(VERMILION POWER STATION),

)

)

Petitioner,

)

v.

)

)

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY,

)

)

Respondent.

NOTICE OF FILING

To:

Dorothy Gunn, Clerk

Illinois Pollution Control Board

James R. Thompson Center

Suite 11-500

100 West Randolph

Chicago, Illinois 60601

Sally Carter

Robb Layman

Division of Legal Counsel

Illinois Environmental Protection Agency

1021 North Grand Avenue, East

P.O. Box 19276

Springfield, Illinois 62794-9276

PLEASE TAKE NOTICE that we have today filed with the Office of the Clerk of the Pollution

Control Board

APPEAL OF CONSTRUCTION PERMIT

, copies of which are herewith served upon

you.

/s/

Kathleen C. Bassi

Kathleen C. Bassi

Dated: October 3, 2006

SCHIFF HARDIN LLP

Attorneys for Dynegy Midwest Generation, Inc.

Sheldon A. Zabel

Kathleen C. Bassi

Stephen J. Bonebrake

Kavita M. Patel

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

312-258-5567

FAX: 312-258-5600

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

(VERMILION POWER STATION),

)

)

Petitioner,

)

v.

)

)

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY,

)

)

Respondent.

)

APPEAL OF CONSTRUCTION PERMIT

NOW COMES Petitioner, DYNEGY MIDWEST GENERATION, INC., VERMILION

POWER STATION (“Petitioner” or “DMG”), by and through its attorneys, SCHIFF HARDIN

LLP, pursuant to Section 40(a)(1) of the Illinois Environmental Protection Act (“Act”) (415

ILCS 5/40(a)(1)) and 35 Ill.Adm.Code §§ 105.200,

et seq.

, and requests a hearing before the

Board to contest the decisions contained in the construction permit

1

issued to Petitioner on May

30, 2006, (received via mail) pursuant to Section 39(a) of the Act (415 ILCS 5/39(a)) and 35

Ill.Adm.Code § 201.142 (the “Construction Permit”) and attached hereto as Exhibit 1. 35

Ill.Adm.Code §§ 105.210(a) and (b). Pursuant to Section 39(a) of the Act and 35 Ill.Adm.Code

§ 105.206(a), this Petition is timely filed with the Board. On July 6, 2006, the Board granted a

joint request to extend the 35-day period within which DMG may appeal the Construction Permit

to October 3, 2006. In support of its Petition, Petitioner states as follows:

1

Application No. 06030002.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-2-

I. BACKGROUND

1.

The Vermilion Power Station (“Vermilion” or the “Station”), I.D. No.

183814AAA, is an electric generating station owned and operated by DMG. Vermilion

electrical generating Units 1 and 2 (“EGUs”) began commercial operation in 1955 and 1956,

respectively. The Station is located at County Road 2150N, Oakwood, Vermilion County,

Illinois 61858. DMG employs approximately 53 people at Vermilion.

2.

DMG operates two coal-fired boilers at Vermilion and one natural gas -fired

heating boiler. In addition to the boilers, DMG operates one distillate oil-fired internal

combustion engine to start one distillate oil-fired combustion turbine. Vermilion also operates

associated coal handling, coal processing and ash handling activities.

3.

Vermilion is a major source subject to the Clean Air Act Permitting Program

(“CAAPP”). 415 ILCS 5/39.5. The Illinois Environmental Protection Agency (“Agency”)

issued a final CAAPP permit to DMG for Vermilion on September 29, 2005. Subsequently, on

November 2, 2005, DMG timely appealed the CAAPP permit for Vermilion at PCB 06-073. The

Board accepted the appeal for hearing on November 17, 2005. On February 16, 2006, the Board

held that, pursuant to Section 10-65(b) of the Administrative Procedure Act (5 ILCS 100/10-

65(b)) (“APA”) and the holding in

Borg-Warner Corp. v. Mauzy

, 427 N.E. 2d 415 (Ill.App.Ct.

1981) (“

Borg-Warner

”), the CAAPP permit is stayed, upon appeal, as a matter of law. Order,

Dynegy Midwest Generation, Inc. (Vermilion Power Station) v. Illinois Environmental

Protection Agency

, PCB 06-073 (February 16, 2006) (“Order 1”), p. 2.

4.

On February 27, 2006, DMG submitted an application for a Construction Permit.

The Construction Permit that DMG sought was to permit the construction a baghouse, to be

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-3-

installed as air pollution control equipment on the two coal-fired boilers. The baghouse is to be

installed downstream of, and in series with, the existing electrostatic precipitators (“ESP”) of

each unit. The baghouse would collect ash that passes through the ESPs as well as sorbent

injected into the flue gas stream after the ESPs. The layer of sorbent collected on the baghouse

filters would adsorb mercury from the flue gas. DMG required the Construction Permit to

promptly begin the six-month on-site construction of the baghouse and sorbent injection system

so that this equipment could be installed during Vermilion’s planned outage that is scheduled to

begin March 31, 2007. DMG did not apply for an operating permit. DMG did not apply for a

construction permit for the unloading or storage of sorbent injection system since those activities

qualified for the permitting exemption of 35 IAC 201.146.

5.

The Agency received DMG’s application for the Construction Permit on March 1,

2006. On March 25, 2006 DMG sent comments to the Agency regarding the draft Construction

Permit which included its objection to the inclusion of language that has been appealed in the

CAAPP permit.

See

email dated May 25, 2006, sent by Rick Diericx to Christopher Romaine at

the Agency, attached hereto as Exhibit 2. However, the Agency persisted in including such

language in the Construction Permit issued by the Agency on May 30, 2006

.

6.

Following a meeting regarding the Construction Permit with the Agency, DMG

filed a joint request for a 90-day extension of the time for appeal, pursuant to Section 40(a)(1) of

the Act.

See

Joint Request for Ninety Day Extension of Appeal Period,

Dynegy Midwest

Generation, Inc. (Vermilion Power Station) v. Illinois Environmental Protection Agency,

PCB

06-194 (June 29, 2006). The Agency supported this request, and on July 6, 2006 the Board

granted the extension to October 3, 2006. Order,

Dynegy Midwest Generation, Inc. (Vermilion

Power Station) v. Illinois Environmental Protection Agency,

PCB 06-194 (July 6, 2006).

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-4-

Subsequent to that request for extension, DMG has provided the Agency with additional

comments, but DMG and the Agency have not arrived at resolution of DMG’s issues with the

Construction Permit. Therefore, this appeal is necessary and is timely.

II. EFFECTIVENESS OF THE CONSTRUCTION PERMIT

7.

