Midwest Generation EME, LLC,
Petitioner
Illinois Environmental Protection Agency,
Respondent
RECE~VED
CLERK’S OFFICE
AUG 132004
)
STATE OF ILLINOIS
)
PCB
04-185 Pollution Control Board
)
Trade Secret Appeal
)
)
)
)
NOTICE OF FILING
To:
Dorothy Gunn, Clerk
Illinois Pollution Control Board
100 West Randolph
Suite 11-500
Chicago, Illinois 60601,
Brad Halloran
Hearing Officer
Illinois Pollution Control Board
100 West Randolph
Suite 11-500
Chicago, Illinois 60601
Sheldon A. Zabel
Mary A. Mullin
Andrew N. Sawula
SchiffHardin LLP
6600 Sears Tower
Chicago, Illinois 60606
Keith Harley
Annie Pike
Chicago Legal Clinic, Inc.
205
West Monroe, 4th Floor
Chicago, Illinois 60606
Please take notice that todaywe have filed with the Office ofthe Clerk ofthe
Pollution Control BOard an original (1) and nine (9) copies of Respondent’s
Memorandum in Opposition to Midwest Generation’s Motion for Partial Reconsideration
ofthe Illinois Pollution Control Board’s Order of May 6, 2004. A copy is herewith
served upon the assigned Hearing Officer, the attorneys for the Petitioner, Midwest
Generation EME, LLC, and the attorneys for the Sierra Club.
Dated: Chicago, Illinois
August 13, 2004
LISA MADIGAN, Attorney General of the
State ofIllinois
BEFORE
THE ILLINOIS POLLUTION CONTROL
BOARD
V.
MATTHEW DUNN, Chief, Environmental Enforcement!
Asbestos Litigation Division
Aim Alexander, Assistant Attorney General and
Environmental Counsel
Paula Becker Wheeler, Assistant Attorney General
188 West Randolph Street, Suite 2000
Chicago, Illinois 60601
312-814-3772
312-814-2347 (fax)
RECE~VE~
BEFORE THE ILLINOIS POLLUTION CONTROL
BOARD CLERK’S OFFICE
AUG 13 2004
Midwest Generation EME, LLC
)
Petitioner
)
PCB 04-185
STATE OF
ILLINOIS
Pollution Control Board
)
,
Trade Secret Appeal
v.
)
)
Illinois Environmental Protection Agency,
)
Respondent
)
MEMORANDUM IN OPPOSITION TO MIDWEST
GENERATION’S MOTION FOR PARTIAL RECONSIDERATION OF
THE ILLINOIS POLLUTION CONTROL BOARD’S ORDER OF MAY 6~2004
Preliminary Statement
Respondent Illinois Environmental Protection Agency (“IEPA”) submits this
memorandum in opposition to the motion by Appellant Midwest Generation EME, LLC
(“Midwest Generation”) for reconsideration ofthe portion ofthe Board’s order requiring
that the hearing in this matter be held exclusively on the JEPA record pursuant. to 35 Ill.
Adm. Code 105.2 14(a), requesting that the issues be reviewed de novo.
Midwest Generation’s request contravenes not only the Board’s regulations but
more than three decades ofconsistent Board precedent requiring that hearings be held on
the agency record, to preserve JEPA’ proper decisionmaking role and prevent forum
shopping. Nothing in Midwest Generation’s motion provides any cognizable basis for
such wholesale’ overthrow ofprecedent. While Midwest Generation, like all who come
before JEPA and the Board, is clearly entitled to due process, the type and level of
process that is due is commensurate with the right being protected. Here, the process
afforded by IEPA gave Midwest Generation ample opportunity to protect its rights and
submit pertinent information. Indeed, nowhere in its motion does Midwest Generation
even provide a clue as to what particular extra-record information it would like to now
1
introduce, and why such information could not have been provided to IEPA in the first
place.
Point I
BOARD REGULATIONS AND
PRECEDENT UNAMBIGUOUSLY
REQUIRE THAT
HEARINGS BE
HELD ON THE RECORD
The relevant regulatory provision governing Board hearings, 35 Ill. Adm. Code
105.2 14(a), expressly provides,
The hearing will be based exclusively on the record before the Agency at
the time the permit or decision was issued, unless the parties agree to
supplement the record pursuant to 40(d) ofthe Act. Ifany 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 the issue of fact.
This provision expressly applies to “any appeal to the Board of the Agency’s final permit
decisions and other final decisions ofthe Agency.” 35 Ill. Adm. Code. 105.200.
Accordingly, the Board held in the challenged order,
Hearings will be based exclusively on the record before JEPA at the time
it issued its trade secret determination.
