BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

)

NOx TRADING PROGRAM:

) R06-22

(Rulemaking - Air)

ADM. CODE PART 217

)

Mr. John T. Therriault

Timothy J. Fox, Esq.

lerk

of the

Board

Hearing

Officer

Illinois Pollution Control Board

Illinois Pollution Control Board

100 West Randolph Street

2125 Sout

61820

Chicago,

Illinois 60601

(VIA ELECTRONIC

Dated: August 17, 2009

ILLINOIS ENVIRONME

215 East Adams Street

ngfield, Illinois 62701

(217) 522-5512

By: /s/ Katherine D. Hodý4e

N. LaDonna Driver

Katherine D.

3150 Roland Avenue

Post Office Box 5776

Illinois 62705

(217) 523-4900

Electronic Filing - Received, Clerk's Office, August 17, 2009

* * * * * PC # 15 * * * * *

---

LLUTION CONTROL BOA

NTS TO 35

R06-22

. CODE PART 217

PROTECTION

OIS EN

THE ILLINO

ENCY'S RESPONSE TO MOTION FOR EMERGENCY

OTION FOR EXPEDITED ACTION ON TILE ILLINOI

NOW

COMES the ILLINOIS ENVIRONMENTAL REGU

G"), by and through its attorneys, Alec M. Davis and HODGE DWY

Control

Motion for

d") August 6, 2009

00 and the Illinois Pollution

edited Action on IERG's Alternat

`Mot ons") filed with the Boar

UP

on Agency's ("111inois EPA") Rcsr-,once

ove-referenced

ions with the Board

the

Board

adopt an emergency rule in order to provide a mee

which 2009 NOx allowances could be

Clean Air It

1

IR

zone

Season

TradinLy

'am for the 2010

control period and beyond. Sae Motion for Emergency Rule and Moti

On August 3, 2009,

d to budget units su

anal adopt an alternative proposal to bring budget units into the

of NOx Tracing Program:

---

Amendments to 35 111

Adm. Code Part 217, R06-22 (I11.Pol.Control.Bd.

Aug. 3, 2009)

(rulem

s on August 13,

2009, and pursuant to the Board's

August 6, 2009 Order, IERG

hereafter cited as "R06-22").

t The Illinois EPA filed a Response

to IERG's

t

at

Expedited Action,

R06-22 (III.Pol.Control.Bd.

Aug. 13, 2009) (hereafter

cited as "Response");

Board Order, R06-22 (11I.Pol.Control.Bd.

Aug.

6, 20

Illinois EPA's Response and

is EPA's Response.

for IERG"s

Motions and urges the Board to

Bran

filed, provide suffici

on and support for the

Board to grant hot

s Response to Motion

e

to the

415

ilure to see that such mandate

is implemented. IERG

fhc Board,

at this time, to take immediate

action on IERG's

Rule. As set forth subsequently

in

information in support

of IE

for the Board's

considera

develop a

that

Board request addi

provide such

work with the Illinois EPA to

to ensure the

allocation

of allowances for the

2009 ozone season, IERG

requests that the Board not

he Motion for Emergency

Rule.

s

Motion

for Emergency Rule cited

hereafter as "IERG MER." Motion for

Expedited Action cited

hereafter

as "IERG MEA."

2

---

11. NOx TRADtNG PROGRAM

requires a

SIP Call obligations for both el

ading program. 415

u

discussed under

Section

9.9 of the Act, which is clearly enti

s s_"

trading

!. (Emphasis added.) Section 9.9(b) requires the Agency to propose and the

Board to adopt regulations to

implement an interstate

5/9.

ions pursuant the October 27, 1998 Federal Register on regional transport (overtly

labeled by the General Assembly as the

ion Agency ("USEPA"), in the CA

stated is still

forward by the Illinois E

en

s obsolete

stating that the Section 9.9

24. Apparently, th

agency, decided to move to tr

passed

0

non-E

rading_proý-,ram.

415 ILCS

tion 9.9(x)(1) references the need to reduce

is sta

nois are now usurped.

tion that a federal administrati

void legislation passed by the

General Assembly. Assn

Section 9.9's mandate for non-

trading stands, especially since the NOx SIP Call obligation for affected

and adopted Subpart U. Response

at

T

USEPA, a federal administra

LCS 519.9. NOx

its ("EGUs") and non-EGUs are

non-EGU emission

trading laws

ois EPA has provided no legal authority for

sources remains in

full force

and

effect.

