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TransGas Energy Systems, LLC - Ruling, August 22, 2003

Ruling, August 22, 2003

STATE OF NEW YORK: DEPARTMENT OF ENVIRONMENTAL CONSERVATION

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

by

TransGas Energy Systems, LLC,
Applicant.

RULING ON PROPOSED ADJUDICABLE ISSUES AND PETITIONS
FOR PARTY STATUS

DEC No. 2-6106-00149/00014
SPDES No. NY0006301

[August 22, 2003]

Summary

The Applicant has applied for air pollution control permits and a State Pollutant Discharge Elimination System (SPDES) permit for its proposed electrical generation project. Eight petitions for Department of Environmental Conservation (DEC) party status were filed regarding this application. A related Siting Board hearing, pursuant to Public Service Law (PSL) Article X is pending. The issues conference was held on a joint record for the DEC permit review and Article X certificate. The DEC Administrative Law Judge (ALJ) also is the Article X Associate Examiner.

One petitioner has identified an omission in the permit application regarding technology to comply with the tetrachloroethene SPDES permit limit of 0.26 parts per million (ppm). This petitioner is granted party status.

The other seven interveners failed to raise any DEC substantive and significant adjudicable issue. Therefore, the other seven petitions for DEC party status all are denied.

Introduction

In December 2002, TransGas Energy Systems, LLC (the Applicant), applied for a Certificate of Environmental Compatibility and Public Need pursuant to Article X of the New York PSL(1) and Air Pollution Control and SPDES permits pursuant to Articles 17 and 19 of the Environmental Conservation Law (ECL), to construct and operate a 1,100 megawatt (MW) combined cycle co-generation electric facility. The facility would be configured with two power blocks, each consisting of two Siemens Westinghouse W501-F combustion turbine generators (CTG), two heat recovery steam generators (HRSGs), one steam turbine generator (STG) and associated balance-of-plant systems and facilities. Each gas turbine will burn natural gas and would be coupled to its HRSGs, which would produce steam to operate the steam turbine and for steam export. To provide flexibility for steam export and help serve the Facility's thermal needs, two auxiliary boilers have also been incorporated into the design. Heat recovery and delivery infrastructure for potential steam sales is included. The primary fuel would be natural gas. Very low sulfur fuel oil would be used for backup.

The proposed facility would be located on an approximately eight-acre site at the existing Bayside Oil Terminal at North 12th Street and Kent Avenue, in Brooklyn, New York. The project site is bounded on the north by Bushwick Inlet, on the east by Kent Avenue, on the south by North 12th Street and on the west by the East River.

The site is heavily contaminated as a result of hydrocarbons in the subsurface soils. The entire project area is zoned M3, a heavy industrial district.

Proceedings

The Applicant's application for an Article X certificate also included a request for an Air Pollution Control permits (the permits required pursuant to 6 NYCRR Parts 201 and 231) and a SPDES permit. The facility proposes to use dry cooling technology for cooling purposes. The proposed facility would obtain process and makeup water from the Metropolitan Transit Authority dewatering facilities. The DEC Staff reviewed The Applicant's SPDES and Air permit applications, and subsequently developed draft SPDES and Air permits, dated June 4, 2003 (including a single draft permit, captioned 'Air State Facility Permit'; hereinafter, the draft Air permit[s](2)).

A DEC Combined Notice of Complete Application, Public Hearing and Issues Conference (the Notice) was published in the DEC's electronic Environmental Notice Bulletin on June 4, 2003 and appeared as a legal notice in the New York Daily News on June 9, 2003. The Notice also was published in El Diario (Spanish), The Greenpoint Gazette, Der Blatt (Hebrew) and Nowy Dziennik (Polish). In addition, copies of the notice were sent to the parties to the related PSL Article X proceeding, as well as to the required governmental officials and to many individuals who had expressed an interest in the proposed facility.

The Notice included descriptions of the proposed electric generating facility and the nature of the point sources for the anticipated waste water discharges. In addition, the Notice provided for a 38-day comment period, and advertised the schedule for a legislative hearing and an issues conference.

The joint DEC and related Article X hearings concerning The Applicant's request for a Certificate of Environmental Compatibility and Public Need commenced with public comment sessions on July 17, 2003 at 4:00 p.m. and 7:00 p.m., at the Polish National Home, 261 Driggs Ave, Brooklyn, New York. The hearing room could accommodate approximately 500 people, and was filled to capacity at both sessions. In the evening, a substantial overflow crowd remained outside the hearing location.

Several elected officials spoke (or appeared by representative) to voice opposition to the project, including U.S. Congresswoman Nydia Velazquez, N.Y.S. Senator Martin Dilan, N.Y.S. Senator Martin Connor, N.Y.S. Assemblyman Joseph Lentol, N.Y.S. Assemblyman Vito J. Lopez, Brooklyn Borough President Marty Markowitz, N.Y.C. Councilmember David Yaske, N.Y.C. Councilmember Diana Reyna and Community Board Chairman Vincent Abate.

