Opinion
DOCKET NO. A-5840-12T2
06-23-2015
IN RE NEW JERSEY POLLUTANT DISCHARGE ELIMINATION SYSTEM PERMIT NUMBER: NJ0005444 FINAL CONSOLIDATED RENEWAL PERMIT ACTION
Edan Rotenberg (Super Law Group, LLP) of the New York bar, admitted pro hac vice, argued the cause for appellants American Littoral Society, Clean Ocean Action and Sierra Club-New Jersey Chapter (Eastern Environmental Law Center, and Mr. Rotenberg, attorneys; Aaron Kleinbaum and Mr. Rotenberg, on the briefs). Helene Chudzik, Senior Deputy Attorney General, argued the cause for respondent Department of Environmental Protection (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Jacobine K. Dru, Deputy Attorney General, on the brief). Steven C. Russo (Greenberg Traurig LLP) of the New York bar, admitted pro hac vice, argued the cause for Intervenor RC Cape May Holdings, LLC (Wolff & Samson PC and Mr. Russo, attorneys; John J. Valeri, Jr., and Dennis M. Toft, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Reisner, Haas, and Currier. On appeal from the Bureau of Surface Water Permitting, Department of Environmental Protection. Edan Rotenberg (Super Law Group, LLP) of the New York bar, admitted pro hac vice, argued the cause for appellants American Littoral Society, Clean Ocean Action and Sierra Club-New Jersey Chapter (Eastern Environmental Law Center, and Mr. Rotenberg, attorneys; Aaron Kleinbaum and Mr. Rotenberg, on the briefs). Helene Chudzik, Senior Deputy Attorney General, argued the cause for respondent Department of Environmental Protection (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Jacobine K. Dru, Deputy Attorney General, on the brief). Steven C. Russo (Greenberg Traurig LLP) of the New York bar, admitted pro hac vice, argued the cause for Intervenor RC Cape May Holdings, LLC (Wolff & Samson PC and Mr. Russo, attorneys; John J. Valeri, Jr., and Dennis M. Toft, on the brief). PER CURIAM
Appellants, American Littoral Society, Clean Ocean Action, and Sierra Club-New Jersey Chapter (collectively, appellants), appeal from a June 17, 2013 decision of the Department of Environmental Protection (DEP or agency) issuing a renewed New Jersey Pollutant Discharge Elimination System (NJPDES) permit to RC Cape May Holdings LLC (RC Cape May or applicant), in accordance with N.J.A.C. 7:14A.
The DEP's action carries a "'strong presumption of reasonableness.'" Aqua Beach Condo. Ass'n v. Dep't of Comm. Affairs, 186 N.J. 5, 16 (2006) (quoting Newark v. Nat. Res. Council, 82 N.J. 530, 539 (1980)). Appellants have the burden of demonstrating that the decision was unsupported by substantial credible evidence or was inconsistent with the applicable statutes and regulations, or that the DEP made a clear error of judgment in applying the law to the facts of record. See Pub. Serv. Elec. & Gas Co. v N.J. Dep't of Envirl. Prot., 101 N.J. 95, 103 ( 1985); In re Adoption of Amendments to Water Quality Management Plans, 435 N.J. Super. 571, 582-83 (App. Div.), certif. denied, 219 N.J. 627 (2014).
In reviewing the DEP's determination, we owe deference to the agency's expertise and to its reasonable construction of its enabling statute and regulations:
The Legislature has entrusted to the DEP the enforcement of a complex system of water pollution control. We will ordinarily defer to an agency's construction of its enabling statute and its regulations, particularly where the Legislature has relied on the agency's expertise in enforcing a complex regulatory scheme. Accordingly, we give deference to DEP's construction of the Water Pollution Control Act and to the agency's construction of its NJPDES regulations adopted pursuant to the Act.
[SJC Builders, LLC v. State of N.J. Dep't of Envirl. Prot., 378 N.J. Super. 50, 54 (App. Div. 2005) (citations omitted).]
Our appellate review does not encompass whether the agency's decision was wise, only whether it was lawful.
"[J]udicial deference to administrative agencies stems from the recognition that agencies have the specialized expertise necessary to . . . deal[] with technical matters and are 'particularly well equipped to read and understand the massive documents and to evaluate the factual and technical issues . . . .'" "'[W]here there is substantial evidence in the record to support more than one regulatory conclusion, it is the agency's choice which governs.'" The court "may not vacate an agency determination because of doubts as to its wisdom or because the record may support more than one result," but is "obliged to give due deference to the view of those charged with the responsibility of implementing legislative programs."
