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Re-Enact the Former Article X of the Public Service Law

New York Law Journal

March 5, 2008

Article X of the Public Service Law, which generally was known as a one-stop licensing process for the siting of new power plants, expired Jan. 1, 2003 and has not been reenacted. Over the past four years, numerous bills have been drafted to structure a new Article X, many of which create brand new schemes for power plant licensing, even proposing to capture plants as small as five megawatts or renewable energy projects, and which propose to address new environmental issues, such as regulating greenhouse gas emissions from power plants.[1]

One such bill is by Governor Eliot Spitzer, which again he endorsed in his State of the State Address on Jan. 9, 2008. We think it is essential to have a licensing process for large power plants and, after reviewing the various proposed bills, question whether the former Article X statute really needs fixing.

Former Article X Statute

The Former Article X Statute and Why It Applied to Larger Power Plants. Article X provided a well-established licensing process for the siting of power plants 80 megawatts or larger. The Article X process involved environmental and technical reviews by the relevant state agencies, including the New York Department of Public Service (DPS), New York State Department of Environmental Conservation (DEC), and New York State Department of Health (DOH). Representatives of the municipality where the plant would be sited also participated in the licensing process to ensure that local zoning issues were adequately addressed. Where the local requirements were found to be unreasonably restrictive in view of the existing technology or the needs of, or the costs to, ratepayers, the Article X Siting Board had authority to preempt those requirements.[2] Finally, interested citizens had numerous opportunities to participate in the licensing process, and they could hire expert witnesses and consultants to review the proposed plant using intervenor funds provided by the power plant applicant.[3]

The Article X process allowed interested parties to participate in a hearing and submit comments on the proposed project. If the comments were material, an evidentiary hearing was held to determine whether the proposed plant met all of the Article X and other environmental and land use requirements. That hearing required all parties to work together to provide and exchange information, explore new technologies or alternatives, and negotiate settlements to resolve issues regarding the site proposed for the new power plant.

For example, most of the proposals for projects to be located in New York City resulted in settlements that involved pollution reduction goals, community funds, and monies for energy efficiency projects.[4] The Article X process may not have stopped a power plant from being sited, but the settlements under Article X resulted in benefits to the community participants.

For the most recent projects, the licensing process lasted close to two years,[5] which is not that much longer than a typical process under the State Environmental Quality Review Act (SEQRA) that involves scoping and the preparation of an environmental impact statement (EIS). It was also rare for anyone to file a lawsuit after an Article X certificate was issued, which suit could only be filed in the Appellate Division; thus, the overall Article X siting process for larger power plants was in fact likely faster than the SEQRA process, where litigation is quite common.[6]

SEQRA vs. Article X

The question many are grappling with is whether SEQRA is an adequate review process for power plants, so that reenacting Article X is not necessary. New Yorkers have experienced the siting of power plants under both programs and many, including the authors, would agree that Article X was a much better review process for the siting of large fuel-fired power plants. Article X required a comprehensive technical review of a large facility and its proposed site, by the developer, agencies, community and local municipalities. Article X, unlike SEQRA, was beneficial in encouraging developers to site large power plants in New York State in two ways: (1) the siting board had authority to preempt local zoning requirements, thus removing delays experienced by developers in dealing with local planning boards and town boards; and (2) lawsuits had to be filed directly with the Appellate Division, reducing litigation costs and delays. In contrast, environmental review of power plant siting conducted under SEQRA generally results in litigation because no administrative law judge is provided as an intermediary to encourage settlements between the applicant and local parties during the environmental review process.

Many community groups favor Article X over SEQRA, for two reasons. First, the public was given numerous opportunities to review the Article X application and supporting material and an administrative law judge was available to ensure that sufficient time was provided to local communities, even granting extensions to hearing schedules as necessary. Second, the application fee of up to $300,000 was set aside in an intervenor account that was then distributed to municipalities and local community groups for retaining consultants and expert witnesses. Because large power plants require five to 10 acres of land, emit air and water pollutants, have high stacks that create visual impacts, and have a life span of 30 years or more, it makes sense that such plants should not be sited without adequate review and input from the municipality and community where the project would be located, which was the overall goal of Article X. Because the Article X process generally required the applicant and community to enter into settlement negotiations and resolve disputes, the result was a "win-win" for both sides, minimizing litigation costs and improving the chance that a project would proceed only after incorporating some mitigation measures sought by the community.