---

The Illinois EPA next attempts to

circumvent Section 9.9's trading requirements

for non-EG

to the NOx

While

"Genera

not have

all Trading Program and the adoption

of the CAIR program." Id.

disagree with

this statement, it is obvious that the General

Assembly has not seen fit to pass any legislation, nor, to

IERG's

requirement

n-EGUs. As such, the legislative

mandate for NOx

stands as

applicable law in Illinois that must be fulfilled by the

Boa

Section 9

.F

CY

pa

Illinois

eality is

a NOx trading system for non-EGtfs.

And indeed, CAIR provi

Us.

5/9.9(b). Although

has the

GUs, to

9.9 requires

system

`no longer administer the trading

it NOx SIP Call

administered

cap and trade program will also adopt the

s by statin

1

g ested the

same, that would amend Section 9.9 to do away with the

ason

model rule." 70 Fed. Reg. 25275 (May 12, 2005). (Emphasis

added.)

---

The Illinois EPA states

that it has had discussions with U

outstanding NOx SIP Call budget for 2009 ozone control period can be met." Response

at T 21. The conclusion

that is alleged to have been derived from such discussions is that

an e scion report showing that the NOx budget is met "would suffice lieu of

adopted measures." Id.

the

111i

has failed to provide

any

documentation

regarding this agreement.

understanding that such an agreement would be in violation of

the requirements of 40 C.F.R.

("SIP"

however

reduct

Ox budget. 40 C.F.R.

§

51.121

The Illinois

s that its obligations under 40 C.F.R.

§

51.121(r)(2) were net with the various NOx

hat specify specific control measures. Response at

J[

24.

IERG questions

start in 2012. Further, the provisions of 40 C.F.R.

§

51.123(e) and

(bb) allow a state to adopt the LAIR ozone

season emissions trading program for non-

EGUs

in lieu of haviru4 to adopt specific emission control measures under Section

C.

it has not received

USEPA that it is deficient in demonstrating that the NOx SIP Call budget will be met, but

the Illinois EPA

states, without proof, that it has received "every indict

a State Implementation Plan

ion that shows enforceable control measures have been adopted that will

can

meet the requirements of 40 C.F.R.

§

51.121(r)(2) by submitting a "demonstration

---

ported

emissions front the applicable sources" to show that "the budget has been

met." Response at e 23. Again, the Illinois EPA provides

no

documentation

from

USEPA substantiating the

"indications" that it is meeting the requirements of 40 C.F.R.

§

51.12

subm

(r)(2). In fact, USEPA did provide notice to the Illinois EPA that the State's LAIR

did not address

non-EGUs. 72 Fed. Reg. 58528, 58531 (act. 16,

2007) (stating that

of

s

ois' LAIR NOx ozone

season trading program addresses the

from EGUs

ic] not address emissions from non-EGUs that are

covered by the NOx SIP Call tr

ose a trading program

lies

EGUs into the C

ol.Control.

of 2009.''

also Post-Hearing

Comments

8-1

ois

ol.I3d. Mar. 23, 2009)

he Matter of Nitrogen Oxides

35 Ill. Adm. Code Parts 211

after "R08-19") (stating that

iois EPA intended to "make a

regulatory proposal soon to address" its

"deficiency"

in not amending its rules for non-EGUs to ensure compliance with the

non-

EGU NOx budget). The Illinois EPA stated its

intent to propose a trading program, and

009,

gave every indication it would do so. IERG and its member

tly for the Illinois

to act on its stated

intentions.

When t

---

Illinois E

iled to do so, IERG was

compelled to step in on behalf of the owners and

operators

subject to oblir

as taken

ions under Subpart U.

requirements of

Section 9.9, the Illinois

has reversed its course at the last possible

moment. The Illinois EPA has provided purported alternative

language at

EGUs to

ports its proposal by s

osition on

that there are several new air

standards which "ti

at

ý46.

"still in flux" and

inois

h

at

IIERG's

proposal

sh

ich implements GA

Illinois for EGUs. Further, Section

sting air

quality criteria

9.9(a)(2) of the Act clearly states that the "General

Assembly

" that reducing NOx

415 ILC

s trading is a cost effective means of mee

519.9(a)(3

may hold with respect to changing air

Illinois requires that non-EGU NC)x trading be used

as a way to meet those obligations.

nois EPA's intentions were actually to

on III and

ponse that would attempt to eliminate the requirement for

ion that the

Board cannot

sanction.

I" the State's legislatively mandated trading program

for non-EGUs.

ontravention of Section 9.9 of the Act. IERG urges the Board

gly that

if

the

Board follows the Illinois EPA's path in this regard, it

o

move the Board to act to fialfill the

---

to reject such an

requirements o

III. MOTION FOR EMERGENCY RULE

trading in Illinois.