A total of 29 people predominately members of various trade unions spoke during the afternoon session, in support of the economic development that the project would represent during the construction phase. A total of 33 people predominately local residents (and their elected officials)spoke during the evening session in opposition to the project. In addition, several written comments were filed during the legislative hearing or by mail. At the conclusion of the evening session, in excess of sixty speaker cards remained that had not been called, although the comments received provided broad characterization of public views on the project.

Those who spoke in opposition were concerned that if this project were to go forward, it would adversely affect waterfront redevelopment in this Williamsburg/Greenpoint area of Brooklyn. Several speakers noted the City's recent announcement of proposed re-zoning of this area. In addition, comments in opposition expressed concern about the cumulative public health impact of this project and other existing projects in the Williamsburg/Greepoint communities. Various opposition speakers asserted that Williamsburg/Greepoint hosts 44% of the City's waste transfer stations, a marine waste transfer station, the Newtown Creek sewage treatment plant, a cement mixing plant, bulk oil storage facilities and four other electric generation power plants.

A joint prehearing conference/issues conference commenced on July 18, 2003 and was continued on July 29, 2003.

Article X Presiding Examiner, Robert R. Garlin, and I (as Associate Examiner) presided during the joint issues conference. Presiding Examiner Garlin led the discussion of the proposed Article X issues, and I led the discussion of proposed DEC issues. The DEC petitions for party status were addressed on July 29, 2003.

Timely filings were received from eight entities seeking DEC party status. A joint petition was filed by the New York Public Interest Research Group (NYPIRG), the Office of the Brooklyn Borough President and the Greenpoint Williamsburg Waterfront Task Force (collectively, the Joint Petitioners). The Joint Petitioners were represented by Seth J. Cummins, Esq., Counsel, Office of the Brooklyn Borough President, Victor M. Tafur, Esq., Staff Attorney, Pace Energy Project and Lisa F. Garcia, Esq., Staff Attorney, NYPIRG.

A petition was filed by the City of New York and the N.Y.C. Department of Environmental Protection and Department of City Planning (collectively, the City). The City was represented by William S. Plache, Esq., Assistant Corporation Counsel to the City.

A petition was filed by Citipostal, Inc., a document storage business located immediately south of the project site. Citipostal was represented by the law firm of Dickstein, Shapiro, Morin & Oshinsky, LLP. Appearing for the law firm was Ms. Jennifer Radwan.

Separate petitions were filed for five residential real estate development entities: Ramlu Trading Co. and M & H Realty, LLC, both represented by Herrick & Feinstein, LLP, Mark A. Levine, Esq., of counsel, the Greenpoint Terminal Owners, represented by Wachtel & Masyr, LLP, Raymond H. Levin, Esq., of counsel, Park Tower Greenpoint Associates, LLC, represented by Adam D. Perlmutter, Esq., and Northside Waterfront Improvement Group (N-WIG), LLC, represented by Michael A. Kaye.

In addition, on July 21, 2003, the Joint Petitioners filed a supplemental DEC petition proposing certain water issues that the Joint Petitioners originally had identified as proposed Article X issues (as authorized during the July 18, 2003 joint issues conference).

The DEC Staff was represented by Jennifer Hairie, Esq.

The Applicant was represented by the law firm of Read and Laniado, Sam M. Laniado, Esq., of counsel.

The stenographic record of the July 18 and July 29, 2003 joint issues conference sessions (and the July 17, 2003 joint public comment/DEC legislative hearing sessions) were received by August 1, 2003. The DEC issues conference record closed on August 6, 2003, with the receipt of filings authorized during the issues conference.

The Joint Petitioners and the City each provided petitions proposing specific adjudicable issues. However, the other six interveners, in their one-page petitions, each summarily adopted all issues raised by the Joint Petitioners.

I. Standards for Ruling on Proposed Adjudicable Issues

Pursuant to 6 NYCRR 624.5, the parties to any adjudicatory hearing are the Applicant, the DEC Staff and those who have been granted full party status. The criteria for determining whether the ALJ should grant petitions for full party status are provided in 6 NYCRR 624.5(d)(1).

Section 624.4(c) of 6 NYCRR sets forth the standards for adjudicable issues. When, as here, the DEC Staff has determined that a proposal as conditioned by a draft permit will conform to all applicable statutory and regulatory requirements, the burden of persuasion is on the prospective party advancing the issue to show that the proposed issue is both substantive and significant.(3) Briefly, an issue is substantive if there is sufficient doubt about the Applicant's ability to meet the applicable statutory or regulatory criteria such that a reasonable person would inquire further. An issue is significant if the adjudicated outcome can result in permit denial, a major modification to the proposed project, or the imposition of significant conditions in addition to those proposed in the draft permit.(4) See, generally, Athens Generating Company, LP, Interim Decision of the Commissioner (June 2, 2003)(at 3, "Standards for Adjudication").

