ILLINOIS POLLUTION CONTROL BOARD
September 7, 2006
IN THE MATTER OF:
PROPOSED NEW 35 ILL. ADM. CODE 225
CONTROL OF EMISSIONS FROM LARGE
COMBUSTION SOURCES (MERCURY)
)
)
)
)
)
R06-25
(Rulemaking - Air)
ORDER OF THE BOARD (by G.T. Girard, A.S. Moore):
On August 24, 2006, Midwest Generation, L.L.C. (Midwest Generation) filed a motion to
schedule additional hearings (Mot.). On August 31, 2006, the Board received responses from
two participants in opposition to the motion and one in support of the motion. On September 1,
2006, the Board received a response in opposition to the request from the Environmental Law
and Policy Center (Center). For the reasons discussed below, the Board denies the motion for
additional hearings.
BACKGROUND
On July 28, 2006, Ameren Energy Generation Company, Amerenenergy Resources
Generating Company, and Electric Energy, Inc. (Ameren) and the Illinois Environmental
Protection Agency (Agency) filed a joint statement with the Board that was also entered into the
record as Exhibit 75 during the hearings held on August 14, 2006.
See
August Tr. at 96-97. At
hearing on August 21, 2006, Dynegy Midwest Generation, Inc. (Dynegy) indicated that a joint
statement with the Agency had been filed with the Board.
See
PC 6283 and 6284. Both joint
statements propose language to create multi-pollutant standards (MPS) to require reductions in
three pollutants, SO
2
, NO
x
, and mercury. The reductions would take place over several years
and would require incremental steps to be completed by 2015.
In response to the joint statement by Ameren and the Agency, Midwest Generation made
an oral motion on the record at hearing on August 14, 2006 that additional hearings be held in
this proceeding.
See
August Tr. at 75. The hearing officer asked that the motion be provided to
the Board in writing with an expedited response time.
See
Hearing Officer Order of August 18,
2006.
On August 24, 2006, Midwest Generation filed the motion for additional hearings. On
August 31, 2006, the Agency (Resp.1) and Ameren (Resp.2) responded in opposition to the
motion for additional hearings. Also on August 31, 2006, Kincaid Generation, L.L.C. (Kincaid)
filed a response (Resp.3) supporting Midwest Generation’s motion.
MOTION
Midwest Generation argues that the statements filed jointly by the Agency with Ameren
(Exh. 75), and the Agency with Dynegy (PC 6283, 6284) require additional hearings before the
Board concerning the proposed language in each of those statements. Midwest Generation sets
2
forth three arguments for additional hearings: first, the MPS creates fundamental issues and
questions that require additional hearings (Mot. at 2); second, the language raises state law
issues and questions (Mot. at 4); third, the MPS raises federal law issues and questions (Mot. at
6). Those arguments will be summarized in turn below.
Creates Need for Additional Hearings
Midwest Generation argues that the joint statements create issues and questions that need
further examination and without additional hearings other participants will have no opportunity
to present evidence regarding the joint statements. Mot. at 2. Midwest Generation points out
that under the current schedule for hearings, the participants had no time to investigate the effects
of the MPS or to prepare evidence or arguments concerning the effect of the MPS.
Id
. For this
reason, Midwest Generation argues more hearings should be scheduled. Mot. at 3.
Midwest Generation further claims that without time to analyze the joint statements and
the MPS, participants cannot know whether or not the MPS is technologically feasible,
economically reasonable, and generally available, or how the MPS impacts the original Agency
proposal. Mot.at 3. Midwest Generation argues that the effect of the joint statements on the
operations of Midwest Generation and others is unknown.
Id
. Additional hearings would allow
participants to investigate these issues, according to Midwest Generation.
Id
.
Midwest Generation requests additional time for analysis to assess the following potential
impacts:
1.
Impacts on companies that choose the MPS and impacts of companies choosing
MPS on the broader proposal including achieving required state caps under
CAMR;
2.
Impacts on future SO
2
, and NO
x
. regulations;
3.
Impacts created by exchanging allegedly harmful, neurotoxin mercury emissions
for particulate an ozone precursors. Mot. at 3.
Midwest Generation asserts that without expert analysis, Midwest Generation and others are
unable to determine why the MPS technology cannot be applied generally to reduce emissions
from all electrical generating units (EGUs).
Id
. Midwest Generation asks that if mercury
controls in the joint statements are sufficient for half the coal-fired power plants in Illinois, why
are the controls not sufficient for the remaining units in the state. Mot. at 3-4.
State Law Issues
Midwest Generation argues that the record contains no evidence related to the
technological feasibility or economic reasonableness of controlling SO
2
, and NO
x
. Mot. at 4.
