RECE WED
CLERK’S OFFICE
MIDWEST GENERATION EME, LLC
Petitioner,
V.
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
AUG 27 2004
)
PCB 04-1
85
)
(Trade Secret Appeal)
)
)
)
)
)
)
)
)
NOTICE OF FILING
TO:
Robert A. Messina
Illinois Environmental Regulatory
Group
3150 Roland Avenue
Springfield, IL 62703
Lisa Madigan
Matthew Dunn
Ann Alexander
PaulaBecker Wheeler
188 West Randolph Street, Suite 2000
Chicago, Illinois 60601
Keith Harley
Annie Pike
Chicago Legal Clinic
205 W. Monroe, 4th Floor
Chicago, IL 60606
Bradley P. Halloran, Hearing Officer
Illinois Pollution Control Board
100 West Randolph, Suite 11-500
Chicago, IL 60601
Mary Ann Mullin
ILLINOIS POLLUTION CONTROL BOARD
STATE OF ILLINOIS
)
PoHution Control Board
PLEASE TAKE NOTICE that I have today filed with the Office of the Clerk of the Pollution
Control Board an original (1) and nine (9) copies of Petitioner’s Reply to Respondent’s
Opposition to Midwest Generation EME, LLC’s Motion for Partial Reconsideration of the
Illinois Pollution Control Board’s Order of May 6, 2004, copies of which are herewith served
upon you.
Dated: August 27, 2004
SchiffHardin LLP
6600 Sears Tower
Chicago, IL 60606
(312) 258-5687
CH2\ 1115952.1
CERTIFICATE OF SERVICE
I, the undersigned, certify that I have served the attached
Respondent’s Opposition to Midwest Generation EME, LLC’s
Reconsideration of the Illinois Pollution Control Board’s Order of May
upon the following persons:
Robert A. Messina
Keith Harley
Illinois Environmental Regulatory Group
3150 Roland Avenue
Springfield, IL 62703
Lisa Madigan
Matthew Dunn
Ann Alexander
Paula Becker Wheeler
188 West Randolph Street, Suite 2000
Chicago, Illinois 60601
Dated: Chicago, Illinois
August 27, 2004
Bradley P. Halloran, Hearing Officer
Illinois Pollution Control Board
100 West Randolph, Suite 11-500
Chicago, IL 60601
SCHIFF HARDIN LLP
6600 Sears Tower
Chicago, Illinois 60606
(312) 258-5540
One ofthe Attorneys for
Midwest Generation EME, LLC
Petitioner’s Reply to
Motion for Partial
6,
2004, by U.S. Mail,
Annie Pike
Chicago Legal Clinic
205 W. Monroe, 4th Floor
Chicago, IL 60606
Respectfully submitted,
MIDWEST GENERATION EME, LLC
By:
c?~1~2
Andrew N. Sawula
CH2\ 1138448.1
RECEIVED
CLERK’S OFFICE
ILLINOIS POLLUTION CONTROL
BOARD
AUG 27 2004
STATE OF ILLINOIS
Pollution Control Board
MIDWEST GENERATION EME, LLC
)
Petitioner,
)
PCB 04-185
)
(Trade Secret Appeal)
v.
)
)
)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
)
PETITIONER’S REPLY TO RESPONDENT’S OPPOSITION TO
MIDWEST GENERATION EME, LLC’S MOTION FOR
PARTIAL RECONSIDERATION OF THE ILLINOIS POLLUTION
CONTROL BOARD’S ORDER OF MAY 6, 2004
Midwest Generation EME, LLC (hereafter “Midwest Generation” or “Petitioner”) has
moved for reconsideration ofthe holding in the Board’s May 6, 2004 Order that the hearing on
this matter “will be based exclusively on the record before IEPA at the time it issued its trade
secret determination.” Order at 3. For the reasons summarized below and more fully set forth in
the Memorandum of Law in Support of its Motion (“Petitioner’s Memorandum”), Midwest
Generation believes that this ruling violates the fundamental requirement of the due process
clause the Fourteenth Amendment of the United States Constitution and Article I, Section 2 of
the Illinois Constitution.
A hearing based exclusively on the record precludes Midwest Generation from
introducing evidence rebutting the facts and reasoning upon which IEPA based its denial. The
procedures at the IEPA level gave Midwest Generation no opportunity to respond to the IEPA’s
determination and the procedures at the Board level will not cure this denial of due process.
Midwest Generation submitted the requisite Statement of Justification for its trade secret claim in
conformance with the rules creating a rebuttal presumption that the article has not been
published, disseminated, or otherwise became a matter of general public knowledge.1 IEPA
summarily denied the claim without identifying any deficiency in Midwest Generation’s
Statement of Justification or providing a statement of its reasoning.
