TO:
RECEIVED
CLERK’S OFFICE
OCT -6 2004
STATE OF ILLINOIS
Pollution Control Board
PCB 04-216
)
(Trade
Secret Appeal)
)
)
)
)
).
)
NOTICE OF FILING
Dorothy Gunn, Clerk
BradleyP. Halloran, Hearing Officer
Illinois Pollution Control Board
100 West Randolph, Suite 11-500
Chicago, IL 60601
Robert A. Messina
Illinois Environmental Regulatory
Group
3150 Roland Avenue
Springfield, IL 62703
Keith Harley
Chicago Legal Clinic
205
W. Monroe, 4th Floor
Chicago, IL 60606
Lisa Madigan
Matthew Dunn
Ann Alexander
Paula Becker Wheeler
188 West Randolph Street, Suite 2000
Chicago, illinois 60601
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 Midwest Generation’s Motion for Leave to
File the Attached Reply to Respondent’s Opposition to Midwest Generation’s Motion for Partial
Reconsideration of the Illinois Pollution Control Board’s Order of June 17, 2004, copies of
which are. herewith served upon you.
Dated: October 6, 2004
•SchiffHardin LLP
6600 Sears Tower
Chicago, IL 60606
(312) 258-5687
(
~$4aryAnnMullin’
ILLINOIS POLLUTION CONTROL BOARD
)
)
)
)
MIDWEST GENERATION EME, LLC
•
Petitioner,
V.
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
CERTIFICATE OF SERVICE
I, the undersigned, certif~rthat I have served the attached Midwest Generation’s Motion
for Leave to File the Attached Reply to Respondent’s Opposition to Midwest Generation EME,
LLC’s Motion for Partial Reconsideration ofthe Illinois Pollution Control Board’s Order of June
17,2004, by U.S. Mail, upon the following persons:
Dorothy Gunn, Clerk
Bradley P. Halloran, Hearing Officer
Illinois Pollution Control Board
100 West Randolph, Suite 11-500
Chicago, IL 60601
• Robert A. Messina
Illinois Environmental Regulatory Group
3150 Roland Avenue
Springfield, IL 62703
Dated: Chicago, illinois
October 6, 2004
Keith Harley
Chicago Legal Clinic
205 W. Monroe, 4th Floor
Chicago, IL 60606
Lisa Madigan
Matthew Dunn
Ann Alexander
Paula Becker Wheeler
188 West Randolph Street, Suite 2000
•Chicago, Illinois 60601
Respectfully submitted,
MIDWEST GENERATION EME, LLC
BY:5t4~4y21
7(~?c~
SCHIFF HARDIN LLP
6600 Sears Tower
Chicago, Illinois 60606
(312)258-5540
One ofthe Attorneys for
Midwest Generation EME, LLC
C12\ 1148394.1
•
RECEIVED
•
CLERK’S OFFICE
ILLINOIS POLLUTION CONTROL
BOARD
•
OCT -62004
STATE OF ILLINOIS
•
Pollution Control Board
MIDWEST GENERATION EME, LLC
)
•
Petitioner,
)
PCB 04-216
•
•
•
)
(Trade Secret Appeal)
v.
•
)
)
•)
ILLINOIS ENVIRONMENTAL
•
)
PROTECTION AGENCY,
)
•
Respondent,
•
)
MOTION FOR LEAVE TO FILE THE ATTACHED REPLY TO
RESPONDENT’S OPPOSITION TO
MIDWEST
GENERATION’S
MOTION FOR PARTIAL RECONSIDERATION OF THE
•
•
ILLINOIS POLLUTION CONTROL BOARD’S ORDER
OF
JUNE
17, 2004
Pursuant to 35 111. Adm. Code
101.500(e),
Midwest Generation EME, LLC ‘(“Midwest
Generation”) respectfully submits this Motion for Leave to File the• Attached Reply to
Respondent’s Opposition to Midwest Generation’s Motion for Partial Reconsideration of the
Illinois Pollution Control Board’s Order of June 17, 2004. In support of this motion, Midwest
Generation states as follows:
1.
This matter concerns IEPA’s denial of trade secret protection to a document
referred to as the Continuing Property Record (“CPR”). The CPR contains a listing ofhardware
and equipment that has been added and retired from six coal-fired generating stations formerly
owned by Commonwealth Edison (“CornEd”) and currently owned by Midwest Generation.
CornEd submitted the CPR to the United States Environmental Protection Agency (“USEPA”) in
response to an USEPA information request under the Clean Air Act; at the USEPA’s suggestiOn,
CornEd submitted a courtesy copy to JEPA.