Neither the Applicant nor DEC Staff objected to the environmental interest of any Petitioner(5).

II. Discussion of Proposed Adjudicable Issues and Rulings

A. Air Pollution Control Issues

1) Air Modeling and the City's Proposed Re-zoning

The Joint Petitioners' first proposed issue is that The Applicant's air modeling studies failed to consider the newly proposed zoning announced by the City's Department of City Planning. The City also identified this issue in its petition. The City's proposed re-zoning initiative was not announced until well after the air modeling for this project had been completed.

Air resources are addressed in Section5 of the Application. Air quality impact assessment is addressed in Application Volume 1, Section5.4. Modeling was performed consistent with the procedures found in the U.S. Environmental Protection Agency (USEPA) Guideline on Air Quality Models (Revised) (USEPA, 2001), New Source Review Workshop Manual (Draft) (USEPA, 1990), and Screening Procedures for Estimating the Air Quality Impact of Stationary Sources (USEPA, 1992). The Air Quality Modeling Protocol was submitted to DEC and USEPA on January 8, 2002, and was approved by DEC on April 11, 2002. See generally, Application Section5.4.4. The Air Quality Modeling Analysis was filed as part of the Applicant's Prevention of Significant Deterioration (PSD) and Part 201 Air Permit Applications on June 12, 2002 (revised March 2003). (App. Vol. 5, Att. Y-2, Section7).

Subsequently, on or about June 19, 2003, the City announced its re-zoning proposal for the area including the proposed project site and surroundings. The Joint Petitioners and the City argue that Brooklyn waterfront development is now at a critical juncture. They assert that due to the magnitude of impacts on the community under the two development scenarios, the Applicant's air modeling must be revised to address the City's proposed re-zoning. But, neither the Joint Petitioners nor the City have identified any statute or regulation that would require such revised air modeling.

The competing public policy and land use issues presented here are, first, whether the re-zoning proposed by the City that envisions the project site as waterfront park land precludes this Applicant, who holds an option to purchase the proposed project site, from a land use that is consistent with current zoning. Second, the site is a hazardous waste site requiring millions of dollars in remediation, which must be completed before the site may be used for any new purpose. The Applicant has volunteered to undertake this remediation. On the other hand, although the City re-zoning proposal envisions the project site as park land, the City has not yet stated its intent to remediate the site or explained how the site would be remediated (nor have the other petitioners addressed this issue). Last, the City has affirmatively stated that it is not prepared to acquire the project site at this time, either by purchase, condemnation or other means. (However, the City also stated that it does intend to acquire the site eventually.)

For purposes of the DEC hearing, the proposed issue is limited to whether the Applicant's air modeling data should be revised to include the City's proposed re-zoning. The Applicant and DEC Staff strongly contend that the petitioners' legal argument must be rejected. They assert that no requirement exists in the NSR modeling protocol (or the project stipulations) that would require an applicant to go back and re-do the air modeling protocol based upon an unapproved municipal re-zoning proposal. Nor does any federal guidance on National Ambient Air Quality Standards (NAAQS) modeling require re-modeling of proposed receptor sites, as the Joint Petitioners and the City are suggesting should be required here. In addition, Applicant and DEC Staff assert, since the City's re-zoning of the project area is merely a proposal, its consequence remains indefinite and speculative. In fact, the Joint Petitioners do not completely endorse the City's re-zoning proposal. Transcript, at 168.

Another reason this is not an adjudicable issue, DEC Staff contends, is that because the zoning proposal is not final, no plans exist for proposed residential buildings in the proposed project area. Consequently, it would be impossible to determine whether any such sources might be receptors that should be included in a revised modeling.

Ruling #1 a): The Joint Petitioners and the City have not raised an adjudicable issue challenging the air modeling for this project. Since the City's re-zoning of the project area is a proposal, it is indefinite and speculative at this time. More importantly, the interveners have not identified any statute, regulation or guidance that would require the Applicant to revise the air modeling.

Environmental Justice

The Joint Petitioners cite Matter of Orange Recycling and Ethanol Production Facility, Pencor-Masada Oxynol, LLC (Masada), U.S. EPA Order, Petition No. II-2001-05 at 12 (April 8, 2002) [Environmental justice issues can be raised and considered in a variety of actions carried out under the Clean Air Act, as for example when EPA or a delegated state issues a PSD or New Source Review (NSR) permit (citing, Clean Air Act [CAA] Section173 and Borden Chemical, Inc., Title V petition No. 6-01-01 [Dec. 22, 2000])]. The Joint Petitioners assert that since 6 NYCRR 231-2.4(a)(ii)(2) is the New York analogue of CAA section 173, it too is an environmental justice section. The Department recently promulgated a guidance document on environmental justice. See, Commissioner's Policy 29: Environmental Justice and Permitting, issued March 19, 2003 (the EJ Policy).

