IN THE MATTER OF:

PROPOSED NEW

35 1LL.ADM.CODE PART 225

)

PCB R06-25

CONTROL OF EMISSIONS FROM

)

Rulemaking

-

LARGE

NOTICE OF FILING

Dorothy Gunn, Clerk

Illinois Pollution Control Board

James

R. Thompson Center

Suite 11-500

100 West Randolph

Chicago, Illinois 60601

Persons included on the

ATTACHED SERVICE LIST

PLEASE TAKE NOTICE that we have today filed with the Office of the Clerk of the

Pollution Control Bo

EARANCE OF DANlEL McDEVlTT

and

SCHEDULE ADD

,J

Dated: August 24,2006

Daniel

McDevitt

General Counsel

MIDWEST GENERATION, LLC

440 South

LaSalle Street, Suite 3500

Chicago, Illinois 60605

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

1

1

PROPOSED NEW 35 1LL.ADM.CODE PART 225

)

PCB R06-25

CONTROL OF EMISSIONS FROM

)

LARGE COMBUSTION SOURCES

)

APPEARANCE

I hereby file my appearance in this proce

General Counsel

MIDWEST GENERATION, LLC

440 South

LaSalle Street, Suite 3500

Chicago, Illinois 60605

Dated: August 24, 2006

CIiZ\ 1508208.1

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

1

1

PROPOSED NEW 35 1LL.ADM.CODE PART 225

)

PCB R06-25

CONTROL OF EMISSIONS FROM

1

LARGE COMBUSTION SOURCES

1

MOTION TO SCHEDULE ADDITIONAL HEARINGS

NOW COMES MIDWEST GENERATION, LLC, ("MWG), by and through its

attorney, Daniel

McDevitt, and moves the Illinois Pollution Control Board ("Board") to schedule

additional hearings to address amendments to proposed 35

111. Adm. Code 225, titled Multi-

Pollutant Alternative, 35 Ill. Adm. Code

§

225.233, proposed by Ameren Energy Generating

Company,

AmerenEnergy Resources Generating Company, and Electric Energy, Inc.

(collectively "Ameren") and the Illinois Environmental Protection Agency ("IEPA") on July 28,

2006 and by Dynegy Midwest Generation, Inc. ("Dynegy") and IEPA on August 21,2006.'

I.

INTRODUCTION

On March 14,2006, IEPA submitted to the Board proposed regulations seeking reduction

in mercury emissions from electric generating units

("EGUs"). On May 23,2006, IEPA filed a

revised version to those regulations which provided, inter

alia, a Temporary Technical Based

Standard ("TTBS") (the original proposal and the TTBS collectively referred to as the

"Proposal"). The Board held evidentiary hearings on the Proposal on June 12,2006 through

June 23,2006.

'

Such hearings should also include the latest revision proposed by IEPA and Dynegy and

the Dominion proposal submitted at the hearing on August 23, 2006. Time did not permit

addressing these further in this Motion.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

As a result of those hearings and subsequent negotiations, in its Joint Statement filed July

28,2006, Ameren asked the Board to consider and include with

IEPA's Proposal an amendment

to proposed 35

Ill. Adm. Code 225, titled Multi-Pollutant Standards, 35 Ill. Adm. Code

5

225.233 (hereafter the proposed amendment filed jointly by Ameren and IEPA and proposed

changes thereto submitted by Dynegy and IEPA are collectively referred to as the "MPS"). The

MPS requires covered

EGUs, among other things, to meet an emission rate of 0.1 1 IbsImmBtu

for NO, by 2012, and 0.25 1bsImmBtu for SO2 by 2015. It also imposes different, more lenient

mercury requirements than the Proposal.

MWG does not know

what effect the MPS might have on its operations, the proposed

regulations to implement the Clean Air Interstate Rule ("CAIR) in Illinois, and the Proposal.

As a result, the MPS raises fundamental issues and questions for the Board and parties to this

proceeding that have not been addressed in this rulemaking proceeding given the dates when the

MPS was submitted to the Board. Therefore, MWG moves for additional hearings in order to

address these issues and questions.

11.

REQUIRE ADDITIONAL HEARINGS.

The MPS creates issues and questions that need further examination. First, without

additional hearings, MWG and others ("participants") have no opportunity to present evidence

regarding the MPS. Throughout the hearings held on June 12,2006 through June 23,2006, and

August 14,2006 through August 23,2006, participants presented evidence regarding the

Proposal to control mercury emissions from

EGUs. The hearing schedule afforded participants

the opportunity to investigate the effects of the Proposal and to prepare evidence for hearing.

However, the current hearing schedule offers no time for participants to investigate the effects of

the MPS and to prepare evidence or arguments concerning its effects. Because, at this time,

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

participants are not aware of what issues the MPS creates, on its own and its impact on issues

involving the original Proposal, the Board should schedule additional hearings so that all

interested persons can investigate the MPS further, delineate its independent effects as well as its

effects on the Proposal and elsewhere, and prepare evidence

and/or argument if necessary.