Pursuant to Section 10-65(b) of the Illinois Administrative Procedures Act

(“APA”), 5 ILCS 100/10-65 the APA applies to the portion of the Construction Permit that is

de

facto

an operating permit. The Construction Permit issued, though titled a construction permit,

includes authorization for DMG to operate the two coal-fired boilers with a baghouse and

sorbent injection system. Therefore, the Construction Permit is both a construction permit and

operating permit. The conditions that DMG has appealed all relate to the portion of the

Construction Permit that is an operating permit. In that context, the underlying activity,

operation of the coal-fired boilers, is continuing in nature. The addition of a sorbent injection

system and baghouse to the coal-fired boilers does not affect the need to operate or the

continuing nature of the operation of the coal-fired boilers. The pollution control equipment

would not be needed nor would it operate absent the presence of the coal-fired boilers, which is

the source of the emissions being controlled. The authorization to operate in Condition 11

addresses the “affected boilers,”

i.e.

, the two coal-fired boilers, with

the new pollution control

equipment. It cannot be disputed that the operation of the coal-fired boilers is a continuing

activity. Therefore, Section 10-65(b) of the APA applies to the portion of the Construction

Permit that is an operating permit.

8.

Historically, the Board has granted partial stays in permit appeals where a

petitioner has so requested.

C.f.

Order 2 at p.8 fn 3; Order,

Midwest Generation, LLC, Will

County Generating Station v. Illinois Environmental Protection Agency

, PCB 06-156 (July 20,

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-5-

2006) (“Order 3”) (granted stay of the effectiveness of contested conditions of a construction

permit);

Hartford Working Group v. Illinois Environmental Protection Agency

, PCB 05-74

(November 18, 2004) (granted stay of the effectiveness of Special Condition 2.0 of an air

construction permit);

Community Landfill Company and City of Morris v. Illinois Environmental

Protection Agency

, PCB 01-048 and 01-049 (Consolidated) (October 19, 2000) (granted stay of

effectiveness of challenged conditions for two permits of two parcels of the landfill);

Allied Tube

& Conduit Corp. v. Illinois Environmental Protection Agency

, PCB 96-108 (December 7, 1995)

(granted stay of the effectiveness of Conditions 4(a), 5(a), and 7)a) of an air permit). In Order 3

the Board noted that the Board in

Community Landfill

stated that “[t]he permit appeal system

would be rendered meaningless in many cases, if the Board did not have the authority to stay

permit conditions.” Order 3 at p. 6.

9.

The only way in which the Board can protect its own jurisdiction and authority in

Docket No. 06-073 is if a partial stay in this matter is available or to acknowledge that the

challenged permit conditions are stayed under Section 10-65. Without a stay here the Agency

can impose the challenged language despite the Board’s findings in Docket No. 06-073, as

discussed in more detail below. To require a stay of the entire permit would, effectively, require

Vermilion to shut down in order to avoid imposition of the challenged provisions until the Board

completes its deliberations under Docket 06-073.

10.

As discussed below, the Agency has included in the Construction Permit language

that DMG is appealing at Docket 06-073. DMG understands that the operating conditions

included in the Construction Permit will roll into the CAAPP permit when it becomes effective.

See

Exhibit 1, Condition 1.11. DMG will suffer irreparable harm if this language is allowed to

remain in the Construction Permit for inclusion, ultimately, in the CAAPP permit if the Board

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-6-

finds, in Docket 06-073, that the language should be struck from the CAAPP permit. Moreover,

DMG would suffer irreparable harm if it were required to comply now, through the Construction

Permit, with conditions that the Board may determine, in Docket 06-073, are inappropriate.

Inclusion of such language in the Construction Permit effectively denies DMG its statutory right

to its appeal of the CAAPP permit unless the Board stays the contested language.

11.

Moreover, DMG will suffer irreparable harm and the environment will not receive

the benefit of the improved pollution control devices if DMG is not allowed to construct and

operate the baghouse and sorbent injection system on the boilers for Units 1 and 2 at Vermilion.

Additionally, DMG will suffer irreparable harm if it is not allowed to construct and operate the

baghouse and sorbent injection system on the boilers for Units 1 and 2 at Vermilion because it

would cause DMG to be in violation of the Consent Decree entered on May 27, 2005, by the

United States District Court for the Southern District of Illinois in the matter of the

United States

of America, et al. v. Dynegy Midwest Generation, et al.

, Case No. 99-833-MJR (the “Consent

Decree”). DMG notes that while the Consent Decree requires the installation of the baghouse

and sorbent injection system, it does not authorize the Agency to abuse the conditions of the

Consent Decree or to force DMG to agree to inappropriate permit conditions in order to avoid

noncompliance with the Consent Decree.

12.

DMG requests in this instance that the Board exercise its inherent discretionary

authority to grant a partial stay of the Construction Permit, staying only those contested portions

of the following conditions, as the Board stayed conditions in

Midwest Generation, LLC, Will

County Generating Station

: Conditions 1.1(a), 1.1(b), 1.2, 1.4, 1.5, 1.6, 1.7, 1.8, 1.9-1, 1.9-2,

1.9-4, 1.10-2, 1-11. In the alternative, if the Board finds that it cannot grant a stay of only the

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-7-

indicated language in any of these conditions, DMG requests that the Board stay the entire

condition.

III. ISSUES ON APPEAL

(35 Ill.Adm.Code §§ 105.210(c))

13.

DMG appealed various conditions in the CAAPP permit applicable to control

equipment, including conditions containing language that has reappeared in the Construction

Permit issued to Vermilion. Additionally, the Construction Permit improperly interprets and

incorporates provisions from the Consent Decree. Furthermore, there are conditions contained in

the Construction Permit that are duplicative of the CAAPP permit, typographically incorrect, and

factually incorrect.

A.

That Was Appealed in PCB 06-073 (Vermilion CAAPP Appeal).

14.

The Construction Permit allows for operation of the new equipment until such

time as final action is taken to address these devices in the CAAPP permit for the source

provided that the Permittee submits an appropriate application for CAAPP permit that

incorporates new requirements established by this permit within one year of beginning

operations of the affected boilers with either of these new control devices.

See

Exhibit 1,

Condition 1.11. In essence, then, the Construction Permit is also, at least temporarily, an

operating permit. In issuing the Construction Permit, the Agency is attempting to impose

operating conditions through the Construction Permit that have been appealed in the context of

the CAAPP permit appeal prior to the Board’s decision on these points.

15.

The Agency’s action ignores DMG’s right to challenge and have a fair hearing on

the appropriateness of the language in the CAAPP permit. Inclusion of such language forces

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-8-

DMG into this second appeal in order to preserve the integrity of its appeal of the CAAPP

permit, as well as to prevent the imposition of inappropriate conditions in the Construction

Permit and the CAAPP permit. It undermines the Board’s authority to determine whether

challenged language is appropriate through the statutory process established in the Act by the

General Assembly. If the Board determines that the challenged language is appropriate, then the

language will become applicable to the equipment at the time that the CAAPP permit becomes

effective, as the language is already in the CAAPP permit. If the Board determines that the

challenged language is not appropriate, then the Agency will have undermined that decision by

including the language in this Construction Permit (unless it is appealed), which would be rolled

into the CAAPP permit upon termination of the CAAPP appeal process under Docket 06-073.

