Regional Reports: Region 2

Philip Karmel
Robinson Silverman Pearce Aronsohn & Berman LLP
New York, NY
Karmel@rspab.com

I. PM2.5 Impact Reviews Required by NYSDEC, NYS Board on Electric Generation Siting and the Environment, and the City of New York

Opponents of projects subject to New York's environmental review laws have, for the last several years, actively demanded that such reviews include an analysis of the health impacts of project-related changes to concentrations of fine particulates (PM2.5). The laws under which this issue has arisen are the State Environmental Quality Review Act (SEQRA), codified at N.Y. Env. Cons. Law, Art. 8; the New York City Environmental Quality Review Act (CEQR), codified at Rules of the City of New York, tit. 62, ch. 5; and Article X of the Public Service Law. SEQRA and CEQR require that environmental reviews be undertaken with respect to any discretionary state or local agency action, including the approval or permitting of projects. Article X applies to major new electric generation facilities, and places jurisdiction over the environmental review, siting and certification of such facilities in the State Board on Electric Generation Siting and the Environment (Siting Board).

Initially, the New York State courts, the Department of Environmental Conservation (NYSDEC), the City of New York and the Siting Board all rejected requests to include potential PM2.5 impacts in the environmental review process, reasoning that (i) it was premature to regulate PM2.5 in advance of a PM2.5 state implementation plan and (ii) the assessment and mitigation of PM2.5 impacts would be exceedingly difficult, because the tools needed to undertake such an analysis - such as PM2.5 air dispersion models, background PM2.5 monitoring data, and health benchmarks against which to measure small increases in ambient PM2.5 concentration levels - were not yet available. See, e.g., Matter of American Marine Rail, LLC, No. 2-6007-00251/0001, NYSDEC Commissioner's Interim Decision, dated Feb. 14, 2001; Application of Consolidated Edison Co. of New York, Inc., Case 99-F-1314, Siting Board Order Concerning Interlocutory Appeals, dated June 22, 2001; Spitzer v. Farrell, Index No. 400365-00 (Sup. Ct. New York County Oct. 12, 2000); Golden v. New York City Department of Sanitation, Index No. 42723-98 (Sup. Ct. Kings County June 25, 1999).

In the last several months, however, the reluctance (or outright refusal) of these agencies to assess PM2.5 impacts appears to have been swept away by the Appellate Division's decision in Uprose v. Power Authority of the State of the New York, 285 A.D.2d 603, 729 N.Y.S.2d 42 (2nd Dep't), leave to appeal denied, ___ N.Y.2d ___ (2001), which required that a "hard look" be taken at potential PM2.5 impacts in the context of the State Power Authority's installation of natural gas turbines in New York City to meet forecasted peak electric loads. Shortly thereafter, the Siting Board, with the concurrence of the NYSDEC Commissioner, reversed its earlier position and held that it would consider evidence on PM2.5 impacts under Article X. See Application of Consolidated Edison Co. of New York, Inc., Case No. 99-F-1314, Siting Board Order Granting Rehearing In Part, Jan. 24, 2002. Around the same time, the City of New York published a new edition of its CEQR Technical Manual, which now recommends an assessment of PM2.5 impacts under CEQR, and George Pavlou, Director of the EPA Region II Division of Environmental Planning and Protection, sent a letter to NYSDEC dated Dec. 27, 2001 stating that "[b]ecause preliminary PM2.5 air quality monitoring data indicates levels are elevated in urbanized areas it is our policy, where a proposed new source may generate significantly increased PM2.5 emissions, to encourage those preparing environmental impact statements to . . . assess [PM2.5 impacts]."

II. New Acid Rain Controls Proposed for New York Power Plants

On Oct. 14, 1999, Governor George E. Pataki announced that fossil fuel fired electric generators in New York would be required to reduce emissions to protect the Adirondacks and Catskills from acid rain. After much wrangling, NYSDEC, on Feb. 14, 2002, has now published proposed regulations to implement the governor's announcement. The proposed regulations would establish an Acid Deposition Reduction NOx Budget Trading Program and an Acid Deposition Reduction SO2 Budget Trading Program, to be codified at 6 NYCRR Parts 237 and 238, respectively.

