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Proposed Bills to Re-Enact Article X of the Public Service Law
On May 3, 2007, the New York Independent System Operator (NYISO) released its Power Trends 2007 report, which found a need for significant new energy infrastructure by 2011 in the Lower Hudson Valley, New York City, and Long Island, and by 2012 for the rest of New York State. The NYISO found that the absence of a streamlined siting process for large power plants that existed under the former Article X of the Public Service Law has slowed the development of new power plants because of the “unnecessary risk, expense and uncertainty for potential investors at a time when the state needs that investment.” Many energy experts have called for the re-enactment of Article X, including the New York City Bar Association’s Energy Committee, in order to create a streamlined siting review process for new power plants (or for the repowering of existing plants) to respond to the increase in energy demand predicted over the next several years, to reduce electricity costs, and to displace the environmental consequences of operating older and less efficient power plants.
In response to such recommendations, three Article X bills are now being considered. Governor Eliot Spitzer has proposed a bill that would provide an optional siting review process that would apply only to certain categories of clean electric generating facilities, while the Senate and Assembly have both passed bills that would provide a mandatory siting process for all electric generating facilities of a certain size.
Applicability Thresholds Under The Proposed Bills
Governor Spitzer proposed a new program a few days before Earth Day called the “Clean Economic Power Supply Act,” which would amend the Public Service Law by creating a new Article X entitled the “Siting of Clean Economic Power Supply.” The Governor’s office released a preliminary draft of the proposed bill in mid-May 2007 but did not formally file the bill with the State Legislature. Governor Spitzer’s proposal would provide an optional siting review process that would apply to “qualifying facilities” that are five megawatts (MW) or larger and meet one of the following criteria:
- Negative emission repowering - a modification or replacement of an existing facility that would result in a decrease of not less than 75 percent in the hourly rate of emissions of each relevant air pollutant (nitrogen oxide, sulfur dioxide and particulate matter sized 10 microns and 2.5 microns) [or not less than a 50% reduction when the existing facility burns natural gas]; would result in a total annual reduction of each relevant air pollutant by at least 10 percent; would employ air pollution control technology that achieves the Lowest Achievable Emissions Rate (LAER); would meet a carbon dioxide emission rate of 975 pounds per megawatt-hour when burning one fuel [or another calculated rate when more than one fuel is burned]; would employ closed-cycle cooling or better; and would result in a lower heat rate than the existing facility;
- Positive emission repowering - a modification or replacement of an existing power plant that would meet the same requirements as a negative emission repowering, except that the facility would not need to achieve the annual 10 percent emissions reductions;
- Positive emission facility - a new facility that would employ LAER, achieve a carbon dioxide emission rate of 975 pounds per megawatt-hour when burning one fuel [or another calculated rate when more than one fuel is burned], and install closed-cycle cooling or better; or
- Wind turbines.
As noted above, both houses of the State Legislature have approved bills to re-enact Article X, which bills are now in conference for reconciliation. Both legislative bills are similar to the former Article X statute in that they create mandatory programs for the siting of electric generating facilities. The Senate bill (S. 5908) would apply to generating facilities 50 MW or larger, and would create two review programs: (a) one for major electric generating facilities that operate with a net output of 80 MW or greater; and (b) a second for non-major electric generating facilities that operate with a net output of 50 to 79.9 MW. In contrast, the Assembly bill (A. 8697) would apply only to major electric generating facilities, defined as those with a nameplate generating capacity of 30 MW or more (including a combination of plants or any plants built by a single person within a 12-month period). The Assembly bill would not apply to a facility that utilizes coal as a fuel source where the New York State Department of Environmental Conservation (NYSDEC) determines that the technology for such coal-fired plant is unsuitable for Article X or for a facility that does not utilize a closed-cycle cooling water intake structure or other similar technology.
Review Procedures Under The Proposed Bills
The Article X review processes under the three proposals are similar and are consistent with the review processes of the former Article X statute.
Under the Governor’s proposal, the process would begin with the applicant’s filing of a notice of intent and a pre-application report. A public meeting would be held on the pre-application report, which would then be followed by a stipulation conference to address the methodologies to be used to conduct the environmental studies prior to the preparation of the Article X application. After completing all necessary environmental studies, the applicant would file an Article X application along with an intervenor fee of up to $300,000 (a lower fee is provided for repowering and wind projects).
Under the Senate bill, the applicant would file a preliminary scoping document with an intervenor fee of $50,000 (or a $20,000 fee for a non-major facility). Under the Assembly bill, the applicant must prepare a preliminary scoping statement and pay an intervenor fee of up to $100,000 (which can be increased by no more than $25,000). Both bills provide for citizen participation during the pre-application period. In particular, interested parties would have an opportunity to reach agreement on the studies to be conducted as part of the Article X application in the form of stipulations, and such stipulations would be subject to public comment before being signed. Where there is no agreement, an administrative law judge would be assigned to mediate the issues. Similarly to the Governor’s bill, after completing all required studies, the applicant would then file an Article X application. The Senate bill would require that each application be accompanied by an intervenor fee of $1,000 per MW, with the maximum capped at $300,000 (which can be increased by up to $100,000). Under the Assembly bill, the intervenor fee is also $1,000 per MW, up to a maximum of $400,000 (which can be increased by up to $125,000).