(The City's re-zoning proposal identifies the project site as future park land. During the issues conference, the City stated that it intends eventually to acquire the project site by some means, including, possibly, exercise of its powers of eminent domain.)

Ruling #1 b): The Joint Petitioners failed to present an environmental justice issue consistent with the Departmental guidance policy document. Therefore, no substantive and significant environmental justice issue has been presented.(6)

2) Analysis of Alternatives Pursuant to 6 NYCRR 231-2.4(a)(2)(ii)

The Joint Petitioners and the City assert that an adjudicable issue exists regarding The Applicant's analysis of alternatives pursuant to 6 NYCRR 231-2.4(a)(2)(ii), which examined alterative sites, sizes, production processes and environmental control techniques for the proposed facility and concluded that the benefits of the proposed facility outweigh the environmental and social costs.

The Applicant's comprehensive analysis of alternatives pursuant to 6 NYCRR 231-2.4(a)(2)(ii) is presented in Application Volume 6, Attachment Y-4.

Part 231 requirements are part of a regulatory scheme to control new sources of air pollution in areas that are in non-attainment for one or more criteria pollutants. A review of alternatives undertaken in accordance with Part 231 must recognize its relation to this Non-Attainment New Source Review program and its goal of furthering attainment of the NAAQS. See generally, Keyspan Spagnoli, Decision of the Commissioner (February 25, 2003).

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

"submit an analysis of alternative sites, sizes, production processes, and environmental control techniques which demonstrates that benefits of the proposed source project or proposed major facility significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification within New York State . . . ."(7)

The DEC Commissioner has adopted the three prong test originally set forth in a Louisiana state court decision interpreting similar, but not identical, requirements.(8)

The three prong test for determining whether the requirements of 6 NYCRR 231-2.4(a)(2)(ii) have been satisfied is as follows:

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

Keyspan Spagnoli, Interim Decision.

An applicant bears a low burden to demonstrate compliance with the alternatives analysis under 6 NYCRR 231-2.4(a)(2)(ii). Petitioners challenging a CAA/Part 231 alternatives analysis bear a heavy burden of persuasion since the nature of the decision regarding alternatives is inherently subjective. See, Spagnoli, Hrg. Rpt. at 10.

Following is a discussion of the 6 NYCRR 231-2.4(a)(2)(ii) three prong test as it applies to this project.

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

The first prong of the three-prong test requires that "the applicant must show whether the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible."

The Applicant points to seven factors of the project design to show that the project will avoid potential and adverse environmental effects regarding air quality impacts. Among these factors are: the use of Lowest Achievable Emissions Rate (LAER) for non-attainment pollutants; use of natural gas as primary fuel (and very low sulfur fuel as backup); compliance with all federal and New York air quality standards and no adverse or disproportionate impact on potential environmental justice communities. See, Att. Y-4 at 3. In addition, the Applicant contends that potential and adverse impacts have been avoided or minimized relating to a wide variety of environmental media including land use, aesthetics, noise, odor, water use and quality, ecology, soil conditions and protection of the environment.(9) Moreover, pursuant to a Voluntary Cleanup Agreement between The Applicant and DEC, the Applicant will undertake the cleanup and remediation of contaminated surface soils at the site. See, Application Section6.2.3 and Att. Y-4 at 4.

The Joint Petitioners did not propose any adjudicable issues regarding this first prong, until the July 29, 2003 issues conference. During the issues conference, the Joint Petitioners asserted that because impacts to the above referenced environmental media will be adjudicated in the 'Article X component' of the joint hearing, these issues must also be DEC adjudicable issues.

The Applicant and DEC Staff both objected to the Joint Petitioners' proffer of a proposed issue not raised in their petition for party status.

But more importantly, the standards of proof for adjudicating an issue are different under Article X (material and relevant) than under the ECL and 6 NYCRR Part 624 (substantive and significant) and the scope of alternatives considered is broader in the Article X component than under the Part 231 analysis. Because the issue is adjudicated in the 'Article X component' of the joint proceeding does not necessarily require that the issue be adjudicated in the DEC component. The Joint Petitioners have not otherwise identified how the issue they raise is substantive and significant.

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

This prong essentially requires the Applicant to quantify the costs and benefits of the proposed facility. The Joint Petitioners and the City argue that the Applicant has failed to quantify the costs and benefits of the facility and, therefore, in the interveners' view, the record lacks critical information necessary to evaluate the facility's compliance with 6 NYCRR 231-2.4(a)(2)(ii). The Joint Petitioners and the City contend that a defect or omission in the application exists, because the Applicant did not provide any analysis of costs. T 194.

