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In re Riverkeeper, Inc.

Supreme Court of New York, Third Department

July 20, 2017

In the Matter of RIVERKEEPER, INC., Appellant,
v.
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION et al., Respondents. (And Another Related Proceeding.)

          Calendar Date: June 5, 2017

          Todd Ommen, Pace Environmental Litigation Clinic, White Plains, and Abigail Jones, Riverkeeper, Inc., Ossining, for appellant.

          Eric T. Schneiderman, Attorney General, Albany (Susan L. Taylor of counsel), for New York State Department of Environmental Conservation, respondent.

          Nixon Peabody, LLP, Albany (Ruth E. Leistensnider of counsel), for Danskammer Energy, LLC, respondent.

          Before: Egan Jr., J.P., Lynch, Devine, Clark and Aarons, JJ.

          MEMORANDUM AND ORDER

          DEVINE, J.

         Appeal from a judgment of the Supreme Court (McDonough, J.), entered January 26, 2016 in Albany County, which dismissed petitioner's applications, in two combined proceedings pursuant to CPLR article 78 and actions for declaratory judgment, to, among other things, review a determination of respondent Department of Environmental Conservation granting respondent Danskammer Energy, LLC certain permits to operate a natural gas electric generating station.

         The Danskammer Generating Station (hereinafter the station) uses four steam turbine generators to produce electricity. The station is located on the shore of the Hudson River and employs a "once-through cooling system" to prevent the generating units from overheating, a process wherein water is pumped from the river to cool the units and then returned to the river at a higher temperature. This discharge of warmer water is a pollutant under federal and state law (see 33 USC §§ 1326, 1362 [6]; ECL 17-0105 [17]) and, as such, requires a State Pollutant Discharge Elimination System (hereinafter SPDES) permit issued by respondent Department of Environmental Conservation (hereinafter DEC) (see ECL 17-0701, 17-0801 et seq.; see also Matter of Riverkeeper, Inc. v Crotty, 28 A.D.3d 957, 957 [2006]). The station is also a source of hazardous air pollutants within the meaning of the federal Clean Air Act (see 42 USC § 7412) that requires an additional permit, known as a "Title V" permit, issued by DEC (see 42 USC § 7661 et seq.; ECL 19-0311).

         The station's SPDES permit was set to expire in 2011, but remained in effect due to a pending renewal application (see State Administrative Procedure Act § 401 [2]). The then-owner of the station also filed for bankruptcy in 2011 and, as part of the bankruptcy proceedings, sought to sell the station at auction. A massive storm flooded the station and forced it offline in October 2012, prompting the then-owner to request authorization to quickly discontinue operation of the station and sell it to a bidder at auction that had an expressed intention of demolishing the station. Authorization to retire the station was granted by the Public Service Commission in April 2013, but the sale was never consummated and regulatory changes restored the station's financial viability. The station was then sold to a different entity that, in June 2014, was authorized by the Public Service Commission to resume operations at the station and transfer it to respondent Danskammer Energy, LLC (hereinafter Danskammer).

         The ownership changes and passage of time resulted in applications to DEC for the issuance of updated operating permits, including SPDES and Title V permits. In August 2014, DEC published a combined notice of complete applications in which it noted its issuance of a negative declaration pursuant to the State Environmental Quality Review Act (see ECL art 8 [hereinafter SEQRA]) and the availability of draft SPDES and Title V permits. Following technical review and public comment, DEC granted final SPDES and Title V permits to Danskammer. Petitioner thereafter commenced two combined proceedings pursuant to CPLR article 78 and actions for declaratory judgment seeking various relief, including annulment of the negative declaration under SEQRA and the final SPDES and Title V permits. Following joinder of issue, Supreme Court considered the two combined proceedings and actions together and dismissed them in a single judgment. Petitioner appeals, and we now affirm.

         Contrary to petitioner's contention, DEC was not required to hold a public adjudicatory hearing prior to issuing final SPDES and Title V permits. It was incumbent upon DEC, after evaluating the permit applications and reviewing all comments submitted in response to them, to "determine whether or not to conduct a public hearing 'based on whether the evaluation or comments raise substantive and significant issues relating to any findings or determinations [DEC] is required to make..., including the reasonable likelihood that [the permits] will be denied or can be granted only with major modifications to the project" (Matter of Eastern Niagara Project Power Alliance v New York State Dept. of Envtl. Conservation, 42 A.D.3d 857, 859 [2007], quoting ECL 70-0119 [1]; see 6 NYCRR 621.8). The ultimate burden rested on petitioner to show that its issues were "substantive and significant" enough to warrant a public hearing (6 NYCRR 624.4 [c] [4]; see Matter of Eastern Niagara Project Power Alliance v New York State Dept. of Envtl. Conservation, 42 A.D.3d at 859).