All three proposals would provide significant opportunity for participation in the licensing by interested agencies and other stakeholders. After the determination that the Article X application is complete, there would be an opportunity for public comment on the Article X application and the air and water permit applications filed with the NYSDEC; this process would include the holding of a public statement hearing. After the holding of a public statement hearing, the NYSDEC and New York State Department of Public Service would then hold a joint adjudicatory hearing on issues raised by interested parties (also called the “intervenors”). After adjudicating all relevant issues and reviewing stipulations by the parties that resolve any disputes on particular issues, the assigned hearing officer would then issue a recommended decision as to whether an Article X Certificate should be issued or not issued. The applicant and intervenors would then have an opportunity to file briefs on “exceptions to the recommended decision.”
Under the Governor’s proposal, all proceedings from the compliance determination through the close of any adjudicatory hearing must be completed within 210 days for a positive emission facility, within 180 days for a positive emission repowering facility, within 150 days for a negative repowering facility and within 90 days for a wind facility. However, the administrative law judge may extend these time periods, up to 60 days in the case of a positive emission facility. Future extensions can be provided with the consent of the applicant. Both legislative bills propose that all proceedings, including hearings and filing of interlocutory motions and appeals, be completed within 12 months from the application being deemed complete, but this time frame can be extended for up to six months. Both bills also provide that if a reasonable alternative location, supply source or demand reducing measure that is not listed in the Article X application is identified, a notice of such proposed alternative must be provided, and then testimony on such proposed alternative would be provided during the adjudicatory hearing.
Like the former Article X statute, all three proposals would allow a board to override local zoning laws that it finds are unreasonably restrictive. The Governor’s bill would also require that anyone seeking judicial review must file a petition with the Appellate Division, Third Department, within 30 days after the Board renders a final decision (which generally would occur once the board made a decision on any petition for a rehearing) while the legislative bills would permit the petition to be filed in any Appellate Division department where a facility is proposed to be located.
The Governor’s proposal would create a new local air pollution mitigation fee. Within 30 days of the commencement of construction of a qualified positive emission facility to be sited in an area designated as not meeting a national ambient air quality standard for a particular pollutant, the certificate holder would pay a local air pollution mitigation fee of $1,000 per megawatt. This fee would be used by the New York State Energy Research and Development Authority to fund improvements to reduce air emissions within two miles of the plant site, or in a city having a population of one million or more, within one-half mile of the plant site.
Procedures for Repowering Under The Legislative Bills
All three bills define repowering. The Assembly bill provides a deadline for proceedings on repowering projects, but the Senate bill also includes specific application and review procedures, including interim deadlines, that apply only to repowering and non-major facilities.
For a repowering project that meets the criteria defined in the Assembly bill, the proceedings must be completed within six months after the application is deemed complete. The criteria to be defined as a repowering project under the Assembly Bill are very similar to the criteria in Governor Spitzer’s bill. The Assembly bill requires that: (a) the potential to emit of the new combined facility (with the repowered unit) must result in a decrease in the hourly emissions rate of each relevant air pollutant by 75% (or 50% for natural gas); (b) the annual emissions must decrease by 10%; (c) the facility must install LAER and meet a carbon dioxide limit of 975 pounds per megawatt-hour (or other calculated rate for a dual-fuel fired plant); (d) the facility must install closed-cycle cooling or the equivalent; and (e) the new facility must result in a lower heat rate.
The Senate bill would define a repowering project as one that modifies or replaces an existing electric generating facility or locates a new facility adjacent or contiguous to an existing facility that: (a) results in a 75% reduction in the hourly emissions rates of relevant air pollutants facility-wide; (b) employs Best Available Control Technology or LAER, whichever is applicable; (c) limits water withdrawal to no more than 15 gallons per minute per megawatt; and (d) replaces an existing unit with one with a lower heat rate. The Senate bill does not propose to regulate carbon dioxide emissions.
Unlike the other proposed bills, the Senate bill sets forth specific application requirements and review procedures that would apply only to repowering and non-major facilities. The application would need to address environmental justice and include proof of the public outreach conducted within the previous 60 days. The fee for a non-major facility would be up to $40,000 and for a major repowering would be up to $300,000 (both including the pre-application fee). The public would have 45 days from the date the application is deemed complete to comment. Within 60 days after the application is deemed complete, the hearing officer would determine whether there is a relevant and material issue of fact that requires the holding of an adjudicatory hearing. Within 30 days of the closing of the public comment period and the filing of briefs, the board would issue an Article X Certificate, but the bill provides that such time frame can be extended for up to three months.
Questions regarding this client advisory should be directed to Christine A. Fazio at (212-238-8754, email@example.com).
 The NYISO is a not-for-profit corporation that manages New York State’s electricity transmission grid and oversees the wholesale electricity market. More information about NYISO is available at www.nyiso.com.
 The former Article X of the Public Service Law applied to all new power plants sized 80 megawatts or greater. The law expired on January 1, 2003.
 NYISO, Power Trends 2007 at 4.
 See, e.g., Energy Committee letters dated December 19, 2002 and December 13, 2006 under subheading “Energy” at the New York City Bar Association’s index of committee reports at: http://www.nycbar.org/Publications/index.htm.
 The second draft of the Governor’s bill is analyzed in this Client Advisory. A third version of the Governor’s proposal has reportedly been prepared but is not yet publicly available. This Client Advisory will be updated as more information emerges on these Article X bills.
 Board is defined in both legislative bills as the “New York State Board on Electric Generation Siting and the Environment.” Board is defined in the Governor’s proposal as the “New York State Clean Economic Power Supply Board.”
 The bill provides that if mitigation is not available within the two mile radius (or one-half mile radius for plants located in cities), then the mitigation could be provided within five miles of the power plant (or one mile radius for plants located in cities).
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.
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