Emergency Circumstances Threat to the Public Interest

Illinois EPA states

adoption of an

emergency rule

because

individual sources cannot be sued for lack of compliance with

all Trading Program because such

program no longer

ex

es that this, however, is not the issue to be resolved. Rather, individual sources

t to Subpart U are required by existing Subpart U to hold suff cien

uances to cover NC)x emissions for the 2009 ozone season and beyond. Further,

of the facilities subject to Subpart U re

sources hold allowances available for compliance that are

not less

than

the

budget

units

4.

ent that

non-EGUs comply with the provisions of the NO

de Part 217. Absent adoption

ntact. IEl

alternative proposal, there will be no mechanism by which the sources subject to Subpart

once that "IERG has provided no evidence

members have been subject to a lawsuit . . ." Response at S[ 25. Such issue

is not yet ripe since

the potential for noncomp

ropriate and arguably

illegal approach. The Board must follow the

r until November 30,

2009, the date ors which budget units must hold

---

filing is to avoid potential litigation. The costs associated with litigation do

constitute the best use of anyone's

-- be it individual companies, state or federal

mments, or private parties - limited resources. Further, impacted sources could face

as

Board regulations, or permit conditions "shall be liable for a civil penalty of not to exceed

$50,000 for the violation and additional civil penalty of not to exceed $10,000 for each

day during which the violation continues . . ." 415 ILLS 5/42. Each ton of NUx for

allowance is not he]

CAAPP

permits, o

ovided in Section 42 of the Act,

which

states

that persons violating

the Act,

required under

both Subpart U and

tuber 30th, could potentially be deemed to be a separate

ontends that the threat of economic

hart

IERG reiterates that the obligation

to

otherwise

satisfy the NUx SIP Call remains

regulations and

ication that such is the case,

thereby absolving all sources subject to the

current Subpart U from potential liability

ements of Subpart U and their CAAPP permits, adoption of the

are necessary

in order to shield impacted

facilities

program.

rom liability and fulfill statutory requirements requiring a

The Illinois

states that "no emergency exists under the circumstances

present." Response at

T

28.

in detail in the Motion for

Emergency

Rule, an

ocedure Act ("APA"),

9

---

5 ILCS 100/5-45,

currently exists since

applicable regulations and/or their CA

linois faces the very real threat of

by the regulatory deadline.

Impacted facilities also

face significant economic hardship

ed to purchase NOx allowances. IERG

expressed

in. Its

e nforcement

actions by federal, state,

or third parties. Id. at 3. Further, as descr

below, the Secur

to be taken

I fly.

es and

Exchange Corn

111. App 3d

105, 504 N.E.2d 166 (1 st. 1987)

The Illinois

EPA states that the threat to the public as described

in

"' Response

at

ý

30 (citing Citizens for

Better Environment v. Illi

"[a]rguably analogous to an administrative

need" and "does not constitute

an

ion Control

Board,

exist under

109-1

0. The Board argued that the

emergency rulemaking was proper

appeals to the Board"

reg

period

when

facilities face potential liability of

riuits should they not hold NOx

allowances

("SEC") reporting

oblig

earn authorizations,

would ease the "transition

pted," and gave effect to the statute

since the

"argument [could] be made

that [the] sec

statute

] not self-executing." Id.

at 109.

The Court concluded that the

emergency rule was invalid and

there was an "administrative

problem that was self created and

an attem

situation was

made at the eleventh hour." Id.

at 110.

to remedy the

10

---

In this matter, the threat to the

described in the Motion for

Emergency Rule, is in no way "administrative,"

as the Illinois EPA would argue. In fact,

the threat of liability for noncompliance with applicable regulations and CAAPP permits

is real. Further, impacted sources

financial

hardship

should the

ssary since they have, in the past, rel

allowances to meet their com

NOx

the allocation of

ents.

the administrative situation was self created and a

solution was attempted at the "eleventh hour."

problem that

2010 control period and beyond.

ated

the

's Motions by failing to take action to establish a rule

one Season Tra

fore the Board its defic

rogram for the

_p;0

Mended to

"ma

Co

from Various Source Catego

I

this case, the Illinois

because of the

roposal soon to address this deficiency .

In the.Matter

of: Nitrogen Oxides Emissions

mendments to 35 Ill. A dm. Code Parts 211 and 217,

2009) (hereafter

"R08-19").

en attempt a solution at the "eleventh IlOI

. It was

IERG that was compelled to take action

of liability that faces sources su

II

---

The Illinois EPA also states that it agrees with the dissenting opinion to the

Board's final opinion issued in In the Matter of Emergency Rule Amending 7.2 psi Reid

Vapor Pressure Requirement

in the

Metro-East Area,

35111. Adm. Code 219.585(a), R95-

10

opted an emergency rule to address

federal and state a

1

- 10"). In the R95-10

onsistency between

gasoline and

to refiners, distributors, and bulk gasoline terminals resulting

s. Id.

