ILLINOIS POLLUTION CONTROL BOARD

SUMMARY OF DECISION
ORDER

October 18, 2007

IN THE MATTER OF:

PROPOSED EXTENSION OF ADJUSTED

STANDARD APPLICABLE TO ILLINOIS-

AMERICAN WATER COMPANY’S ALTON

PUBLIC WATER SUPPLY FACILITY

DISCHARGE TO THE MISSISSIPPI RIVER

UNDER 35 ILL. ADM. CODE 304.124, and

304.106

)

AS 07-2

(Adjusted Standard-Water)

BRADLEY S. HILES AND ALISON M. NELSON, BLACKWELL, SANDERS, PEPER,

MARTIN LLP, APPEARED ON BEHALF OF PETITIONER; and

SANJAY K. SOFAT, ASSISTANT COUNSEL, DIVISION OF LEGAL COUNSEL, ILLINOIS

ENVIRONMENTAL PROTECTION AGENCY APPEARED ON BEHALF OF

RESPONDENT.

OPINION AND ORDER OF THE BOARD (by N.J. Melas):

SUMMARY OF DECISION

The Board today grants petitioner, Illinois-American Water Company (Illinois-American

or IAWC), a new adjusted standard to replace the expiring one first granted in 2000 concerning

discharges from Illinois-American’s public water supply treatment facility in Alton, Madison

County. Petition of Illinois-American Water Company’s Alton Public Water Supply

Replacement Facility Discharge to the Mississippi River for Adjusted Standard From 35 Ill.

Adm. Code 304.124, 304.106, and 302.203, AS 99-6 (Sept. 7, 2000 as modified on

reconsideration Oct. 19, 2000).

The original adjusted standard, granted with the affirmative recommendation of the

Illinois Environmental Protection Agency (Agency or IEPA), required Illinois-American to

finance and demonstrate its achievement of a sustained 2:1 reduction of sediment loading to the

Mississippi River, at a project cost of roughly $4,150,000 over ten years. IAWC financed this

sediment reduction project in exchange for permission not to treat plant discharges to remove

total suspended solids and total iron. In 1999, IAWC estimated installation of control equipment

and settling lagoons would involve $7.4 to $20 million in capital costs and $420,000 to $1.3

million in annual operating costs for the treatment of the effluent IAWC discharges at

approximately River Mile 204.

The Agency has recommended that IAWC’s current request be denied. In granting this

request over the Agency’s objection, the Board finds that IAWC has provided the justification

required by Section 28.1 of the Environmental Protection Act (Act), 415 ILCS 5/28.1 (2006).

Among other things, the Board finds that the relief granted is consistent with federal law, which

has not changed since 2000 when the adjusted standard was granted. The crux of the parties’

dispute is whether federal law requires Illinois’ IAWC to install treatment technology (a point

source control) prior to, rather than in lieu of, investment in any nonpoint source controls

sediment reduction program. IAWC continues to believe its adjusted standard is consistent with

federal law. The Agency believes it is not, notwithstanding its position when the adjusted

standard was originally granted. The Agency now contends that IAWC cannot be lawfully

granted an adjusted standard, and that IAWC’s installation of treatment technology is absolutely

required. The United States Environmental Protection Agency (USEPA) has not filed a

comment in this proceeding, although the parties have submitted to the Board e-mail

communications between their employees and USEPA which each has argued supports its own

position. Given USEPA’s silence here, the Board sees no reason to retreat from its previous

position.

The Board also finds that petitioner’s sediment reduction program, know as the Piasa

Creek Watershed Project, has more than fulfilled the expectations leading the Board to grant the

original adjusted standard. As a condition of AS 99-6, petitioner agreed to expend $4,150,000

over the course of 10 years. The Piasa Creek Watershed Project, administered under contract by

the Great Rivers Land Trust (GRLT), has won various awards, as well as national recognition

and community approval and support. As detailed later in this opinion, by the ninth year into the

10-year project, petitioner hoped to document the prevention of sediment from entering the

Mississippi by a 2 to 1 ratio of sediment prevented to total suspended solids (TSS) discharged by

IAWC. In AS 99-6, IAWC predicted that the new facility would discharge approximately 3,360

tons of residual solids per year back into the Mississippi. Based on actual conditions of the

facility, IAWC currently estimates only 1,600 tons of TSS per year are discharged. According to

IAWC and the GRLT, by the fifth year, the Piasa Creek Watershed Project had achieved a

savings of approximately 6,487 tons of soil per year. By the sixth year, the Project had saved

6,691 tons of soil per year, representing a 4.2 to 1 offset ratio. In addition to soil savings,

sediment reductions have also prevented approximately 79 tons of total iron per year from

entering the Mississippi, offsetting the estimated 21 tons per year that IAWC discharges by a

ratio of 3.8 to 1.

See infra

, p. 13.

Illinois-American has satisfied all conditions of the original adjusted standard, and has

justified grant of a permanent one given the unique circumstances involved. While not finding

that the formal legal principles of

res judicata

or collateral estoppel apply here, the Board finds

that Illinois-American has reasonably relied on the professional and legal judgment of the Board

and the Agency in making its decision not to install treatment facilities at the Alton plant and to

instead pursue sediment reduction. In extending IAWC’s adjusted standard, the Board is not

here granting blanket permission for similar offset projects in lieu of installation of control

technology, or establishing principles of any yet-to-be codified Illinois water quality trading

policy. Today’s action has little precedential effect, as no other Illinois source can claim

occurrence of similar events or circumstances.

