ILLINOIS POLLUTION CONTROL BOARD
March 25,
1976
ENVIRONMENTAL PROTECTION AGENCY,
)
Complainant,
v.
)
PCB 75—232
CITY OF SPRINGFIELD,
)
Respondent.
-
and
-
CITY OF SPRINGFIELD,
Complainant,
v.
)
PCB 75—275
ENVIRONMENTAL PROTECTION AGENCY,
Respondent.
Larry Eaton and Anthony Cameron appeared on behalf of the Environ-
mental Protection Agency.
George Gilimor, Eugene Bernstein and Charles Bane,
of Isham, Lincoln
& Beale appeared on behalf of the City of Springfield.
OPINION AND ORDER OF THE BOARD
(by Mr. Goodman):
On June
3,
1975,
the Environmental Protection Agency
(Agency)
filed a Complaint against the City of Springfield
(City).
This
Complaint, ?CB 75-232, alleged construction of
a new coal-fired
electric generating unit,
known as Dallrnan Unit
3, without a construc-
tion permit,
in violation of Rule 103(a) (1) of the Air Pollution Regu-
lations
(Chapter 2).
On July
16,
1975, the City filed a Permit
Appeal, PCB 75-275, alleging that the Agency improperly denied
its
application for a construction permit for Dailman Unit
3.
These
two proceedings, as well as another proceeding, PCB 75—242, were
consolidated for hearing.
At public hearing on November 17,
1975,
however, PCB 75-242 was severed from these proceedings by order
of the hearing officer.
PCB 75-242
is now an entirely separate
matter and will not be considered herein.
Hearings on PCB 75-232 and PCB 75-275, consolidated, were held
on November
4,
5,
6,
7,
8,
and
17,
1975,
in Springfield, Illinois,
20
33g
—2—
and produced a voluminous record of some 1350 pages.
No citizen
witnesses testified during the hearings.
The City filed a waiver
of its right to a decision on the Permit Appeal within
90 days from
the filing of said Appeal.
Springfield operates an electric power generating supply system
servicing 48,000 ratepaying customers in the Springfield area
(R.
384).
Power production
is administered by a department of the City govern-
ment known
as City Water, Light
& Power
(CWLP).
The City built and
began operating its
first power station at its premises abutting Lake
Springfield
(Lakeside I)
in 1935
(R.
223).
Lakeside II was built
in
the 1940’s, but was added to until 1963
(R. 224).
The units of
Springfield’s V.Y. Daliman power plant complex were begun in the
early 1960’s on the same general premises where the Lakeside stations
were located.
Daliman Unit
1 went on-line in 1968 and Dallman Unit
2
went on-line
in 1972
(R.
224).
Dailman Unit
3,
the subject of these
proceedings,
is currently projected to become operational in the
spring of 1977
(R.
353).
Mr. Edward Campbell, Regional Supervisor
in the Field Operations Section of the Agency’s Air Pollution Control
Division, testified that in April,
1975, he and another member of
the Agency inspected the Daliman Unit
3 site
(R.
46).
They esti-
mated that,
at that time,
construction was approximately
10 percent
complete
(R.
50).
The site had been excavated,
concrete had been
poured, and steel was being erected
(R.
50).
Daliman Unit
3 is
to be
a 192 megawatt. unit, representLng 72
of the capacity of the City’s existing electrical system
(R.
396).
The capital cost for the Dailman Unit
3 construction program in its
present form is slightly under $56 million
(R.
340).
The City applied for a construction permit for Dailman
3 on
June 10,
1974.
The Agency denied the application due to failure to
show compliance with several of the Chapter 2.r~guiat~ons~:
~,particu-
lates,
Rule 203(g) (1) (d)
,
sulfur dioxide, Rule 204(a)(l),
and, nitrogen
oxides,
Rule 207(a).
A second application was rec~iy~:bytheAgency
on August
10,
1974.
On October
5,
1974, thesecond app1i~ca14onwas
denied due to failure to show compliance withRu1es~204(a)(:stack
height)
and 204(a) (1) (sulfur dioxide).
The principal issue presented in this case
is whether Daliman
Unit
3 is
a new or existing emission source.
.Resoi~t~on~.p~f
t~at
issue resolves two related questions:
whether a pq~i~4~
is required
for Dailman Unit
3 under Rule 103(a)
(1): and~whether~O~1-manUn~Lt
3
must comply with the sulfur dioxide 1imitati~on~fp~r~
~
Rule 204(a) (1),
in force
at the time of the City’s application,
or
for existing sources under Rule 204(c) (1) (B).
