BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

NOTICE

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

R06-25

PROPOSED NEW 35 ILL. ADM. CODE 225

)

(Rulemaking – Air)

CONTROL OF EMISSIONS FROM

)

LARGE COMBUSTION SOURCES (MERCURY) )

NOTICE

TO:

Dorothy Gunn

Clerk

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph St., Suite 11-500

Chicago, IL 60601-3218

SEE ATTACHED SERVICE LIST

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

Illinois Pollution Control Board the

POST-HEARING COMMENTS OF THE ILLINOIS

ENVIRONMENTAL PROTECTION AGENCY, a copy of which is herewith served upon you.

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY

By: ______________________

Gina Roccaforte

Assistant Counsel

Division of Legal Counsel

DATED: September 20, 2006

1021 North Grand Avenue East

P. O. Box 19276

Springfield, IL 62794-9276

THIS FILING IS SUBMITTED

217/782-5544

ON RECYCLED PAPER

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BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

R06-25

PROPOSED NEW 35 ILL. ADM. CODE 225

)

(Rulemaking – Air)

CONTROL OF EMISSIONS FROM

)

LARGE COMBUSTION SOURCES (MERCURY) )

POST-HEARING COMMENTS OF THE ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY

NOW COMES the ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

(Illinois EPA), by its attorneys, and hereby submits post-hearing comments in the above

rulemaking proceeding. The Illinois EPA appreciates the efforts of the Illinois Pollution

Control Board (Board) in this rulemaking regarding the request to add 35 Ill. Adm. Code

Part 225 to control mercury emissions from coal-fired electric generating units.

On March 14, 2006, the Illinois Environmental Protection Agency (“Illinois

EPA”) filed a regulatory proposal entitled

In the Matter Of: Proposed New 35 Ill. Adm.

Code 225, Control of Emissions from Large Combustion Sources

, with the Board to

control mercury emissions from coal-fired electric generating units (“EGUs”) beginning

in July 2009. The Illinois EPA engaged in extensive outreach on this proposal and held

regular meetings with representatives of the affected sources and public interest groups

during the months of January and February. The proposed rulemaking is intended to

satisfy Illinois’ obligation to submit a State plan to the United States Environmental

Protection Agency (“USEPA”) to address the requirements of the Federal Clean Air

Mercury Rule (“CAMR”). 70

Fed. Reg.

28606 (May 18, 2005). Furthermore, this

rulemaking proposal addresses the significant deficiencies present in the CAMR--the

unnecessary delay in achieving mercury emissions reductions, the inherent concerns

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associated with a cap and trade program to control a persistent, bioaccumulative toxin,

and the inadequate mercury reductions contained in the CAMR.

Today, approximately 40% of Illinois’ electricity comes from coal-fired power

plants, and these coal-fired power plants comprise the largest source of uncontrolled

mercury emissions in the State. Accordingly, the rulemaking proposal is designed to

achieve a high level of mercury reductions, based upon the Illinois EPA’s finding that

there exists mercury control technology that is both technologically feasible and

economically reasonable. The proposal requires mercury reductions from Illinois’ coal-

fired power plants in two phases. During phase I, which begins on July 1, 2009, coal-

fired power plants must comply with either an output-based emission standard of 0.0080

lbs mercury/GWh, or a minimum 90-percent capture of input mercury, both on a rolling

12-month basis. However, plants with the same owner/operator may elect to comply

with the limit on a system-wide basis by averaging across their entire fleet of plants in

Illinois, provided that each plant meets a minimum output-based emission standard of

0.020 lbs mercury/GWh or a minimum 75-percent capture of input mercury. In Phase II,

beginning January 1, 2013, plants must comply with either an output-based emission

standard of 0.0080 lbs mercury/GWh or a minimum 90-percent capture of input mercury,

both on a rolling 12-month basis.

Furthermore, to provide additional regulatory flexibility for compliance with the

proposed rule, the Illinois EPA filed a motion to amend the rulemaking to include a

Temporary Technology-Based Standard (“TTBS”) that was granted by the Board. Under

the TTBS, which is voluntary, EGUs that satisfy relevant eligibility criteria may

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demonstrate compliance with control requirements for mercury emissions for a specified

and limited time frame.

Illinois EPA witnesses testified and provided evidence in support of the proposed

rulemaking at the first hearing that was held in Springfield on June 12, 2006 through June

23, 2006. In addition, prior to the second hearing, the Illinois EPA and Ameren Energy

Generating Company, AmerenEnergy Resource Generating Company, and Electric

Energy (collectively “Ameren”) jointly proposed Multi-Pollutant Standards (“MPS”),

along with Ameren testimony, that allow a slight relaxation of the mercury emissions

reduction requirements in exchange for significant reductions in NO

and SO

emissions.

Ameren Joint Statement, Hearing Exhibits (“Exhibit”) 75-78. The MPS, like the TTBS,

are voluntary provisions that allow for additional compliance flexibility. At the second

hearing that was held in Chicago on August 14, 2006 through August 23, 2006, the

Illinois EPA and Dynegy Midwest Generation, Inc. (“Dynegy”) jointly submitted a

slightly revised version of the Ameren MPS, with a corrected version resubmitted to the

Board. Public Comment #6284, Exhibit 125. Given the minor distinctions between the

Ameren MPS and Dynegy MPS, and the fact that the Dynegy MPS effectively supersedes

the Ameren MPS, the Dynegy MPS will henceforth be referred to in these comments as

the MPS.

In addition, Kincaid Generation, LLC (“Kincaid”) introduced provisions at the

second hearing relating to “Alternative Emissions Standards for EGUs Electing Optional

Control Plan.” Exhibit 138. Such provisions allow for EGUs meeting certain eligibility

criteria to comply with alternative control options; however, compliance with such

options results in significantly less stringent mercury control requirements.

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The Illinois EPA urges the adoption of the initial proposed rulemaking and

proposed amendatory TTBS and MPS provisions. The Board may revise proposed

regulations before adoption upon its own motion or in response to suggestions made at

hearing and in written comments made prior to second notice. 35 Ill. Adm. Code

102.600. No additional hearing on the revisions need be held.

. Accordingly, the

Illinois EPA urges the Board to adopt the initial rulemaking proposal and proposed

amendatory TTBS and MPS provisions.

The Illinois EPA testified and introduced evidence in support of this proposition

and reiterates such in these post-hearing comments. A very thorough record has been

compiled in this rulemaking proceeding encompassing 18 days of hearings,

approximately 4457 pages of hearing transcript, and 138 exhibits. Also, as was set forth

in the Illinois EPA’s Response to Midwest Generation’s Motion for Additional Hearings,

all parties had more than sufficient time and opportunity to either question proponents of

the MPS provisions or present testimony challenging those provisions. Thus, there is no

impediment to the Board including the MPS provisions in the second notice of this

rulemaking. Indeed, inclusion of the MPS and TTBS provisions in the second notice will

allow the proposed rule to be adopted in the manner and scope intended.

These post-hearing comments of the Illinois EPA are two-fold; the comments

summarize the hearing testimony and address issues raised by the Board and Midwest

Generation, LLC (“Midwest Generation”) in pleadings. The areas of coverage are as

follows: Technical feasibility and economic reasonableness of controlling mercury

emissions from coal-fired power plants in Illinois; deposition of mercury; mercury

impacts on human health; fish advisories; monitoring of mercury emissions; impact on

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utilization of fly-ash; interaction of the proposed Illinois mercury rule and the Clean Air

Interstate Rule (“CAIR”); MPS issues; Kincaid’s proposal; suggested clarification of

certain MPS provisions; and compliance with the CAMR annual EGU mercury budget or

caps.

Technical Feasibility

The Illinois EPA’s Technical Support Document (“TSD”) classifies existing coal

fired units in Illinois broadly into the following five categories:

1. Those that can comply with the emission requirements of the proposed Illinois

rule through “co-benefit” removal. These include bituminous units equipped with

flue gas desulfurization (scrubbers) and selective catalytic reduction (SCR) and

the circulating fluidized bed boiler at Marion. With regard to this category of

units, the testimony of Mr. Cichanowicz on behalf of Midwest Generation

assumes that these units will be able to comply with the rule through co-benefit

removal of mercury as indicated by its table entitled CAIR-IL Rule Tech. Exhibit

120.

2. A small number of small-capacity bituminous coal units that currently are

unscrubbed and may or may not be able to meet the 90% removal or the output-

based standard, but are addressed by the multipollutant control alternative and the

TTBS.

3. Some units (Baldwin, Havana, Vermilion)

with electrostatic precipitator (“ESPs”)

that currently plan to install a fabric filter downstream of the ESP. Both Illinois

EPA and the industry acknowledge that these units are expected to achieve 90%

or more capture of mercury.

4. Two units burning Powder River Basin (“PRB”) coal and using hot-side ESPs.

Illinois EPA and industry agree that these units would have to install fabric filters

to comply with the proposed Illinois rule.

5. Units firing PRB coal and using cold side ESPs – the largest group of units in

Illinois.

TSD § 8.6, pgs. 147-152.

The principle area of disagreement between Illinois EPA and Midwest Generation

relates to this last group of units. Illinois EPA and Midwest Generation disagree on the

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method that will be necessary to meet the requirements of the Illinois mercury rule on

PRB coal-fired units. This disagreement accounts for nearly all the difference in the

estimates of cost of the regulation between Illinois and its expert, Dr. Staudt, on the one

hand, and Mr. DePriest and Mr. Cichanowicz, the Midwest Generation experts, on the

other. However, the evidence before the Board demonstrates that PRB coal-fired units

will be able to use sorbent injection to achieve 90% or greater reduction of mercury

emissions on the timetable of the proposed rule. Cross-examination of Mr. Cichanowicz,

technology expert for Midwest Generation, showed that his opinions to the contrary were

based on speculation contradicted by the evidence in the record.

Based on the evidence presented in the TSD, the Illinois EPA concluded that

mercury emissions reductions of 90% or greater are achievable on PRB coal-fired units

with cold-side precipitators using sorbent injection of halogenated Powdered Activated

Carbon (“PAC”) at a treatment range of about 3 lb/MMacf. TSD § 8.6.2, p. 149.

In testimony to the Board, Dr. Staudt, witness for Illinois EPA, stated that in his

opinion, “All of the coal-fired units in the state of Illinois are capable of meeting the

requirements of the proposed mercury control rule.” Exhibit 50, p. 6. With respect to

units burning low sulfur PRB coal, Dr. Staudt stated that sorbent injection of

“halogenated PAC has been shown to be very effective at several full-scale coal-fired

boiler installations providing 90% or more removal.” Exhibit 50, p. 6. Based on these

conclusions, and using cost figures for halogenated PAC that are not in serious contention

here, Dr. Staudt estimated the total cost of compliance with the proposed mercury

regulation at about $32-37 million per year in the period 2010-2018. Since the EPA’s

CAMR, which limits mercury emissions to similar levels, takes effect in 2018, Dr. Staudt

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properly concluded that the incremental cost of the Illinois program would be negligible

thereafter.

By contrast, Mr. Cichanowicz assumed that many PRB coal-fired units would

need to install fabric filters because of his opinion that sorbent injection has not currently

been demonstrated to achieve emissions reductions of 90% or more. Mr. DePriest

testified that he used Mr. Cichanowicz’ assumptions regarding the technology that will be

needed to comply with the Illinois rule when he developed his estimate of the cost of the

rule. Thus Mr. DePriest’s extraordinarily high cost estimate stands or falls on the control

technology testimony offered by Mr. Cichanowicz.

Mr. Cichanowicz’ opinion rests solely on the premise that sorbent injection

upstream of a cold-side ESP is incapable of providing high levels of mercury reduction.

He asserts that “there is insufficient data to demonstrate that Hg control technology is

available today to assure compliance with the Agency’s proposed Hg rule”; and,

“suggests” that there is a relationship between ESP size and the removal rate achieved by

sorbent injection, based on a figure developed by Mr. Cichanowicz (figure 5.2 of his pre-

filed testimony). Exhibit 84, p. 4. If it existed, such a relationship would be relevant in

this proceeding because many Illinois PRB coal-fired units have ESPs with relatively

small plate area (expressed as Specific Collection Area or “SCA”).

With regard to the first point, Mr. Cichanowicz posed the wrong test. The issue

before the Board is not whether 90% reduction of mercury emissions is demonstrated to

be “available today,” but rather whether the technology is sufficiently demonstrated for

the Board to conclude that it will be available to meet the requirements of the regulation

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when they become effective. The Illinois EPA has presented ample evidence for the

Board to reach that conclusion.

First, the TSD provides a list of 28 field demonstrations completed, and 11 more

in progress or planned. TSD, Table 8.1, p. 125-6. In contrast to the arguments industry

has presented, Illinois EPA’s position is supported by actual test results under

sponsorship of the U.S. Department of Energy and others.

On PRB units with a cold-side ESP, 90% or better removal has been demonstrated

at multiple sites using halogenated PAC at treatment rates of about 3 lb/MMacf. The

consistency of these results at multiple sites provides high confidence that this

performance will be achieved by Illinois units that burn PRB coal. Only when carbons

were used that have lower activity than normal halogenated PAC – such as untreated

carbon or specialty treated carbons like Sorbent Technologies’ C-PAC – was less than

90% removal achieved.

With regard to the second point, whether mercury capture will be adversely

affected by small ESP plate size, Mr. Cichanowicz admitted in his pre-filed testimony

that the relationship “suggested” in his pre-filed testimony was “anecdotal” and “not

intended to reflect any fundamental theorem of carbon Hg absorption.” Exhibit 84, p. 4.

Under cross-examination, Mr. Cichanowicz acknowledged that the “suggested”

relationship of Figure 5.2 between ESP size and sorbent injection effectiveness is not

supported by the underlying data. Mr. Cichanowicz acknowledged that the variations in

the effectiveness of sorbent injection in field demonstrations identified in Figure 5.2 are

explained by other factors – choice of sorbent (halogenated or not), sorbent injection,

coal type, sulfur content of coal, or, in the case of Yates unit 1, poor reagent distribution.

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Poor reagent distribution at Yates 1 has been confirmed by the computer modeling results

performed for the U.S. Department of Energy that are included in Exhibit 71. Thus the

“suggested” relationship between ESP size and Hg removal in Figure 5.2 was shown to

be spurious, with the variations in performance acknowledged to be explained by other

factors that Mr. Cichanowicz agreed affect mercury capture performance by sorbent

injection. Tr. 8/17/06, pgs. 831-834, 999.

In his pre-filed testimony Mr. Cichanowicz also claimed that theoretical analysis

by Professor Clack of the Illinois Institute of Technology supported his theory that ESP

size is an important factor in mercury capture. However, cross examination of Mr.

Cichanowicz demonstrated that these theoretical studies performed by Professor Clack do

not support the suggestion that ESP size determines the effectiveness of sorbent injection

technology. Exhibits 102, 103; Tr. 8/16/06, pgs. 747-748. As demonstrated on cross

examination of Mr. Cichanowicz, the effect of mercury capture that Clack found to be

potentially significant is fully realized in even the smallest ESP in Illinois and there is

little or no further benefit to mercury capture beyond that size.

The figure below, submitted with Dr. Staudt’s oral testimony, [

identify transcript

reference and exhibit number

] shows the strong relationship between the amount of

halogenated sorbent and the removal of mercury. As noted in Dr. Staudt’s oral

testimony, each of these points represents full-scale test data using either Darco Hg LH or

Sorbent Technologies B-PAC sorbent on a PRB coal unit with a cold-side ESP. The

dashed blue lines added to this figure (+1.96s and -1.96s) indicate the 95% confidence

interval for the brominated carbon data that is calculated in a straightforward manner

using the best fit curve and data submitted with Dr. Staudt’s oral testimony.

