BEFORE THE POLLUTION CONTROL BOARD

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

TRADING PROGRAM

)

R 06-22

AMENDMENTS TO 35 ILL.

)

(Rulemaking Air)

ADM. CODE PART 217

)

NOTICE

TO:

Dorothy Gunn, Clerk

John Knittle, Hearing Officer

Illinois Pollution Control Board

James R. Thompson Center

2125 South First Street

100 W. Randolph Street, Suite 11-500

Champaign, Illinois 61820

Chicago, Illinois 60601

(VIA FIRST CLASS MAIL)

(VIA ELECTRONIC MAIL)

SEE ATTACHED SERVICE LIST

PLEASE TAKE NOTICE that I have filed with the Office of the Pollution

Control Board the RESPONSE TO MOTION FOR EXPEDITED REVIEW

on behalf of the

Illinois Environmental Protection Agency, a copy of which is herewith served upon you.

Date: March 27, 2006

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY

By:__/s/ Rachel L Doctors__________

Rachel L. Doctors

Assistant Counsel

Division of Legal Counsel

1021 North Grand Avenue East

P.O. Box 19276

Spring field, IL 62794-9276

THIS FILING IS SUBMITTED ON

217/782-5544

RECYCLED PAPER

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

CERTIFICATE OF SERVICE

I, the undersigned, hereby certify that I have served the attached

Response to Motion for

Expedited Review

upon the person to whom it is directed, by placing it in an envelope

addressed to:

TO:

Dorothy Gunn, Clerk

John Knittle, Hearing Officer

Illinois Pollution Control Board

James R. Thompson Center

2125 South First Street

100 W. Randolph Street, Suite 11-500

Champaign, Illinois 60601

Chicago, Illinois 60601

(VIA FIRST CLASS MAIL)

(VIA ELECTRONIC MAIL)

SEE ATTACHED SERVICE LIST

and mailing it by First Class Mail from Springfield, Illinois on March 27, 2006, with sufficient

postage affixed.

__/s/ Rachel L. Doctors_______________

THIS FILING IS SUBMITTED ON RECYCLED PAPER

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

SERVICE LIST R 06-22

Gale W. Newton

Hodge Dwyer Zeman

3150 Roland Avenue

P.O. Box 5776

Springfield, Illinois 62705-5776

Katherine D. Hodge

N. LaDonna Driver

Illinois Environmental Regulatory Group

3150 Roland Avenue

Springfield, Illinois 62703

Kathleen C. Bassi

Schiff Hardin, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606-6473

William Richardson

Illinois Department of Natural Resources

One Natural Resources Way

Springfield, Illinois 62702

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

BEFORE THE POLLUTION CONTROL BOARD

OF THE STATE OF ILLINOIS

IN THE MATTER OF:

)

NOx TRADING PROGRAM:

)

R06-22

AMENDMENTS TO 35 ILL.

)

(Rulemaking – Air)

ADM. CODE PART 217

)

RESPONSE TO MOTION FOR EXPEDITED REVIEW

NOW COMES the Proponent, the Illinois Environmental Protection Agency (“Illinois

EPA”), by one of its attorneys, Rachel L. Doctors, Assistant Counsel, and, pursuant to the

Illinois Pollution Control Board (“Board”) Rules at 35 Ill. Adm. Code 101.500, 101.504 and

101.512, hereby responds to the Motion for Expedited Review (“motion for expedited review” or

“motion”) filed by the Illinois Environmental Regulatory Group (“IERG”). The Illinois EPA

requests that the Board enter an order denying IERG’s motion. In support of this request, the

Illinois EPA states as follows:

THERE IS NO MATERIAL PREJUDICE IF THE MOTION IS DENIED

Section 101.512(b) of the Board’s procedural rules (35 Ill. Adm. Code

101.512(b)) provides in part that the Board will consider whether material prejudice will result if

the motion for expedited review is either granted or denied. In its motion for expedited review,

IERG argues that expediting the proposed amendments will not cause material prejudice to the

Illinois EPA, but denying the motion may result in material prejudice to sources that wish to sell

NOx allowances. IERG motion, pp. 1, 2.

Contrary to IERG’s assertion, the Illinois EPA would be materially prejudiced if

the motion were granted, and no material prejudice will befall any affected sources if the motion

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

is denied. Section 101.512(c) of the Board’s procedural rules (35 Ill. Adm. Code 101.512(c))

states that the Board will grant a motion for expedited review consistent with available resources

and decision deadlines. As the Board is well aware, the Illinois EPA has recently filed a very

complex proposed rulemaking concerning mercury emissions. See, In the matter of: Proposed

New 35 Ill. Adm. Code Part 225, Control of Emission from Large Combustion Sources, PCB

R06-25. That proceeding will consume much of the Board’s and Illinois EPA’s resources over

the next several months. If the Illinois EPA is required to divert its already stretched technical

and legal staff to handle this matter on an expedited basis, it will adversely affect its ability to

adequately present its rulemakings in other dockets.

Further, there will be several other major rulemakings, including the Clean Air

Interstate Rule (CAIR) and NOx SIP Call Phase II (engine/turbine) rulemakings, that the Illinois

EPA anticipates filing with the Board in the coming weeks. Both of these will be filed by the

Agency as “fast track” proceedings pursuant to Section 28.5 of the Act and these may be

accepted and handled by the Board pursuant to fast track procedures. These matters will,

therefore, further reduce the Board’s and the Illinois EPA’s available resources. These more

pressing and immediate rulemakings will tax the Board’s staff; actions unnecessarily adding to

the Board’s and Illinois EPA’s short-term work load should be avoided.