According to the
Agency’s calculations, Daliman Unit 3:will ~
SO2
20—340
—3—
per million btu’s of actual heat input
(R.
143)
.
This figure indi-
cates that Dallman Unit
3,
if found to be an existing source, would
comply with Rule 204(c)(l)(B).
If found to be a new emission source,
however, Dailman Unit
3 would not comply with the limitation of
1.2 pounds per million btu’s,
required by Rule 204(a) (1).
Whether an emission source
is considered new or existing depends
upon whether construction or modification of the source “commenced’t
after or prior to the effective date of Chapter
2, April
14,
1972.
Rule 101 defines
1’commence”
as
the act of entering into a binding agreement
or contractural obligation to undertake and
complete, within
a reasonable time,
a continuous
program of construction or modification.
The Pollution Control Board
(Board)
in its Interim Order of July
31,
1975,
interpreted this definition as applied in the present case in
order to account for the possibility of the City being its own
general contractor,
as follows:
Whether Springfield had bound itself to
a course
of conduct to undertake and complete, within a
reasonable time,
a continuous program of construc-
tion.
In adopting the definition of a new source the Board,
on April
13,
1972,
commented that the definition
recognizes that once binding contracts have
been entered for construction of
a facility,
there
is
a significant reliance interest in treating the
source as an existing one.
Reliance,
then,
is the key to the distinction between new and exist-
ing sources.
The date for determining whether Dailman Unit
3
is
a new or
existing emission source
is April
14,
1972.
Therefore,
it
is im-
portant
to examine what occurred prior
to that date.
As mentioned
previously,
Dailman Units
1 and
2 went on-line in
1968 and 1972,
respectively.
In 1970 Springfield requested the engineering firm
Burns
&
McDonnell to make a study of the City’s generation needs and
financing ability
(R.
251).
That report was submitted in ~4ay,1970,
and a supplemental report was submitted in July,
1970
(R.
252-3).
Burns
& McDonnell recommended that the City proceed immediately with
Dallman Unit
3.
At that time,
however, Dailman
3
was
still
in the
planning stages and had not yet been designed
(R.
253).
The first
20 —341
—4—
contract for the construction
of
Daliman
3 was awarded on September
29,
1970
to General Electric for
a steam turbine generator
(R.
256)
Burns
&
McDonnell submitted specifications for coal-handling facili-
ties,
specifically,
for foundations and construction of
2 underground
coal hoppers, on July
2,
1971.
The contract was awarded on September
7,
1971,
to Franklin Cress Company
(R.
267).
A related contract for
an underground conveyor and drive mechanism was awarded to Fertilizer
Engineering Company on February
1,
1972
(R.
283-4).
The City antici-
pates awarding
a total of
45
contracts
for Dallman
3
(R.
304).
How-
ever,
these
3 contracts
-
for the steam turbine generator and coal-
handling facilities
-
were the only contracts for the construction of
Dailman
3
awarded prior to April
14,
1972.
Four other contracts re-
lated to Daliman
3 were also entered into prior to April 14,
1972:
two
contracts for oil circuit breakers, one for steel towers,
and one for
a volt tie transformer
(R.
493—5)
The steam generator itself
is
to house the boiler and, therefore,
the furnace.
Specifications for the steam generator were submitted
by Burns
&
McDonnell
on May 21,
1971.
These specifications called
for a bid on a scrubber for SO2, which was an alternate to the base
bid
(R.
312)
.
Bids were received on August 17,
1971.
Two
scrubber
bids were submitted
(R.
313)
.
The ordinance
to
award the contract was
filed in September,
197.1.
At
that time an ordinance for a new rate
structure was also on file.
However, due to
the
President’s economic
freeze on wages and prices,
the contract and rate increase were
tabled by the City Council and bid bonds were returned
(R.
276).
The 1971 rate increase proposal included $10 million for air
pollution control equipment.
City, Water,
Light
&
Power
(CWLP),
urged
the City Council
to adopt the rate structure in 1971 with the money
included for SO2 control equipment so that CWLP could issue bonds
if
necessary
(R.
316).
The City Council approved the rate structure in
January,
1972.
However,
even
though the approved rate structure in-
cluded the original
$10 million,
the City Council required ~WLP not
to include in the increase money needed to
finance gas cleaning equip-
ment
(R
314)
Specifications
for the
steam generator were submitted again in
1973.
