Declaratory Ruling 19-13: Astoria Generating Company, LLC
State of New York
Department of Environmental Conservation
In the Matter of the Petition of
the ASTORIA GENERATING COMPANY, LLP
for a Declaratory Ruling
Petitioner, Astoria Generating Company, LLP, petitions, pursuant to Section 204 of the State Administrative Procedure Act and 6 NYCRR Part 619, for a declaratory ruling that a continuous emission Monitoring system (CEMS) installed at a fossil fuel power plant pursuant to Department of Environmental Conservation and Environmental Protection Agency regulations is eligible for certification for the real property tax exemption for air pollution control facilities under Section 477-a of the Real Property Tax law.
Statement of Facts
For the purposes of this declaratory ruling only, the Department will assume that the facts alleged in the petition are true. the Department may take official notice of any fact not subject to reasonable dispute if it is either generally known or can be accurately and readily verified. 6 NYCRR 619.2(b). Hence, this declaratory ruling is based on the assumed facts provided by the petitioner and any other readily verifiable facts which are pertinent to this matter. The Department will engage in no fact finding for purposes of this declaratory ruling and the binding effect of this ruling is limited by the assumed fact predicate. See Power Authority of the State of New York v. New York State department of Environmental Conservation, 58 NY2d 427, 434; 461 NYS2d 769, 772 (1983). The Department will not assume the truth of statements which are legal conclusions.
Petitioner is a limited partnership located at 18-01 20th avenue, Astoria, New York, and is owned and operated by affiliates of Orion Power Holding Company, Inc. (Orion). Orion is an owner and Developer of unregulated electric power facilities based in baltimore, Maryland. In August 1999, Petitioner acquired from the Consolidated Edison Company of New York (Con Edison) the AstoriA steam Station in Queens, New York. In 1993 and 1994, Con Edison installed a CEMS at the Astoria power plant at an approximate cost of $8 million.
In the course of reviewing property taxes payable on its Astoria facility, Petitioner learned that New York City was assessing and taxing the CEMS for property tax purposes based on its cost to Con Edison. Petitioner was of the opinion that the CEMS was eligible for a property tax exemption as an air pollution control facility under RPTL Section 477-a and submitted an application for a certificate of Compliance for Tax Relief to the Department's region 2 office. The Acting Regional Attorney advised Petitioner to Submit a request for a declaratory ruling.
Definition of a Continuous Emission Monitoring system
Pursuant to Article 19 of the Environmental Conservation Law (ECL), the Department has authority to issue permits to air contamination sources in accordance with 6 NYCRR Part 201. To that end, and in order to comply with the provisions of Title V of the Clean Air Act (CAA), the Department has incorporated by reference into Part 201 certain Federal regulations, including 40 CFR 72.2. That regulation defines a CEMS for the purposes of the Acid Rain Program under Title IV of the CAA as follows:
"Continuous emission monitoring system (CEMS) means the equipment required by part 75 of this chapter used to Sample, analyze, measure, and provide, by readings taken at least once every 15 minutes, a permanent record of emissions, expressed in pounds per hour (lb/hr) for sulfur dioxide and in pounds per million British thermal units (lb/mmBtu) for nitrogen oxides. The following systems are component parts included in a continuous emission monitoring system:
- Sulfur dioxide pollutant concentration monitor;
- Flow monitor:
- Nitrogen oxides pollutant concentration monitors;
- Diluent gas monitor (oxygen or carbon dioxide);
- A continuous moisture monitor when such monitoring is required by part 75 of this chapter; and
- A data acquisition and handling system."
Section 204-1.2(b)(15) of 6 NYCRR also contains the following definition of a CEMS for the purposes of the monitoring and reporting requirements for nitrogen oxides under 6 NYCRR 204-8:
"(15) Continuous emission monitoring system or CEMS.
The equipment required under Subpart 204-8 of this Part, to sample, analyze, measure, and provide, by readings taken at least once every 15 minutes of the measured parameters, a permanent record of nitrogen oxides emissions, expressed in tons per hour for Nitrogen oxides. The following systems are component parts included, consistent with 40 CFR part 75, in a continuous emission monitoring system.
- flow monitor;
- nitrogen oxides pollutant concentration monitors;
- diluent gas monitor (oxygen or carbon dioxide) when such monitoring is required by subpart 204-8 of this Part;
- a continuous moisture monitor when such monitoring is required by Subpart 204-8 of this Part; and
- an automated data acquisition and handling system."
Both of these definitions are clear in their terms, whatever particular equipment may be incorporated into it, a CEMS is intended to "sample, analyze, measure and provide, by readings... a permanent record...." The role of the CEMS is a Passive one and is merely to monitor the nature, level of Concentration and rate of emission of pollutants emitted by an air contamination source. Moreover, this passive status for the CEMs would still remain even if the CEMS were incorporated into a Pollution control system whereby equipment that actually removes pollutants from the air, e.g., electrostatiC precipitators, or wet flue gas desulfurization units, were Automatically activated when the CEMS measured an exceedence of a Particular permitted standard. Accordingly, a CEMS, by definition, does not in any direct or immediate way actually remove pollutants from the air.