Along these same lines, currently, participants have not had adequate time to investigate

and suggest alternatives to the MPS or, as a result thereof, to the Proposal. Additional hearings

would allow participants to do so.

Without adequate time to analyze the MPS, participants cannot know whether or not the

proposed amendment is technologically feasible, economically reasonable, how it impacts the

Proposal, and its availability generally. Further, MWG, and possibly others, do not know what

impact the MPS may have on its operations now and in the future. Furthermore, additional

hearings will allow the Board to probe the impact of the MPS on other pending rule-makings

(e.g., Illinois CAIR) or possible, necessary future rule-makings. With additional hearings,

participants could investigate these issues and present their position regarding the MPS.

MWG also needs additional time for its experts to analyze the impacts of the MPS.

Without expert analysis, MWG, and the Board, cannot adequately assess the following potential

impacts of the MPS:

1) impacts of opting in or out of the MPS in terns of both the impact on

companies that opt in and the impact of opt-ins on the broader proposal, including achieving

required state caps under CAMR;

2) impacts on future SO2 and NO, regulations; and 3) impacts

created by exchanging allegedly harmful, neurotoxic mercury emissions for particulate and

ozone precursors. Without expert analysis, MWG and the Board are unable to determine why

the MPS technology standards cannot be applied generally to reduce emissions from all EGUs.

If the mercury controls in the MPS are sufficient for half the coal-fired power plants in Illinois

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

(Ameren and Dynegy), why are they not sufficient for all the plants in the state, irrespective of

SOz and NO,? Additional hearings would afford MWG, other participants and the Board an

opportunity to investigate these questions.

Further, the MPS may not be a rule of general applicability or, alternatively, the Proposal

may not be. Although opting in to the MPS is voluntary, Ameren and Dynegy may be the only

companies that can technologically employ it. In other words, the MPS may not be a generally

applicable standard. Alternatively, the reasons justifying the more relaxed mercury standard in

the MPS for half the plants in the state may demonstrate that the Proposal is infeasible or

uneconomic.

111.

THE PROPOSED AMENDMENT RAISES STATE LAW ISSUES AND

QUESTIONS.

The MPS also raises questions and issues under state law that need further examination.

Under Illinois law, the Board must consider, when promulgating a rule, the "technological

feasibility and economic reasonableness" of measuring or reducing the particular type of

pollution proposed to he regulated. 41 5 ILCS 5127. Docket R06-25 contains no evidence related

to

SO2 or NO,. As a result, the technological feasibility and economic reasonableness of

regulating

SO2 or NO,under the MPS remain unclear. Thus, MWG requests additional hearings

so that the Board, MWG and other participants can consider these issues.

The proposed amendment may also violate section

10 of the Illinois Environmental

Protection Act (the "Act"). Section 10 prohibits the Board from adopting

SO;!regulations and

emission standards for existing fuel combustion stationary emission sources located outside the

Chicago, St. Louis and Peoria Metropolitan areas unless those regulations are necessary to attain

and maintain the Primary National Ambient Air Quality Standards ("NAAQS') for sulfur

dioxide. 41 5 ILCS 5110. There is no evidence in the record that the

SOz portion of the MPS is

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

necessary for attaining and maintaining the SO* NAAQS. The MPS purports to be available to

all

EGUs in the state and many of the Ameren and Dynegy plants are outside the three

metropolitan areas. Although participation in the MPS is voluntary, once a company volunteers,

it is compelled to comply with the

SO1 requirements and it is at least an open question whether

the Board can adopt such a requirement even if it only becomes applicable as a result of

volunteering for the more lenient mercury requirements. The allegedly voluntary nature of the

MPS may not relieve the Board from the proscription of Section 10. Again, this may comprise

both legal and evidentiary issues that should be put before the Board through another hearing

Further, the MPS may not be a rule of general applicability, but rather it may be an

emission standard for Ameren and Dynegy only. If that is the case, then the wrong process

under Illinois law is being followed. In

Commonweulth Edison

Co.

v.

Pollution Control Board,

25

Ill. App. 3d 271 (ISt Dist. 1974), although arising in a somewhat different context, the Court

stated:

substantive rules of this nature are promulgated for general, not special

application

. . . .

Where one [fails to challenge the rules generally and] seeks to

relax their enforcement against him exclusively [due to arbitrary and unreasonable

hardship], the legislature has determined that the appropriate remedy is for the

aggrieved party to seek

a variance in accordance with Title 9 of the Act.

