0001

1 ILLINOIS POLLUTION CONTROL BOARD

2 January 27, 2005

4 IN THE MATTER OF: )

5 AMENDMENTS TO 35 ILL. ADM. ) R05-11

6 CODE 205, EMISSIONS REDUCTION ) (Rulemaking-Air)

7 MARKET SYSTEM, )

8 AND 35 ILL. ADM. CODE 211 )

10 TRANSCRIPT OF PROCEEDINGS had in the

11 above-entitled matter at Suite 2-029, 100 West

12 Randolph Street, Chicago, Illinois, on the 27th day

13 of January, A.D. 2005, at 1:00 p.m.

15 BEFORE: BOARD MEMBER THOMAS E. JOHNSON;

16 BOARD MEMBER G. TANNER GIRARD, Ph.D.;

17 BOARD MEMBER NICHOLAS J. MELAS.

21 REPORTED BY: LAURIE KEELING, CSR

22 CSR License No. 84-4507

0002

1 MR. KNITTLE: Hello. My name is John

2 Knittle. I am a hearing officer for this

3 rulemaking proceeding, Board Docket R-05-11,

4 in the matter of the amendments to 35 Ill.

5 Adm. Code 205, Emissions reduction Market

6 System and 35 Ill Adm. Code 211.

7 Present with us today from the Illinois

8 Pollution Control Board are our board

9 members, Tom Johnson, Tanner Girard, and Nick

10 Melas. Also from the board are Anand Rao and

11 Alisa Liu.

12 And we are all present here, and I want

13 to introduce Member Johnson, who is the board

14 member who is coordinating this rulemaking.

15 Do you have anything you want to say,

16 Mr. Johnson?

17 MR. JOHNSON: Welcome, and it looks

18 like we are going to get this done in a short

19 order.

20 MR. KNITTLE: As you know, the ERMS

21 system -- I am going to give a little

22 background here just for the record. Even

23 though there's -- I should note this as well.

24 No members of the public are present here

0003

1 today.

2 Everyone is either with the Agency or

3 with IERG who has filed the appearance. The

4 ERMS system is a cap and trade program that

5 involves VOM emissions in the Chicago area.

6 It was adopted by the Board on November 20,

7 1997, and received approval by the United

8 States Environmental Protection Agency as

9 part of the Illinois state implementation

10 plan for ozone effective November 14, 2001.

11 It's designed to reduce BOM emissions

12 in the Chicago nonattainment area below the

13 levels required by reasonably available

14 control technology and other emission

15 standards.

16 The proposed revisions to this program

17 effect only sources in the Chicago ozone

18 nonattainment area. In a statement of

19 reasons, the Agency asserts that these

20 revisions are needed because the US EPA is

21 revoking the one-hour Ozone National Ambient

22 Quality Standard effective on June 15, 2005.

23 The Agency contends that the revocation

24 of the one-hour standard will effect

0004

1 applicability thresholds currently the source

2 of subject to the CAAPP. I should say the

3 Clean Air Act Permit Program are those with

4 potential to emit 25 tons of VOM.

5 Once the one-hour standard is revoked,

6 however, the applicability threshold will be

7 raised to 100 tons. This would result in

8 less facilities being subject to rules and

9 the corresponding loss of approximately 330

10 tons of VOM reductions for each seasonal

11 allotment period.

12 So the Agency asserts that it must

13 ensure the ERMS remain in place in its

14 current form so that the required BOM

15 emissions reduction in the Chicago area is

16 maintained. As you know, on December 2 the

17 board granted a motion for expedited review

18 in this matter.

19 The Agency claims this is necessary to

20 ensure the rulemaking is promulgated by June

21 15. As a result, the board accepted the

22 proposal and also sent the proposal of first

23 notice under the Administrative Procedure Act

24 without commenting on the merits of the

0005

1 proposal. This notice was published in the

2 Illinois Register on December 17.

3 Also on December 9, 2004, the board

4 asked the Department of Commerce Economic

5 Opportunity to conduct an economic impact

6 study for the rulemaking. On January 20,

7 2005, the Board received a response from DCO

8 indicating that it will not perform an

9 economic impact study on this rule.