The Applicant identified several project benefits, including: increased electric system reliability benefits for the City electric system; the provision of black-start capability at 345 kV voltage to help energize the City in the event of a full system outage; promotion of competition in the electric market; reduction in air pollution; brownfield cleanup; water conservation; funding for public access to the waterfront; reduced dependency on foreign oil; increased gas distribution reliability; increased steam reliability; lower steam costs and the economic stimulus of approximately 620 construction jobs and 40 permanent jobs during operation. See, Att. Y-4, Section3.

The Applicant concludes that these benefits far outweigh the potential adverse impacts of the project, which have been avoided or minimized through application of stringent control measures and compliance with all applicable health standards.

3. The Alternative Sites

It is undisputed that the Applicant owns a site in Syracuse, New York and has an option to purchase the proposed site.

An applicant need only consider sites it owns or controls; this is the standard under Article X review and under SEQR review, adopted for Part 231 analysis by the DEC Commissioner in

Keyspan Energy Development Corporation, Interim Decision, DEC No. 1-4726-01500/00001 (November 15, 2002).

Ruling #2: An applicant bears a low burden to demonstrate compliance with the alternatives analysis under 6 NYCRR 231-2.4(a)(2)(ii). Petitioners challenging a CAA/Part 231 alternatives analysis bear a heavy burden of persuasion because the nature of the decision regarding alternatives is inherently subjective. See, Spagnoli, Hrg. Rpt. at 10.

Further, a distinction must be made between instances where a permit applicant or permit issuer have failed to undertake an analysis required by the Clean Air Act, and instances where as in this case, the analysis was performed but the permit issuer arrived at a conclusion that a petitioner disagrees with. When an analysis has been performed and a determination made, those favoring a different outcome must show that the evidence "for" the outcome clearly outweighs the evidence "against" the outcome. That heavy burden is particularly appropriate where, as here, the nature of the decision to be made is inherently subjective. See, id. at 21.

The Applicant has made a prima facie showing that the potential and real adverse environmental effects of the proposed project have been avoided, that the social and economic benefits of the project outweigh the costs of the project and that the environmental benefits and other benefits of the proposed facility outweigh any adverse environmental impacts from the facility, which will be subject to extensive mitigation measures. The DEC Staff has accepted that analysis.

The Applicant, as a private entity, cannot be compelled to construct the facility at any of the alternative sites which it reviewed.

As stated above, a review of alternatives undertaken in accordance with Part 231 must recognize the relation of such issues to this Non-Attainment NSR program and its goal of furthering attainment of the NAAQS. In view of the above discussion, and considering the record as a whole, neither the Joint Petitioners nor the City have raised a substantive and significant issue. They made no offer of proof of availability of any alternative site or that any other site is preferable to the proposed site. The petitioners have failed to identify any substantive and significant issue regarding the Applicant's Part 231 alternatives analysis.

3) NOx LAER and SCONOx Technology

The Joint Petitioners assert that SCONOx technology should be deemed to be Lowest Achievable Emissions Rate (LAER) for this project, on the basis that it eliminates ammonia emissions and also controls volatile organic compounds (VOCs), carbon monoxide (CO), particulate matter (PM10) and toxics.

The Applicant and DEC Staff contend that SCONOx technology was considered and properly excluded as the appropriate control technology for NOx control. See, App. Vol. 1, Section4.4.2. They contend that SCONOx is not available as a demonstrated technology and Selective Catalytic Reduction (SCR), which is proposed for this facility, remains the control technology of choice to achieve the NOx LAER limit. Furthermore, DEC Staff states that SCR has been required by the Commissioner in other recent Article X cases to achieve the NOx LAER limit. The Joint Petitioners provided no offer of proof that the state of technology has advanced since those cases were decided.

Ruling #3: SCONOx is not available as a demonstrated technology and Selective Catalytic Reduction (SCR) remains the control technology of choice to achieve the NOx LAER limit. The Joint Petitioners have failed to provide an offer of proof explaining how SCONOx technology presently is used in a large dual fuel facility (natural gas/very low sulfur oil) as is proposed for this project, to achieve the NOx LAER limit. No substantive and significant issue has been identified regarding use of SCONOx technology.

4) Secondary PM10 from Ammonia Slip

Next, the Joint Petitioners assert two issues regarding ammonia slip. First, the Joint Petitioners contend that secondary PM10 from ammonia slip was not included in The Applicant's emissions estimates on air quality modeling.

But, DEC Staff explained that the Joint Petitioners have confused the formation of particulates from ammonia slip with formation of particulates downwind from the facility. DEC Staff asserted that EPA and DEC air permits for facilities regulate all particulate emissions from the source stack(s), whether direct particulates or secondary particulates formed from condensing gaseous emissions. In DEC Staff's view, the Joint Petitioners' concerns are really a long range transfer issue. DEC Staff concludes that the Applicant has included all the particulates formed in the stack in its calculation of PM10 emissions, including the formation of ammonia salts from ammonia slip. See, App. Vol. 1, Appendix B, Section 2.4.1.