See
35 Ill. Adm. Code 105.214(a).
Therefore, though the Board hearing affords petitioner the opportunity to
challenge IEPA’s reasons for denial, information developed after IEPA’s
decision typically is not admitted at hearing or considered by the Board.
See
Alton Packaging Corp. v. PCB, 162 Ill. App. 3d 731, 738,
516
N.E.2d
275, 280 (5th Dist. 1987); Community Landfill Co. &City ofMorris v.
IEPA, PCB 01-170 (Dec. 6, 2001),
aff’d sub nom.
331 Ill. App. 3d 1056,
772 N.E.2d 231 (3d Dist. 2002).
‘
Board Order, PCB 04-185 (May 6, 2004).
Notwithstanding the unambiguous nature ofthe applicable regulation and the
precedent cited by the Board, Midwest Generation attempts to create room to
accommodate its unusual request by arguing that neither the regulation nor the precedent
are definitive statements on the matter. It argues that the second sentence ofthe
2
regulation should effectively be read to cancel out the first; that the lack ofan express
statutory provision applicable here in addition to the regulation diminishes the force of
the regulation; and that the cases cited by the Board do not actually support the
requirement that hearings be held on the agency record. Midwest Generation Brief at 6-
7.
None of these arguments withstand scrutiny. With respect to Midwest
Generation’s reading ofthe regulation, its argument was expressly raised and dismissed
in one ofthe matters cited by the Board, Community Landfill
—
indeed, by the same
hearing officer presiding here, Brad Halloran. In Community Landfill, the petitioner had
argued before the hearing officer, as Midwest Generation does here, that the second
sentence ofthe regulation
—
“If any 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 the issue offact’.’
—
should be read to allow it to
introduce non-record evidence into the proceeding, notwithstanding the first sentence
requiring hearings to be held on the record. Hearing Officer Halloran held, consistently
with basic principles ofinterpretation, that ratherthan negating the first sentence, the
second sentence should be read as modifying only the clause in the first sentence
regarding agreements under 40(a) (which does not apply here) to supplement the record
—
i.e., such that the separate hearirig is allowed only to address evidence brought into the
proceeding through such 40(a) agreements. See Community Landfill, PCB 0 1-170,
Transcript Volume 1 at 233-37 and December 6, 2001 Order.1
Midwest Generation misinterprets Community Landfill by referencing only the Appellate Court decision
affirming the Board’s Order, and not the Order itself. Midwest Generation brief at 7. The Appellate court
affirmed on the ground that it lacked sufficient information to determine whether the particular document
3
Regarding the relationship between the statute and the regulations, Midwest
Generation appears to suggest that the regulation lacks force as it applies to proceedings
such as this one
—
essentially implying that inclusion ofproceedings such as this one in
the on-the-record requirement was less than intentional and well thought out.
$~
Midwest Generation brief at 6. However, this assertion is belied by the factthat the
applicable regulations, which have since been amended, previously provided expressly
for a
novo hearing using non-record evidence in certain circumstances. See former
section 105.l03(b)(8).2 Clearly, the Board is cognizant of how to craft regulations calling
for ~ novo proceedings when it so chooses, and it chose not to do so here.
As to the question ofwhetherthe cases cited by the Board support the board’s
ruling, as noted above, Midwest Generation entirely missed the point ofConmiunity
Landfill by citing only to the Appellate court affirmance and not the referenced Board
decision. More importantly, the purported “dicta” contained in the Board’s other citation,
that appellants wanted considered by the Board had in factbeen part of the agency record. 331 Ill.App.3d
at 1063.
2
That section applied only to NPDES permit appeals, and provided in its entirety (emphasis added),
The hearings before the Board shall extend to all questions of law and fact presented by
the entire record. The Agency’s findings and conclusions on questions, of fact shall be
prima facie true and correct. If the Agency’s conclusions of factare disputed by the party
or if issues of fact are raised in the review proceeding, the Board may make its own
determination of factbased on the record. If any party desires to introduce evidence
before the Board with respect to any disputed issue of fact
the Board shall conduct a de
novo hearing and receive evidence with respect to such issue offact.
Even this express ~ novo provision was construednarrowly when it was in effect in order not to distort the
respective roles of the board and the agency as defined in the statute. The Board held in Dean Foods v.
IEPA, PCB 81-151 (August 22, 1984), quoting Olin Corp. v. JEPA, PCB 80-126 (February 17, 1982),
The hearing de novo provisions must be construed narrowly; otherwise permit applicants
will be tempted to withhold facts at the Agency level in hopes of a more friendly
reception before the Board. This would encourage appeals and would place the Board in
a position ofbeing the first agency to evaluate the factual submissions. This would
distort the separation of functions in the Act.
