fE
,f7gVED
CLERK'S
OFFICE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
MAR 0 2 2006
Midwest Generation EME, LLC,
)
STATE OF
ILLINOIS
Petitioner
)
PCB
04-216
Pollution Control Board
Trade Secret Appeal
v .
).
)
Illinois Environmental Protection Agency,
)
Respondent
)
NOTICE OF FILING
To :
Dorothy Gunn, Clerk
Sheldon A. Zabel
Illinois Pollution Control Board
Mary A. Mullin
100 West Randolph
Andrew N. Sawula
Suite 11-500
Schiff Hardin LLP
Chicago, Illinois 60601
6600 Sears Tower
Chicago, Illinois 60606
Brad Halloran
Hearing Officer
Illinois Pollution Control Board
100 West Randolph
Suite 11-500
Chicago, Illinois 60601
Please take notice that today we have filed with the Office of the Clerk of the
Pollution Control Board an original (1) and nine (9) copies of Respondent's
Memorandum in Opposition to Midwest Generation's Motion to Compel, the Affidavit of
Donald E. Sutton, and the Affidavit of Ann Alexander . A copy is herewith served upon
the assigned Hearing Officer and the attorneys for the Petitioner, Midwest Generation
EME, LLC
.
Dated: Chicago, Illinois
March 2, 2006
LISA MADIGAN, Attorney General of the
State of Illinois
MATTHEW DUNN, Chief, Environmental Enforcement/
Asbestos Litigation Division
I
BY : ~
Ann A xander, Assistant Attorney General and
Environmental Counsel
Paula Becker Wheeler, Assistant Attorney General
188 West Randolph Street, Suite 2000
Chicago, Illinois 60601
312-814-3772
312-814-2347 (fax)
RED; SAVE®
CLERK'S
OFFICE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
MAR 0 2 2006
Midwest Generation EME, LLC
)
STATE OF ILLINOIS
Petitioner
)
PCB
04-216
Pollution Control Board
Trade Secret Appeal
v .
)
Illinois Environmental Protection Agency,
)
Respondent
)
MEMORANDUM IN OPPOSITION TO
MIDWEST GENERATION'S MOTION TO COMPEL
Preliminary Statement
Respondent Illinois Environmental Protection Agency (IEPA or the "Agency")
submits this memorandum in response to Petitioner Midwest Generation EME, LLC's
("Midwest Generation") motion to compel IEPA's responses to discovery demands
seeking information concerning every trade secret determination the Agency has ever
made. This motion is no more and no less than an attempt to re-litigate Midwest
Generation's unsuccessful motion in a related trade secret matter, Midwest Generation
EME„ LLC v. IEPA, IPCB 4-185, for a hearing de novo rather than on the record .
The
held in that matter, affirming its initial order, that evidence in trade secret matters is
limited to the Agency record (plus any new information not available to the Agency at
the time of its decision)
.
Midwest Generation now moves to compel the production of vast volumes of
archival evidence in unrelated matters that are not part of the record in this case .
It has
asked the Agency, among other things, to identify
every
determination it has made,
ever,
concerning the trade secret status of financial information submitted to it by anybusiness ;
and to produce all statements of justification and agency responses to them in any matter
from the past 15 years. The Board has already told Midwest Generation once that such
1
non-record information is not relevant to this proceeding, and that its claimed due process
concerns are insufficient to overcome the long-standing Board requirement that
proceedings of this nature be conducted on the record . Midwest Generation's motion to
compel requires, unfortunately, that the Board reiterate once again its earlier finding
.
Moreover, regardless of relevance issues, compliance with the requests would be
impossible as a practical matter. As set forth in the accompanying Affidavit of Donald
Sutton, the IEPA Bureau of Air does not maintain any recordkeeping system specifically
concerning trade secret matters . Trade secret determinations are stored in the file of the
particular emission source concerning which they were made, and no separate record is
kept of them. Thus, there is simply no way to locate all of the files containing trade
secret determinations
.
Facts
This matter concerns IEPA's April, 2004 denial of Midwest Generation's claim
that information submitted in response to a federal investigation of Clean Air Act
("CAA") compliance, requested by the Sierra Club pursuant to the Freedom of
Information Act ("FOIA"), should be protected as a trade secret. The United States
Environmental Protection Agency ("USEPA") had demanded in 2003 that both Midwest
Generation and Commonwealth Edison ("ComEd"), the previous owner of Midwest
Generation's electric generating facilities, produce information necessary to determine
the companies' compliance with the CAA New Source Review ("NSR") program,
including lists of projects that might have triggered NSR permitting requirements with
their attendant stricter emission limits. Both Midwest Generation and ComEd supplied
IEPA with a copy of their response to USEPA, and that copy was the subject of the FOIA
request and this proceeding
.
2
Midwest Generation appealed IEPA's denial of trade secret protection for its
response to USEPA, which covered the years following its purchase of the facilities from
ComEd, in PCB 04-185 . In addition, although ComEd filed a petition seeking trade
secret protection for the information it supplied to USEPA covering the pre-purchase
timeframe (PCB 4-215), Midwest Generation petitioned the Board separately concerning
most of that same information in PCB 4-216 .'
On May 6, 2004, the Board issued its Order in 4-185 accepting Midwest
Generation's petition. In that order, the Board stated as follows :
Hearings will be based exclusively on the record before IEPA at the time
it issued its trade secret determination
.
See
35 Ill. Adm. Code 105.214(a) .
Therefore, though the Board hearing affords petitioner the opportunity to
challenge IEPA's reasons for denial, information developed after IEPA's
decision typically is not admitted at hearing or considered by the Board .
See Alton Packaging Corp . v. PCB, 162 Ill. App. 3d 731, 738, 516 N.E.2d
275, 280 (5th Dist. 1987) ; Community Landfill Co. & City of Morris v .
IEPA, PCB 01-170 (Dec. 6, 2001), aff'd sub nom. 331 Ill. App. 3d 1056,
772 N.E.2d 231 (3d Dist. 2002) .
Affidavit of Ann Alexander ("Alexander Aff.") Ex. 1 at 3
. The Board included identical
language in its June 17, 2004 joint Order accepting the petitions in PCB 4-215 and 4-216
.
Alexander Aff. Ex. 2 at 4. On July 1 and August 17, 2004, respectively, Petitioner filed
motions for partial reconsideration of this portion of the Board's order in PCB 4-185 and
4-216. In its motions (which were essentially identical), Midwest Generation argued that
IEPA's decision making process violated the federal Due Process clause, on the ground
that Midwest Generation had been given insufficient opportunity to submit information to
counter IEPA's stated grounds for the denial . Alexander Aff. Ex. 3 . Among other things,
Midwest Generation asserted it was not "on notice" that IEPA would determine that its
'The ComEd petition is slightly broader in what it seeks to protect than the Midwest Generation petition
.
The basis for Midwest Generation's separate petition is a purported contractual duty to maintain the
confidentiality of the records transferred to it by ComEd in the course of the purchase
.
3
documents constitute emission data, which is exempt from trade secret protection under
state and federal law. Id. at
18
.
Midwest Generation argued that the purported denial of
due process should be remedied by a hearing conducted de novo rather than on the record
as the Board had ordered .
By order dated November
4, 2004,
the Board denied Midwest Generation's
request for a de novo hearing .2 Alexander Aff. Ex. 3. It held that Midwest Generation
had not been denied due process, and that the Board's rule requiring that trade secret
proceedings be conducted on the administrative record would be adhered to. Alexander
Aff. Ex. 3 at
29,
33. The Board held that "a de novo hearing on appeal would promote
forum shopping, undermining the separate roles of IEPA as the initial decision-maker and
the Board as the reviewing tribunal ." Alexander Aff Ex. 3 at
29 .
It further stated,
[R]equiring
a
de novo
hearing would impose both an additional
administrative and monetary burden on the State . This burden cannot be
dismissed where a trade secret claimant has already had the opportunity to
make its case to IEPA in a Statement of Justification. With
a
de novo
hearing, the scope of the Board hearing may be greatly expanded beyond
IEPA's record. The need for these types of proceedings to be efficient and
timely is heightened because they are often triggered by a citizen's or
citizen group's FOIA request, as appears to be the case here . The citizens'
right to know environmental information is significant, particularly where
emission data is involved, as the General Assembly has recognized
.
See
415 ILCS 5/7(c) (2002) .
Alexander Aff. Ex. 3 at
28
.
The Board concluded that no extra-record evidence would
be allowed at the hearing, except that, in keeping with long-standing Board practice,
"Midwest may present new evidence at the Board hearing if it makes the requisite
2
The Board has issued a ruling only in the 04-185 matter. Alexander Aff. Ex. 3. It has not ruled on the
identical motion in 04-216 . In the 04-185 ruling, the Board required IEPA to submit a clarification of its
decision . A motion concerning that clarification remains pending before the Board.
4
demonstration that the information was unavailable to Midwest Generation and IEPA
when IEPA denied trade secret protection ." Id. at 33 (emphasis in original)
.3
The Board specifically rejected petitioner's claim that it had "no notice" of
IEPA 's determination that the documents are emission data :
Nor is the Board convinced by Midwest's suggestion that the IEPA's
denial based on "emission data" was unfair surprise . Midwest's claimed
information was submitted in response to a Section 114 Clean Air Act
information request. The trade secret requirements of the Act and the
Board's rules specifically address the emission data exemption
from
trade
secret protection. The Board's rules define the term "emission data." See
415 ILCS 5/7(c) (2002); 35 Ill. Adm. Code 130 .110. Moreover, Section
130.203 [concerning Statements of Justification] calls not only for
information relevant to the public availability and competitive value of the
claimed trade secret, but also "[a]ny other information that will support the
claim" (35 Ill. Adm. Code 130 .203(e)), which here clearly could have
included a demonstration that the claimed information is not emission
data .
Id. at 25. IEPA had explained in its response to the motion that emission data includes
any information necessary to determine how much a particular facility was "authorized to
emit" - i.e., that would determine whether the facility's emissions constitute a violation
of the CAA. The records in question - including records of modifications performed at
the company's facilities - therefore constitute emission data, since they are relevant to
USEPA's inquiry as to whether Midwest Generation should be held to the more stringent
emission standards that can be triggered by such modifications pursuant to the NSR
program. Alexander Aff. Ex. 3 at 17 .
On October 27, 2005, pursuant to the Hearing Officer's order, Midwest
Generation submitted its interrogatories and requests for the production of documents in
a The Board indicated that the only other general exception to the requirement that trade secret appeal
hearings be conducted on the record, the situation where no opportunity for submission of a Statement of
Justification has been provided, did not apply here . Alexander Aff. Ex. 3 at 28-29 .
5
the 04-216 matter
.4 The interrogatories requested information concerning essentially
every trade secret determination ever made by the Agency, at any time in any matter
.
Specifically, Midwest Generation requested that IEPA identify information as follows
:
Interrogatory No . 13: Identify any determination you have made relating
to the trade secret status of a business's financial information submitted to
IEPA .
Interrogatory No. 14 :
Identify any determination you have made that
information constitutes "emission data" as that term is now or was in the
past defined under Section 5/7 of the Illinois Environmental Protection
Act, 415 ILCS 7/5, or Sectionl14(c) of the Clean Air Act, 42 U .S.C . §
7417(c), or their predecessors, and their implementing regulations
.
Since these requests contain no time frame, they apply to the entire 36-year history of the
Agency's existence. In addition, Midwest Generation submitted document requests as
follows
:
Document Request No. 4: All Statements of Justification that were
submitted to IEPA from January 1, 1990 to the present
.
Document Request No. 5 : All agency responses to the Statements of
Justification submitted to IEPA fom January 1, 1990 to the present,
including preliminary and final agency determinations and correspondence
related to the same
. 5
IEPA objected to all of these requests and declined to respond to them . Its
grounds for the objection were, inter alia, that the information requested is irrelevant in
view of the Board's November, 2004 order; and, in addition, that the requests are
overwhelmingly burdensome and overbroad . Concerning the burdensomeness objection,
as acknowledged in petitioner's affidavit accompanying this motion, IEPA's counsel
explained to Midwest Generation's counsel that compliance with the discovery requests
would be essentially impossible even if it were required, since the Agency keeps no
No discovery schedule has been established in the 04-185 matter, since the motion concerning the
clarification of IEPA's decision ordered by the Board remains pending
.
5
A copy of the interrogatories and document requests, as well as IEPA's response to them, is attached to
Petitioner's motion.
6
K
separate record of its trade secret determinations . As described in the accompanying
Affidavit of Donald E. Sutton, custodian of records at the IEPA Bureau of Air, all records
pertaining to those determinations - including statements of justification and responses -
are kept in the Agency file for the source concerning which such determinations were
made. There is no way for the Agency to call up only those source files in which trade
secret determinations or emission data determinations were made, because its filing
system does not reference which files those are
.
Sutton Aff. 13. Notwithstanding that
explanation, Midwest Generation filed the instant motion to compel responses to its
discovery requests .
Argument
Point I
PETITIONER'S REQUESTED DISCOVERY IS IRRELEVANT IN
VIEW OF THE BOARD'S ORDER REQUIRING THAT THE HEARING
BE CONDUCTED EXCLUSIVELY ON THE ADMINISTRATIVE RECORD
Petitioner's motion to compel is nothing more than an unvarnished attempt to re-
litigate the motion for reconsideration it lost before the Board more than a year ago
.
In
both its June 17 order in this matter and again in its November, 2004 order on
reconsideration in the 04-185 matter, the Board made abundantly clear that hearings in
the trade secret matters at issue are to be held
exclusively
on the administrative record,
and that no non-record evidence would be admissible ; with the sole exception made for
new information available to neither petitioner or IEPA at the time of IEPA's decision .
Alexander Aff. Exs. 2, 3. The Board made equally clear that its decision rested in
substantial part on the need to minimize "administrative and monetary burden on the
State" so as to ensure that response to citizens' FOIA requests concerning environmental
matters are not delayed. In flagrant disregard of that order, Midwest Generation is now
7
requesting - and moving to compel the Agency to provide - massive volumes of records
in unrelated cases that could not even arguably have been included in the administrative
record (or have been unavailable prior to IEPA's decision) . That motion, so utterly in
conflict with the Board's authority, must be denied
.
Petitioner's argument for why it is entitled to the discovery it seeks is merely a
description of why it wants it. Midwest Generation wants the decades worth of unrelated
agency decisions because it "anticipates" (without any stated basis) that if it were to
comb through them all, it would find some decisions on similar facts that were
inconsistent with the decision at issue ; and "suspects" (without any stated basis) that it
will not find any decisions concerning emission data at all . Petitioner's motion ¶¶ 6, 7 .
Since Midwest Generation "does not believe the Respondent has any expertise in
determining when business information has competitive value," it wants to determine
what standard the Agency is in fact using. Id. 17. Similarly, it believes the "suspected"
lack of prior emission data decisions are relevant to a "fair notice argument," i.e., that
Midwest Generation could not have been expected to address this issue in its statement of
justification. Id. 16
.
The latter point, that the requested discovery concerning emission data is
necessary for a "fair notice" argument, is a particularly egregious example of petitioner's
disregard for the Board's ruling. "Fair notice" is a type of due process argument,
grounded in the concept that legal requirements must be sufficiently specific to put those
subject to them on notice of their applicability. See People v. Conlon, 189 I11.2d 286
(2000). As described above, the November, 2004 decision expressly held that due
process does not require that petitioner be allowed to present non-record evidence ; and,
moreover, specifically rejected petitioner's fair notice argument, i.e., its claim that
8
application of the emission data exception was "unfair surprise ." Alexander Aff. Ex. 3 at
25 .
Petitioner's motion references the Board's November, 2004 decision only to
misquote it entirely or quote it out of context . Midwest Generation claims that statements
the Board's order "indicate that this information [it seeks to compel] will be admissible,"
and cites as an example a purported quote from the order as follows
: "the hearing affords
the petitioner the opportunity to challenge the reasons given to the Board and the
opportunity to receive testimony which would `test, the validity ofthe information (relied
upon by the Agency)."' Petitioner's motion 19, Alexander Aff. Ex. 3 at 21 . The quote,
however, is not accurate. What the Board actually said (quoting authority) was, "the
hearing affords the petitioner the opportunity to challenge the reasons given by the
Agency for denying such permit by means of cross-examination and the Board the
opportunity to receive testimony which would `test the validity of the information (relied
upon by the Agency)."' The Board's actual statement, as opposed to the altered version
offered in Midwest Generation's motion, indicates that petitioner is allowed at the
hearing to probe the Agency's reasoning through testimony, not through admission of
non-record documents. In keeping with its long-standing practice, the Board was merely
reiterating that petitioner is allowed to call and cross-examine Agency personnel who
made and can explain the trade secret decision at issue
.
Petitioner also quotes the Board's statement that the hearing "is not necessarily
limited to the record before IEPA at the time of the trade secret determination,"
Petitioner's motion 19, without noting that the Board was specifically referencing its
description on that same page (and again in its conclusion) of the only applicable
exception to the record-only requirement, which is that new evidence unavailable to
9
either party at the time of the decision is admissible . Alexander Aff. Ex. 3 at 22, 33
.6
Similarly, it quotes the Board as stating that "new evidence may be considered in trade
secret appeals under particular circumstances" (Petitioner's motion 19, Alexander Aff
.
Ex. 3 at 21) without noting that the quoted authority directly following indicates that
previously-unavailable evidence is the sole applicable exception to the record-only rule.
Petitioner does not claim- and cannot claim - that the information it seeks was
unavailable to IEPA at the time it made its decision, since the information is by definition
historic
.
Petitioner makes much of the fact that the Board rules (like most other evidentiary
rules) allow discovery that is "calculated to lead to relevant information ." 35 Ill. Admin .