•
2.
On June 3, 2004, Midwest -Generation filed a Petition for Review of IEPA’s
Denial of Trade Secret Protection. On June 22, 2004, the Illinois Pollution Control Board (the
“Board”) accepted the Petition forReview and held, in part, that the Board hearing on this matter
“will be based exclusively on the record before IEPA at the time it issued its trade secret
determination.” June 17, 2004 Order at 4. On August 17, 2004, Midwest Generation filed a
Motion forPartial Reconsideration ofthe Board’s Order ofJune 17, 2004 (hereinafter referredto
as “Motion for Reconsideration”) seeking reversal ofthe portion ofthe Board’s Order requiring
the Board hearing to be on JEPA’s record.
•
3.
In support of its Motion for Reconsideration, Midwest Generation argues that
limiting the hearin•g to the record would deny Midwest Generation due process. Midwest
Generation contends that the IEPA procedures for making trade secret determinations lacked
fundamental duc process protections because the procedures did. not provide a rneanii.gftil
opportunity for Midwest Generation to be heard. Specifically, Midwest Generation was not
informed ofthe reasons for denial of trade secret protection and was not given an opportunity to
offer evidence into the record rebutting the reasoning, whatever it may have been. Midwest
Generation argues that a Board hearing limited to this deficient record would similarly deprive
Midwest Generation of due process. Midwest Generation has asked that the Board partially
reverse its Order and allow Midwest Generation to supplement the record once IEPA articulates
the basis for its reasoning.
4.
In its Opposition, JEPA, for the first time, articulates one of the reasons for its
denial. In a novel and nonsensical position, IEPA claims the CPR, which is only a listing of
hardware and equipment additions and retirements, is some how “emissions data” which is not
protectable as a trade secret. IEPA then argues that Midwest Generation should have somehow
-2-
guessed that this would have been the IEPA’s reasoning and should have pre-emptorially
addressed this issue in its Statement of Justification, the only opportunity Midwest Generation
• had to submit evidence into the record. Although the “emissions data” theory was not articulated
• until the Opposition, JEPA chastises Midwest Generation for not identifying documents in its
Motion for Reconsideration that it would like to submit into the record.rebutting this theory and
the other, as ofyet unarticulated theories, upon which it based its denial.
5.
Midwest Generation will be materially prejudiced unless it is allowed to Reply to
this Opposition. It is only in this Opposition that JEPA has first articulated any ofthe reasons for
its denial of trade secret protection to the CPR~ So, it only now, in the attached Reply, that
Midwest Generation can explain why it would have been impossible, at the time it submitted its
Statement of Justification, to guess that IEPA would consider the CPR “emissions data.” It is
only now in the attached Reply, that Midwest Generation can identify the types of documents it.
would like to submit into the record disputing the claim that the CPR is somehow• “emissions
data.”
6.
Further, in its Opposition, IEPA mischaracterized Board cases, claiming there is a
long history oflimiting hearings in trade secret appeals to the record before IEPA. In its Reply,
Midwest Generation properly characterizes these cases as pertaining only to permit appeals, and
demonstrates how authority cited by IEPA supports Midwest Generation’s position that hearings
on the record are improper if IEPA procedures violated fundamental due process requirements.
For the reasons stated here, Midwest Generation will be materially prejudiced unless it is
allowed to file the attached Reply. WHEREFORE, Midwest Generation respectfully requests
that the Board grant Midwest Generation’s Motion for Leave to File the.Attached Reply.
-3-
Dated: October 6, 2004
Respectfully submitted,
MID WEST GENERATION EME, LLC
By:
Sheld A. Zabel
MaryAnn Mullin
Andrew N. Sawula
.SCHIFF RARD1N LLP
6600 Sears Tower
•
Chicago, Illinois 60606
(3 12) 258-5687
Attorneys for
Midwest Generation EME, LLC
-4-
••
ILLINOIS POLLUTION CONTROL BOARD
0~cE
•)
MIDWEST GENERATION EME, LLC
)
S~~tco~ 6O~
Petitioner,
•
)
PCB
•
)
(Trade Secret Appeal)
v.