4
Alton Packaging Corp., both directly and indirectlyreferences a long and consistent line
of court and Board decisions, dating back to 1972, expressly holding that hearings must
be conducted solely on the agency record. 162 Ill. App. 3d at 738, citing IEPAv. PCB
and Album, Inc., 118 Ill.App.3d 772, 780-81 (1983), citing Soil Enrichment Materials
Corp. v. Environmental Protection Agency (1972),
5
Ill.P.C.B.Op. 715 and Peabody
Coal Co. v. Environmental Protection Agency (1979), 35 Ill.P.C.B.Op. 380. See, ~g.,
Prairie Rivers Network v. JEPA and Black Beauty Coal Co., PCB 01-112 (August 9,
2001) (citing numerous authorities); County ofLaSalle v. JEPA, PCB 81-10 (March 4,
1982); Amax Coal Co. v. JEPA, PCB 80-63, -64 (December 19, 1980); Environmental
Site Developers, Inc. v. IEPA, PCB 80-15 (June 12, 1980). Clearly, the authority
supporting the Board’s ruling requiring an on-the-record hearing is overwhelming; and
the authority supporting Midwest Generation’s proposition that there is ambiguity on this
point is essentially nil.
Point II
THE REQUIREMENTS OF DUE PROCESS ARE
SATISFIED BY THE PROCEDURES MANDATED BY
THE BOARD’S ORDER AND SUPPORTING PRECEDENT
Midwest Generation’s argument that the long-standing hearing procedures
codified in the regulations and recognized in the Board’s order deprive it ofdue process
is without basis. Although, as Midwest Generation states, procedural rules are not finally
definitive of due process requirements, such rules “are a useful reference because they
represent standards that the General Assembly and the Department concluded were
sufficient.” Lyon v. Department ofChildren and Family Services, 209 Ill.2d 264 (2004).
Here, Midwest Generation had ample opportunity to make its views known to
5
JEPA, and did so. The limited basis for a trade secret claim is unambiguously laid out in
the statute and regulations. See 415 ILCS 3/490; 35 Ill. Adm. Code 130.208. Under
these provisions, a trade secret claimant must prove (i) that the article has not been
published or disseminated or otherwise become a matter ofgeneral public knowledge,
and (ii) that it has competitive value. The statute also exempts from trade secret
protection all “emission data” as expressly defined under Clean Air Act
§
114, 42 U.S.C.
7414 and associated regulations. See 415 ILCS
5/7,
40 C.F.R. 2.301(a)(2)(i)(B), 35 Ill.
Adm. Code 130.110. Under the applicable regulations, a trade secret claimant may
present the basis for its claim in a Statement ofJustification, provided either at the outset
or in response to a request from the agency. 35 Ill. Adm. Code 130.200 et ~çj.
Midwest Generation submitted information in its Statement ofJustification
pertinent to both statutory prongs of the trade secret definition
—
j~,public availability
and competitive value. IEPA’s subsequent denial oftrade secret protection was grounded
specifically in these two prongs. Midwest Generation nowhere states either what specific
additional information regarding these prongs it would have submitted upon learning of
IEPA’s unsurprising reliance upon them, nor why it could not have submitted that
informationbefore receiving the denial.
IEPA’s denial ofprotection was based additionally in the status ofthe documents
as
§
114 emission data. Midwest Generation states in its brief that it “cannot conceive”
ofwhy the information it submitted would be considered emission data. Midwest
Generation brief at 2. Its conception process might have been assisted by reviewing the
definitions cited above, which state that emission data includes any documents containing
information necessary to determine how much a particular facilitywas “authorized to
6
emit”
—
i.e., that would determinewhether the facility’s emissions constitute a violation
ofthe Clean Air Act.3 Here, as Midwest Generation is well aware, the United States
Environmental Protection Agency (“USEPA”) information requests, the responses to
which are the subject ofthis proceeding, were all directed specifically toward
determining whether its facilities were emitting pollutants in violation ofthe Clean Air
Act New Source Review standards, which require heightened pollution controls in
connection with certain types ofnon-routine modifications that have the effect of
increasing emissions.4 To the extent Midwest Generation mayhave been unclear on this
point, the solution would have been to submit whatever information it had to the agency
regarding the status ofthe information as emission data and/or seek clarification prior to a
decision being made, ‘rather than complaining after the fact that it did not understand a
basic pointWhere,oflawas
here,well
enoughan
agencyto
submithas
providedappropriatea proceduralinformation.opportunity5
to submit
information in connection with a decision, due process does not require in every
~40 C.F.R. 2.301(a)(2)(i)(B), promulgated pursuant to
§
114, includes in the definitionof emission data
“Information necessary to determine the identity, amount, frequency, concentration, or other characteristics
(to the extent related to air quality) of the emissions which, under an applicable standard or limitation, the
source was authorized to emit (including, to the extent necessary for such purposes, a description of the
manner or rate ofoperation of the source).” The Illinois definition at 35 Ill. Admin. Code. 130.110 is
substantially the same.