[In re Adoption of Amendments to Water Quality Management Plans, supra, 435 N.J. Super. at 583-84 (alterations in original) (citations omitted).]
Consequently, no matter how fervently appellants disagree with the DEP's policy choices in this case, policy disagreements do not warrant our second-guessing the agency's decision. Moreover, having waived the right to an administrative hearing, appellants are bound by the agency's factual findings, and they may not challenge those findings based on materials they did not submit to the agency. After reviewing the record in light of the appropriate legal standards, we affirm.
In deciding this appeal, we do not address exhaustion of administrative remedies, an issue the DEP noted in a letter but did not pursue in its merits brief.
I
The essential facts are set forth in the DEP's draft permit decision. They are summarized more briefly here. B.L. England (facility or power plant) is a coal and oil-powered steam electric generating facility located in Cape May County. The facility is situated on and draws water from the Great Egg Harbor Bay (Bay), which is connected to the Atlantic Ocean by the Great Egg Harbor Inlet. The facility has three units. Units 1 and 2 employ a once-through cooling system, while Unit 3 employs a closed system cooling tower.
A steam electric generating facility heats water to generate steam to drive the turbines, which in turn produce electricity. Water drawn from the Bay is used to cool down the steam after it has passed through the turbines, to return it to its liquid state. On intake, the Bay water is first filtered through traveling screens before it enters the facility through concrete pipes. The water is then pumped through condenser waterboxes and used as a coolant, after which, in Units 1 and 2, it is released back into the Bay. Because it has absorbed heat from the steam, the released water is warmer than the Bay water. The change in water temperature from intake to discharge is approximately 16 degrees Fahrenheit, and is primarily attributable to the thermal input of Units 1 and 2. Unit 3 uses a closed-cycle cooling system, in the form of a cooling tower, which reuses the same water for cooling and uses water diverted from Unit 2 to replace water lost from evaporation.
A cooling tower, which is a type of closed-cycle cooling system, greatly reduces the amount of water that a power plant needs to take in for cooling purposes. Any mechanism that reduces the amount of water the plant takes in from the Bay will also reduce the number of water creatures that are killed in the process. As discussed later in this opinion, there are also mechanisms other than cooling towers that will preserve aquatic life.
The power plant's operation has several effects on the surrounding environment. The cooling water intake structure results in impingement and entrainment of aquatic organisms. Impingement occurs when the force of the water intake pins fish, crabs and other larger organisms against the intake screens, injuring or killing them. Entrainment occurs when smaller organisms pass through the screens and enter the cooling system, where they are subjected to mechanical, thermal, and toxic stress. The water that is released back into the Bay at higher temperatures is considered a thermal pollutant, regulated under the federal Clean Water Act, 33 U.S.C.A. §§ 1251 to 1387. Wastewater, as a byproduct of burning coal and oil, is also discharged. And, operation of the facility releases air pollutants.
Pursuant to an administrative consent order, intended to reduce air pollution, RC Cape May was required to convert the plant from using coal and oil fuel to using a natural gas heat source. Under this consent order, Unit 1 was to cease operations on September 30, 2013. Unit 2 was to cease operations on May 1, 2015, at which time it would be repowered with a new turbine that runs on natural gas and be renamed Unit 4. Unit 3 was to be converted from oil to natural gas. The entire facility should be repowered by May 1, 2016. The repowering will result in an increased energy generating capacity of about 30%, from 447 megawatts (MW) to 584 MWs. The switch to natural gas will significantly decrease the emission of the air pollutants nitrogen oxide and sulfur dioxide.
The DEP's brief advises that the timeline has been pushed back due to delay in building the necessary natural gas pipeline. The timeline set forth in this opinion is the one that was in place at the time the draft permit was issued.
The repowering will also improve the plant's water usage. After the repowering, Unit 3 will continue to use a cooling tower and Unit 4 will utilize a once-through cooling system. Closing Unit 1 will result in a 43% overall reduction in the intake of water used for cooling at the facility.