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Data taken from Mr. Cichanowicz’s Figure 5-2 (Exhibit 85) that was submitted

with Mr. Cichanowicz’s oral testimony in response to Illinois EPA’s questions to his

written testimony has also been added to Figure 1. As shown, the MerCure technology

(Nos. 10 and 4c from his table) is capable of even greater mercury removal at lower

treatment rates on western coals (PRB for #10 and Lignite for #4c). The MerCure results

provided by Mr. Cichanowicz also appear to have the same linear behavior when plotted

in a semi-log fashion as shown. Notably, the data on this figure is taken from units with

ESPs sized with SCAs ranging from 300 ft

/1000 acfm to over 700 ft

/1000acfm.

In short, this table shows the relationship between the amount of sorbent injected

and the degree of mercury removal, without respect to ESP size, holding constant coal

type (PRB coal) and sorbent type (halogenated sorbent). This relationship was not visible

in Mr. Cichanowicz’ Figure 5.2, because neither coal type nor sorbent type were held

constant. By holding constant coal type and sorbent type, it becomes apparent that

removal of mercury from PRB coals is determined by the sorbent injection rate, not by

ESP size. Had ESP size played a significant role, the relationship between injection rate

and mercury removal would not plot in such a linear fashion. In addition, it is apparent

that over 90% mercury capture can be expected at 3 lb/MMacf with halogenated sorbents

and is virtually assured at 3.5 lb/MMacf with PRB coal – without respect to the size of

the ESP.

Figure 1

. Mercury Capture Performance with Brominated PAC on Western Coals

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Log Hg fraction

y = -0.3352x - 0.1199

= 0.9315

-1.6

-1.4

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0.2

0.4

0.5

1.5

2.5

3.5

Injection Concentration (lb/mmacf)

log Hg fraction

PRB Full Scale Test Data

MerCure

+1.96s

-1.96s

Brominated PAC trendline

Mercure trendline

90% reduction

#10

#4c

The data shown in Figure 1 does not reflect the effects of SO

injection, which is

deliberately injected at some units to improve fly ash resistivity for the ESP, and which is

known to adversely affect mercury capture performance of sorbent. But, as discussed at

the hearings by Dr. Staudt, SO

can be injected downstream of the mercury sorbent

injection point, avoiding that effect. Tr. 6/22 & 23/06, p. 122. Or, if that is not possible,

alternative methods can be used to address ash resistivity, such as treating the coal with

other materials as Midwest Generation does. In fact, the testing by Sorbent Technologies

at Midwest Generation’s Crawford Station shows that this method of addressing fly ash

resistivity does not adversely affect the ability of the sorbent to capture mercury. Mr.

Nelson’s testimony, in particular Exhibit 88, shows that around 75% to 80% mercury

capture is achieved with his C-PAC product. Even better mercury capture, similar to

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what is shown on Figure 1, can be expected from Mr. Nelson’s B-PAC product (but a

negative impact to fly ash use for concrete). Finally, the Illinois units that use SO

are

owned by Ameren, Dynegy and Electric Energy, Inc. (Joppa plant), not the companies

that continue to oppose the Illinois mercury rule. Thus SO

is not a major concern for

those companies that continue to oppose the rule.

Midwest Generation has also argued that sorbent injection will adversely affect

ESP performance. This concern is not supported by the facts. Despite dozens of sorbent

test programs having sorbent injected upstream of a cold-side ESP, there are no test

programs of this configuration that have shown sorbent injection to produce adverse

effects. Yates unit 1 is the only such site where the issue has even been raised. Cross-

examination of Mr. Cichanowicz demonstrated, however, that the injection of PAC is not

the cause of ESP problems at Yates unit 1. Examination of the test report issued by the

US DOE during Mr. Cichanowicz’s cross examination showed that the Yates unit 1 ESP

behaved erratically regardless of activated carbon injection. Exhibit 71; Tr. 8/17/06, pgs.

873-876. As shown in the Dombrowski paper referenced in the TSD, there were no ESP

problems in sorbent injection tests at Yates unit 2 which has a smaller ESP than Yates

unit 1. TSD ex. 9.

Moreover, Mr. Nelson’s testimony regarding results of tests at Crawford, which

has a much smaller ESP than either Yates unit 1 or unit 2, showed no adverse impact to

the ESP from activated carbon injection. The only other ESP that is alleged to have had

problems from sorbent injection was with an experimental configuration called

TOXECON II where the sorbent was injected into the middle of the ESP (not upstream) –

a configuration that could be expected to cause problems for the ESP because the very

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carefully controlled flow within the ESP is disrupted by the injection of sorbent. Mr.

Cichanowicz did testify to the importance of controlling flow within an ESP. Exhibit 84,

p. 25. Simply put, the evidence from dozens of sites does not support the argument of the

remaining opponents of the Illinois rule that sorbent injection upstream causes problems

for the ESP.

Opponents of the rule also raised the possibility of carbon ignition. However,

coal fly ash often has high levels of carbon in it that is left over from coal that did not

completely burn. This carbon often exists in much greater quantities than would ever be

injected for sorbent injection. In fact, despite the dozens of tests where carbon sorbent

has been captured by an ESP, none resulted in fires or any ignition – perhaps because

these ESPs were designed to capture unburned carbon from the coal. Carbon ignition has

occurred in fabric filters, but in each case the fires were associated with operating

practices related to hopper heaters and hopper cleaning, and in each case changes to these

operating practices corrected the problem.

Economic Reasonableness

Illinois EPA provided a detailed, unit-by-unit estimate of the cost of complying

with the proposed rule. See TSD Table 8.8, pp.161-166. Illinois EPA spelled out all of

its assumptions that, with Dr. Staudt’s testimony, consider detailed studies of the

facilities in Illinois and to include fuel characteristics, duct sizes, ESP sizes, use of flue

gas conditioning, and other plant-specific matters that may affect the sorbent injection

system design. Illinois EPA had personnel visit every plant to assure that the information

on the units was correct. Tr. 6/21/06 pm, pgs. 15-17. Illinois EPA’s economic analysis

considered site-specific factors when evaluating the suitability, cost and performance of

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mercury control technology. Mr. Marchetti erroneously suggested in his pre-filed

testimony that industry’s cost estimate considered site-specific factors while Illinois

EPA’s did not. Exhibit 84, p. 25. That simply is not the case. Illinois EPA’s cost

estimate considered site-specific information and also considered selection of the

appropriate mercury control technology for that site, based on a recently performed and

thorough review of the state-of-the-art of mercury control technology and the conditions

at the plant. TSD § 8.

In sum, the evidence from actual test programs supports the conclusion of Illinois

EPA that sorbent injection will allow PRB coal-fired units to meet the requirements of

the proposed Illinois rule, supporting Illinois EPA’s cost estimate. This conclusion was

supported by numerous demonstrations cited in the TSD and discussed by Dr. Staudt in

his testimony.

As confirmed by Mr. Cichanowicz, Mr. Marchetti, and Mr. DePriest, the

difference between Illinois EPA’s estimate of the cost of the proposed rule and industry’s

exceedingly large estimate is almost entirely a function of Mr. Cichanowicz opinion that

sorbent injection upstream of cold side ESPs would not be sufficient to achieve 90%

reduction in PRB coal-fired units. As a consequence, Mr. Cichanowicz postulated that

fabric filters would be needed to control mercury emissions from these units . Under

cross-examination, Mr. Cichanwicz opinions regarding the effectiveness of sorbent

injection in such units were shown to be based upon (1) speculation about a relationship

between ESP size and mercury removal efficiency that does not withstand analysis, (2)

misinterpretation of the work of Dr. Clack and (3) misunderstanding of the experience at

Georgia Power’s Plant Yates Unit 1 .

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Moreover, actual compliance costs are likely to be less than the Illinois EPA’s

best current estimate. For example, because some sorbents can adversely affect

beneficial reuse of fly ash, Illinois EPA’s economic analysis assumed that the elimination

of the market for fly ash for beneficial uses would be a significant part of the ongoing

cost of the rule. However, the TSD describes techniques for treating fly ash – carbon

sorbents such as Sorbent Technologies’ C-PAC(being tested at Midwest Generation’s

Crawford Station), mineral-based sorbents – that are being tested to reduce or eliminate

this problem.

Sorbent costs are also expected to drop from the estimate in the TSD. As Mr.

Cichanowicz testified, the widespread use of Selective Catalytic Reduction by the utility

industry attracted many companies to supply the catalyst for this market. The resulting

competition drove down prices substantially. Exhibit 84, p. 22. In the same manner, a

market for mercury sorbent will attract competitors that will likely drive down prices.

Deposition of Mercury

The TSD concluded that by reducing mercury emissions from coal-fired

generating units in Illinois, the proposed Illinois EPA rule would significantly reduce

deposition of mercury in Illinois, TSD §5.1, p 81. The EPA also cited studies in Florida

and Massachusetts that showed rapid and steep declines in measured concentrations of

mercury in fish tissue when mercury emissions from nearby sources such as incinerators

and fossil fuel combustion were curtailed by regulations. TSD §5.2.

These conclusions were supported in the testimony and cross-examination of Dr.

Gerald Keeler, the Illinois EPA expert witness. Dr. Keeler is an internationally

recognized expert in atmospheric chemistry, transport, and deposition based on 16 years

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of research in the field. He has authored, or co-authored, over 100 peer-reviewed,

scientific papers on this and related topics. Dr. Keeler testified regarding a multi-year

source-receptor study of mercury deposition conducted by the University of Michigan

Air Quality Laboratory and the U.S. EPA Office of Research and Development in

Steubenville. In this study, daily precipitation event samples were collected during 2003-

4, then analyzed using Ion Chromatography technology to determine a suite of trace

elements in the samples. Multivariate statistical receptor models were used to identify

source type “fingerprints” for different types of industrial sources. To determine the

direction and distance from which samples arrived, the researchers used back trajectory

analysis of available weather systems.

Dr. Keeler testified that coal combustion sources were the dominant source of

mercury deposition recorded at the Steubenville research site, accounting for about 70 per

cent of the mercury in wet deposition. Other large industrial sources located in the area

of Steubenville were not significant contributors to mercury deposition. Exhibit 10, p. 4.

Dr. Keeler also testified that meteorological analysis corroborated other evidence

that “a substantial amount of the mercury deposition found at the Steubenville site was

due to local and regional sources.”

. at 3. In response to a question from counsel, Dr.

Keeler reiterated the statement quoted in the TSD, §5.1, p. 78, that “the lifetime of

elemental mercury in the atmosphere is likely much shorter than previously believed.

Thus mercury may be deposited much closer to its source, even if emitted in elemental

form, if oxidizing compounds are present in the atmosphere.”

In his prepared testimony, Dr. Keeler noted the empirical foundation for his

conclusions. He stated that the method used in this research “is based on observation

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made at sampling or receptor sites.”

. Dr. Keeler contrasted the empirical nature of the

source receptor method with source-oriented Eulerian models such as that used as the

basis of the testimony of Dr. Vijayaraghavan, the Midwest Generation witness. Eulerian

models, “while extremely useful,”

“are limited by the large uncertainties in emission inventories including the lack

of speciated mercury emission profiles, atmospheric mercury chemistry, and

accurate wet and dry deposition parameterizations. Receptor models differ from

source-oriented models in that they use statistical methods for which

implementation only relies upon observations of deposition at a location or

receptor.”

. at 4. In his written response to questions, Dr. Keeler stated that CMAQ, a widely-

used Eulerian model endorsed by U.S. EPA, underestimated mercury wet deposition by

varying amounts up to a factor of two.

Finally, Dr. Keeler testified that “reductions in emissions from coal combustion

sources in the region would have a significant impact on the amount of mercury

deposited via both wet and dry deposition.”

. at 5. Reducing emissions from Illinois’

21 coal-fired power plants, which emit close to four tons of mercury per year, would be

especially beneficial to the many lakes in the state that have been identified as impaired

due to the levels of mercury found in fish.

. at 5. Under cross-examination, he

unequivocally stated that he endorsed the conclusion of the TSD at 81 (quoted above)

that reductions in emissions of mercury in Illinois will yield significant reductions in

mercury deposition in Illinois. Tr. 6/13/06, p. 98.

Dr. Keeler stated that the conclusions of the Steubenville study were expected to

be published imminently in a peer-reviewed journal,

Environmental Science and

Technology

. The article has now been published as stated. It states that, based on wet

deposition data from 2003-4, and source apportionment modeling,

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“The dominant contributor to the mercury wet deposition was found by both

models to be coal combustion (≈70%). Meteorological analysis also indicated tha

a majority of the mercury deposition found at the Steubenville site was due to

local and regional sources.”

G. Keeler, M. Landis, G. Norris, E. Christianson, T. Dvonch, “Sources of Mercury Wet

Deposition in Eastern Ohio, USA,” The University of Michigan Air Quality Laboratory

and the U.S. EPA Office of Research and Development,

Environ. Sci. and Technol

Public Comment #6292.

On behalf of Midwest Generation, Dr. Vijayaraghavan presented deposition

estimates based on a Eulerian modeling exercise with a proprietary model (“TEAM”),

which Dr. Vijayaraghavan admitted has never been subjected to external benchmarking

or accepted by any regulatory agency for the purpose of regulation. Tr. 8/21/06, pgs.

1355-1356.

Dr. Vijayaraghavan agreed that the source-receptor method used by Dr. Keeler

was a valid method of investigation of mercury deposition. He stated that the results of

his modeling analysis were consistent with Dr. Keeler’s conclusion that 70% of wet

deposition at Steubenville was contributed by coal-fired power plants within 1,000 Km of

Steubenville.

. at 1512.

Dr. Vijayaraghavan also testified that the Illinois rule would significantly reduce

mercury deposition in Illinois. Under cross examination, he stated that the Illinois rule

would approximately double the reduction in mercury deposition provided by the federal

CAMR rule in 2010, and that the Illinois rule would reduce deposition of mercury in

2010 in “most of Illinois” and in “every grid square of Illinois” by comparison to CAMR.

. at 1422, 1436, 1462. He admitted that most of the benefits of the Illinois rule would

occur in Illinois.

. at 1425. In response to a questions Dr. Vijayaraghavan conceded

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that the proposed Illinois rule would reduce deposition in Illinois by approximately the

same amount as the 2020 CAMR rule, but ten years earlier.

. at 1428, 1434.

Under cross-examination, Dr. Vijayaraghavan also confirmed the accuracy of Dr.

Keeler’s critique of the use of Eulerian models to predict deposition of mercury. Dr.

Vijayaraghavan admitted that many of the inputs to his model were based on assumptions

rather than measured data.

•

He admitted that there were few actual measurements of the mercury species

emitted by coal-fired power plants [transcript 1383, 1386, 1387], even though

the deposition and biological activity of different mercury species are very

different.

•

He agreed that mercury emissions from coal-fired generating plants are

affected by the mercury content of the coal burned, the use of pollution

control equipment, and the chlorine content of coal, but that these variables

have not been measured and thus “there is some level of uncertainty in

emissions [inventories].”

. at 1383-1384.

•

With considerable understatement, he agreed that the chemical transformation

of mercury species in the atmosphere is “not understood with 100%

certainty”, and that as a consequence, the TEAM model necessarily makes

assumptions about the atmospheric chemistry.

. at 1388.

Dr. Vijayaraghavan also admitted that the TEAM model does not take into

account the effects of thunder storms on deposition of mercury.

