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New York Legislature Passes Article X Bill For Siting of Major Electric Generating Facilities

Client Advisory

June 24, 2011

On June 23, the New York State Legislature overwhelmingly passed a bill to establish a new Article X of the Public Service law, which governs the siting of major electric generating facilities.[1] Governor Andrew Cuomo is expected to sign the legislation into law shortly. The law would become effective immediately, but would require the promulgation of regulations by both the Public Service Commission (“PSC”) and the Department of Environmental Conservation (“DEC”). The bill requires those regulations to be adopted within one year of the law’s effective date. 

An earlier version of Article X, designed to be a one-stop licensing process for the siting of new power plants, expired on January 1, 2003. Since then, there have been numerous proposals for replacement legislation, but none passed until now. For the past eight years, all power plant applications have been subject to a variety of state and local siting laws, including the New York State Environmental Quality Review Act (“SEQRA”) and local zoning requirements. The new Article X bill would once again consolidate power plant licensing under the PSC and exempt such plants from SEQRA and most local laws. 

Like the older law, the new Article X includes environmental and technical reviews by the relevant state agencies and participation by municipalities, non-profits, and interested citizens. Through application fees, the law provides funds for intervenors to hire expert witnesses and consultants.

Article X allows interested parties to participate in the hearing and submit comments. If the comments are material, an evidentiary hearing is held to determine whether the project would meet the requirements of Article X and other environmental and land use laws.

Some important aspects of the new bill, and differences from the expired Article X include:

Smaller Plants: In contrast to the old law, which covered plants 80 megawatts and greater, the new bill lowers the threshold to electric generating facilities with a nameplate rating of 25 megawatts. Thus, power plant developers will no longer be permitted to limit operations to below a unit’s nameplate rating in order to not be subject to the siting board’s jurisdiction as occurred with the former Article X in which many plants avoided Article X by accepting permit conditions that limited output to 79.9 megawatts.

Environmental Justice & Cumulative Air Impacts: The new bill requires the DEC to promulgate regulations concerning environmental justice and the cumulative impacts of air quality within one half mile of the proposed plant for various existing and proposed emission sources. Because emissions from existing sources are generally included in the background emissions for air modeling purposes, the requirement for a cumulative impact analysis could, depending on DEC’s new regulations, result in the double counting of emissions from these existing sources when completing air dispersion modeling, potentially resulting in modeled air quality exceedances that would not occur in practice. Thus it will be important to follow DEC’s rulemaking on how applicants will be expected to conduct the cumulative impact analysis under Article X to ensure such over-conservative modeling can be avoided. The bill also requires applications to include a comprehensive demographic, economic, and physical description of the proposed facility’s community, compared with the surrounding county and adjacent communities, including population, racial and ethnic characteristics, income, open space, and public health data (including asthma and cancer). If the siting board determines that the facility would have a significant disproportionate impact, the applicant must offset or minimize that impact. 

Enhanced Public Participation:

o   Like the old Article X, application fees are deposited into an intervenor account, to be used to defray expenses incurred by municipal and local parties, including expert witnesses, consultants, administrative, and legal fees (except for litigation). The intervenor account has been increased to a maximum of $750,000 from $400,000 in the old law. 

o   The seven-member siting board now includes two ad hoc public members residing in the proposed facility’s municipality (or community district in New York City), to be selected by the president pro tem of the Senate and speaker of the Assembly, from a list of candidates nominated by local officials. 

o   The parties to a certification hearing include relevant non-profit organizations and any municipality or resident within five miles of the proposed facility

Twelve month process: Like the expired law, the new bill would limit the PSC’s time to issue a decision to 12 months from the time of a complete application, unless the applicant agrees to an extension. However, Article X involves a very extensive pre-application process that requires the applicant to file a preliminary scoping statement that addresses the potential environmental and health impacts from the proposed facility, measures to minimize impacts, reasonable alternatives and other information that is very similar to the application filing. The pre-filing process requires the applicant to provide opportunities for public involvement, with funding available from the intervenor account, and provides an opportunity for the relevant agencies and other interested persons to enter into stipulations setting forth agreement on the types of studies to be conducted as part of the application filing. Therefore, completing the Article X review process is likely to be a two-year process for most power plant developers (or perhaps even longer), a much longer time period for smaller projects where environmental review could be completed in less than six months under SEQRA. However, the advantage of Article X is the potential to remove the need for municipal permits and the reduced likelihood of litigation in state court that can slow down a power plant siting at the back end.

 Fast Track For Existing Facilities: Existing major facilities seeking to modify or build a new, adjacent facility will be permitted in six months, if there would be (1) a decrease in the potential rate of emissions for the modified or combined facility; (2) a decrease in the total annual actual emissions, (3) a cooling system that withdraws water comparable to or less than a closed cycle plant; and (4) a lower heat rate than the existing plant (the plant produces electricity more efficiently).    

Override of Local and State Laws: State and local agencies may not issue permits concerning the construction or operation of any facility covered by the bill, including the interconnection of the facility to utilities in public rights of way. Although the bill requires the siting board to determine compliance with state and local laws such as zoning, the siting board may supercede such laws if it finds that they would be unreasonably burdensome. However, state air pollution construction/operating permits and water discharge permits will still be required because they are delegated programs under the Clean Air and Clean Water Acts. 

SEQRA Still Controls For One Year: The PSC will not accept applications under Article X until the DEC has issued regulations concerning environmental justice and cumulative impacts of air quality within a half mile of the proposed plant. The law requires those regulations to be adopted within one year. Until then, the law allows developers to seek a license under SEQRA. 

 Additional Studies for Wind Projects: For wind project applications, the developer must submit avian and bat studies. 

Climate Change: The bill amends the Environmental Conservation law to require DEC to promulgate regulations within one year targeting reductions in emissions of carbon dioxide from new, major generating plants.

The new Article X, which no longer has a sunset provision, is part of the "Power NY Act of 2011," which also includes conforming changes to the Environmental Conservation Law, a program to encourage energy efficiency upgrades through a program to pay back loans on monthly utility bills, and a requirement that the New York State Energy Research & Development Authority conduct a study concerning increasing photovoltaic generation.
 

Questions regarding this advisory should be addressed to Stephen L. Kass (212-238-8801, kass@clm.com), Christine A. Fazio (212-238-8754, fazio@clm.com), Ethan I. Strell (212-238-8632, strell@clm.com), or Victor Gallo (212-238-8771, gallo@clm.com). 
 
 
 
 
 
 
 

 
Endnotes
[1] S. 5844/A.8510. 


Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
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