)
)
)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
)
MIDWEST GENERATION’S REPLY TO RESPONDENT’S OPPOSITION TO
MIDWEST GENERATION’S MOTION FOR
PARTIAL RECONSIDERATION OF THE ILLINOIS POLLUTION
CONTROL BOARD’S ORDER OF
JUNE 17,2004
In its Motion for Partial Reconsideration, Midwest Generation EME, LLC (“Midwest
Generation”) has placed an issue before the Illinois Pollution Control Board (the “Board”) that
appears to be an issue offirst impression. Midwest Generation moved for reconsideration of the
portion of the Board’s June 17, 2004 Order requiring the Board hearing in this trade secret
appeal be based exclusively on the record before the Illinois Environmental Protection Agency
(“JEPA”) at the time it issued its trade secret determination. Midwest GeneratiOn argued that this
portion of the Order violates Midwest Generation’s right to due process. Midwest Generation
identified facts, which JEPA has not contested, establishing that JEPA procedures did not
provide Midwest Generation with the opportunity to offer evidence to rebut IEPA’s findings.
Midwest Generation argued that the right to offer evidence in rebuttal is a fundamental due
process right that is not cured if the Board hearing is limited to the deficient JEPA record.
In its Opposition, IEPA argues that the Board regulations and precedent require the
hearings to be on the record and that Midwest Generation is not entitled to offer evidence in
rebuttal. Neither ofthese arguments is persuasive.
I.
IEPA’S
TRADE
SECRET PROCEDURES DID NOT
OFFER
MIDWEST
GENERATION AN
OPPORTUNITY TO
OFFER EVIDENCE IN REBUTTAL.
IEPA asserts that Midwest Generation had ample opportunity to submit information to
JEPA, but it does not contest that Midwest Generation’s only opportunity to submit information
was when it submitted its initial Statement ofJustification. The Statement ofJustification is only
required to address two issues
—
whether the materials have become publicly available and
whether the materials have competitive value. 35 Ill. Adm. Code 130.208 The Statement of
Justification is not required to guess or devine IEPA’s reasoning. Here, of course, that
reasoning remains largely unknown and JEPA does not contest.that the, denial failed to set forth
its reasoning. JEPA also does not contest that Midwest Generation had no opportunity to
respond to whatever IEPA’s reasons were forthe denial before it became final.
IEPA appears to argue, instead, that Midwest GeneratiOn had the obligation to anticipate
IEPA’s reasoning and should have pre-emptorily proffered evidence in response. Again, there is,
no requirement that Midwest Generation must guess at IEPA’s reasoning and JEPA articulates
no reason nor cites any authonty for its position that the nght 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 establishing that the right to know the basis for an adverse decision and
have an opportunity to offer evidence in rebuttal is a fundamental due process right.
$~,
Memorandum in Support of Midwest Generation’s Motion for Partial Reconsideration
(“Midwest Generation’s Memorandum”) at 4-6.
IEPA argues that Midwest Generation’s constitutional arguments should be rejected
because Midwest Generation has not identified specific additional evidence it wishes to submit.
But, apart from the position first articulated in the Opposition regarding IEPA’s reasoning for
determining that the Continuing Property Record (“CPR”) constituted “emissions data,” Midwest
-2-
Generation is still not on notice as to the EPA’s reasoning in denying its trade secret claims.
Given that Midwest Generation did not even know why the claims were rejected, and that is still
less than clear, it was hardly in a position to identify evidence it would introduce to rebut this
reasoning.
IEPA’s novel theory that the CPR is somehow “emissions data” perfectly illustrates the
problems associated with the procedures at the EPA level. The CPR is a financial accounting of
hardware additions and retirements from Midwest Generation’s six coal fired electric generating
stations. The CPR does not contain information on pollutants emitted from the sources, and
there is no information on the CPR that could be used to calculate emissions from the sources.
In its Statement of Justification, Midwest Generation certified that the CPR had not been
released to the public and explained why the information contained in the CPR has competitive
value to the company This certification creates a rebuttable presumption that the information
has not been released to the public. 35111. Adrn. Code 130.208 As IEPA acknowledges in its
Opposition, these are the only two showings required by the trade secret regulations Opposition
at 6. 35 Ill. Adm. Code 130.208 While the trade secret statute excludes certain types of
information from protection, the regulations do not require submitters to’ demonstrate, at the
Outset, that the information does not fall within any of the statute’s many exclusions, such as
emissions data. ~
35 Iii. Adm. Code 130 et seq. Midwest Generation was not required to
guess that IEPA might conclude one ofthose exclusions applied and it certainly had no notice
that EPA had, or would post hoc 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
-3-
this new interpretation or to rebut EPA’s totally unanticipated and unjhstified categorization of
the CPR as “emissions data.”