Ruling #4: Secondary formation of particulates downwind of the facility is not an air permitting issue, but instead is regulated by EPA and DEC through general implementation plans. The Joint Petitioners have not cited any statute or regulation to support their proposed issue, nor have they asserted that any draft permit emissions limitation would be exceeded. No substantive and significant issue has been identified regarding formation of secondary PM10 from ammonia slip.

5) Ammonia Slip and Selective Catalytic Reduction

The Joint Petitioners' second ammonia slip issue is that lower ammonia slip levels could be readily and inexpensively achieved using a standard Selective Catalytic Reduction (SCR) system designed to meet a lower slip, specifically, 2 ppm rather than the draft permit limit of 5 ppm. The Joint Petitioners point to the State of Massachusetts, which has required an ammonia slip limit of 2 ppm, a limit that has been achieved consistently by the regulated community.

During the issues conference, DEC Staff stated that ammonia emissions levels for similar sources nationally are currently and routinely regulated with a 5 ppm limitation. However, this issue was largely resolved because the DEC Staff changed its position on ammonia slip limit for the natural gas fuel operation from 5 ppm to 2 ppm in view of the Massachusetts data. The Applicant agreed to accept this revised limitation, as memorialized in an August 6, 2003 letter (Laniado to Casutto). The revised permit limit would be reflected in a final permit. Staff elaborated that as recently as a few years ago, the ammonia slip limit for similar sources was reduced from 10 ppm to 5 ppm, and the revised limit for this facility reflects further advancements in technology.

The Joint Petitioners also asserted that the 2 ppm ammonia slip limitation also should apply to the low sulfur oil fuel operation. However, they were not able to provide any offer of proof to show that such a limit has been achieved elsewhere. DEC Staff affirmatively stated that no operational data exists to show that the 2 ppm ammonia slip limit can be achieved under an oil fuel scenario and, therefore, the limit should remain at 5 ppm as reflected in the draft permit.

Ruling #5: This issue was largely resolved because the DEC Staff changed its position on ammonia slip limit for the natural gas fuel operation from 5 ppm to 2 ppm in view of the Massachusetts data, and the Applicant agreed. Regarding the low sulfur oil fuel operation, the Joint Petitioners were not able to provide an offer of proof to show that such a limit has been achieved elsewhere. No substantive and significant issue has been identified.

6) SCR and Sulfur Trioxide

The Joint Petitioners' sixth proposed issue is that because the SCR catalysts oxidize sulfur to sulfur trioxide (SO3) and SO3 is converted into sulfate particulate matter, there is no indication that the emission limits in the draft permit are the lowest emissions achievable to mitigate the secondary impacts from ammonia of SO3.

DEC Staff contends that, as with proposed issue #4, above, these emissions were accounted for in the Applicant's PM10 emissions calculation. In addition, the sulfur content of the proposed backup oil is among the lowest sulfur content of any other Article X projects that have proceeded through the siting process (0.02% versus 0.04% or 0.05%). Therefore, DEC Staff concludes, the contribution of the sulfur content of the backup fuel to formation of PM10, has been minimized.

Ruling #6: No substantive and significant issue has been identified regarding formation of secondary PM10 from oxidation of sulfur to sulfur trioxide ammonia slip.

7) Short-Term NOx Emissions Limit and LAER

The Joint Petitioners' final proposed air issue is that the NOx emissions limit of 2.0 ppm for a 3 hour rolling average is not LAER (Draft Air Permit Condition #57).

DEC Staff explained that the three-hour average actually is a block average, not a rolling average. Block averages are calculated by averaging three of the hourly values in each of the eight three-hour blocks in a day. While the averaging time in a permit for a specific criteria pollutant depends upon several factors, Staff explained that the averaging time primarily will be driven by the requirement to meet corresponding ambient standards.

Most criteria pollutants do have short-term standards, but NOx does not (only an annual standard has been promulgated for NOx). The requirement in the draft permit to collect hourly NOx data is based upon the Acid Rain provisions of the federal Clean Air Act. The facility's NOx emissions are subject to the LAER standard, but the LAER regulations do not specify an averaging time for the standard. DEC Staff has determined that the three- hour block average for NOx is more than adequate to address both the LAER and the annual national ambient air quality standard compliance demonstrations.

The Applicant concurs with Staff's position.

Ruling #7: Regarding short-term NOx averaging time standards, the Joint Petitioners were not able to provide any offer of proof to show that such a standard has been used elsewhere. No adjudicable issue concerning short-term NOx averaging time has been identified.

B. SPDES Issues

NYPIRG initially filed proposed Article X issues that included some proposed issues relating to the draft SPDES permit. During the July 18, 2003 issues conference, the Presiding Examiner and I excluded the SPDES issues as potential Article X issues. NYPIRG, in response, requested and was granted permission to file a supplemental DEC petition asserting SPDES issues. That supplemental petition of the Joint Petitioners (including NYPIRG) identified the following two proposed SPDES issues.