Granting IERG’s motion in this matter is unnecessary, since there is no

compelling reason to expedite the rulemaking. The arguments presented by IERG in favor of

granting the motion to expedite review are without merit and, in some cases, are misleading.

One assertion by IERG is that the amendments set forth in the proposed

rulemaking should be implemented as soon as possible since the relevant amendments

concerning allocations of NOx allowances may impact the allocations for the 2006 ozone season.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

IERG motion, p. 1. This is a dubious claim at best, since the 2006 season’s allocations have

already been made and cannot be undone. The 2006 ozone season ends on September 30, 2006.

Even if this matter were expedited as requested, it is very possible that the amendments would

still not be formally adopted before that date.

There are also some misrepresentations made by IERG as to whether the Illinois

EPA may “confiscate” certain NOx allowances. While those statements go to the substance of

the rulemaking, and thus should not be argued in the context of the motion, it is sufficient to state

that the Illinois EPA takes issue with IERG’s characterizations since no such “confiscation” of

allowances that have already been allocated to source accounts can take place. To state there is

such a possibility is extremely misleading. Further, sources have no property rights to

allowances that have not yet been allocated. See

, 35 Ill. Adm. Code 217.456(d)(6).

However, IERG’s interpretation of the amendments aside, its argument on this

point is that prospective out-of-state buyers have access to the proposed amendments and may

not be as likely to purchase NOx allowances from Illinois units out of fear that the amendments

may become rules and thus the threat of “confiscation” would be raised. IERG motion, p. 2.

This argument fails for several reasons. The statement made by IERG regarding

the supposed mindset of prospective out-of-state buyers is pure speculation. The Board should

not grant a motion based on the possible fears of parties that have not expressed such fears to the

Board. Also, there should be no fear of “confiscation” since there is no possible taking of

allowances in the manner described by IERG.

This speculation as to fear on the part of out-of-state buyers is taken one step

further by IERG, when it asserts that allowances from Illinois units would have a lower value

than NOx allowances from units in other states. IERG motion, p. 2. For this expanded

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

speculation on the part of IERG to have any possible relevance, the Board would have to

recognize that the rules covering NOx allowances should be treated with the goal of increasing

the value of those allowances as much as possible. Maximizing the value of the allowances is

not a goal of Part 217, and any hypothetical economic impact on the allowances is not something

that the Board could or should act upon as a basis for expediting review of the amendment

proposal.

10.

The concern expressed by IERG that sources that wish to sell NOx allowances

during the pendency of this rulemaking would be materially prejudiced by the denial of this

motion is without validity. Pursuant to Section 217.466(a) of the Board’s rules (35 Ill. Adm.

Code 217.466(a)), the Illinois EPA must issue 2007 and 2008 allowances for Non-EGUs by

March of 2007. It should be noted that, contrary to IERG’s motion, there are no allowances to

be given for the 2009 ozone season since the NOx trading program will conclude after the 2008

ozone season. This will be further described in the Illinois EPA’s proposal for the Clean Air

Interstate Rule (one of the upcoming fast track rulemakings soon to be received by the Board).

11.

Past 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. An Illinois source that wishes to sell its NOx allowances during the time

of the Board’s review of this rulemaking will not be materially prejudiced, especially since the

alleged prejudice could stem only from an alleged possible loss in value of the allowances. The

current and proposed amended rules are not written to maximize the value of the allowances, and

the rules are not intended to safeguard against any such loss in value (for whatever reason).

12.

Further arguments by IERG that the value of NOx allowances could possibly be

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

reduced unless the Board expedites its review of this proposal are similarly unpersuasive. While

the Illinois EPA does not wish to intentionally adversely affect the value of the NOx allowances,

there is no requirement that it take action to actively maximize the value of the allowances. To

expedite the review of this matter will not guarantee that the allowances’ value will be increased

(since the Illinois EPA will likely not act upon the 2007 and 2008 allowances until after the date

these amendments would be adopted by a normal review by the Board), but it will almost

certainly place the Board and the Illinois EPA at an administrative resource disadvantage in this

and several other rulemakings.

13.

Finally, IERG argues that since the initial rule for Part 217 was accepted pursuant

to the fast track provisions, these amendments should also be handled as a fast track rulemaking.

IERG motion, p. 4. This argument fails to acknowledge that while the initial rule did meet the

criteria for a fast track rulemaking (i.e., a federally required rule that exposes the State to

sanctions if not adopted), these amendments do not. The amendments are not being proposed

pursuant to a

Federal Register

or a

Clean Air Act

requirement that obligates the State to act or

US EPA will act in its stead. The amendments are not federally required, and there is no

sanction exposure if the amendments are not adopted. Further, the Illinois EPA did not file this

proposal pursuant to Section 28.5 of the Act and has not met the procedural requirements for

“fast track” rulemaking.

WHEREFORE, for the reasons and arguments herein, the Illinois EPA respectfully

requests that the Board deny the motion for expedited review.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

Proponent

_____/s/Rachel L. Doctors_________

Rachel L. Doctors

Assistant Counsel

Division of Legal Counsel

1021 North Grand Avenue, East

P.O. Box 19276

Springfield, Illinois 62794-9276

217.782.5544

217.782.9143 (TDD)

Dated: March 27, 2006

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, MARCH 27, 2006