Petition of Seneca Meadows, Inc. for a Declaratory Ruling

[Pages:14]New York State Department of Environmental Conservation

Office of General Counsel, 14th Floor

625 Broadway, Albany, New York 12233-1500

Phone: (518) 402-9185? Fax: (518) 402-9018 Website: dec.

SEP 0 9 2011

Mr. Scott M. Turner, Esq. Nixon Peabody LLC 1300 Clinton Square Rochester, New York 14604-1792

Joe Martens Commissioner

Dear Mr. Turner:

Enclosed please find Declaratory Ruling No. 19-19 in response to the Petition for Declaratory Ruling (Petition) filed on behalf of Seneca Meadows, Inc. (SMI), the owner and operator of Seneca Meadows Landfill located in Waterloo, New York. The Petition was filed on January 13, 2011, pursuant to State Administrative Procedures Act (SAPA) Section 204, as implemented by the Department through 6 NYCRR Part 619. The Petition seeks a declaratory ruling with respect to: 1) what constitutes "under common control" as that tenn is used in 6 NYCRR Part 201-2.1(b)(21); and 2) whether SMI's Landfill and a companion landfill gas-toenergy (LFGTE) facility, owned and operated by Seneca Energy II, LLC (SE), are "under common contro1." Deputy Commissioner and General Counsel Steven C. Russo has delegated responsibility to me, as Deputy Counsel, to respond to this request for a Declaratory Ruling due to the involvement of his fonner law finn in representation of a subsidiary of SE.

For-the reasons set forth in the ruling, I have detennined that it is appropriate to issue a Declaratory Ruling as to what constitutes "under common control," but decline to rule on whether SMI's landfill and SE's power plant are ''under common contro1." The latter question raises issues that will be the subject of thorough review by the Department pursuant to the pennit application which was recently filed by SE. While I am exercising my discretion pursuant to 6 NYCRR ? 619.3 in declining to issue a declaratory ruling as to that question, I strongly encourage the Petitioner and SE to continue to work with Department staff in developing a draft pennit that complies with all applicable requirements..

If you have any questions on the ruling, please contact Khai Gibbs, Esq. of my office at (518) 402-9512.

Sincerely,

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Alison H. Crocker Deputy Counsel

Enclosure

c: K. Gibbs J. Snyder D. Shaw J. Nasca S. Flint T. Marriott

STATE OF NEW YORK DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Petition of Seneca Meadow, Inc. for a Declaratory Ruling

DECLARATORY RULING DEC NO. 19-19

INTRODUCTION

Seneca Meadows, Inc. (SMI), through its representative Nixon Peabody LLC (Scott M. Turner, Esq.), petitions the Department, pursuant to Section 204 ofthe State Administrative Procedure Act (SAPA) as implemented by the Department under 6 NYCRR Part 619, for a declaratory ruling with respect to: 1) what constitutes "under common control" as that term is used in 6 NYCRR Part 201-2.1(b)(21); and 2) whether Seneca Meadows Landfill, a facility owned and operated by SMI, and a gas-to-energy (GTE) facility, owned and operated by Seneca Energy II, LLC (SE), are "under COUlillon control."

Pursuant to ? 204(1) of SAPA, "[o]n petition of any person, any agency may issue a declaratory ruling with respect to (i) the applicability to any person, property, or state of facts of any rule or statute enforceable by it, or (ii) whether any action by it should be taken pursuant to a rule." A declaratory ruling is binding upon the agency unless it is altered or set aside by a court. An agency may not retroactively change a valid declaratory ruling, but nothing in SAPA prevents an agency from prospectively changing any declaratory ruling. The Department implements SAPA ? 204 through 6 NYCRR Part 619.

FOi pUiposes of this declaratorjl ruling onl)', the Department \viII assume that the facts alleged in the petition are true. The Department may take official notice of any fact not subject to reasonable dispute if it is either generally known or can be accurately and readily verified. 6 NYCRR ? 619.2(b). The Department will engage in no fact finding for purposes ofthis declaratory ruling and the binding effect of the ruling is limited by the assumed fact predicate. See Power Authority of the State of New York v. New York State Department of Environmental ~onservation, 58 NY2d 427, 434, 461 NYS2d 769, 772 (1983). The Department will not assume the truth of statements which are legal conclusions.

For reasons set forth below, I find as follows: (1) Petitioner's request that the Department clarify what constitutes "under common control" as that term is used in 6 NYCRR ? 201-2.1 (b)(21) is granted; and (2) Petitioner's request that the Department determine whether SMI's Landfill and SE's GTE facility are "under common control" must be declined. Rather, such determination will be made during the Department's review ofSE's pending permit application.

PROCEDURAL BACKGROUND

The Department received SMI's Petition on January 13,2011. By letter dated February 14,2011, I notified Petitioner that the Petition was incomplete and that the Department was exercising its discretion to seek additional information to supplement the Petition pursuant to 6 NYCRR ?? 619.1(c) and (d). I also notified Petitioner that I was exercising my discretion to solicit public comments on the Petition pursuant to 6 NYCRR ? 619.1(e)(1). Notice of receipt of the Petition and a solicitation for public comment was placed in the Environmental Notice EuHetin (ENE) on February 23,2011. Public comment on the Petition was accepted through March 16, 2011. On March 2, 2011, Petitioner provided additional infoffilation to supplement its Petition. A second notice and solicitation for public comment was placed in the ENB on March 30,2011. Public comments were accepted through April 6, 2011. On April 19, 2011, Petitioner responded to the public comments pursuant to 6 NYCRR ? 619.1 (e)(2). On May 25,2011, Petitioner provided additional information to supplement the Petition. Comment on the petition was solicited from the U.S. Environmental Protection (EPA) Region 2 office, but none was provided in the record.