Meanwhile, if DMG did not appeal the Construction Permit, the challenged language would

apply during the operation phase of the Construction Permit. The challenged language has no

more stature when included in the Construction Permit than it did in the CAAPP permit.

16.

Regardless of one’s perspective, the Agency’s inclusion of the challenged

language during the pendency of the appeal of Vermilion’s CAAPP permit is inappropriate,

injurious to DMG’s rights under Sections 39, 39.5, and 40.2 of the Act and under the APA, and

contrary to the Board’s Order 2 in PCB 06-073 regarding the applicability of the APA to

appealed permits.

(i)

The Construction Permit Improperly Requires Control Plans,

Operating Logs, Reporting Requirements and Recordkeeping

Requirements for PM Emissions in Conditions 1.6(c), 1.9-2(a),

1.9-2(b), 1.9-4, 1.10-2(a)(i), and 1.10-2(a)(ii).

17.

Conditions 1.6(c), 1.9-2(b), 1.9-4, 1.10-2(a)(i), and 1.10-2(a)(ii) of the

Construction Permit require DMG to maintain records of the procedures and practices for the

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-9-

control of particulate matter (“PM”) emissions, defined in the Construction Permit as a “control

plan.” DMG appealed these requirements in the CAAPP appeal for Vermilion.

C.f.

paragraphs

110 - 114 of the Vermilion CAAPP Appeal, Docket No. 06-073. Furthermore, the Consent

Decree already requires optimization plans for the electrostatic precipitator. Adding another PM

control plan requirement is unnecessary and could result in additional and inconsistent

obligations. Accordingly, the requirements concerning PM controls plans are arbitrary and

capricious and unauthorized by law.

18.

In addition, Condition 1.9-4(a)(vii) of the Construction Permit imposes

recordkeeping requirements on DMG if the “PM emission standards or limits . . .may have been

violated.” This requirement appears in the Construction Permit despite the fact that a similar

requirement is under appeal in Vermilion CAAPP Appeal, Docket No. 06-073. The Agency is

demanding that DMG record the mere supposition that there have been PM violations. The

Agency has provided no regulatory basis for recording suppositions. At the very least, DMG

should be granted the opportunity to investigate whether operating conditions are such that

support or negate the likelihood that there may have been PM emissions violations. DMG does

not believe that even this is necessary, since the Agency lacks a regulatory basis for this

requirement in the first place. Therefore, the condition as written is arbitrary and capricious.

19.

For these reasons, DMG requests that the Board order the Agency to delete

Conditions 1.6(c), 1.9-2(b), 1.9-4, 1.10-2(a)(i) and 1.10-2(a)(ii) of the Construction Permit.

DMG further requests that the Board stay Conditions 1.6(c), 1.9-2(b), 1.9-4, 1.10-2(a)(i) and

1.10-2(a)(ii) during the pendency of this appeal.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-10-

20.

Condition 1.9-2(a) of the Construction Permit requires DMG to maintain

operating logs “related to the baghouse that are required to be or are otherwise implemented

pursuant to Conditions 1.6(a) . . .” Condition 1.6(a), in turn, requires compliance with various

provisions of the Consent Decree that, as described below, should be deleted from the

Construction Permit.

21.

Neither the Consent Decree nor any other applicable requirement authorizes or

imposes the obligations set forth in Condition 1.9-2(a). Condition 1.6(a) characterizes and

describes various requirements of the Consent Decree, which is improper and unnecessary for

the reasons set forth later in this petition in Section III(B).

22.

For these reasons, DMG requests that the Board order the Agency to delete

Condition 1.9-2(a) from the Construction Permit, and DMG requests that the Board stay

Condition 1.9-2(a) during the pendency of this appeal.

(ii)

The Construction Permit Improperly Requires DMG to

Perform and Provide Information on PM Emissions Testing in

Conditions 1.7(b)(ii)(B) and 1.7(e)(i) – 1.7 (e)(viii).

23.

The Agency requires condensable PM emission testing of Units 1 and 2 of the

boilers in accordance with Method 202 in Condition 1.7(b)(ii)(B). This requirement was

appealed in the Vermilion CAAPP Appeal.

C.f.

paragraphs 76 - 82 of the Vermilion CAAPP

Appeal, Docket No. 06-073. As mentioned in the Vermilion CAAPP Appeal, this requirement is

beyond the scope of the Agency’s authority to include in a CAAPP permit. The inclusion of

Method 202 testing requirements is inappropriate because there is no regulatory requirement that

applies PM10 limitations to Vermilion.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-11-

24.

Vermilion is subject to the requirements of 35 Ill.Adm.Code 212.Subpart E,

Particulate Matter Emissions from Fuel Combustion Emission Units. It is not and never has been

located in a PM10 nonattainment area.

2

The Board’s PM regulations are structured such that

particular PM10 requirements apply to identified sources located in the PM10 nonattainment

areas.

3

No such requirements apply now or have ever applied to the Vermilion Power Station.

25.

The measurement method for PM, referencing only Method 5 or derivatives of

Method 5, is at 35 Ill.Adm.Code § 212.110. This section of the Board’s rules applies to

Vermilion. The measurement method for PM10, on the other hand, is found at 35 Ill.Adm.Code

§ 212.108, Measurement Methods for PM-10 Emissions and Condensible PM-10 Emissions.

This section references both Methods 5 and 202, among others. Not subject to PM10 limitations,

Vermilion is not subject to § 212.108. Therefore, there is no basis for the Agency to require in

the Construction Permit, that Vermilion be tested pursuant to Method 202.

26.

DMG requests that the Board order the Agency to delete Condition 1.7(b)(ii)(B)

from the Construction Permit, and DMG requests that the Board stay Condition 1.7(b)(ii)(B)

during the pendency of this appeal.

27.

Condition 1.7(e) requires DMG to provide detailed information that is to be

included in certain test reports, including target levels and settings. DMG appealed the

requirement to provide this information in test reports in the Vermilion CAAPP Appeal.

See

2

In fact, there are no more PM10 nonattainment areas in the state.

See

70 Fed.Reg.

55541 and 55545 (September 22, 2005), redesignating to attainment the McCook and Lake

Calumet nonattainment areas, respectively.

3

Presumably, these sources will remain subject to those requirements as part of

Illinois’ maintenance plan.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-12-

paragraph 117 in the Vermilion CAAPP Appeal. DMG has already stated that operation of an

electric generating station depends upon many variables – ambient air temperature, cooling water

supply temperature, fuel supply, equipment variations, and so forth – such that different settings

are used on a daily basis. Using those settings as some type of monitoring device or parametric

compliance data would be inappropriate.

28.

For these reasons, DMG requests that the Board order the Agency to delete

Conditions 1.7(e)(i) – 1.7(e)(viii) from the Construction Permit, and DMG requests that the

Board stay Conditions 1.7(e)(i) – 1.7(e)(viii) during the pendency of this appeal.