The change will also decrease the amount of polluted water and heated water that leaves the plant. The facility's outfalls, which are discharge points for its wastewater, will be affected as follows: DSN 001A, the outfall for Unit 3, will remain unchanged; DSN 003A, the outfall for slag pond overflow and for storm water from Unit 4, will experience an 87% reduction of discharge as a result of sealing the slag pond outfall; DSN 009A, the outfall for Unit 1, will be sealed, resulting in a 100% reduction in discharge; DSN 010A, the outfall for the proposed Unit 4, will experience an 18% increase in discharge due to the repowering; and DSN 0014A, which consists of wastewater from flue gas desulfurization, will be closed and there will be a 100% reduction in discharge due to cessation of the use of coal. The heat output from DSN 010A (Unit 4) will increase during the summer and other high operation times, and temperatures within the zone of initial dilution may be greater, but will only affect a small area. Overall, after the repowering, the facility should have a net reduction of 26% to 32% of the thermal plume, due primarily to the elimination of heat pollutants from DSN 009A (the shutdown of Unit 1).
The term "thermal plume" refers to the spread of the heated wastewater when it is discharged into the Bay.
The DEP issued the draft permit on March 28, 2013, published notice, and provided a public comment period.
In response, appellants, who were the only commenters, submitted written objections. The DEP's final permit decision, which was issued on June 17, 2013, addressed each of those objections in detail, in a forty-page single-spaced "response to comments" section of the permit. In particular, the agency explained why it did not require RC Cape May to install a second cooling tower (for Unit 4) or to undertake a study of its feasibility. As previously noted, the agency also gave appellants written notice of their right to request an administrative hearing, but appellants did not ask for one.
The permit became effective on August 1, 2013 and will expire on July 31, 2018. When the permit expires, the plant will undergo yet another permit application process, which will be subject to the federal Environmental Protection Agency (EPA) and DEP's then-current regulations. In response to our question at oral argument, RC Cape May's attorney confirmed that the issue of whether to require installation of a cooling tower at Unit 4 could be re-raised during that future permit application. As acknowledged in its brief, RC Cape May cannot claim a vested right not to be required to build another cooling tower in the future merely by virtue of the fact that DEP did not impose that requirement in issuing the 2013 permit.
II
On this appeal, appellants focus on the same issues they raised before the DEP. The primary issue is whether the applicant should be required to construct another cooling tower or whether, as DEP decided, it would be acceptable to reduce the plant's water intake and undertake a study of other technologies to keep organisms out of the plant's intake system and get them promptly back into the Bay with as little physical damage as possible.
Two secondary issues are (a) whether the agency properly addressed the discharge of certain chemicals from the plant by requiring future monitoring and inserting a re-opener clause in the permit, as provided in N.J.A.C. 7:14A-13.5(1), rather than by conducting a reasonable potential analysis and establishing water quality based effluent limits; and (b) whether the agency should have issued a renewal of the plant's existing thermal discharge variance. We conclude that the agency's final permit decision thoroughly addressed the latter two points, and appellants' arguments on those issues are without sufficient merit to warrant further discussion here. R. 2:11-3(e)(1)(E).
Accordingly, we turn to the cooling tower issue. To put the issue in context, we briefly review the development of the relevant law. Congress enacted the Clean Water Act (CWA) in 1972. Pollution from thermal discharge is regulated under 33 U.S.C.A. § 1326. Subsection 1326(b) (also known as section 316(b)) requires that "the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact." 33 U.S.C.A. § 1326(b). Appellants allege that the DEP acted arbitrarily in granting this permit without considering a cooling tower, or other technologies for minimizing entrainment, as a best technology available (BTA) for minimizing adverse environmental impact under section 316(b).
The two most pertinent sections of the CWA, 33 U.S.C.A. § 1326(a) and 33 U.S.C.A. § 1326(b), are generally known as "section 316(a)" and "section 316(b)."
A cooling tower is a type of closed-cycle cooling system. Since it is the only closed-cycle system at issue in this case, we will use the terms interchangeably. --------
A. Regulatory History of 316(b) Standards
The EPA issued regulations under section 316(b), but in 1977 they were invalidated on procedural grounds. Appalachian Power Co. v. Train, 566 F.2d 451, 457 (4th Cir. 1977). Instead of promptly proposing new regulations, later that same year the EPA issued draft guidance on implementing section 316(b). See Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 213-14, 129 S. Ct. 1498, 1503, 173 L. Ed. 2d 369, 377 (2009).