Smaller Power Projects

SEQRA Works for Smaller Power Projects. SEQRA, however, is far quicker than the Article X process for smaller projects, including many smaller alternative energy projects. In fact, an environmental assessment for such a project, followed by a negative declaration, can be completed in six months or less. And this is the source of our concern about the bills pending before the New York State Legislature today. Bills are pending that propose to lower the threshold triggering Article X review to 30 megawatts, which means that smaller plants with today's state-of-the-art controls that would not result in significant environmental impacts would be thrown into the two-year Article X process, making it virtually impossible for utilities and governmental officials to site peaking units or other clean emergency units when energy shortages are predicted or occur.

Bills are pending that would bring renewable energy projects, such as wind farms, into the Article X process. We believe subjecting renewable energy to the very complex and evidentiary-intensive Article X process will discourage the entry of renewable energy projects into New York. In fact, many wind projects have been approved under SEQRA over the past four years, while only one large fuel-fired power plant has been licensed under SEQRA. Specifically, four EISs for large wind projects have been completed under SEQRA this year alone, another three are in progress, and one negative declaration for a small 10 megawatt wind project was also completed. Accordingly, wind energy projects do not need a new siting law; they are doing just fine under SEQRA.[7]

In addition, the environmental issues related to wind are very different from those for a fuel-fired power plant. For instance, some of these bills call for a cumulative air impact analysis of the proposed power plant with all other air emitting sources in the area. Because wind energy plants result in no air emissions, there is no reason that they should be subject to the cumulative air impact analysis requirements proposed under pending Article X bills. On the other hand, cumulative visual impacts from multiple wind projects, as well as impacts from the construction of new roads and transmission lines to serve a proposed wind park, are wind-specific issues. But they have been adequately analyzed under the most recently issued EISs for wind projects proposed upstate.[8]

Overall, the siting of baseload fuel-fired power plants, including the repowering of existing plants, is what was intended to fall under Article X, and the pace of permitting new fuel-fired power plants dropped significantly after Article X expired. The simple way to encourage the construction of clean, baseload power plants in New York is simply to re-enact the former Article X.

Existing Law

Environmental Issues Raised in Pending Bills Can Be Addressed Under Existing Law or Regulations or Through Guidance. Another problem with the pending Article X bills is the desire of the bills' sponsors for Article X to become a catch-all for solving various environmental issues.

For example, many Article X bills propose adding specific carbon dioxide emission limits in all Article X certificates. As the earth's temperatures continue to rise, we of course want to regulate greenhouse gas emissions, but Article X is a siting bill, not an air pollution bill or clean energy bill per se. The appropriate agency to regulate all air pollutants, including greenhouse gases, is the DEC, which has issued draft regulations to reduce the emissions of carbon dioxide from power plants under the Regional Greenhouse Gas Initiative (RGGI).[9] Moreover, the U.S. Supreme Court in Massachusetts v. EPA, 127 S.Ct. 1438 (2007), held that carbon dioxide is an air pollutant subject to regulation under the federal Clean Air Act. By relying on its existing authority, the DEC can begin to set carbon dioxide limits for all source categories, not just power plants, which, based on existing state-of-the-art technology, would be expected to decrease over time. Accordingly, addressing impacts associated with climate change is best left to the DEC, which can use its existing authority under the New York Environmental Conservation Law to determine the appropriate carbon dioxide limits for power plants and other industrial sources. No new law, and certainly not carbon dioxide provisions added to Article X, is necessary.

This brings us to another issue with the pending bills. Several of the bills attempt indirectly to amend the Clean Air Act and New York Environmental Conservation Law by making power plants subject to the lowest achievable emission rate (LAER), the technology standard that applies under the federal Nonattainment New Source Review permit program, even when a source is located in an attainment area, where National Ambient Air Quality Standards for criteria pollutants are met, and even though such plants would otherwise be subject to the somewhat less stringent best available control technology (BACT), the technology standard under the Prevention of Significant Deterioration (PSD) permit program.

