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October 17, 2014

New York Court Rejects Sierra Club's Challenge to First Initial Water Withdrawal Permit Issued Under New State Law

In a precedent setting decision, the New York State Supreme Court, Queens County, has ruled that initial permits sought under New York's new water withdrawal law are not subject to review under the State Environmental Quality Review Act ("SEQRA"). The Court's October 1, 2014 decision ("Decision") denied Sierra Club and the New Jersey Chapter of the Hudson River Fisherman's Association's ("HRFA") petition claiming that an Environmental Impact Statement ("EIS") should have been conducted pursuant to SEQRA prior to the New York State Department of Environmental Conservation's ("NYSDEC") issuance of the initial water withdrawal permit for the Ravenswood Generating Station ("Ravenswood") in Long Island City.

On April 1, 2013, the Water Resources Protection Act of 2011 (the "Act"), Environmental Conservation Law Article 15, and its implementing regulations at 6 NYCRR §601, became effective. Under the Act and implementing regulations, any facility with existing withdrawals of 100,000 gallons or more per day was required to obtain an initial water withdrawal permit from the NYSDEC. This included Ravenswood, which had more than a fifty year history of withdrawing water from the East River for use in its once through cooling water system. The Ravenswood application was the first initial permit considered and issued by NYSDEC. Because the Act dictated that existing withdrawals were entitled to an initial permit, the NYSDEC determined that issuance of the permit was a ministerial act, and as such, a Type II action, not subject to SEQRA review.

Sierra Club and the HRFA challenged NYSDEC's finding and the Ravenswood permit, arguing that the NYSDEC violated SEQRA by classifying the issuance of the initial permit as a Type II action and not conducting a full environmental review. More specifically, they argued that because the NYSDEC has broad discretion to specify the terms and conditions of all water withdrawal permits issued pursuant to the Act, including initial permits, the NYSDEC violated SEQRA as well as New York State's Waterfront Revitalization of Coastal Areas and Inland Waterway Act and other related acts, by failing to require an EIS for the Ravenswood initial permit. They maintained that had NYSDEC done so, it would have been required to impose additional requirements on Ravenswood's water withdrawals, including limiting the amount of water authorized to be withdrawn and revisiting Ravenswood's once through cooling water system.

Section 316(b) of the Clean Water Act ("CWA"), and New York regulations at 6 NYCRR § 704.5 regulate power plant cooling water intake structures by requiring the best technology available ("BTA") based, in part, on a cost-benefit analysis. For the 1960s-built Ravenswood facility, BTA was determined not to require closed-cycle cooling, but instead includes specific BTA provisions in its State Pollution Discharge Elimination System ("SPDES") permit issued under the CWA. While Sierra Club and HRFA could have challenged the BTA provisions during issuance of Ravenswood's SPDES permit and subsequent renewal, it did not. Instead, they attempted to get a "second bite" at the BTA apple through this instant action by seeking to use the Act to require Ravenswood to install closed-cycle cooling, even though such is not required by the CWA or its implementing regulations.

The court held that NYSDEC had a rational basis for classifying the issuance of an initial water withdrawal permit as ministerial under SEQRA because the Act does not give NYSDEC the type and breadth of discretion that would allow it to grant or deny an initial permit based on the broader environmental concerns detailed in an EIS. According to the court, the express language in the Act left NYSDEC with only one course of action – issuance of the initial permit allowing Ravenswood to withdraw water from the East River at existing volumes. The Act did not vest NYSDEC with the discretion to compel Ravenswood to switch to closed cycle cooling because of information that might have been contained in an EIS. The court noted, however, that due to the Act's different treatment of initial permits and new permits, NYSDEC does not regard new water withdrawal permits as ministerial, which means new permits may still be subject to SEQRA.

This Decision confirms that facilities seeking an initial water withdrawal permit will not be subject to SEQRA and required to complete an EIS, saving time and effort. It also establishes important case law that environmental groups cannot use the Act as a back-door attempt to revisit an existing generating facility's BTA. We anticipate that the significant number of initial water withdrawal permit applications that have been held up by the lawsuit will now be processed and permits issued by NYSDEC. However, the Sierra Club and HRFA are expected to appeal the Decision. In addition, more lawsuits challenging other initial permits are expected as NYSDEC continues to issue such permits.

As litigation counsel for TC Ravenswood LLC, Hiscock & Barclay has first-hand experience with New York's Water Resources Protection Act of 2011 and the State Environmental Quality Review Act. Please contact Yvonne E. Hennessey, counsel for Ravenswood and Co-Chair of the Firm's Environmental Practice Area, at (518) 429-4293 or, for more information.


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