8) Stormwater Control During Construction Phase

The Joint Petitioners contend that The Applicant must be required to properly contain stormwater during the construction phase of the project. However, it became clear during the issues conference that the Joint Petitioner's concern was not stormwater control during the construction phase, but stormwater control during the remediation phase under the voluntary cleanup agreement.

DEC Staff explained that stormwater control during the construction phase of the project is governed by a general permit for stormwater discharges from construction activity, DEC General Permit #GP02-01.

Remediation of the site would occur prior to construction as a separate distinct activity from the project construction. However, DEC Staff confirmed that a remediation plan has not yet been developed for the site because the remedial investigation activities at the site are ongoing and must first be completed. Once a remediation action plan is developed, it will address stormwater control during remediation. The remedial action plan will be subject to public comment.

Ruling #8: No adjudicable issue has been identified regarding stormwater control.

9) Tetrachloroethene Levels in MTA Dewatering Effluent

The proposed facility would obtain process and makeup water from Metropolitan Transit Authority (MTA) dewatering facilities.

The Applicant's analyses of samples of the MTA dewatering effluent show that the effluent contains significant levels of VOCs, including trichloroethene and tetrachloroethene (PERC).(10) The Draft SPDES Permit sets a limit of 26 parts per billion (ppb) for PERC.(11) The Applicant will use this water source, eventually discharging a portion of the water to the East River. The Applicant has utilized the CORMIX computer model to predict the mixing of this effluent with receiving waters of the East River.

The Joint Petitioners contend in their final issue that although The Applicant's CORMIX analysis indicates that the East River will supply a 10-fold to 100-fold reduction in contaminant concentrations in the mixing zone, this reduction is not sufficient to reduce the concentrations of tetrachloroethene to below Surface Water Quality Standards. The remedy for this defect, the Joint Petitioners assert, is a requirement that the Applicant install air stripper technology for this facility, to mitigate any possible impacts to the East River. The Joint Petitioners' concern is that untreated contaminated effluent should not be discharged to the East River.

As stated above, the PERC contamination exists in the MTA influent to the proposed facility; it would not be a byproduct of The Applicant's proposed processes.

The Joint Petitioners have confused the CORMIX modeling with the water quality limit for PERC discharge from "the end of the pipe", which is 26 ppm. CORMIX modeling predicts the dispersion of effluent into the receiving waters. But, the water quality standard applies to concentration of pollutant at the point of discharge to the receiving waters.

Contrary to the Joint Petitioners' concern that untreated effluent would be discharged, both the Applicant and DEC Staff acknowledge that some pre-treatment will be necessary prior to discharge to meet the water quality standards in the draft SPDES permit. DEC Staff explained that the water quality standards do not dictate by what technology a permittee will comply with particular water quality standards. The Applicant stated air stripper technology or another technology may be used to comply with the water quality standards. The Applicant plans to submit a proposed treatment technology to DEC in a post-certificate compliance filing, for DEC review and approval.

However, at this stage of the project review, it is not unreasonable for the Applicant to specify the technology proposed to meet the PERC discharge limit. Offers of proof can take the form of the identification of some defect or omission in the application. See, Matter of Jointa-Galusha LLC., Interim Decision of the Commissioner at 12, May 7, 2002 (DEC Application No. 5-5538-00009/00001), citing Matter of Oneida Resource Recovery Facility, Interim Decision, 1982.

As I stated at the outset of the DEC issues conference, if the interveners assert an omission in the application materials, they must show that the omission is likely to affect permit issuance in a substantial way. The ALJ must consider whether the information is something that should reasonably be part of the application to evaluate its adequacy or whether it is something that the intervener should provide as part of its offer of proof. Here, the Joint Interveners correctly assert that there is an omission in the application materials because the Applicant has not specified the technology proposed to meet the 0.26 ppm PERC discharge limit. The Applicant does not dispute that some treatment technology will be necessary prior to discharge of effluent, but as part of the application materials has not specified the technology that will be used.

Ruling #9: A substantive and significant issue (an omission) has been identified regarding technology to be used to comply with the tetrachloroethene permit limitation of .26 ppm. Here, the additional information is needed from the Applicant with respect to compliance with the PERC SPDES permit limit and, thus, there is an omission of necessary information that should be developed on the record. This information is necessary to enable an evaluation of whether a proposed technology for control of PERC levels in facility effluent will be sufficient to assure compliance with the SPDES permit limit.

The Applicant must provide this information by October 1, 2003. By October 15, 2003, the Joint Petitioners must state whether they wish to contest any aspect of the Applicant's proposed technology in adjudication. The adjudication will be scheduled during the period already established for adjudication of Article X issues, November 12 through 21, 2003.

