NOTICE OF FILING
SUMMARY OF THE CASE AND THE ISSUE PRESENTED
DISCUSSION
B. No Adverse Environmental Impact Is Occurring
CERTIFICATE OF SERVICE

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PROPOSED EXTENSION OF ADJUSTED STANDARD

)

AS 2007-2

APPLICABLE TO ILLINOIS

-AMERICAN

)

(Adjusted Standard)

WATER COMPANY'S ALTON PUBLIC WATER

)

SUPPLY FACILITY DISCHARGE

)

TO THE MISSISSIPPI RIVER

)

NOTICE OF FILING

John Therriault, Assistant Clerk

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph Street, Suite 1 1-500

Chicago, Ilinois 60601

William Richardson, Chief Legal Counsel

Illinois Department of Natural Resources

One Natural Resource Way

Springfield, Illinois 62702

Matthew J. Dunn

Division Chief, Environmental Enforcement

Illinois Attorney General

100 West Randolph Street,

1 2th Floor

Chicago, Illinois 60601

Thomas M.

Andryk

Division of Legal Counsel

Illinois Environmental Protection Agency

102 1 North Grand Avenue East

P.O. Box 19276

Springfield, Illinois 62794-9276

Sanjay Sofat

Division of Legal Counsel

Illinois Environmental Protection Agency

102 1 North Grand Avenue East

P.O. Box 19276

Springfield, Illinois 62794-9276

Carol Webb

Hearing Officer

Illinois Pollution Control Board

102 1 North Grand Avenue East

P.O. Box 19274

Springfield, Illinois 62794-9274

PLEASE TAKE NOTICE that on July 2,2007, the PETITIONER ILLINOIS-

AMERICAN WATER COMPANY'S RESPONSE TO THE RECOMMENDATION OF THE

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY was filed with the Clerk of the

Pollution Control Board. A copy is herewith served upon you.

Respectfully submitted,

St. Louis, MO 63 101

Telephone: (3 14) 345

-6000

Facsimile: (3 14) 345

-6060

An Attorney for Petitioner

Electronic Filing, Received, Clerk's Office, July 2, 2007

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PROPOSED EXTENSION OF ADJUSTED STANDARD

)

AS 2007-2

APPLICABLE TO ILLINOIS

-AMERICAN

(Adjusted Standard)

WATER

COMPAW'S ALTON PUBLIC WATER

SUPPLY FACILITY DISCHARGE

TO THE MISSISSIPPI RIVER

)

Petitioner, Illinois-American Water Company ("Illinois-American Water"), by its

attorneys, Bradley S. Hiles and Alison M. Nelson, submits its response to the Recommendation

Of The Illinois Enviro

ental Protection Agency (the

"Agency Recommendation

') pursuant to

35 Ill. Adm. Code 104.4

16(d). The Agency Reco

endation, which was filed with the Board

on June 15,2007 and served on Illinois-

erican Water by U.S. Mail on June 18,2007,

recommends that the Illinois Pollution Control Board (the

"Board") deny Illinois-American

Water's request for an adjusted standard.

SUMMARY OF THE CASE AND THE ISSUE PRESENTED

Illinois-American Water's Petition for Extension of Adjusted Standard, as amended by

the Amended Petition for Extension for Adjusted Standard, asks the Board to extend Adjusted

Standard 99

-6 to provide Illinois-American Water with relief from the effluent standard for total

suspended solids at Section 304.124; the effluent standard for total iron at Section 304.124; and

the effluent standard for offensive discharges at Section 304.106. The Agency Recommendation

asserts that Illinois

-American Water has failed to satisfy the requirements specified in Section

28.1

deny Illinois

-American Water's request for an extension of the adjusted standard. Essentially,

Electronic Filing, Received, Clerk's Office, July 2, 2007

therefore, the Agency suggests that the adjusted standard terminate this year and that Illinois-

erican Water treat its effluent. This stands in stark contrast to the Agency's position in 2000,

when it proposed that only an

"insurmountable failure" of the Piasa Creek Watershed Project

(

"the Project") would trigger treatment of the Alton plant's effluent.

See

the Agency's Final

Brief (June

20,2000), AS 99-6 at 5.

The Agency's Recommendation should be rejected. Far from being an insurmountable

failure, the Project has hit, and even exceeded, its target years ahead of schedule. But the

Agency's Reco

endation is notably silent on the Project's success. Instead, the Agency

advances arguments which are fatally flawed. The Reco

endation suggests, for example, that

the situation at Illinois

-American Water's Alton plant (the "Alton plant" or "Alton facility")

must be "substantially or significantly different from [six] other facilities in the State

' in order to

warrant an extension.

See

Rec. at

3 1. That argument distorts the "substantially and

significantly different

" standard established by the Illinois legislature and should not be adopted

by the Board. The other facilities mentioned by the Agency do not bear any relationship to the

Alton facility, Piasa Creek or the Mississippi River. Moreover, none of those facilities have

applied for adjusted standards related to soil conservation programs.

The Agency also argues that

USEPA has "refined" its view on pollutant trading since AS

-6 was issued.

See

Rec. at

3 1. But the Agency's main authority for that proposition is a

"Frequently Asked Questions" publication on EPA's website. The Agency cannot cite binding

legal authority, for none exists.

In reality, EPA's stance on pollutant trading is the same today as

it was when AS 99

-6 was decided. If EPA opposed this adjusted standard, their voice would

have been heard before the Board in 1999 (in connection with AS 99

-6). Recent

pronouncements

fiom EPA headquarters officials are quite different fiom the position suggested

Electronic Filing, Received, Clerk's Office, July 2, 2007

by the Agency. At a time when EPA is contemplating the promulgation of effluent standards for

water treatment plants, EPA officials are considering offset projects in the regulatory mix.

fact, the Piasa Creek Watershed Project, in particular, is part of that analysis, according to EPA.