B.

Requirements.

29.

Under Section 157 of the Consent Decree, “any term or limit established by or

under this Consent Decree shall be enforceable under this Consent Decree regardless of whether

such term has or will become a part of a Title V permit . . . .” Although the Consent Decree

remains enforceable by its terms, many conditions of the Construction Permit improperly

interpret or incorporate requirements set forth in the Consent Decree.

See

Conditions 1.1(a),

1.2(b), 1.4, 1.6(a) and 1.6(b). The references to and the characterizations and purported

incorporation of the Consent Decree requirements in multiple conditions result in duplicative and

potentially inconsistent obligations, unauthorized requirements, confusion, and ambiguity. Thus,

the portions of these conditions that attempt to summarize or incorporate language from or

otherwise characterize or refer to the Consent Decree and conditions that reference or relate to

such conditions are arbitrary and capricious and unauthorized by law.

30.

Condition 1.1(a) incorrectly states that “the baghouse would be designed to allow

the boilers to comply with an outlet emission rate for particulate matter (PM) of 0.030 lb/mmBtu

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-13-

. . .” without qualifying when the 0.030 lb/mmBtu emission rate is to take effect. According to

the Consent Decree, that rate is not required until the end of 2010.

31.

Condition 1.2(b) of the Construction Permit purports to summarize the definition

of “Unit” as defined in Paragraph 50 of the Consent Decree. However, this summary of the

definition creates confusion as to the actual definition.

32.

Condition 1.4 of this Construction Permit purports to summarize the requirements

set forth in Paragraphs 86 and 90 of the Consent Decree but, in reality, if sustained, would create

confusion as to the obligation. According to the Consent Decree, the PM emission rate will not

take effect until December 31, 2010.

33.

Condition 1.6(a) of this Construction Permit purports to summarize the

requirements set forth in Paragraphs 83 and 87 of the Consent Decree but, in reality, if sustained,

would create confusion as to the obligation.

34.

Condition 1.6(b) of this Construction Permit purports to summarize the

requirements set forth in Paragraph 84 of the Consent Decree. However, this summary also

creates confusion similar to the confusion caused in Conditions 1.2(b), 1.4, and 1.6(a).

35.

For these reasons, DMG requests that the Board order the Agency to delete the

portions of these conditions that attempt to interpret or summarize the Consent Decree.

See

Exhibit 3. DMG further requests that the Board stay those portions of Conditions 1.1(a), 1.2(b),

1.4, 1.6(a), and 1.6(b) indicated in the redlined version of the Construction Permit, Exhibit 3,

during the pendency of this appeal. In the alternative, DMG requests that the Board stay the

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-14-

entirety of Conditions 1.2(b), 1.4, 1.6(a), and 1.6(b) during the pendency of this appeal. This

stay will have no effect on the enforceability of the Consent Decree under its own terms.

C.

Compliance Assurance Monitoring of PM Emissions in Condition 1.5.

36.

Condition 1.5 of the Construction Permit requires DMG to submit a plan to the

Agency for compliance assurance monitoring (“CAM”) of PM Emissions in accordance with 40

C.F.R Part 64. This condition duplicates the requirement in the CAAPP permit issued to DMG

for Vermilion. The Construction Permit requirements will roll into the CAAPP permit when it

becomes effective. Thus, the duplicative requirements are unnecessary, arbitrary and capricious.

Moreover, CAM is not applicable, under Illinois’ Title V scheme, until reissuance of the CAAPP

permit,

i.e.

, the permit is renewed after its initial issuance.

37.

For these reasons, DMG requests that the Board order the Agency to delete

Condition 1.5 from the Construction Permit, and DMG requests that the Board stay Condition

1.5 during the pendency of this appeal.

D.

Conditions 1.8(a) and 1.8(b).

38.

Condition 1.8(a) requires DMG to “install, operate, calibrate and maintain

continuous monitoring equipment for” the bypass ductwork and baghouse. The conditions do

not relate to monitoring any emissions from the bypass ductwork and baghouse. The condition

addresses whether the equipment is functioning properly. Thus, it would be appropriate to delete

“install, operate, calibrate and maintain continuous monitoring equipment for” and keep only

“monitor.”

See

Exhibit 3.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-15-

39.

Condition 1.8(b) requires DMG to “install, operate, calibrate and maintain

continuous monitoring equipment to measure” certain operating parameters of the baghouse.

The condition relates to how the equipment is functioning rather than the actual data that is

generated from the equipment. Thus, “install, operate, calibrate and maintain continuous

monitoring equipment to measure” should be deleted from the Construction Permit and retain

only the word “monitor.”

See

Exhibit 3. This accomplishes the Agency’s apparent goal of

requiring DMG to know whether the baghouse is being bypassed.

40.

DMG requests that the Board order the Agency to delete from Condition 1.8(a)

“install, operate, calibrate and maintain continuous monitoring equipment for” and retain only

the word “monitor” as indicated in Exhibit 3. DMG further requests that the Board order the

Agency to delete from Condition 1.8(b) “install, operate, calibrate and maintain continuous

monitoring equipment to measure” and retain only the word “monitor” as indicated in Exhibit 3.

DMG requests that the Board stay those portions of Conditions 1.8(a) and 1.8(b) indicated in the

redlined version of the Construction Permit, Exhibit 3, during the pendency of this appeal. In the

alternative, DMG requests that the Board stay the entirety of Conditions 1.8(a) and (b) during the

pendency of this appeal.

E.

Requirements for the Sorbent Injection System

41.

Conditions 1.8(c) and 1.9-2(c) require DMG to monitor and maintain records,

respectively, for the sorbent injection system. However, the sorbent injection system is not

required for the coal-fired boilers by any Agency or other state regulations. Therefore, there is

no basis for the Agency to require in the Construction Permit that Vermilion monitor and

maintain records for the sorbent injection system.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-16-

42.

For these reasons, DMG requests that the Board order the Agency to delete

Conditions 1.8(c) and 1.9-2(c) from the Construction Permit, and DMG requests that the Board

stay Conditions 1.8(c) and 1.9-2(c) during the pendency of this appeal.

F.

Affected Boilers

43.

Condition 1.9-1 requires DMG to “sample and analyze samples of the coal supply

to the affected boilers for mercury and chlorine content.” However, there are no Agency or other

state regulations that requires DMG to measure mercury and chlorine content of the coal supply.

Therefore, the Agency has not basis to impose the above requirement on DMG in the

Construction Permit.

44.

For these reasons, DMG requests that the Board order the Agency to delete

Conditions 1.9-1 from the Construction Permit, and DMG requests that the Board stay Condition

1.9-1 during the pendency of this appeal.

G.

Various Conditions.

45.

The Construction Permit contains numerous conditions that are factually

inaccurate or reference a condition that does not exist or otherwise contain errors. These

mistakes and errors create confusion and ambiguity and result in uncertainty regarding how

certain conditions are to be implemented and interpreted.