There is no reason that Article X needs to change existing clean air laws and regulations. We are not aware of citizens' complaints that the PSD permit program with its BACT requirements is not protective of public health or the environment. DEC can make the appropriate decisions under existing laws and regulations regarding air pollutant requirements; thus, no change to Article X is required for this purpose either.

Most Article X precedent was developed based on the agencies' review of Article X applications and issues raised during the evidentiary hearing process. The agencies' commissioners and administrative law judges became very adept at addressing and solving issues that commonly arose under Article X. Thus, Article X legislation is not needed to address issues already adequately solved in the former Article X process. For instance, the most recent Article X applications all examined fine particulate matter and environmental justice (EJ), generally relying on DEC guidance.[10]

While improvements to the EJ program should be pursued, the state should not wait for Article X to be passed to encourage an EJ analysis for the siting of a new facility. If the promoters of the various bills believe a more effective EJ policy should be enacted, and we would agree, then the DEC should either develop regulations or update its EJ guidance to ensure that a developer adequately analyzes the cumulative impacts to a sensitive or overburdened neighborhood that already houses many polluting facilities or generators. Such guidance or regulation should then be applicable to all industrial sources and not just power plants.

We agree that new renewable energy should be encouraged in New York, but Article X is not a fast-track process. For renewable energy projects with little potential to result in significant impacts to the environment, environmental review under SEQRA is much faster than review under any bill proposed under Article X. Some forms of renewable energy that are expected to have no impact on the environment could be supported by adding new Type II actions to the DEC's, the DPS's, or the New York State Energy Research & Development Authority's SEQRA regulations. For instance, solar paneling on rooftops, solar heating systems, heat recovery from mechanical systems, and single small wind turbines should generally not require any environmental review because such renewable energy projects should not have significant impacts to the environment. Accordingly, encouraging the entry of renewable energy to the New York market can be dealt with via changes in regulations and not new legislation.

Finally, how the intervenor funds are distributed can also be addressed through DPS or DEC guidance. At the heart of some of the disagreements is whether the intervenor funds should be used for legal fees or how much could be used for various experts. In reality, having lawyers argue whether intervenor funds should be used to pay for their services is somewhat self-serving and not helpful when community groups absolutely need the technical guidance of an experienced consultant to assist them with the very difficult technical aspects of a project.

In any event, this is simply not an issue that should be delaying the passage of the Article X bill. Without the bill, there is no fund to aid the community in participating in the siting of a large power plant. The priority should be to put the process in place, and once all of the stakeholders have a place at the table, policy, guidance and agency oversight can dictate the minor details of how much each expert can charge.

Conclusion

What Needs to Be Revised Under Article X? At most, two provisions of the former Article X statute, involving just a few word changes, should be revised. One controversial aspect of the former Article X was that, because it was triggered by a threshold based on operations and not design capacity, plants could reduce their operations to stay below 80 megawatts in order to avoid Article X review. To ensure that power plants do not operate at reduced efficiencies, the statute could be changed to subject all power plants with a nameplate rating of 80 megawatts to Article X. Second, the former application fee of $1,000 per megawatt of generating capacity from the proposed facility, up to a maximum of $300,000, to be deposited in the intervenor account might need to be increased based on the consumer price index or other relevant standard to ensure that there are sufficient funds for local parties to participate in the process under a reenacted Article X. To encourage re-powering, however, a lower application fee should be considered for projects that will replace an older generating facility, thereby reducing overall air, water and noise pollution within the local community.

Other than those minor changes, Article X does not need to be fixed and should simply be re-enacted as it was. All other policy issues addressed in the pending Article X bills can be handled under existing laws.

is counsel and Judith Wallace is an associate in Carter Ledyard & Milburn's environmental practice group.

Reprinted with permission from the March 5, 2008 edition of The New York Law Journal  © 2008 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited. 