And it should be. Seven years ago, the Board's decision in AS 99

-6 launched what many

believe is the nation's most successful offset project for solids. Despite the Recommendation's

silence on the issue, the Project has already exceeded expectations. As long as the

2: 1 ratio is

maintained (along with 6,600 tons of soil saved, at a minimum), an indefinite extension of the

adjusted standard is warranted. Settlement lagoons and landfilling of dewatered solids, which is

the Agency's apparent desire, cannot compare to the elimination of 6,600 tons of solids (at least)

from the Piasa Creek and the Mississippi River. At its average flow of 8.99 million gallons per

day, the Alton facility returns approximately 1,600 tons of TSS to the Mississippi River each

year.

See

Amended Pet. at

47,48.' So, the elimination of 6,600 tons represents a greater than

4: 1 offset, presently. Success of this magnitude should be rewarded with an extension, not

terminated.

For the reasons identified below, Illinois

-American Water has satisfied all applicable

requirements to justify issuance of an adjusted standard, and respectfully requests that this Board

grant

Illinois-Amenican Water the relief it requests.

As the Agency correctly observes, the facility's TSS and iron loading could increase if the plant increases its

capacity to 16

MGD, the maximum daily flow rate for the facility.

See

Agency Rec. at 79. However, the Agency

fails to mention that even at maximum capacity, the estimated tons of solids discharged

from the facility would be

only 2,846

approximately

500 tons less

than the number of tons estimated at the time Adjusted Standard 99-6

was issued.

See

Amended Pet. at 747. Even at maximum flow, the soil savings would still meet the 2-to-1 ratio.

Electronic Filing, Received, Clerk's Office, July 2, 2007

DISCUSSION

ILLINOIS-AMERICAN WATER)§ AMENDED PETITION PROVIDES THE GENE

OF JUSTIFICATION REQUIRED

UNDER SECTION 28.1(~)

The Agency Advances an Improper Interpretation of Section 28.l(c) that the

Board Should

Not Adopt.

The Board may grant an adjusted standard if it

determines that Illinois-American

Water meets the general level of justification required under Section 28.1 (c) of the

~ct.~

The

essence of Section 28.1 (c) is that factors relating to that petitioner are substantially and

significantly different from the factors relied upon by the Board in adopting the Regulations of

General Applicability.

Illinois-

erican Water's implementation of the Piasa Creek Watershed

Project is substantially and significantly different

from the factors relied upon by the Board in

adopting the effluent standards for total suspended solids and iron. The Board has already

rendered that decision when it reviewed the request for an adjusted standard in 2000.

In fact, the

Board rendered a final decision on this issue, and principles of res judicata and collateral

estoppel prevent the Agency

from retrying that decision now.

The Compliance Decisions Made By Other Facilities

In The State Are Not

Relevant To The

"Substantially And Significantly Different

? Analysis

The Agency's Recommendation mentions the

"substantially and significantly

different

" standard. But the Agency distorts the standard well beyond its statutory boundaries.

In fact, the Agency rewrites the standard to be

"substantially and significantly different from the

other facilities in the State.

" (Agency Recommendation

1, emphasis added). The

Section 28.l(c) provides that the Board may grant an adjusted standard whenever it determines that 1) "factors

relating to that petitioner are substantially and significantly different

from the factors relied upon by the Board in

adopting the general regulation applicable to that petitioner; 2) the existence of those factors justifies an adjusted

standard;

3) the requested standard will not result in environmental or health effects substantially and significantly

more adverse than the effects considered

by the Board in adopting the rule of general applicability; and 4) the

adjusted standard is consistent with applicable federal law.

" (emphasis added).

Electronic Filing, Received, Clerk's Office, July 2, 2007

underscored words do not appear in Section

28.l(c) of the Act. The Board should not accept the

Agency's invitation to rewrite the statute.

Noticeably missing from the Agency's Reco

endation is an argument

addressing the actual language of the

"substantially and significantly different" standard.

Instead, the Agency attempts to draw attention to the treatment options employed by other

facilities and the soil conservation projects undertaken by other

permitted entities. Basically, it is

the Agency's desire that Illinois

-American Water should be on a "level playing field" with other

regulated entities. However, the statute does not contemplate an industry

-wide comparison.

Instead, the language of Section 28.1 (c) expressly limits the Board's inquiry to

Illinois-

Water: "[Flactors relating to that petitioner are substantially and significantly different..

(emphasis added). Had the Illinois legislature intended for the Board to consider an entire

industry sector, it would have chosen different statutory language.

The "level playing field" argument suggests that, because other facilities conduct

soil conservation but have not received relief from the regulations of general applicability,

Illinois

-American Water should not receive such relief either.

See

Agency Rec. at 71

(observing

that

"[n]o relief has been granted to Springfield to allow lesser or no treatment of its water plant

wastewater in exchange for soil conservation efforts

");

id.

("Ameren receives no relief from

applicable wastewater discharge control requirements for these efforts.

");

id.

(noting that the

table

"provides additional examples of regulated facilities in the State that are conducting soil

conservation projects to protect source water without requesting relief from applicable effluent

standards

");

id.

at 716 ("In fact, these other facilities have been consistently complying with the

effluent limits and requirements regarding TS

S, total iron, and offensive discharges. "). The

water conservation practices of these other facilities are laudable, but those projects differ from

Electronic Filing, Received, Clerk's Office, July 2, 2007

the Piasa Creek Watershed Project. (A comparison is set forth in

7 below). Even if the

conservation efforts were comparable, which they are not, none of the entities identified by the

Agency have applied for adjusted standards connected to their soil conservation

programs.3 It

does not make sense for the Agency to compare other entities which do not have an adjusted

standard when there is no evidence they ever requested an adjusted standard. More importantly,

erican Water should not be denied an extension of the adjusted standard in this case

just because others have not sought adjusted standards for themselves. Applying the level

playing field approach will put an end to adjusted standards in Illinois. At the very least,

petitioners with

successfbl offset projects will be pulled down to the comparison level of the

state's least

fruitful offset project. The weakest offset project will become the least common

denominator for all, discouraging innovation and success.