46.

Condition 1.1(b)(i) states “which will not increase emissions of PSD pollutants

other than PM.” This contradicts the first part of the same sentence that states “will be to reduce

PM.” This condition should be corrected by deleting “other than PM.”

See

Exhibit 3. DMG

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-17-

requests that the Board order the Agency to delete from Condition 1.1(b)(ii) the phrase “other

than PM.” DMG further requests that the Board stay the redlined portions of this condition as

indicated in Exhibit 3. In the alternative, DMG requests that the Board stay the entire condition.

47.

Condition 1.1(b)(ii) states “[t]his does affect the Permittee’s obligation to comply

with all applicable requirements that apply to the receiving, storage and handling of sorbent.”

The Agency has inadvertently omitted the word “not” after “does” in the above sentence. DMG

does not request any stay with respect to this condition because the meaning of Condition

1.1(b)(ii) is apparent. Nevertheless, DMG does request that the Board order the Agency to

correct this omission in the final permit following the conclusion of this appeal.

48.

Condition 1.2(a) should read “two existing coal-fired boilers” not “two existing

coal-fired boiler.” DMG does not request any stay with respect to this condition because the

meaning of Condition 1.2(a) is apparent without the correction. Nevertheless, DMG does

request that the Board order the Agency to correct this typographical error in the final permit

following conclusion of this appeal.

49.

Both affected boilers always exhaust through the common stack. Therefore,

Condition 1.3(a)(ii) should state, “ when the PM compliance test is performed in the common

stack with both units operating simultaneously the PM limit shall be 0.10 lb/mmBtu, otherwise

each unit’s respective PM rate limit applies.” Note that the comma between “0.10 lb/mmBtu”

and “otherwise” should be a semicolon. Because this condition cannot be corrected through

redlining, DMG requests that the Board stay the entire condition during the pendency of this

appeal, as the limit for Unit 1’s boiler need only meet 0.12 lb/mmBtu when Unit 2’s boiler is not

operating.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-18-

50.

Condition 1.6(c) cites 1.9-2(b)(ii)(A), but there is no Condition 1.9-2(b)(ii)(A) in

the Construction Permit. In Section A(i), above, DMG requests that Condition 1.6(c) be deleted

because it requires PM control plan requirements which are duplicative of the requirements set

forth in the Consent Decree. The deletion of Condition 1.6(c) would address the unnecessary

reference to Condition 1.9-2(b)(ii)(A).

See Id.

51.

Condition 1.7(a) ends with the phrase “shall have measurements conducted for the

PM emissions of the affected boilers with control provided by the baghouse, as follows.”

However, there are no measures following.

See Id.

52.

Condition 1.7(b) should add “PM” before “measurements.”

53.

Condition 1.7(c) should add “PM” before “emission testing.”

54.

Condition 7.1(d) add “PM” before “emission tests.”

55.

For the above-mentioned reasons, DMG requests that the Board order the Agency

to correct these errors. Because DMG cannot identify “surgical” stays of conditions identified in

paragraphs 51-54 above, DMG requests that the Board stay these conditions during the pendency

of this appeal.

56.

Condition 1.11 states in pertinent part “which incorporates new requirements

established by this permit within one year (365 days) of beginning operations of the affected

boilers with either of these new control devices.” The only control device that is being added to

the boilers is a new baghouse. The sorbent injection system is not a control device. Therefore,

DMG requests that the Board order the Agency to delete from Condition 1.11 “control” before

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

-19-

“devices.” DMG further requests that the Board stay the redlined portions of this condition as

indicated in Exhibit 3. In the alternative, DMG requests that the Board stay the entire condition.

WHEREFORE, for the reasons set forth above, DMG requests that the Board grant its

petition to appeal the Construction Permit issued May 30, 2006, and that it stay the portions or

entirety of the conditions as set forth in Exhibit 3 or, in the alternative, that the Board stay the

entirety of all of the conditions appealed herein.

Respectfully submitted,

DYNEGEY MIDWEST GENERATION, INC.,

VERMILION POWER STATION

by:

/s/

Kathleen C. Bassi

One of Its Attorneys

Dated: October 3, 2006

SCHIFF HARDIN, LLP

Sheldon A. Zabel

Kathleen C. Bassi

Stephen J. Bonebrake

Kavita M. Patel

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

312-258-5500

Fax: 312-258-2600

CH2\ 1459872.5

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

EXHIBIT 1

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

EXHIBIT 2

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

EXHIBIT 3

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

217/782-2113

CONSTRUCTION PERMIT

PERMITTEE

Dynegy Midwest Generation, Inc.

Attn: Rick Diericx

2828 North Monroe Street

Decatur, Illinois 62526

Application No.

: 06030002

I.D. No.: 183814AAA

Applicant’s Designation

:

Date Received: March 1, 2006

Subject

: Baghouse and Sorbent Injection System for Units 1 and 2

Date Issued

: May 30, 2006

Location

: Vermilion Power Plant, Box 250, Country Road 2150, Oakwood

Permit is hereby granted to the above-designated Permittee to CONSTRUCT

equipment consisting of a sorbent injection system and baghouse for the Unit

1 and 2 Boilers, as described in the above referenced application. This

Permit is subject to standard conditions attached hereto and the following

special condition(s):

1.1 Introduction

a. This Permit authorizes the Permittee to construct a baghouse and

sorbent injection system to supplement the existing emission

control systems on the two existing coal-fired boilers at its

Vermilion Power Station. The new baghouse and sorbent injection

system would serve both boilers and further process the flue gas

from the existing electrostatic precipitator (ESP) on each

boiler. In particular, the baghouse would be designed to allow

the boilers to comply with an outlet emission rate for

particulate matter (PM) of 0.030 lb/mmBtu, as measured by USEPA

Method 5, as is required to be achieved by a Consent Decree that

addresses this source (See Conditions 1(d) and 1.4). The new

ductwork to accommodate these new control systems would include

bypass ductwork, which would allow the exhaust from each boiler

to bypass the baghouse as may be needed for startup and

maintenance of the baghouse, and a booster fan, which would

compensate for the additional pressure drop created by the

baghouse and additional ductwork.

b. i. This permit is issued based on this project being an

emissions control project, whose purpose and effect will be

to reduce emissions of particulate matter (PM) from the

existing boilers and which will not increase emissions of

PSD pollutants

other than PM

. As such, the terms and

conditions of the existing permits will continue to govern

emissions and operation of the boilers except as

specifically indicated.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 2

ii. This permit is issued based on the receiving, storage and

handling of sorbent for the new sorbent injection system

qualifying as an insignificant activity, with annual

emissions of PM in the absence of control equipment that

would be no more than 0.44 tons, so that this activity need

not be addressed by this permit. This does affect the

Permittee’s obligation to comply with all applicable

requirements that apply to the receiving, storage and

handling of sorbent.

c. This permit does not authorize any modifications to the existing

boilers or generating units, which would increase capacity or

potential emissions.

d. This permit does not affect requirements for the affected boilers

established by the Consent Decree in United States of America and

the State of Illinois, American Bottom Conservancy, Health and

Environmental Justice-St. Louis, Inc., Illinois Stewardship

Alliance, and Prairie Rivers Network, v. Illinois Power Company

and Dynegy Midwest Generation Inc., Civil Action No. 99-833-MJR,

U.S. District Court, Southern District of Illinois (Decree),

certain provisions of which are referenced by this permit.*

* Electronic links to a copy of the Decree, as initially entered

by the Court on May 27, 2005 are provided for convenience in

Attachment 1 of this permit.