10 The statute requires that we make this

11 available to the public for 20 days before

12 the hearing. Since we didn't get this 20

13 days before this hearing, this hearing will

14 not be the economic impact study hearing. We

15 will hold that on February 22 to fulfill the

16 requirements of Section 27(b) of the act.

17 We also accepted some prefile testimony

18 on January 18 by Agency employee David

19 Bloomberg. We accepted this testimony. And

20 also with that testimony, the Agency filed an

21 errata sheet which we will discuss later.

22 At this point I want to ask the Agency

23 to introduce themselves.

24 MR. MATOESIAN: Good afternoon, ladies

0006

1 and gentlemen. My name is Charles Matoesian,

2 assistant counsel to the Illinois

3 Environmental Agency. I am here today

4 representing the Illinois EPA's to this

5 rulemaking docketed as RO5-11 in the matter

6 of the amendments 35 Ill. Adm. Code, 205,

7 emissions reduction market system and 35 Ill.

8 Adm. Code, 211.

9 First, I would like to thank you, the

10 Board, for granting our motion for expedited

11 review. This rulemaking proposal is to

12 amend the emissions reduction market systems,

13 or ERMS, to ensure that the ERMS remains in

14 place in it's current form so as to maintain

15 the required BOM emission reductions in the

16 Chicago area in response to the

17 implementation of the eight-hour Ozone

18 National Ambient Air Quality Standard.

19 As Mr. Knittle pointed out, on June 15,

20 2005, the United States Environmental

21 Protection Agency is revoking the one-hour

22 Ozone National Ambient Air Quality Standard

23 including the associated designations and

24 classification.

0007

1 To avoid the loss in ERMS reduction,

2 this rulemaking is being submitted so that

3 the ERMS will remain in place in its current

4 form, and maintain the required VOM or

5 emission reduction in the Chicago area

6 regardless of the nonattainment

7 classification or attainment designation of

8 the Chicago area. This rulemaking

9 accomplishes that goal.

10 With me today is Mr. David Bloomberg,

11 manager of the compliance section of the

12 Division of Air. He is here to answer any

13 questions that you may have. Mr. Bloomberg

14 submitted pretrial testimony on January 14,

15 2005. At that same time, we submitted an

16 errata sheet making several relatively minor

17 changes to the rules that Mr. Bloomberg can

18 explain.

19 At this time I would move the Board to

20 accept Mr. Bloomberg's pretrial testimony as

21 if it were read into the record and ask that

22 Mr. Bloomberg be sworn in.

23 MR. KNITTLE: Thank you. Any

24 objections? I see none. We will accept the

0008

1 testimony as it is read. Will you swear the

2 witness in, please?

3 (WHEREUPON, the witness was duly

4 sworn.)

5 MR. KNITTLE: Do you have anything

6 further, Mr. Matoesian.

7 MR. MATOESIAN: No.

8 MR. KNITTLE: Do the Board members or

9 anyone have any questions for Mr. Bloomberg?

10 MR. RAO: I have a couple.

11 MR. KNITTLE: Do you guys have

12 anything that you want to ask first?

13 MR. JOHNSON: No, I don't think so.

14 MR. KNITTLE: Mr. Rao, you're up for

15 some questions.

16 MR. RAO: I have a few questions on

17 the changes to the errata sheet.

18 MR. BLOOMBERG: Okay.

19 MR. RAO: Basically clarification type

20 of questions. On Item No. 2, I believe it's

21 Section 205.150.

22 MR. BLOOMBERG: Uh-huh.

23 MR. RAO: The proposed change talks

24 about the offset ratios. And the last

0009

1 sentence of Subsection (f)(1) gives reference

2 to an offset ratio of 1.3 to 1.0. Are other

3 previously affected outset ratio -- can you

4 explain what other offsets are applicable

5 under the rules?

6 MR. BLOOMBERG: Well, what we were

7 trying to do here, and that's the reason this

8 was amended was because we felt it wasn't

9 clear in the original version, was that as

10 things change, for example, in moderate, I

11 believe the ratio is 1.15 to 1.0. If we were

12 to be bumped up from moderate, if we didn't

13 attain in time where it would be bumped up to

14 serious, the ratio would be, I think it's 1.2

15 to 1.0.

16 MR. JOHNSON: Severe; is that right?

17 It's serious, right?

18 MR. BLOOMBERG: They're serious before

19 severe.