As the result of a 1995 consent decree, in 2001 the EPA issued regulations (the Phase I rules), which only applied to new power plants. The Phase I rules required new plants to either draw in limited amounts of water or build cooling towers. Those regulations were largely upheld. See Riverkeeper, Inc. v. EPA (Riverkeeper I), 358 F.3d 174 (2d Cir. 2004).
In 2004, the EPA issued new section 316(b) regulations applying to existing power plants, such as the one operated by RC Cape May (the Phase II regulations). See Riverkeeper, Inc. v. EPA (Riverkeeper II), 475 F.3d 83, 92 (2d Cir. 2007), rev'd, Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 129 S. Ct. 1498, 173 L. Ed. 2d 369 (2009). Unlike the Phase I rules, which applied to newly constructed power plants, the Phase II rules did not mandate adoption of closed-cycle cooling systems, due to the high cost of converting existing facilities to this technology, and because other technologies approached the benefits of a closed-cycle cooling system. See Entergy, supra, 556 U.S. at 215-16.
In 2007, the Phase II regulations were remanded to the EPA by the federal court of appeals, which found the EPA's cost-benefit approach impermissible. Riverkeeper II, supra, 475 F.3d at 89, 102-05. However, two years later, the Supreme Court reversed on that critical point, holding that the EPA could require use of a cost-benefit analysis when determining a BTA under section 316(b). Entergy, supra, 556 U.S. at 218-26. The Court concluded that the EPA was reasonable in its interpretation that the "best technology available" could mean the technology that most efficiently reduces adverse environmental impact (as opposed to technology that most significantly reduces the impact, regardless of cost) and in its interpretation that "minimizing adverse environmental impact" means reducing the adverse impact, not necessarily reducing the impact as much as possible. Id. at 218-20.
After Riverkeeper II was decided in 2007, and continuing through and after the 2009 Entergy decision, the EPA suspended enforcement of the 2004 Phase II regulations. 72 Fed. Reg. 37107 (July 9, 2007). Since there were no regulations in force, the EPA directed state agencies implementing the CWA to issue permits in accordance with their best professional judgment (BPJ). The EPA stated that "[p]ermit requirements for cooling water intake structures at Phase II facilities should be established on a case-by-case best professional judgment (BPJ) basis." 72 Fed. Reg. 37108 (July 9, 2007).
The EPA finally proposed new Phase II regulations in 2011. 76 Fed. Reg. 22174 (April 20, 2011). An unofficial pre-publication version of those regulations was adopted on May 19, 2014, and the regulations were finalized and published on August 15, 2014. 79 Fed. Reg. 48300 (Aug. 15, 2014). The regulations became effective on October 14, 2014. 79 Fed. Reg. 48358 (Aug. 15, 2014). The 2014 regulations are not retroactive, but are to be implemented in permits as they are issued. 79 Fed. Reg. 48358 (Aug. 15, 2014).
B. The Current Appeal
Against that somewhat byzantine regulatory backdrop, we consider appellants' arguments. Appellants contend that a new cooling tower should have been required in the 2013 permit, or at least should have been considered, because cooling towers were then and still are the best technology available for preserving aquatic organisms, and DEP is mandated to consider cooling towers as an option in reviewing a permit. We disagree. Contrary to appellants' arguments, at the time DEP issued this permit, EPA had not adopted regulations designating cooling towers as the BTA, nor had EPA mandated that existing power plants install them.
According to the 1977 EPA guidance document: "It is accepted that closed cycle cooling is not necessarily the best technology available, despite the dramatic reduction in rates of water used. The appropriate technology is best determined after a careful evaluation of the specific aspects at each site." The document recommended "[a] stepwise thought process" rather than immediate consideration of cooling towers. The document stated that after considering and eliminating the possibility of other technologies, such as "modification of the existing screening systems," changing the size of the intake location, or moving its location, a closed-cycle cooling system should be considered. In other words, cooling towers were a last resort, not a first option.