Code 101.616(a). Petitioner's motion 14 .
Yet nowhere does it actually describe how
discovery from entirely unrelated case files is "calculated to lead to" information in the
record - the only information deemed relevant by the Board .
Certainly, petitioner is
entitled to discovery to determine whether the record provided by the Agency is
complete. As the Board held in Oscar Meyer & Co . v. Environmental Protection Agency,
PCB 78-14 (June 8, 1978), discovery is allowable "to insure that the record filed by the
Agency is complete and contains all of the material concerning the permit application
that was before the Agency when the denial statement was issued
."
Thus, in response to
petitioner's discovery demands for communications regarding the subject Sierra Club
FOIA request, IEPA provided all such communications up through the time of its
decision, as such communications could arguably be considered part of the administrative
6
The Board stated in its conclusion, "[T]he Board denies Midwest's motion to partially reconsider the
Board's May 6, 2004 order. However, the Board's review of IEPA's trade secret denial is not necessarily
limited to the record before IEPA at the time of the trade secret determination ." Alexander Aff. Ex. 3 at 33
.
10
record .7
But unless petitioner wishes to argue that the record in a trade secret proceeding
should include the Agency's trade secret determinations in unrelated matters - a facially
absurd and unsupportable proposition - then discovery of documents in those unrelated
matters cannot be "calculated to lead" to documents that ought to have been included in
the Agency record .
Indeed, the Board has repeatedly affirmed that Agency documents relating to its
previous decisions in other matters are not discoverable in record-only proceedings
. In
Oscar Meyer & Co . v. Environmental Protection Agency, PCB 78-14 (June 8, 1978),
where the petitioner had sought discovery concerning its own prior permit applications in
connection with a permit hearing required to be held exclusively on the administrative
record, the Board denied the discovery, holding, "How or why the Agency arrived at a
different conclusion on the same facts is simply not relevant to the Board determination ."
Similarly, in Owens-Illinois, Inc . v. Environmental Protection Agency, PCB 77-288
(February 2, 1978), also in connection with a hearing held exclusively on the
administrative record, the Board held that the petitioner's interrogatories concerning
Agency decisions not contained in the record were beyond the scope of permissible
discovery because "Agency policy in the granting of other permits is not properly at issue
and the discovery sought is not relevant ."
Petitioner merely cites two decisions from
cases not conducted on an administrative record8 and one concerning discovery of
7
See IEPA's response to petitioner's interrogatories, attached as Exhibit 2 to petitioner's motion, at 4
(response to Interrogatory No . 5) .
s Wilson v. Norfolk & W. Ry. Co., 440 N.E.2d 238, 244 (III. App. Ct. 1982) ; Wegmann v. Deo't of
Registration & Educ
., 377 N.E.2d 1297, 1301 (Ill. App. Ct. 1978) .
1 1
Agency documents contained in the file of the matter at issue,
9
none of which support a
contrary conclusion .
In Joliet Sand and Gravel Co. v. Environmental Protection Agency, PCB 86-159,
again addressing the question of the scope of discovery in proceedings held exclusively
on the administrative record, the Board noted that, while "the Board could properly
determine whether the Agency reviewed all facts 'available to' or 'in possession of the
Agency when making its permitting decision, the Board does not construe this holding as
authorizing unlimited discovery in permit appeals .i
1°
It concluded, in disallowing the
petitioner's discovery requests, "Were the Agency a natural person, Joliet's discovery
requests would amount to an attempt to hold the person upside down, to shake that
person, and to see what fell out of the person's pockets, without differentiating between
lint and items of value." The same description might well be applied to ComEd's
requests at issue here .
Point II
PETITIONER'S REQUESTED DISCOVERY IS BURDENSOME AND
OVERBROAD GIVEN THAT THE AGENCY'S FILING SYSTEM PROVIDES
NO MEANS TO LOCATE AND GATHER THE DOCUMENTS IN QUESTION
Even if IEPA were required to produce the voluminous historical document
record requested by petitioner - which it clearly is not - that production would be as a
practical matter impossible, simply by virtue of the way Agency files are kept . As
described in the accompanying Affidavit of Donald E. Sutton ("Sutton Aff."), the
c
'
Grigoleit Co . v. IEPA, PCB 89-184 (Nov. 29, 1990). In Grigoleit, the Board found that Agency staff had
falsely affirmed to petitioner that it had produced all documents contained in the permit file at issue in the
roceeding
.
0 Trade secret appeals before the Board are governed by the procedural rules for permit appeals set forth
in Subparts A and B of Part 105 of Title 35 of the Illinois Administrative Code. 35 Ill. Adm. Code
130.214(a) .
12
Agency's Bureau of Air'
1 keeps no separate record of trade secret determinations
.
Sutton Aff. 13. All records . pertaining to those determinations .-including statements of
justification and responses - are kept in the file of the emission source that was the
subject of the determination . Thus, there is no way to call up only those files for sources
for which trade secret determinations or emission data determinations were made
.
Additionally, the files of sources no longer operating in Illinois are archived and
eventually destroyed . Id .
Given the Agency's inability to find and segregate out the source files containing
trade secret determinations, there is no way to locate a complete set of such
determinations. Polling current staff for their anecdotal recollection would be useless
(not to mention burdensome and disruptive), not only because such memory would by
nature be faulty and incomplete, but because such polling would not include staff no
longer with the agency- a much larger category than current staff given the multi-decade
time frame of petitioner's request. Sutton Aff. 14. Even if the Agency were to curtail its
other work and assign staff to review all 6,500 source files maintained by the Bureau to
see if any of them contain trade secret determinations, that absurd task would still not
turn up all of the information sought by petitioner, because files for sources no longer
operating in Illinois are eventually destroyed pursuant to the Agency's document
retention policy. Id. Sutton Aff. ¶¶ 3, 5 .
An incomplete set of previous trade secret determinations, which is all the
Agency could produce, would not serve the purpose specified by petitioner
.
Petitioner
"
This discussion focuses on the filing system of the Bureau of Air, since the information at issue was
maintained in that Bureau and the trade secret determination made by Bureau staff . Since Midwest
Generation's proffered assertion is that trade secret determinations made on similar facts concerning similar
documents should be considered in evaluating the determination at issue, the dissimilar types of documents
provided to the other Agency bureaus in the course of their work are not reasonably at issue even for
purposes of petitioner's argument
.
13
argues that it needs the documents in order to show that previous determinations on
similar facts came out differently ; or, in the case of emission data, that no such
determinations have been made at all . Petitioner's motion
116-7
.
Leaving aside for a
moment that this argument is utterly impermissible for all the reasons explained above,
anything less than the full set of prior agency determinations would not serve to support
it. Even if, for instance, the Agency located a file in which information similar to that at
issue here was found to be protectable as a trade secret, there would be no way to know
whether there had been additional determinations on even more similar facts that went
the other way. Likewise, with respect to emission data determinations, failure to locate
any such determinations in an incomplete set of them would prove nothing as to whether
any such determinations had been made (and, of course, locating one or more emission
data determinations would contravene the entire argument)
.
In any event, requiring the Agency to engage in any of these extraordinary
measures to locate non-record documents would fly in the face of the Board's logic in the
November, 2004, decision, which was grounded in the principle that the burden on
Agency resources inherent in expanding trade secret proceedings to include non-record
evidence cannot be justified by any benefits. The Board rightly observed that "[t]he
need for these types of proceedings to be efficient and timely is heightened because they
are often triggered by a citizen's or citizen group's FOIA request, as appears to be the
case here"; and that "[t]he citizens' right to know environmental information is
significant, particularly where emission data is involved, as the General Assembly has
recognized." Alexander Aff. Ex . 3 at 28. This case is has already delayed the public's
access to the data at issue by nearly two years. To require the Agency to now take
14
additional time to ransack all 6,500 of its Bureau of Air files for irrelevant and
inadmissible information before this matter can be resolved would be unconscionable.
Conclusion
For the foregoing reasons, IEPA respectfully requests that petitioner's motion to
compel discovery be denied .
Dated: Chicago, Illinois
March 2, 2006
Respectfully submitted,
LISA MADIGAN, Attorney General of the
State of Illinois
MATTHEW DUNN, Chief, Environmental
Enforcement/
Asbestos Litigation Division
BY :
15
Ann Alexander, Assistant Attorney
General and Environmental Counsel
Paula Becker Wheeler, Assistant
Attorney General
188 West Randolph Street, Suite 2001
Chicago, Illinois 60601
312-814-3772
312-814-2347 (fax)
AFFIDAVIT OF ANN ALEXANDER
I, Ann Alexander, depose and state as follows :
1 .
I am an Assistant Attorney General in the Office of Attorney General Lisa
Madigan, lead counsel for Respondent IEPA in the captioned matter . I have personal
knowledge of the matters set forth below
.
2 .
Attached hereto as Exhibit 1 is an order of the Illinois Pollution Control
Board (the "Board") dated May 6, 2004 accepting for hearing petitioner Midwest
Generation EME, LLC 's ("Midwest Generation") petition appealing IEPA's trade secret
determination in Midwest Generation EME, LLC v .IEPA, PCB 04-185
.
3
.
Attached hereto as Exhibit 2 is an order of the Board dated June 17, 2004
accepting for hearing both Midwest Generation's petition appealing IEPA's trade secret
determination in Midwest Generation EME, LLC v.IEPA, PCB 04-216, and
Commonwealth Edison Company's appeal of that same determination in Commonwealth
Edison Company v. IEPA, PCB 04-215
.
4 .
Attached hereto as Exhibit 3 is an order of the Board dated November 4,
2004 denying Midwest Generation's motion for partial reconsideration of the Board's
May 6, 2004 order in PCB 04-185 .
Alexander
BEFORE THE ILLINOIS POLLUTION CONTROL BOA4 C 2
l1VE
LEAK'S OFFICE
Midwest Generation EME, LLC
)
MAR 0 2 2006
Petitioner
)
PCB
04-216
„, r
OF ILLINOIS
Trade Secret
AMR
v .
)
Illinois Environmental Protection Agency,
)
Control Board
Respondent
)
STATE OF ILLINOIS
COUNTY OF COOK
Subscribed to and sworn before me
This '~day of March, 2006
11,
a
1V1S'OIlOlld &dY'10N
NOINCIO SIIlod
1V3S lvloldtO
N
OFFICIAL SEAL
PHYL I
OUNTOtJ
NOTARY PUUCY'
;FATE OF
!.!INOIS
MYCOMMISSIG'
:;<PIREY'!2-n-2008
2
EXHIBIT
1
ILLINOIS POLLUTION CONTROL BOARD
May 6, 2004,
MIDWEST GENERATION EME, LLC,
)
Petitioner,
)
v .
)
PCB 04-185
(Trade Secret Appeal)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
)
ORDER OF THE BOARD (by A.S. Moore) :
On April 19, 2004, Midwest Generation EME, LLC (Midwest Generation) timely filed a
petition asking the Board to review a March 10, 2004 trade secret determination of the Illinois
Environmental Protection Agency (IEPA)
. See 415 ILCS 5/40(a)(1) (2002); 35 Ill. Adm. Code
130.214(a). IEPA denied Midwest Generation's request for trade secret protection of
information the company submitted to IEPA. For the reasons below, the Board accepts the
petition for review.
TRADE SECRET PROTECTION
Under Section 7 of the Environmental Protection Act (Act) (415 ILCS 5/7 (2002)), all
files, records, and data of the Board, IEPA, and the Illinois Department of Natural Resources are
open to public inspection and copying . However, the Act provides that certain materials may
represent "trade secrets," "privileged" information, "internal communications of the several
agencies," or "secret manufacturing processes or confidential data" and, accordingly, be
protected from public disclosure
. See 415 ILCS 5/7(a) (2002) ; see also 415 ILCS 5/7 .1 (2002)
(trade secrets). Even so, the Act denies protection from public disclosure for
: effluent data
under the National Pollutant Discharge Elimination System (NPDES) permit program ; emission
data to the extent required by the federal Clean Air Act; and the quantity, identity, and generator
of substances being placed or to be placed in landfills or hazardous waste treatment, storage, or
disposal facilities . See 415 .ILCS 5/7(b)-(d) (2002) .
In Midwest Generation's appeal, trade secret status is at issue . The Act defines "trade
secret" as follows :
[T]he whole or any portion or phase of any scientific or technical information,
design, process (including a manufacturing process), procedure, formula or
improvement, or business plan which is secret in that it has not been published or
disseminated or otherwise become a matter of general public knowledge, and
which has competitive value. A trade secret is presumed to be secret when the
owner thereof takes reasonable measures to prevent it from becoming available to
2
persons other than those selected by the owner to have access thereto for limited
purposes. 415 ILCS 5/3 .48 (2002) .
The Board has established procedures for identifying and protecting articles that
constitute trade secrets or other non-disclosable information
.
See
35 Ill. Adm. Code 130 . 1 These
include procedures for appealing trade secret determinations of State agencies . An owner of an
article submitted to IEPA (or a person, known as a "requester," seeking an article from IEPA)
who is adversely affected by a final trade secret determination of IEPA, may appeal that
determination to the Board
.
See
35 III. Adm. Code 130 .214(a). Trade secret appeals before the
Board are governed by the procedural rules for permit appeals set forth in Subparts A and B of
Part 105 of Title 35 of the Illinois Administrative Code . Id.
MIDWEST GENERATION'S PETITION
In its petition, Midwest Generation states that it submitted information to IEPA on
November 6, 2003, claiming trade secret protection for the information . Petition at 1-2. The
company explains that it provided the submittal in response to an
information request that the
United States Environmental Protection Agency (USEPA) made pursuant to Section 114 of the
federal Clean Air Act (42 U.S.C. § 7414). Midwest Generation states that, as required by
USEPA's Section 114 request, the company sent a copy of its response to IEPA
.
Id.
On
January 5, 2004, IEPA asked Midwest Generation to provide a statement justifying the trade
secret claims. 1d., Attachment 2 . Midwest Generation submitted its statement of justification to
IEPA on January 23, 2004 . Id., Attachment 3 . As noted, IEPA issued its final determination on
March 10, 2004, denying trade secret protection, and Midwest Generation has timely appealed to
the Board . Id. at 2, Attachment 1
.
IEPA denied trade secret protection for what Midwest Generation describes as two types
of information: (1) "information Midwest Generation compiled concerning capital projects at
each of its coal-fired electric generating units"; and (2) "information identifying the monthly and
annual net generation, the monthly coal heat content, and the monthly net heat rate for each of its
coal-fired units." Petition at 2. Midwest Generation's petition includes, in full and redacted
form, the company's statement purporting to justify trade secret status and the information
claimed to be trade secret. Petition at 2, 6, Attachments 3-5
.
Midwest Generation argues that IEPA erred in determining the company failed to
demonstrate that the information claimed to be trade secret had not become a matter of general
public knowledge, had competitive value, and did not constitute emission data exempt from
protection. Petition at 2-5, Attachment 1 . Midwest Generation claims that disclosure of the
information will put the company at a competitive disadvantage
. Id. at 4-5. Finally, Midwest
Generation asks that the Board's hearing on the petition contesting IEPA's determination be held
in camera
to avoid disclosing to the public the information claimed to be trade secret . Id. at 6 .
1 "Article" means "any object, material, device or substance, or whole or partial copy thereof,
including any writing, record, document, recording, drawing, sample, specimen, prototype,
model,
photograph,
culture, microorganism, blueprint or map." 415 ILCS 5/7 .1 (2002) .
IT IS SO ORDERED
.
HEARING
The Board accepts Midwest Generation's petition for hearing . In accordance with
Section 130.214(a) of the Board's procedural rules (35 Ill. Adm. Code 130.214(a)), this trade
secret appeal will proceed under the procedures for permit appeals at 35 Ill . Adm. Code
I05.Subparts A and B. Because this appeal was not brought by a requester and no requester has
been identified, the only parties to this proceeding are Midwest Generation, as petitioner and
article owner, and IEPA, as respondent and the State agency that rendered the contested trade
secret determination
. -See Archer Daniels Midland Co . v. IEPA, PCB 99-166 (May 20, 1999) .
Midwest Generation has the burden of proof. See 415 ILCS 5/40(a)(1) (2002) ; see also
35 III. Adm. Code 105.112(a). Hearings will be based exclusively on the record before IEPA at
the time it issued its trade secret determination . See 35 Ill. Adm. Code 105.214(a). Therefore,
though the Board hearing affords petitioner the opportunity to challenge IEPA's reasons for
denial, information developed after IEPA's decision typically is not admitted at hearing or
considered by the Board . See Alton Packaging Corp . v. PCB, 162 Ill. App. 3d 731, 738, 516
N.E.2d 275, 280 (5th Dist. 1987) ; Community Landfill Co. & City of Morris v. IEPA, PCB 01-
170 (Dec. 6, 2001), aff'd sub nom . 331 111. App. 3d 1056, 772 N.E.2d 231 (3d Dist. 2002) .
Hearings will be scheduled and completed in a timely manner, consistent with the
decision deadline (see 415 ILCS 5/40(a)(2) (2002)), which only Midwest Generation may extend
by waiver (see 35 Ill. Adm. Code 101 .308). If the Board fails to take final action by the decision
deadline, Midwest Generation may deem its request for trade secret protection granted
. See 415
ILCS 5140(a)(2) (2002). Currently, the decision deadline is August 17, 2004, which is the 120th
day after the Board received Midwest Generation's petition
. See 35 I11. Adm. Code 105.114 .
The Board meeting immediately before the decision deadline is scheduled for August 5, 2004
.
As requested, any hearings will be held in camera .
In accordance with Part 130 of the
Board's procedural rules (35 Ill. Adm. Code 130), articles properly identified as containing
claimed trade secrets will be segregated and handled to avoid unauthorized disclosure. IEPA
must continue to protect the claimed information during the course of this and any subsequent
appeal. See 35 Ill. Adm. Code 130.210(c) .
Unless the Board or the hearing officer orders otherwise, IEPA must file the entire record
of its determination by May 19, 2004, which is 30 days after the Board received Midwest
Generation's petition
. See 35 Ill. Adm. Code 105.212(a). If IEPA wishes to seek additional time
to file the record, it must file a request for extension before the date onn which the record is due to
be filed . See 35 Ill. Adm. Code 105 .116. The record must comply with the content requirements
of 35 Ill. Adm. Code 105.212(b) .
4
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above order on May 6, 2004, by a vote of 5-0
.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
EXHIBIT
2
ILLINOIS POLLUTION CONTROL BOARD
June 17, 2004
COMMONWEALTH EDISON COMPANY,
)
Petitioner,
)
v
.
)
PC13 04-215
(Trade Secret Appeal)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
)
MIDWEST GENERATION EME, LLC,
)
Petitioner,
)
PCB 04-216
(Trade Secret Appeal)
ILLINOIS ENVIRONMENTAL
)
(Not Consolidated)
PROTECTION AGENCY,
)
Respondent.
)
ORDER OF THE BOARD (by A.S. Moore) :
Two companies have separately appealed two trade secret determinations of the Illinois
Environmental Protection Agency (IEPA) . In each determination, IEPA denied trade secret
protection from public disclosure for information about six coal-fired generating stations
. The
stations are formerly owned by Commonwealth Edison Company (ComEd) and currently owned
by Midwest Generation EME, LLC (Midwest Generation). The information claimed to be trade
secret in each appeal was submitted to IEPA by ComEd and some of the same information is at
issue in each appeal
.
Specifically, on June 2, 2004, ComEd timely filed a petition asking the Board to review
an April 23, 2004 trade secret determination of IEPA .
See
415 ILCS 5/40(a)(1) (2002); 35111
.
Adm. Code 130.214(a). The Board docketed this appeal as PCB 04-215 . On June 3, 2004,
Midwest Generation timely filed a petition asking the Board to review a separate April 23, 2004
trade secret determination of the IEPA. The Board docketed this appeal as PCB 04-216 .
For the reasons below, the Board accepts for hearing thee petitions for review of ComEd
and Midwest Generation . The Board also directs the parties to address whether the two appeals
should be consolidated for purposes off hearing and decision
.
In this order, the Board first
2
provides the legal background for trade secret protection . The Board then describes the two
petitions before accepting them for hearing .
TRADE SECRET PROTECTION
Under Section 7 of the Environmental Protection Act (Act) (415 ILCS 5/7 (2002)), all
files, records, and data of the Board, IEPA, and the Illinois Department of Natural Resources are
open to public inspection and copying . However, the Act provides that certain materials may
represent "trade secrets," "privileged" information, "internal communications of the several
agencies," or "secret manufacturing processes or confidential data" and, accordingly, be
protected from public disclosure . See 415 ILCS 5/7(a) (2002)
; see also 415 ILCS 5/7.1 (2002)
(trade secrets) . Even so, the Act denies protection from public disclosure for : effluent data
under the National Pollutant Discharge Elimination System (NPDES) permit program ; emission
data to the extent required by the federal Clean Air Act ; and the quantity, identity, and generator
of substances being placed or to be placed in landfills or hazardous waste treatment, storage, or
disposal facilities
. See 415 ILCS 5/7(b)-(d) (2002) .
In the appeals of ComEd and Midwest Generation, trade secret status is at issue . The Act
defines "trade secret" as follows :
[T]he whole or any portion or phase of any scientific or technical information,
design, process (including a manufacturing process), procedure, formula or
improvement, or business plan which is secret in that it has not been published or
disseminated or otherwise become a matter of general public knowledge, and
which has competitive value . A trade secret is presumed to be secret when the
owner thereof takes reasonable measures to prevent it from becoming available to
persons other than those selected by the owner to have access thereto for limited
purposes. 415 ILCS 5/3.48 (2002) .
The Board has established procedures for identifying and protecting articles that
constitute trade secrets or other non-disclosable information
. See 35 III. Adm. Code 130 .
1 These
include procedures for appealing trade secret determinations of State agencies . An owner of an
article submitted to IEPA (or a person, known as a "requester," seeking an article from IEPA)
who is adversely affected by a final trade secret determination of IEPA, may appeal that
determination to the Board . See 35 111. Adm. Code 130.214(a). Trade secret appeals before the
Board are governed by the procedural rules for permit appeals set forth in Subparts A and B of
Part 105 of Title 35 of the Illinois Administrative Code
. Id.
COMED'S PETITION
In its petition, ComEd states that on January 30, 2004, it submitted information in
response to an information request made by the United States Environmental Protection Agency
1 "Article" means "any object, material, device or substance, or whole or partial copy thereof,
including any writing, record, document, recording, drawing, sample, specimen, prototype,
model, photograph, culture, microorganism, blueprint or map ." 415 ILCS 5/7.1 (2002) .
3
(USEPA) under Section 114 of the federal Clean Air Act (42 U .S.C. § 7414)
. ComEd Petition at
1. ComEd submitted a "courtesy copy" of the information to IEPA at USEPA's suggestion,
according to the petition .
Id.
ComEd states that the information included "excerpts from a
Continuing Property Record ('CPR') and Generating Availability Data System (`GADS') data
relating to six coal-fired generating stations formerly owned by ComEd ."
Id.
The petition provides that the excerpts from the CPR are "compiled listings of
confidential detailed financial information related to expenditures at the six coal-fired generating
stations." ComEd Petition at 1 . The petition further provides that the GADs data "contains
compiled information relating to the operation of the electric generating units at the six coal-fired
generating stations ."
Id.
at 2. ComEd states that the information has been kept and marked as
confidential and that if its competitors had access to the information, ComEd would be
disadvantaged .
Id.
According to ComEd, the CPR is also considered trade secret by the current
owner of the six coal-fired generating stations, Midwest Generation
.
Id.
at 3 .
On March 1, 2004, IEPA asked ComEd to provide a statement justifying the trade secret
claims. ComEd Petition at 3 . ComEd submitted its statement of justification to IEPA on March
11, 2004
.
Id.
As noted, IEPA issued. its final determination on April 23, 2004, denying trade
secret protection
.
Id.
ComEd argues that IEPA erred in determining the company failed to show
that the claimed information had not become a matter of general public knowledge, had
competitive value, and did not constitute emission data exempt from protection
.
Id.
IEPA
granted trade secret status only to work order numbers in the CPR compilation
.
Id.
at 3-4,
Attachment. ComEd asks that the claimed information "be filed under seal" and that the Board's
hearing on the petition contesting IEPA's determination be held
in camera
to avoid disclosing to
the public the information claimed to be trade secret .
.
Id .
at 4 .
MIDWEST GENERATION'S PETITION
In its petition, Midwest Generation also states that on January 30, 2004, ComEd
submitted information in response to'USEPA's request under Section 114 of the federal Clean
Air Act (42 U.S.C. § 7414) and submitted a "courtesy copy" of the information to IEPA . MG
Petition at 1 . Midwest Generation similarly notes that the information ComEd submitted
included "excerpts from a continuing property record ('CPR') relating to six coal-fired
generating stations formerly owned by ComEd and currently owned by Midwest Generation
."
Id.
at 1-2, Attachment 1 .
The petition further states that Midwest Generation purchased the six stations in
December 1999 and received
a
copy of the CPR pursuant to an asset sale agreement between
ComEd and Edison Mission Energy, Midwest Generation's parent company . MG Petition at 2
.
As with ComEd's petition, Midwest Generation's petition asserts that the excerpts from the CPR
are "compiled listings of confidential detailed financial information related to expenditures
at the
six generating stations."
Id.
Midwest Generation states that ComEd marked the information as
confidential .
Id .
Midwest Generation maintains that after it was informed of IEPA's request that ComEd
provide a statement justifying the trade secret claims, Midwest Generation submitted an
4
independent statement of justification to IEPA concerning the CPR . Midwest Generation's
statement of justification did not address the GADs data. MG Petition at 2, Attachments 2-4 .
IEPA issued a final determination on April 23, 2004, responding to Midwest Generation's
statement of justification and denying trade secret protection for the information submitted by
ComEd. IEPA granted trade secret status only to work order numbers in the CPR
. Id. at 2,
Attachment 4 .
Like ComEd, Midwest Generation argues that IEPA erred in determining the company
failed to demonstrate that the information claimed to be trade secret had not become a matter of
general public knowledge, had competitive value, and did not constitute emission data exempt
from protection. MG Petition at 3. Midwest Generation claims that disclosure of the
information will harm the company's competitive position
. Id. at 3-4. Midwest Generation filed
the information (Petition, Attachment 1) in both full and redacted form . Finally, Midwest
Generation asks that the Board's hearing on the petition contesting IEPA's determination be held
in camera to avoid disclosing to the public the information claimed to be trade secret . Id. at 6 .
HEARING
The Board accepts for hearing the petitions of ComEd and Midwest Generation . All of
the information claimed to be trade secret in these appeals was submitted by ComEd and
concerns the same six coal-fired generating plants. Unlike ComEd, Midwest Generation does
not appeal IEPA's trade secret determination on the GADs data . However, both petitioners
appeal IEPA's determination that the CPR submitted does not constitute trade secret . In
addition, IEPA denied trade secret protection for the CPR on the same grounds in each of the two
decision letters .
Under these circumstances, the Board directs the parties to address whether it would be
appropriate to consolidate the two appeals for purposes of hearing, if any, and decision . See 35
III. Adm. Code 101 .406. The parties have ten days from receipt of this order to file the pleading,
and seven days from service of the pleading to file any response
.
In accordance with Section 130.214(a) of the Board's procedural rules (35 III . Adm. Code
130.214(a)) and whether or not the Board consolidates the two appeals, these trade secret cases
will proceed under the procedures for permit appeals at 35 Ill . Adm. Code I05.Subparts A and B
.
Accordingly, ComEd and Midwest Generation each has the burden of proof
. See 415 ILCS
5/40(a)(1) (2002) ; see also 35 III. Adm. Code 105.112(a). Hearings will be based exclusively on
the record before IEPA at the time it issued its trade secret determination
. See 35 Ill. Adm. Code
105.214(a). Therefore, though the Board hearing affords petitioner the opportunity to challenge
IEPA's reasons for denial, information developed after IEPA's decision typically is not admitted
at hearing or considered by the Board
. See Alton Packaging Corp . v. PCB, 162 Ill . App. 3d 731,
738,516 N .E.2d 275, 280 (5th Dist . 1987) ; Community Landfill Co . & City of Morris v . IEPA,
PCB 01-170 (Dec. 6, 2001), aff'd sub nom . 331111. App. 3d 1056, 772 N .E.2d 231 (3d Dist .
2002) .
Hearings will be scheduled and completed in a timely manner, consistent with the
decision deadline (see 415 ILCS 5/40(a)(2) (2002)), which only petitioner may extend by waiver
(see 35 Ill. Adm. Code 101 .308). If the Board fails to take final action by the respective decision
deadlines, petitioner may deem its request for trade secret protection granted
. See 415 ILCS
5/40(a)(2) (2002). Currently, the decision deadline is September 30, 2004, in the ComEd appeal
and October 1, 2004, in the Midwest Generation appeal. These dates represent the 120th day
after the Board received the respective petition
. See 35 Ill. Adm. Code 105.114. The Board
meeting immediately before each decision deadline is scheduled for September 16, 2004
.
As petitioners requested, any hearings will be held
in
camera . In accordance with Part
130 of the Board's procedural rules (35 III . Adm. Code 130), articles properly identified as
containing claimed trade secrets will be segregated and handled to avoid unauthorized
disclosure. IEPA must continue to protect the claimed information during the course of this and
any subsequent appeal
. See 35 111. Adm. Code 130.210(c) .
Unless the Board or the hearing officer orders otherwise, IEPA must file the entire record
of each of its determinations by July 6, 2004 . If IEPA wishes to seek additional time to file the
record, it must file a request for extension before the date on which the record
is due to be filed .
See 35 111. Adm. Code 105.116. The record must comply with the content requirements of 35
Ill .
Adm. Code 105.212(b) .
IT IS SO ORDERED
.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above order on June 17, 2004, by a vote of 5-0 .
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
EXHIBIT
3
ILLINOIS POLLUTION CONTROL BOARD
November 4, 2004
MIDWEST GENERATION EME, LLC,
)
Petitioner,
)
v
.
)
PCB 04-185
(Trade Secret Appeal)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent,
)
ORDER OF THE BOARD (by A.S. Moore) :
This trade secret appeal was filed by Midwest Generation EME, LLC (Midwest), which
has asked the Board to review a trade secret determination of the Illinois Environmental
Protection Agency (IEPA). In this order, the Board rules on two motions
:
a motion to intervene
in the proceeding; and a motion to partially reconsider the Board's order accepting the appeal for
hearing. The Board today also orders a limited remand to IEPA for IEPA to specify its reasoning
for denying trade secret protection .
By way of background, in a March 10, 2004 letter, IEPA partially denied Midwest's
.
request for trade secret protection of information the company submitted to IEPA . The
information relates to Midwest's six coal-fired power stations, all of which are in Illinois . On
May 6, 2004, the Board accepted for hearing Midwest's appeal . Since then, the Board has
received a motion to intervene filed by Sierra Club and a motion to partially reconsider filed by
Midwest .
By the motion to intervene, Sierra Club seeks to become a party to this proceeding
.
Under the Freedom
of
Information Act (FOIA), Sierra Club sought, from IEPA, disclosure of the
information Midwest submitted to IEPA . For the reasons in this order, the Board denies Sierra
Club's motion to intervene. Sierra Club may, however, participate in this proceeding through
hearing statement, public comment, and amicus curiae briefing .
By the motion to partially reconsider the Board's May 6, 2004 order, Midwest asks the
Board to review IEPA's trade secret decision de novo,
i.e., to consider new evidence and not just
the evidence in the record before IEPA at the time of IEPA's trade secret determination
. As
discussed below, the Board denies Midwest's motion for partial reconsideration, but notes that,
consistent with long-standing Board precedent, Midwest may introduce new evidence at the
Board hearing if it was unavailable when IEPA denied trade secret protection .
Finally, though the Board will retain jurisdiction of this appeal, the Board remands this
matter to IEPA for the limited purpose of having IEPA state the reasoning for its March
10, 2004
2
denial of trade secret protection. Midwest will have an opportunity to respond to this
supplemental decision of IEPA .
In this order, the Board first provides the procedural history of this case and rules on
several procedural motions. The Board then discusses trade secret protection generally and the
pleadings before ruling on the motions to intervene and to partially reconsider .
PROCEDURAL MATTERS
Petition for Review, Accept for Hearine, Administrative Record
On April 19, 2004, Midwest filed its appeal of IEPA's March 10, 2004 trade secret
determination.' In a May 6, 2004 order, the Board accepted for hearing Midwest's petition for
review. The Board also directed that, as Midwest requested, any hearings would be held in
camera to avoid disclosing to the public the information claimed to be trade secret . On May 20,
2004, IEPA filed the administrative record of its trade secret determination, which consists of
approximately 2,700 pages, in two volumes: Volume I is redacted so as not to disclose claimed
trade secret information; Volume II contains the unredacted documents claimed to contain trade
secrets. On May 27, 2004, Midwest waived to April 19, 2005, the Board's deadline for
deciding this appeal . The Board meeting before that deadline is currently scheduled for April 7,
2005
.
Motion to Intervene and Responses
On May 27, 2004, Sierra Club filed a motion to intervene in this trade secret appeal
.
Midwest filed a response opposing Sierra Club's motion on June 14, 2004 . IEPA filed a
response opposing Sierra Club's motion on June 17, 2004. On June 18, 2004, Sierra Club filed a
reply to Midwest's response, followed by a motion for leave to file the reply on June 24, 2004,
which the Board grants. On June 23, 2004, IEPA and Sierra Club jointly filed a stipulation,
which withdrew IEPA's objection to intervention by Sierra Club
.3
On July 12, 2004, the Illinois Environmental Regulatory Group (IERG) filed an amicus
curiae brief opposing Sierra Club's motion to intervene, along with a motion for leave to file the
brief. In the motion for leave to file, IERG states that it is an affiliate of the Illinois State
Chamber of Commerce and a not-for-profit Illinois corporation. IERG is comprised of 66
member companies "engaged in industry, commerce, manufacturing, agriculture, trade,
1 The Board cites Midwest's petition for review as "Pet . at
."
2
In this order, the Board cites . only to the redacted IEPA record, which is Volume I, and does so
as "AR, Vol . I at_."
3 The Board cites Sierra Club's motion to intervene as "SC Mot. at _"; Midwest's response as
"MG Interv. Resp. at
";Sierra Club's reply as "SC Reply at
'; and the joint stipulation of
IEPA and the Sierra Club as "Stip . at _"
3
transportation, and other related activities ." IERG Motion for Leave at 1 . IERG explains that it
"was organized to promote and advance the interests of its members before governmental
agencies
.
.
. and before judicial bodies."
Id.
at 1-2 .
In the motion for leave to file, IERG states that "[t]his matter presents an issue that is of
significant concern to the member companies of IERG and to industry throughout the State ."
IERG Motion for Leave at 1 . According to IERG, "most of IERG's member companies submit
information to the Illinois EPA which includes material claimed as trade secret ; thus, IERG's
members have an interest in the procedure by which appeals of such trade secret determinations
take place ."
Id.
at 3. IERG notes that the Board and Illinois courts have previously allowed
IERG to participate as an amicus and that doing so here will "assist the Board in considering this
matter by presenting the viewpoint of Illinois industrial concerns on issues that are important to
the regulated community."
Id.
The Board grants IERG's motion for leave to file the amicus
curiae brief.4
Motion to Partially Reconsider and Responses
On July 1, 2004, Midwest filed a motion for the Board to partially reconsider its May 6,
2004 order . Specifically, Midwest asks the Board to review IEPA's trade secret denial de novo
rather than limiting the Board's review to the record before IEPA at the time of IEPA's denial .
IEPA filed a response on August 13, 2004, opposing Midwest's motion
.
Midwest filed a reply
on August 27, 2004 .5
The motion and subsequent related filings were timely pursuant to the
schedule set forth in a May 27, 2004 hearing officer order
.
DISCUSSION
The Board provides background on trade secret protection and Midwest's petition for
review before discussing Sierra Club's motion to intervene and Midwest's motion to partially
reconsider
.
Background on Trade Secret Protection
Under Section 7 of the Environmental Protection Act (Act) (415 ILCS 5/7 (2002)), all
files, records, and data of the Board, IEPA, and the Illinois Department of Natural Resources are
open to reasonable public inspection and copying : However, the Act provides that certain
materials may represent "trade secrets," "privileged" information, "internal communications of
the several agencies," or "secret manufacturing processes or confidential data" and, accordingly,
be protected from public disclosure
. See 415 ILCS 5/7(a) (2002); 415 ILCS 5/7 .1 (2002) (trade
secrets)
.
4 The Board cites IERG's amicus curiae brief as "IERG Br . at _"
'The Board cites Midwest's motion for partial reconsideration as "MG Mot . Recon. at _";
IEPA's response as "IEPA Recon . Resp. at " ; and Midwest's reply as "MG Recon. Reply a
4
Even so, the Act denies protection from public disclosure for : effluent data under the
National Pollutant Discharge Elimination System (NPDES) permit program ; emission data to the
extent required by the federal Clean Air Act; and the quantity, identity, and generator of
substances being placed or to be placed in landfills or hazardous waste treatment, storage, or
disposal facilities . See 415 ILCS 5/7(b)-(d) (2002)
.
In Midwest's appeal, trade secret status is at issue . The Act defines "trade secret" as
follows :
[T]he whole or any portion or phase of any scientific or technical information,
design, process (including a manufacturing process), procedure, formula or
improvement, or business plan which is secret in that it has not been published or
disseminated or otherwise become a matter of general public knowledge, and
which has competitive value. A trade secret is presumed to be secret when the
owner thereof takes reasonable measures to prevent it from becoming available to
persons other than those selected by the owner to have access thereto for limited
purposes. 415 ILCS 5/3 .48 (2002)
.
The Board has established procedures for identifying and protecting articles that
constitute trade secrets or other non-disclosable information
. See 35 Ill. Adm. Code 130
.6 The
owner of an article seeking trade secret protection for the article must claim that the article
represents a trade secret when the owner submits the article to the State agency . See 35 111. Adm .
Code 130.200(a). The State agency must consider the claimed information as a trade secret and
protect it fromm disclosure in accordance with Part 130 procedures unless and until the State
agency makes a final determination denying the trade secret request and all appeal times have
expired without that final determination being overturned . See 35 III. Adm. Code 130.200(d),
130.210 .
The owner of the article may submit a "Statement of Justification" for trade secret
protection (see 35 III. Adm. Code 130.203) too the State agency at the time the owner submits the
article, or at a later time, but in no event later than the time limit of Section 130 .202 . See 35 III .
Adm. Code 130.200(c). Section 130.202 requires the owner to submit the Statement of
Justification within ten working days of the State agency's request (see 35 Ill. Adm. Code
130.202(a)), which request may be triggered by a FOIA request for the claimed information (see
35 Ill. Adm. Code 130.201(b)). The State agency may extend the time period an additional ten
working days if timely requested by the owner. See 35 111. Adm. Code 130.202(b). The State
agency must determine whether the article represents a trade secret within 45 days after receiving
a complete Statement of Justification, but the owner may waive out this decision deadline . See
35 III. Adm. Code 130.206 .
6 "Article" means "any object, material, device or substance, or whole or partial copy thereof,
including any writing, record, document, recording, drawing, sample, specimen, prototype,
model, photograph, culture, microorganism, blueprint or map." 415 ILCS 5/7.1 (2002) .
Part 130 includes procedures for appealing trade secret determinations of State agencies
.
For example, an owner of an article submitted to IEPA (or a person, known as a "requester,"
seeking an article from IEPA) who is adversely affected by a final trade secret determination of
IEPA, may appeal that determination to the Board
. See 35 III. Adm. Code 130.214(a). Trade
secret appeals before the Board are governed by the procedural rules for permit appeals set forth
in Subparts A and B of Part 105 of Title 35 of the Illinois Administrative Code
. Id.
Midwest's Petition for Review
In its April 19, 2004 petition for review, Midwest states that it submitted information to
IEPA on November 6, 2003, claiming trade secret protection for the information . Pet. at 1-2 .
The company explains that it provided the submittal in response to an information request that
the United States Environmental Protection Agency (USEPA) made pursuant to Section 114 of
the federal Clean Air Act (42 U.S.C. § 7414). Midwest states that, as required by USEPA's
Section 114 request, the company sent a copy of its response to IEPA
. Id.
IEPA denied trade secret protection for what Midwest describes as two types of
information: (1) "information Midwest [] compiled concerning capital projects at each of its
coal-fired electric generating units" ; and (2) "information identifying the monthly and annual net
generation, the monthly coal heat content, and the monthly net heat rate for each of its coal-fired
units." Pet. at 2. Midwest argues that IEPA erred in determining the company failed to
demonstrate that the information claimed to be trade secret had not become a matter of general
public knowledge, had competitive value, and did not constitute emission data exempt from
protection . Id. at 2-5, Attachment 1
.
Sierra Club's Motion to Intervene
Sierra Club filed a motion to intervene in this trade secret appeal, seeking to become a
party to the proceeding. Sierra Club made a FOIA request to obtain from IEPA the information
claimed by Midwest to constitute trade secret. Below the Board sets forth its procedural rule on
intervention, describes the motion to intervene and responsive pleadings, and rules on the
motion .
Procedural Rule on Intervention
Section 101 .402 of the Board's procedural rules (35 Ill. Adm. Code 101 .402) addresses
intervention in adjudicatory proceedings. That Section provides in relevant part :
a)
The Board may permit any person to intervene in any adjudicatory
proceeding. * * * The motion must set forth the grounds for intervention
.
In determining whether to grant a motion to intervene, the Board will
consider the timeliness of the motion and whether intervention will, unduly
delay or materially prejudice the proceeding or otherwise interfere with an
orderly or efficient proceeding
.
d)
Subject to subsection (b) of this Section, the Board may permit any person
to intervene in any adjudicatory proceeding if : ***
2)
The person may be materially prejudiced absent intervention ; or
3)
The person is so situated that the person may be adversely affected
by a final Board order. 35 Ill. Adm. Code 101 .402 .
Sierra Club's Motion
In its motion to intervene in this trade secret appeal, Sierra Club states that it is a not-for-
profit environmental group with 26,000 members in Illinois . According to Sierra Club, in
February 2004, it submitted an electronic FOIA request to IEPA "seeking all documents
submitted to IEPA by [Midwest] in response to an information request under Section 114 of the
Clean Air Act." SC Mot. at 1 . Sierra Club asserts that the records it requested "relate to IEPA
oversight of coal-fired plants and [Midwest's] compliance with requirements that originate in the
Clean Air Act and the Illinois Environmental Protection Act." Id.
Sierra Club maintains that its motion to intervene is timely because IEPA has not filed
any responsive pleading to Midwest's petition and the Board has not set a hearing date. SC Mot .
at 2. Sierra Club seeks to intervene on the basis that the Board's final order "may adversely
affect and materially prejudice [Sierra Club's] interests ." Id. at 2-3. Citing Section
101 .402(d)(3) of the Board procedural rules, Sierra Club argues that because it has a pending
FOIA request for the information that is the subject of Midwest's trade secret appeal, Sierra Club
will be adversely affected if the Board's final decision "prohibits releasing some or all of the
information to [Sierra Club] ." Id. at 3 .
Citing Section 101 .402(d)(2) of the Board procedural rules, Sierra Club also argues that it
may be materially prejudiced absent intervention because: (1) Sierra Club may be prevented
from "making an adequate record of its interests in the hearing before the Board" should Sierra
Club decide to appeal any adverse final Board decision to the appellate court ; (2) Sierra Club
may be prevented from "adequately representing the interests of its members and the public at
large in having access to information compiled by the IEPA ;" (3) Sierra Club and the public at
large may be prevented from "gaining a better understanding of how the IEPA enforces laws and
regulations related to air and water pollution in keeping with the public's right to educate itself
on the environmental protection process;" and (4) Sierra Club and the public at large may be
prevented from "gaining a well-grounded understanding of the compliance status of [Midwest]
and, in turn, evaluating opportunities for members of the public to participate in efforts to
remedy any non-compliance." SC Mot. at 3-4 .
Sierra Club states that the goal of the Act to increase public participation in protecting the
environment is facilitated by giving access to IEPA's
records. SC Mot. at 4. According to Sierra
Club, while the parties are focused on whether the information constitutes trade secret, its "focus
in this hearing is altogether different and involves creating a record of the public's interests in
having access to information consistent with Illinois and federal law
." Id.
6
Sierra Club emphasizes that by its motion to intervene, it is not seeking access to the
claimed trade secret information before the Board's final decision on the trade secret
denial . SC
Mot. at 4-5 . Further, Sierra Club maintains that allowing it to intervene will not unduly delay
the
proceeding or materially prejudice Midwest or IEPA "in light of the timeliness of this motion
and the disparate interests of the Sierra Club and the original parties to the appeal ."
Id.
at 5 .
Midwest's Response to Motion to Intervene
In its response opposing Sierra Club's motion to intervene, Midwest argues first that
Sierra Club failed to establish that it may be "materially prejudiced absent intervention" under
Section 101 .402(d)(2) of the Board's procedural rules. MG Interv. Resp. at 2. According to
Midwest, Sierra Club has no interest in the issue before the Board ; which is the "narrow question
of whether IEPA correctly determined whether information submitted to IEPA constitutes trade
secret information ."
Id .
The Board's determination on that issue, continues Midwest, requires
analyzing the nature of the information and, how Midwest treated that information, but it "does
not involve an analysis of Sierra Club's or the general public's interest in the information" or
their interest in having access to the claimed information
.
Id.
at 2-3
Midwest asserts that the public's interest in the claimed trade secret information is neither
relevant nor admissible. MG Interv. Resp. at 4. Midwest further argues that because the Board
need not and properly should not consider the public's interest in or interest in having access to
the claimed information, Sierra Club will not be materially prejudiced if it cannot make a record
of that interest.
Id.
at 2-3 .
Midwest also argues that Sierra Club failed to explain how intervening could assist it in
gaining a better understanding of how IEPA enforces laws and
regulations. MG Interv. Resp. at
3. Midwest states that Sierra Club would presumably gain this understanding by learning what
type of information is afforded trade secret protection and gaining access to information related
to air pollution .
Id.
But, according to Midwest, Sierra Club admits that intervention would not
allow it to gain access to the disputed documents during this proceeding .
Id.
Nor will
intervention, Midwest maintains, "enable Sierra Club to learn more about the type of information
IEPA affords trade secret protection."
Id.
at 3-4. Midwest similarly argues with respect to Sierra
Club's claimed interest in learning about Midwest's compliance status
.
Id.
at 4. Midwest
concludes that Sierra Club will not be prejudiced absent intervention
.
Id.
In addition, Midwest argues that Sierra Club's statement that it has a pending FOIA
request for the claimed trade secret information does not explain how Sierra Club will be
adversely affected by a final Board order. MG Interv .. Resp. at 4 . According to Midwest, "Sierra
Club has no legal right to these documents to the extent they contain [Midwest's] trade secret
information."
Id.
at 4-5. Midwest states that if the Board finds that the contested documents
contain trade secret information, then Sierra Club has "no legal interest in this information and
cannot be adversely affected by not receiving the documents ."
Id.
at 5 .
Midwest asserts that even if Sierra Club has established grounds for intervention, the
Board should not exercise its discretion to allow intervention here-because intervention would
unduly delay, materially prejudice, and otherwise interfere with an orderly and efficient
8
proceeding. MG Interv. Resp. at 5 (citing 35 111. Adm. Code 101 .402(b)). Midwest notes that
Sierra Club "admits that it has no interest in the issue that is before the Board ." Id. Midwest
argues that Sierra Club's interest is "irrelevant to the issue before the Board" and that Sierra Club
"overlooks that the parties are focused on [the trade secret] issue because it is the
only issue
before the Board ." Id. at 6 (emphasis in original) .
Stating that trade secrets "do not cease being trade secrets merely because someone
contends the public has an interest in seeing them," Midwest maintains that Sierra Club's
intervention would not assist the Board in determining whether the claimed information is trade
secret. MG Interv. Resp. at 5. Sierra Club's proposed intervention, continues Midwest, is an
attempt to "bring irrelevant issues and politics into this proceeding in a manner that is completely
unrelated to the only issue the Board is called upon to decide ." Id.
Sierra Club's Reply to Midwest's Response
Sierra Club replies to Midwest's arguments by stating that its interest in this appeal
"involves establishing a record of the public's interest in having access to information consistent
with Illinois and federal law," citing to the Illinois FOIA (5 ILCS 140/1 (2002)) and the federal
Clean Air Act (42 U .S.C. §§ 7414(a), (c)) . SC Reply at 3-4. Sierra Club argues that it needs to
intervene to make an "adequate record" of this interest should it decide to appeal the Board's
final decision in this trade secret appeal
. Id. at 4. Sierra Club maintains that under 35 Ill. Adm
.
Code 130.214(b), it, as a FOIA requester, may appeal any adverse final Board decision regarding
release of the requested records, even if Sierra Club is not a party to the Board proceeding : "it is
inconsistent that the Sierra Club is entitled the right to appeal but not the right to intervene in
order to create an adequate record of its interests in the hearing before the Board ." Id. at 4-5
(emphasis in original)
.
Joint Stipulation of Sierra Club and IEPA
In the joint stipulation filed by Sierra Club and IEPA regarding intervention, IEPA
withdraws its response opposing Sierra Club's motion to intervene. Stip. at 1 . Further, in light
of the conditions in the stipulation, IEPA states that it now supports intervention by Sierra Club
in this trade secret appeal . Id. The stipulation sets forth six proposed conditions limiting Sierra
Club's participation in the proceeding should Sierra Club be allowed to intervene, citing 35 III
.
Adm. Code 101 .402(e) . Id. Those conditions provide that Sierra Club must
:
(1) not be allowed to control any decision deadline; (2) be barred from serving
discovery, interrogatories, and requests to admit; (3) be barred from conducting
any depositions; (4) be bound by all Board and hearing officer orders issued to
date; (5) not be allowed to raise any issues that were raised and decided, or might
have been raised, earlier in this proceeding ; and (6) not be provided, in connection
with this proceeding, with the subject documents for which trade secret protection
is claimed, until and unless those claims are finally resolved against Midwest
. Id.
IERG'sAmicus CuriaeBrief Opposing Intervention
IERG states that it is concerned about the "ability of a third party to intervene in a trade
secret appeal, where the resolution of that matter will clearly involve argument, depositions,
and
details of those very documents ." IERG Br. at 1-2. IERG maintains that allowing intervention
would circumvent the Act's protections for trade secrets
. Id. at 2 .
According to IERG, Illinois case law is not instructive on this issue, but federal case law
"suggests that third party intervention is permissible where the intervenor shows a property
interest in the disputed information." IERG Br. at 2-3
.
Here, maintains' IERG, "Sierra Club
possesses no such interest." Id. at 3. IERG claims instead that Sierra Club's interest is "to see
that the documents are disclosed, which the Illinois EPA has already determined to do." Id.
IERG states that it "cannot believe that the only way for a party to make a record of its
interests is to intervene in each and every instance before the Board where such an interest
arises." IERG Br. at 3. According to IERG, that would necessitate "dozens, or even hundreds,
of precautionary `interventions' to ensure that a record of one's interests are made in the event
that a Board decision would warrant appeal ." Id. Rather, IERG maintains that an "adequate
record could be made through oral or written statements at hearing, public comment, or, as IERG
does here, the filing of an amicus curiae brief." Id. at 3-4 .
IERG also argues that Sierra Club's interest in determining the compliance status of
Midwest "has nothing to do with the underlying cause of action ." IERG Br. at 4. IERG
continues that Midwest's compliance status is not part of the test of whether material is a trade
secret . Id.
IERG questions what would be conferred to Sierra Club under the intervention conditions
proposed in the joint stipulation that would not otherwise accrue to Sierra Club as an amicus.
IERG Br. at 5. IERG argues that under the proposed conditions, it is unclear whether Sierra
Club would be barred from
reviewing
discovery,
attending
depositions, or
discussing
the claimed
information . Id. at 5-6. IERG asserts that the proposed conditions "are simply not sufficient to
ensure that the safeguards provided within the Act for trade secret claimants are met ." Id. at6 .
Lastly, according to IERG, the risks of intervention outweigh any potential benefit given
the "minimal contribution to the proceeding that Sierra Club will have due to the [stipulated]
limitations" and "the potential for disclosing the information at the heart of this very matter
."
IERG Br. at 6. IERG states that it "cannot fathom how intervention could be in any way useful
or productive unless the information at issue was disclosed to the intervenor ." Id. In conclusion,
IERG likens Sierra Club's proposed participation to "seeking to intervene in the penalty phase of
a trial while agreeing to not having any knowledge of the offense committed ." Id.
Board's Ruling on Motion to Intervene
The Board may allow a person to intervene in an adjudicatory proceeding if the person
seeking to intervene establishes that he may be "materially prejudiced absent intervention"
or
that he is so situated that he may be "adversely affected by a final Board order." See 35 Ill .
10
Adm. Code 101 .402(d)(2), (3). For the reasons below, the Board denies Sierra Club's motion to
intervene .
The Board finds that Sierra Club has not established that it may be materially prejudiced
absent intervention. Sierra Club has not articulated how its interests will not be adequately
represented in this proceeding by IEPA. Under the Act, IEPA is required to have all files,
records, and data open for reasonable public inspection, unless the material is trade secret-and
even then, emission data must be publicly available to the extent required by the federal Clean
Air Act . See 415 ILCS 5/7(a), (c) (2002). Here, the decision being appealed, and being
defended by IEPA, is that the claimed information should be available to the public
.
Section 130.214(a) of the Board's procedural rules provides in pertinent part :
An owner or requester who is adversely affected by a final determination of the
Illinois Environmental Protection Agency or DNR pursuant to this Subpart may
petition the Board to review the final determination within 35 days after service of
the determination. 35 III. Adm. Code 130.214(a) (emphasis added) .
Accordingly, under this provision, if IEPA grants trade secret protection, and a FOIA
request would therefore be denied, only then does the FOIA requester have the right to appeal
the trade secret determination to the Board. However, when IEPA has denied trade secret status,
as is the case here, there is no right of appeal for a FOIA requester-only the article owner may
appeal. This case does not present an instance of a third party seeking to intervene to assert its
own property interest in contested information by arguing against its claimed trade secret being
disclosed. Here, IEPA determined that the contested information is not trade secret . Mindful of
IEPA's decision in this case and IEPA's statutory obligations to make information publicly
available, the Board can find no justification in Sierra Club's pleadings to expand through
intervention the permissible parties in this appeal
.
Sierra Club's argument that it is not "focused' on whether the claimed information is a
trade secret only underscores that Sierra Club need not be a party . Sierra Club's rationales for
seeking intervention do not concern the sole issue in this appeal . Sierra Club's described interest
in building a "record of the public's interest in having access to information" (1) is not relevant
to the Board's ultimate decision-whether the contested information is trade secret-and (2) is
beyond the evidentiary scope of the Board's hearing. That hearing, as discussed more fully
below in ruling on Midwest's motion, is generally limited to the record before IEPA at the time
of trade secret denial. Under these circumstances, Sierra Club has not shown how it may be
materially prejudiced by not becoming an intervenor in this trade secret appeal
.
Sierra Club also misconstrues Section 130 .214(b) of the Board's procedural rules. Sierra
Club argues that it should be allowed to intervene because under that provision, it can appeal to
the appellate court any reversal here by the Board regarding release of the claimed trade secret
information, even if Sierra Club is not made an intervenor . Section 130.214(b) reads
:
An owner or requester who is adversely affected by a final determination of the
Board pursuant to this Subpart may obtain judicial review from the appellate court
1 1
by filing a petition for review pursuant to Section 41 of the Act [415 ILCS 5/41]
.
35111. Adm. Code 130.214(b) .
In turn, Section 41 of the Act states in relevant part
:
[A]nyparty adversely affected by a final order or determination of the Board
.
.
.
may obtain judicial review, by filing a petition for review within 35 days from the
date that a copy of the order or other final action sought to be reviewed was
served upon the party affected by the order or other final Board action
complained of, under the provisions of the Administrative Review Law .
.
.
.
except that review shall be afforded directly in the Appellate Court
.
.
.
. 415
ILCS 5/41 (a) (2002) (emphasis added)
.
Under this language, only an "adversely affected" party to a Board proceeding may
appeal the Board's final decision to the appellate court . For purposes of Sierra Club's motion,
Section 130.214(b) simply provides that if a party appealing IEPA's trade secret determination
pursuant to Section 130 .214(a) (i.e., "an owner or requester who is adversely affected by a final
determination" of IEPA) loses before the Board, that party to the Board proceeding may appeal
the Board's final decision to the appellate court under Section 41 of the Act
.
Contrary to Sierra
Club's suggestion, Section 130.214(b) does not confer upon any non-party requester the right to
appeal to the appellate court a final Board decision on the merits of a trade secret appeal .
The Administrative Review Law likewisee refers only to a "party" seeking direct
administrative review of an agency final decision in the appellate court
. See 735 ILCS 5/3-113
(2002). This is an axiom of administrative law and to hold otherwise would lead to a flood of
appeals never contemplated by the General Assembly or the courts . And if simply wanting to be
able to appeal the Board's final order was in itself a sufficient ground to intervene in a Board
proceeding, intervention may never be denied .
Sierra Club was not seeking, and could not have, access to the claimed information
during the course of this proceeding. The Board findss that Sierra Club has not shown how its
purposes cannot be fulfilled by means of participating other than as a party to this appeal, such as
by making statements at hearing and filing amicus curiae briefs or public comments .
The Board also finds that Sierra Club has not demonstrated that it may be adversely
affected by a final Board order in this case . Again, Sierra Club does not seek to intervene to try
to introduce evidence that the disputed documents are not trade secrets
.
To the extent that the
Board reverses IEPA and finds that some of the disputed information constitutes trade secret and
not emission data, then that information would be protected from disclosure under the Act
.
Sierra Club would have no legal right to the protected information
;
Sierra Club has not shown
how it would be adversely affected when it would simply not be allowed to receive information
that it had no legal right to receive.
In addition, even when discretionary intervention is permissible, the Board must consider
"whether intervention will unduly delay or materially prejudice the- proceeding or otherwise
interfere with an orderly or efficient proceeding." 35 Ill. Adm . Code 101 .402(b) . The Board
12
finds that intervention here would raise all of these concerns . Sierra Club seeks to make a record
that is unrelated to the lone issue of this appeal, and the Board is not convinced that the
conditions of the joint stipulation would necessarily protect the claimed trade secret information
from improper disclosure
.
Accordingly, the Board denies Sierra Club's motion to intervene . Sierra Club may,
however, participate in this proceeding by making oral or written statements at hearing and by
filing amicus curiae briefs or public comments . See 35 III. Adm. Code 101 .110, 101.628 . In
denying intervention here, the Board is in no way ruling on Sierra Club's or the public's rights to
information under the FOIA, which is not the subject of this appeal
.
Midwest's Motion to Partially Reconsider
Midwest filed a motion for the Board to partially reconsider its May 6, 2004 order
. In
doing so, Midwest asks the Board to conduct
a de novo hearing on IEPA's trade secret decision,
allowing all relevant evidence to be admitted without regard to whether the evidence was part of
the record before IEPA at the time of the trade secret determination. Below the Board describes
the motion to partially reconsider and the responsive pleadings before ruling on the motion
.
Midwest's Motion
Midwest submitted to IEPA a copy of its response to the USEPA Section 114 information
request, claiming trade secret. Later, in response to an IEPA request, Midwest submitted a
Statement of Justification for its trade secret claims. MGMot. Recon. at 1. Midwest maintains
that its Statement of Justification identified two charts that contained trade secret information, a
"Project Chart" and a "Generation Chart." Id. According to Midwest, its Statement of
Justification explained that the information in the charts was not publicly available and was
compiled solely to respond to USEPA's Section 114 request, and further provided "specific
reasons why the release of the information would cause the company competitive harm." Id.
Midwest adds that the Statement of Justification was supported by the affidavit of a Midwest
official . Id.
Midwest states that IEPA "summarily" denied most of the company's trade secret claims,
doing so without clearly identifying the applicable grounds for denial and without adequately
explaining the basis for the denial grounds. MGMot. Recon. at 2. Regarding information on the
Project Chart, Midwest asserts that IEPA's denial letter simply concludes that Midwest failed to
demonstrate that the information is not a matter of general public knowledge "and/or" failed to
demonstrate that the information has competitive value
. Id. (quoting IEPA denial letter)
.
Midwest maintains that besides IEPA's decision not specifying which denial ground applies (i .e.,
whether the denial is based on the information being either publicly available or lacking
competitive value, or both), the denial letter fails to articulate the factual or other basis for any
denial ground . Id.
Regarding information on the Generation Chart, according to Midwest, the IEPA denial
grounds are identical with the "curious addition" of Midwest allegedly failing to demonstrate
1 3
that the information is not emission data .
Id.
Midwest "cannot conceive of why the generation
information on this chart would be considered emissions data." MG Mot. Recon. at 2.
Midwest states that before issuing the denial of trade secret protection, IEPA held no
formal or informal hearing on the matter and never discussed with Midwest its trade'secret
claims. MGMot. Recon. at 2. Before the final determination, Midwest continues, Midwest
"was given no opportunity to refute IEPA's conclusory determinations by submitting additional
evidence ."
Id.
Midwest argues that under these circumstances, the Board's May 6, 2004 order,
which Midwest asserts limits the Board hearing to the record before IEPA at the time of
decision, violates the due process requirements under the Fourteenth Amendment of the United
States Constitution and Article 1, Section 2 of the Illinois Constitution
.
Id.
at
3
.
Midwest asserts that under Constitutional due process requirements, administrative
agencies performing adjudicatory functions must give the parties before them the opportunity to
be heard at a meaningful time and in a meaningful way. MGMot. Recon. at 3
. Midwest quotes
the Illinois Supreme Court's decision in Lyon v. Dept. of Children and Family Services, 807
N.E.2d 423 (2004), for the factors that should be considered when evaluating procedural due
process claims
:
First, the private interest that will be affected by the official action; second, the
risk of an erroneous deprivation of such interest through the procedures used, and
the probable value, if any, of additional or substitute procedural safeguards ; and
finally, the Government's interest, including the function involved and the fiscal
and administrative burdens that the additional or substitute procedural
requirements would entail. MGMot. Recon. at 3 (quoting Lyon, 807 N.E.2d at
423, citing Mathews v. Eldridge, 424 U.S. 319, 335, 96 S .Ct. 893, 903 (1976)) .
Applying these factors, Midwest states that its claim involves protecting a property
interest and that disclosing the trade secrets will cause it financial harm . MGMot. Recon. at 3-4
.
The risk of depriving Midwest of this property interest is great, according to Midwest,
if
Midwest is prevented from "knowing IEPA's reasons for denial and from submitting evidence to
refute these reasons."
Id.
at 4. Midwest argues that the government has no interest in releasing
trade secret information because trade secrets are protected from disclosure under Section
7(a) of
the Act .
Id.
Lastly, allowing Midwest to submit additional evidence at the Board hearing,
Midwest argues, would not cause a "significant administrative burden" as it will "only slightly
lengthen the required hearing."
Id.
Midwest concedes that the "due process clause is flexible," but argues that due process
"requires that all parties have an opportunity to offer evidence in rebuttal ." MG Mot. Recon. at
4. Midwest maintains that if a party is denied an "effective opportunity" to submit information
to IEPA, "this denial of due process will not be corrected at the Board level if, in the proceedings
before the Board, the party cannot submit additional information ."
Id.
Midwest relies on the
Illinois Appellate Court decisions in Village of Sauget and Wells for the proposition that the
Board hearing, if limited to the IEPA record, cannot cure this due process infirmity
.
Id.
at 4-6 .
14
Midwest states that in Village of Sauget v. PCB, 207111. App. 3d 974, 982-83, 566
N.E.2d 724 (5th Dist. 1990), the court found that Monsanto was denied due process because it
was not given an effective opportunity by IEPA to introduce evidence into the record to respond
to USEPA comments on Monsanto's permit application. MGMot. Recon. at 4. Midwest quotes
the Village of Sauget court :
If, as occurred here, the parties are precluded from supplementing the record
before the IEPA on such issues, this failure cannot be cured through the Board
hearing because the scope of a Board hearing in a permit appeal is limited to the
record developed before the IEPA. *** We find that the procedural safeguards to
which Monsanto was due at the agency level were not afforded, and the
proceedings before the Board did not cure this deficiency
. Id. at 4-5 (quoting
Village of Sauget, 207 Ill. App. 3d at 983)
.
Midwest continues that in Wells Manufacturing Co. v. IEPA, 195 111. App. 3d 593, 596,
552 N.E.2d 1074 (1st Dist. 1990), IEPA denied Wells' application to renew its air permit,
concluding that operation of the Wells facility would cause a violation of the Act. MG Mot .
Recon. at 5. According to Midwest, before Wells' renewal application was denied, Wells did not
have the opportunity to present evidence that it would not violate the Act. Midwest quotes
Wells :
There are several problems with this procedure. The Board's decision was based
on the record compiled by the Agency . *** However, Wells never had an
opportunity to proffer evidence that it would not pollute . *** [I]t is obvious that
the manner in which the Agency compiled information denied Wells a fair chance
to protect its interest. The Agency asserts that the Board gave Wells an
opportunity to challenge the information relied on by the Agency in its permit
denial. This is by no means the same as being allowed to submit evidence, some
time during the application process, in order to show that it is not polluting the air
.
Id. (quoting Wells, 195 III. App. 3d at 597-98)
.
Midwest argues that, like Monsanto and Wells, it was not given an "effective opportunity
to protect its interest" by responding to IEPA before the denial, in which IEPA "conclusorily
rejected" Midwest's Statement of Justification "on a factual basis unknown to Midwest ." MG
Mot. Recon. at 5. According to Midwest :
This denial of due process will not be cured by a Board hearing on the record
before IEPA because Midwest [] will not have the opportunity to submit evidence
responding to IEPA's sweeping, unsubstantiated conclusions that the trade secret
is not in the public domain and that its release will not cause competitive harm
.
Id. at 5-6 .
In addition to its due process arguments, Midwest argues that the Board's procedural rule
at Section 105 .214(a) explicitly allows for the submittal of additional evidence at hearing. MG
Mot. Recon. at 6. Midwest quotes the following sentence from Section 105 .214(a), a section of
the Board's procedural rules cited in the Board's May 6, 2004 order
:
15
If any party desires to introduce evidence before the Board with respect to any
disputed issue of fact, the Board will conduct a separate hearing and receive
evidence with respect to the issue of fact . Id.,quoting 35 Ill. Adm. Code
105.214(a) .
Midwest asserts that the Board's May 6, 2004 order "would seem to negate the protection
afforded in the regulation." MG Mot. Recon. at 6 .
Midwest argues that the trade secret provisions of the Act (415 ILCS 5/7 .1 (2002)) do not
explicitly require the Board to base its decision exclusively on the IEPA record, in contrast with
the permitting provisions of the Act (415 ILCS 5/40(d) (2002)), which do explicitly require the
Board to base its permit appeal decisions exclusively on the record before
IEPA. MGMot .
Recon . at 6. Midwest maintains that. even if compliance with the Board's procedural rules
requires the Board's review to be limited to the record, "compliance or noncompliance with state
procedural requirements is not determinative of whether minimum due process standards have
been met." Id.
Finally, Midwest takes issue with the Board's citation to case law in the Board's May 6,
2004 order. Specifically, Midwest argues that the following decisions, cited in the Board's
order, do not stand for the proposition that Board review in permit appeals is typically
limited to
the record, but the Board hearing affords petitioner the opportunity to challenge IEPA's reasons
for denial : Community Landfill Co. v. PCB, 331 Ill. App. 3d 1056, 1063, 772 N.E.2d 231 (2d
Dist. 2002); and Alton Packaging Corp . v. PCB, 162 III. App. 3d 731, 516 N.E.2d 275, 279 (5th
Dist. 1987). MG Mot. Recon. at 7. Midwest states that the Community Landfill court merely
found that the record on appeal was inadequate for the court to decide if IEPA had certain
documents in its possession at the time of permit denial
. Id. In Alton, according to Midwest, the
court "only mentioned the procedural due process issues in
dicta" and merely observed that
another decision did not change the law on the requirements for permit appeal hearings before
the Board
. Id.
IEPA's Response to Midwest's Motion to Partially Reconsider
IEPA opposes Midwest's motion for partial reconsideration. IEPA Recon. Resp. at 1
.
IEPA argues that Midwest's request for a de novo hearing :
[C]ontravenes not only the Board's regulations but more than three decades of
consistent precedent requiring that hearings be held on the agency record, to
preserve IEPA's proper decisionmaking role and prevent forum shopping
. Id.
IEPA asserts that the process it afforded Midwest gave Midwest "ample opportunity to
protect its rights and submit pertinent information ." IEPA Recon. Resp. at 1 . IEPA notes that
Midwest fails to "even provide a clue as to what particular extra-record information it would
like
to now introduce, and why such information could not have been provided to IEPA in the first
place." Id. at 1-2 .
16
IEPA maintains that Midwest's argument regarding Section 105.214(a), relying on the
third sentence of the Section, would "cancel out" the second sentence of the Section. IEPA
Recon. Resp . at 2-3. IEPA quotes the second and third sentences of Section 105 .214(a)
:
The hearing will be based exclusively on the record before the Agency at the
time the permit or decision was issued, unless the parties agree to supplement
the record pursuant to Section 40(d) of the Act. If any party desires to introduce
evidence before the Board with respect to any disputed issue of fact, the Board
will conduct a separate hearing and receive evidence with respect to the issue of
fact . Id. at 2, quoting 35 III. Adm. Code 105 .214(a) .
IEPA notes this Midwest argument was rejected by the Board in Community Landfill Co. v .
IEPA, PCB 01-170 (Dec. 6, 2001), where the Board affirmed the hearing officer's ruling that the
record could not be supplemented under Section 105 .214(a) because the third sentence of that
rule modified only the clause in the second sentence regarding Section 40(d) of the Act, not the
entire second sentence
. Id. at 3. IEPA states that Section 40(d) does not apply here . Id.
IEPA asserts that the Board's former procedural rules (repealed 35 Ill . Adm. Code
105.103(b)(8)) expressly allowed de novo hearings under certain circumstances in appeals of
NPDES permit decisions . IEPA Recon. Resp. at 4. Based on this, IEPA states: "Clearly, the
Board is cognizant of how to craft regulations calling for de hovo proceedings when it so
chooses, and it chose not to do so here ." Id. IEPA emphasizes that even when this de novo
provision was in effect, the Board construed it narrowly "in order not to distort the respective
roles of the board and the agency as defined in the statute ." Id., n. 2. On this point, IEPA quotes
the Board's decision in Dean Foods v. IEPA, PCB 81-151 (Aug. 22, 1984), quoting Olin Corp. v .
IEPA, PCB 80-126 (Feb. 17, 1982) :
The hearing de novo provisions must be construed narrowly ; otherwise permit
applicants will be tempted to withhold facts at the Agency level in hopes of a
more friendly reception before the Board. This would encourage appeals and
place the Board in a position of being the first agency to evaluate the factual
submissions. This would distort the separation of functions in the Act . IEPA
Recon. Resp. at 4, n. 2 .
According to IEPA, Midwest "entirely missed the point of Community Landfill by citing
only to the Appellate court affirmance and not the referenced Board decision ." IEPA Recon .
Resp. at 4. IEPA further states that the purported "dicta" in Alton Packaging refers to a "long
and consistent line of court and Board decisions, dating back to 1972, expressly holding that
hearings must be conducted solely on the agency record ." Id. at 5-6 .
IEPA concedes that procedural rules are not dispositive of due process requirements
.
However, IEPA notes that "such rules are a useful reference because they represent standards
that the General Assembly and the Department concluded were sufficient
.'." IEPA Recon. Resp .
at 5, quoting Lyon, 209 I11.2d at 274. IEPA maintains that Midwest had "ample opportunity to
make its views known to IEPA, and did so ." Id. at 5-6
.
17
IEPA states that the "limited basis for a trade secret claim is unambiguously laid out in
the statute and regulations." IEPA Recon. Resp. at 6. IEPA notes that under the statute and
regulations, the trade secret claimant must prove that the article has not become public and has
competitive value. "Emission data," as defined in these requirements, is exempt from trade
secret protection .
Id.
IEPA further notes that the trade secret claimant may present its Statement
of Justification (i.e., "the basis for its claim") either at the outset when it makes its claim or in
response to an agency request .
Id.
Here, IEPA explains, Midwest submitted information in its Statement of Justification
pertinent to both prongs of the trade secret definition : public availability and competitive value
.
IEPA Recon. Resp. at 6. IEPA argues that Midwest :
[N]owhere states either what specific additional information regarding these
prongs it would have submitted upon learning of IEPA's unsurprising reliance
upon them, nor why it could not have submitted that information before receiving
the denial .
Id.
IEPA states that it denied trade secret protection additionally on the ground of claimed
documents being "emission data." IEPA Recon. Resp. at 6. IEPA maintains that this should
come as no surprise to Midwest because the USEPA Section 114 information requests here
"were all directed specifically toward determining whether [Midwest's] facilities were emitting
pollutants in violation of the Clean Air Act New Source Review standards
."
Id.
at 7. IEPA
argues that the State and federal definitions of "emission data" are "substantially the same," and
include "documents containing information necessary to determine how much a particular
facility was `authorized to emit' - i.e., that would determine whether the facility's emissions
constitute a violation of the Clean Air Act ."
Id.
at 6-7.
IEPA states that if Midwest was somehow "unclear on this point," it should have
submitted "whatever information it had to the agency regarding the status of information as
emission data" or sought "clarification prior to a decision being made," but instead Midwest is
"complaining after the fact that it did not understand a basic point of law well enough to submit
appropriate information."
Id.
IEPA adds, however, that. the issue of whether information is
"emission data" is "essentially a legal one," therefore "it
is
unlikely that.Midwest [] would have
had any pertinent factual information to submit."
1d.
IEPA quotes the Illinois Supreme Court
in
Lyon for the proposition that "what due
process entails is a flexible concept in that not all situations calling for procedural safeguards call
for the same kind of procedure." IEPA Recon. Resp. at 8, quotingLv, 209 IIl.2d at 272. IEPA
asserts that there are situations, such as criminal proceedings and license deprivations, that
require every available procedural protection, such as the right to cross-examine and rebut
unfavorable testimony. But in trade secret matters, IEPA argues, the Board has properly
determined that "the Statement of Justification process outlined in the [Part 130 rules]
is
sufficient to protect the interest of trade secret claimants ."
Id.
Midwest's Reply
Midwest maintains that a hearing based exclusively on the record before IEPA precludes
Midwest from "introducing evidence rebutting the facts and reasoning upon which IEPA based
its denial." MG Recon. Reply at 1 . Midwest reiterates that it had no opportunity "to respond to
the IEPA's determination" and the Board's proceedings "will not cure this denial of due
process." Id.
Midwest states that it submitted the requisite Statement of Justification and notes that
Section 130.208(b) creates a rebuttable presumption that the article has not become a matter of
general public knowledge. MG Recon. Reply at 1-2. Yet IEPA, according to Midwest,
"summarily denied the claim without identifying any deficiency in Midwest['s] Statement of
Justification or providing a statement of its reasoning ." Id. at 2. Midwest notes that Section
130.210(b)(1) requires IEPA to give the claimant a "statement of the State agency's reasoning
for denying the claim ." Id., quoting 35 III. Adm. Code 130.210(b)(1). Here, according to
Midwest, it is "not on notice of the reasons for the IEPA denial and has had no opportunity at the
IEPA level to rebut the facts and reasoning supporting IEPA's denial, whatever they may be
."
Id.
Midwest argues that "IEPA articulates no reason nor cites any authority for its position
that the right to offer evidence in rebuttal is not a minimum right guaranteed by the due process
clause." MG Recon. Reply at 3. Midwest further argues that given the company does not know
the reasoning behind the denial of trade secret protection, it is in no position to identify what
additional evidence it might submit . Id. at 3-4 .
Midwest asserts that it was not on notice that "IEPA would come up with a nonsensical
interpretation of the term `emission data' ; accordingly, Midwest [] could not have dealt with this
argument pre-emptorily in its Statement of Justification ." MG Recon . Reply at 4. According to
Midwest, unless the Board reverses its ruling, Midwest "will be prevented from showing that it is
impossible to calculate emissions data from the Project Chart ." Id.
Midwest argues that the only authority cited by IEPA relates to permit appeals, and that
they are distinguishable because permit applicants are "afforded due process at the IEPA level ."
MG Recon. Reply at 6. Moreover, asserts Midwest, even in permit appeals, the Board allows
petitioners to introduce new evidence at the Board hearing "if petitioners had been denied that
opportunity at the agency level ." Id. Midwest cites to the Board's allowance of evidence
regarding estoppel in Community Landfill, PCB 01-170, even though that information was not in
the IEPA record, because, according to Midwest, petitioner there did not know it would have to
make an estoppel argument until after it was denied the permit
. Id.
Midwest similarly relies on Environmental Site Developers v. IEPA, PCB 80-15 (June
12, 1980) . Midwest states that during the hearing in that case, IEPA testified that it denied the
permit because of the water pollution potential of certain sludge, although this basis was not
specified in the permit denial
letter. MG Recon. Reply at 6-7. According to Midwest, the Board
in Environmental Site Developers allowed petitioners to introduce additional evidence, not
included in the permit application, providing that the material was inert
. Id. at 7. Midwest
18
19
quotes the Board's decision: "This case could have been handled more easily had the Agency
fully complied with the requirements of Section 39(a) of the Act in issuing a denial letter
[requiring detailed statements as to why the permit application was denied] and had ESD
responded with a supplemental application ." Id., quoting Environmental Site Developers, PCB
80-15. Midwest concludes that the Board in Community Landfill and Environmental Site
Developers "allowed.permittees to supplement the record as fairness requires ." Id.
Board Ruling on Midwest's Motion to Partially Reconsider
For the following reasons, the Board denies Midwest's motion for partial
reconsideration. A motion to reconsider may be brought "to bring to the [Board's] attention
newly discovered evidence which was not available at the time of the hearing, changes in the law
or errors in the [Board's] previous application of existing law." Citizens Against Regional
Landfill v. County Board of Whiteside County, PCB 92-156, slip op. at 2 (Mar. 11, 1993), citing
Korogluyan v. Chicago Title & Trust Co ., 213 Ill. App. 3d 622, 627, 572 N.E.2d 1154, 1158 (1st
Dist. 1991) ; see also 35 111. Adm. Code 101 .902. A motion to reconsider may specify "facts in
the record which were overlooked." Wei Enterprises v . IEPA,PCB.04-23, slip op . at 5 (Feb. 19,
2004). As explained below, the Board finds that Midwest has not met any of these criteria for
reconsideration
.
Scope of the Board Hearing Under Part 130 . The passage of the Board's May 6, 2004
order that Midwest asks the Board to reconsider reads as . follows: "Hearings will be based
exclusively on the record before IEPA at the time it issued its trade secret determination
. See 35
111. Adm. Code 105 .214(a)." The Board's Part 130 procedural rules on trade secrets provide that
trade secret appeals before the Board are governed by the Board's Part 105 procedural rules for
permit appeals. Specifically, Section 130.214(a) provides :
An owner or requester who is adversely affected by a final determination of the
Illinois Environmental Protection Agency or DNR pursuant to this Subpart may
petition the Board to review the final determination within 35 days after service of
the determination . Appeals to the Board will be pursuant to 35 Ill. Adm. Code
105.Subparts A and B .
35 111. Adm. Code 130.214(a) (emphasis added) .
Accordingly, the Board cited Part 105, specifically 35111 . Adm. Code 105.214(a), which
provides that the "hearing will be based exclusively on the record before the Agency at the time
the permit or decision was issued ." In its entirety, Section 105.214(x) reads
:
Except as provided in subsections (b), (c) and (d) of this Section, the Board will
conduct a public hearing, in accordance with 35111 . Adm. Code 101.Subpart F,
upon an appropriately filed petition for review under this Subpart. The hearing
will be based exclusively on the record before the Agency at the time the permit
or decision was issued, unless the parties agree to supplement the record pursuant
to Section 40(d) of the Act. If any party desires to introduce evidence before the
Board with respect to any disputed issue of fact, the Board will conduct a separate
hearing and receive evidence with respect to the issue of fact . 35 111, Adm. Code
105.214(a) .
20
Midwest relies on the third and final sentence of Section 105 .214(a) to argue that it may
now introduce new evidence at a "separate hearing." Midwest has misconstrued the provision .
The Board's order of May 6, 2004, does not "negate" this sentence as Midwest argues . Instead,
the provision simply does not apply here . Importantly, the final sentence of Section 105 .214(a)
is preceded by the following
:
The hearing will be based exclusively
on
the record before the Agency at the time
the permit or decision was issued, unless the parties agree to supplement the
recordpursuant to Section 40(d) of the Act
.
35 Ill. Adm. Code 105.214(a)
(emphasis added)
.
The Board has held that the "separate hearing" provision being relied upon by Midwest is
limited to instances where the parties agree to supplement the record "pursuant to Section 40(d)
of the Act." See Community Landfill, PCB 01-170, slip op. at 9 ("the third sentence in Section
105.214(a) pertains to the previous sentence regarding Section 40(d)"), citing Prairie Rivers
Network v. IEPA and Black Beauty Coal Co
., PCB 01-112, slip op. at 10 (Aug. 9, 2001)
("Section 40(d) of the Act provides for supplementation of the record in appeals involving
permits issued pursuant to
.
.
. permitting programs under the Clean Air Act.") .
Section 40(d) in turn refers to Board review of IEPA permit denials or permit conditions
involving rules for Best Available Control Technology (BACT) or Lowest Achievable Emission
Rate (LAER) under the federal Clean Air Act. EPA argues that Section 40(d) does not apply
here, and Midwest does not dispute this
. See 415 ILCS 5/40(d) (2002). Were new evidence
always admissible in permit appeals if "any party desires," as Midwest suggests, this exception
to the Board's review being limited to the record could swallow the rule
.
Midwest argues that the Act does not expressly require the Board's review to be limited
to the IEPA record . That is true. Section 7.1(b) of the Act does, however, require the Board to
adopt regulations that prescribe "procedures for determining whether articles represent a trade
secret." 415 ILCS 5/7.1(b)(i) (2002). The Board has done so. The Board's Part 130 rules
provide that trade secret appeals will proceed like permit appeals . That Section 7.1 did not
expressly provide that the trade secret appeal hearing be limited to the IEPA record does not
mean that the regulation is void or even unwise . Section 7.1 likewise does not state the trade
secret appeal hearing must be de novo .
In other words, the General Assembly left it to the
Board's discretion to craft procedural rules . Those rules could have, but have not, been
challenged in appellate court, nor can Midwest attack them collaterally now
. See 415 ILCS 5/29
(2002). Nor did the Board receive any comments during the rulemaking process that trade secret
appeal hearings should be de novo. See Revision of the Board's Procedural Rules
:
35 III. Adm .
Code 101-130, R00-20.
Midwest also maintains that the two decisions (Community Landfill and Alton
Packaging) cited by the Board in its May 6, 2004 order for the basic proposition -that Board
review is limited to the record, with some exceptions, and that the hearing nevertheless affords
an opportunity to challenge IEPA's reasons for denial-are not on point . But they are. First,
Midwest complains that the appellate court decision in Community Landfill does not stand for
2 1
this proposition . The Board agrees. However, the Board cited its own decision in Community
Landfill, not the appellate court's. The Board in Community Landfill stated the general
principles and in one instance allowed new evidence to be admitted
. The Board stated :
It is well-settled that the Board's review of permit appeals is limited to
information before the Agency during the Agency's statutory review period, and
is not based on information developed by the permit applicant, or the Agency,
after the Agency's decision . [citation omitted] However, it is the hearing before
the Board that provides a mechanism for the petitioner to prove that operating
under the permit if granted would not violate the Act or regulations . Further, the
hearing affords the petitioner the opportunity to challenge the reasons given by
the Agency for denying such permit by means of cross-examination and the Board
the opportunity to receive testimony which would "test the validity of the
information (relied upon by the Agency) ." [citation omitted]
Typically, evidence that was not before the Agency at the time of
its
decision is not admitted at hearing or considered by the Board
.
[citation omitted]
Community Landfill, PCB 01-170, slip op. at 4 .
The court in Alton Packaging held :
While both the appellate and the supreme court opinions discussed the
opportunity afforded the permit applicant, during the Board hearing, to challenge
the reasons given by the Agency for denying such permit by means of cross-
examination and the receipt of testimony "to test the validity of the information
[relied upon by the Agency]" [citation omitted], the courts' language should not
be construed to allow the supplementing of the record with new matter not
considered in the Agency's denial of the permit application
. Alton Packaging,
162 111. App. 3d at 738, 516 N.E.2d at 280
.
Therefore, contrary to Midwest's arguments, Community Landfill andAlton Packaging
directly support the proposition for which the Board cited them in its May 6, 2004 order .
The Board's statement in the May 6, 2004 order that its review is limited to the record,
however, must not be interpreted out of context . Midwest's motion to reconsider reads the
contested sentence of the Board's order in isolation, effectively ignoring the very next sentence,
which states: "Therefore, though the Board hearing affords petitioner the opportunity to
challenge IEPA's reasons for denial, information developed after IEPA's decision
typically is not
admitted at hearing or considered by the Board." (emphasis added) .
The Board's order therefore contemplated not only that Midwest could use the Board
hearing to challenge IEPA's reasoning, but also that there may be situations where new evidence
could be admitted,
i.e ., evidence that was not before IEPA at the time of its trade secret
determination. Indeed, the Board has long held that new evidence may be considered in trade
secret appeals under particular circumstances :
22
The parties in this trade secret appeal are the owner of the article (petitioner,
General Mills), and the agency whose determination is the subject of appeal
(respondent, Illinois Environmental Protection Agency) . The burden of proof in
these appeals rests with petitioner . Further, although the Board is standing in
review posture, new evidence will be accepted upon a demonstration that : (1) it
was unavailable to the party and the Agency at the time that the Agency made its
determination; or (2) the party was not given an opportunity under Part 120 to
present it to the Agency. General Mills Operations, Inc . v. IEPA, PCB 99-74, slip
op. at 2 (Dec. 17, 1998) (emphasis added) ; see also Monsanto Co. v. IEPA,PCB
85-19, slip op. at 2-3 (Feb. 20, 1985) .
Part 120 in this quoted passage refers to the Board's former procedural rules on trade secrets
.
The Part 120 rules, which were at 35 Ill . Adm. Code 120, are now repealed and replaced by Part
130, but the Part 120 rules also provided for the process of submitting a Statement of
Justification for a trade secret claim .
In adopting the new Part 130 procedural rules, the Board codified long-standing practice,
and in no way signaled a paradigm shift in how the Board would hear trade secret appeals .
There remain circumstances when the Board considers a trade secret matter de novo .
That
occurs, however, when the trade secret claim is initially made with the Board, such as when the
purported trade secret document is filed with the Board in a variance or adjusted standard
proceeding
. See, e.g., Burlington Environmental, Inc . v. IEPA, PCB 94-177, slip op. at 3
(July 21, 1994) (Board granted trade secret protection in variance proceeding) . In that instance,
the Board is not reviewing a trade secret determination of another State agency, but instead is the
first State agency to consider the owner's trade secret claim .
Therefore, under Part 130 and in accordance with well-settled precedent, if a trade secret
claimant appealing to the Board demonstrates that relevant and otherwise admissible new
evidence was unavailable at the time of IEPA's determination or that the claimant was not given
the opportunity to present the information to IEPA, then the claimant could introduce the new
evidence at the Board hearing. Accordingly, though Midwest is denied reconsideration, the
Board hearing is not necessarily limited to the record before IEPA at the time of the trade secret
determination
.
Constitutional Due Process .
It is Midwest's position that it was denied an effective
opportunity to submit evidence to IEPA and that this deprivation constitutes a denial of its
federal and State Constitutional due process rights, necessitating
a
de novo hearing before the
Board .
The Fourteenth Amendment of the Constitution of the United States provides in relevant
part: "nor shall any State deprive any person of life, liberty, or property, without due process of
law." U.S. Const., 14th Amend., § 1. The Illinois Constitution likewise states : "No person shall
be deprived of life, liberty or property without due process of law." Const. of the State of
Illinois, Art. 1, § 2
.
23
Due process principles apply to administrative proceedings
. See Abrahamson v. Illinois
Dept. of Professional Regulation, 153 Ill. 2d 76, 92, 606 N.E.2d 1111 (1992). Procedural due
process claims "question the constitutionality of the procedures used to deny a person's
life,
liberty, or property." Lyon, 209 111. 2d at 272, 807 N.E.2d at 431. The Illinois Supreme Court
explained in Coldwell Banker :
It is a well-established constitutional principle that every citizen has the right to
pursue a trade, occupation, business or profession . This inalienable right
constitutes both a property and liberty interest entitled to the protection of the
law as guaranteed by the due process clauses of the Illinois and Federal
constitutions .
Coldwell Banker Residential Real Estate Services of Illinois, Inc
.
v. Clayton, 105 Ill. 2d 389, 397, 475 N.E.2d 536 (1985) .
In
Lam,
the Illinois Supreme Court stated
:
The due process clause protects fundamental justice and fairness . [citation
omitted] However, what due process entails is a flexible concept in that "not all
situations calling for procedural safeguards call for the same kind of procedure ."
[citing Morrissey v. Brewer, 408 U.S. 471, 481, 494, 92 S. Ct. 2593, 2600
(1972)]. Consequently, what procedures are required by due process in a
particular situation depend upon "`the precise nature
of
the government function
involved as well as the private interest that has been affected by governmental
action."' [citing Morrissey, 408 U.S. at 481, 92 S. Ct. at 2600, quoting Cafeteria
& Restaurant Workers Union, Local 473 v . McElroy, 367 U .S. 886, 895, 81 S. Ct .
1743, 1748-49 (1961)] .
The due process clause requires that the opportunity to be heard occur "`at a
meaningful time and in a meaningful manner ."' [citing Mathews v. Eldridge, 424
U.S ..319, 333, 96 S . Ct. 893, 902 (1976), quoting Armstrong v. Manzo, 380 U.S
.
545, 552, 14 L. Ed., 2d 62, 66, 85 S. Ct. 1187, 1191 (1965)]
. Lam, 209 III. 2d at
272, 277, 807 N.E.2d at 430-31, 433 .
The Board recognizes that providing due process is not necessarily synonymous with
compliance with state regulations
:
The United States Supreme Court has made clear that due process is a matter of
federal constitutional law, so compliance or noncompliance with state procedural
requirements is not determinative of whether minimum procedural due process
standards have been met
. Lyon, 209 111. 2d at .274, 807 N.E.2d.at 432, citing
Cleveland Board of Education v. Loudermill, 470 U.S. 532, 541, 105 S. Ct. 1487,
1492 (1985) .
Nevertheless, state requirements ."are a useful reference because they represent standards
that the General Assembly and the [agency] concluded were sufficient ." Lam, 209 Ill . 2d at
274, 807 N.E.2d at 432. "Generally, the State must act reasonably before depriving a person of
24
an interest protected by the due process clause ." Rosewell v. Chicago Title & Trust Co ., 99 Ill .
2d 407, 412, 459 N.E.2d 966 (1984) .
Three factors are used to consider procedural due process claims under the federal
Constitution :
(1) the private interest implicated by the official action; (2) the risk of an
erroneous deprivation of that interest through the procedures used and the
probable value of the proposed additional or substitute safeguards ; and (3) the
government's interest, including the function involved and the administrative or
fiscal burdens that would result from the proposed additional or substitute
safeguards
. People v. Botruff, 2004 III. LEXIS 1019, 17-19 (filed Sept. 23,
2004), citing Mathews v. Eldridge, 424 U.S. 319, 335, 96 S. Ct. 893, 903 (1976)
.
The same factors are used in determining what procedures are required by the Illinois
Constitution's due process clause .
Botruff, 2004 111. LEXIS at 18
.
Regarding the first factor, IEPA does not dispute Midwest's statement that a trade secret
is a property interest, and that the property interest is entitled to due process. The Board
recognizes that trade secrets, by definition, have been subject to their owners' efforts to maintain
confidentiality and have competitive value . As discussed, the General Assembly has taken steps
to ensure that trade secrets be protected appropriately
. See 415 ILCS 5/7, 7.1 (2002) .
As for the second factor, the Board finds that the Part 130 Statement of Justification
process, with the right of appeal to the Board, presents little, if any, risk of erroneous deprivation
of the trade secret property interest . The trade secret claimant under Part 130 has the opportunity
to present evidence to IEPA in the form of a Statement of Justification before IEPA can make the
information publicly available . See 35 III. Adm. Code 130.200(c), 130.201, 130.202. Under
Section 130.203, a Statement of Justification must contain the following
:
a)
A detailed description of the procedures used by the owner to safeguard
the article from becoming available to persons other than those selected by
the owner to have access thereto for limited purposes
;
b)
A detailed statement identifying the persons or class of persons to whom
the article has been disclosed
;
c)
A certification that the owner has no knowledge that the article has ever
been published or disseminated or has otherwise become a matter of
general public knowledge ;
d)
A detailed discussion of why the owner believes the article to be of
competitive value; and
e)
Any other information that will support the claim . 35 Ill. Adm. Code 130.203
.
25
Coloring Midwest's complaints is its argument that the IEPA denial letter fails to
articulate IEPA's reasons for denial. Even if IEPA's denial letter is insufficiently detailed,
however, that does not mean that Midwest did not have a meaningful opportunity to submit
evidence to IEPA: Midwest had that opportunity through the Statement of Justification
. Indeed,
IEPA's January 5, 2004 request to Midwest for a Statement of Justification specifically referred
to and paraphrased the Board's procedural rule on the required contents of that submittal,
Section
130.203. AR, Vol. I at 174-75. Midwest responded by submitting a 27-page long Statement of
Justification to IEPA on January 26, 2004. AR, Vol. I at 177-204
.
Nor is the Board convinced by Midwest's suggestion that the IEPA's denial based on
"emission data" was unfair surprise . Midwest's claimed information was submitted in response
to a Section 114 Clean Air Act information request . The trade secret requirements of the Act and
the Board's rules specifically address the emission data exemption from trade secret protection
.
The Board's rules define the term "emission data ."
See
415 ILCS 5/7(c) (2002) ; 35 Ill. Adm .
Code 130.110. Moreover, Section 130.203 calls not only for information relevant to the public
availability and competitive value of the claimed trade secret, but also "[a]ny other information
that will support the claim" (35 111. Adm. Code 130.203(e)), which here clearly could have
included a demonstration that the claimed information is not emission data
.
A trade secret denial letter must state the reasons for denial
.
See
35 Ill. Adm. Code
130.210(b)(1) . At that point, nothing in Part 130 precludes the trade secret claimant from
submitting to IEPA an amended Statement of Justification
in
an attempt to respond to the
deficiencies identified in the denial letter. The claimant also may appeal the denial to the Board .
See 35 Ill. Adm. Code 130.214(a). During the entirety of the appellate process, the claimed
information must be kept confidential by the State agencies .
See
35 Ill. Adm. Code 130.210(c) .
Unless the case is dismissed on a dispositive motion, an appeal before the Board will
include a hearing .
See
35 Ill. Adm. Code 130.214(a) (proceeding under Part 105 process) . That
hearing affords the trade secret claimant the opportunity to challenge IEPA's reasons for denial
.
The Board hearing is generally limited to the record before IEPA at the time of denial
. As
discussed above, however, the claimant may introduce new evidence if it can demonstrate that
the evidence was unavailable to the party and IEPA at the time that IEPA made its determination
or that the claimant was not given the required opportunity to present a Statement of Justification
to IEPA. With these safeguards in place, the Board finds that any value of a mandatory de novo
hearing before the Board in every trade secret appeal is slight
.
The court decisions relied on by Midwest do not help its position . This case is
distinguishable from Wells . In Wells, the court found IEPA's process for considering an
operating permit renewal application to be improper
.
Wells had a five-year operating permit .
Before the five years expired, IEPA sent the company a two-page permit renewal form, in which
Wells was required to either certify that its equipment remained unchanged or, if changed, to
explain those changes. Wells executed the form by certifying that no changes were made, and
then submitted the form to IEPA . Wells, 195 Ill . App. 3d at 595-96, 552 N.E.2d at 1075-76 .
IEPA issued a letter denying Wells renewal of its permit because Wells might be violating the
Act's prohibition on causing air pollution, though no formal enforcement action had been filed .
26
At the time of denial, IEPA had numerous citizen complaints regarding odor from Wells'
operations . Wells, 195 Ill. App. 3d at 595, 597, 552 N .E.2d at 1076-77 .
The Wells court noted that in the context of a permit application, the Act places
:
[T]he burden of proof on Wells to show that it would not violate the Act or
.
.
.
rules and regulations . However, Wells never had an opportunity to proffer
evidence that it would not pollute . *** [T]he Agency denied the renewal permit
without bringing an enforcement action
.
.
. . In effect, it denied Wells the right to
operate its business because it may be violating the Act, but never gave it an
opportunity to submit information which would disprove the allegation
.
Wells,
195 111 . App. 3d at 597, 552 N.E.2d at 1077 .
In Wells, the court specifically refused to hold that a "predenial hearing" was required,
but did find it "obvious that the manner in which the Agency compiled information denied Wells
a fair chance to protect its interest." Wells, 195 III. App. 3d at 598, 552 N.E.2d at 1078. The
court held that merely giving Wells the opportunity, at the Board hearing, to challenge the
information relied upon by IEPA for denial is not the same as being "allowed to submit
evidence, sometime during the application process, in order to show that it was not polluting the
air."
Wells, 195 111. App. 3d at 598, 552 N.E.2d at 1078
.
Before the IEPA denial in Wells, the company had no opportunity to submit evidence to
prove that it would not violate the air pollution law-the basis of the denial . Wells was only
allowed to submit the two-page certification form to verify that its equipment had not changed
.
In contrast, Midwest was specifically requested to, and did, submit the Statement of Justification
to IEPA before IEPA's final determination . The Statement of Justification was Midwest's
opportunity to submit evidence supporting its claim for trade secret status
.
Another case relied on by Midwest is Village of Sauget . Despite Midwest's suggestions
to the contrary, Village of Sauget does not stand for the broad proposition that before any
administrative denial there must be an opportunity for rebuttal by the applicant . Rather, the court
in Village of Sauget interpreted the very specific regulatory procedures of NPDES permitting .
Village of Sauget, 207 III. App. 3d at 979-83, 566 N.E.2d at 727-30 . NPDES permits allow for
the discharge of pollutants in particular amounts to surface waters of the State. The NPDES
permitting regulations accordingly provide many opportunities for input from the public as well
as the permit applicant, through issuance of draft permits followed by comment periods and
potential hearings, all before a final permit issues .
Village of Sauget, 207 III. App. 3d at 979-83,
566 N.E.2d at 727-30
.
In Village of Sauget, USEPA's comments on a draft permit were submitted after the time
period provided by the NPDES regulations
.
Village of Sauget, 207 III. App. 3d at 979-80, 566
N.E.2d at 727-28. In addition, the regulations required that USEPA's comments be served on
the permit applicant . That also happened late, merely 11 days before the final permit issued
.
That final permit contained conditions proposed by USEPA in its comments
.
Village of Sauget,
207 Ill. App. 3d at 980-81, 566 N .E.2d at 728-29. Moreover, contrary to the regulations, IEPA's
draft permit did not include a brief description of USEPA's proposed substantive conditions or
27
the bases for them. Under these circumstances, the court found that the. permit applicant had no
notice of the proposed conditions and was not apprised of their bases until after the close of the
comment period. The court therefore held that the permit applicant was "denied the right to
submit comments on the proposed conditions and otherwise participate in the permit process
."
Village of Sauget, 207 III. App. 3d at 981-82, 566 N .E.2d at 729 .
Unlike Village of Sauget, here Midwest cannot point to any regulation requiring the
opportunity for additional input before IEPA's final determination. It was only in the context of
the noncompliance with the applicable regulations requiring the opportunity for additional input
at the IEPA level that the Village of Sauget court held that this deficiency could not be cured at
the Board level. There the Board hearing could not remedy the regulatory noncompliance, i.e .,
could not "remedy [the permit applicant's] inability to submit information during the public
comment period or request a hearing concerning the additional permit conditions suggested by
the U.S. EPA."
Village of Sauget, 207 Ill. App. 3d at 982, 566 N.E.2d at 730. Midwest does not
argue that IEPA failed to allow Midwest to submit a Statement of Justification in compliance
with Part 130 .
Midwest's reliance on several other court decisions for the position that due process
requires the opportunity to offer evidence in rebuttal is also misplaced . See Novosad v. Mitchell,
251111. App. 3d 166, 621 N.E.2d960, 966 (1993) ; Anderson v. Human Rights Commission, 314
Ill. App. 3d 35, 731 N.E. 2d 371, 376 (2000). The full statement of law in those cases is that
administrative agencies must base their decisions upon facts, data, and testimony
in the hearing
record, because due process requires an opportunity to cross-examine witnesses and
offer
evidence in rebuttal. The courts stated these general principles of law in the context of
examining whether administrative agencies improperly relied upon extra-record information,
instead of the limiting their review to the evidence in the hearing record
. See Novosad, 251 111 .
App. 3d at 174, 621 N.E.2d at 966 ; Anderson, 314 Ill. App. 3d at 41, 731 N.E.2d at 376 .
In that context, the due process concern was that the parties at hearing would not have the
opportunity to subject the extra-record evidence to cross-examination orrebuttal evidence, as
had been the evidence in the hearing record . For example, the Novosad court stated :
[F]indings must be based on evidence introduced in the case, and nothing can be
treated as evidence which is,not introduced as such because due process of law
requires that all parties have an opportunity to cross-examine witnesses and to
offer evidence in rebuttal. [citation omitted] Therefore, a decision pursuant to an
administrative hearing must be based upon testimony and other evidence received
at the hearing, and a conclusion influenced by extraneous considerations must be
seta aside
.
Novosad, 251 Ill. App. 3d at 174, 621 N.E.2d at 966
.
The Board takes no issue with this general statement of law, but finds it inapplicable
here. IEPA held no hearing on Midwest's trade secret request and Midwest does not argue that it
was entitled to one before IEPA . The large record in this case was filed over a month before
Midwest filed its reconsideration motion and nowhere does Midwest argue that IEPA improperly
relied on extra-record evidence in making the final trade secret determination .
28
Midwest cites Community Landfill for circumstances when the Board has allowed new
evidence in a permit appeal . The new evidence in that case, however, related to
a
lachesand
estoppel arguments against IEPA, evidence of which was neither part of nor called for by the
permit application
. See Community Landfill, PCB 01-170, slip op. at 5-6. The rationale behind
that ruling in Community Landfill is akin to the rationale for the scope of the Board's review of
local government decisions on pollution control facility siting
. See 415 ILCS 5/39.2, 40.1
(2002). In those appeals, the Board's review is generally limited to the record developed by the
local government. But, under certain circumstances, the Board will allow the introduction of
new evidence, such as when there is an allegation that the local government's proceeding was
fundamentally unfair-evidence of which would not necessarily be in the local record
. See Land
& Lakes v. PCB, 319 III. App. 3d 41, 48, 743 N.E.2d 188, 194 (3d Dist. 2000). Midwest does
not seek to introduce any such evidence here, but rather seeks to introduce evidence that goes to
the core of its trade secret claim-that the claimed information is not public, that it has
competitive value, and that it is not emission data. Midwest had the opportunity to submit that
information to IEPA through the Statement of Justification
.
Environmental Site Developers, another case cited by Midwest, cannot be read as
allowing a permit applicant to introduce any new evidence as long as the new evidence supports
a claim made in the permit application . Such a reading would gut the long-held principle stated
by the Board in that very case
:
The Board has long held that the issue on appeal of a permit denial
is
whether the
Agency erred and not whether new material which was not before the Agency
persuades the Board that a permit should be granted. [citation omitted] "The
Agency errs in denying a permit only when the material, as submitted to the
Agency by the applicant, proves to the Board that no violation of the Act or
regulations will occur if the permit is granted ." [citation omitted] Environmental
Site Developers, PCB 80-15, slip op. at 4 .
On the third factor for considering a constitutional due process claim, always requiring a
de novo hearing would impose both an additional administrative and monetary burden on the
State. This burden cannot be dismissed where a trade secret claimant has already had the
opportunity to make its case to IEPA in a Statement of Justification. With
a
de novo hearing, the
scope of the Board hearing may be greatly expanded beyond IEPA's record. The need for these
types of proceedings to be efficient and timely is heightened because they are often triggered by
a citizen's or citizen group's FOIA request, as appears to be the case here . The citizens' right to
know environmental information is significant, particularly where emission data is involved, as
the General Assembly has recognized . See 415 ILCS 5/7(c) (2002)
.
Considering the three factors in total, the Board finds that the Part 130 Statement of
Justification process, with the right of appeal to the Board and the scope of the Board hearing as
described above, strikes the proper balance between the private interest in trade secret protection,
the government's interest in administrative efficiency, and the public's right to know. The
Statement of Justification to be submitted' to IEPA is a meaningful opportunity to present
evidence. If IEPA had not allowed for a Statement of Justification, or not given the requisite
29
time to submit one, neither of which is alleged here, then new evidence could be admitted during
the Board hearing, curing that defect at the IEPA level
.
This process provides adequate safeguards against any erroneous loss of trade secret
status. At the same time, it avoids wasting State resources through duplication and helps ensure
timely availability of information pursuant to citizen FOIA requests . The Board finds that
a de
novo
hearing on appeal would promote forum shopping, undermining the separate roles of IEPA
as the initial decision-maker and the Board as the reviewing tribunal
.
.
IEPA's Denial Letter . The Board does find merit, however, in Midwest's claims that
IEPA's trade secrett denial letter is insufficiently specific
.
IEPA's denial letter reads in relevant
part as follows
:
Midwest failed to adequately demonstrate that the information has not been
published, disseminated, or otherwise become a matter of general public
knowledge (i.e., the.Illinois EPA was able to locate the information
in
sources
available to the public) and/or failed to demonstrate that the information has
competitive value. The Illinois EPA denies trade secret protection to the
abbvementioned information with the exception of the information contained in
columns 2 and 4 .
Regarding the information contained in the response to USEPA's request #3, the
Illinois EPA is denying trade secret protection to all information except that found
in column 2. Midwest failed to adequately demonstrate that the information has
not been published, disseminated, or otherwise become a matter of general public
knowledge (i.e., the Illinois EPA was able to locate the information in sources
available to the public) and/or failed to demonstrate that the information has
competitive value. Further, Midwest has failed to demonstrate that the
information does not constitute emission data . AR, Vol. I at 174-75
7
In trade secret appeals as with permit appeals, the denial letter frames the issue in the
appeal before the Board :
[T]he information in the denial statement frames the issues on review .
[citations
omitted] Such information is necessary to satisfy principles of fundamental
fairness because it is the applicant who has the burden of proof before the Board
to demonstrate that the reasons and regulatory and statutory bases for denial are
inadequate to support permit denial . Pulitzer Community Newspapers, Inc . v .
IEPA, PCB 90-142, slip op. at 6 (Dec. 20,1990) ;
see also
35 111. Adm. Code
130.214(a) .
7 In its March 10, 2004 decision, IEPA also granted protection from disclosure for some of the
claimed information ("only columns 2 and 4 constitute confidential business or trade secret
information") and noted that Midwest withdrew the company's "confidentiality claim" with
respect to other information. AR, Vol. 1 at 174 .
30
Here, IEPA's denial letter states that Midwest failed to demonstrate that the claimed
information is not publicly available "and/or" has competitive value . The denial is ambiguous as
to whether one or both grounds apply . In addition, given that a trade secret is statutorily defined
as information that has been kept private and has competitive value, IEPA's denial letter appears
circular. In effect, the denial letter seems to say that trade secret protection is denied because
Midwest failed to demonstrate that the information is a trade secret .
IEPA's denial provides no specific reasoning for the decision. The letter suggests that
IEPA was able to locate the claimed information in "sources available to the public," without
saying where. The letter gives no reasons why IEPA apparently believes Midwest failed to show
that the claimed information has competitive value, or for that matter, does not constitute
emission data. And yet IEPA submitted an administrative record, on which the denial is
purportedly based, that is some 2,700 pages long
.
Part 130 requires IEPA to provide its reasoning in the denial letter. Section 130.210
states
:
b)
Written notice that the State agency denied a claim for trade secret
protection must be given by certified mail, return receipt requested, and
must contain the following information :
1)
A statement of the State agency's reasoning for denying the claim .
35 III. Adm. Code 130.210(b)(1) .
Had IEPA provided its reasoning, as required by Part 130, Midwest could have submitted an
amended or supplemental Statement of Justification in an attempt to address the identified
shortcomings. It is also unclear from the IEPA denial letter whether Midwest failed to establish
the rebuttable presumption provided in Section 130 .208(b), or how that presumption was
rebutted. Section 130.208(b) provides
:
b)
There will be a rebuttable presumption that an article has not been
published, disseminated, or otherwise become a matter of general public
knowledge, if:
1)
The owner has taken reasonable measures to prevent the article
from becoming available to persons other than those selected by
the owner to have access to the article for limited purposes ; and
2)
The statement of justification contains a certification that the
owner has no knowledge that the article has ever been published,
disseminated, or otherwise become a matter of general .public
knowledge. 35 Ill. Adm. Code 130.208(b) .
Under these particular circumstances, the Board directs IEPA to issue a supplemental
decision stating the reasoning for its denial of Midwest's trade secret request . Specifically, the
Board requires IEPA to specify which grounds apply (i.e., matter of general public knowledge,
3 1
lacks competitive value, emission data) andwhy. If IEPA's specification of its reasoning may
require the articulation of information claimed by Midwest to be a trade secret, then IEPA must
subject that part of the supplemental decision itself to all Part 130 procedures for maintaining the
confidentiality of claimed trade secrets .
A supplemental decision pursuant to this order will promote a much more efficient Board
hearing and cure any potential due process deficiencies that could result from Midwest not
having a meaningful opportunity to submit an amended or supplemental Statement of
Justification to respond to identified deficiencies . The Board recognizes that IEPA lacks the
authority to simply reconsider its final decision . See Reichhold Chemicals, Inc . v. PCB, 204 Ill
.
App. 3d 674, 678-80, 561 N.E.2d 1343, 1345-46 (3d Dist. 1990) (IEPA lacks authority to
reconsider final decision absent amended application)
.
The Board is not, however, directing
IEPA to reconsider its decision. Instead, the Board is remanding this matter to IEPA for the
limited purpose of having IEPA articulate,, in compliance with Section 130
.2 1 0(b)(1), the
reasoning behind IEPA's March 10, 2004 denial of trade secret protection
.
Midwest timely filed this appeal, conferring jurisdiction on the Board, and the Board has
already accepted for hearing Midwest's petition for review. The Board is duty-bound to consider
this appeal and, consistent with administrative economy, will not direct the parties to simply start
the process all over again. The Board will therefore retain jurisdiction of this appeal while IEPA
issues its supplemental decision .
.
Mindful of the Board's decision deadline in this appeal, the Board directs IEPA to file the
supplemental decision by November 30, 2004, with service on Midwest . In turn, Midwest will
have until December 31, 2004, to file a document with the Board that either amends Midwest's
grounds for appeal based on the supplemental decision or states the company chooses not to
amend its April 19, 2004 petition for review
.
In ordering this limited remand for IEPA to articulate its denial reasons, the Board
emphasizes that it is departing from its past practice in permit appeals and permit appeal-type
cases (such as underground storage tank appeals) in recognition of the unique nature of trade
secret appeals. Midwest's appeal is the first of its kind since the Board adopted new procedural
rules, which. became effective January 1, 2001, and which, as discussed above, provide that trade
secret appeals are to proceed like permit appeals
. See 35 Ill. Adm. Code 130.214(a). The Board
finds that the distinctions between trade secret appeals and permit appeals can justify remand
for
articulation of denial reasons in the former, but notin the latter
.
In crafting the permitting and permit appeal . systems of Sections 39 and 40 of the Act
(415 ILCS 5/39, 40 (2002)), the General Assembly was concerned that pollution be prevented
from new or continuing business, municipal, and private activities . Consequently, permitting is
required before initiation of potentially polluting activities, or continuation of such
activities
after a permit has expired. The legislature required the Board to hold a public hearing before
reaching any permit appeal decision
.
The General Assembly was also cognizant, however, of a competing interest : that failure
of IEPA or the Board to make timely decisions could be unduly burdensome to the permittee
32
seeking approval to conduct a lawful business or activity . Except in situations involving certain
federal programs, the General Assembly therefore provided that, if IEPA or the Board failed to
meet their respective 90-day and 120-day decision deadlines, the applicant "may deem the permit
issued" in the form requested. The public's right to environmental protection was therefore
conditioned on timely State action, subject to decision deadline waiver by the permittee . Under
these circumstances, remanding to IEPA to further articulate the reasoning behind the denial runs
counter to the legislative preference for a timely decision . Any Board failure to timely notice
and hold a hearing, and issue a written decision would result in an automatic "win" for the
permittee, and a potential loss to environmental protection .
By contrast, in trade secret cases there are other interests at play . As discussed above, the
Act generally provides that "[a]ll files, records, and data of the Agency, the Board and the
Department [of Natural Resources] shall be open to reasonable public inspection" and copying
.
415 ILCS 5/7(a) (2002). However, recognizing legitimate business interests, the Act carves out
limited exceptions, requiring the agencies to keep confidential, among other things, trade secret
information . See 415 ILCS 5/7(a)(i)-(iv) (2002). Even then, the General Assembly determined
that the public's right to information concerning the environment trumped business interests, so
that even the trade secret exception to disclosure has an exception, requiring disclosure of, for
example, emission data to the extent required under the federal Clean Air Act
. See 415 ILCS
5/7(b)-(d) (2002) .
Notably, the General Assembly did not require that hearings be held in every trade secret
case, or impose time deadlines for the making of trade secret determinations. The only time
constraints have been those adopted by the Board during the rulemaking process, after hearing
and public comment, to balance the interests of free access to information, protection of trade
secrets, and the agencies' needs for efficient operation . As a matter of practice and good
government then, in determining that trade secret appeals would be processed under the permit
appeal procedures of Section 40, the Board incorporated the 120-day decision deadline, subject
to waiver by the owner of the article claimed to be a trade secret
.
The limited remand ordered here will not jeopardize the interests of Midwest or the
public . During an appeal of a trade secret denial, the claimed information is kept confidential, so
the appeal does not preclude the trade secret claimant from carrying out its business
. In contrast,
as earlier stated, during an appeal of a permit denial, the permit applicant cannot lawfully
proceed to construct or operate at its business as sought in the application . In addition, the
limited remand ordered here does not affect this case's decision deadline, which only Midwest
controls
.
As to the right of the public to information, the interest in timeliness is to some extent
already protected by the decision deadline . Further, articulation of IEPA's specific denial
reasons before any hearing will keep members of the public at least minimally informed as to the
nature of the dispute. This may be of particular importance in a case where, for instance, IEPA
believes that the claimed information is emission data, rather than one where the claimant has
failed to properly protect non-emission data from public disclosure . In addition, since all or part
of a hearing in a trade secret case may need to be closed to the public to keep the claimed
33
information confidential, the denial letter may be the public's only source of information about
the claimed secret
.
This limited remand is further designed to advance the interests of both the Board and
IEPA in operating efficiently. IEPA's articulation of the specific denial reasons will focus the
issues in any appeal hearing by, for example, eliminating questions as to whether claimed
information is emission data where the actual denial reason is premised on the claimant's failure
to show competitive value . Alternatively, as discussed, articulation of specific denial
reasons
might prompt Midwest to submit a supplemental or amended Statement of Justification,
potentially obviating any need for this appeal .
Finally, the Board stresses that today it is retaining jurisdiction of this appeal and issuing
an interim order for clarification of the denial grounds . Accordingly, the Board is in no way
abdicating its obligation to "adjudicate the controversy before it." Illinois Power Co. v. PCB,
100 Ill. App. 3d 528, 531-32, 426 N .E.2d 1258, 1261-62 (3d Dist. 1981) (reversing final Board
decision that remanded contested permit requirements to IEPA for resolution as IEPA "saw fit")
.
CONCLUSION
For the reasons above, the Board denies Sierra Club's motion to intervene, but notes that
Sierra Club may participate in this proceeding as a non-party by hearing statement, public
comment, and amicus curiae briefing. Additionally, the Board denies Midwest's motion to
partially reconsider the Board's May 6, 2004 order. However, the Board's review of IEPA's
trade secret denial is not necessarily limited to the record before IEPA at the time of the trade
secret determination. As described in this order, Midwest may present new evidence at the
Board hearing if it makes the requisite demonstration that the information was unavailable to
Midwest and IEPA when IEPA denied trade secret protection
.
Additionally, the Board remands this matter to IEPA for the limited purpose of having
IEPA state in a supplemental decision its reasoning for the March 10, 2004 denial of Midwest's
request for trade secret protection, in compliance with 35111. Adm. Code 130.210(b)(1)
. IEPA
must specify which grounds apply and why, and must file this supplemental decision by
November 30, 2004. By December 31, 2004, Midwest must file a pleading with the Board
. That
Midwest pleading, based on IEPA's supplemental decision, must either (1) add grounds for
appeal, withdraw grounds for appeal, or otherwise amend Midwest's petition for review, or (2)
state that the company stands by its petition for review unaltered, The Board accordingly retains
jurisdiction of this appeal
.
ORDER
The Board denies Sierra Club's motion to intervene in this trade secret appeal. In
accordance with the Board's procedural rules (35 Ill. Adm. Code 101 .110,
101.628), Sierra Club may participate in this proceeding by making oral or written
statements at hearing and by filing amicus curiae briefs or public comments .
2 .
The Board denies Midwest's motion to partially reconsider the Board order of
May 6, 2004 .
3
.
By November 30, 2004, IEPA must file a supplemental decision, in accordance
with this order, that states the reasoning behind IEPA's March 10, 2004 denial of
trade secret protection, with service on Midwest . If IEPA's supplemental
decision describes any information claimed by Midwest to be a trade secret, then
IEPA must subject that portion of the supplemental decision to all procedures of
35 III. Adm. Code 130 for protecting claimed information from disclosure .
4
.
By December 31, 2004, Midwest must file a pleading with the Board, in
accordance with this order, responsive to IEPA's supplemental decision described
in paragraph 3 of this order
.
IT IS SO ORDERED
.
1, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above order on November 4, 2004, by a vote of 5-0
.
34
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
RERKelvr=
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
MAR 0
2 2006
Midwest Generation EME, LLC
)
Pollution OCControl
Bard
Petitioner
)
PCB
04-216
Trade Secret Appeal
V.
)
Illinois Environmental Protection Agency,
)
Respondent
)
AFFIDAVIT OF DONALD E. SUTTON
I, Donald E. Sutton, depose and state as follows :
1 .
I am employed in the Bureau of Air ("BOA") of the Illinois
Environmental Protection Agency ("IEPA" or the "Agency") . I submit this affidavit in
opposition to petitioner Midwest Generation EME, LLC's ("Midwest Generation")
motion to compel discovery in this matter. I am the manager of the BOA permit section,
and the designatedd custodian of BOA records
.
2 .
Midwest Generation has requested that IEPA identify (i) "any
determination you have made relating to the trade secret status of a business's financial
information submitted to IEPA," and (ii) "any determination you have made that
information constitutes `emission data' as that term is now or was in the past defined"
under the Illinois Environmental Protection Act or the Clean Air Act
. This request has no
defined time frame, and hence would apply to the entire 36-year history of the Agency .
Additionally, Midwest Generation has requested that IEPA produce all statements of
justification submitted to it, and all responses to such statements of justification, since
1990 .
3 .
Compliance with these requests would be for all practical purposes
impossible, for the simple reason that IEPA keeps no separate record of its trade secret
determinations . All records pertaining to those determinations - including statements of
1
justification and responses - are kept in the file of the source that was the subject of the
determination. As such, there is no way to call up only those files for sources for which
trade secret determinations or emission data determinations were made . Furthermore, the
files of sources no longer operating in Illinois are archived and eventually destroyed
.
4
.
Polling current permitting and enforcement staff to determine whether
they recall any trade secret and/or emission data determinations would be burdensome
and disruptive, and would accomplish little . Even assuming current staff would actually
recall every case or some subset of matters in which a trade secret and/or emission data
determination was made, seeking such anecdotal recollection would not capture trade
secret matters handled by staff no longer with the BOA permit section or the Division of
Legal Counsel enforcement unit - which, in view of the extraordinarily long time frame
of Midwest Generation's discovery, is a much larger category of people than current
staff.
5
.
Accordingly, the only way to actually obtain the information requested by
Midwest Generation would be to review the files of the approximately 6500 sources
regulated by the BOA - i .e ., all permitting files in the Bureau of Air
.
GZ>
r 4zuz-
DonaldE. Sutton
STATE OF ILLINOIS
COUNTY OF COOK
Subscribed to and sworn before me
Thiso2$t4day of February, 2006
Notary
blic
2
"OFFICIALSEAT .
Vicky Vonlanken
Notary Public, State of Illinois
My Commission Exp . 01/12/2008
Midwest Generation EME, LLC
Petitioner
V.
Illinois Environmental Protection Agency,
Respondent
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
Dated: Chicago, Illinois
March 2, 2006
LISA MADIGAN, Attorney General of the
State of Illinois
MATTHEW DUNN, Chief, Environmental Enforcement/
Asbestos Litigation Division
CERTIFICATE OF SERVICE
I hereby certify that I did on the 2" a day of March, 2006 send by United States
mail a copy of Respondent's Memorandum in Opposition to Midwest Generation's
Motion to Compel, the Affidavit of Donald E. Sutton, and the Affidavit of Ann
Alexander,, to
:
Sheldon A. Zabel
Mary A. Mullin
Andrew N. Sawula
Schiff Hardin LLP
6600 Sears Tower
Chicago, Illinois 60606
BY :
Ann
lexander, Assistant Attorney General and
Environmental Counsel
188 West Randolph Street, Suite 2000
Paula Becker Wheeler, Assistant Attorney General
Chicago, Illinois 60601
312-814-3772
312-814-2347 (fax)
PCB
04-216
Trade Secret Appeal