III. Party Status Summary Ruling

Ruling #10: In conclusion, upon review of the criteria for determining issues and party status, and the petitions for full party status, I find that the City of New York has not proposed any substantive and significant issue. Therefore, the City of New York must be denied party status.

The Joint Petitioners have demonstrated environmental interest in the project and have raised a substantive and significant issue for adjudication, the ninth proposed issue. Therefore, the Joint Petitioners are granted full party status and the ninth proposed issue is advanced to adjudication as described above.

Regarding the remaining six Petitioners, they each provided petitions insufficient on their face. See, 6 NYCRR 624.4(c) and 624.5(b)(1) and (2). None of these Petitioners identified any specific issue for adjudication, but instead merely relied upon the issues identified in the Joint Petitioners' petition. These remaining six Petitioners must be denied party status.

Appeals

A ruling of the ALJ to include or exclude any issue for adjudication, a ruling on the merits of any legal issue made as part of an issues ruling, or a ruling affecting party status may be appealed to the Commissioner on an expedited basis.(12) Ordinarily, expedited appeals as of right must be filed to the Commissioner in writing within five days of the disputed ruling.(13)

Allowing extra time due to the length of these rulings, any appeals must be received by the Commissioner (Office of the Commissioner, N.Y.S. Department of Environmental Conservation, 625 Broadway, Albany, New York, 12233-1010) before 3 p.m. on September 4, 2003. All replies to appeals must be received before 3 p.m. on September 12, 2003.

Send three copies of any appeal and reply to the Administrative Law Judge/Associate Examiner. Participants who use word processing equipment to prepare the brief and reply must also submit a copy of their appeal and reply to the ALJ/Associate Examiner in electronic form on a 3.5 computer disk formatted in either WordPerfect for Windows 6.1, 7.0 or 8.0; or Microsoft Word for Windows.

Alternatively, parties may file an electronic copy via e-mail at 'kjcasutt@gw.dec.state.ny.us', to be followed by one paper copy to the Commissioner and three paper copies to the ALJ/Associate Examiner, all by first class mail, all postmarked by the date(s) specified above.

The participants shall ensure that transmittal of all papers is made to the ALJ and all others on the DEC distribution list at the same time and in the same manner as transmittal is made to the Commissioner. No submissions by telecopier will be allowed or accepted.

Appeals should address the ALJ's rulings directly, rather than merely restate a party's contentions.

/s/
Kevin J. Casutto
Administrative Law Judge

Dated: August 22, 2003
Albany, New York

To: Attached TransGas Energy Systems, LLC,
DEC Distribution List (August 7, 2003)

1 See Department of Public Service Case No. 01-F-1276, Application by TransGas Energy Systems, LLC, for a Certificate of Environmental Compatibility and Public Need to Construct and Operate a 1,100 Megawatt Combined Cycle Cogeneration Facility in the Borough of Brooklyn, New York City.

2 A draft Prevention of Significant Deterioration (PSD) permit dated June 4, 2003 also was the subject of public notice in local newspapers during the week of June 2, 2003.

3 6 NYCRR 624.4(c)(4).

4 6 NYCRR 624.4(c)(3).

5 See, 6 NYCRR 624.5(b)(1)(ii).

6 Incidentally, during the July 18, 2003 issues conference, Presiding Examiner Garlin and I certified an Article X issue for adjudication regarding the City's proposed re-zoning, land use effects and possible air pollution effects. Therefore, effects of the proposed re-zoning will be evaluated under Article X, the analogue of the State Environmental Quality Review Act (SEQR or SEQRA).

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

8 See, Keyspan Spagnoli, Hearing Report, DEC No. 1-4726-01500/00001 (February 3, 2003), citing, Save Ourselves, Inc. v. Louisiana Environmental Control Comm'n and the Louisiana Dep't of Natural Resources, 452 So.2d 1152 (La. 1984); Matter of Rubicon Inc., 670 So.2d 483 (La.App. 1st Cir. 1996) (cited in EPA Case 6-01-1, Matter of Operating Permit, Formaldehyde Plant, Borden Chemical, Inc., Administrator's Ruling (issued Dec. 22, 2000) (Borden), at 37-38).

9 Impacts to these media will be the subject of adjudication in the "Article X component" of the joint proceeding.

10 Tetrachloroethene is a manufactured chemical that is widely used in the dry-cleaning of fabrics, including clothes. It is also used for de-greasing metal parts and in manufacturing other chemicals. Tetrachloroethene is found in consumer products, including some paint and spot removers, water repellents, brake and wood cleaners, glues, and suede protectors. Other names for tetrachloroethene include PERC, tetrachloroethylene, perchloroethylene, and PCE. PERC is the commonly used name.

11 See, Draft SPDES Permit, Part I, Page 8 of 15 and SPDES Permit Fact Sheet, Page 5 of 8.

12 6 NYCRR 624.8(d)(2).

13 6 NYCRR 624.6(e)(1).

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