-5. However, Board Member J.

Theodore Meyer dissented from the

opinion, "R95-10 does not m

" Dissenting Opinion,

of the emergency rule because,

anal i s

All other

a threat to the pub

rule in

the

R95-10

East

Area, 35 Ill. Adm. Code

21

PA's

1

g, but

tile Amending the

rules resulted in a situation where gas stations i

recovery equi

outlays to

(hereafter cited as

hat - a

s warranted

oard determine that

also

made

the same

determination in

]it the Matter

Gasoline Vapor Recovery Rule in the Metro-

(d), where

the

Board found that

uncertainty as to the

board vapor

compliance deadline

0

S tage 11 vapor

which outlays would be unnecessary if the USEPA promulgated

or recovery rules.

er of Emergency Rule Amending the Stage Il

Gasoline Vapor Recovery Rule in the Metro-East Area, 35 Ill. Adm. Code 219.5

12

Electronic Filing - Received, Clerk's Office, August 17, 2009

* * * * * PC # 15 * * * * *

---

R93-12 at *5 (111.Pol.Control.Bd.

May 20, 1993) (hereafter ci

ificantly, the Board stated:

Emergency L°ulemaking by the

Board is justified when there is a threat to

the public interest.

The record in this case demonstrates that facilities in

area that should have complied with Stage 11 vapor

overy requirements by May 1, 1993,

would suffer extreme economic

intolerable uncertainty until the USE

for Metro-East facilities to comply with Stage 11 requirements, creates

ip if forced to comply at this

time. The court mandate for USEPA

romulgate onboard controls,

which potentially tray eliminate the need

facilities have been dace

subject to legal action b

comply with the State

I

on May 1. 1993.

oreover,

ion where they are

itizen, if they fail to

uld have taken effect

Id. at *8. (Emphasis

added.)

As in the R93-12 and R95-10 proceedings,

in this matter, impacted facili

should NC3x allowances not be allocated as

required

by

cable regulations, and thus, like the sources

in the 93-12 proceeding, they "have

been

placed in a position where they are s

conditions.

Id. As explained in the Mot

expenditure of capital to purchase

previously have been issued

without imposition

of a fee. 1n both the rulemakings referenced above,

the Board di

hards

of an emergency rule.

The impending economi

the

he potential

liability for violation of Board regulations

and CAAPP pen-nit conditions, as well as SEC

disclosure issues, amounts

to a real and serious threat to the public interest, as discussed

il below.

to legal

Electronic Filing - Received, Clerk's Office, August 17, 2009

* * * * * PC # 15 * * * * *

---

The R93-12

and R95-10 proceedings also provide additional

Board's considerations when adopting emergency

rules. In R93-12,

the Illi

ial Motion for Emergency Rule defective because "essential

*

the Board's

Motion

Board

Order

information was missing." R93-12 at 1. In

response to

order requesting

additional information, the Illinois

EPA submitted a revised

providing the

information

requested from the Board. Response to

of May 5, 1993, R93-12

(Ill.PoLCantral.Bd. May 17, 1993)(hereafter

"Response to Board Order"). In addition,

re filed in support of

the emergency rule, including

Illinois

exp l ai

the current requirements

would substantiallyimpact industry should the emergency

ru 1e

hat be adapted.

R93-

f of the hardship facing

Illinois EPA, as proponent of

mpacted

facilities, such as

various members of the regulated

community who have requested

or who support the change" proposed by

the emergency

rule. R95-10 at *4.

atter, IERG "s

Motion

ceeding, the events

ation,

why these circumstances are an emergency, and why

such circumstances

warrant the adoption o

Moreover, this Reply

provides additional information

that supports the adoption of the emergency rule. The

Board, in R93-12, adopted

an emergency rule based on the

Illinois

which

the Board deemed incomplete, and

a brief

raing the

card deemed

initial motion,

ow-up Motion that relied on a call

---

from the Illinois Petroleum Association, comments

filed

by

impacted sources, and a

single paragraph citing CBE,

and a statement that "emergency rules are being proposed to

viate a clear and present threat to the public interest, not merely administrative

ease."

Response to Board Order at 'T 8;

R93-12 at * 1. If the Board made a determination based

pport for the emergency rule provided by the Illinois EPA in the R93-12

ing, surely the detailed information

explaining the emergency circumstances in

act on non-EGUs justifies and warrants the adoption of the

it I to the

Motion for Emergency Rule.

Also note that, in this proceeding, like in R93-12 and R95-10, several companies,

why the emergency rule and

ary. See Response of Corn Products

al, Inc. to

1.Bd. Aug. 11,

of Illinoi

.Bd. Aug. 11, 2009); Response of Illinois Chamber of

9).

otions Submitted by IERG, R6-22

(III.Pol.Control.Bd.