Therefore, Midwest Generation argues that the technological feasibility and economic
reasonableness of the MPS cannot be determined.
Id
. The Board is required by law to consider
3
technological feasibility and economic reasonableness, so Midwest Generation believes
additional hearings are necessary to address this issue.
Id
.
Midwest Generation also opines that the adoption of a rule setting SO
2
emission
standards could violate the provisions of Section 10 of the Environmental Protection Act (Act)
(415 ILCS 5/10 (2004)). Mot. at 4. Section 10 of the Act “prohibits” the Board from adopting
SO
2
emission standards for existing fuel combustion stationary emission sources located outside
Chicago, St. Louis, and the Peoria Metropolitan area unless the standards are necessary to meet
the Primary National Ambient Air Quality Standards (NAAQS) for SO
2
. Mot. at 4, citing, 415
ILCS 5/10 (2004). Midwest Generation argues that there is no evidence in the record that the
SO
2
of the MPS is necessary to meet the NAAQS. Mot. at 4-5.
Midwest Generation notes that the MPS purports to be available to all EGUs in the State
and many of the Ameren and Dynegy plants are outside Chicago, St. Louis, and the Peoria
metropolitan area. Mot. at 5. Midwest Generation concedes that participation in the MPS is
voluntary, but once committed to the MPS, a source must follow the SO
2
emission standards
described in the MPS.
Id
. Midwest Generation argues that the voluntary nature of the MPS
“may not relieve the Board form the proscription of Section 10” of the Act (415 ILCS 5/10
(2004)). Mot. at 5.
Midwest Generation also argues that the language proposed in the joint statements may
not be a rule of general applicability and if the MPS is not a rule of general applicability then the
wrong process under Illinois law is being followed. Mot. at 5. Midwest Generation asserts that a
variance or adjusted standard are the appropriate “pathway for sources needing special
consideration” rather than rulemaking. Mot. at 5, citing Commonwealth Edison Co. v. PCB, 25
Ill. App. 3d 271 (1st Dist. 1974). Alternatively, Midwest Generation maintains that if every
EGU has the same need for the MPS, then the proposal should be changed. Mot. at 5-6.
Federal Law Issues
Midwest Generation asserts that the MPS could violate federal law because of limitations
placed on the trading of SO
2
allowances. Mot. at 6. Midwest Generation cites Clean Air
Markets Group v. Pataki, 194 F.Supp2d 147 (N.D.N.Y. 2002),
affirmed
338 F.3d 82 (2d Cir.
2003) in support of this contention. In
Clean Air Markets, the court invalidated a New York rule
that placed restrictions on transferring SO
2
allowances to upwind states.
Id
. Midwest
Generation asserts that the MPS effectively prohibits trading of SO
2
allowances and under the
reasoning of
Clean Air Markets the MPS may be in violation of federal law. Mot. at 6-7.
RESPONSE
The Board received three responses to Midwest Generation’s motion for additional
hearings. The Agency and Ameren oppose additional hearings while Kincaid supports the
request. Each of the responses will be summarized below.
Agency Response
4
The Agency opposes holding additional hearings in this proceeding. Resp.1 at 1. The
Agency points out that the Ameren/Agency joint statement was filed on July 28, 2006, the date
that prefiled testimony was due to be filed for the August 14, 2006 hearing.
Id
. Thus, the
Agency asserts that Midwest Generation had sufficient time to prepare questions for Ameren and
the Agency prior to the hearing beginning.
Id
. The Agency notes that Midwest Generation did
prefile questions and ask follow-up at the hearings of Ameren and the Agency. Resp.1 at 2. The
Agency argues that the Dynegy/Agency joint statement is a slightly revised version of the
Ameren/Agency joint statement.
Id
. The Agency opines that given the questioning allowed at
hearing and the slight differences in the two joint statements, there is no reason to hold additional
hearings on either of the joint statements.
Id
.
The Agency also points out that the hearings were adjourned on August 23 although the
hearings were scheduled to continue until August 25. Resp.1 at 2. The Agency asserts that the
failure of Midwest Generation to “take advantage of the remaining time during the Chicago
hearing to offer witnesses contesting the provisions of the MPS . . . highlights the lack of merit in
the motion.”
Id
.
The Agency argues that the impact of the MPS on the original proposal is not of concern,
as the MPS was written to be a key component of the underlying proposed rule. Resp.1 at 3.
The Agency notes that as written the original proposal and the MPS are company specific and
the progress of one company or system toward compliance is independent of other systems.
Id
.
The Agency asserts that the MPS is just one more way to comply with mercury controls and is a
part of the flexibility of the proposal. Resp.1 at 5-7.