20 MR. JOHNSON: All right.

21 MR. BLOOMBERG: And what we're saying

22 is once we move from the 1.3 to 1.0, then you

23 will somewhere else. Well, if someone makes

24 a major modification during that time, they

0010

1 will subject to the ratio in effect at that

2 time. So if it was bumped up to 1.2, these

3 sources would not have to meet 1.2. They

4 would just have to meet what was effective at

5 the time that it occurred.

6 MR. RAO: In a related question, could

7 you explain, just for the record, why when

8 the eight-hour standard kicks in, you know,

9 Illinois, the Chicago area, is classified as

10 moderate as opposed to severe under the

11 one-hour? Is that because of all of the

12 reductions that have been achieved over a

13 period of time?

14 MR. BLOOMBERG: Part of it is from

15 reductions. Part of it is just a different

16 measure. As you may know, we were very close

17 to coming into attainment president with the

18 one-hour standard and would have except for a

19 very bad bout of weather that bumped up

20 temperatures, kept the air stagnant and put

21 the monitors over.

22 So there have definitely been

23 reductions, and the air quality has gotten

24 better as far as ozone is concerned. So that

0011

1 is part of the reason.

2 The other one is that -- simply that

3 the eight-hour standard uses a different

4 measurement criteria to the one hour --

5 compared to the one-hour.

6 MR. RAO: My second question is on

7 Item 6. It deals with Section 205.310,

8 Subsection E, which addresses the public

9 notice requirement. In the proposed

10 language, you have made a change to include

11 FESOP permits also along with the draft CAAPP

12 permit.

13 In the existing language for the CAAPP

14 permit, the notice requirements were supposed

15 to be made in accordance with Section 39.58,

16 which spells out the notice requirement. In

17 the proposal, you have deleted that reference

18 to Section 39.58.

19 Could you explain what procedures the

20 Agency follows for notice requirement?

21 MR. BLOOMBERG: It will still be the

22 same notice requirements; however, the FESOP

23 does not necessarily follow those same notice

24 requirements. So we didn't -- we felt that

0012

1 leaving it in there would be confusing. And

2 actually in the original draft of the rule,

3 there were several places -- the original

4 redraft, I guess I should say. There were

5 several places where he added more FESOP and

6 similarly we took out language that only

7 referenced CAAPP.

8 We discussed it with IERG ahead of

9 time, and they didn't have a problem with it.

10 We discussed it with our legal people. And

11 since there really is only one way of doing

12 public notice for CAAPP --

13 MR. RAO: Okay.

14 MR. BLOOMBERG: -- we felt it would be

15 fine to remove that.

16 MR. RAO: So you would still follow

17 the CAAPP requirements?

18 MR. BLOOMBERG: Yeah. We would still

19 follow the requirements.

20 MR. RAO: Just making sure.

21 MR. NEWTON: Can I ask a question?

22 MR. RAO: Sure.

23 MR. NEWTON: You would follow the

24 requirements that were applicable to the

0013

1 specific -- if it was CAAPP, they would

2 follow CAAPP?

3 MR. BLOOMBERG: Right.

4 MR. NEWTON: If they follow FESOP,

5 they'll follow FESOP.

6 MR. BLOOMBERG: Correct.

7 MR. RAO: So the FESOP rules also have

8 their own notice requirements?

9 MR. BLOOMBERG: Yes.

10 MR. RAO: So FESOP

11 MR. BLOOMBERG: Yes.

12 MR. RAO: And my last question deals

13 with changes proposed in Section 205.316. It

14 deals with FESOP permits for ERMS sources.

15 One of the changes or items that you made is

16 to capture all of the sources that you

17 regulate by adding this new participating

18 source in the rules in certain sections.

19 For example, in Subsection A it deals

20 with any participating or new participating

21 source.

22 MR. BLOOMBERG: Yes.

23 MR. RAO: And when you go to

24 Subsection B, says when implementing the

0014

1 baseline emission and allotment for a

2 participating source -- but a new

3 participating source is not addressed in that

4 section. Is that an old cite or -- I saw a

5 number of provisions where, you know,

6 sometimes both participating and new

7 participating sources are used. Sometimes

8 it's just the participating source. I wanted

9 to make sure that, you know, the intent is

10 clear or if there are some sections where it

11 has been missed.