Aug. 12, 2009); Response of 111inois Manufacturers'

Association to

ions Submitted by IERG, R6-22

(III.Pol.Control.Bd. Aug. 12, 2009); Response of

ca to Motions Submitted by IERG, R6-22 (111.Po1.Control.Bd.

A ug. 13, 2009); Response of C Petroleum

Corporation to Motions Submitted by

13, 2009); Response of Archer

Daniels

Midland

Coin to Motions

Illinois Petroleum

IERG, R6-22 (111.

IE RG, R6-22

15

---

(111TOLCo rol.Bd. Aug. 13, 2009); and Response of Mai

Motions Submitted by

ol.Control.Bd. Aug. 13, 2009).

ompany to

evidenced by the rulemaking discussed above, the Board has considered comm

related entities

that represen

from

h parties. Here, all the submittals,

excluding the Illinois EPA's Response, filed in response to IERG's Motions support

adoption of the emergency rule and alternative proposal

and explain that impacted

ility and possibility

initiated by U

Illinois EPA, the Attorney General's

Office, or citizen groups. As the Board gave

consideration to

R93-12 an

lied

IERG

requests that the Board give due consideration to the comp

ergency

rule and alternative proposal.

ding, the

ompted the

a

more

timely

['I"]he Agency was aware of

months ago and more than a month before

the May l, 1993 compliance

deadline. The Agency did not

notify this Board until May 3, 1993; after

the compliance deadline had already passed. Compounding the matt(

Agency's May 3 notification was defective, forcing additi

ly

actions

have reduced. the opportunity for this

Board to

weigh

alternative,

and perhaps more appropriate, measures in

place

of

the drastic emergency rulemaking action.

Id. at *9. As in R93-12, it is the Illinois EPA's "untimely

ac

16

---

Trading Program in a timely manner

that has caused the emergency situation that exists.

As discussed in detail

in the Motions, the Illinois EPA has been aware for months of the

need to establish a trading program

udget.

uch time

Reports riled in this rulemaking,

as well as the Illinois EPA's statement in

non-EGUs.

This

"mak

deficiency ... " in

not amending its rules for non-EG o ensure compliance with the

-EG

Comments of the Illinois

EPA,

(111.Pol.Control.Bd. Mar.

23, 2009). As the Board has considere

Illinois EPA's actions in a past ru

latory proposal soon to address this

was adopted to "replace" the prior comp

the Status

of the

layed

a part

ii

an emergency rule with a new compliance date

after 150

days, the prior "comp

amendment to Section

21

ecome the law, unless a permanent

original.) In this proceed

IERG's emergency rule offers a replacement of the

current version of Subpart U with the

NOx Ozone

Season Trading Program in order to provide a mechanism by which

2009 NOx allowances can be issued. Similarly, the alternative

proposal is intended only

Ozone Season Trading Program for the 2010

control period

an

an alternative

osal or "permanent rule"

is

necessary

ergency rule will expire after only

150 days. The Board in

recognized the

anent solution, and thus,

17

---

IERG requests

that the

Board

adopt the emergency rule and alternative proposal as

described in IERG's Motions.

The

it

CAAPP Permit Liability

at impacted sources face potential

rms of violations of CAAPP permit conditions should facilities not hold the

requisite NOx allowances as require

The Illino

their CAAPP

does not address this issu

the threat

of

liability posed

by potenti

Further, the suggested sunset provision i

I

liance with

CAA

t

its, as well as Subpart U.

. It simply ignores

nditions.

he Illinois EPA's Response

nplianee with the regulatory requirement to

NOx allowances, but it does not address the CAAPP

permit

conditions

requ

have

to undergo significant

modifications. Such sign

The Illinois

0

faced by sources,

as evidenced by the Illinois EPA's statement that "US

Id

failed to adopt an applicable program."

Response at e

22. As explained in

liability stemming from both an exis

ntial

rogram an

andpoint,

which could prompt enforcement from USEPA or the Illinois

llinois Attorney General's

gation by cit

18

---

Although the Illinois EPA states that "USEPA has indicated that a demonstration

using reported emissions

from

the

applicable sources demonstr

that the budget has

been met would suffice in lieu of having adopted measures," documen

indication is neither included with the Illinois

EPA's Response nor

this rulemaking.

n of such an

at e 22. Impacted facilities cannot rely on the Illinois EPA's

ion of discussions

with

USE

of USEPA's po

SEC Di

ERG's Motion for Emergency Rule, publicly held companies must

isputes

that

the

Illinois EPA, as

noes" for purposes of the requirement of a publicly held corporation

to deter

its Response. Response at

ý

27.

