Danskammer Energy, LLC v. New York State Department of Environmental Conservation

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In a lawsuit challenging the denial of a Title V air permit for construction and operation of an expanded and repowered natural gas-fired power plant, a New York Supreme Court held that New York’s Climate Leadership and Community Protection Act (CLCPA) granted the New York State Department of Environmental Conservation (NYSDEC) authority to deny the permit application based on a provision requiring state agencies to consider whether decisions “are inconsistent with or will interfere with the attainment of the statewide greenhouse gas limits” established under the CLCPA. If decisions are deemed inconsistent, agencies must provide a detailed statement of justification as to why limits cannot be met and identify alternatives or greenhouse gas mitigation measures. The court found that the provision’s plain language granted NYSDEC authority to deny a permit, rejecting the owner’s interpretation that the provision required to review consistency with CLCPA goals but did not authorize denial of a permit. The court said such a review would serve “no practical or meaningful purpose” and would render the legislature’s mandate to reduce emissions “completely toothless for years to come.” The court also rejected the owner’s contentions that NYSDEC “usurped a legislative function in denying the permit” and that NYSDEC violated the owner’s due process rights under the New York Constitution and the State Administrative Procedure Act “by promulgating a de facto ‘rule’ prohibiting all gas-fired power plants in New York.” Although the court concluded that it could consider the claims that NYSDEC exceeded its authority and acted unconstitutionally, the court did not decide “significant, fact driven substantive issues” arising from the determination that the project would be inconsistent with CLCPA goals and was not otherwise justified. The court said the owner had failed to exhaust its administrative remedies concerning these issues, which would be addressed in a pending administrative appeal.

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The operator of a natural gas-fired power plant in New York filed a lawsuit challenging the New York State Department of Environmental Conservation’s (DEC’s) denial of its application to modify a Title V air permit to construct and operate a new, more efficient electricity generating plant. The operator contended that DEC unlawfully based the denial on “general provisions” of the Climate Leadership and Community Protection Act (CLCPA), which was enacted in 2019. The operator asserted that DEC’s interpretation of the CLCPA as barring a new plant on the site of an existing plant because it would result in greenhouse gas emissions that do not currently exist would effectively impose a ban on issuance of all Title V permits for new or repowered greenhouse gas-emitting electricity generation sources. The operator argued that the CLCPA did not authorize such a ban and that, even if it did, DEC had established and applied a de facto new rule without complying with requirements of the New York State Constitution and the State Administrative Procedure Act. In addition, the operator claimed that denial of the permit violated its due process rights and was arbitrary and capricious.