Although IEPA’s position is still unclear, it seems to be taking the position that
“emissions data” is any information relevant to determining how much a particular facility is
“authorized to emit”. IEPA’s interpretation of “emissions data” is strained, leading it to an
unauthorized and unjustified expansion of the definition to include the CPR. EPA relies upon
the following definition of“emissions data”:
Infonnation necessary to determine the identity, amount, frequency, concentration
or other characteristics (to the extent related to air quality) ofthe emissions which,
under an applicable standard or limitation, the source was authorized to emit
(including, to the extent necessary for such purposes, a description ofthe manner
orrate ofoperation ofthe source).
40 CFR 2.301(a)(2)(i)(B). Pursuant to this definition, “emissions data” is the data necessary to
determine the identity, amount, frequency, concentration or other characteristics of a source’s
emissions. The regulation says “under an applicable standard,” it does not say “to determine
what the applicable standard is.” The regulation presumes knowledge ofthe applicable standard;
“emissions data” is the information used to determine compliance with the standard
—
with the
authorization
—
not the information used to determine what the standard or authorization is. Even
if, as EPA contends, the CPR will aid in determining “what the facility is authorized to emit,”
Opposition at 6-7, that is determining what regulatory limits may apply, but is not, itself,
“emissions data.”
Midwest Generation is fully aware that the United States Environmental Protection
Agency (“USEPA”) requested Commonwealth Edison’s (“ComEd’s”) CPR in connection with
an investigation of CornEd’s compliance with the Clean Air Act’s New Source Review (“NSR”)
-4-
provisions.1 These provisions require sources to apply for NSR permits if they undertake major
modifications to the facility. ~ ~g. 40 CFR 52.21. Tn relevant part, a major modification is
defined as a physical change that results in a significant net emissions increase. 40 .CFR 52.21
(2)(i). Physical changes do not include routine maintenance, repair and replacement. 40 CFR
52.21 (2)(iii). USEPA requested the CPR to determine if ComEd had undertaken any non-
routine physical changes, not to calculate ComEd’s emissions. USEPA already has all of
CornEd’s emissions data. To determine if the projects identified on the CPR caused emissions
increases, USEPA will use the actual emissions data CornEd has annually submitted to USEPA
as required by its permit.
However, unless the Board reverses its ruling, Midwest Generation will be prevented
•
from showing that it is impossible to calculate emissions data from the CPR, will be prevented
from introducing evidence that CornEd has submitted all actual emissions data without a trade
secret claim, will be’ prevented from introducing evidence that the USEPA and EPA have never
before considered the information contained in the CPR to be emissions data, and will be
prevented from introducing evidence from experts that this interpretation is improper.
Midwest Generation does not know IEPA’s other reasons, if any, for its demal of trade
L
secret status to the CPR. If IEPA determined that release of the CPR would not cause
competitive harm, Midwest Generation does not know the basis for that determination and does
1 Even assuming the CPR is “emissions data”, the trade secret provisions of the
Environmental Protection Act only exclude from protection “emission data reported to or
otherwise obtained by the Agency, the Board or the Department in connection with any
examination, inspection or proceeding under this Act.” 415 ILCS
5/7(c).
The CPR was neither
reported to JEPA nor was it obtained in a proceeding under the Act; rather, IEPA obtained a copy
of the CPR after CornEd submitted the document in response to the USEPA’s investigation
under the federal Clean Air Act. Accordingly, even if the CPR can somehow be considered
“emissions data,” the trade secret provisions of the Environmental Protection Act do not
automatically exempt the CPR from trade secrete protection.
-5-
not concede that EPA has any expertise in matters of competition. Given the opportunity, if
Midwest Generation had known the basis of the denial, it would have submitted additional
evidence on how the release ofthe CPR can cause competitive harm to Midwest Generation.
II.
Board Precedent
Does Not Support Limiting Hearings
to the Agency Record in
Trade Secret Appeals.
There is no basis for IEPA’s claim that there is a long history ofBoard precedent limiting
hearings in trade secret appeals to the record. EPA has not cited a single case in support ofthis
assertion. Instead, EPA has cited cases concerning appeals of permit denials. These cases are
inapposite for exactly the reason this issue is before the Board today. Pçrmit applicants, unlike
those seeking trade secret protection, are given an opportunity to respond to a potential denial
before the denial is issued. As noted in Community Landfill:
A ‘Wells letter’, is a letter that the Agency is required to submit to a
permit applicant under certain conditions pursuant’ to Wells Manufacturing
Company v. IEPA. 195 Ill. App. 3d
593; 552
N.E. 2d 107 (1st Dist. 1990) The
letter provides the permit applicants an opportunity to respond to potential denial
reasons before a denial letter is issued.