incorporates the discussion below

in regards to the Motion for Expedited

Rule. IE

to the discussion above regarding IERG's Motion for Emergency

otions and this Reply, IERG requests that the Board grant the Motion for

facilities can be

allowances

for the 2009 control period and avoid potential liability for not

holding the required

a

19

---

rates

the discussion above, as applicable, to the discussion below

regarding IERG's Motion for Expedited Action.

at the Board grant

the Motion for Expedited Action, as the Agency

indication of material prejudice that would result from the Motion

G's alternative proposal

is intended "to allow the continued tradin

mlessly as possible so that operations of industry

throughout Illinois can continue to comply with the

federal NC1x SIP Call requirements

for Non-

ois E

ed in Appe

argument fails to recognize the

fundamental economics of a trading program. The

prospect of excess, saleable allowances is intended to motivate sources to reduce

established threshold, as i

levels of budget sources. The Illinois EPA states that the alternative proposal "allocates

more al owances than

are needed by existing sources for compliance."

is EPA, however, fails to recognize that this is the direct

result of

sources

ions,

through investment in pollution control

technology

or adopting operating practices to minimize emissions of NQx, in expectation

of being able to rea

proposal

U with the

o n their investment.

As

stated

above, IER.G's alternative

erely

ed to extend the current trading program by amen

ry changes to comport with the federal C

20

---

disagrees

with the

"do not comport with pu

's conclusion that the budget and allocation

methodology

Hey and protec

at, as

it

only

intends to continue the existing trading program,

it is

seeking

the

of public policy and protection of the environment

as that previously approved

program.

IE

llinois EPA's desired

limitations of a budget no

longer than the 2011

control period.

Id.

allocated is contrary to

the

to reduce the number of

ublic policy associated with the NOx trading

Illinois EPA's position effectively

nullifies any economic

rule that have taken action to reduce their emissions,

and furt

a sunset date, with no pro

mechanism for replacing a

NOx trading rule at some time

if the

Illinois

re USEPA rulemakings

necessitate. The Illinois EPA has not

otherwise.

such a provision could

result in the expiration of a rule

rc?-:ýird to a limited duration, IERG cannot support such a provision.

eral Applicability

21

---

Federal

Apprava

1y states that the alternative proposal "is

not federally

a pprovable." Response

at T,T 8 -9 and 36-37. I ERG quest

conclusi

r the

rmination.

As discussed in IERG's Motion for Expedited

Action,

the alternative proposal

meets

budget

units into the CA

s the

CAIR

ecified

by USEPA, for bringing

NOx Ozone

Season Trading Program because the

alternative

1 rule at 40 C.F.R. Part 96 Subparts

AAAA throu

model rule, but it also

follows t

a o priate,

as

oral not only incorporates the federal

CA

225 Subpart E, which

was federally approved as

ed. Reg. 58528

"due

to the press of time" it has not

"a copy of the draft

rule to UEFA for review to ensure the approv

proposal." Response

at 1133. IE

state

that the alternative proposa

the same ti

draft to US EPA

to determine appro

eies are evident

nois EPA's

statement "if the rule being suggested

by IERG was not

approved"

w h seems to

unknown, not a foregone

conclusion. Id. at 'T 35.

Illinois

EPA has no basis to state that an

yond

what the Illinois EPA. has proposed

in Attachme

22

---

ed by USEPA. Id. at

It

34. To make

such an unequivocal statement

would have required the Illinois EPA

to have been informed by USEPA that

IER

ve proposal

was not federally approvable. In

order for USEPA to have made

it would have had to

have reviewed IERG's alternative proposal.

Yet, the Illinois EPA admits

that it did not provide a copy of the

draft rule to USEPA for

rovability. Id. at I[ 33.

d on the Illinois

EPA's admission that it has not provided

IERG's alternative

sat to USEPA. it wool

ear that

the Illinois EPA would not be in the position to

al

was or was not federally approvable.

Absent USEPA's

tion of the approv

appears to be no basis

federally

f

7 0 Fed. Reg. at 25274,

9-11, 13.

offers that there

"in the six days provi

oposed rule or s

ad time to submit

the regulatory language proposed

for USEPA's review

"to ensure the approvability of the proposal"?

Response at

IF

33. If Illinois

EPA did so, why did it not

similarly have time to forward

proposal to USEPA

for review?

