failing to find a "public necessity" [Matter of Ton-Da-Lay, Ltd. v. Diamond, 44 AD2d 430, 355 NYS2d 820 (3d Dep't. 1974), app. dis. 35 NY2d 789 (1974) and 36 NY2d 856 (1975)]. The Applicant is cognizant of the sensitivity of Long Island's groundwater supply and, through design and well placement, is not only minimizing negative impacts to that supply, but is also helping to clean it up.

As noted in the draft EIS, the project site is underlain by a contaminated groundwater plume that is emanating from the center's wastewater treatment leaching beds. The Applicant proposes to place its two primary wells at a location and depth sufficient to intercept the flow of this plume. In this way, the facility is designed to pump and treat the plume's non-potable contaminated water and to use that water in its plant processes. The water will leave the aquifer and enter a zero discharge system, meaning that 90 percent will be recycled back to the plant, and the remainder will be lost through evaporation. Water will be drawn from the upper glacial aquifer and not from the Magothy or Lloyd aquifers, which are reserved for Long Island's drinking water. The withdrawal of contaminated water will presumably hasten the aquifer's recharge from cleaner water sources.

In summary, the project is designed in a way that, if anything, will benefit the water resource. Neither the wells nor the project they will serve have been identified with any particular environmental harm. Therefore, no basis exists not to find that they are justified by the public necessity, as is required by the ECL. No issue is raised with regard to the Long Island wells permit.

Issue No. 4 - - Project Alternatives

DEC's SEQRA regulations require that an EIS discuss a range of reasonable alternatives which are feasible, considering the objectives and capabilities of the project sponsor [6 NYCRR 617.14(f)(5)]. The alternatives identified should result in the same or a reduced level of environmental effects, allowing a reviewer to determine whether the proposed action is, in fact, the best project when environmental factors have been considered.

For the Pilgrim project, the draft EIS has considered alternate sites and facility arrangements; alternate fuels, fuel delivery methods, and energy routes; alternate air quality controls; alternate means of liquid waste management; alternate cooling water systems; and alternate plant water supplies. It has considered the "no action" alternative as well as conservation as an alternative for meeting the energy needs of the psychiatric center.

LIPA argues that the range of alternatives should also include possible conversion of the Shoreham nuclear plant to a gas-fired, combined cycle power facility. I disagree, for the following reasons:

  • The Applicant is a developer of new facilities, and the conversion of Shoreham is not one of its objectives.
  • The Shoreham plant is owned by LIPA, and its conversion is not within the Applicant's capabilities.
  • The conversion of Shoreham is at this point only a matter for speculation. Without a plan for the conversion, one could not determine whether it would cost less or be better environmentally than the construction of the Pilgrim project, as LIPA alleges in its filing.

LILCO and LIPA both argue that the "no action" alternative was wrongly rejected in light of the impact the project might have on consumers' electric rates. This impact is economic and therefore outside the intent of the SEQRA alternatives discussion, which is to mitigate environmental impacts.

LILCO argues that conservation was wrongly dismissed since at least part of the center's electric load requirements could be met in this manner. As a project alternative, conservation is an option for OMH, but not for the Applicant. It is not within the Applicant's objectives and capabilities and therefore need not be considered.

The same might be said for the last alternative proposed by LILCO, which is the construction of a facility far smaller than the one now proposed. LILCO argues that DEC should order the EIS be supplemented to discuss this option, on the premise that it would still meet the needs of the psychiatric center, without possibly burdening LILCO ratepayers.

There is no need to supplement the EIS with discussion of a smaller project alternative since it is not justified in relation to the project's environmental impacts. In addition, the alternatives analysis is limited by the project host, OMH, which has chosen the 340 MW facility among many proposals considered as the one best meeting its goals.

Overall, SEQRA requires only that a reasonable range of alternatives be considered. Where this has happened, it would be necessary to develop a record on additional alternatives only if the project as proposed would have unmitigable significant adverse environmental impacts (In the Matter of Peckham Materials, Interim Decision of the Commissioner, January 27, 1992). As described above, a reasonable range of alternatives already has been considered, and no showing has been made of environmental impacts that have not already been mitigated or avoided to the maximum extent practicable.

For these reasons, there is no need to supplement the draft EIS, nor is a hearing issue raised.

Summary Ruling

No issues have been raised for adjudication. For that reason, there will be no adjudicatory hearing, and party status is denied to LILCO and LIPA.

Appeals

Pursuant to 6 NYCRR 624.4(f) and 624.6(d), the rulings of the Administrative Law Judge denying party status and ruling on hearing issues may be appealed in writing to the Commissioner within three days of the rulings. To expedite the appeals process, these rulings are being sent today by telecopier to all whose names appear on the service list. Any appeals must be received at the Office of the Commissioner (NYSDEC, 50 Wolf Road, Albany, New York, 12233-5500) no later than close of business (4:45 p.m.) on May 14, 1993. Any letters or briefs responding to any appeals that are filed must be received on or before close of business on May 21, 1993. The parties shall ensure transmission of all papers to me and all others on the service list at the same time and in the same manner as transmission is made to the Commissioner.

Order of Disposition

Subject to the Commissioner's determination of any appeals that are filed, this matter is remanded to Department Staff for issuance of final permits in the form Staff has currently proposed.

Staff shall ensure completion of the final EIS and make the necessary SEQRA findings.

Addendum

The Applicant, LILCO and LIPA have each submitted proposed corrections to the issues conference transcript. Having reviewed the corrections against the existing transcript, and having received no objections to the corrections as proposed, these corrections are hereby adopted. They have been made in my copy of the transcript, which is part of the official hearing record.

Albany, New York
May 7, 1993

Edward Buhrmaster
Administrative Law Judge

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