Community Landfill v. IEPA, PCB 01-170, 2001 WL 1598282 at
5
(Ill. Pol. Control Bd. 2001).
As discussed in Midwest Generation’s Memorandum, the Wells court found that the existing
permit proceedings were flawed at the IEPA level because the permit applicant did not have the
opportunity to proffer evidence in rebuttal to JEPA findings. Wells at
597.
$~~
Midwest
Generation’s Memorandum at 4.
As a result ofthe Wells decision, IEPA has adopted procedures whereby it notifies permit
applicants, the “Wells letter,” ofits intent to deny, accompanied by a detailed statement of basis.
See, ~
Ill. Adm. Code 705.141. The “Wells letter” was developed to cure, in permit
proceedings, the very same due process problem Midwest Generation has raised here. As a
result, permit applicants now have an opportunity to submit additional comments and data as
-6-
well as request a public hearing before the denial is final.
~,
~g~,35 Ill. Adm. Code 705.181.
Accordingly, in permit appeals, it may be appropriate to limit a Board hearing to the record
before the JEPA because the permit applicant has had a meaningful opportunity to offer evidence
in rebuttal, unlike those seeking trade secret protection. In fact, Wells is more indicative ofthe
need for EPA to provide Midwest Generation with the opportunity to proffer evidence in
rebuttal to the denial of trade secret status for the CPR. Given Wells, IEPA’s reference to the
“long history of Board precedent limiting trade secret appeal hearings to the record” and its
failure to cite any trade secret cases, particularly cases subsequent to Wells, is completely
misplaced and supports Midwest Generation’s position.
Further, many of the permit appeal cases relied on by EPA actually support the
proposition that the Board allows petitioners to supplement the record if the petitioners were
denied that opportunity at the JEPA level. EPA’s argument that Community Landfill does not
stand for an entitlement to a
de novo
hearing is largely irrelevant. In Community Landfill, the
Board allowed petitioners to supplement the record to rebut EPA findings, the precise remedy
Midwest Generation is seeking. In Community Landfill, the Board cited the general proposition
that hearings in denials of permit appeals are held on the record, but the. Board made an
exception to that general proposition and allowed the petitioner an opportunity to offer evidence
Communityin
rebuttal,
Landfillbecausev.theTEPA,petitionerat 4.
had been denied that opportunity at the EPA level.2
Similarly, in Environmental Site Developers. Inc v. EPA, an appeal of a denial ofa solid
waste disposal site development permit, the Board allowed petitioners to introduce new evidence
2 There could be a serious question whether even this, or a hearing
de novo
is sufficient to
satisfy due process; that the opportunity to rebut must occur at the initial decision-making stage,
at the EPA stage, not later. The Board could avoi,d this issue by remanding this case back to
JEPA and requiring IEPA to follow procedures that comportwith due process.
-7-
at the hearing. Environmental Site Developers v. Environmental Protection Agency, PCB 80-
15,1980 WL 13571 *3 (June 12, 1980). During the hearing, EPA testified that it denied the
permit because of the water pollution potential of certain sludges, although this basis was not
specified in the permit denial letter. j~ The Board allowed petitioners to introduce additional
evidence, not included in its application, proving that the material was inert. j4. In reversing the
EPA’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) ofthe Act in issuing a denial letter
and had ESD responded with a supplemental application.” j~. Accordingly, in both Community
Landfill and Environmental Site Developers, the’ Board did not restrict the hearing to the EPA’s
record; rather it allowed permittees to supplement the record as fairness and due process
required.
EPA argues that the Board regulation requiring that appeals of EPA trade secret
determinations be heard exclusively on ‘the record preserves EPA’ s proper decisionmaking role
and prevents forum shopping. Opposition at 1. Midwest Generation is not forum shopping. The
company would have gladly provided JEPA with evidence in rebuttal had it known of EPA’s
reasons for the denial and been given an opportunity to offer evidence in rebuttal. Midwest
Generation is only seeking to exercise its fundamental right to due process, not to forum shop.
For the reasons set forth above, Midwest Generation respectfully requests that the Board
partially reverse its order and find that the Midwest Generation be permitted to supplement the
record in order to offer evidence in rebuttal.
-8-
Dated: October6, 2004
Respectfully submitted,
MIDWEST GENERATION EME, LLC
By:___________
Mary Ann Mullin
Andrew N. Sawula
SCHIFF HARDIN LLP
6600 Sears Tower
Chicago, illinois 60606
•
(312)258-5687
Attorneys for
•
Midwest Generation EME, LLC
CH2\1148471.4
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