Id at 281. Since that decision, the General Assembly has added a second pathway for sources

needing special consideration, the adjusted standard. 415 ILCS 5128.1. Thus, if Ameren and

Dynegy have company-specific coordination, financing and technology problems with the

Proposal, as Ameren has already testified, and the MPS is effectively made available only to

them to address these problems, then Illinois law may require Ameren and Dynegy to apply for a

variance or adjusted standard, rather than adding a special provision purporting to be of general

applicability.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

On the other hand, if most or all EGUs have the same coordination, financing and

technology problems with the Proposal, and there is significant evidence already in the record

suggesting that is true,

then the Proposal should be changed rather than trying just to "carve-out"

half of the sources in the state. When so many sources appear willing to exchange

SO2 and NO,

emissions reductions for more lenient mercury timing and

reduction/emission requirements, and

IEPA is willing to accept more lenient mercury timing and

reductionsiemission requirements,

that approach undermines any claimed validity to the appropriateness of the original Proposal.

Hence, if the Proposal itself is unworkable and unmanageable for so many sources, then the

Proposal itself may fail the statutory tests of economic reasonableness and technological

feasibility. Additional hearings

m-ould allow the Board and participants to address these issues

and, possibly, develop generally applicable solutions.

Moreover, the MPS may raise compliance problems for meeting both the mercury

regulations and the proposed regulations of the Clean Air Interstate Rule. Currently, MWG and

possibly others, do not know whether they can simultaneously comply with both regulations. By

scheduling additional hearings, this issue could be addressed

IV.

QUESTIONS.

The MPS also raises issues and questions under federal law that need further

examination. The Supremacy Clause of the Constitution "invalidates state laws that 'interfere

with, or are contrary to,' federal law."

Clean Air Markets Group

v.

Pataki,

194

F.

Supp. 2d 147,

157 (N.D.N.Y. 2002),

affirmed

338 F.3d 82 (2d Cir. 2003). As such, federal law preempts state

law to the extent state law actually conflicts with the federal law.

Id.

In

Clean Air Markets,

New

York passed a law that placed a trading restriction on

SO2 allowances.

Id.

at 154. The court

found that "New York's restrictions on transferring allowances to units in the Upwind States is

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

contrary to the federal provision that allowances be tradeable to

any

other person."

Id

at 158.

As a result, the court held that New York's law was preempted by the Clean Air Act

("CAP)

because it interfered with the CAA's "method for achieving the goal of air pollution control: a

cap and nationwide

SO2 allowance trading system."

Id

Like New York's law in

Clean Air Markets,

the MPS mandates that a party opting into

the MPS must surrender

SO2 allowances. As a result, the MPS effectively prohibits trading of

SOz allowanccs and, as IEPA has indicated, it intends to retire the surrendered allowances thus

reduces the size of the market as expressly determined by Congress in Title

IV of the CAA.

Under the Supremacy Clause and

Clean Air Markets,

state laws cannot impede on the CAA's

cap and nationwide SO* allowance trading system. As such, the CAA may preempt the MPS,

thus potentially invalidating, under federal law, its limitations on trading of

SO2 allowances.

Additional hearings would allow a more thorough examination of these issues and unanswered

questions.

The proposed amendment also may potentially violate the Commerce Clause of the

Constitution. In

Clean Aiv Markets,

New York attempted to halt altogether "transfers of SOz

allowances from New York units to units in Upwind States[,]

. . .

in spite of a federal system

designed for free nationwide transferability of

SO* allowances."

Id

at 162. Thus, New York's

law imposed a burden on interstate commerce.

Id

And since New York failed to justify its law

in terms of "local benefits flowing from the statute and the unavailability of nondiscriminatory

alternatives adequate to preserve the local interests at stake", the court invalidated New York's

law under the Commerce Clause.

Id

Like

Clean Air Markets,

the MPS may prohibit sources in

Illinois from transferring

SO* allowances in spite of the free-market federal system. Further, as

noted above.

by taking allowances off the market the MPS would change the scope of that

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

market, a scope that has been specifically defined by Congress. Even if there are local benefits

from the MPS, there may be less discriminatory (as to interstate commerce) alternatives, and this

raises yet another question that could be addressed through additional hearings.

Moreover, under the Clean Air Mercury Rule

("CAMR"), each state must demonstrate

that it will meet the mercury cap. How Illinois will demonstrate compliance with

CAMR if the

Board adopts the MPS is unclear. Evidence in the record shows that if Ameren alone opts-in to

the proposed amendment, a

500 pound increase in mercury emissions will occur. See Testimony

of Anne Smith,

Ph.D., Figure 3. If other sources opt-in, that raises the question of whether

Illinois will be able to demonstrate compliance with the mercury cap. Thus, this issue, and

inconsistencies in the Agency's testimony regarding this issue, need to be addressed through

additional hearings with the Board.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

V.