Note: This permit does not address whether this project will

qualify as a Supplemental Environmental Project (SEP) for control

of mercury emissions from the boilers under the Consent Decree as

this is a matter for the parties to the Consent Decree to

determine. This permit also does not address Paragraph 88 of the

Consent Decree, as the parties to the Decree have agreed to

modify the Decree to delete Paragraph 88 in its entirety.

1.2 Applicability Provisions

a. The “affected boilers” for the purpose of these unit-specific

conditions are the two existing coal-fired boiler at this source

after the initial startup of the baghouse, as described in

Condition 1.1.

b. For purposes of certain conditions related to the Consent Decree,

each affected boiler is also part of a “Unit” as defined by

Paragraph 50 of the Decree

, which defines a “Unit” to mean

collectively, the boiler that produce steam for the steam turbine

(i.e., an affected boiler), the coal pulverizer, stationary

equipment that feeds coal to the boiler, the steam turbine, the

generator, the equipment necessary to operate the generator,

steam turbine and boiler, and all ancillary equipment, including

pollution control equipment

.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 3

1.3 Applicable Emission Standards for the Affected Boilers

a. i. The affected boilers shall comply with applicable emission

standards under Title 35, Subtitle B, Chapter I, Subchapter

c of the Illinois Administrative Code, as addressed in

existing permits for the affected boilers.

ii. When both affected boilers are exhausted through the common

baghouse, the PM emissions of the affected boilers shall

comply with 35 IAC 212.202, which limits PM emissions to no

more than 0.10 lb/mmBtu of actual heat input in any one

hour period.

Note: This permit does not affect requirements contained in the

existing CAAPP permit for the source that would accompany the

Permittee’s reliance upon 35 IAC 212.123(b) for the affected

boilers, which would allow opacity greater than 30 percent

(6-minute average) from the affected boilers in certain

circumstances.

b. This permit does not affect the authorizations in existing

operating permits, pursuant to 35 IAC 201.149, 201.161 and

201.262, that allow the Permittee:

i. To operate an affected boiler in violation of certain state

emission standards during startup of the boiler or the

terms and conditions that accompanied such authorization.

ii. To continue to operate an affected boiler in violation of

certain state emission standards during malfunction or

breakdown of the boiler, including control devices and

ancillary systems, or the terms and conditions that

accompanied such authorization.

1.4 PM Emission Rate under the Consent Decree

The PM emission rate of each affected boiler shall be no greater than

the limit specified in Paragraph 86 of the Decree

, i.e., 0.030

lb/mmBtu,

by the date specified in Paragraph 86

, i.e., no later than

December 31, 2010

. Emission testing conducted to determine compliance

with these limits shall use methods and procedures as specified in

Paragraph 90 of the Decree

, (which, among other matters, specifies use

of USEPA Reference Method 5 or an alternative method approved by USEPA

and the State of Illinois for such measurements)

.

Note: The PM emission rate for the affected boiler pursuant to the

Decree, when it takes effect, will be more stringent than the

applicable state emission standard(s) for PM.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 4

1.5 Compliance Assurance Monitoring for PM

If the Permittee applies for a significant modification of the CAAPP

Permit for the source to include the new baghouse, the Permittee shall

submit a plan for monitoring to address the PM emissions from each

affected boiler in accordance with 40 CFR Part 64, Compliance

Assurance Monitoring, as provided by 40 CFR 64.5(a)(2)

1.6 Work Practices and Operational Requirements

a. The Permittee shall operate and maintain each PM control device

on each affected boiler in accordance with Paragraphs 83 and 87

of the Decree

(which generally require that these devices be

operated to maximize PM emission reductions at all times when the

Unit is in operation to the extent reasonably practicable and

specify certain minimum operating and maintenance practices that

the Permittee must implement for this purpose)

.

b. The Permittee shall operate and maintain the ESP on each affected

boiler in accordance with Paragraph 84 of the Decree (which

requires that the Permittee implement the practices recommended

by the PM Emission Control Optimization Studies performed in or

other alternative actions approved by USEPA in accordance with

Paragraph 84 of the Decree),

unless the criterion in Paragraph 87

of the Decree that lift this requirement have been satisfied.

c.

The Permittee shall operate and maintain each affected boiler and

Unit, and associated PM control equipment in accordance with the

PM control plan maintained by the Permittee pursuant to Condition

1.9-2(b)(ii)(A).

1.7 Testing Requirements

a. i. Within 180 days after initial startup of an affected boiler

with the baghouse, the Permittee shall have measurements

conducted for the PM emissions of the affected boilers with

control provided by the baghouse, as follows.

ii. The Permittee shall also have measurements conducted for

the PM emissions from the affected boilers within 90 days

(or such later date set by the Illinois EPA) following a

request by the Illinois EPA for such measurements.

b. i. These measurements shall be performed in the maximum

operating range of the affected boilers and otherwise under

representative operating conditions.

ii. A. The methods and procedures used for PM testing to

determine compliance with the applicable PM emission

standards and limitation shall be in accordance with

Paragraph 90 of the Decree.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 5

B. In conjunction with such measurements, measurements

of condensable PM shall also be conducted by USEPA

Method 202 (40 CFR Part 51, Appendix M) or other

established test method approved by the Illinois EPA.

c. Except for minor deviations in test methods, as defined by 35 IAC

283.130, emission testing shall be conducted in accordance with a

test plan prepared by the testing service or the Permittee and

submitted to the Illinois EPA for review prior to emission

testing, and the conditions, if any, imposed by the Illinois EPA

as part of its review and approval of the test plan, pursuant to

35 IAC 283.220 and 283.230. The Permittee shall submit this test

plan at least 60 days prior to the actual date of testing.

d. The Permittee shall notify the Illinois EPA prior to conducting

emission tests to enable the Illinois EPA to observe testing.

Notification for the expected test date shall be submitted a

minimum of 30 days prior to the expected date of testing.