These specifications differed
from
those submitted in 1971
in
that they included a 2400 pound rather than 1800 pound boiler and
did
not include specifications for a scrubber for
SO2
(R.
313)
.
The
steam
generator
contract
was
awarded
on
August
8,
1973.
The
Agency
argues
that,
because
SO2
will
be
created
within
the
furnace,
which
is
within the steam generator,
the contract for the
steam
generator
is
the
critical
contract:..
Because
this
contract
was
awarded
in
Auqust,
1973,
Dallninn
Unit
3
is,
according
to
the
—5—
Agency,
a new source.
We must reject this argument.
To single out
one piece of equipment in an entire unit as the “emission
source’t
is
to deny the interdependence of most of the individual pieces of equip-
ment which comprise an electric generating unit such as Daliman Unit
3.
Contracts for the turbine generator and coal handling facilities were
entered into prior to April
14,
1972.
However,
these facilities would
be unable to serve their intended purpose in the absence of the steam
generator producing the steam necessary to drive the turbine—generator
while utilizing the coal-handling facilities.
Similarly,
the steam
generator depends on these facilities
to accomplish its purpose.
We,
therefore,
find that Dallrnan Unit
3 as
a whole, rather than any indi-
vidual element thereof, constitutes the “emission source,”
for the
purposes of this case.
Although we find that prior to April
14,. 1972,
the City had
entered into certain binding contracts for the construction of its
emission source,
we nevertheless must agree with the ultimate conclu-
sion that Dailman Unit
3 is
a new emission source.
Our finding is
based upon the policy behind Rule 101’s distinction between new and
existing sources:
that a source is
to be considered existing if
the owner or operator of that source binds itself to a course of con-
struction relying upon the state of the law as it existed prior to
April 14,
1972.
Based upon the facts presented at the hearing on
this matter, we are unable
to find any reliance on the part of the
City of Springfield on its status as
an existing source.
In 1971,
specifications for the steam generator submitted for bids included a
specification for SO2 control equipment.
In fact,
two bids for
scrubbers were received by the City.
Although the 1971 bid bonds
were returned and the 1973 specifications did not include S02 control
equipment, the 1971 specifications indicate that the City foresaw
the possibility of being required to reduce S02 emissions from Daliman
Unit
3.
Furthermore, Mr.
James Henneberry,
Commissioner of Public
Property for the City,
testified as to why the City excluded S02 re-
moval equipment from its construction permit application.
He testi-
fied that inquiry hearings being conducted by the Board on SO2 control
technology, various pending appeals on the subject, hearings being
conducted on a national level,
and
a permit granted to the Central
Illinois Light Company
(CILCO)
left an aura of uncertainty which
caused the City to be hesitant before committing itself to the ex-
pense of SO2 control equipment
(R.
1202).
Commissioner Henneberry,
however, did not indicate, nor did any other witness, that the City
failed to plan for 502 control equipment because
it considered it-
self to be an existing source and was relying upon that status.
All
the testimony reveals quite the opposite
-
i.e.,
that the City
considered Daliman Unit
3 to be governed by Rule 204 (a) Cl) but was
hesitant to invest in SO2 control equipment due to its uncertainty
as to the status of that regulation.
Furthermore, the definition of commence that the Board has
20— 343
—6—
adopted requires Springfield to have “bound” itself to a “continuous”
course of construction prior to April 14,
1972.
Yet facts presented
indicate that the City’s course of conduct was intermittent rather
than continuous.
Although bids on the steam generator were received
in
1971,
these were returned,
and new specifications were not issued
until February of 1973
(R.
276).
Springfield initiated the project,
tabled it,
and then resumed.
Such conduct is not evidence of being
bound to a continuous course of construction.
During the period of
delay, the Air Regulations in question became effective.
The lack of
a showing of reliance on the law prior to April
14,
1972,
coupled
with a significant interruption in the course of construction during
the period of time in which the applicable Air Regulations became
effective,
lead to the conclusion that Dailman Unit
3
is a new
emission source.
It was, therefore,
subject to Rules 103(a) (1)
and
204(a) (1)
at the time the City submitted its application.
During the hearing, the City presented much evidence about a
construction permit granted by the Agency to CILCO.
The Hearing
Officer reserved to the Board a motion by the Agency attorney to
exclude all such testimony as irrelevant.
We hereby grant the
Agency’s motion.
The CILCO situation differs significantly from
the situation in the present case,
and the Agency’s treatment of
another facility is irrelevant
to its treatment of Daliman Unit
3.