~The New Source Review provisions of the Clean Air Act define a plant modification that triggers
heightened pollution control standards as follows:
The term “modification” means any physical change in, or change in the method of
operation of, a stationary source which increases the amount of any air pollutant emitted
by such source or which results in the emission of any pollutant not previously emitted.”
Clean Air Act
§
11 l(a)(4), 42 U.S.C. 741 1(a)(4). In the
§
114 information request, USEPA sought
information conceming, inter alia, capital projects undertaken at Midwest Generation facilities (some of
which may constitute
§
111(a)(4) modifications) and net generation, coal heat content, and net heat rate for
each plant, which is necessary for a determination of whether emissions have increased.
~In any event, given that the question of whether information constitutes “emission data” according to the
Clean Air Act definition is essentially a legal one, it is unlikely that Midwest Generation ‘would have had
any pertinent factual information to submit.
7
circumstance that a hearing be provided with a full panoply ofprocedural rights. On’ the
contrary, as observed by the Illinois Supreme Court in Lyon, “what due process entails is
a flexible concept in that not all situations calling for procedural safeguards call forthe
same kind of procedure.” 209 Ill.2d at 272 (citing various United States Supreme Court
decisions). Clearly there are circumstances
—
~
criminal proceedings, license
deprivations, etc.
—
where every available procedural right must be in place and adhered
to rigorously, including the right to cross-examine and rebut unfavorable testimony. But
the Board has appropriately determined that, in a trade secret matter, the Statement of
Justification process outlined in the regulations at 35 Ill. Adm. Code 130.200 ~ ~q. is
sufficient to protect the interest oftrade secret claimants.
Conclusion
For the foregoing reasons, IEPA respectfullyrequests that Midwest Generation’s
request for reconsideration of the Board’s Order and review ofthis matter ~ novo be
denied.
Dated: Chicago, Illinois
August 13, 2004
Respectfully submitted,
LISA MADIGAN, Attorney General ofthe
State of Illinois
MATTHEW DUNN, Chief, Environmental
Enforcement!
Asbestos Litigation Division
8
BY~
Ann Alexander, Assistant Attorney
General and Environmental Counsel
PaulaBecker Wheeler, Assistant
Attorney General
188 West Randolph Street, Suite 2001
Chicago, Illinois 60601
312-814-3772
312-814-2347 (fax)
9
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
Midwest Generation EME, LLC
)
Petitioner
)
PCB 04-1 85
)
Trade Secret Appeal
v.
)
)
Illinois Environmental Protection Agency,
‘
)
Respondent
)
CERTIFICATE OF SERVICE
Thereby certify that I did on the 13th Day ofAugust 2004 send by First Class
Mail, with postage thereon fully paid and deposited into the possession ofthe United
States Postal Service, one (1) original and nine (9) copies ofthe following instruments
entitled Notice ofFiling and Memorandum in Opposition to Midwest Generation’s
Motion for Partial Reconsideration ofthe Illinois Pollution Control Board’s Order ofMay
6, 2004, to
To:
Dorothy Gunn, Clerk
Illinois Pollution Control Board
100 West Randolph
Suite 11-500
Chicago, Illinois 60601
and a true and correct copy ofthe same foregoing instruments, by First Class Mail with
postage thereon fully paid and deposited into the possession ofthe United States Postal
Service, to:
Sheldon A. Zabel
Keith Harley
Mary A. Mullin
Annie Pike
Andrew N. Sawula
,
Chicago Legal Clinic, Inc.
SchiffHardin LLP
205 West Monroe, 4th Floor
6600 Sears Tower
Chicago, Illinois 60606
Chicago, Illinois 60606
Dated: Chicago, Illinois
August 13,2004
LISA MADIGAN, Attorney General ofthe
State ofIllinois
.
MATTHEW DUNN, Chief, Environmental Enforcement!
Asbestos Litigation Division
BY:
~
~
Ann Alexander, Assistant Attorney General and
Environmental Counsel
188 West Randolph Street, Suite 2000
Paula BeckerWheeler, Assistant Attorney General
Chicago, Illinois 60601
312-814-3772
312-814-2347 (fax)