Endnotes


[1] See E. Gail Suchman, "Power-Plant-Siting: Efforts to Amend Article X Fail," New York Law Journal, Aug. 8, 2007 (providing a summary of the pending bills proposed in the spring 2007). Program Bill #33R is the most current version of the governor's bill entitled "The Siting of Clean Economic Power Supply."

[2] N.Y. Public Service Law §168(2)(d).

[3] N.Y. Public Service Law §164(6)(a).

[4] See, e.g., State of New York Board on Electric Generation Siting and the Environment, Opinion and Order Granting Certificate of Environmental Compatibility and Public Need to Consolidated Edison Company of New York, Inc. to repower its East River generating station located in the Borough of Manhattan, New York City, Case 99-F-1314 (Aug. 30, 2001) (Con Edison committed to providing $500,000 towards the cost of widening the East River Esplanade near 14th Street and $2.5 million to the New York City Economic Development Corporation (EDC) to assist the local community in the development and implementation of local air quality and health improvement projects and other amenity programs.); State of New York Board on Electric Generation Siting and the Environment, Opinion and Order Granting Certificate of Environmental Compatibility and Public Need to New York Power Authority to construct and operate a 500 megawatt electric generation facility in the Astoria Section of Queens, Case 99-F-1627 (Oct. 2, 2002) (NYPA committed to (1) establish an account of $2 million for community-based programs to improve air quality and public health in northern Queens; (2) increase its budget for energy efficiency projects by $50 million over a five-year period; and (3) shut down its existing 825-megawatt Poletti plant by a specified date); State of New York Board on Electric Generation Siting and the Environment, Opinion and Order Granting Certificate of Environmental Compatibility and Public Need to Astoria Generating Company LP to construct a 1,816 MW Combined Cycle Plant in New York, Queens County, NY, Case 00-F-1522 (June 25, 2003) (Astoria Generating Company agreed to provide $2.5 million to EDC for projects in Astoria, Queens).

[5] While the statute provided that the siting board was to issue a certificate within 12 months of its determination that an application was complete, see N.Y. Public Service Law §165(4), extensions were routinely granted for the parties to prepare for the evidentiary hearings, prepare briefs after the hearings, and hold settlement conferences.

[6] From 2000 through 2004, 12 power plant projects were certified (even after Article X expired, the Article X Siting Board continued to process applications found complete prior to Article X's expiration). See Department of Public Service Web site at http://www.dps.state.ny.us/xtable.pdf. Only two citizen suits were filed and in both cases, the Appellate Division upheld the Article X certificate. See New York Institute of Legal Research v. New York State Board on Electric Generation Siting and the Environment, 295 AD2d 517 (2d Dept. 2002) (dismissing lawsuit because citizen group failed to exhaust administrative remedies provided under Article X statute); Citizens of the Hudson Valley v. New York State Board on Electric Generation Siting and the Environment, 281 AD2d 89 (3d Dept. 2001) (finding that proposed facility was selected pursuant to an approved procurement process, that a private party applicant was not required to analyze alternative sites that it neither owns nor controls, and that determination that visual impacts from plant would be slight was supported by the voluminous record).

[7] Wind projects, nonetheless, are still subject to litigation under SEQRA. See, e.g., Brander v. Town of Warren Town Board, 2007 WL 4294718 (Onondaga Cty. Sup. Ct., Dec. 7, 2007) (vacating EIS issued by Warren Town Board for a 136-megawatt wind project in Herkimer County for failure to conduct a full alternatives analysis and mitigation program for impacts to historic resources and noise impacts).

[8] See, e.g., Brander, 2007 WL 4294718 at *7 (finding the analyses of cumulative impacts (although not some other issues) were thoroughly considered).

[9] DEC's proposed RGGI rules are to be promulgated at 6 NYCRR Part 242.

[10] See DEC Commissioner Policy 29 (March 19, 2003) (DEC's EJ policy); DEC Commissioner Policy 33 on Assessing and Mitigating Impacts of Fine Particulate Matter Emissions (Dec. 29, 2003


Christine Fazio

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