CONCLUSION

WHEREFORE, for the reasons set forth above, MIDWEST GENERATION, LLC

reasserts its Motion to Schedule Additional Hearings and requests that: the Board schedule

additional hearings to address

an amendment to proposed 35 Ill. Adm. Code 225, titled Multi-

Pollutant Alternative, 35 Ill. Adm. Code

§

225.233, proposed by Ameren Energy Generating

Company,

AmerenEnergy Resources Generating Company, and Electric Energy, Inc. and the

Illinois Environmental Protection Agency on July 28,2006 and as proposed to be revised by

Dynegy Midwest Generation, Inc. and IEPA on August 21,2006.

Dated: August 24,2006

Respectfully submitted,

by:

One of Their ~ttorn&s

Daniel McDevitt

General Counsel

Midwest Generation, LLC

440 South

LaSalle Street, Suite 3500

Chicago, Illinois 60605

312-583-61

17

Facsimilie 3 12-583-4998

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

CERTIFICATE OF SERVICE

I, the undersigned, certify that on this 24th day of August, 2006,I have served

electronically the attached

APPEARANCE

OF

DANIEL McDEVITT

and

MOTION TO

SCHEDULE ADDITIONAL HEARINGS

upon the following persons:

Dorothy

Gunn, Clerk

Illinois Pollution Control Board

James

R. Thompson Center

Suite 11-500

100 West Randolph

Chicago, Illinois 60601

and electronically and by first-class mail wi

persons listed on the

ATTACHED SERVICE LIST.

Daniel McDevitt

General Counsel

MIDWEST

GENERATION, LLC

440 South

LaSalle Street, Suite 3500

Chicago, Illinois 60605

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

(RO6-25)

Marie Tipsord

I-Iearing Office

Illinois Pollution Control Board

James R. Thompson Center

100 W. Randolph

Suite 11-500

Chicago, Illinois 60601

tipsonn@,ipcb.state.il.us

William A. Murray

Special Assistant Corporation Counsel

Office of Public Utilities

800 East Monroe

Springfield, Illinois 62757

bmurrav@,cwlp.co~~~

Christopher W. Newcomb

Karaganis, White

&

Mage., Ltd.

414 North Orleans Street, Suite 8

10

Chicago, Illinois 60610

cnewcomb@k-w.com

Faith E. Bugel

Howard A. Learner

Meleah Geertsma

Environmental Law and Policy Center

35 East Wacker Drive, Suite 1300

Chicago, Illinois 60601

fbugeliiilel~c.org

Gina Roccaforte, Assistant Counsel

Charles Matoesian, Assistant Counsel

John J. Kim, Managing Attorney

Air Regulatory Unit

Division of Legal Counsel

Illinois Environmental Protection Agency

1021 North Grand Avenue, East

P.O. Box 19276

Springfield, Illinois 62794-9276

john.kim@,e~a.state.il.us

charles.matoesian@,e~a.state.il.us

gina.roccaforte@,euaastate.il.us

N. LaDonna Driver

Katherine

D. Hodge

Hodge

Dwyer Zeman

3150 Roland Avenue, P.O. Box 5776

Springfield. Illinois 62705-5776

nldriver@hdzlaw.com

-

Bill S. Forcade

Katherine M.

Rahill

Jenner

&

Block

One IBM Plaza,

4oth Floor

Chicago, Illinois 6061 1

bforcade@,ienner.com

krahill@,ienner.com

Keith I. Harley

Chicago Legal Clinic

205 West Monroe Street,

4th Floor

Chicago, Illinois 60606

kharley@,kentlaw.edu

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006

---

(R06-25)

David Rieser

James

T. Harrington

Jeremy

R. Hojnicki

McGuireWoods LLP

77 West Wacker, Suite 4100

Chicago, Illinois 60601

drieser@,mcguirewoods.com

Bruce Nilles

Sierra Club

122 West Washington Avenue, Suite 830

Madison, Wisconsin 53703

bruce.nilles@sierraclub.org

Mary Frontczak

Dianna Tickner

Prairie State Generating Company, LLC

701 Market Street, Suite 781

St. Louis. Missouri 63 101

S. David

Farris

Manager, Environmental, Health and Safety

Office of Public Utilities, City of Springfield

201 East Lake Shore Drive

Springfield, Illinois 62757

dfarris@,cwlo.com

James W.

Ingram

Senior Corporate Counsel

Dynegy Midwest Generation,

Inc.

1000 Louisiana, Suite 5800

Houston. Texas 77002

Jim.Ingram@,dynerv.com

Sheldon A.

Zahel

Kathleen C. Bassi

Stephen J. Bonebrake

Joshua R. More

Glenna L. Gilbert

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

312-258-5500

Fax: 3

12-258-5600

szabel@,schiffhardin.com

kbassi@,schiffhardin.com

sbonehrake@schiffhardin.com

jrnore@,schiffhardin.com

~~ilbert@schiSfiardin.com

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, AUGUST 24, 2006