STATEMENT OF FACTS

Petitioner Seneca Meadows, Inc. owns and operates Seneca Meadows Landfill located at 1786 Salcman Road, Seneca Falls, New York 13165-006. SMI's landfill is currently permitted as a non-hazardous solid waste landfill under 6 NYCRR Part 360.21 and as a Title V facility under 6 NYCRR Part 201-6.2 SMlalso owns and operates a landfill gas (LFG) collection system which is designed to capture gas from the landfill. SMI may either bum the LFG with flares for

Solid Waste Management Pennit ID: 8-4532-00023/00001. 2 Air Title V Facility Pennit ID: 8-4532-00023/00041

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air pollution control or provide the LFG to an end user. SMI also owns and maintains the production system, which is the conveyance system that delivers LFG to an end user.3

Petitioner states that a significant portion ofSMI's LFG is sold to SE, which uses the gas to fuel its electric power plant.4 SE's power plant is located across the street from the landfill, on a defined parcel leased from SMI. SE's power plant is permitted separately from SMI, as a Title V facUity under 6 NYCRR Part 201-6. 5 According to the Petition, SMI's and SE's business

According to Petitioner, SE plays no role with respect to the SMI's LFG collection system, production system, or the flares. 7 Although SE's power plant can also run on natural gas, SE is not currently connected to any oth~r fuel source. Petitioner states that there are three natural gas pipelines within the vicinity of SE's power plant but there is currently no business reason that would justify the expense of connecting to any of the pipelines.8 Petitioner states since SMI is contractually committed to supply fuel for SE's power plant, there is no plausible business reason to contractually require connection to another fuel source.9

Petitioner states that there is no common ownership between SMI and SE, including parent or subsidiary corporations. 1O Petitioner also stated that SMI and SE do not share personnel, including common workforces, plant managers, security forces, corporate executive officers or board executives. II

Petitioner states that SE previously submitted a Title V permit application to the United States Environmental Protection Agency (EPA) and the Department on April 13,2009, but later withdrew that application. 12 Petitioner states that since the authority to implement NSR is now fully vested in the Department, the Department has full authority to make common control determinations for major facilities in the State and requests that the Department utilize that

Petition, Exhibit F 4 . Petition, p.1

Air Title V Facility Permit ID: 8-4532-00075/00001 6 Petition, Exhibit F 7 Petition, p.2

8 Petition, p.5 9 !d.

10 Supplement to the Petition, dated March 2,2011, SMI's Response to DEC's 2/14/11 Request for information,

p.l (Supp. Response)

,

11 Petition, p.7 12 Supp. Response, p.3

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authority to "reaffirm its prior determination that SMI's landfill and SE's power plant are not under common control...,,13

Additionally, Petitioner states that EPA never responded to or challenged the Department's previous common source determinations, including the Department's May 13, 2008 response letter to EPA finding that the two facilities were separate sources. 14 Petitioner also states that EPA, having an opportunity to object during its 45-day review period, never objected on cmmnon control grounds to SMI and SE's Title V permits prior to their issuance by the Department on March 23,2002 and October 27,2008, respectively. 15

At the time the Petition was submitted, Petitioner stated that SE intends to add four new internal combustion landfill gas engines (LFGEs) to its power plant and will shortly file a new permit application with the Department in order to install the new engines under 6 NYCRR Part 231-6, Non-Attainment New Source Review (NNSR) and 6 NYCRR Part 231-8, Prevention of Significant Deterioration (PSD), inasmuch as operation ofthe new engines would result in a NSR major modification for nitrogen oxides (NOx) and for carbon monoxide (CO). 16 SE's permit application was subsequently received by the Department on July 27,2011.

APPLICABLE LAW

Pursuant to the CAA, permit issuing authorities are required to review Title V permit applications to determine, inter alia, whether two or more nominally separate facilities should be permitted as a single source of emissions. 17 The purpose of a source determination is to ensure that all emissions from a single source are taken into account when determining what applicable requirements and permit conditions should apply to the source. 18 Source determination criteria are derived from the applicable statutory and regulatory definitions of "major source" and its van?ant. s.-IQ'

13 Petition, p.3-4; and Exhibit A 14 Petition, p.3; and Exhibit A 15 Supp. Response, cover letter 16 Petition, p.2 17 See generally, CAA ? 501, et seq. [42 USC 7661, et seq.] and CAA ? 165, et seq. [42 USC 7475, et seq.] 18 Pennit issuing authorities may issue separate pennits to each of the facilities so long as the pennits reflect the

aggregated emissions. 19 See, CAA ? 501(2) [42 USC 7661] and 40 CFR ?? 70.2, 71.2, 63.2, and 51.1 65(a)(1)(i) and (ii) [includes

"major emitting facility," "major source," or "major stationary source"]; see also, 40 CFR ? 5 1.1 66(b) (5) and (6) [defmed under the definitions of "stationary source" and "building, structure, facility or installation"]; and CAA 173(a)(3) [42 USC 7504] and 40 CFR ? 52.21; but compare, CAA ? 112 [42 USC 7412] and National

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CAA ? 501(2) [42 USC 7661] provides,

The tenn major source means any stationary source (or any group of stationary sources located within a contiguous area and under common control)

40 CFR ? 70.2 provides,

Major source means any stationary source (or any group of stationary sources that are located on one or more contiguous or adjacent properties, and are under common control of the same person (or persons und ................
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