Notification of the actual date and expected time of testing

shall be submitted a minimum of 5 working days prior to the

actual test date. The Illinois EPA may on a case-by case basis

accept shorter advance notice if it would not interfere with the

Illinois EPA’s ability to observe testing.

e. The Permittee shall submit the Final Report(s) for this emission

testing to the Illinois EPA within 45 days of completion of

testing

, which report(s) shall include the following information:

i. The name and identification of the affected unit(s) and the

results of the tests.

ii. The name of the company that performed the tests.

iii. The name of any relevant observers present including the

testing company’s representatives, any Illinois EPA or

USEPA representatives, and the representatives of the

Permittee.

iv. The date and time of measurements.

v. Description of test method(s), including description of

sampling points, sampling train, analysis equipment, and

test schedule, including a description of any minor

deviations from the test plan, as provided by 35 IAC

283.230(a).

vi. Detailed description of operating conditions during

testing, including:

A. Source(s) of fuel and specifications (ash, sulfur and

heat content).

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 6

B. Operating information for the affected boilers, i.e.,

firing rate of each boiler (million Btu/hr) and

composition of fuel as burned (ash, sulfur and heat

content).

C. Combustion system information, i.e., settings for

distribution of primary and secondary combustion air,

target level for O

2

in the flue gas, and levels of CO,

CO

2

or O

2

in the flue gas, as determined by any

diagnostic measurements.

D. Control equipment information, i.e., equipment

condition and operating parameters during testing,

including any use of the flue gas conditioning

system.

E. Load during testing (gross megawatt output and steam

flow).

vii. Data and calculations, including copies of all raw data

sheets and records of laboratory analyses, sample

calculations, and data on equipment calibration.

viii. The SO

2

, NO

x

, O

2

or CO

2

, (hourly averages) and opacity data

(6-minute averages) measured during testing.

Note: This permit does not affect the requirements for emission

testing contained in the existing permits for the source. It also

does not address requirements under the Decree that may be applicable

to PM emission tests.

1.8 Monitoring Requirements

a. The Permittee shall install, operate, calibrate and maintain

continuous monitor

ing

equipment for the bypass ductwork to

indicate operation of a boiler with flue gas flow bypassing the

baghouse through the bypass ductwork.

b. The Permittee shall install, operate, calibrate and maintain

continuous monitoring equipment to measure the following

operating parameters of the baghouse:

i. The temperature of the flue gas at the inlet of the

baghouse (hourly average).

ii. The pressure drop across the baghouse (hourly average).

c.

The Permittee shall install, operate, calibrate and maintain

continuous monitoring equipment to measure the following

operating parameters of the sorbent injection system:

i. Operation, i.e., injection of sorbent.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 7

ii. If sorbent feed rate is either automatically or remotely

adjusted, sorbent feed rate, in pound or cubic foot per

unit of operation of the boilers, e.g., pound or cubic foot

per million actual cubic feet of exhaust, million Btu of

heat input to the boilers, or MW-hr output from the

boilers.

Note: This permit does not affect the requirements for operational

monitoring contained in the existing permits for the source.

1.9-1

Recordkeeping Requirements for the Affected Boilers

The Permittee shall sample and analyze samples of the coal supply to

the affected boilers for mercury and chlorine content so as to have

representative data for the mercury and chlorine content of the coal

supply to the boilers to accompany mercury emission data collected for

the affected boilers. (See also Condition 1.9.1) This sampling and

analysis shall be conducted using appropriate ASTM Methods or other

methods developed, approved or endorsed by USEPA.

Note: This permit does not affect the recordkeeping requirements in

the existing permits for the source.

1.9-2 Records for Control Devices and Control Equipment

The Permittee shall maintain the following records for the new

baghouse and sorbent injection system on the affected boilers:

a. i. Logs for the Baghouse

A. An operating log or other records for the baghouse that,

at a minimum: (1) Identifies the trigger for bag

cleaning, e.g., manual, timer, or pressure drop; (2)

Identifies each period when a Unit was in operation and

the baghouse was not being operated or was not operating

effectively; (3) Identifies each period when any baghouse

module(s) were removed from regular service, with

identification of the module(s) and explanation; and (4)

Specifically documents the implementation of the

operating procedures related to the baghouse that are

required to be or are otherwise implemented pursuant to

Conditions 1.6(a) and (c).

B. Maintenance and repair log or other records for the

baghouse that, at a minimum: (1) List the activities

performed, with date and description, and (2)

Specifically document the maintenance and repair

activities related to the baghouse that are required

to be or are otherwise performed pursuant to

Conditions 1.6(a) and (c).

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 8

ii. Logs for the Sorbent Injection System

A. An operating log or other records for the system that, at

a minimum, identify the sorbent that is being used,

target sorbent injection rate(s) and each period of time

when an affected boiler was in operation and the system

was also being operated.

B. Maintenance and repair log or other records for the

system that, at a minimum, list the activities

performed, with date and description.

b. PM Emission Control Planning

i. The following records related to the procedures and

practices for control of PM emissions from the affected

boilers:

A. A record, which shall be kept up to date, identifying

the specific operating procedures and maintenance

practices (including procedures and practices

specifically related to startups and

malfunction/breakdown incidents) currently being

implemented by the Permittee for each affected boiler

and Unit and associated PM control equipment to

satisfy Conditions 1.6(a) and (c). These procedures

and practices are referred to as the “PM Control

Plan” in this permit.

B. Accompanying this record, the Permittee shall

maintain a demonstration showing that the above PM

Control Plan fulfills the requirements of Conditions

1.6(a) and (b), as applicable.

ii. Copies of the records required by Conditions 1.9-2(b)(i)

shall be submitted to the Illinois EPA upon request.

iii. Accompanying the records required by Conditions 1.9-

2(b)(i), a file containing a copy of all correspondence and

other written material exchanged with USEPA that addresses

the procedures and practices that must be implemented

pursuant to Paragraph 56 and Paragraphs 83, 84 and 87 of

the Decree. This file shall be retained for at least three

years after the permanent shutdown of both affected Units.

c. Specific Records for the Sorbent Injection System

i. Usage of sorbent (lbs/month) and average sorbent injection

rates (lbs/Unit operation).

ii. The setting for sorbent feed rate, if not monitored

pursuant to Condition 1.8(c)(ii).

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 9

Note: This permit does not affect the recordkeeping requirements for

the existing electrostatic precipitators and associated flue gas

conditioning systems that are contained in the existing permits for

the source.

1.9-3 Records for Continuous Monitoring Systems

a. The Permittee shall maintain operating records for the continuous

monitoring systems required by Condition 1.8 that, at a minimum,

include:

i. Measured data.

ii. Performance evaluations and other quality assurance/control

activities, including calibration checks and maintenance

and adjustment performed.

iii. Periods other than performance of routine quality

assurance, calibration, and maintenance, as addressed

above, when the monitor was inoperative, with reason.

iv. Quarterly reports submitted in accordance with Condition

7.1.10-2(a).

Note: This permit does not affect the recordkeeping requirements for

the continuous opacity monitoring systems on the affected boilers that

are contained in the existing permits for the source.