As to Midwest Generation’s argument concerning the portions of the MPS dealing with
controlling SO
2
, and NO
x
, the Agency argues that the impacts on future rulemakings should be
addressed in those rulemakings. Resp.1 at 4. The Agency argues that controls for SO
2
, and NO
x
are only tangentially in the proposed Illinois rule. Resp.1 at 7. The MPS includes controls for
SO
2
, and NO
x
to reduce mercury compliance uncertainty by including the co-benefits of SO
2
,
and NO
x
controls.
Id
. Thus, the Agency asserts that the MPS and the original proposal concern
mercury reduction from EGUs, not controls for SO
2
, and NO
x
.
Id
.
The Agency offers substantial argument concerning Midwest Generation’s position that
adoption of the MPS could violate state and federal law. The Agency generally disagrees with
Midwest Generation’s reading of state and federal law. Resp.1 at 8-23. More specifically, the
Agency asserts that Section 9.10 of the Act, adopted 20 years after Section 10 of the Act (415
ILCS 5/9.10 and 10 (2004)) allows for broad-based regulation of SO
2
. Resp.1 at 13. The
Agency also argues that Midwest Generation cites to dicta from Commonwealth Edison in
support of Midwest Generation’s argument. Resp.1 at 14. Finally, the Agency notes that the
United States Environmental Protection Agency directly discussed the impact of
Clean Air
Markets on the CAIR rule. Resp.1 at 19-21.
Ameren Response
Ameren opposes additional hearings. Resp.2 at 1. Ameren points out that the hearings
beginning on August 14, 2006, addressed issues regarding the MPS and that Ameren and the
5
Agency provided testimony through almost three days of hearings.
Id
. Ameren asserts that
Midwest Generation is a “sophisticated company” that has been involved with the mercury
rulemaking from the beginning and may be negotiating an approach to mercury control with the
Agency.
Id
. Ameren further argues that Midwest Generation seeks additional hearings to
address the impact of the MPS on companies that do not opt in when Midwest Generation has
not provided any evidence regarding the impact of the Agency’s proposal on Midwest
Generation. Resp.2 at 1-2. Ameren maintains that Midwest Generation has had plenty of time to
examine the joint statement and appeared to have done so based on the questions addressed to
the Agency and Ameren in August. Resp.2 at 2. Ameren argues that as a result nothing in the
motion justifies the addition expenditure of time and resources that additional hearings would
take.
Id
.
Ameren argues that pursuant to the Board’s procedural rules, Midwest Generation must
demonstrate that failing to hold additional hearings would result in material prejudice to Midwest
Generation. Resp.2 at 2, citing 35 Ill. Adm. Code 102.412(b). Ameren asserts that Midwest
Generation did not and cannot demonstrate that Midwest Generation will suffer material
prejudice.
Id
. Ameren asserts that Midwest Generation cannot claim any impact from the MPS
because the MPS is a voluntary program and the program places no additional obligations on
those who do not choose to enter the program. Resp.2 at 3.
Ameren argues that Midwest Generation also cannot demonstrate that Midwest
Generation exercised the level of due diligence necessary to justify the request for additional
hearings. Resp.2 at 3. Ameren points out that Midwest Generation presented several expert
witnesses during the hearings, Midwest Generation did not present a single witness to testify as
to the impact specifically on Midwest Generation.
Id
. Ameren asserts that Mr. Sid Nelson
introduced information concerning Midwest Generation’s use of halogenated carbon injection at
one of Midwest Generation’s Crawford plant, but Midwest Generation did not choose to share
the evaluations of mercury control. Resp.2 at 3-4.
Ameren asserts that Midwest Generation has failed to establish that the issues remaining
concerning the MPS cannot be addressed in written comment. Resp.2 at 6. Ameren argues that
the factual issues have been addressed at hearing in response to questions from Midwest
Generation and the legal issues raised by Midwest Generation can plainly be addressed in final
comment.
Id
. Ameren notes that legal issues are ill suited to being addressed during hearing and
should be addressed in final comment.
Id
. Ameren maintains that in any event, Midwest
Generation’s legal arguments would not stand further scrutiny.
Id
. Ameren will address the
legal issues more fully in post-hearing comments, but generally Ameren believes that Midwest
Generation’s reliance on Section 27 of the Act (415 ILCS 5/27 (2004)) and Commonwealth
Edison are misplaced. Resp.2 at 6-7. Ameren also dismisses Midwest Generation’s argument
concerning Clean Air Markets, as being inapplicable to the MPS. Resp.2 at 7.
Kincaid Response
Kincaid specifically adopts and supports the arguments of Midwest Generation; however,
Kincaid believes that the appropriate solution is to consider the MPS in a separate docket.