. at 1394-1395. In his

research, Dr. Keeler observed that “The deposition of mercury is heavily influenced by a

few large precipitation events. . . .” Exhibit 10, p. 5.

Dr. Vijayaraghavan admitted a

storm would bring most of the reactive gaseous mercury to the ground, regardless of the

stack height at which the emissions were released.

. at 1467, 1470, 1472. As a

consequence, Dr. Vijararaghathan agreed that the failure to take thunderstorms into

account would be a limitation on the ability of the TEAM model to predict deposition,

The recently published peer-reviewed report of the work of Dr. Keeler’s group’s work notes that

“Individual precipitation events can contribute significantly to the annual Hg deposition total at individual

sites.”

Environ. Sci. and Technol.

article at p. F.

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and that, as a result of not taking thunderstorms into account, the TEAM model would

not predict well the local or regional contributions to deposition.

. at 1397-1399.

While admitting that the results of the TEAM model were a function of the many

assumptions built into it, Dr. Vijayaraghavan maintained that it was the only tool for

predicting the deposition effects of changes in emissions. But the Board should regard

these predictions with considerable skepticism, even though Dr. Vijayaraghavan

presented the predicted deposition reductions to three significant figures in the slide

show. Although Dr. Vijayaraghavan was asked to provide 90% statistical confidence

intervals for the predicted deposition effects, and agreed that doing so would be

“informative”, Midwest Generation now takes the position that providing such a common

statistical expression of uncertainty “ is not applicable” to the deposition effects predicted

by the TEAM model.

. at 1444; Post-Hearing Comments: Additional Information of

Midwest Generation, point 6.

As Dr. Vijayaraghavan admitted in his testimony, nationwide, the TEAM model

accounted for only 50% of the variance in measured mercury deposition, or, in statistical

terms, had an r

of only 0.5.

. at 1441-1442. For purposes of comparison, a rule of

betting “heads” on a coin flip would, over enough flips, explain 50% of the variance.

Mercury Impact on Human Health

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The goal of public health policymaking is the reduction of risk to the public. Reducing

the risk of methyl-mercury exposure from consumption of Illinois fish to as many Illinoisans as

possible is an appropriate human health objective and one that has considerable support. The

human health effects testimony of Dr. Deborah Rice, provided in support of the Agency’s

proposal, is scientifically sound and compelling. Dr. Gail Charnley’s testimony was offered in

opposition to the proposed Illinois mercury rule, yet, even within her responses can be found

support for a policy of reduced methyl-mercury risk. Her comments note the value of controlling

mercury emissions, including those mercury emissions from coal-fired power plants, as well as

the desirability of reducing the mercury content of fish, and the expectation of health benefits

from emission reductions. Tr. 8/22/06, pgs. 62-63, 96. It is therefore altogether appropriate for

the State of Illinois to seek a reduction in methyl-mercury exposure risk by regulating mercury

emissions from power plants.

Dr. Charnley’s stated preference for an emissions “trading program” in contrast with a

“command-and-control program” as the basis for her public policy position on mercury control

must be viewed as a bias which impugns any potential value of her testimony to the proceedings.

Tr. 8/22/06, p. 1678. Dr. Charnley has no record of independent research evaluating these types

of control programs and, thus, her assessment of CAMR and the proposed Illinois mercury rule

with regard to their level of health benefits to which she has said “. . . it will be very difficult, if

not impossible, to distinguish between the benefits of one compared to the other” is highly

suspect. Tr. 8/22/06, pgs. 1679, 1682. If one accepts the premise that mercury reductions

achieved through CAMR or the proposed Illinois mercury rule will translate into health benefits

(no matter the size), Dr. Charnley’s opinion asserting an inability to distinguish between the

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benefits of CAMR and the Illinois proposed rule is simply counterintuitive, given that the Illinois

proposal results in deeper reductions, that are implemented more quickly.

There is scientific uncertainty in attempting to assess the extent to which mercury

emission reductions from power plants translate to reduced atmospheric deposition, reduced

methyl-mercury generation, reduced methyl-mercury accumulation in fish, and ultimately

reduced adverse human health effects. A one-to-one reduction in fish tissue mercury

concentrations relative to power plant mercury emissions is not expected, nor was this intended

by Illinois EPA’s TSD. What is clear, however, is that near-term improvement (or possible

elimination) of fish consumption advisories for the waters of Illinois will not likely occur without

deep and accelerated reductions in mercury emissions. Relative to the CAMR, timelines set for

compliance with the initial Illinois mercury rule provisions and the more recent multipollutant

standard amendments---2009 and 2015, respectively---represent deeper and quicker emission

reductions that are expected to translate to reduced human health risks. While these risks are

expected to be less, scientific uncertainty precludes a precise statement of the spatial-temporal

distribution of lower risk that will result for Illinois.

The National Research Council (“NRC”) was asked to review USEPA's reference

dose for methylmercury. TSD, Appendix A, p.10. Based upon its review and analysis,

the NRC determined that the existing reference dose (0.1 micrograms per kilogram body

weight per day) was scientifically justifiable.

. A reference dose is defined by USEPA

as “an estimate (with uncertainty spanning perhaps an order of magnitude) of a daily

exposure to the human population (including sensitive subgroups) that is likely to be

without an appreciable risk of deleterious effects during a lifetime”

(www.epa.gov/iris/subst/0073.htm). The USEPA reference dose is not a “bright line”

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and does not represent a true threshold in a toxicological sense. Tr. 06/13/06, p. 88. It

does, however, have great utility from a risk management perspective in helping to define

an acceptable level of exposure. The

Oken et.al

(2005) investigators found that

approximately 10% of the women in their study had hair mercury levels that would

exceed the reference dose level, and an equivalent or slightly greater percentage of

women would exceed the reference dose based upon recent National Health and Nutrition

Examination Survey (NHANES) data. Tr. 6/13/06, p. 58. The average maternal hair

methyl-mercury concentrations within the Faroes Islands, Seychelles Islands, and New

Zealand longitudinal study cohorts were above the equivalent USEPA reference dose

concentration, but, more importantly, the range of maternal hair concentration values has

significant overlap with that of United States women. Perhaps surprisingly, the

Oken et.al

(2005) study according to Dr. Deborah Rice, suggests effects from methyl-mercury

exposures that are below the USEPA reference dose. Tr. 6/13/06, p. 55. As to the

question of whether there is a threshold for developmental neurotoxic effects from

methyl-mercury exposure, Dr. Rice has testified that the body of scientific data do not

indicate such a threshold. The appropriate critical analysis of methyl-mercury health

effects data, (touted as the question “that matters the most”), is not on revisiting the

assumptions that could result in any upward adjustment of the reference dose, as

suggested by Dr. Charnley, but rather on identifying that research needed to better

ascertain the dose-response relationships for this seemingly non-threshold pollutant. Tr.

8/22/06, pgs. 1684 -1685. As Dr. Rice has noted, “We don’t really know that there’s no

effect below the reference dose.” Tr. 6/13/06, p. 112.

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The Faroes Islands study represented the “critical study” from which the National

Academy of Sciences (“NAS”) provided their recommendation for the methyl-mercury

reference dose, even though individual and integrative analyses that included the

Seychelles Child Development Study and the New Zealand study were part of the

evaluation. Tr. 6/13/06, p. 81. The Faroes Island cohort was the largest (over 900

children), and biological markers for assessing exposure included umbilical cord blood,

as well as maternal hair. The investigators found “that cord blood was a better predictor

of the performance of the child than was maternal hair.” Tr. 6/13/06, p. 44. Only

maternal hair mercury concentrations were measured in the Seychelles Islands study and

the New Zealand study. As noted by Dr. Rice, “If you’re using hair as a marker, you’re

likely to be mischaracterizing, misclassifying exposure to the fetus on the basis of hair,

which would bias the results of the study towards the null.” Tr. 6/13/06, pgs. 67-68. The

Faroes Islands study was truly prospective in that maternal participants were recruited

before the children were born. The Seychelles Island study cohort, on the other hand, was

recruited approximately 6 months after the children were born, at which time hair

samples were collected by the study investigators. As noted by Dr. Rice, “It can be

argued that the measure of exposure might not have been quite as precise in the

Seychelles as it was in the other two studies.” Tr. 6/13/06, p. 11. The Seychelles Islands

investigators assumed that the mothers were eating fish purchased at local markets, and

they analyzed these fish for methyl-mercury concentrations. It is actually unknown as to

what exactly these women were eating (no food diary or food questionnaire information

was obtained).

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Points of disagreement between testifying experts regarding the adequacy, outcomes,

and/or applicability of the Faroes Islands, Seychelles Islands, and New Zealand longitudinal

studies appear to be the interpretations of experts on matters to which seemingly reasonable

people can disagree. For example, the dose-response modeling performed by the NAS on the

Faroes Islands study data has been interpreted as showing “no evidence of a threshold within the

range of exposures . . . down to about one microgram per liter in cord blood” whereas Dr.

Charnley contends that the “modeling does not rule out a threshold.” Tr. 8/22/06, p. 112. The

NAS considered that only a linear or sublinear relationship between exposure and effect was

biologically plausible, and Dr. Charnley has indicated that this is the appropriate fitting of the 7-

year and, more recent, 14-year results for the Faroes Islands study. Dr. Rice, however, has

contended that the relationship is log-linear and that this relationship has also been indicated for

the New Zealand study results. The Seychelles Islands study investigators, though concluding

that their data “do not support the hypothesis that there is a neurodevelopmental risk from

prenatal exposure resulting solely on ocean fish consumption” have conducted benchmark dose

analyses on more recent data from the cohort, presumably, as stated by Dr. Rice, to determine “a

defined effect level.” Tr. 6/13/06, p. 28.

Aside from the three longitudinal studies previously identified, there is considerable

relevant information in published reports and in the peer-reviewed literature on mercury body-

burdens and the human health effects of methyl-mercury exposure. Dr. Rice’s written testimony

describes three prospective studies---Massachusetts (Oken et.al., 2005), Poland, and the

Phillippines---which have evaluated these effects. TSD App. A, p. 5. Cross-sectional studies

evaluating mercury exposure and neuropsychological deficits have indicated adverse effects,

even with limited fish consumption by the study subjects. Neurological function deficits were

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noted in a Portuguese study involving children whose mothers ate on average 2.5 fish meals

weekly. Tr. 8/22/06, p. 97. Many other cross-sectional studies---developmental studies

involving children and studies involving adults---were described in Dr. Rice’s written testimony.

TSD App. A, pgs. 7-9. The cardiovascular benefits of fish consumption are well known;

however, there is compelling evidence that these benefits (which may have thresholds) can be

more than offset by the negative impacts resulting from methyl-mercury exposure. Although Dr.

Charnley contends that “the evidence that mercury is associated with coronary heart disease risk

is contradictory” she acknowledges that there are “suggestive positive findings.” Tr. 8/22/06, p.

1656.

Studies showing a relationship between increased prenatal fish consumption and

better performance by children on neurodevelopmental tests, have generally not

controlled for covariants known to be the strongest performance determinants---maternal

IQ and environment of the child. Tr. 06/13/06, p. 35. Interpreting the results of these

studies may be complicated by the choice of markers being measured (e.g. cord tissue),

an inadequate or inappropriate statistical assessment, or other aspects of the work. In the

Daniels

et.al. (2004) study, the investigators noted a “benefit from eating fish at least

once every two weeks but no incremental increase in benefit with more frequent fish

consumption.” Tr. 8/22/06, p. 89. Thus, indicating a threshold between fish

consumption and cognitive development.

The potential contributory role of polychlorinated biphenyls (PCBs) to neurotoxic

responses ascribed to methyl-mercury in the Faroes Islands study group is uncertain, but not

supported by initial and follow-up study results---low correlation values for PCB and mercury

levels; test scores and PCB exposure associations reduced to a non-significant level after

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adjusting for mercury exposure. As stated by the Faroes’ investigators (and provided in Dr.

Charnley’s testimony), “The possible neurotoxic influence of PCB exposure did not explain the

methyl-mercury associated neurobehavioral deficits.” Tr. 8/22/06, p. 103. Additionally, Dr.

Charnley has acknowledged that there is not “any reason to believe that postnatal PCB exposure

(through breast milk) would be highly correlated with

in utero

mercury exposure.” Tr. 8/22/06,

p. 101. PCBs and methyl-mercury may have common endpoints (test measures of cognitive

functioning), but there is not a clear weight of evidence for accepting a combined methyl-

mercury and PCB neurotoxic effect in explaining the Faroes Islands study results.

Dr. Charnley’s contention that reducing methyl-mercury in Illinois waters will not lead to the

elimination of the fish consumption advisories because PCB’s will still be present, is

meaningless. If the Board adopted this point of view no pollution control regulation would be

justified because there are always going to be other pollutants contaminating the air. No rule

must solve every facet of a problem to be valid. The various rules work in tandem to improve

public health.

A further point is that the CAMR looks at the United States as a single unit and

seeks reductions within that unit. From this perspective, allowance trading may not seem

to have a significant impact because there will always be a reduction occurring

somewhere. For Illinois, however, this does not hold true. As a single state, Illinois’

outlook is very different. Reductions in another state do not improve the health of Illinois

citizens and therefore Illinois cannot depend upon CAMR from a public health

perspective. This is evident by looking at USEPA’s own projections for mercury

reduction. Dr. Charnley’s testimony clearly shows that CAMR will have a modest

impact on existing mercury deposition in Illinois. Exhibit 130, ex. 2. This map,

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generated by USEPA, shows mercury deposition in the United States from domestic coal-

fired EGUs in 2001 and then shows remaining deposition in 2020, after CAMR takes

effect. As can be seen, there are only a few border areas of Illinois which show

significant declines in deposition. Most of the state remains in the same quintile after

CAMR that it was in before CAMR existed. Indeed, the entire region surrounding Lake

Michigan shows at best a modest reduction from CAMR. Such an outcome may be

acceptable if the entire country is viewed as one unit. But as a state, Illinois clearly needs

something more.

Illinois must experience reductions within Illinois if the state’s public health is to

improve. Dr. Charnley attempts to create a long chain of uncertainty which she apparently hopes

the Board will accept and thus favor no action. Tr. 8/22/06, pgs. 1659-60. The chain is that for

there to be a public health problem the regulating authority must first be certain of the following

factors. First, it must be determined where an emission of mercury occurred. Then the mercury

must deposit in Illinois waters. Then there must be site-specific factors present to convert that

mercury to methyl-mercury. Then people must catch those fish and eat them in sufficient

quantities to result in an adverse result. And after all of this, the regulating authority must be

sure that reducing the pollutant will produce a demonstrable health benefit. Only after being

certain of all those factors should a regulator seek to manage a problem. If all regulatory

authorities adopted this attitude, the scope of environmental regulation would narrow greatly and

it’s pace turn glacial.

More importantly, the Illinois EPA has testified that there is a state-wide fish

consumption advisory due to methyl-mercury contamination in Illinois waters. Coupled with

USEPA projections that there will still be considerable mercury deposition after CAMR takes

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affect, there is sufficient reason to adopt regulations in this case. After all, USEPA has already

determined that there is a nationwide problem with mercury emissions from coal-fired EGUs.

They have also determined that methyl-mercury results in harm to US citizens. The question is

thus what needs to be done that Illinois can do? In all of Dr. Charnley’s chain of activities, the

only part that Illinois regulators can control is in-state mercury emissions. This is the point

where Illinois can make a difference. Thus, considering that methyl-mercury is contaminating

Illinois water bodies and USEPA’s projection continuing mercury deposition in Illinois after

CAMR takes effect, even Dr. Charnley’s high standard for regulations seems appropriate.