1.9-4 Other Recordkeeping Requirements

a. Summary Records Related to the PM Control Plan

The Permittee shall maintain the following records for each

incident when applicable action(s) required pursuant to the PM

Control Plan were not taken for affected boiler(s) or Unit(s):

i. The date of the incident.

ii. A description of the incident, including the required

action(s) that were not taken; other actions or mitigation

measures that were taken, if any; and the likely

consequences of the incidents as related to emissions.

iii. The time at and means by which the incident was identified.

iv. The length of time after the incident was identified before

required action(s) were taken or were no longer required

and an explanation why this time was not shorter, including

a discussion of the timing of any mitigation measures that

were taken for the incident.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 10

v. The estimated total duration of the incident, i.e., the

total length of time that the affected boiler ran without

the required action(s) being taken.

vi. A discussion of the probable cause of the incident and any

preventative measures taken.

vii. A discussion whether any applicable PM emission standards

or limits, as listed in Condition 1.3, 1.4 or 1.6, may have

been violated, either during or as a result of the

incident, with supporting explanation.

b. Records Related to Mercury Emissions

The Permittee shall maintain the following records related to

operation of the sorbent injection system and mercury emissions:

i. Records of emission data for mercury collected for the

affected boilers by the Permittee, including emissions

(micrograms per cubic meter, pounds per hour, and pounds

per million Btu) and control efficiency for each mode of

operation of the boilers and sorbent injection system, with

identification and description of the various modes of

operations.

ii. A copy of any formal report(s) that are prepared for

evaluation(s) of operation of the sorbent injection system

that include: (1) a description of the evaluation, (2)

technical data gathered during the evaluation, including

data for the elemental composition and heat content of the

coal supply to the boilers, boiler operating rates, loss on

ignition, (i.e., carbon carry over in ash), sorbent

injection rates, flue gas temperatures, mercury emissions,

measured mercury concentrations in the flue gas, SO

2

and NO

x

emissions monitored during the period of evaluation, and

any determinations of mercury control efficiency or

oxidation rates, and (3) a description of the analytical

methodology by which measurements were conducted.

1.10-1 Reporting Requirements – Reporting of Deviations

a. Prompt Reporting of Deviations

For each affected boiler, the Permittee shall promptly notify the

Illinois EPA of deviations from permit requirements as follows.

At a minimum, these notifications shall include a description of

such deviations, including whether they occurred during startup

or malfunction/breakdown, and a discussion of the possible cause

of such deviations, any corrective actions and any preventative

measures taken.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 11

i. Immediate notification for bypass of the baghouse other

than during startup or shutdown of the boiler.

ii. Notification with the quarterly reports required by

Condition 1.10-2(a) for deviations not addressed above,

including deviations from other applicable requirements,

e.g., work practice requirements, required operating

procedures, required maintenance practices, and

recordkeeping requirements.

b. Periodic Reporting of Deviations

The quarterly reports required by Condition 1.10-2(a) shall

include the following information for the affected boilers

related to deviations from permit requirements during the

quarter.

i. A listing of all instances of deviations that have been

reported in writing to the Illinois EPA as provided by

Condition 1.10-1(a)(i), including identification of each

such written notification or report. For this purpose, the

Permittee need not resubmit copies of these previous

notifications or reports but may elect to supplement such

material.

ii. Detailed information, as required by Condition 1.10-

1(a)(ii), for all other deviations.

Note: This permit does not affect the requirements for reporting of

deviations contained in the existing permits for the source.

1.10-2 Reporting Requirements – Periodic Reporting

a. Quarterly Reports

The Permittee shall submit quarterly reports to the Illinois EPA.

i.

These reports shall include a summary of information

recorded during the quarter pursuant to Conditions 1.9-4(a)

and (b).

ii. These reports shall include the information for the

affected boiler related to deviations during the quarter

specified by Condition 1.10-1(b).

iii. These reports shall be submitted within 45 days after the

end of each calendar quarter. For example, the quarterly

report for the first quarter, i.e., January, February and

March, shall be submitted by May 15.

Note: This permit does not affect the requirements for quarterly

reporting contained in the existing permits for the source.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Page 12

1.11 Authorization for Operation

The Permittee may operate the affected boilers with the new baghouse

and sorbent injection system under this construction permit until such

time as final action is taken to address these devices in the CAAPP

permit for the source provided that the Permittee submits an

appropriate application for CAAPP permit, which incorporates new

requirements established by this permit within one year (365 days) of

beginning operations of the affected boilers with either of these new

control

devices.

If you have any questions concerning this permit, please contact Kunj Patel

or Christopher Romaine at 217/782-2113.

ORIGINAL PERMIT SIGNED BY CHIRISTOPHER ROMAINE FOR DONALD E. SUTTON

Donald E. Sutton, P.E.

Manager, Permit Section

Division of Air Pollution Control

DES:CPR:psj

cc: Region 3

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

Attachment 1

Electronic links to the Consent Decree in United States of America and the

State of Illinois, American Bottom Conservancy, Health and Environmental

Justice-St. Louis, Inc., Illinois Stewardship Alliance, and Prairie Rivers

Network, v. Illinois Power Company and Dynegy Midwest Generation Inc., Civil

Action No. 99-833-MJR, U.S. District Court, Southern District of Illinois, as

initially entered by the Court on May 27, 2005 (Decree)

This Consent Decree is available at either:

http://yosemite.epa.gov/r5/il_permt.nsf/1187a64140e3f8ad862568b70

0763ce9/603884da715c88a585256f88005067f4!OpenDocument

or at http://www.epa.gov/region5/air/permits/ilonline.htm

(under Title V Permit Records, look for Dynegy, Baldwin plant.)

This Consent Decree can also be found at the following US District

Court’s website:

http://www.ilsd.uscourts.gov/Forms/dmgfinal-cd.pdf

CPR:psj

CH2\ 1535698.1

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006

---

CERTIFICATE OF SERVICE

I, the undersigned, certify that on this 3

rd

day of October, 2006, I have served

electronically the attached

APPEAL OF CONSTRUCTION PERMIT

, upon the following

persons:

Dorothy Gunn, Clerk

Illinois Pollution Control Board

James R. Thompson Center

Suite 11-500

100 West Randolph

Chicago, Illinois 60601

and by first-class mail with postage thereon fully prepaid and affixed to the following persons:

Sally Carter

Robb Layman

Division of Legal Counsel

Illinois Environmental Protection Agency

1021 North Grand Avenue, East

P.O. Box 19276

Springfield, Illinois 62794-9276

/s/

Kathleen C. Bassi

Kathleen C. Bassi

SCHIFF HARDIN LLP

Attorneys for Dynegy Midwest Generation, Inc.

Sheldon A. Zabel

Kathleen C. Bassi

Stephen J. Bonebrake

Kavita M. Patel

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

312-258-5567

FAX: 312-258-5600

CH2\ 1466017.2

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 3, 2006