The Illinois EPA also offers

that if the Board proceeds

with a short term solution,

ould do so

u

he regulatory language submitted

by the Illinois EPA in

Attachment A to its Response, "which

does not have the aforementioned

23

---

associated with" IERG's alternative proposal.

inois EPA's

. at T 12. This would seem to imply that

oposed regulatory language is federally approvable. However, as

referenced above,

IERG

questions

w

the Illino

A has provided a draft of

Attachment A to USEPA for approval; and if so, why was

to

's alternative proposal

also offers that non-EGUs can be included in the CAIR program

only if the ru

11H." Id. at e 32. Yet, the

ntical l y

to 40 C.F.R. Subparts AAAA through

that it has not completed a line by line

Id. at e 33. Absent

through 1111.

completed such analysis, it

posal, the sole purpose of

rograrn

approvable.

bases its belie

federal requi

to NOx emissions under CAIR. 40

C.F.R.

51.123. Spec

gram in a State's SI

ved:

[I]f a State adopts regulations substantively identical to subparts AAAA

of this chapter (CAIR Ozone Season NOX Trading

Program), incorporates such subparts by reference into its regulations, or

adopts regulations that differ

substantively from such subparts only as set

forth in paragraph (aa)(2) of this section, then such emissions trading

in the State's SIP revision is autornatically a roved as meeting

all budget units into the CAI

ly approvable, but may even be automatically

outlines the requ

24

---

the requirements of paragraph (q) of this section, provided that the State

has the legal authority to take such action and to implement its

responsibilities under such regulations.

40 C.F.R. § 51.123(aa)(1). (Emphasis added.)

Procedural Issues

Illinois EPA states that IERG's alternative proposal "is more correctly a

separate proposal from the subject

matter

and

scope of the present rulemaking."

Response at ýI0. IERG disagrees with the Illinois EPA's assertion. As described in

detail in the Motion for Expedited Action, the Status

Reports filed by the Illinois

g acknowledge that thi

roposal would likely need to be

placement of the NOx SIP Call

acknowledged the

2009).

been ongoi

to NC)x reduc

on replacing Subpart U with a rule to "integrate the Non-EGUs into

port,

not intend "to establish a new federal program,'" but

e at T1h; IERG MEA at 13.

In addition, in paragraph

I I of the Response, the Illinois EPA alleges that the

ction does not include several

requirements that the Illinois

EPA

a

n otes that the requirements that the

ponse at'[( 11. IERG

EPA references are for new rulemakings, an

such requirements are not applicable

to the Motion for Emergency Rule, and it is

n is necessary for the alternative proposal. IERG's Motions

25

---

contain sufficient information

and justification as

the emergency rule and the alte

waive any non-statutory

infonna

card requires

to consider adoption

pawl. The Board has discretion to

gents far several reasons, including where

the

already been provided. 35

111.

Board does deter

additional information,

with the requested

infarirrati

provide the

Board

As discussed in the Motion

far Emergency Rule, the APA grants the Board

for 150 days. IERG MER at

10. The

es

in

is no nrovisi

would be in

atT 1

aired to

ed

in the Motion for E

e necessary

latory re

ion in order

nto the CAIR

NOx !Ozone Season Trading

Program for the 2010

control period

and beyond. The "permanent

rule" as described in the Motion for

Expedited Action should be in place

and provide the requi

the emergency rule

expires.

02.110. However, if the

for comp

2

If a permanent rule is not adopted prier to the expiration

of the emergency r ule, the rule existing

prior to

the adoption of the emergency

rule will once again become effective.

See R93-12 at *9 (stati

Board observed

"that when the instant emergency

rule expires, the May 1, 1993 compli

permanent amendment to Section

219.526.ismade''}.

26

---

In regards

to the Illi

"should

seek to amend Par

" IERG

does not deny that a proposal could be placed in

Part 225: Control of

Emissions from Large Combustion Sources. See

35 111.

Code Part

225. However, as IERG intends to coat

poses the addition of a sunset provision to

225 app

ory structure in which that program exist

units regulated by the

current version of Subpart U, as

well as the alternative proposal, are non-EGUs,

amending

Part 217 is appropriate.

As stated above, should the

Board request

i

Board's consideration. IERG

will also work with the Illinois EPA to develop a

mutually

for Emergency

Rule.

I; V .-k'

`permanent rule," but

to ensure the allocation of allowances

In tyre Illinois EPA'

achment A. The proposed

sunset provision does not

ial liability that impacted facilities

face should they not hold sufficient NOx al

the sunset

provision is i

allowances,

mate

the regulatory requirement to

ct on CAAPP

permit requirements. In addition,

as stated

previously, IERG

is uncertain

to "adopt

co

the existing trading program, i

itional information in support

of

ch information for the

November

30, 20

roach satisfies the requirement

atisfy the

same portion of the State's NGx

27

---

reduction requirements unde

program would sat

LTERNAT

language provides an incomplete solution as

al

risk and uncertainty for affected sources

would remain. Again, as IERG has

proach

is to continue the existing NOx trading program.