IEPA trade secret
procedures, unlike the FOIA procedures,2 do not give those submitting trade secret information
the opportunity to cure deficiencies or introduce evidence rebutting IEPA’s denial before the
determination is final. 35 III. Adm. Code 130 et seq. IEPA’s trade secret procedures allow the
submission of a Statement of Justification and re4uire TEPA to make a determination within
45
days. If the determination is negative, IEPA is required to give the submitter “A statement of
the State agency’s reasoning for denying the claim.” 35 Ill. Adm. Code 130.210(b)(l). Midwest
Generation is not on notice ofthe reasons for the IEPA denial and has had no opportunity at the
IEPA level to rebut the facts and reasoning supporting IEPA’s denial, whatever they may be. A
hearing based exclusively on the record will not cure this deficiency because Midwest
Generation will not be allowed to introduce evidence.
1The trade secret regulations provide: There will be a rebuttable presumption that an article has not been published,
disseminated, or otherwise become a matter ofgeneral public knowledge, if:
I)
The owner has taken reasonable measures to prevent the article from becomingavailable
to persons other than those selected by the owner to have access to the articles for limited purposes; and
2)
The Statement of Justification contains a certification that the owner has no knowledge
that the article has ever been published, disseminated, or otherwise become• a matter of general public
knowledge.
35
III. Adm. Code 130.208(b).
2
The FOIA regulations provide an opportunity for those claiming exemption from disclosure to respond to the IEPA’s
initial findings. If IEPA determines that a claim fails to meet the FOIA requirements:
the Agency shall so notify the submitter in writing, within 30 days of the date that the Agency determines that
review of the claim is required under subsection (a) ofthis Section. In such notice, the Agency must identify
the deficiency or deficiencies in the claim and provide the opportunity to cure the deficiency or deficiencies
within 10 business days of the date of the notification letter.
2 III Admin Code 1828.402 (b). Further, once the Agency makes the final decision, the submitter has the opportunity to appeal
the denial to the Director of the Agency. 2 Ill Admin Code 1828.405. The submitter is allowed to submit additional evidence in
the appeal to the Director. j.çi.
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In its Opposition, IEPA claims Midwest Generation had ample opportunity to submit
pertinent information, is not entitled to the full panoply of procedural rights, has not specifically
identified additional evidence it would like to submit, and finally, IEPA argues that the Board
should not reconsider its position because the Board has always done things this way. These
arguments are unpersuasive.
I
Midwest Generation Did
Not
Have An Effective
Opportunity
to Submit Information
toIEPA.
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IEPA does not contest that Midwest Generation’s only opportunity to submit pertinent
information was when it submitted its initial Statement of Justification. JEPA does not contest
that its denial failed to set forth the agency’s reasoning. And finally, IEPA does not contest that
Midwest Generation had no opportunity to respond to IEPA’s denial before it was final. IEPA’s
response to Midwest Generation’s argument that a minimum requirement of due process is the
requirement that all parties have an opportunity to offer evidence in rebuttal, is that Petitioner is
not entitled to a full panoply of procedure rights. IEPA articulates no reason nor cites any
authority for its position that the right to offer evidence in rebuttal is not a minimum right
guaranteed by the due process clause. IEPA does not refute the authority cited by Midwest
Generation. IEPA does not refute that Illinois Appellate courts, reviewing Board decisions, have
found an unconstitutional deprivation of due process when a party is denied an effective
opportunity to submit information at the TEPA level. See, Petitioner’s Memorandum at 4-6.
IEPA argues that Midwest Generation’s constitutional arguments should be rejected
because it has not identified specific additional evidence it wishes to submit. But, apart from the
“emissions data” argument first articulated in the IEPA’s Opposition, Midwest Generation is still
not on notice as to the IEPA’s reasoning in denying its trade secret claims~ Given that Midwest
Generation does not even know why the claims were rejected, it was hardly in a position to
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introduce evidence rebutting these claims, even if there had been an opportunity to do so. The
IEPA’s novel theory that Midwest Generation’s Project Chart is somehow “emissions data”
perfectly illustrates the problems associated with denying due process at the IEPA level.
The Project Chart is a list of hardware additions and retirements from Midwest
Generation’s six coal fired electric generating stations. In its Statement of Justification, Midwest
Generation certified that this information had not been released to the public and explained why
the information has competitive value to the company. These are the only two showings
required by the trade secret regulations, and the certification creates a rebuttable presumption
that the information has not been released to the public. 35 Ill Admin Code 130.208. Midwest
Generation thought it obvious that the Project Chart, merely a listing of hardware additions and
retirements, is not emissions data. There is no requirement in the statute or regulations to
demonstrate that the information does not constitute emissions data, probably because it is
obvious when information is emissions data.
$~
35 Iii. Adm. Code 130 et seq. Midwest
Generation was not on notice that IEPA would come up with a nonsensical interpretation of the
term “emissions data”; accordingly, Midwest Generation could not have dealt with this argument
pre-emptorily in its Statement of Justification and had no opportunity to do so after learning of
this new interpretation. Although IEPA’s position is still unclear,3 unless the Board reverses its
ruling, Midwest Generation will be prevented from showing that it is impossible to calculate
emissions data from the Project Chart, will be prevented from introducing evidence that Midwest
Generation has submitted all actual emissions data without a trade secret claim, from introducing
As IEPA contends, Midwest Generation is fully aware ofthe New Source Review (“NSR”) regulations and reasons
for USEPA’s request for the information on contained on the Project Chart. Even if, as IEPA contends, the Project Chart will aid
in determining “what the facility is authorized to emit.” Opposition at 6-7, that is determining what regulatory limits apply, but is
not “emissions data.”