Applicability of Section 477-a of the Real Property Tax Law to a CEMS
Originally enacted in 1966 as Section 481 of the RPTL and subsequently renumbered as Section 477-a, the provision in question provides for a tax exemption for air pollution control facilities which were constructed or reconstructed after September 1, 1974, in order to comply with the provisions of the ECL and the codes, rules, regulations, permits or orders issued pursuant thereto. the exemption, however, only applies to the increase in value to the air pollution control facility occasioned by the construction or reconstruction. In order to qualify for the exemption, such facilities must be certified by the Commissioner or his designated representative as being in compliance with applicable provisions of the ECL and the codes, rules, regulations, permits or orders issued pursuant thereto. Since the instant issue is whether or not a CEMs is an air pollution control facility within the meaning of RPTl Section 477-a, for the purpose of the discussion herein, it shall be assumed that the Petitioner is otherwise in such compliance.
Critical to the proper application of the statute is the meaning of the term "air pollution control facilities." The term "air pollution control facilities" as defined in RPTl Section 477-a(7) means:
"facilities which remove, reduce, or render less noxious air contaminants emitted from air contamination sources (as the terms "air contaminant" and "air contamination source" are defined in section 19-0107 of the environmental conservation law) from a point immediately preceding the point of such removal, reduction, or Rendering to the point of discharge of air, meeting emission standards as established by the department of Environmental Conservation, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable and excluding those facilities which rely for their efficacy on dilution, dispersion or assimilation of air contaminants in the ambient air after emission. Such term shall further include flue gas desulfurization equipment and attendant sludge disposal facilities, fluidized bed boilers, precombustion coal cleaning facilities or other facilities that conform with this subdivision and which comply with the provisions of the state acid deposition control act set forth in title nine of Article Nineteen of the Environmental Conservation Law."
Virtually the same definition of air pollution control facilities is to be found elsewhere in the New York statutes, as for example, Sections 208 and 210 of the Tax Law; Section 2 of the City Business Tax, incorporated Business Tax Model Local Law contained in the Appendix to the General City Law; and Section 135 of the Workers' Compensation Law. Only Title 12 of the Public Authorities Law (PUB A) establishing the New York State Environmental Facilities Corporation provides a different definition of the term. Section 1281(17) of that statute defines the term "air pollution control facility" as "a facility, for the purpose of abating or controlling atmospheriC pollutants, contaminants, waste or heat, by recovery methods or otherwise, whether said facility serves one or more purposes in addition to the primary purpose of abating or controlling such pollutants, contaminants, waste or heat, including treatment, Neutralizing or stabilizing plants, site equipment and necessary furnishings thereof, their appurtenances, and any property, real or personal, functionally related and subordinate to said facility."
For the purposes of interpreting the meaning of the term air pollution control facilities as used in RPTL Section 477-a, this alternative definition provided in PUB A Section 1281(17) provides valuable insight into the drafter's intent. While the Definition contained in PUB A Section 1281(17) clearly is concerned With the purpose for which an entire pollution control project is proposed and the purpose for which a piece of apparatus is used incidental thereto, the term as used in RPTL Section 477-a is only concerned with the actual functionality of the particular piece os solution control apparatus, not with its purpose from a systemiC perspective. Simply put, only that pollution control equipment which actually and directly removes pollutants from the air will Qualify for the exemption provided for by RPTL Section 477-a. Thus, even if a piece of apparatus is used to maintain or monitor the equipment that is actually removing pollutants from the air, that former piece of apparatus will not enjoy the benefit of the exemption because it itself does not actually or directly remove Any pollutants from the air.
A CEMS, though required by regulation under the circumstances of this case, is a passive system that only serves to monitor the amount and concentration of pollutants being discharged to the air by an air contamination source. The CEMS does not itself in any actual or direct way remove pollutants from the air.
In order to qualify for the exemption provided in RPTL Section 477-a, an apparatus must be, in the first instance, an air pollution control facility as defined by said section. This means that the apparatus must actually and directly "remove, reduce, or render less noxious air contaminants emitted from" the particular air contamination source. A CEMS is a passive monitoring system that in and of itself does not remove, reduce, or render less noxious air contaminants emitted from an air contamination source. Accordingly, a CEMS does not qualify for a property tax exemption as an air pollution control facility under RPTL Section 477-a and Petitioner's request for a Certificate of Compliance for Tax Relief for the same must be denied.
Dated: April 5, 2001
Albany, New York
Frank V. Bifera