12 MR. BLOOMBERG: No.

13 MR. RAO: Okay.

14 MR. BLOOMBERG: The new participating

15 sources do not get a baseline or an

16 allotment.

17 MR. RAO: Okay.

18 MR. BLOOMBERG: So, therefore, we did

19 not include them when discussing that.

20 MR. RAO: Okay.

21 MR. BLOOMBERG: So that was done on

22 purpose.

23 MR. RAO: Thanks. That's it.

24 MR. KNITTLE: Anything else?

0015

1 MS. LIU: I have one question,

2 somewhat unrelated. I was wondering how the

3 revocation of the one-hour ozone standard is

4 going to affect the attainment status of the

5 Metro East area and if there are going to be

6 any affects on our rules at all.

7 MR. BLOOMBERG: I do not know how it

8 will affect it. That's not my area.

9 However, I do not believe we have any rules

10 similar to ERMS in the Metro East.

11 Obviously, ERMS only applies to the Chicago

12 area. Most of our rules have a specific

13 applicability level as we are putting in

14 here, 25 tons or 100 tons or whatever. So

15 there shouldn't be any rules that are

16 affected in the Metro East.

17 MS. LIU: Thank you.

18 MR. JOHNSON: Isn't the eight-hour

19 standard supposed to be more stringent than

20 the one-hour?

21 MR. BLOOMBERG: I don't claim to be an

22 expert on the two, but it's supposed to be,

23 as I understand it, a better measurement of

24 the way pollution affects people, and that

0016

1 generally, we are not just there for

2 one hour. We are not just breathing the air

3 for one hour.

4 MR. KNITTLE: Hopefully we are

5 breathing it for 24 hours.

6 Anything further, Alisa?

7 MS. LIU: No.

8 MR. KNITTLE: Mr. Rao?

9 MR. RAO: No.

10 MR. KNITTLE: I have no questions.

11 Anybody from the Board?

12 MR. JOHNSON: Not I.

13 MR. MELAS: Not I.

14 MR. GIRARD: No.

15 MR. KNITTLE: I think we have pretty

16 much covered the end of today's proceeding.

17 I want to note for the record that it is

18 almost 1:25 p.m. We started this hearing at

19 1:00 p.m. today. There are still no members

20 of the public present. Were they here, they

21 would, of course, be given the opportunity to

22 ask questions and participate in the hearing.

23 If there were anybody here, I would

24 note that. We have a notice and a sign-up

0017

1 sheet set out for people to sign up if they'd

2 like, but there is nobody here.

3 I have nothing further. If anyone has

4 any questions about the procedural aspects of

5 this rulemaking, I can be reached, as you all

6 know, at 278-3111, area code 217. Or you can

7 e-mail me. My e-mail address is on the

8 board's website.

9 The transcript of today's hearing will

10 be available by -- can we go off the record

11 for a second?

12 (WHEREUPON, a discussion was had

13 off the record.)

14 MR. KNITTLE: We are back on will

15 record.

16 The transcript of today's hearing

17 should be ready on Wednesday, February 3,

18 2005. Copies of the transcript will be

19 available shortly after that on the Board's

20 website at www.ipcb.state.il.us as well as

21 previous Board hearing officer orders.

22 We will be having another hearing,

23 already noticed up, for February 22, in the

24 room next door, which is Room 2-027 at the

0018

1 James R. Thompson Center, 100 West Randolph

2 Street, Chicago, Illinois 60601.

3 That's all I have. Thank you very

4 much.

5 (WHEREUPON, the proceedings were

6 adjourned.)

0019

1 STATE OF ILLINOIS )

2 ) SS:

3 COUNTY OF COOK )

5 I, LAURIE KEELING, a Certified Shorthand

6 Reporter of the State of Illinois, do hereby certify

7 that I reported in shorthand the proceedings had at

8 the hearing aforesaid, and that the foregoing is a

9 true, complete, and correct transcript of the

10 proceedings of said hearing as appears from my

11 stenographic notes so taken and transcribed under my

12 personal direction.

13 IN WITNESS WHEREOF, I do hereunto set my

14 hand at Chicago, Illinois, this 2nd day of

15 February 2005.

17 Certified Shorthand Reporter

19 CSR Certificate No. 84-4507