Dr. Charnley further states that the USEPA did not include the Seychelles Islands study

when calculating its reference dose. Exhibit 130, p. 16. This, she believes, produces a more

stringent reference dose than other countries have calculated.

. This is irrelevant. It is

reasonable and logical for Illinois to follow the federal government’s lead. Since the USEPA has

determined that a health risk exists, it is not necessary for the Board to review USEPA’s

decision. The Illinois EPA is not disputing whether a health risk exists, it is accepting USEPA’s

judgment. Rather, the Illinois EPA takes issue with the level of mercury emissions reductions

required by coal-fired EGUs for the reasons stated above.

Hence, what will CAMR actually achieve for Illinois? What is needed is a state rule that

will actually ensure that there are reductions within Illinois. The Illinois mercury rule takes that

extra step to achieve deep reductions where CAMR predicts they will be needed. That is proper

public health policy. As Dr. Rice stated when questioned by Ms. Geertsma of the Environmental

Law and Policy Center:

Q. Dr. Rice, you just used the phrase "reaching genetic potential." Would

you say that the roll [sic] of a person practicing public health is not just to

prevent severe defects or mental retardation, but also in maximizing the

population's full genetic potential?

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A. Absolutely. That is the role of public health.

Tr. 6/13/06, p. 66-67. When viewed from Illinois’ perspective, the proposed Illinois mercury

rule is a reasonable and justifiable exercise of regulatory authority to further public health goals

in Illinois.

Fish Advisories

The Illinois Fish Contaminant Monitoring Program (“FCMP”) is a cooperative

effort of five Illinois agencies, the Departments of Agriculture, Emergency Management,

Natural Resources, and Public Health, and the Illinois EPA. As the Illinois EPA

explained in the hearings, the FCMP operates under a Memorandum of Agreement that

spells out the responsibilities of each agency, and certain other procedures have been

adopted from the “Protocol for a Uniform Great Lakes Sport Fish Consumption

Advisory” and from policy determinations agreed upon by the members of the FCMP.

Tr. 6/16/06, p. 48. These procedures provide guidance for the activities needed to

generate consistent and reliable data about contaminants in Illinois sport fish. The

primary goal of the FCMP is to identify for Illinois anglers through sport fish

consumption advisories those species of fish and bodies of water that may pose the

greatest potential risks to the anglers and their families, and allow them to avoid these

risks by making informed judgments about the types and amounts of fish they eat. TSD,

p. 54-55; Exhibit 9, p. 2.

Data gathered by the FCMP has resulted in the state-wide mercury advisory that

was discussed so thoroughly during the hearings, and in fifteen bodies of water being

placed on the Special Mercury Advisory. As can be seen from the other sport fish

consumption advisories included in the Department of Natural Resources’ “2006 Illinois

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Fishing Information” booklet introduced in the first hearing, there are also numerous

advisories based on polychloriniated biphenyls (“PCB”), three based on chlordane, and

one based on both PCBs and chlordane. Exhibit 11. By following these advisories,

anglers in Illinois can eat the fish they catch and not be concerned that they and their

families will suffer health effects from these fish.

On the topic of PCB advisories, it should be noted that Dr. Peter Chapman’s

testimony included a claim that 74% of the waters listed as impaired due to mercury

would still be impaired due to PCBs even if the proposed rule resulted in all fish in the

listed waters achieving compliance with the mercury criteria. This claim is extremely

misleading since there are numerous waters that could have been listed as impaired due to

mercury but have not because of FCMP policy decisions. One of these policies is that

initial samples found to have a contaminant that exceeds its criterion require follow-up

samples. Another FCMP policy requires that two or more recent samples exceeding a

criterion are necessary for issuing or changing an advisory, and the Illinois EPA’s Bureau

of Water has the same policy for listing a water body as impaired.

However, the FCMP has also decided that initial samples of predator species

having mercury levels in the one meal/week range (0.06-0.22 mg/kg) will not be

followed up, since the state-wide advisory already covers these samples (allowing the

limited funding to be spent more appropriately elsewhere). Thus, many more waters

could have been listed as impaired for mercury if initial samples in the range of 0.06-0.22

mg/kg had been followed up – this is amply demonstrated by the tables submitted by Dr.

Hornshaw showing that two-thirds to three-quarters of all waters sampled between 1988-

2001 had predator species that would require advisories for mercury. TSD, p. 53.

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Of the many points made and issues discussed in the three and one-half weeks of

hearings, one key subject was sport fish advisories. For nearly everyone, eating fish is

the only way they are exposed to methyl mercury, and for some Illinois anglers and their

families a significant portion of their exposure is through the fish they catch. The Illinois

EPA presented evidence and testimony that some anglers and their families eat a lot of

sport fish, enough in some cases to put their children and their future children at risk for

the problems known to be caused by methyl mercury. It has been shown that most of the

predator fish in most water bodies in Illinois contain enough methyl mercury that a state-

wide advisory is needed, cautioning women of child-bearing age and children under 15

years of age to eat no more than one meal per week of any predator species.

Unfortunately, as more data on levels of methyl mercury in fish have been

generated by the FCMP in recent years, more waters have been found that require listing

in the Special Mercury Advisory. The original list of four water bodies in the 2002

Special Mercury Advisory has been expanded in the 2006 Special Mercury Advisory to

fifteen waters, including for the first time an entire river system (the Little Wabash River

and its tributaries).

The Illinois EPA has presented testimony in support of the proposition that

reductions in mercury emissions ultimately result in reductions in mercury in fish tissue,

but the question facing the State is how much reduction is appropriate from coal-fired

power plants. In proposing a regulation that calls for a 90% reduction of mercury

emissions by 2009, with no related “hotspots,” the Illinois EPA’s position is that larger

and faster reductions in mercury emissions are the most appropriate way to address sport

fish advisories for methyl mercury. It is a realistic goal of the proposed Illinois rule that

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there will be a slowing in the growth of the Special Mercury Advisory, including possible

delistings from this advisory, and a reduced number of waters being listed as impaired

due to mercury.

Monitoring of Mercury Emissions

While the proposed Illinois mercury rule has many differences from the Federal

CAMR program, emissions monitoring of mercury emissions is identical in substance to

the emissions monitoring required under the CAMR. Mr. Richard McRanie, who

presented testimony challenging the monitoring provisions of proposed rule, tried to

claim technical difficulties with mercury emissions monitoring. However, Mr. McRanie

also admitted several times that the monitors required under the proposed Illinois

regulations are the same as those required under the CAMR, that any issues he believes

exist would exist under the CAMR as well, and that if the proposed Illinois rule is not

adopted, sources would have to monitor using the same provisions under the CAMR. Tr.

8/22/06, pgs. 1738, 1743, 1751, 1758. These admissions significantly undercut Mr.

McRanie’s testimony, since Illinois sources would be subject to the same mercury

emissions monitoring whether or not the Board promulgates the proposed rule, thus

making his comments on this point essentially a non-issue.

It should be noted that this is not the first time Mr. McRanie has offered his

opinions on mercury emissions monitoring. He provided similar comments to USEPA

during the CAMR rulemaking process (

. at 1736, 1759) and USEPA nonetheless

finalized its regulation containing the monitoring requirements that are identical to the

emissions monitoring requirements for the proposed Illinois rule. As Mr. Keith Harley

noted in questioning Mr. McRanie, it seemed Mr. McRanie’s testimony was “in fact,

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much more about CAMR than it is about anything in the monitoring requirements that are

contained in the Illinois rule.”

. at 1759.

Other portions of Mr. McRanie’s testimony indicate that he has a clearly

expressed bias against regulatory agencies and those who write and promulgate

regulations. This bias should be taken into account when considering the weight of his

testimony. Mr. McRanie made a number of unwarranted inflammatory statements in his

prefiled testimony, where he cast aspersions on the Illinois EPA and the rulemaking

process as a whole without providing any evidence to support his claims. Under

questioning at hearing, Mr. McRanie admitted he had not talked to anyone from Illinois

EPA involved in the rulemaking and further admitted that such unsupported claims were

only his opinions.

. at 1739-41, 1750-52, 1761. His objectivity in this matter must

certainly be questioned.

More of this bias was evident when Mr. McRanie asserted that the Illinois EPA’s

TSD should have contained more information about mercury monitoring. On

questioning, he admitted that he did not actually know what it should have contained that

isn’t found in the Federal CAMR documents on the subject.

. at 1804. This raises the

question of why he would make such a claim when he cannot articulate what he was

supposedly seeking.

Beyond his acknowledged bias, Mr. McRanie further admitted unfamiliarity with

certain parts of the proposed rule, including the 12-month average and averaging across

multiple units that would work to lessen the effects of any monitor problems, admitting it

was “a little confusing to me.”

. at 1747-48, 1754.

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But even if Mr. McRanie’s statements were taken at face value, and for the sake

of argument his bias were set aside, the main points of his testimony remain

unconvincing. In addition to his concession that sources will be subject to the same

monitoring requirements whether through the proposed Illinois rule or CAMR, Mr.

McRanie also admitted that mercury monitors have already improved and will continue

to do so.

. at 1695. He further admitted that detection has gotten better, that monitors

“will make further advances” before the proposed Illinois regulation requires their

installation, and that they are “definitely seeing better reliability” in monitors and “we

can get the reliability up some more.”

. at 1730, 1797, 1798.

Other evidence supports the Illinois EPA’s position that accurate and reliable

mercury emissions monitoring will be readily available for Illinois sources. After the

second round of hearings for this rulemaking, USEPA’s Clean Air Markets Division

posted a document on its website entitled, “Mercury Emissions Monitoring Program for

Coal-Fired Boilers under the Clean Air Mercury Rule, Status Report, August 2006.” A

copy of this document is attached to these written comments as Attachment 1 and can be

found at

http://www.epa.gov/airmarkets/whatsnew.html.

This document provides new information that supports the Illinois EPA. For

example, USEPA states in the document, “As a result of [field demonstration and

validation] tests, system design changes have been made to improve the performance and

reliability of the monitoring systems.” The document also provides, “Additionally, the

precision between different CEM [Continuous Emissions Monitoring] systems has

improved dramatically.” Written Comments Attachment 1, p. 1. Indeed, USEPA says,

“Mercury monitoring technologies continue to advance at a rapid pace and are on-track to

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meet the QA/QC requirements required under CAMR.” Written Comments Attachment

1, p. 2.

Furthermore, USEPA seems certain that there will be enough mercury emissions

monitors to supply the demand created by CAMR and related rules. USEPA notes in this

document that “Approximately, twelve Hg CEMS and sorbent trap vendors are currently

developing new and improved monitoring systems.” Written Comments Attachment 1, p.

2. USEPA further states, “The manufacturers of Hg CEMS have indicated that beginning

in 2007 they will, collectively, be able to produce well over 1000 CEMS per year,” and

“[B]ased on these projections, there will be more than enough Hg CEMS and sorbent trap

systems available to meet the requirements of CAMR, and there should be sufficient time

for facilities to install and certify the monitoring systems before the January 1, 2009

compliance deadline.” The document succinctly says, “Thus, EPA is confident that the

CAMR monitor certification deadline will be met.” Written Comments Attachment 1, p.

But USEPA is not the only source of information that challenges Mr. McRanie’s

opinions. The Thermo Electron mercury monitor brochure (Exhibit 134) is one example

that contradicts Mr. McRanie’s claims that such monitors are difficult to use and prone to

breakdown. As the brochure says, the monitor is “Easy to use” with “Fast, intuitive

navigation. Simple, menu-driven programming. Common interface with all new Thermo

iSeries analyzers.” Furthermore, the brochure says the monitor is “Easy to maintain” and

continues, “Key components are readily accessible for quick maintenance or change-out.”

In addition, Mr. McRanie is contradicted by EPRI, an organization for which he

works. An EPRI document introduced at the hearing discussing mercury CEMS states,

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“In 2007, this project is expected to complete the work conducted over the past several

years to ensure that commercially offered continuous emissions monitoring systems

(CEMS) for mercury are accurate and field-ready.” Exhibit 135, p. 2.

While Mr. McRanie attempted to dismiss this out of hand with his opinion that

this is merely an objective or being too aggressive, the fact remains that this is provided

in writing by EPRI as an “expected” deliverable, and should be given much more

significant consideration than Mr. McRanie’s unsubstantiated dismissal. The same is true

for EPRI’s expectation, provided in the same document, that in 2007 it will “complete the

development of QA/QC procedures for Hg CEMS” and “obtain EPA approval of these

procedures.” And, again, for EPRI’s expectation that it will, in 2007, “work on QA/QC

procedures [that] includes National Institute of Standards and Technology (NIST)-

traceable cylinders and/or use of on-site gas generators as calibration gases, as well as an

instrumental reference method for immediate readout of RATA test results.”

In the August update document referenced above, USEPA relied upon a variety of

tests to reach its conclusions. Contrast that with the fact that a great deal of Mr.

McRanie’s evidence stems from tests at only one facility, the Trimble County station. Tr.

8/22/06, p. 1707. This site has a wet stack; however, when asked how many stacks in

Illinois are wet stacks, he admitted, “I don’t have a clue.”

. at 1787. This is important

because Mr. McRanie also admitted that mercury monitoring on a dry stack is “much

easier than on a wet stack with low mercury emissions.”

. at 1792. Without Mr.

McRanie’s ability to somehow link his testimony and suppositions to existing

configurations or conditions at Illinois power plants, his testimony on this point is

questionable at best.

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When Mr. McRanie did not even have one particular site to rely upon, he

presented a “made-up curve” (the “Log Normal Distribution”) that supposedly supported

his position but which was not backed by any actual presented evidence.

. at 1764.

Furthermore, Mr. McRanie admitted that he is “not an expert on mercury control

technology” and thus could not readily comment on how that curve would actually be

affected by the ability for mercury controls to achieve greater than 90 percent reduction.

. at 1766. Thus, Mr. McRanie’s entire testimony on this point should be discarded as

unsupported and meaningless.

Use of Sorbent Traps

It was pointed out in the Chicago hearing that the emissions monitoring

requirements of the proposed Illinois regulation include the allowed use of sorbent trap

technology, just as in the CAMR. Mr. McRanie was aware of this alternative and

admitted that affected sources could make use of it under the proposed Illinois rule.

. at

1774, 1781-82. Significantly, none of the potentially affected sources provided any

prefiled testimony suggesting any problems with this methodology, and Mr. McRanie

even admitted that he was only asked by his client to discuss CEMS.

. at 1780.

The fact remains that the sorbent trap methodology is an accepted alternative to

CEMS for those sources that might agree with Mr. McRanie’s opinions about monitor

issues. Mr. McRanie even noted that EPRI is a supporter of sorbent traps and that it is

working with vendors on a 2007 deliverable that includes “Commercially available,

reliable, robust sorbent trap mercury measuring system that satisfies Appendix K criteria,

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with training services to allow operation by plant instrument technicians.”

. at 1779;

Exhibit 135. Furthermore, the information provided in that EPRI document discussed

how sources can save up to $80,000 per installation and reduce capital costs for mercury

monitoring by using sorbent traps rather than CEMS.

In support of the EPRI statements, the USEPA August update document

referenced above notes, “Mercury sorbent trap monitoring systems continue to perform

well at the EPA and EPRI field test sites.” Written Comments Attachment 1, p. 2. The

document goes into further detail, stating, “Field demonstration tests currently in progress

include a continuation of EPA’s work at a coal-fired power plant in North Carolina and

EPRI’s work at a field test site in Kentucky. Substantial improvements in Hg CEMS and

sorbent trap operation and performance have been achieved at these two test sites.”

. at

Data Substitution

In his testimony, Mr. McRanie objected to the use of data substitution for mercury

monitors, claiming that substitution should only be used in a trading rule and the

proposed Illinois rule does not fall into that category. However, aspects of the proposed

Illinois mercury rule are, in fact, similar to those of a trading rule when it comes to

allowing freedom from a specific hard cap on emissions at all times. A trading program

allows averaging of emissions over multiple locations and across a longer time period

than an instantaneous compliance determination would, as does the proposed Illinois

mercury rule.

Further, Mr. McRanie admitted that these averaging provisions within the

proposed Illinois rule are “in conceptual thought” essentially the same as a trading rule.

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Tr. 8/22/06, p. 1749. And, as mentioned previously, he admitted to being unfamiliar with

certain parts of the proposed rule, including the 12-month average and averaging across

multiple units, so his statements on this topic should be given little weight or

consideration.

. at 1747-48, 1754. In addition, Mr. McRanie admitted that without the

use of missing data substitution, companies faced with possible noncompliance could

avoid accounting for excess emissions and thus avoid the intent of the regulation.

. at

1772.

Also on the topic of data substitution, the Illinois EPA respectfully disagrees with

Acting Chairman Girard’s suggestion that the proposed regulation might be modified by

discarding “a certain number of outliers” such that data points would be thrown out.

at 1768. Under such a system, a source’s noncompliance could be covered up by

throwing out data points that would otherwise lead to a finding of such noncompliance.

Similarly, the Illinois EPA disagrees with the suggestion that the 90 percent requirement

might be reduced because sources would supposedly need to achieve greater than 90

percent reduction to comply with a 90 percent limit.

. at 1769.

The same could be said about virtually all Illinois air pollution regulations with

specific reduction requirements, and almost all of those require instantaneous compliance

rather than allowing averaging over a full year and multiple locations. The only way to

guarantee a 90 percent reduction is to require it specifically.

NIST-Traceable Reference Standard

Another point that was raised by Mr. McRanie in his testimony was his

observation that there was no National Institute of Science and Technology (“NIST”)-

traceable reference standard for calibrating mercury monitors.

. at 1697. He went on to

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testify that “we do not have” a protocol for calibration yet.

. at 1710. However, in the

August 2006 status report cited above, USEPA noted that NIST was continuing to

provide assistance in developing mercury reference standards for elemental and oxidized

mercury. Through USEPA and NIST collaboration, USEPA stated that it expects that

NIST-traceable gas standards and protocols will be available in fiscal year 2007 for use in

certifying CEMS and sorbent trap monitoring systems. Written Comments Exhibit 1, p.

Impact on Utilization of Fly-Ash

Dr. Ishwar Prasad Murarka’s pre-filed and oral testimony set forth information

regarding the effects of activated carbon injection on the utilization of coal fly ash.

However, Dr. Murarka’s testimony was general in nature and did not specifically address

how the proposed rule would impact Illinois’ power plants, much less on a unit by unit

basis. In fact, he testified at hearing that his working knowledge of Illinois power plants’

generation of fly ash was limited to his review of partial contracts of Dynegy and Electric

Energy, Inc. Tr. 8/17/06, p. 1023, 1025.

In reality, Dr. Murarka only presented information that the Illinois EPA already

considered when performing the economic analysis of the proposed mercury rule. The

Illinois EPA stated in the TSD that the cost analysis that was performed included an

assumption that all fly ash revenues were lost for those plants that reported fly ash

revenues in their 2004 EIA Form 767 and were projected to use activated carbon

injection. TSD p. 154.

In presenting his testimony, Dr. Murarka set forth three points pertaining to the

impact the use of activated carbon injection (“ACI”) would have on the fly ash.

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Specifically, Dr. Murarka stated that the use of ACI will increase the loss-on-ignition

(“LOI”) content in fly ash; the use of ACI will darken the color of the fly ash; and the use

of ACI will result in an unacceptable Foam Index. Exhibit 114, p. 1; Tr. 8/17/06, p.

1017. Dr. Murarka’s testimony made clear he considered the first of the aforementioned

three points to formulate his fourth point. The fourth point raised by Dr. Murarka

through testimony is that the reduction of utilization of fly ash in concrete will result in

increased costs to the affected entities.

Id.

Again, the Illinois EPA acknowledges that the

use of ACI could potentially impact the utilization of fly ash in concrete, but already

stated in the TSD that the cost impact to the affected entities will vary depending upon

several factors. The factors are: the amount of fly ash that is being generated at the

power plant (which depends on coal ash content, heating value and unit heat rate, etc.),

the marketable value of the ash as a cement material, the marketable value of the ash for

lower quality applications, and the cost to dispose of the ash, if necessary. TSD p. 136.

The Illinois EPA included a worst case scenario when performing the economic analysis

of the proposed rule by establishing a $25 per ton of generated fly ash that will not be

able to be utilized by the power plants for concrete purposes. TSD p. 155. Dr. Murarka

did not dispute the Illinois EPA’s economic analysis or the $25 per ton cost estimate the

Illinois EPA used when evaluating the economic impact the proposed rule will have on

the affected entities. Furthermore, Dr. Murarka agreed with the Illinois EPA’s economic

results during his oral testimony. Tr. 8/17/06, p. 1045.

Thus, Dr. Murarka’s testimony at best served to confirm the underlying

assumptions the Illinois EPA previously discussed and set forth in the TSD. His

testimony added no new information or arguments for the Board’s consideration,

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especially given his admitted lack of knowledge of all fly ash-related contracts entered

into in Illinois. His testimony was too general and failed to contain specifics applicable

to Illinois facilities that will be subject to the proposed mercury rule.

Issues Raised by the Board and Midwest Generation

The Illinois EPA strongly advocates the adoption of the initial proposed

rulemaking and proposed amendatory TTBS and MPS provisions. As stated above, the

Board may revise proposed regulations before adoption upon its own motion or in

response to suggestions made at hearing and in written comments made prior to second

notice. 35 Ill. Adm. Code 102.600. No additional hearing on the revisions need be held.

. Therefore, the Illinois EPA urges the Board, at second notice, to propose the adoption

of the initial rulemaking proposal including the proposed amendatory TTBS and MPS

provisions. The Board has heard testimony from the Illinois EPA and affected utilities

that the TTBS and MPS provisions should be included in the rule to ensure the needed

level of flexibility to ensure compliance with the rule itself.

Interaction of the Proposed Illinois Mercury Rule and CAIR

Introduction

This discussion encompasses the interaction between two pending rulemakings

before the Board, namely the proposed Illinois mercury rule and the proposed Illinois

CAIR rule. Although the proposed mercury rule focuses on the control of mercury

emissions, it contains optional MPS provisions that companies can comply with as an

alternative to the otherwise applicable requirements of the rule. Under the MPS,

companies can commit to voluntarily meet numerical emission standards for both NOx

and SO

emissions and in return are provided additional flexibility in complying with the

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mercury emission standards. The MPS also contains a provision restricting the trading of

NOx and SO

allowances. By regulating the emissions of NOx and SO

and restricting

the trading of allowances, the MPS has implications for the proposed Illinois CAIR NOx

and SO

cap and trade program.

At the present time, two of Illinois’ three largest coal-fired electric power

generating companies have indicated that they would utilize the MPS, specifically

Ameren and Dynegy. These companies comprise roughly half of the coal-fired electric

generating capacity in Illinois. The Illinois EPA has discussed the MPS with

representatives from other eligible companies and in particular, has had several

discussions with Midwest Generation concerning the MPS.

Background

The Illinois EPA believes that a multi-pollutant approach for controlling the

emissions of mercury, SO

, and NO

from EGUs can have numerous advantages over the

traditional, single pollutant schemes. For example, a well crafted MPS can increase the

protection of public health and the environment, reduce pollution more cost-effectively,

and offer greater certainty to both industry and regulators. Since mercury emission

reductions can be obtained as a “co-benefit” from the control devices used to reduce SO

and NO

, it makes sense to allow companies the option to synchronize the control of

these pollutants, provided that public health and the environment are likewise positively

impacted. The MPS contained in the proposed Illinois mercury rule accomplishes these

goals.

Both the proposed Illinois mercury rule with the MPS and the proposed Illinois

CAIR target the emissions of SO

and NOx from power plants. In this respect, their

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goals are the same in that they seek to significantly reduce the emissions of these harmful

pollutants from EGUs. In Illinois, EGUs are the largest source of SO

emissions, and one

of the largest sources of NOx. Both SO

and NOx are precursors to the formation of fine

particles or PM

2.5

, and NOx is also a precursor to ozone formation. Control of these air

pollutants is necessary for Illinois to comply with the Federal CAIR promulgated on May

12, 2005. 70

Fed

Reg

. 25162. As part of the Federal CAIR development process,

USEPA found that air pollution originating from Illinois contributes significantly to air

quality problems in downwind states through the phenomenon of interstate air pollution

transport. Specifically, pollution from Illinois was determined to have a significant

contribution to nonattainment with the National Ambient Air Quality Standards

(“NAAQS”) for 8-hour ozone and PM

2.5

in downwind states. In addition, USEPA

concluded that transported pollution from Illinois sources interfered with the maintenance

of air quality in areas that are in attainment with the NAAQS. Moreover, modeling on

both a regional scale and at the State level indicates that substantial reductions of NOx

and SO

emissions are necessary to attain the 8-hour ozone and PM

2.5

NAAQS in Illinois.

CAIR is a cap and trade program that regulates the emissions of NOx and SO

States were given an emissions budget by USEPA that is not to be exceeded. This budget

is comprised of allowances which are allocated to sources in advance of the year in which

they are to be used. Each allowance is an authorization to emit one “unit” of a pollutant.

Allowances essentially permit a source to emit up to the level of allowances it holds (e.g.,

for NOx, 1 ton = 1 allowance) during a given period in time. On an annual basis, sources

must demonstrate to the program authority that they hold sufficient allowances to cover

their emissions and surrender the appropriate number of allowances for each unit of

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actual emissions. Because each source must hold sufficient allowances to cover its

emissions each year, the limited number of allowances available ensures required

reductions are achieved. Sources are technically not restricted in the amount of emissions

they actually emit; they are only required to hold sufficient allowances to cover their

emissions during the reconciliation period. Since allowances can be traded (i.e.,

exchanged, gifted, banked, purchased or sold) sources are not required to actually reduce

emissions each year in order to meet a numeric emission standard. Instead, they can

choose to emit greater than their allocated allowances, and make up for the difference by

purchasing allowances, relying on banked allowances, or otherwise obtaining allowances

sufficient to cover the level of emissions by which they exceed their cap. These

additional allowances can come from out-of-state sources and used by Illinois sources,

and in this manner, Illinois would not be the direct beneficiary of the emissions

reductions contemplated in the determination of Illinois’ budget. Accordingly, CAIR

does not ensure a specific amount of emissions reductions occur in Illinois. Therefore, a

regional cap and trade program such as CAIR may or may not provide the necessary level

of emission reductions and air quality benefits to a specific state, like Illinois. Forecasts

of emission reductions and air quality benefits expected from cap and trade programs are

typically made using complex predictive models such as the Integrated Planning Model

(“IPM”) owned by ICF Resources.

A numeric emission standard or limit is a set emission rate that cannot be

exceeded. This type of regulation is commonly referred to as command and control.

Under the MPS, the sources within Illinois owned by one power company will be

required to meet either specific NOx and SO

numeric emission limits in pounds per

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million Btu or a percent reduction that can be converted to, and is essentially the

equivalent of, a specified numeric emission limit. In addition, a source is not allowed to

sell, trade, or bank outside of the confines of its Illinois companies any allocated

allowances equal to the level of emissions reductions needed for compliance with the

MPS. The restrictions on trading are designed to ensure that the emissions reductions

required by the MPS are carried forward into CAIR and that they occur in Illinois. In this

regard, an amount of allowances equal to the extra emissions reductions beyond CAIR

that occur as a result of the MPS are removed from the trading program each year and

prevented from being reintroduced and used in Illinois and other states. This ensures that

these reductions provide benefits both in Illinois and region wide. The combination of

numeric emission limits and trading restrictions guarantees that emissions reductions will

occur in Illinois and therefore provide substantial benefit to public health and the

environment in Illinois.

Companies that opt-in to the MPS are not restricted from trading or selling any

additional allowances that occur as a result of companies controlling emissions beyond

the levels required by the MPS. This provides an incentive for companies to reduce

emissions to the greatest extent possible instead of seeking only to control emissions to

the exact level of the MPS numeric emission limits. Illinois is guaranteed to receive the

benefit of the emissions reductions down to the level of the MPS numeric emission

limits.

Once a company opts-in to the MPS, it is required to comply with the MPS for the

lifetime of the affected units, i.e., the MPS is a “once-in, always-in” provision. This

provision is necessary to ensure that Illinois and its citizens continue to receive the

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benefits of the MPS if a company elects to use this alternative to the otherwise applicable

standards of the Illinois mercury rule. Otherwise a company might elect to opt-in to the

MPS, receive the benefits of mercury control flexibility, and then opt-out of the MPS and

comply with the otherwise applicable requirements of the proposed mercury rule absent

the additional emissions reduction requirements for NOx and SO

The co-existence of numeric emission limits and trading programs is not unusual

and such rules do not typically conflict or present unmanageable contradictions. Other

occurrences where such rules co-exist in a manner where sources are required to comply

with both a numeric emissions standard and trading program requirements are found in

Illinois and other states. For example, Illinois currently has a Volatile Organic Material

(“VOM”) cap and trade program for the Chicago non-attainment area known as the

Emissions Reduction Market System (“ERMS”), 35 Ill. Adm. Part 205. Sources subject

to ERMS must comply with both the cap and trade requirements of ERMS as well as

other applicable Board rules such as 35 Ill. Adm. Code Part 218, which contains numeric

emissions standards for VOM emissions. There have been no significant issues with the

implementation of these two rules in the context of contradictions of requirements.

Similar circumstances exist for sources subject to the NOx SIP Call and Acid Rain

trading programs which both utilize a combination of cap and trade and numeric emission

standards. Affected sources must comply with both the NOx and SO

trading

requirements and any applicable numeric emission standards. In addition, affected

sources would need to comply with any applicable Board rules, such as 35 Ill. Adm.

Code 217, Subpart V.

Interaction of the Two Rules

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The most straightforward way to look at the interaction between the requirements

of the MPS in the proposed mercury rule and the proposed CAIR is that companies that

elect to utilize the MPS would need to comply with both rules. Such companies will be

required to comply with both the CAIR cap and trade requirements and the numeric

emission limits of the MPS. Specifically, these companies will need to both hold

sufficient allowances each year under CAIR and emit NOx and SO

at a rate equal to or

less than the numeric emission limits of the MPS. Compliance with CAIR is mandatory

whereas companies have the option of utilizing the MPS. Compliance with both rules

was contemplated and is accounted for in the proposed MPS rule language. In particular,

the MPS provisions do not prohibit companies from purchasing, using banked, or

otherwise obtaining allowances for purposes of complying with other federal or state

requirements such as the proposed CAIR. In essence, a company utilizing the MPS can

purchase or obtain allowances from the general interstate market in order to meet the

proposed CAIR requirements. Companies under the MPS can also utilize banked

allowances to comply with CAIR. The need to obtain additional allowances will be

necessary if and when actual emissions rates meet the requirements of the MPS, yet the

company still needs to obtain allowances for compliance with the proposed CAIR.

Implications of MPS Trading Restrictions on CAIR

The MPS does not allow the trading of allowances that are generated as a result of

measures taken to comply with the NOx and SO

emission standards. Specifically,

companies cannot sell or trade outside of Illinois or with other companies in Illinois the

allowances needed to meet the MPS numeric emissions limits for NOx and SO

. The

allowances needed to meet the numeric emissions limits are determined by converting

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into allowances the allowable emissions from a company based on compliance with the

numeric emissions limits. The allowances needed to meet the MPS limits are required to

be retired or surrendered on an annual basis beginning on the date the MPS emission

standards become effective (i.e., 2012 for NOx and 2013 for SO

). Any allowances

remaining with the company as a result of over-compliance with the MPS can be freely

traded or banked. Allowances from over-compliance occur when a company's actual

emission rates are below the required emission rates of the MPS. The availability of

allowances for trading or banking would be determined from the actual emissions rate, in

pounds per million Btu, achieved for NOx and SO

in the particular year. The difference

between the required rate and a lower actual rate would be converted into allowances that

could be traded or banked.

Since the requirements of the MPS for SO

and NOx do not become applicable

until 2012 for NOx and 2013 for SO

, and CAIR requirements for NOx begin in 2009

and 2010 for SO

, a company using the MPS would need to comply with only CAIR until

the corresponding MPS limits become applicable. Once the MPS and CAIR limits both

apply, it is believed that initially compliance with the MPS will result in inherent

compliance with the emission reduction requirements of the proposed CAIR in regards to

. This is due to emission reduction requirements for SO

in the MPS being more

stringent than the reductions required under CAIR. As a result, companies that comply

with the MPS should reduce actual emissions to a level below their emissions allowed by

their allocated SO

allowances under CAIR. However, this may change over time due to

various factors, including the potential for increases in electrical generation from existing

units (e.g., increase in operating hours or generation efficiency). If it becomes necessary

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in the future, affected companies could purchase, trade, utilize banked, or otherwise

obtain additional SO

allowances to comply with CAIR as needed without interference

from the MPS.

For NOx, the situation is slightly more complex. A company opting into and

complying with the MPS is more likely to need additional allowances beyond what is

initially allocated to them under CAIR as proposed to be implemented in Illinois. Before

further discussion, it is of critical importance to again recognize that companies utilizing

the MPS retain their ability to purchase, trade, utilize banked allowances, or otherwise

obtain (e.g., accept as gift or exchange) NOx allowances in order to meet the proposed

CAIR NOx requirements in the event that actual emissions rates meet the requirements of

the MPS, yet the company still needs to obtain allowances for compliance with the

proposed CAIR.

One option for companies using the MPS to obtain any needed additional

allowances is to obtain them through the Clean Air Set-Asides (“CASA”). Seven percent

of the CASA is intended for (1) air pollution control equipment upgrades, and (2) early

adopters. For companies utilizing the MPS and installing additional pollution control

equipment that is not otherwise required pursuant to a consent decree, additional NOx

allowances sufficient for compliance purposes should be readily obtainable. For those

companies required to install controls under a consent decree, the Illinois EPA is revising

the current proposed CAIR CASA provision to allow for NOx allowances to be obtained

for the amount of over-compliance achieved. Over-compliance would be the amount of

NOx reduced beyond that required by the consent decree.

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Of course a company could also choose to reduce emissions through additional

control measures such that additional allowances were not needed. Regardless of the

mechanism for CAIR compliance, the MPS does not prohibit a company from

purchasing, using banked, or otherwise obtaining additional allowances needed to comply

with the proposed CAIR.

CAIR allows the use of banked allowances for compliance with the emissions

caps. The MPS addresses the use of banking by allowing companies to utilize the banked

allowances obtained prior to the effective dates of the associated MPS standards for

CAIR compliance purposes. However, even though companies can continue to carry

forward and utilize such banked allowances and are not required to surrender them, after

the effective date of the associated MPS standard a company under the MPS can only

bank allowances obtained from over-compliance. Essentially, the MPS allows for use of

both banked allowances acquired before 2012 for NOx and before 2013 for SO2 and any

additional banked allowances that are generated from over-compliance after those dates.

For example, if a company has NOx allowances in a given year in excess of those needed

for compliance after 2012 (i.e., allowances from over-compliance), the source can bank

such allowances or may instead choose to sell or trade them within the interstate market.

Possible Retirement of Additional Allowances as a Result of the MPS and Potential

Impact on CAIR

Another issue that was raised is the potential impact to the region-wide trading

program and to other companies that may occur as a result of the retirement of any

allowances that would otherwise not be removed from the CAIR trading program absent

the MPS. A primary area of concern appears to be the additional cost of allowances in

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the regional market that could occur from any corresponding shrinkage of the allowance

pool.

The MPS requires that allowances needed to cover the allowable emissions

pursuant to the numeric emissions limits for NOx and SO

be retired each year. CAIR

requires that the appropriate number of allowances for each unit of actual emissions be

retired each year. Therefore, only the incremental amount of any additional allowances

retired as necessary for compliance with the MPS could potentially have an impact on the

trading program.

Since the allocated allowances to companies for NOx under CAIR are expected to

be fewer than the allowances needed to cover the allowable emissions pursuant to the

MPS NOx emission rate, there should be no additional NOx allowance retirements due to

the MPS. Therefore, there would be a negligible impact to the region-wide CAIR

program in regards to NOx due to the requirement to retire NOx allowances under the

MPS. Even if the MPS resulted in a large amount of additional allowances being retired

or surrendered, the impact to the CAIR should be negligible. Evidence of this is found in

the economic modeling performed by the Illinois EPA during the development of the

proposed CAIR rule. In particular, it was assumed that 30% of the total NOx allowances

were retired, although a 30% retirement is not the case. Even this large amount of retired

NOx allowances was shown to have an insignificant impact on CAIR in terms of cost to

industry and the Illinois consumer. A similar minimal impact would be expected to the

trading program from a large retirement. This is due to the region-wide scope of the

trading program and Illinois constituting only one of up to 28 states participating. Any

impact from an incremental amount of additional allowances retired in Illinois would be

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spread over the region and total allowance pool, and hence minimized. Additionally, cap

and trade programs by design are cost effective and spread costs over the program

participants. For perspective on this issue, the Federal CAIR establishes region-wide

annual NOx caps of 1.5 million tons in 2009 (53,361 allowances in Illinois) and 1.3

million tons in 2015 (44,468 allowances in Illinois).

Companies opting-in to the MPS will likely need to acquire and retire or

surrender additional SO

allowances under CAIR. However, the MPS is structured

similar to CAIR in that it required SO

reductions in two phases. This should help

minimize any impact to the trading program from additional allowance retirements since

the timing of the effective date of the more stringent SO

standard of the MPS

corresponds to the tightening of emissions in CAIR. For both phase 1 and phase 2 of

CAIR it is estimated that the any additional allowances needed to be retired or

surrendered would have a negligible impact to the trading program for the reasons

discussed and provided for the NOx trading program. Any additional retirement of SO

allowances would be relatively small in comparison to the annual SO

region-wide

budget. For perspective on this issue, the Federal CAIR establishes region-wide annual

SO2 caps of 3.6 million tons in 2010 (385,341 allowances or 192,671 tons in Illinois) and

2.5 million in 2015 (134,869 tons in Illinois). The additional SO2 allowances estimated

to be retired or surrendered as a result of the MPS is less than 10% of the Illinois budget

and less than 1% of the region-wide budget.

MPS, CAIR and the CASA

As stated above, a portion of the CASA is for (1) air pollution control equipment

upgrades, and (2) early adopters. Air pollution control upgrades are eligible for 5% of

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the total allowance pool, which is 3,812 allowances in phase I and 3,176 in phase II of

CAIR, and such projects can continue to receive allowances for 15 years. Early adopters

are eligible for 2% of the CASA, which is 1,525 allowances in phase I and 1,271

allowances in phase II, and such projects can continue to receive allowances for 10 years.

These set-asides provide for the allocation of allowances to sources that install controls

and such additional allowances would serve to offset the costs of the controls.

Companies using the MPS are eligible for additional NOx allowances through any

category of the CASA, but due to the installation of controls needed for compliance with

the MPS they are particularly suited for the air pollution control equipment upgrades or

early adopter categories. Should Ameren or Dynegy (or any other company that chooses

to use the MPS) need additional allowances for CAIR compliance purposes, it is believed

they could obtain all or a portion of the allowances needed through the CASA from these

categories. For Ameren in particular this is the case since it plans to install up to seven

scrubbers and two SCRs to meet the MPS limits.

Since unused allowances in a CASA category accrue until the category contains

double its initial allocation amount, if the pollution control upgrade or early adopter

categories go unused or are undersubscribed for a period, more allowances will be

available from these categories once companies start installing controls. Moreover, in the

event that other CASA categories have excess allowances more than double their initial

allocation amount, these excess allowances will be available for distribution to other

categories, including pollution control upgrades and early adopters. It is possible that

available allowances could even exceed double the amount of the initial allowances

available in these two CASA categories. All allowances are allocated on a pro rated, or

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assessed proportionately, basis. The proposed CASA is aimed at making installation of

pollution control equipment more cost effective in Illinois.

For Dynegy, it would be able to utilize these categories of the CASA only for new

control equipment beyond that already required by the consent decree and to the extent it

achieves emission reductions beyond what is required in the consent decree. Dynegy has

theorized that it may need to install a new scrubber and baghouse in order to meet the

2015 SO

emission rate of the MPS. Such controls would be eligible for full allowance

allocations from the CASA.

Conclusion

The MPS of the proposed Illinois mercury rule and the proposed Illinois CAIR

will work together to ensure significant reductions of SO

and NOx. Companies that

elect to utilize the MPS provisions will need to comply with both the cap and trade

requirements of CAIR and the emission rate and restricted trading requirements of the

MPS. The provisions of the MPS allow for companies to purchase, trade, utilize banked,

or otherwise obtain allowances needed to comply with the proposed CAIR. The

requirements of the MPS do not interfere with companies obtaining additional allowances

if needed for compliance with the proposed CAIR. The combination of the two rules

ensures public health and environmental benefits in Illinois and region wide.

Multi-Pollutant Standard Issues

The following discussion addresses issues and concerns raised regarding the impact

of the proposed MPS provisions.

Potential Impact of the MPS on companies that do not opt-in to the MPS.

Specifically, the potential impact of the MPS on Midwest Generation and Kincaid in

controlling mercury emissions.

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As a general matter, the MPS will have no impact in regard to mercury control on

companies that do not opt-in to the MPS. Such companies will need to comply with the

non-MPS provisions of the proposed mercury rule and these provisions have not been

revised. Therefore, the mercury control requirements for companies that do not choose to

utilize the MPS are the same before and after the MPS provisions were added. The MPS

is simply an alternative means to comply with the proposed rule.

Of course the MPS is an option available to all of the coal-fired systems. A company

can either choose to comply with the proposed Illinois mercury rule or it may elect to opt-

in to the proposed MPS provisions and thereby comply with the proposed rule.

For Midwest Generation in particular, the Illinois EPA determined the emission

standards that would apply to it if it elected to use the MPS. Interestingly enough, for

both annual and seasonal NOx emissions, Midwest Generation would need to comply

with the numerical standard, i.e., 0.11 lbs/mmbtu. For SO

, it would need to comply with

the percent reductions requirement, i.e., 56% beginning 2013, and then 65% from 2015

on.

Therefore, under the MPS, Midwest Generation would be required to meet the

same NOx emissions rate as Ameren and the same SO

percent reduction as Dynegy.

Of note is that Dynegy has to meet a lower NOx emission rate than Midwest Generation,

i.e., 0.10 lbs/mmbtu for Dynegy versus 0.11 lbs/mmbtu for Midwest Generation.

For SO

, Ameren has to meet a greater percent reduction of 70% by 2015, whereas

Midwest Generation would only need to reduce SO

by 65%.

Potential Impact of the MPS on future SO

and NOx rulemakings

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The proposed Illinois CAIR is the only rulemaking besides the proposed Illinois

mercury rule that is currently underway to regulate coal-fired power plants and therefore

have any impact on Midwest Generation or Kincaid, or any other coal-fired power plant.

Potential future rulemakings by the Illinois EPA that may address coal-fired

power plants are Reasonably Available Control Technology (“RACT”) and Best

Available Retrofit Technology (“BART”). The Illinois EPA is in the process of

determining the applicability of RACT and BART requirements for coal-fired generating

units in Illinois. The Illinois EPA must develop revisions to Illinois’ State

Implementation Plan (“SIP”) in the next two years to address these requirements. These

requirements are based on four related federal rulemakings: On July 1, 1999, USEPA

issued final regional haze regulations for the protection of visibility in national parks and

wilderness areas (Regional Haze Rule). One of the key components of the Regional

Haze Rule is BART, which is required on certain older combustion units. On June 15,

2004, nonattainment designations became effective for portions of Illinois for 8-hour

ozone. Similarly, on April 5, 2005, nonattainment designations became effective for

portions of Illinois for fine particulate matter (PM2.5). Finally, on November 29, 2005,

USEPA published the final rule to implement the 8-hour ozone NAAQS.

USEPA's 1999 Regional Haze Rule was established to improve visibility at

designated Class I areas in the United States. As mentioned, BART is a key element of

this program, and it has been the subject of litigation since the initial promulgation.

Currently, BART applies to coal-fired electric generating units that began operation after

August 7, 1962, were in existence as of August 7, 1977, are located at facilities with a

generating capacity greater than 750 MW, and that cause significant visibility impairment

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at a designated Class I area. Visibility impairing pollutants, as determined by modeling

performed by the Midwest Regional Planning Organization (Midwest RPO, aka

LADCO), are NO

and SO

The BART rule requires states to identify whether emissions from units subject to

BART contribute to visibility impairment, and if so, whether retrofit controls are

available to reduce emissions below current levels. Preliminary modeling by the Illinois

EPA has determined that there may be significant impairment to at least one Class I area

as the result of emissions from units at the following facilities: Baldwin, Kincaid,

Coffeen, Wood River, Edwards, Powerton, Joliet, CWLP, Duck Creek, and Will County.

As part of the determination of BART, states must consider a number of factors,

including: the cost of the controls; the impact of controls on energy availability or any

non-air quality environmental impacts; the remaining useful life of the equipment to be

controlled; any existing pollution controls already in place; and the visibility

improvement that would result from controlling the emissions. These factors may lead

states to require no additional control or the use of the best technology available, a less-

effective technology than BART.

The BART rule allows for states to establish that compliance with the CAIR by

affected EGUs would satisfy BART requirements. USEPA has noted that it believes that

CAIR is clearly better than BART, and that CAIR would therefore satisfy the BART

requirements for affected EGUs. The BART rule also provides presumptive emission

limits for coal-fired EGUs for both SO

and NOx. Depending on the coal type and boiler

configuration, the presumptive emission limitations generally require the use of flue gas

desulfurization (FGD) and selective catalytic reduction (SCR) to control SO

and NOx

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emissions, respectively. It is important to note that the Illinois EPA is still evaluating the

best approach for satisfying the BART requirements pertaining to coal-fired EGUs and

will consult interested stakeholders in the decision-making process.

As mentioned previously, portions of Illinois have been designated as

nonattainment for both 8-hour ozone and PM2.5. Under Sections 110 and 182 of the

Clean Air Act, states must include in their SIPs requirements for RACT for ozone and

PM2.5 precursors for affected sources located in the nonattainment areas. 42 U.S.C. §§

7410 and 7511a. The 2005 Implementation Rule for 8-hour ozone establishes guidance

for states in developing RACT requirements for volatile organic compounds (VOCs) and

NOx during the ozone season. Since Illinois has already implemented VOC RACT under

the previous 1-hour ozone NAAQS, the Illinois EPA is focusing its efforts on addressing

the requirements for NOx RACT. USEPA has not yet finalized the companion

implementation guidance for PM2.5, so it is yet unclear what states must do to satisfy

RACT requirements for SO

and NOx, the primary PM2.5 precursors, on an annual basis.

It is the Illinois EPA’s intention to require RACT on all emission sources in the

nonattainment areas with a potential to emit NOx of 100 tons per year or more.

Depending on the requirements of the final PM2.5 Implementation Rule, the Illinois EPA

expects to follow the same approach for SO

as well. The Illinois EPA is still evaluating

the best approach for satisfying RACT requirements for coal-fired EGUs. Coal-fired

EGUs that are located in either the Chicago or Metro-East nonattainment areas include

the Baldwin, Wood River, Joliet, Will County, Crawford, Fisk, and Waukegan power

plants. Similar to BART, the 8-hour ozone Implementation Rule provides for states to

establish that compliance with the CAIR by affected EGUs would satisfy RACT

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requirements. Presumably the PM2.5 Implementation Rule will contain a similar option

for meeting RACT.

As mentioned above, the Illinois EPA is considering the best approach for

addressing the requirements of BART and RACT. The Illinois EPA is committed to an

open process and will consult stakeholders as it refines and finalizes its approaches. The

Illinois EPA’s recently proposed rule to address mercury emissions from coal-fired EGUs

does not preclude the Illinois EPA from examining these requirements and taking action

to address these requirements as appropriate or necessary. To the extent that the MPS

affects any future rule, those potential affects would be addressed as part of the

rulemaking process for that rule.

Potential Impact created by exchanging mercury emissions for particulate and ozone

precursors.

The MPS does not result in the exchange of reductions in mercury for reductions

in particulate and ozone precursors, i.e., SO

and NOx. Instead, it provides additional

flexibility in regard to the installation and timing of controls and the mercury control

strategy utilized. In exchange for this flexibility, companies must commit to meet

numeric emission limits on NOx and SO

. Although companies that use the MPS may

not immediately achieve the 90% or equivalent mercury reductions for a short period,

ultimately, the system-wide reduction in mercury emissions should be greater than what

would be achieved using the mercury control strategy that would likely be employed

absent the MPS. This is because under the MPS companies must install controls not only

for mercury, but also for SO

and NOx. These SO

and NOx controls (e.g., scrubbers and

SCRs) achieve and/or enhance mercury control as a co-benefit.

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As a result of the MPS, it is believed that air quality will benefit from both

significant reductions in mercury and significant reductions in NOx and SO

. It is

expected that mercury will be reduced to an even greater extent than it would absent the

MPS. Hence, there will be an overall net gain in benefits to the public and environment,

not an exchange in the reductions of one pollutant for others, as has been suggested. The

benefits of mercury control have been well documented in the TSD to the proposed

mercury rule and the testimony and exhibits of the hearings.

Although the Illinois EPA has not attempted to quantify the additional air

quality benefit associated with the MPS, it is expected that the main benefits will come

from the reduction in fine PM and ozone. Both SO

and NOx contribute to the formation

of PM, and NOx contributes to the formation of ground-level ozone. PM and ozone are

associated with premature deaths and illnesses. Additionally, these pollutants reduce

visibility and damage sensitive ecosystems.

PM-related benefits include fewer premature fatalities, fewer cases of chronic

bronchitis, fewer non-fatal heart attacks, fewer hospitalization admissions (for respiratory

and cardiovascular disease combined) and result in significant reductions in days of

restricted activity due to respiratory illness and fewer work loss days. We also estimate

health improvements for children from reduced upper and lower respiratory illness, acute

bronchitis, and asthma attacks.

Ozone health-related benefits are expected to occur during the summer ozone

season (usually ranging from May to September). Ozone-related health benefits are

expected to include fewer hospital admissions for respiratory illnesses, fewer emergency

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room admissions for asthma, fewer days with restricted activity levels, and fewer days

where children are absent from school due to illnesses.

In addition to these significant health benefits, the proposal will result in

ecological and welfare benefits. These benefits include reductions in acidification in

lakes, streams, and forests, benefits from reduced ozone levels for forests and agricultural

production, and visibility improvements.

Kincaid’s Proposal

It is the Illinois EPA’s position that the proposed amendment to the rule submitted

by Kincaid is unacceptable and should not be adopted by the Board. The proposal would

significantly relax the mercury control requirements as proposed in the rule. This would

occur with no additional requirements for SO

and NOx reductions, which will also serve

to facilitate control of mercury. Kincaid has not identified any benefits for air quality and

the environment.

In addition, since the proposal would significantly relax the proposed mercury

reduction requirements, it results in additional mercury emissions beyond that

contemplated by the Illinois EPA in the rule development process and recent

amendments. As a result, the additional mercury emissions allowed by the proposal

would have a detrimental impact on Illinois’ ability to demonstrate compliance with the

Federal CAMR caps.

The Illinois EPA believes that Kincaid can comply with the applicable emission

standards as they currently exist, i.e., through the injection of halogenated ACI. This is

the approach that other sources in Illinois are expected to rely upon and the approach that

Dominion, the owner of Kincaid, is planning to use at plants located outside of Illinois.

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In the event that compliance cannot be achieved, Kincaid can seek source-specific

regulatory relief from the Board as provided by the Environmental Protection Act, in

which context the consequences of such relief for Illinois’ budget could be considered.

The Illinois EPA is not at this time commenting on the appropriateness of relief for

Kincaid.

Suggested Clarification of MPS Provisions

There are several minor changes that the Illinois EPA is bringing to the Board’s

attention concerning the existing language of the MPS. First, given testimony at hearing

by Ameren that the Joppa power plant is part of its system, the Illinois EPA recommends

the deletion of the reference to this source, “Electric Energy, Inc., ID 127855AAC,” in

Sections 225.232(d)(2)(A) and 225.234(b)(3)(B). There is no negative impact on the

remaining sources listed in those sections if such source is removed.

Second, in Section 225.233(f)(3) of the MPS, the inclusion of the word “banking”

in the first line of the subsection (so that the subsection reads, “The provisions of this

subsection do not restrict or inhibit the banking, sale or trading * * *”) will more clearly

describe the flexibility concerning handling of allowances.

Finally, the Illinois EPA recommends replacing Section 225.233(f)(5) with

different language to insure that affected sources have an appropriate amount of time to

account for USEPA’s actions regarding surrender of allowances. To that end, more

reasonable language for that subsection would read:

By March 1, 2010, and continuing each year thereafter, the owner or

operator of EGUs in an MPS Group shall submit an initial report to the

Agency detailing the means by which compliance with the requirements of

this subsection for the previous year will be accomplished, which shall

include identification of any allowances that are expected to be

surrendered to the USEPA or to the Agency, and identification of any

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allowances that were or will be sold, gifted, used, exchanged or traded

because they became available due to overcompliance. All allowances that

are required to be surrendered must be surrendered by August 31, unless

USEPA has not yet deducted the allowances from the previous year. A

final report shall be submitted to the Agency by August 31 of each year,

verifying that the actions described in the initial report have taken place

or, if such actions have not taken place, an explanation of all changes that

have occurred and the reasons for such changes. If USEPA has not

deducted the allowances from the previous year by August 31, the final

report shall be due, and all allowances required to be surrendered must be

surrendered, within 30 days after such deduction occurs.

Compliance with CAMR Annual EGU Mercury Budget or Caps

The Federal CAMR requires that Illinois reduce and maintain mercury emission

levels from coal-fired EGUs at or below 3,188 pounds per year beginning in 2010, or

phase 1 of CAMR. Under Phase 2 of CAMR, beginning in 2018, mercury emissions

from all coal-fired EGUs statewide are budgeted at 1,258 pounds annually. These

budgeted emissions for Illinois equate to a reduction in mercury emissions of

approximately 47 percent by 2010 and 78 percent by 2018. Since the Illinois mercury

rule targets a 90% reduction beginning July 2009, compliance with the Illinois rule

should result in inherent compliance with the CAMR budget in both phase 1 and 2 of the

Federal CAMR.

Even though Illinois’ proposed mercury rule requires greater mercury emissions

reductions, and requires that the reductions be achieved sooner than CAMR, the proposed

rule does not directly impose the “emissions budget” established by the Federal rule.

Several factors could affect Illinois mercury emissions and cause them to approach the

level of the CAMR emissions budget. Such factors include future growth of electric

generation from existing coal-fired EGUs, additional mercury emissions as a result of the

TTBS, additional mercury emissions as a result of the MPS, and mercury emissions from

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new EGUs. Although CAMR does not require a state to adopt a cap and trade program,

the rule does require that a state not using the cap and trade provisions demonstrate that it

will not exceed the budget. The Illinois EPA must submit a State plan to USEPA by

November 17, 2006 that demonstrates how it will ensure that the State’s CAMR

emissions budget will never be exceeded, or if exceeded, that the appropriate corrective

action is taken (e.g., purchase and retirement of an appropriate amount of mercury

allowances by Illinois).

Increases in mercury emissions from the future growth of electric generation at

existing coal-fired EGUs and from new EGUs was estimated and it is believed that the

Illinois mercury rule is sufficiently stringent so as to not jeopardize any exceedances of

the CAMR caps. The introduction of additional flexibility provided in the mercury rule

via various provisions, including the TTBS and MPS, does not significantly increase the

emissions of mercury so as to jeopardize the ability of Illinois to meet the CAMR caps.

In regard to the MPS, by the end of 2009, companies opting-in to the MPS are

required to install mercury controls that the Illinois EPA believes will achieve 90%

control on all units, except for the smallest units. The EGUs that are required to install

mercury controls in 2009 are also required to demonstrate a minimum of 90% mercury

reduction by January 1, 2015. The small units can only delay the installation of mercury

controls until the end of 2012. Reasons for allowing a delay in controlling mercury for

the smallest units include the fact that such units are also the smallest emitters of

mercury. The additional mercury emissions that could occur from these small units

during the period of 2009 to 2012 would be minimal compared to the overall reduction

that will be occurring. After 2012 and the required installation of mercury controls on

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these small units, the additional mercury emissions as a result of the MPS amounts to

only the small incremental difference between 90% control and the average level of

control actually achieved, which may well be greater than 90%. Also under the MPS,

these small units are never required to achieve a 90% emission reduction. Instead, they

are required to operate the ACI systems appropriately and inject sorbent at specified

default rates. The default rates are based on injection rates that assure that ACI is being

injected for the maximum practicable reduction in mercury emissions. These units

should achieve a high level of mercury emission reductions and the level of any

additional emissions will not meaningfully affect the overall reduction that is achieved.

In actuality, the Illinois EPA, Ameren and Dynegy all estimate that Ameren and Dynegy

will each achieve greater than 90% mercury reduction system-wide after all controls are

installed.

Under the TTBS, 25% of a system’s capacity can elect to inject sorbent at default

rates and thereby temporarily avoid the requirement to demonstrate 90% mercury

emission reduction. The Illinois EPA testified that in development of the TTBS, it sought

to minimize the additional amount of mercury emissions that could occur from units that

comply via the TTBS. This was accomplished by limiting the use of the TTBS to 25% of

a systems capacity and by requiring specified default sorbent injection rates. As with the

MPS, the additional mercury emissions that could occur under the TTBS is the

incremental amount between 90% control and whatever lesser level of control is actually

achieved. These additional mercury emissions should be small. For example, the

additional level of mercury emissions from a unit that emits 100 pounds of uncontrolled

mercury emissions per year that achieves only 80% control instead of 90% is only 10

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pounds of mercury per year. The duration of this effect is time-limited as the TTBS

ceases to be available as of July 1, 2015. Since both Ameren and Dynegy have indicated

they will opt-in to the MPS, Midwest Generation is the primary candidate to utilize the

TTBS. It is important to note that EGUs equipped with hot-side ESPs are not eligible for

the extension under the TTBS.

The Illinois EPA has prepared a projection of expected mercury emissions in

Illinois from coal-fired EGUs for the first 10 years of the CAMR program (2010-2020)

that projects Illinois mercury emissions will remain below budget levels during this

period (see Figure 2). This is based on projected growth in coal consumption by EGUs

during this timeframe and the control requirements contained in Illinois’ proposed rule.

The Illinois EPA is actively preparing a revised projection, however, and it is believed

that the message will be essentially the same, i.e., that the proposed Illinois mercury rule

will provide reductions beyond the CAMR budget.

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Figure 2

Figure 1

Current and Projected Mercury Emissions

from Coal-Fired Power Plants in Illinois

1000

2000

3000

4000

5000

6000

7000

8000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Hg (Pounds)

CAMR Budget

IL Hg

CAMR Budget

IL Hg Emissions

Furthermore, the Illinois EPA will commit to provide to USEPA on an annual

basis beginning in 2011, subsequent to the first year of the CAMR program, a report that

tabulates mercury emissions reported by the subject sources for the preceding year to

demonstrate that actual emissions have not exceeded the State’s CAMR emissions

budget. The annual report to be submitted by Illinois EPA will also include a projection

of mercury emissions from coal-fired EGUs in Illinois for the next 10-year period. In the

event that annual emissions exceed the applicable CAMR mercury budget, based on

either the previous year’s reported emissions or on the 10-year projection, the Illinois

EPA will take corrective actions to limit mercury emissions as needed to comply. The

corrective actions may include the submission to the Board of an amendment to the

proposed Illinois mercury rule that contains an emissions cap on Illinois mercury

emissions from coal-fired power plants. The Illinois EPA’s commitment to prepare the

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annual report, including the 10-year projection, and to take corrective actions in the event

that the CAMR budget is exceeded is an integral part of Illinois’ state Plan to be

submitted to the USEPA.

In the event USEPA does not approve Illinois’ demonstration that the proposed

rule will meet the CAMR budget for Illinois, or if the State plan is submitted to USEPA

after the November 17, 2006 deadline, then CAMR will be imposed upon Illinois. If this

occurs, it is Illinois’ intention that it will still proceed forward with the proposed mercury

rule, and if promulgated, Illinois EGUs will need to comply with both CAMR and the

Illinois mercury rule. It is believed that compliance with CAMR will be inherent upon

compliance with the Illinois mercury rule since the Illinois mercury rule standards will

result in emissions below the CAMR caps. There should be relatively little additional

burden placed on Illinois EGUs if both rules are implemented. In fact, sources would be

able to sell allowances that are not needed for CAMR compliance. Such allowances

would likely occur as a result of sources meeting the more stringent reduction

requirements of Illinois’ proposed mercury rule.

The Illinois EPA has discussed CAMR compliance with USEPA Region V

personnel. The Illinois EPA is aware of areas that USEPA has identified as needing

resolution in order to demonstrate CAMR compliance. The Illinois EPA is actively

working to address these issues and is optimistic that a resolution can be reached.

WHEREFORE, as provided herein, and as supported and set forth in the Illinois

EPA’s testimony, exhibits, and other documents submitted to the Board in this

proceeding to date, the Illinois EPA respectfully requests that the Board adopt the initial

rulemaking proposal, as well as the TTBS and MPS provisions.