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evidence that the USEPA and IEPA have never before considered the information contained in
the Project Chart to be emissions data and from introducing evidence from experts that this
interpretation is improper.
Midwest Generation does not know IEPA’s other reasons, if any, for its denial of trade
secret status to the Project Chart. IfTEPA determined that release ofthe Project Chart would not
cause competitive hann, Midwest Generation does not know the basis for that determination and
does not concede that JEPA is an expert in matters of competition. Given the opportunity, if
Midwest Generation had known the basis of the denial, it should have submitted additional
evidence on how the release of the Project Chart can cause competitive harm to Midwest
Generation.
As to the other piece oftrade secret information submitted to IEPA, the Generation Chart,
Midwest Generation does not know the basis of IEPA’s denial. Once IEPA makes its position
clear, Midwest Generation will be denied the opportunity to refute the facts and conclusions.
II
The Regulations Permit Midwest Generation to Supplement the Record.
As set forth in Petitioner’s Memorandum, Board regulations provide that if a party
desires to introduce evidence before the Board with respect to any disputed issue of fact the
Board will conduct a separate hearing and receive evidence with respect to that issue of fact. 35
Ill Adm Code 105.214(a). IEPA argues that this sentence merely modifies the proceeding
sentence in the regulation regarding agreements to supplement the record. But, if the parties
agree to supplement the record, Midwest Generation fails to see why a separate hearing would be
required.
In support of its argument, IEPA relies upon a hearing officer ruling pertaining, not to the
regulation at issue, but rather to a statutory provision governing permit appeals. See Community
Landfill, PCB 01-170, transcript Volume 1 at 233-37. IEPA has failed to cite any Board
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precedent as to the meaning of this regulatory provision. Midwest Generation believes a plain
reading ofthe text is warranted.
III
Board Precedent, Therefore, Does
Not Support
Limiting Hearings to the Agency
Recordin Trade Secret Appeals.
The Board should not be persuaded by IEPA’s argument that the hearing in this matter
should be based exclusively on the record because that is the way the Board has always done
things. All authority cited 4y Respondents pertain to permit appeals. While hearings on the
record may be appropriate in permit appeals because permitees are afforded due process at the
IEPA level, hearings on the record are not appropriate in appeals of IEPA trade secret
determinations. ~
Further, the cases cited by IEPA actually support the proposition that the Board allows
petitioners to introduce new evidence at Board hearings if petitioners had been denied that
opportunity at the agency level. In Community Landfill the Board expressly allowed a petitioner
to supplement the record with information that was not part of the agency’s record because the
information pertained to an estoppel argument the petitioner did not know it would have to make
until after it received IEPA’s permit denial. Community Landfill v. IEPA, PCB 0 1-170; 2001
WL 1598272 at 4 (Ill. Pol. Control Bd. 2001). Similarly, in Environmental Site Developers, Inc
v. EPA, an appeal of a denial of a solid waste disposal site development permit, the Board
allowed petitioners to introduce new evidence at the hearing. Environmental Site Developers v.
Environmental Protection Agency, PCB 80-15,1980 WL 13571 *3 (June12, 1980). During the
hearing, the agency testified that it denied the permit because of the water pollution potential of
If, for example, IEPA tentatively decides to deny a Resource Conservation and Recovery Ace (RCRA) permit or
Underground Injection Control permit, IEPA must issue a notice of intent to deny accompanied by a detailed statement ofbasis.
35 ILL Adm Code 705.141. The permittees then have an opportunity to submit additional comments and data as well as request
a public hearing before the denial is final. 35 IIlAdm Code 705.181.
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certain sludges, although this basis was not specified in the permit denial letter. Id. The Board
allowed petitioners to introduce additional evidence, not included in its application, providing
that the material was inert. In reversing the IEPA’s decision the Board observed: “This case
could have been handled more easily had the Agency fully complied with the requirements of
Section 39(a) of the Act in issuing a denial letter and had ESO responded with a supplemental
application.”
Id.
Accordingly, in both Community Landfill and Environmental Site Developers,
cases cited by JEPA, the Board did not restrict the hearing to the agency’s record; rather it
allowed permittees to supplement the record as fairness requires.
Even if the Board has always limited its review of trade secret determinations to the
record developed by IEPA, this is not determinative of whether Midwest Generation’s due
process rights have been violated. As discussed in Midwest Generation’s Memorandum,
Appellate courts look to constitutional principles, not the Board’s past practices. Petitioners
Memorandum at 3-6.
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For the reasons set forth above, Midwest Generation respectfully requests that the Board
partially reverse its order and find that the hearing on this matter will be de novo.
Dated: August 27, 2004
Respectfully submitted,
MIDWEST GENERATION EME, LLC
By ShZ?AZab?”~’~’~~
Mary A. Mullin
SCHIFF HARDIN LLP
6600 Sears Tower
Chicago, Illinois 60606
(312)258-5540
Attorneys for
Midwest Generation EME, LLC
CH2\1138436.t
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