         In that regard, while petitioner raised a number of concerns regarding the draft SPDES permit, it also acknowledged that the draft permit was largely identical to the existing permit (see e.g. Matter of Riverkeeper, Inc. v Johnson, 52 A.D.3d 1072, 1072-1073 [2008], lv denied 11 N.Y.3d 716 [2009]), one that DEC noted had only been issued after extensive administrative proceedings and an adjudicatory hearing. Moreover, to the extent that the draft SPDES permit modified the terms of the prior permit, those modifications reduced the impact of the station upon the river. The objection to the Title V permit amounted to the rather obvious point that a station in service would create more atmospheric emissions than one offline. DEC issued a written response to petitioner's comments and, while it did make modifications as a result of the concerns raised, it gave no reason to believe that those concerns might have required extensive retooling of either permit or imperiled their issuance altogether. Accordingly, mindful as we are that our judgment should not be substituted for that of the agency, the determination that petitioner had failed to demonstrate the need for an adjudicatory hearing was not arbitrary and capricious (see Matter of Raritan Baykeeper, Inc. v Martens, 142 A.D.3d 1083, 1085-1086 [2016]; Matter of Eastern Niagara Project Power Alliance v New York State Dept. of Envtl. Conservation, 42 A.D.3d at 861).

         Turning to the merits of petitioner's challenges to the various permits, we reiterate that we do not "substitute [our] judgment for that of the agency responsible for making the determination, ... [and] ascertain only whether there is a rational basis for the decision or whether it is arbitrary and capricious" (Flacke v Onondaga Landfill Sys., 69 N.Y.2d 355, 363 [1987]; see Matter of Department of Envtl. Protection of City of N.Y. v Department of Envtl. Conservation of State of N.Y., 120 A.D.2d 166, 169 [1986], lv denied 69 N.Y.2d 921');">69 N.Y.2d 921 [1987]). As for the SPDES permit, petitioner claims that the discharge of warm water from the station will cause surface water temperature near the discharge point to occasionally exceed the regulatory maximum of 90 degrees Fahrenheit and threaten marine life (see 6 NYCRR 700.1 [a] [17]; 704.2 [b] [5] [i]). That being said, there is nothing inherently improper in "allow[ing] for ambient [temprature] above the criteria in small areas near outfalls" (EPA, Water Quality Standards Handbook: Second Edition at 5-1 [Aug. 1994], available at https://www.epa.gov/sites/production/files/2016-06/documents/wqs-handbook-1994.pdf [accessed July 13, 2017]). New York has adopted such a "mixing zone" policy (see 6 NYCRR 704.1 [b]; 704.3; see also 40 CFR 131.13), and such a zone will pass muster so long as it is defined in scope, does "not interfere with spawning areas, nursery areas and fish migration routes" (6 NYCRR 704.3 [c]) and avoids lethality "in contravention of water quality standards to aquatic biota which may enter" it (6 NYCRR 704.3 [b]). Lethality, for purposes of mixing zones, focuses upon the impacts of a mixing zone upon an entire population, not whether the water temperature in the zone will prove deadly to an individual organism (see 6 NYCRR 704.1 [a]; EPA, Water Quality Standards Handbook: Second Edition at 5-6 [Aug. 1994], available at https://www.epa.gov/sites/production/files/2016-06/documents/ wqs-handbook-1994.pdf [accessed July 13, 2017]).

         DEC had before it a report disclosing the results of a thermal survey of the defined mixing zone, conducted in 2005, finding that the zone would "accommodate [all] water greater than 90 [degrees Fahrenheit] at any point in time under all likely [station] operation scenarios and receiving water conditions while respecting" the requirements of 6 NYCRR 704.3. In reaching that conclusion, the survey found that maximum temperatures only had the potential to be excessive during the summer months and, even then, would do so in shifting portions of the mixing zone and would have no impact upon bottom-dwelling organisms where the temperature would be lower [1]. DEC further noted that most fish in the area did not spawn during the summer months and that juvenile and adult ...


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