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Respectfully submitted,

By:_________________________________

John J. Kim

Managing Attorney

Air Regulatory Unit

Division of Legal Counsel

Dated: September 20, 2006

Illinois Environmental Protection Agency

1021 North Grand Avenue East

P.O. Box 19276

Springfield, Illinois 62794-9276

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ATTACHMENT 1

Mercury Emissions Monitoring Program for Coal-Fired Boilers

under the Clean Air Mercury Rule

Status Report

August 2006

Introduction

The Clean Air Mercury Rule (CAMR) requires affected electric utility units to

continuously monitor mercury (Hg) mass emissions, using technically-feasible,

compliance-capable technologies. To ensure that the Hg emission reduction goals of

CAMR are met, these monitoring technologies will be subject to rigorous certification

and quality assurance/quality control (QA/QC) requirements under 40 CFR Part 75. The

U.S. Environmental Protection Agency (EPA) continues to work with the regulated

community, the monitoring equipment and software vendors, academia, and other

organizations to ensure timely implementation of a technically sound, effective CAMR

mercury monitoring program.

This paper updates the February 2006 status report on the mercury emissions monitoring

program under the CAMR. The paper discusses the results of the mercury emission

monitoring demonstration and method validation tests to date and the remaining

challenges to be overcome. The paper also discusses capacity issues associated with the

availability and installation of the required monitoring systems within the required

CAMR deadlines.

Background

Over the past two years, EPA, the Electric Power Research Institute (EPRI), industry and

monitoring equipment vendors have conducted field demonstration and validation tests of

continuous mercury emission monitoring systems (CEMS) and sorbent trap monitoring

systems at a number of coal-fired utility boilers. EPA and the National Institute of

Standards and Technology (NIST) have also been working together to develop NIST-

traceable mercury calibration gas standards and protocols necessary to ensure the

accuracy of the mercury monitoring systems. As a result of these tests, system design

changes have been made to improve the performance and reliability of the monitoring

systems. Most notably, design changes have been made to reduce probe plugging and

calibration drift, particularly under wet stack environments. Additionally, the precision

between different CEM systems has improved dramatically.

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Working with EPRI, NIST, and industry, most of the major issues have been successfully

addressed, and now the focus of future field tests and laboratory analyses is on resolving

the remaining issues. These include: (1) developing a viable instrumental reference

method (IRM) for mercury; (2) finalizing NIST traceability protocols for Hg calibration

gas cylinders and gas generators; and (3) improving CEMS performance in daily

calibration error tests and system integrity checks (especially in low temperature, low

concentration, high moisture stack environments).

EPA is also working with industry and other groups to develop an alternative reference

method using sorbent trap technology. However, the Agency still considers a workable

instrumental reference method for mercury to be the best alternative to the currently-

required Ontario Hydro wet-chemistry reference method.

Hg CEMS and Sorbent Trap Hardware

Mercury monitoring technologies continue to advance at a rapid pace and are on-track to

meet the QA/QC requirements required under CAMR. However, continued commitment

from all parties is essential to maintain this pace and ensure that CAMR requirements are

met.

Approximately, twelve Hg CEMS and sorbent trap vendors are currently developing new

and improved monitoring systems. EPA, EPRI and monitoring system vendors will

continue to conduct tests demonstrating these improvements at various coal-fired power

plants in the United States. Hg CEMS manufactured by Tekran, Horiba, Durag, Opsis,

Thermo, Ohio Lumex, Forney/Genesis, and GE/PS Analytical are currently being field

tested. Most manufacturers have made significant improvements to or refinements of

their monitors as a direct result of EPA and EPRI’s field demonstration tests. For

example, several new CEMS probe designs have been developed, some of which reduce

plugging and may reduce system calibration drift in low concentration, high moisture

stack environments. Other more streamlined probe designs are being developed by

equipment vendors to facilitate sample traversing

during IRM testing. Vendors are also

working to integrate Hg calibration gas generating systems into their CEMS.

Mercury sorbent trap monitoring systems continue to perform well at the EPA and EPRI

field test sites. Remaining developmental efforts for these systems will include: (1)

testing of a variety of sorbent materials and sample conditioning systems; and (2)

development of alternatives to the lengthy process of sending Hg samples to a laboratory

for analysis. Promising alternatives that allow for rapid, on-site sample analysis include

thermal desorption and direct combustion methods, both of which are based on sample

heating/combustion to release mercury. Industry is also working to improve the Hg

detection capabilities of sorbent trap systems in low-concentration stack environments.

In order to make measurements of its concentration in the stack, sampling at multiple points is

generally required. “Traversing” is the act of moving the probe to reach the individual sampling

points.

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Instrumental Reference Method Evaluation and Validation

EPA has drafted a conceptual mercury IRM to provide an alternative to the lengthy and

complex Ontario Hydro reference method currently required by CAMR. EPRI and

industry will continue to provide IRM development assistance to EPA through the

assessment of its feasibility and challenges. Issues associated with the implementation

and validation of the conceptual IRM are currently being addressed at the EPA North

Carolina and the EPRI Kentucky test sites. Also, IRM development was one of the

primary areas of focus at the recent Pennsylvania/Lehigh University field test, and is

currently a primary area of focus at a Texas lignite field test site. The principal objective

of these field tests is to demonstrate the practicality and effectiveness of the draft IRM

procedures in a variety of stack environments. EPA and EPRI are examining the length

of time required to perform the procedures and the efficacy of pre- and post-test dynamic

spiking, as well as the possibility of using SO

stratification test results as an indicator of

Hg stratification in the stack. Equipment manufacturers are also exploring equipment

design modifications to improve sample conditioning, reference method probe mobility,

and the integrity of the instruments during transport.

Field Demonstrations

Field demonstration tests currently in progress include a continuation of EPA’s work at a

coal-fired power plant in North Carolina and EPRI’s work at a field test site in Kentucky.

Substantial improvements in Hg CEMS and sorbent trap operation and performance have

been achieved at these two test sites. Testing was recently completed at a coal-fired

power plant in Pennsylvania in collaboration with Lehigh University, and additional

testing has commenced at a lignite coal-fired facility in Texas. The following paragraphs

describe these tests in more detail.

North Carolina Site Testing: At this dry stack location, EPA ORD has installed and

operated a Tekran CEMS since December 2004. In addition to the Tekran system, the

test team has evaluated Hg CEMS manufactured by Thermo, Horiba, GE/PS Analytical,

Forney/Genesis, Durag and Ohio Lumex. These evaluations include multiple

certification and relative accuracy tests as well as long-term daily calibration error tests

and weekly system integrity checks. Results of the testing effort include improvements

in instrument reliability as evidenced through increased data availability. More recently,

the North Carolina site has been used to demonstrate and optimize tools and approaches

for implementing the conceptual IRM, including the refinement of approaches for

dynamic spiking. The North Carolina test site is also being used to evaluate new and

innovative probes that can be used to meet the traversing requirements of the IRM.

Kentucky Site Testing: As mentioned in the February 2006 status report, the Kentucky

test site is now serving as an equipment and software development location for Hg CEMS

vendors and is considered to be representative of the most challenging measurement

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environment found among well-controlled boilers (i.e., it represents low temperature, low

Hg concentration, and high moisture flue gas conditions). EPRI has evaluated the

performance and reliability of CEMS manufactured by GE, Thermo, and Tekran at this

site, as well as sorbent trap systems made by Frontier Geosciences. Remaining CEMS

and sorbent trap performance issues continue to be addressed.

Participating equipment vendors are also developing and testing suitable probes for the

wet stack conditions encountered at the Kentucky site. One manufacturer is testing two

probe types simultaneously. Each of these new probes has shown promise, and has

significantly reduced the occurrence of plugging. On-going efforts are being made to

continue to improve probe reliability and reduce the amount of required maintenance and

repair. The Agency expects that industry and vendors will have reliable probes within

the next few months.

Other outstanding CEMS issues that have been identified at the Kentucky test site

include: (1) the need to reduce calibration drift; (2) the need for front-end humidification

to allow for dynamic spiking and daily calibration at the probe; and (3) the need to

optimize the position of the Hg converter in the sampling system (i.e., nearer to or farther

away from the probe). EPRI and industry experts are addressing these issues, however,

the same high level of commitment and support provided up to this point needs to be

maintained by all parties to ensure that these issues are satisfactorily resolved.

Lehigh Field Study: With support from EPA, EPRI, the Italian government, several

utility companies and others, the Lehigh University Energy Research Center (ERC)

organized a field test where reference methods for mercury, heavy metals and particulate,

which have been developed in the U.S. and the European Union (EU), were compared.

The field testing was begun in late June 2006 and was completed in July 2006. Testing

was conducted by a joint U.S. and European Union team at a power plant in

Pennsylvania. Western Kentucky University (WKU) provided a mobile mercury test

laboratory for the project.

As part of the Lehigh field study, EPA was able to satisfactorily perform many of the

procedures in EPA’s draft conceptual IRM, including dynamic spiking, calibration error,

and system integrity tests. The test team performed IRM test procedures on Hg CEMS

manufactured by Thermo Electron, Tekran, GE/PS Analytical and Ohio Lumex. In

addition, Frontier Geosciences and CONSOL/Clean Air performed Appendix K sorbent

trap monitoring. The Lehigh study provided a valuable opportunity to assess the amount

of time required to perform the IRM pretest activities and sample runs, and to develop

and optimize the dynamic spiking procedures. Due to time and resource constraints, only

limited traverse and stratification tests (using SO

as a surrogate) were undertaken.

These issues will be addressed more fully in future field tests. The results of the

conceptual IRM testing from the Lehigh study will be compared to those obtained with

paired Ontario Hydro trains.

We Energies Michigan Field Study:

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We Energies has been working with the Department of Energy on a mercury control

technology demonstration project at a Michigan test site, involving a ®TOXECON

baghouse and activated carbon injection to control mercury emissions from three electric

generating units. Hg CEMS manufactured by Thermo have been installed on the inlet

and outlet of the baghouse and have been operating without any significant problems for

several months. Baseline stack tests were conducted in February using the Ontario Hydro

reference method and the Appendix K sorbent trap method. In addition, CEMS relative

accuracy and IRM evaluation testing are scheduled to be performed later this summer or

in the fall.

Texas Lignite Field Study:

WKU, in conjunction with EPRI, is conducting three field tests on Tekran and Thermo

CEMS at a lignite-fired utility plant in Texas. The tests are scheduled to be completed

later this summer. Both relative accuracy and IRM evaluation testing will be conducted.

Stratification tests, using SO

as a surrogate for Hg, will also be performed during one of

the field tests.

Additional Field Tests:

EPRI and the U.S. Department of Energy performed relative accuracy tests of a Hg

CEMS and a sorbent trap monitoring system at another field site in Pennsylvania. IRM

evaluation tests were also performed. The IRM tests were conducted using batch-type

dynamic spiking.

Field tests of Thermo and Tekran CEMS and two sorbent trap monitoring systems have

also been performed at an Indiana power plant. These tests are part of EPA’s

Environmental Technology Verification (ETV) program. The verification testing

included two relative accuracy tests, the first of which was conducted in mid-June 2006

and the second in mid-July 2006. IRM evaluation testing was not done at this site.

Availability of Mercury Monitoring Systems

Approximately 1100 electric generating units (EGUs) are affected by CAMR. EPA

estimates that between 800 and 1000 mercury monitoring systems (i.e., Hg CEMS and

sorbent trap systems) must become commercially available between now and 2008, to

ensure that the affected EGUs will be able to meet the continuous emission monitoring

requirements of CAMR. The exact number of Hg monitoring systems that will be needed

to implement CAMR is somewhat uncertain, because: (1) some of the affected units are

in common stack configurations; and (2) at least 100 to 200 of the affected units are

expected to qualify as low mass emission (LME) units under Part 75 (§75.81(b)), and the

owners of these units may elect to perform periodic Hg emission testing rather than

installing mercury monitoring systems.

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The manufacturers of Hg CEMS have indicated that beginning in 2007 they will,

collectively, be able to produce well over 1000 CEMS per year. One vendor plans to

produce 600 Hg CEMS per year, and a second vendor plans to produce 60 CEMS per

month. A number of other monitoring equipment manufacturers also plan to increase

their production capabilities to meet the monitoring demands of CAMR. Based on these

projections, there will be more than enough Hg CEMS and sorbent trap systems available

to meet the requirements of CAMR, and there should be sufficient time for facilities to

install and certify the monitoring systems before the January 1, 2009 compliance

deadline.

Thus, EPA is confident that the CAMR monitor certification deadline will be met. The

Agency will continue to work with industry and with the equipment vendors to ensure

that the CAMR emissions monitoring program is implemented on schedule.

NIST- Traceable Hg Calibration Standards

NIST continues to provide assistance in developing Hg reference standards for elemental

and oxidized mercury. The existence of such reference standards is the first step in

developing the NIST-traceable Hg standards for use under Part 75. EPA ORD and NIST

are collaborating to develop calibration procedures for mercury gas generators and

cylinders. Gas generators calibrated by these procedures are expected to be available for

field tests during the fall of this year. These calibration procedures will serve as the basis

for drafting traceability protocols for elemental and oxidized mercury. The Agency also

expects that NIST-traceable gas standards and protocols will be available in fiscal year

2007 for use in certifying CEMS and sorbent trap monitoring systems.

Rulemaking Changes to Hg Monitoring Provisions in Part 75

EPA has proposed minor technical and procedural changes to the Hg monitoring

provisions of Part 75. The proposed changes were published in the Federal Register on

22 August 2006 and are expected to be finalized by early summer 2007. These changes

include adding EPA Method 29 (with additional QA provisions consistent with the

Ontario Hydro method) as an alternative reference method. Method 29 is similar to

Ontario Hydro, but is more familiar to stack testers. The method would be an option for

relative accuracy and LME tests.

The rule change proposal also addresses the testing and reporting requirements of

mercury LME units and provides changes to the common stack provisions. EPA will

also solicit comment on how to equitably apply the LME provision to units which, in

addition to coal, burn fuels that have very low Hg content. The rule currently assumes

that only coal is burned in these units.

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STATE OF ILLINOIS

)

COUNTY OF SANGAMON

)

CERTIFICATE OF SERVICE

I, the undersigned, an attorney, state that I have served electronically the attached

POST-HEARING COMMENTS OF THE ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY upon the following persons:

Dorothy Gunn

Clerk

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph St., Suite 11-500

Chicago, IL 60601-3218

SEE ATTACHED SERVICE LIST

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY,

__________________________

Gina Roccaforte

Assistant Counsel

Division of Legal Counsel

Dated: September 20, 2006

1021 North Grand Avenue East

Springfield, Illinois 62794-9276

(217) 782-5544

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SERVICE LIST 06-25

Marie Tipsord

Hearing Officer

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph St., Suite 11-500

Chicago, IL 60601-3218

77 West Wacker, Suite 4100

Special Assistant Corporation Counsel

Office of Public Utilities

800 East Monroe

Springfield, IL 62757

S. David Farris

Environmental, Health and Safety

Manager

Office of Public Utilities

City of Springfield

201 East Lake Shore Drive

Springfield, IL 62757

Faith E. Bugel

Howard A. Lerner

Meleah Geertsma

Environmental Law and Policy Center

205 West Monroe Street, 4th Floor

Chicago, IL 60606

Christopher W. Newcomb

Karaganis, White & Magel, Ltd.

414 North Orleans Street

Springfield, IL 62705-5776

233 South Wacker Drive

122 W. Washington Ave., Suite 830

Madison, WI 53703

James W. Ingram

Senior Corporate Counsel

Dynegy Midwest Generation, Inc.

1000 Louisiana, Suite 5800

Houston, TX 77002

Dianna Tickner

Prairie State Generating Company, LLC

St. Louis, MO 63101-1826

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Daniel McDevitt

General Counsel

Midwest Generation, LLC

440 S. LaSalle Street, Suite 3500

Chicago, IL 60605

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