Nor did EPA's Phase II rules mandate that existing power plants be retrofitted with cooling towers. Entergy acknowledged EPA's rationale that cooling towers were enormously expensive and sometimes reduced power production, and there were far cheaper technologies available that worked well without negatively affecting plant efficiency:
In its Phase II rules, however, the EPA expressly declined to mandate adoption of closed-cycle cooling systems or equivalent reductions in impingement and entrainment, as it had done for new facilities subject to the Phase I rules. It refused to take that step in part because of the "generally high costs" of converting existing facilities to closed-cycle operation, and because "other technologies approach the performance of this option." Thus, while closed-cycle cooling systems could reduce impingement and entrainment mortality by up to 98 percent, (compared to the Phase II targets of 80 to 95 percent impingement reduction), the cost of rendering all Phase II facilities closed-cycle-compliant would be approximately $3.5 billion per year, nine times the estimated cost of compliance with the Phase II performance standards. Moreover, Phase II facilities compelled to convert to closed-cycle cooling systems "would produce 2.4 percent to 4.0 percent less electricity even while burning the same amount of coal," possibly requiring the construction of "20 additional 400-MW plants . . . to replace the generating capacity lost." The EPA thus concluded that "[a]lthough not identical, the ranges of impingement and entrainment reduction are similar under both options. . . . [Benefits of compliance with the Phase II rules] can approach those of closed-cycle recirculating systems at less cost with fewer implementation problems."
[Entergy, supra, 556 U.S. at 215-16 (alterations in original) (citations omitted).]
Appellants argue that EPA's newest regulations, which were adopted in 2014, would require consideration of cooling towers as an option. That is, however, irrelevant to this appeal because the permit was issued in 2013. Further, as RC Cape May concedes, when the plant's permit is considered for renewal in 2018, it will have to comply with EPA's 2014 regulations, assuming they are still in effect at that time.
We also note that when EPA proposed the 2014 regulations, it issued a technical background document listing Ristroph screens (also known as traveling screens) as one of the BTAs to reduce fish mortality. In the permit, DEP recognized that EPA might impose such a requirement in the future, and noted its own scientific judgment that Ristroph screens are "a proven and effective technology to minimize impingement mortality."
The DEP therefore gave RC Cape May fifteen months from the permit date to submit an "impingement alternative analysis" evaluating the potential effectiveness of installing Ristroph screens with fish lifting buckets and a "fish return system for the intake structure." DEP indicated that upon receipt of the study it would "reopen the permit to incorporate permit conditions pursuant to N.J.A.C. 7:14A-16.4." In other words, the agency retained the right to require the applicant to install new technology even after the permit was issued. In its response to comments, the DEP also explained why the conditions it included in permits issued to other facilities, including in some cases the construction of cooling towers, were not relevant to its consideration of the permit for the B.L. England plant. We find no basis in this record to reject the agency's reasoning.
We also find no merit in appellants' argument that DEP failed to address the issue of minimizing entrainment. By retiring one of its three units, leaving one unit with a cooling tower and one that used a once-through system, the applicant proposed to reduce its water intake by 43%. The DEP concluded that the 43% reduction in intake flow after the plant's repowering would significantly reduce entrainment. Reducing water intake was one of the EPA's recommended alternatives to address entrainment.
Further, as the DEP noted in its response to comments, implementing a cooling tower would require a feasibility study and would be a many-years-long process, while the unit retirement could be accomplished relatively quickly. The agency stated that "[i]t would not be appropriate for NJDEP to prejudge the outcome of a study" by concluding that a cooling tower was necessary when "the requirements [mandating the feasibility study] have not yet been finalized [by the EPA] and therefore technically not even yet required." Not only did the DEP find that consideration of a closed-cycle system without the accompanying studies would be inappropriate, but also it found that the "suite of intake protection technologies evaluated was sufficient given the site-specific information regarding the plant and the language contained in the pending EPA rule."
Lastly, as the agency indicated in its comment response, DEP did not make its permit decision in a vacuum. It relied on several voluminous scientific studies provided by the applicant, analyzing the plant's existing features to protect aquatic species, as well as analyzing the current ecological health of the Bay.
In summary, we cannot conclude that the agency's permit decision was arbitrary, irrational, or unsupported. Until EPA adopted regulations on the subject, which it did not do until 2014, the law required DEP to use its best professional judgment in considering what conditions to impose in the permit. Absent factors not present here, our standard of review requires that we defer to DEP's exercise of its environmental expertise, not substitute our judgment for that of the agency. See In re Adoption of Amendments to Water Quality Management Plans, supra, 435 N.J. Super. at 583-84.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION