THIS FILING SUBMITTED ON RECYCLED PAPER
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF: )
)
NOx TRADING PROGRAM: ) R06-22
AMENDMENTS TO 35 ILL. ) (Rulemaking - Air)
ADM. CODE PART 217 )
NOTICE OF FILING
TO: Ms. Dorothy M. Gunn John C. Knittle, Esq.
Clerk of the Board Hearing Officer
Illinois Pollution Control Board
Illinois Pollution Control Board
100 West Randolph Street 2125 South First Street
Suite 11-500 Champaign, Illinois 61820
Chicago, Illinois 60601
(VIA FIRST CLASS MAIL)
(VIA ELECTRONIC MAIL)
(SEE PERSONS ON ATTACHED SERVICE LIST)
PLEASE TAKE NOTICE that I have today filed with the Office of the Clerk of
the Illinois Pollution Control Board a
MOTION FOR LEAVE TO FILE A REPLY
TO RESPONSE TO MOTION FOR EXPEDITED REVIEW
and
REPLY TO
RESPONSE TO MOTION FOR EXPEDITED REVIEW,
copies of which are
herewith served upon you.
Respectfully submitted,
ILLINOIS ENVIRONMENTAL
REGULATORY GROUP,
By: /s/ Katherine D. Hodge
One of Its Attorneys
Dated: March 31, 2006
Katherine D. Hodge
N. LaDonna Driver
HODGE DWYER ZEMAN
3150 Roland Avenue
Post Office Box 5776
Springfield, Illinois 62705-5776
(217) 523-4900
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
CERTIFICATE OF SERVICE
I, Katherine D. Hodge, the undersigned, hereby certify that I have served the
attached MOTION FOR LEAVE TO FILE A REPLY TO RESPONSE TO MOTION
FOR EXPEDITED REVIEW and REPLY TO RESPONSE TO MOTION FOR
EXPEDITED REVIEW upon:
Ms. Dorothy M. Gunn
Clerk of the Board
Illinois Pollution Control Board
100 West Randolph Street
Suite 11-500
Chicago, Illinois 60601
Kathleen C. Bassi, Esq. (kbassi@schiffhardin.com)
Schiff Hardin, LLP
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606-6473
via electronic mail on March 31, 2006; and upon:
John C. Knittle, Esq.
Hearing Officer
Illinois Pollution Control Board
2125 South First Street
Champaign, Illinois 61820
Rachel L. Doctors, Esq.
Assistant Counsel
Division of Legal Counsel
Illinois Environmental Protection Agency
1021 North Grand Avenue East
Post Office Box 19276
Springfield, Illinois 62794-9276
William Richardson, Esq.
Chief Legal Counsel
Illinois Department of Natural Resources
One Natural Resources Way
Springfield, Illinois 62702-1271
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
by depositing said documents in the United States Mail, postage prepaid, in Springfield,
Illinois, on March 31, 2006.
/s/ Katherine D. Hodge
Katherine D. Hodge
IERG:001/R Dockets/Fil/r06-22/COS – Motion for Leave and Reply
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF: )
) R06-22
NOX TRADING PROGRAM: ) (Rulemaking – Air)
AMENDMENTS TO )
35 ILL. ADM. CODE PART 217 )
MOTION FOR LEAVE TO FILE A REPLY
TO RESPONSE TO MOTION FOR EXPEDITED REVIEW
NOW COMES the ILLINOIS ENVIRONMENTAL REGULATORY GROUP
(“IERG”), by its attorneys, HODGE DWYER ZEMAN, and pursuant to Section
101.500(e) of the Illinois Pollution Control Board’s (“Board”) procedural rules, 35 Ill.
Admin. Code § 101.500(e), moves the Board for leave to file its Reply (the “Reply”) to
the Illinois Environmental Protection Agency’s (the “Illinois EPA”) Response to IERG’s
Motion for Expedited Review (the “Response”).
1.
On January 19, 2006, the Illinois EPA filed proposed rule change R06-22,
NOx Trading Program: Amendments to 35 Ill. Admin. Code Part 217 (the “Proposal”),
with the Board.
2.
The Illinois EPA indicated that “ . . . several areas of the rule need to be
updated to reflect changes in ownership of companies and changes in fixed allocations, to
simplify the administration of the program, and to address issues that have arisen since
the program was implemented . . .”. Illinois EPA’s Statement of Reasons (“SOR”) at 2.
3.
The Illinois EPA concluded the SOR by stating that it “ . . . respectfully
requests that the Board expeditiously adopts [sic] these rules for the State of Illinois.”
SOR at 22. (Emphasis added.)
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
4.
In keeping with the Illinois EPA’s request to the Board, IERG filed a
Motion for Expedited Review on March 13, 2006 (the “Motion”).
5.
On March 27, 2006, the Illinois EPA filed the Response which requested
that the Board deny the Motion. Response at 1.
6.
Under the Board’s procedural rules, a moving party is not entitled to file a
reply, except as permitted by the Board or the Hearing Officer to prevent material
prejudice. 35 Ill. Admin. Code § 101.500(e).
7. IERG believes that the Illinois EPA’s Response, inter alia, incorrectly
alleges misrepresentations by IERG, provides an inaccurate interpretation of its proposed
changes to Part 217, misstates the history of previous NOx allocations, and is inconsistent
with its Proposal.
8. Allowing IERG to file the Reply would avoid material prejudice that
would result if the Response was allowed to stand containing incorrect allegations of
misrepresentations by IERG, inaccurate interpretations of the Illinois EPA’s proposed
changes to Part 217, misstatements regarding the history of previous NOx allocations and
a misunderstanding of the concept of material prejudice.
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
WHEREFORE, for the above and foregoing reasons, ILLINOIS
ENVIRONMENTAL REGULATORY GROUP, respectfully requests that the Illinois
Pollution Control Board grant it leave to file its Reply to the Illinois Environmental
Protection Agency’s Response to Motion for Expedited Review.
Respectfully submitted,
ILLINOIS ENVIRONMENTAL
REGULATORY GROUP
By: /s/ Katherine D. Hodge
One of Its Attorneys
Date: March 31, 2006
Katherine D. Hodge
N. LaDonna Driver
HODGE DWYER ZEMAN
3150 Roland Avenue
Post Office Box 5776
Springfield, Illinois 62705-5776
(217) 523-4900
F:\GWN working folder\Miscellaneous\217 changes\Motion to reply to Agency's response to motion to expedite.doc
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF: )
) R06-22
NOX TRADING PROGRAM: ) (Rulemaking – Air)
AMENDMENTS TO )
35 ILL. ADM. CODE PART 217 )
REPLY TO RESPONSE TO
MOTION FOR EXPEDITED REVIEW
NOW COMES the ILLINOIS ENVIRONMENTAL REGULATORY GROUP
(“IERG”), by its attorneys, HODGE DWYER ZEMAN, and pursuant to Section
101.500(e) of the Illinois Pollution Control Board’s (“Board”) procedural rules, 35 Ill.
Admin. Code § 101.500(e), submits this Reply (this “Reply”) to the Illinois
Environmental Protection Agency’s (the “Illinois EPA”) Response to IERG’s Motion for
Expedited Review (the “Response”).
1.
On January 19, 2006, the Illinois EPA filed proposed rule change R06-22,
NOx Trading Program: Amendments to 35 Ill. Admin. Code Part 217 (the “Proposal”),
with the Board.
2.
IERG filed a Motion for Expedited Review on March 13, 2006 (the
“Motion”).
3.
On March 27, 2006, the Illinois EPA filed the Response which requested
that the Board deny the Motion. Response at 1.
4. Concurrently with this Reply, IERG has filed a Motion for Leave to File a
Reply
to Response to Motion for Expedited Review.
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
INCONSISTENCIES BETWEEN THE
PROPOSAL AND THE RESPONSE
5.
The Proposal was filed by the Illinois EPA.
6.
In the Proposal, the Illinois EPA indicated that “ . . . several areas of the
rule need to be updated to reflect changes in ownership of companies and changes in
fixed allocations, to simplify the administration of the program, and to address issues that
have arisen since the program was implemented . . .”. Illinois EPA’s Statement of
Reasons (“SOR”) at 2.
7.
The Illinois EPA concluded the SOR by stating that it “ . . . respectfully
requests that the Board expeditiously adopts [sic] these rules for the State of Illinois.”
SOR at 22. (Emphasis added.)
8.
The Illinois EPA now claims that it would be materially prejudiced by
expediting this rulemaking because it has subsequently filed an additional rulemaking
and plans to file additional rulemakings. See Response at paragraphs 2 and 3.
9.
The Illinois EPA certainly would have known at the time that the Proposal
was filed that it intended to file additional rules within a short period of time. Since the
Illinois EPA is the party that filed the Proposal, indicated that the rule changes were
needed for legitimate purposes and initially requested that the Board expeditiously adopt
the rule changes; it is now inconsistent for the Illinois EPA to claim that it would be
materially prejudiced if this rulemaking proceeding is expedited.
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
ALLEGATIONS OF MISREPRESENTATION
10.
The Illinois EPA asserts that IERG has made the “dubious claim” on page
1 of the Motion that “the relevant amendments concerning allocations of NOx
Allowances may impact the allocations for the 2006 season.” Response at paragraph 5.
11.
In actuality, on page 1 of the Motion, IERG does not claim that any 2006
allocation would be impacted. IERG, instead, indicated that the rules should be finalized
before the end of the 2006 season so that the rules would be applicable to the 2006
season. See Motion at paragraph 4. The proposed changes include provisions that
exempt certain units, incorporate new federal rules by reference and make other changes
to the NOx trading program that will affect IERG member companies for the 2006
season. IERG reiterates its initial point that the proposed changes should be in effect for
the 2006 season.
12.
The Illinois EPA also claims that IERG made a misrepresentation
regarding the substance of the confiscation provisions in the Proposal by making a
“characterization” that allowances already issued could be confiscated by the Illinois
EPA under the proposed confiscation provisions. See Response at paragraph 6.
Although this Reply is not the proper forum to discuss the substance of the Proposal,
IERG must briefly address the Proposal to dispel the Illinois EPA’s allegations of
misrepresentation.
13.
The Proposal states that the Illinois EPA will allocate certain allowances
“listed in Appendix E to different budget units” unless the owner or operator of units that
have been shutdown or sold transferred the allowances to another Illinois source and
notified the Illinois EPA “within two years after the date that the Agency was required to
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
make a NOx allocation to the source or budget unit . . .”. See proposed Section
217.462(d). (Emphasis added.)
14.
The Illinois EPA was required to make a NOx allocation to budget units
before March 1, 2004. See 35 Ill. Admin. Code 217.466(a).
15.
The language of the Proposal, when read literally, would require the
Illinois EPA to confiscate certain allowances listed in Appendix E and allocate them to
different budget units in certain circumstances, regardless of when the allowances were
initially allocated.
16.
Thus, IERG did not make any mischaracterization on this issue and did
not make any “extremely misleading” statements.
HISTORY OF NOx ALLOCATIONS
17. The Illinois EPA states that “[p]ast history and current Illinois EPA
staffing levels clearly indicate that the 2007 and 2008 allowances will not be issued until
very near the March 2007 date. As such, even without expediting the review of this
rulemaking, the amendments will still likely be in place by the March 2007 date.”
Response at paragraph 11. (Emphasis added.)
18. Past history actually indicates that the Illinois EPA has initially allocated
over 101,000 allowances under the NOx trading program for the years 2004, 2005 and
2006. United States Environmental Protection Agency (“USEPA”) NOx Trading
Program Database. The USEPA confirmed the issuance of 85,593 (84%) of these
allowances on October 21, 2002, over 16 months before the deadline. Id. An additional
14,862 (15%) of these allowances were confirmed as issued on July 21, 2003, over 7
months before the deadline. Id.
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
19. Thus, based on past history, affected units in Illinois would have expected
to receive their allocation of allowances for 2007 and beyond in November of 2005, or in
any case, no later than July of 2006. Even if the rulemaking is expedited, units may not
receive their allowances in line with the past history of NOx allocations. However, it is
unclear whether, so long as this rulemaking is pending, the Illinois EPA could issue
allowances for the years 2007 forward and, unless this rulemaking is expedited, there is
no assurance that the units will receive an allocation prior to the March 1, 2007, deadline.
MATERIAL PREJUDICE
20. The Illinois EPA states that “alleged prejudice could only stem from an
alleged possible loss in value of the allowances.” Response at 11.
21. In an apparent attempt to buttress its argument that IERG member
companies would not be materially prejudiced if the Motion were denied, the Illinois
EPA repeatedly states that maximizing the value of allowances is not the goal of the rule.
See Response at paragraphs 9, 11 and 12.
22. However, the goals of the rule have no bearing on the question of whether
certain IERG member companies would be materially prejudiced by failure to expedite
this rulemaking.
23. Although the term “material prejudice” has not been defined with regard
to a motion to expedite Board proceedings, failure to expedite these proceedings will
cause several IERG member companies to suffer considerable uncertainty with respect
to: (1) the value of their NOx allowances; (2) their flexibility and ability to effectively
plan for future operations; and, (3) their ability to compete with facilities in other states
with a more settled and updated NOx SIP call trading program. See Motion at
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
paragraphs 5, 6 and 7. It would seem clear that the occurrence of any one of the above-
mentioned circumstances would cause material prejudice to a company. Therefore, this
rulemaking should be expedited to avoid material prejudice to IERG’s member
companies.
STRAIN ON THE ILLINOIS EPA AND BOARD RESOURCES
24. The Illinois EPA states that it has filed one extremely complex rulemaking
with the Board and intends to file several additional major rulemakings at some
undefined point in the near future. See Response at paragraphs 2 and 3.
25. IERG agrees that the upcoming rulemakings described by the Illinois EPA
may be contentious and resource intensive. However, the rulemaking at issue here is
merely an update of a currently existing rule. Only three areas of disagreement remain
with regard to this rule change, namely, the low-emitter provisions, the confiscation
provisions and the Appendices. Since only one of the rulemakings discussed by the
Illinois EPA has reached the filing stage, it would seem that the Illinois EPA and Board
resources in the short-term would best be utilized by pursuing the rule at issue here as
expeditiously as possible.
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006
WHEREFORE, for the above and foregoing reasons, the ILLINOIS
ENVIRONMENTAL REGULATORY GROUP, respectfully requests that the Illinois
Pollution Control Board grant its Motion for Expedited Review.
Respectfully submitted,
ILLINOIS ENVIRONMENTAL
REGULATORY GROUP
By: /s/ Katherine D. Hodge
One of Its Attorneys
Date: March 31, 2006
Katherine D. Hodge
N. LaDonna Driver
HODGE DWYER ZEMAN
3150 Roland Avenue
Post Office Box 5776
Springfield, Illinois 62705-5776
(217) 523-4900
F:\GWN working folder\Miscellaneous\217 changes\Reply to Agency's response to motion to expedite.doc
ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 31, 2006