V1.

nois EPA states that

IERG's alternative proposal includes a NOx budget

that is different than

the budget provided to Illinois by

described in

Inc.'s ("Bunge")

C

endix E, and thus,

Bunge has never received an allocation of

4-10. In accordance with

the alternative proposal to include

an allocation of allowances for Bunge.

linois EPA's request

to USEPA regarding an allocation of allowances

to

s the State projected such emissions trading

,," if

the

State chooses to not meet the NOx SIP Call budget

use of a trading program.

40 C.F.R.

§

51.121(r)(2). (Emphasis

ince A

adjustment to the

on the Illinois EPA's pending request) is fully

o adjust the Illinois

budget du

nois NOx SIP Call requirements in 2001. See 66

Fed. Re

8,

2001), attached to IERG's MEA as Exhibit

2.

both the emergency rule and

alternative proposal described in the Motions

Board should, thus, adopt the emergency

rule

and

28

---

alternative proposal as s

by IERG, including the revisions to Appendix E.

Should USEPA

disapprove of the adjusted budget for Illinois, USEPA can easily sever

the

lternative proposal, i.e. the allocation

of

allowances to

Bunge, from

the rule it approves. Such a decis however, should be left to USEPA since

establishes the NOx budget for the State.

ould the Board choose not to leave the decision on whether

Bunge receives an allocation to USEPA, the Board should adopt the emergency rule and

ive proposal as

described in the Motions, absent the adjusted budget for Bunge by

1 allowances from the total allowances in Appendix E to the alternative

proposal.

oing so, IERG requests that the Board (:Nenipt Bunge from

rement to hold N Ox allowances on November 30,

200

once:

s Response, that

IE

roposal. Response at T 38.

membership does not include all of the sources impacted by Subpart

general

IERG does not question whether or not the

Agency would harte consulted stakeholders if it had proposed and developed a

rule.

However, the Agency did

not propose o

S O.

existing trading program, and thus, any

elop a rule, and thus IERG was forced to do

Live proposal is a continuation of the

holders regarding the

29

---

current trading program are reflected in

ng program.

The Illinois EPA states

that "allowance allocations do not establish a property

right." Id. at

ý

40.

serted that the

need

based on allowances as property.

In addition, although allowance

allocations may not be

considered as a property

right, IERG interprets Section

9.9 of the Act to indicate

the

General Assembly's preference

for a trading program to satisfy

the NOx SIP Call budget

obligation.

hile true that a continued trading

program creates an incentive

for sources

to install and operate control

equipment that will produce

excess emission reductions,

sell

mpliance

program.

The Illinois

a

new regulatory

tive proposal, as it is merely an

009 ozone

season to industries subject

to

placed

the State's owners/operators

of affected non-E

and

exposed them to risk of liability.

Since th

ceased

to operate the federal

rogram after the

2008 ozone season and

replaced it with the CAIR

required by

existing Subpart U and

their CAAE'Y permits to

ho

ces to

cover NOx emissions

for the 2009 ozone season,

it is imperative that

an emergency rule

be adopted in order to provide a

mechanism by which N4x

allowances for

control period may

be allocated to non-EGUs.

Further, in regards

to IERG's alternative

30

---

proposal, a permanent rule is necessary in order to require the Illinois EPA to bring NOx

NOx Ozone Season Trading Program and distribute

allowances for the 2010 control

requests that the

, the

ILLINOIS

ENVIRO

oard to grant the Motions filed with the Board

on

August

3, 2009 and

take

the

comments

provided above under consideration.

submitted,

215 East Adams Street

3150 Roland Avenue

ILLINOIS ENVIRONMENTAL

REGULATORY GROUP

By:

/s/ Katherine D. Hodge

Post Office Box 5776

ngfield, Illinois

62705

ýFýt:ýtzý;}

---

ATE

OF

SERVICE

I, Katherine D. Hodge, the undersigned, hereby certify that I have served

THE ILLINO

TVIRONME

MOTION FOR EMERGENCY RULE AND MOTION

ROUP

ION O

RONMENTAL

REGULATORY GROUP'S ALTERNATIVE

t Clerk of the Board

Mr. John T. Therriault

Illinois Pollut

100

on:

Suite

1I-500

Chicago, Illinois

Timothy

J.

Fox, Esq.

Rachel

L. Doctors, Esq.

1

1021 North Grand Avenue East

Post Office Box 19276

gfield, Illinois 62794-9276

One Natural Resources Way

702-1271

st 17, 2009.

IERG:001/R Dockets/Fil[NC)F COS - Reply to IEPA Response to

IERG Motions