6
Resp.3 at 1. Kincaid argues that the MPS differs significantly from the Agency’s proposal and
must be the subject of a separate regulatory proposal. Resp.3 at 2.
Kincaid states that no evidence was submitted on the basis for and or the impacts of the
MPS. Resp.3 at 2. Kincaid argues that as a result, participants will not have the opportunity to
cross-examine witnesses regarding the MPS.
Id
. Kincaid asserts that MPS raises issues and
questions which need to be examined, because the MPS sets new requirements for controlling
SO
2
, and NO
x
and fundamentally changes the proposed mercury control requirements for EGUs.
Id
. Kincaid also agrees with the concerns about the insufficiency of the record regarding the
MPS, set forth by Midwest Generation. Resp.3 at 3.
Kincaid argues that a separate docket is necessary to ensure compliance with both state
and federal law. Resp.3 at 4-5. Kincaid reiterates the concerns of Midwest Generation that: 1)
the provisions of Section 27 and 10 of the Act (415 ILCS 5/27 and 10 (2004)) may not be met if
the MPS is adopted; and 2) that Commonwealth Edison does not support the adoption of a rule
that is not of general applicability (Resp.3 at 4); 3) Clean Air Markets prohibits the adoption of
the MPS; and 4) the MPS does not demonstrate compliance with CAMR (Resp.3 at 5). Kincaid
also argues that because the provisions controlling SO
2
, and NO
x
have not been proposed under
the Administrative Procedure Act (5 ILCS 100/5-1
et. seq.
(2004)) and subject to public
comment, the provisions cannot be adopted.
Id
.
Center’s Response
The Board notes that the Center filed a response on September 1, 2005, and that the
response was late pursuant to the hearing officer’s order. The response was one paragraph
indicating the Center’s opposition to holding additional hearings. The Board accepts the
response.
DISCUSSION
The Board will discuss the request for additional hearings and the request that the Board
consider the contents of the joint statements in another docket in two parts. First, the Board will
address the state and federal issues and law. Second, the Board will address the specific
arguments for holding additional hearings and opening another docket.
State/Federal Issues and Law
Midwest Generation and Kincaid present several arguments concerning issues of both
federal and state law regarding the inclusion of the MPS in a rule that the Board adopts for
second notice. The Board appreciates these arguments, but will not discuss or rule on those
arguments here. The issues raised are more appropriately considered by the Board in
determining whether or not to include the MPS at second notice, rather than in a discussion
concerning additional hearings. As Ameren points out, legal issues do not profit from testimony
at a hearing. Therefore, the Board will not consider these issues today; instead the Board asks
that these arguments be presented in post-hearing comments and the Board will address them at
that time.
7
Need for Additional Hearings/New Docket
Midwest Generation and Kincaid express concerns about the inability of participants to
fully examine the impacts of the joint statements. Specifically Midwest Generation and Kincaid
are concerned about the potential impact of the MPS on companies that do not opt-in to the
voluntary MPS program, on future SO
2
, and NO
x
rulemakings, and the specific effect on
Midwest Generation and Kincaid operations in controlling mercury emissions. To address these
potential concerns, Midwest Generation seeks additional hearings and Kincaid seeks additional
hearings and new docket for the changes proposed in the joint statements. Although cognizant of
the concerns expressed by Midwest Generation and Kincaid, the Board is unconvinced that
additional hearings will further develop a record in order to address these concerns.
As pointed out by both the Agency and Ameren, the Ameren/Agency joint statement was
filed before the beginning of the August hearings. Prefiled questions were filed addressing many
of these issues and follow-up questions further flushed out information relating to these issues.
Also, the hearing officer specifically asked several questions on the record concerning not only
the joint statements, but also proposed language from Kincaid. The hearing officer invited all
participants to comment on those questions. August Tr. at 1876-78. Thus, the Board expects
that additional information concerning the joint statements as well as many other aspects of the
proposal will be filed in the post-hearing comments.
1
The Board finds that the concerns expressed in the motion for additional hearing and by
Kincaid in seeking a new docket, can be addressed in post-hearing comments. Certainly, the
Board may revisit this issue after receipt of post-hearing comments; however, the Board finds
that ordering additional hearings is premature. Therefore, the motion to hold additional hearings
is denied.
CONCLUSION
After reviewing the arguments by participants, the Board finds that holding additional
hearings will not assist in the development of the record in this proceeding. Therefore, the Board
denies the motion to hold additional hearings.
IT IS SO ORDERED.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above order on September 7, 2006, by a vote of 4-0.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
1
Post-hearing comments are currently due on September 20, 2006.