In its brief, the Agency implies that Illinois-American Water receives some sort of

competitive advantage by avoiding the regulations of general applicability and

"is thus seeking

to avoid what other facilities in the business of providing drinking water do to achieve

compliance with the State effluent standards.

See

Agency Rec. at 714. This assertion is simply

wrong. Illinois

-American Water does not compete with other water treatment facilities, in

Illinois or elsewhere. Illinois

-American Water has a defined area of service, and there are no

other water treatment plants located within that area of service that could compete with it.

Even if the factors relating to other facilities were relevant, the Agency provides

insufficient

information to support the Agency's arguments. For instance, the Agency offers the

City of Springfield water treatment plant, the City of Decatur treatment plant, and the City of

In 1994, the City of Springfield's City Water, Light

Power facility ("CWLP") was granted a partial adjusted

standard with respect to its discharge of boron

fiom two of four outfalls into Sugar Creek.

See

AS- 94-9. The

discharge at issue involved

CWLP's coal-fued power plant, however, and not its water plant. That adjusted

standard pertained to Sugar Creek, and was unrelated to the City's soil conservation measures in the Lake

Springfield watershed.

Electronic Filing, Received, Clerk's Office, July 2, 2007

Greenville treatment plant as examples of facilities that conduct soil conservation projects "to

protect source water

" without requesting relief from applicable effluent standards,

see

Agency

Rec. at

15. But the Agency fails to provide facts to determine whether those projects are

comparable to the Project.

In reality, the are not. This is not a negative co

facilities identified by the Agency. Their conservation efforts are to be commended. But their

projects are substantially different

fkom the Piasa Creek Watershed Project.

All of the other projects identified by the Agency involve lakes, which differ

from

the Mississippi River as a source of drinking water. Lakes are reservoirs for water plants.

Reservoirs will eventually fill with sediment without control measures. So, financial

contributions connected to sediment reduction measures at these lakes, while laudable, also

happen to be necessary to ensure a future source of water. Conservation measures in the Piasa

Creek Watershed are not necessary to assure a lasting supply of water because the Mississippi

River will never fill with sediment at the intake location of the Alton facility. These lake

projects also involve other economic interests of the NPDES permit holders and their business

partners. For example, the City of Springfield cares for the water quality of Lake Springfield for

the beneficial use of its citizens. City Water Light

Power, which manages Lake Springfield

for municipal drinking water supply purposes, also manages 735 residential lake leases on Lake

Springfield. The

Kinkaid Area Water System is also a multiple use management organization

involved in water treatment and recreational use of Lake

Kinkaid. The Otter Lake Water

Commission owns Otter Lake and all of the land surrounding that

lake.4 The City of Greenville

has a somewhat different motivation for sediment control.

Its source water is Governor Bond

American Water Company implements environmental stewardship measures at many facilities corporate-wide

including some locations in Illinois, and does not intend for Paragraph

7 to be misinterpreted as criticism of the

projects cited by the Agency. However, the Project was not implemented because of economic and business reasons

which may have motivated, at least

in part, actions taken by some of these other permit holders.

Electronic Filing, Received, Clerk's Office, July 2, 2007

Lake, which has been listed as an impaired water for recreation, swi

ing and overall use. The

City of Greenville should be co

ended for its conservation efforts (as should the other

municipalities and

eren), but

Greenville is engaged in anti-deyadation efforts in connection

with an impaired waterbody. The Agency has not presented any information to suggest that any

of these facilities even approach the 2: 1 offset achieved by

Illinois-

erican Water. In point of

fact, any comparison here is an apples

-to-oranges effort.

The Agency's focus on other facilities draws attention away fiom the appropriate

determination for this Board: whether the factors relating to the Alton facility are substantially

and significantly different

fiom the factors considered at the time the regulations of general

applicability were promulgated.

Ths determination does not require

or even permit

the

Board to consider what other facilities do or fail to do regarding methods of conservation. If this

were relevant, adjusted standards would almost never be granted.

The Board's Intent In 1972 To Establish A Uniform Baseline Of

Technological Treatment Does Not Preclude the Board From Granting

Adjusted Standard To Illinois-American Water In These Circumstances

The Agency cites to a 1972 opinion by this Board to establish that

"[tlhe Board's

basic intent in adopting the effluent requirements in

[35 Ill. Adm. Code 304.1241 was to provide

a uniform baseline of technological treatment provided by all facilities discharging into waters of

the State.

" Illinois-American Water does not dispute that the Board intended to establish

minimum requirements for treatment, but this does not preclude the Board

from granting an

adjusted standard from such minimum requirements in appropriate circumstances, like those

presented in this case. In fact, the adjusted standard mechanism was created to give the Board

this option when appropriate. As the Agency itself observes, the purpose of the minimum

requirements is to

"require[] people who are not doing that good a job to [do] what everybody

Electronic Filing, Received, Clerk's Office, July 2, 2007

else is paying for," and to "prevent local nuisances, to avoid premature exhaustion of

assimilative capacity, and to

fbrther the established federal and state policy against degradation

of clean water.

See

Agency Rec. at 71 2 (citing Board orders from the 1 972 proceedings). Given

the incredible success of the Project, the Agency can hardly argue now that Illinois

-American

Water is

"not doing that good a job." To the contrary, Illinois-

erican Water is actually

increasing the assimilative capacity of the Mississippi River and enhancing the quality of the

River water

the Project prevents two tons of sediment

from 

entering the Mississippi River for

every one ton of sediment that Illinois

erican Water returns to the River in its discharge.

Thus, application of a

minimum technology-based standard in this case is unnecessary to meet

the standards.

10.

In addition, the 1972 proceedings also recognized that in some cases, the use of

uniform minimum requirements is inappropriate. In its January 6, 1 972 order, the Board

determined that facilities that took in water with high levels of

background concentrations of

contaminants should not be required to spend money to clean up contaminants that were already

in the water. The Board concluded that such facilities should be dealt with on a case

-by-case

basis instead of being held to a uniform standard.

See

Effluent Criteria, Water Quality Standards

Revisions, Water Quality Standards Revisions for Intrastate Waters (S WB 1 4) (Jan. 6, 1

972),

R70-8, R7 1

14, R7 1-20, slip op. at 14. In other words, the orders cited by the Agency actually

support the use of case

-by-case standards where, as here, there is a high level of sediment in a

facility's raw water source. A grant of indefinite relief

from technology-based controls

therefore consistent with the Board's intent.

In several places throughout the Agency Recommendation, the Agency refers to the relief requested by Illinois-

American Water as "permanent." However, the discussion of the requested relief in the Amended Petition, as well as

the language of the proposed order itself, proposes an adjusted standard of indefinite duration but also clearly

Electronic Filing, Received, Clerk's Office, July 2, 2007

1 1.

Notably, the principles established in the 1972 proceedings are not newly before

the Board. In the proceedings on Adjusted Standard 99

-6, the Board reviewed the very orders

relied upon now by the Agency and did not attach any significance to the language the Agency

now highlights.

See

Order and Opinion of the Board at 9 (Sept. 7,2000). Rather, the Board cited

to the 1972 orders to establish that the

Board's effluent concerns with respect to TSS are

increased turbidity and

"harmful bottom

deposits,"

see

id., and that the Board's concern with

respect to iron is that

"excessive iron can cause a nuisance for domestic uses or undesirable

bottom deposits.

See

Order of the Board at 3 (Oct. 19,2000). After its consideration of these

concerns, the Board specifically stated that

"[tlhe factors relating to [Illinois-

are substantially and significantly different than the factors which the Board relied upon in

adopting the regulations at issue herein.

See

Order and Opinion of the Board at 9 (Sept. 7,

12.

Also conspicuously absent

from the Agency's Recommendation is any

acknowledgement that the Agency itself considered the Piasa Creek Watershed Project a

substantially and significantly different factor during the proceedings on Adjusted Standard AS

-6. In its response to Illinois-American Water's 2000 Amended Petition, the Agency

supported Illinois

-American Water's request for relief, noting that Illinois-

"is proposing a 'treatment program' that was not contemplated in the Board's

general effluent standards, whose underlying assumption was

an amount of

reduction in suspended solids achievable by a technology applied to the

wastewater. In the present case, reductions in suspended solids in the

provides that the relief will terminate if certain conditions are not satisfied.

See

Amended Pet. at 774 ("The relief

granted by the adjusted standard should be indefinite in nature, and should expire if (a) the Board determines that the

conditions of the Mississippi have changed such that the adjusted standard is made obsolete or infeasible; (b) the

average offset for the calendar year in question and the four preceding calendar years fails to reach a

2 to 1 offset for

the total suspended solids as a result of a change in the condition of the Mississippi, increased capacity of the

Alton

facility, or for any other reason; or (c) the soil savings of the Piasa Creek Watershed Project is reduced below 6,600

tons of soil per year.

"); Attachment F to Amended Petition at Section 6.

Electronic Filing, Received, Clerk's Office, July 2, 2007

Mississippi River are proposed to be achieved through physical methods applied

in the Piasa Creek watershed; the amount of these reductions is not limited by

the effectiveness of the technology that would

othemise be used to reduce the

sediment loading in [Illinois

erican Water] 's discharge, i. e., settling, which

is the technology considered by the Board in adopting the general effluent

standards.''

See

Agency Amended Response to Petition for Adjusted Standard at 12- 13 (June 22,2000)

(emphasis added). When the same program is being presented today, the Agency has not offered

a single reason why the Project should not still be considered substantially and significantly

different (using

conect language fiom 28.1 (c)). In fact, the only thing that has changed since the

Agency concurred with Adjusted Standard 99

-6 is that the Project has proven to be more

successful than the parties anticipated.

No Adverse Environmental Impact Is Occurring

13.

With respect to possible adverse

environmental impacts, the Agency offers the

following conclusory statement:

"[a]n adverse incremental effect on the water quality of the

Mississippi River is occurring and will continue to occur if Illinois

erican does not apply the

technology

-based treatment standards."

See

Agency Rec. at 71 6. This statement is an

unsupported conclusion. The Agency presents no evidence for its assertion, and fails even to

elaborate on what it means by

"incremental effect." In fact, just the opposite is true. The 2 to 1

offset results in a net reduction, so that for every pound of solids entering the Mississippi (solids

which came fiom the river originally), two pounds of solids are prevented fiom entering the river

upstream. Also, this argument conflicts with the Board's finding in the proceedings on AS 99

-6

that

"the untreated discharge fiom the new facility, provided it occurs in the context of the GRLT

Project, will not harm human health and will protect aquatic life

immediately downstream of the

discharge.

See

Order and Opinion of the Board at 19 (Sept. 7,2000). The Agency has not

introduced any change that would alter the Board's conclusion in 2000. Thus, the Agency's

Electronic Filing, Received, Clerk's Office, July 2, 2007

inaccurate and conclusory statement therefore should not be given any weight in the Board's

analysis.

The Adjusted Standard Is Consistent

With

Federal Law

14.

At the time it granted

illinois-

erican Water's petition for an extension in 1999-

2000, this Board clearly recognized that Adjusted Standard 99-6 was consistent with federal law.

See

Opinion and Order of the Board (Sept. 7,2000) at 20 ("Standards adopted in compliance

with the Board's adjusted standard procedure that do not adversely affect the designated uses of

a water body are consistent with federal law. The designated uses of the Mississippi will not

change pursuant to the grant of this adjusted standard.

");

id.

at 20 ("The Board finds that the

requested adjusted standard is consistent with existing federal law.'').

15.

Res judicata and collateral estoppel prevent the Agency from retrying the

adjusted standard. Res judicata is the legal doctrine providing that

"once a cause of action has

been adjudicated by a court of competent jurisdiction, it cannot be retried again between the

same parties or their privies in a new proceeding.

See Cole Taylor Bank v. Rowe Industries,

Inc.,

PCB 0 1

173 (June 6,2002) (quoting

Burke v. Village of Glenview,

257 Ill. App. 3d 63,69,

628 N.E.2d 465,469 (1st Dist. 1993) (quotation marks omitted). The elements of res judicata

are: (1) a final judgment on the merits rendered by a court of competent

jurisdiction6; (2) an

identity of cause of action; and (3) an identity of the parties.

See People v. Jersey Sanitation

Corp.,

PCB 97-2, slip op. at 4-5 (April 4,2002). Even if res judicata does not apply, collateral

estoppel applies to preclude the Agency from relitigating the issue of consistency with federal

law.

See People of the State ofIllinois v. Communiv Landfill Co., Inc.,

PCB 03-191, slip op. at

Although this element generally refers to a final judgment by a "court of competent jurisdiction9" the same

principles apply to decisions of this Board.

See People of the State of Illinois v. Community LandJill Co., Inc.,

PCB

-19 1, slip op. (Feb. 16,2006) (reviewing a claim that res judicata applied to the Board's decision in a previous

proceeding, but holding that res judicata did not apply

"between PCB 0 1

170 and this proceeding" only "because

there is no required identity of causes of action

").

Electronic Filing, Received, Clerk's Office, July 2, 2007

15 (Feb. 16,2006) (recognizing that collateral estoppel can apply "even where the requirements

of res judicata are not met

"). The elements of collateral estoppel are: (1) the issue decided in the

prior adjudication is identical with the one presented in the instant matter; (2) there was a final

judgment on the merits in the prior adjudication; and (3) the party against whom estoppel is

asserted was a party in privity with a party to the prior adjudication.

Cole Taylor Bank

v.

Rowe

Industries,

Inc.,

PCB 01-173 (June 6,2002).

16.

Here, the parties before the Board are the

same, and the Board issued a final

judgment on the merits in Adjusted Standard

99-6. Res judicata applies because the

Petition in this case states an identical cause of action to that in Adjusted Standard 99

-6

erican Water must establish all of the same factors for issuance of an adjusted

standard, and nothing has changed since AS 99

-6 was issued (except that the Project has

achieved its goal). The existing physical characteristics, the character of the area (including

surrounding land uses and zoning classifications), the nature of the receiving water, and the

technical feasibility and economic reasonableness of treatment are the same. The only new

information available to the Agency is the proven success of the Project, which certainly does

not justify retrying the appropriateness of

an adjusted standard

if anything, it further supports

the Board's decision to issue AS 99

-6 and to extend it now. Further, if the cause of action

presented in

Illinois-

erican Water's Amended Petition is not identical to that in AS 99-6, the

issue presented here is clearly identical. Collateral estoppel precludes the Agency

from retrying

this issue because this Board has already determined that a 2 to 1 offset for TSS and iron is

consistent with federal law, and nothing about that federal law (including the

U. S

Environmental

Protection Agency's

("EPA's") position on trading) has changed.

Electronic Filing, Received, Clerk's Office, July 2, 2007

17.

The Agency contends that the "concepts of pollutant trading.. .have been refined

at the federal level

' since AS 99-6 was issued.

See

Rec. at

3 1. That is not the case. There are

no provisions in the Clean Water Act regulating offset projects as either a substitute or

complement for treatment.

In addition, EPA has not promulgated any regulations addressing the

use of offset projects instead of or in addition to treatment. Statutes and regulations comprise the

body of law that is binding on this Board, and both are silent on the issue. The Agency

wrongfully reads EPA

s silence on the issue as prohibiting trading even though no federal

technology

-based effluent guidelines for water treatment facilities exist, a conclusion which is

clearly not supported by federal law. When EPA decides to regulate in this area of law, it knows

how to do so in order to maximize the binding effect of its regulation

by promulgating a

regulation through notice and co

ent rulemaking. No such rulemaking has occurred since AS

-6 was issued. The Board has unquestioned legal authority, through Section 28.1 (c) of the

Act, to grant an adjusted standard

from Illinois effluent standards. The Board has already

decided that Illinois' effluent standards for TSS and total iron (35

Ill. Adm. Code 304.124) will

not apply to the effluent from the Alton facility.

18.

The authority cited by the Agency falls far short of legal justification. The

Agency's

"authority" is a few statements on the Frequently Asked Questions page of EPA's

website: not a federal statute, not a federal regulation, and not even a formally-adopted

statement of federal policy. The regulated community is not bound by so-called

FAQs

pages

posted on a

website, as such statements have no weight as a matter of law. The source of the

Agency's support in itself highlights the

weakness of the Agency's argument. If a sediment

offset program conducted by a water treatment facility in the absence of any

federally-

promulgated effluent standards were clearly inconsistent with federal law, the Agency would

Electronic Filing, Received, Clerk's Office, July 2, 2007

certainly cite to more weighty and binding authority than this. In the absence of federal laws

preempting this field for action by the Board, the issuance of an adjusted standard cannot be

'5n~onsistent~~

with federal law.

19.

In addition, the Agency cites the EPA

webpage material out of context. For

instance, the second statement cited by the Agency regarding baselines states that

"[a] point

source seller should meet its most stringent effluent limitation before it can generate

credits."

See

Agency Rec. at 71 7. However, if this were a trading program involving credits,' Illinois-

erican Water would be the point source purchaser, not the seller. This statement therefore

indicates only that a party generating credits (which here would be the Great Rivers Land Trust)

must meet all standards applicable to it before it could sell credits to another party. This is only

logical, because a party that is itself violating an applicable effluent limitation should not be

permitted to sell its

"excess" capacity to another entity. This attempted analogy by the Agency is

clearly not the situation presented in this case.

20.

The Agency also cites (without comment) to an EPA guidance document,

Final

Water Quality Trading Policy,

dated January 13,2003, in further support of its position that a

change in policy has occurred at the federal level. But the federal trading guidance in place at

the time Adjusted Standard 99

-6 was issued included the same applicable principles.

See

EPA,

Effluent Trading In Watersheds Policy Statement, 61 Fed. Reg. 4,994 (Feb. 9, 1996) (

"To take

advantage of trading, a point source must be in compliance, and remain in compliance, with

applicable technology

-based limits."), available at http://www.epa.gov/fedrgstr/EPA-

WATEW1 996lFebruarylDay-09Ipr-230.html. Neither the Agency nor the Board interpreted this

Offset programs are one of four common conceptual models for water-quality trading. Other models include

managed trading, trading associations, and marketlike trading programs, each of which generally involve the

exchange of credits between buyers and sellers.

See generally

Cy Jones, Lisa Bacon, Mark S. Kieser

David

Sheridan, Water

-Quality Trading: A Guide For The Wastewater Community at Chapter 2 (2006).

Electronic Filing, Received, Clerk's Office, July 2, 2007

statement of policy to prohibit the issuance of Adjusted Standard 99-6. Just as the 1996 policy

statement did not prohibit issuance of AS 99

-6, nearly-identical statements in EPA's 2003

guidance similarly should not prohibit the extension of the adjusted standard at this time.

2 1.

To summarize: Statutes and notice

-and-co

ent mlemakings ought to apply in

adjusted standard cases, not

FAQs

sheets and EPA guidance. But even if

FAQs

sheets and

guidance could be considered, neither is applicable here, because there are no federal

technology

-based effluent standards for water treatment plants. Moreover, the Agency is wrong

to suggest that federal policy has changed. The same principles the Agency advocates

fiom

EPA's 2003 guidance can be found in EPA's 1996 guidance.

The Possibility of Federal Effluent Limits for Water Treatment Plants Is Not

a Basis for Denying the Extension.

22.

The Agency correctly notes that

USEPA is studying the development of

categorical effluent limitations for water treatment plants. That should not influence the Board' s

decision in this case. EPA studies are just that

studies

and do not impose substantive

requirements until after final rulemaking. The Agency, itself, comments that final federal action

is not anticipated until December 2009

over two years after the adjusted standard would go into

effect.

See

Agency Rec. at 719. But there are no guarantees that EPA will establish an effluent

limit that will affect the proposed extended adjusted standard. In addition, the Agency's

prediction of December 2009 is speculative, at best.

USEPA must go through notice-and-

comment rulemaking in order to establish categorical effluent limits. The rulemaking will attract

public comments

from a host of stakeholders, enviro ental groups and states. EPA may need

considerable time to review such a volume of comments. A second proposed

rulemaking could

follow, with a similar delay for the consideration of co

ents. Other

EPA rulemakings have

taken more than two years. When EPA established effluent standards for the metal products and

Electronic Filing, Received, Clerk's Office, July 2, 2007

machinery sector, it proposed a rule on April 23, 1990.

See

55 FR 168 18-01 (April 23, 1990).

Twelve years later, EPA published a final rule.

See

67 FR 33865-01 (May 13,2002). To

suggest that this Board should not act before the federal standards are promulgated, or that this

Board should shape its decision on the basis of a federal action that

may

(or may not) affect the

action now before the Board, is simply inappropriate. If this Board were to base its decisions on

speculation regarding federal actions that might materialize years hence, no decisions could be

made with any certainty.

23.

There is, in fact, a more compelling reason to extend the adjusted standard while

EPA ponders possible effluent limits for water treatment plants. EPA may include trading

programs in its regulatory scheme. Representatives from the Agency and Illinois

-American

Water participated in a teleconference with officials from

EPA9 s headquarters and Region V

offices on June 15,2007. Headquarters officials advised that EPA is considering a technology-

based standard that may include trading as an option. During that teleconference, an Illinois-

American Water representative invited EPA to examine the Piasa Creek Watershed Project in

developing such a standard.

An EPA official replied "We already are." And why not? The

Project may be the most successful

TSS offset program in the nation. Great Rivers Land Trust

representatives are invited speakers at watershed conversation

propams across the country. It is

no wonder EPA would consider a trading program that leaves the river cleaner than it otherwise

would be if the Alton plant merely engaged in settlement lagoon treatment.

24.

Notably, the very guidance document which the Agency cites in support of its

"changing federal policy" argument foreshadows the likelihood that EPA will include trading in

future technology-based effluent standards for water plants. The Policy observes that "EPA will

consider including provisions for trading in the development of new and revised technology

Electronic Filing, Received, Clerk's Office, July 2, 2007

based effluent guidelines and other regulations to achieve technology-based requirements, reduce

implementation costs and increase enviro

ental benefits.

See

Water Quality Trading Policy at

6 at 7 28. At this point, no one can say for sure whether EPA will issue federal categorical

effluent limits. If issued, those limits may be less stringent than Illinois' applicable limits. The

limits may include an offset component consistent with, or modeled upon, the adjusted standard

requested of the Board in the present case. In any case, the adjusted standard proposed by

Illinois

-American Water empowers the Board to terminate the adjusted standard if contrary

federal regulations are promulgated. The specific provision contained in paragraph

8 of the

proposed order is as follows:

Notwithstanding the terms set forth herein, if new regulations are promulgated

that limit or

prohbit Illinois American Water's discharges to the Mississippi or

otherwise conflict with this adjusted standard,

Illinois-

erican Water will be

bound by any such regulations, and modification or termination of the adjusted

standard may be required.

In the event that the adjusted standard is modified or

terminated, Illinois

-American Water may terminate any contracts entered

pursuant to Sections

5(c) or 5(d) above.

II.

THE ADDITIONAL JUSTIFICATION FACTORS ADDRESSED BY THE

AGENCY HAVE ALREADY BEEN ADDRESSED BY

ILLINOIS-AMERICM

25.

The Agency also presents, as a separate argument, additional factors that this

Board must consider under its analysis for issuing an adjusted standard. These factors include the

existing physical conditions at the facility; the character of the area involved, including

surrounding land use; zoning classifications; the nature of the receiving water body; and the

technical and economic reasonableness of measuring or reducing the particular type of pollution.

See

Agency Rec. at 720. However, these factors are already addressed in Illinois-American

Water's Amended Petition under its discussion of the informational requirements under 35 Ill.

Electronic Filing, Received, Clerk's Office, July 2, 2007

Adm. Code 104.406.

See

Ill. Adm. Code 104.406 (implementing 415 ILCS 27(a)).

See

ended Pet.,

a

48.

26.

The Agency does not appear to reco

end denial of the adjusted standard on the

basis of the existing physical conditions at the facility and the character of the area involved,

including surrounding land uses, zoning

classification^,^ and the nature of the receiving body.

See

Agency Rec. at 7721 -24, because it merely identifies facts relevant to four of the factors

identified in Section

27(a) of the Act but does not present any argument against the adjusted

standard on these bases. In any case, these factors were considered by the Board in the

proceedings on Adjusted Standard 99

-6 and did not present any barrier to issuance of the

adjusted standard at that time.

See

Opinion and Order of the Board at 4 (Sept. 7,2000)

(observing that

"[t] he 22-acre site for the new facility was chosen for its.

. .

industrial zoning

classification");

id.

at 13 (discussing the character of surrounding land uses and noting that "1 8

of the 22 acres where the new facility are located are zoned 'heavy industrial9"). Nothing has

changed on any of these factors since the Board's Order to suggest they need to be reconsidered.

27.

The Agency argues, however, that the

"technical feasibility and economic

reasonableness" factor requires this Board to deny Illinois-American Water's request for an

adjusted standard. The Agency further suggests that, because it believes Illinois

-American Water

has the option to provide necessary treatment by hauling the sludge to a landfill, issuance of an

adjusted standard is inappropriate.

See

Agency Rec. at 726.

See

also

id.

71 7 (suggesting that an

offset program may be used only when treatment to water quality standards are technically

AS an aside, the Agency notes that "Illinois EPA views [increased truck traffic] as a local zoning and not an

environmental compliance issue.

See

Agency Rec. at 723. Interestingly enough, if the City of Alton amends its

zoning ordinance to prohibit trucking of solids, Illinois

-American Water might be unable to operate the system using

the treatment option suggested by the Agency.

Electronic Filing, Received, Clerk's Office, July 2, 2007

infeasible or economically unreasonable). However, the Agency, once again, presents no support

for this argument.

28.

As the Board noted in its opinion granting Adjusted Standard 99

-6, the

environmental benefits of the adjusted standard clearly outweigh those that would be achieved

through compliance with the state's technology

-based standard.

See

Opinion and Order of the

Board (Sept. 7,2000) at 20 (

"The Board finds that the proposed adjusted standard, including the

GRLT Project, is a much better and more cost effective way to obtain sediment loading

reductions in the watershed than employing other options to remove residuals from a dilute

mixture of residuals and water.

"). Forcing Illinois-

erican Water to construct lagoons simply

because it may be able to obtain a permit to do so and subsequently may pass along the cost to its

customers makes no sense when the net effects of the treatment are considered. Significantly, the

Board concluded in its September 7,2000 Order that

"[iln light of the substantial costs

associated with treating the new facility's discharge, the Board is persuaded that treatment would

be economically unreasonable and would result in little increased environmental

protection." See

Order and Opinion of the Board at 20 (Sept. 7,2000). The Agency presents no evidence to

indicate that the economic reasonableness of the Alton facility's treatment options have changed

since the Board's determination. The Agency mentions that the testimony of Illinois

-American

Water's Mark Johnson before the

ICC in April, 2000 would indicate that treatment is

"economically feasible."

See

Agency Rec. at

28. But economic

feasibility

is not the issue

before this Board. The applicable standard is economic

reasonableness,

which is much different

and inevitably requires the Board to consider the Project option over the treatment

option.9

The Agency quoted a small portion of

Mr.

Johnson's testimony, the portion describing capital and operating costs

for lagoon treatment. Illinois-American Water wants to make it a matter of record that Mr. Johnson also testified

that the Company was in negotiations at that time (April

17,2000) with Great Rivers Land Trust with respect to the

Electronic Filing, Received, Clerk's Office, July 2, 2007

29.

The Agency also raises several points that are irrelevant to the Board's

consideration of this factor. The Agency notes that

Illinois-

erican Water has committed to

funding new projects to 2010, but not beyond.

See

Agency Rec. at 125. The Agency has no basis

on which to require Illinois

-American Water to continue hnding new projects beyond 201 0,

when the project has already achieved soil savings far beyond what the parties anticipated. In

addition, the Agency points out that Illinois

-American Water's commitment to maintain the soil

savings achieved by the Project does not specify a level of financial commitment.

See

id. The

cost of maintenance is irrelevant. What matters is that Illinois-American Water represents to the

Board that it will maintain the designated 2:1 ratio and 6,600 tons saved (or lose the adjusted

standard as a consequence). The cost of maintenance may fluctuate, but the obligation to

maintain (or consequences of a failed obligation) will not. Already, Petitioner is negotiating with

the Great Rivers Land Trust for a maintenance plan. The Proposed Order attached to the

Amended Petition requires that a maintenance agreement must be finalized within six months of

issuance of the Order.

See

Amended Petition, Attachment F, paragraph 5.c. Such an order will

ensure that Illinois

-American Water maintains soil savings sufficiently or the adjusted standard

will terminate.

III.

CONCLUSION

In a responsive pleading of this variety, Petitioner must, by necessity, address the

contentions of the Agency. Regrettably, those contentions are mostly negative in the present

case. Illinois

-American Water wishes to close by reminding the Board of the positives. The

Project has been remarkably successful. A fair reading of the Board's Order in Adjusted

Project. During that rate case, additional testimony reflected that an annual expense of $415,000 would be incurred

over a ten

-year period for the Project in lieu of lagoon treatment. The ICC set Illinois-American Water's rates with

that information.

Electronic Filing, Received, Clerk's Office, July 2, 2007

Standard 99-6 reveals that the goal of a 2: 1 offset by 201 0 was an expectation, coupled with

uncertainty. By the end of 2006, that expectation had become a reality. Even when using the

most conservative

formula for calculating soil savings, a 2: 1 offset was achieved in year six of a

ten year program. Using TSS effluent numbers based upon the Alton facility

s actual effluent

volume, the offset ratio is

4: 1. Similar reductions have been achieved for iron. In 2000, the

Agency noted in its Final Brief that it would require treatment of the plant's effluent

"in the case

of an

insurmountablefailure ofthe program.

Far from a failure, the Project has become a

model of success. Great Rivers Land Trust officials have spoken at

programs across the country

where attendees clamor to learn about the Project.

Illinois

-American Water pledges to continue this successful program by insuring that the

1 offset ratio is maintained indefinitely. As a safeguard, Illinois-

erican Water pledges to

maintain a minimum threshold of 6,600 tons of soil

"saved"---a threshold which will achieve a

"real" offset well in excess of 2: 1.

The Board should not modify Section 28.1 (c) to add a "level playing field" exception.

The conservation practices of other water plants, cities and power companies are not before this

Board and were never contemplated to be factors in a decision under Section 2 8.1 (c). The

Agency offers no evidence to demonstrate that these other examples bear any

relationshp to the

Alton plant, the

Piasa Creek and the Mississippi River. Federal law does not warrant denial of

the Amended Petition either. The Clean Water Act does not prohibit offset projects as a means

of compliance. EPA has not promulgated regulations prohibiting offset projects as a means of

compliance. To the contrary, there is a possibility that EPA will include offsets in any regulatory

scheme that agency some day promulgates to govern effluent limits for water plants.

Electronic Filing, Received, Clerk's Office, July 2, 2007

Finally, federal technology-based effluent standards do not exist for water treatment

plants. If EPA promulgates such standards, the adjusted standard requested herein may be

modified or

teminated. Illinois-

erican Water acknowledges this and has proposed language

in the Board's order to account for such a possibility. Federal regulators are already examining

the Project as they contemplate the possible promulgation of technology

-based effluent

standards. Through Adjusted Standard

99-6, the Board launched the Project that has captured

the attention of federal regulators and water conservation programs across the nation. The

adjusted standard is worthy of

indefi nite extension with the safeguards of maintenance as

proposed by Illinois

Therefore, Illinois-

erican Water respectfully requests that the Board grant the

extension of the adjusted standard, as proposed in this case.

Respectfully submitted,

ILLNO&-AMERICAW WATER COMPA

By:

720 Olive St., 24th Floor

St. Louis, MO 63

101

Telephone: (3 14) 345-6000

Facsimile: (3 14) 345-6060

An Attorney for Petitioner

Electronic Filing, Received, Clerk's Office, July 2, 2007

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PROPOSED EXTENSION OF ADJUSTED STANDARD

)

AS 2007-2

APPLICABLE TO ILLINOIS-AMERICAN

)

(Adjusted Standard)

WATER COMP

'S ALTON PUBLIC WATER

SUPPLY FACILITY DISCHARGE

)

TO THE MISSISSIPPI RIVER

CERTIFICATE OF SERVICE

I hereby certify that on July 2,2007, the attached PETITIONER ILLINOIS

-AMERICAN

WATER COMP

'S RESPONSE TO THE RECOMMENDATION OF THE ILLINOIS

IRONMENTAL PROTECTION AGENCY was filed by electronic transmission with the

Office of the Clerk of the Illinois Pollution Control Board, and was served by first class mail,

postage prepaid, upon the following persons:

John Therriault, Assistant Clerk

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph Street, Suite

11-500

Chicago, Ilinois 6060 1

William Richardson, Chief Legal Counsel

Illinois Department of Natural Resources

One Natural Resource Way

Springfield, Illinois 62702

Matthew J. Dunn

Division Chief, Environmental Enforcement

Illinois Attorney General

100 West Randolph Street, 1

2th Floor

Chicago, Illinois 60601

Thomas

M. Andryk

Division of Legal Counsel

Illinois Environmental Protection Agency

1 02 1 North Grand Avenue East

P.O. Box 19276

Springfield, Illinois 62794-9276

Sanjay Sofat

Division of Legal Counsel

Illinois Environmental Protection Agency

1 02 1 North Grand Avenue East

P.O. Box 19276

Springfield, Illinois 62794-9276

Carol Webb

Hearing Officer

Illinois Pollution Control Board

1 02 1 North Grand Avenue East

P.O. Box 19274

Springfield, Illinois 62794

-9274

Respectfully submitted,

ILLINOIS

-AMERICAN WATER COMPANU

By:

Blackwell

Sbnders LLP

720 Olive St., 24th Floor

St. Louis, MO 63 101

Telephone: (3 14) 345-6000

Facsimile: (3 14)

345-6060

An Attorney for Petitioner

Electronic Filing, Received, Clerk's Office, July 2, 2007