According to the rulemaking documents, these regulations would require New York power plants to cut emissions of sulfur dioxide (SO2) 50 percent below levels allowed under Phase 2 of the federal Clean Air Act's acid rain program. These reductions will be phased in between 2005 and 2008. Nitrogen oxides (NOx), which are already restricted under state law as ozone precursors from May 1 to Sept. 30 (6 NYCRR Part 204), would be subject to year round regulation, beginning on October 1, 2004. According to the state's press release, the regulations are the most stringent acid rain controls in the nation and are projected to cut SO2 emissions from New York sources by approximately 130,000 tons per year and NOx emissions by 20,000 tons annually.

III. Federal Court Strikes Down New York State's Effort to Regulate Sales of Title IV Allowances

As discussed above, Governor Pataki, in 1999, announced that, in order to reduce acid rain in the Adirondacks and Catskills, New York electric generator units must collectively reduce SO2 emissions to fifty percent of the amount permitted by the SO2 allowances allocated to the units under Title IV of the Clean Air Act - thus resulting in New York units having additional Title IV allowances available for transfer. To address a concern that these additional allowances might be transferred to out-of-state, upwind units to increase their SO2 emissions, and thus increase acid rain deposition in New York from out-of-state sources, New York enacted, in May 2000, the Air Pollution Mitigation Law, codified at Public Service Law § 66-k. Under the law, the Public Service Commission (PSC), purportedly in connection with its ratemaking activities, assessed an "offset" equal to any sum received by a regulated New York unit for the sale or trade of SO2 allowances that were not impressed with a restrictive covenant prohibiting their use upwind of New York; any amounts received for such allowances were, in effect, required to be forfeited to the PSC. On April 9, 2002, a federal district court struck down the state's law as preempted by the Clean Air Act, on the ground that it seeks to interfere with the sale of Title IV allowances, and, to boot, as "protectionist legislation that violates the Commerce Clause of the United States Constitution." Clean Air Markets Group v. Pataki, 00-CV-1738 (N.D.N.Y 2002) (Hurd, J.).

IV. EPA Redesignates New York City and Surrounding Counties as in Attainment with the NAAQS for Carbon Monoxide

On April 19, 2002, EPA redesignated the New York portion of the New York - Northern New Jersey - Long Island Carbon Monoxide (CO) nonattainment area from nonattainment to attainment of the National Ambient Air Quality Standard (NAAQS) for CO. 67 Fed. Reg. 19,337. With this action, all of New York State has now achieved attainment with the CO NAAQS.

V. EPA Approves New York and New Jersey Ozone-Related SIP Amendments

On Feb. 4, 2002, EPA approved revisions to the New York and New Jersey state implementation plans relating to attainment of the 1-hour national ambient air quality standard for ozone. The revisions include New York and New Jersey's reasonable further progress plans, transportation conformity budgets and 1-hour ozone attainment demonstrations. 67 Fed. Reg. 5152-94.

VI. PSEG Agrees to Spend $337 Million for Controls at Two New Jersey Power Plants to Settle New Source Review Allegations

On Jan. 24, 2002, the U.S. Department of Justice (DOJ) and New Jersey Department of Environmental Protection (NJDEP) announced a settlement under which PSEG Fossil LLC will spend over $337 million to install selective catalytic reduction and dry scrubber technology at its Mercer and Hudson coal-fired power plants in Jersey City and Hamilton, New Jersey. The case arose out of allegations that PSEG had undertaken maintenance activities over the years that subjected the plants to the Best Available Control Technology requirements of the federal Prevention of Significant Deterioration regulations. The settlement gives PSEG until 2012 to complete the pollution control work at the plants. The company also agreed to pay a $1.4 million civil penalty and spend $6 million on supplemental environmental benefit projects. In announcing the settlement, the DOJ press release quoted Attorney General John Ashcroft as stating that the settlement "reflects our continuing commitment to enforce vigorously the Clean Air Act to protect public health and the environment."

VII. NJDEP Proposes Environmental Justice Rule

On Feb. 4, 2002, NJDEP proposed a new rule requiring an expanded community participation process to effectuate "environmental equity" in New Jersey permit proceedings. (NJDEP prefers the term "environmental equity" to the more commonly used term "environmental justice.") The text of the proposed rule and related documents are posted at http://www.state.nj.us/dep/equity.