Finally, although we uphold the Agency’s denial of the City’s
application based upon Rule 204 (a) (1), we reject its finding that
the construction permit application did not comply with Rule 204(e).
Contrary to the Agency’s position, we find that the application did
include a specification, not merely speculation, of
a minimum stack
height of 450 feet
to achieve compliance with Rule 204(e).
Having concluded that the Agency properly denied the City’s
application on the basis of Rule 204 (a) (1), we find that the City has
allowed construction work to be done toward erection of Dailman Unit
3 in the absence of a construction permit,
in violation of Rule 103(a)
(1).
However, one more point remains for Board consideration.
Section
33(c)
of the Environmental Protection Act
(Act)
requires the Board
in making its orders and determinations to consider:
1)
the degree
of injury to the public,
2)
the social and economic value of the
pollution source,
3)
the suitability of the pollution source to its
area of location, and
4)
the technical practicability and economic
reasonableness of reducing the emissions.
As to the first factor,
there has been no direct injury to the public
as of yet because
Daliman Unit
3 has not been completed.
Injury to the public is in-
herent, however, when a violation of the permit requirements of the
Act or Rules and Regulations occurs.
The social and economic value
of Dallman Unit
3 and its suitability to its area of
location are
unquestioned.
As to the last factor,
at the hearing, much evidence
—
344
—7—
was presented on the technical practicability and economic reason-
ableness of reducing the emissions.
Testimony was presented on the
various types of SO2 control equipment currently available,
including
both the regenerable and throw—away type systems,
the success of such
equipment,
and the cost.
We have considered the extensive testimony on technical practi-
cability and economic reasonableness and find that reducing SO2
emissions from Dailman Unit
3 is both technically practicable and
economically reasonable.
Various SO2 removal systems have been in-
stalled
in countries such
as Japan and Germany and are currently
commercially available and being installed on facilities
in this
country.
Lead times on the various
systems vary, but, according to
testimony produced at the hearing, generally range from
2
-
3 years
(R.
716).
SO2 control equipment has become an accepted form of tech-
nology.
The City estimates that SO2 control equipment will cost
approximately $18.9 million.
However,
the high cost of installing
such equipment is reasonable
in order to protect the public from in-
jury.
Therefore,
the Board finds that reducing emissions from Dailman
Unit
3
is reasonable both technically and economically.
In Commonwealth Edison Company
v. Pollution Control Board,
decided in January of this year,
the Illinois Supreme Court reversed
the Board’s adoption of,
among others, Rule 204(a) (1) and remanded
it for further consideration.
However, because Rule 204(a) (1)
was
fully in force at the time of the Agency’s denial of the City’s appli-
cation,
the denial may be and
is hereby upheld on the basis of that
rule.
The Board finds that the City of Springfield has acted in
good faith.
The City has submitted two applications for a construc-
tion permit.
It excluded S02 control equipment from those applications
due to a sincere uncertainty as to the status of the SO2 regulations.
Furthermore, the City, prior to the
filing of the complaint in this
matter, began to research a plan for complying with Rule
204(a) (1)
(R.
1252—4).
Therefore,
the Board finds that the City’s good faith
behavior mitigates against assessing a penalty
in this case.
Further-
more,
the Board recognizes that scarce municipal funds should be pre-
served for corporate purposes.
EPA v. City of Silvis,
5 PCB 205.
The
City of Springfield will not be assessed a penalty for the violation
of Rule 103(a)
found herein.
This Opinion represents the findings of fact and conclusions of
law of the Board in this matter.
20—345
—8—
ORDER
It
is the Order of the Pollution Control Board that:
1.
The City of Springfield is
found to have allowed con-
struction toward erection of a coal—fired generating
unit,
known as Dailman Unit
3,
since December 17,
1974,
without an Agency
issued construction permit,
in
violation of Rule
103(a) (1)
of Chapter
2.
2.
The City shall apply for and obtain a construction
permit from the Illinois Environmental Protection
Agency within 120 days of the date of this Order.
3.
The City of Springfield’s appeal from denial of its con-
struction permit application is hereby dismissed.
IT IS SO ORDERED.
Mr. Young abstained.
I,
Christan
L. Moffett, Clerk of the Illinois Pollution Control
Board, h reby certify the abo e Opinion and Order were adopted on
the
day of
,
1976 by a vote of___________
Christan L.
offetf
erk
Illinois Pollution
rol Board