The Board has expedited its decision consistent with its order of July 26, 2007. The new

adjusted standard granted today is effective beginning October 17, 2007 (so that there is no gap

between adjusted standards) and has no sunset date. As a result, the Board’s effluent standards

for offensive discharges, total suspended solids (TSS), and total iron do not apply to the

discharges from the petitioner’s Alton facility to the Mississippi River.

The adjusted standard is granted subject to conditions, to insure that the 2:1 sediment

offset ratio is maintained as long as the adjusted standard is in effect. The adjusted standard is

subject to modification or termination under various circumstances, including any failure by

Illinois-American to comply with the adjusted standard’s conditions and adoption of new state or

federal regulations applicable to Illinois-American’s discharges, such as drinking water treatment

effluent guidelines.

LEGAL FRAMEWORK

The Act and Board rules provide that a petitioner may request, and the Board may grant,

an environmental standard that is different from the generally applicable regulation that

otherwise applies to that petitioner.

See

415 ILCS 5/28.1(a) (2006); 35 Ill. Adm. Code

104.400(a), 104.402. This form of regulatory relief is called an adjusted standard.

The procedures that govern an adjusted standard proceeding are found in Section 28.1 of

the Act

and Part 104, Subpart D of the Board’s procedural rules.

See

415 ILCS 5/28.1 (2006);

35 Ill. Adm. Code 104.400-104.428. The adjusted standard proceeding is adjudicatory in nature

and therefore not subject to the rulemaking provisions of the Act or the Illinois Administrative

Procedure Act (5 ILCS 100 (2006)).

See

415 ILCS 5/28.1(a) (2006); 35 Ill. Adm. Code 101.202.

Once a petition for an adjusted standard is filed, the Agency must file its recommendation with

the Board.

See

415 ILCS 5/28.1(d)(3) (2006); 35 Ill. Adm. Code 104.416. The Board’s

procedural rules specify the required contents for the adjusted standard petition and the Agency

recommendation.

See

35 Ill. Adm. Code 104.406, 104.416.

Section 28.1(d)(1) of the Act (415 ILCS 5/28.1 (2006)) and Section 104.408(a) of the

Board’s procedural rules (35 Ill. Adm. Code 104.408(a) (quoting the Act)) require the adjusted

standard petitioner to publish notice of the petition’s filing by advertisement in a newspaper of

general circulation in the area likely to be affected by the proposed adjusted standard. Under

those provisions, publication must take place within 14 days after the petition is filed. The

newspaper notice must indicate that any person may cause a public hearing to be held on the

proposed adjusted standard by filing a hearing request with the Board within 21 days after

publication.

See

415 ILCS 5/28.1(d)(1) (2006); 35 Ill. Adm. Code 104.408(b).

As the parties remark in their briefs, there also exists, in Section 28.3 of the Act an adjusted

standard provision specifically addressing the subject of adjusted standards for “direct discharge

of waste solids to the Mississippi or Ohio Rivers from clarifier sludge and filter backwash

generated in the water purification process”. 415 ILCS 5/28.3(a) (2006). While that provision

has never been repealed, Section 28.3 sunsetted by its own terms, providing that

No petition for an adjusted standard filed under this Section shall be accepted by the

Board after January 1, 1992. 415 ILCS 5/28.3(d)(4) (2006).

The burden of proof in an adjusted standard proceeding is on petitioner.

See

415 ILCS

5/28.1(b), (c) (2006); 35 Ill. Adm. Code 104.426. Once granted, the adjusted standard applies to

petitioner instead of the rule of general applicability.

See

415 ILCS 5/28.1(a) (2004); 35 Ill.

Adm. Code 101.202, 104.400(a). In granting adjusted standards, the Board may impose

conditions as may be necessary to accomplish the purposes of the Act.

See

415 ILCS 5/28.1(a)

(2006); 35 Ill. Adm. Code 104.428(a).

General Level of Justification Required

The regulations of general applicability at issue here do not specify a level of justification

required to qualify for an adjusted standard. Accordingly, under Section 28.1(c) of the Act, a

petitioner must demonstrate that:

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;

The existence of those factors justifies an adjusted standard;

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

The adjusted standard is consistent with any applicable federal law. 415

ILCS 5/28.1(c) (2006);

see also

35 Ill. Adm. Code 104.426(a).

Further, Section 28.1(a) of the Act (415 ILCS 5/28.1(a) (2006)) provides that the Board

may grant an adjusted standard “for persons who can justify such an adjustment consistent with

subsection (a) of Section 27 of this Act.” Section 27(a) (415 ILCS 5/27(a) (2006)) is a

rulemaking provision that requires the Board to “take into account,” among other things, “the

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

pollution.”

Relevant Issues in This Particular Case

In its opinion in AS 99-6, the Board ordered a termination of the original adjusted

standard to allow for a formal determination as to the success of the GRLT Project:

The Board notes that the Agency plans to study the GRLT Project in five years to

determine its effectiveness. If the GRLT Project is on schedule, it will be halfway

complete in five years.

See

In re Petition of Illinois American Water Company

(September 7, 2000), AS 99-6, slip op. at 22. In order for the Board to consider the

results of the Agency’s determination of effectiveness, IAWC must request an extension

of this adjusted standard for the GRLT Project past its seventh year. The seven-year

sunset provision should provide enough time for the Agency to conduct its determination

of effectiveness and enough time for IAWC to apply for the extension to the adjusted

standard. Illinois-American, AS 99-6, slip op at 4-5 (Oct. 19, 2000).

In requiring petitioner to update the Board on information concerning the projects results, the

Board did not imply that it intended to re-examine or re-weigh the merits of the adjusted standard

in all of its particulars. But, consistency with federal law of course remains a relevant factor.

PROCEDURAL HISTORY

On October 31, 2006, Illinois-American Water Company (Illinois-American) filed a

petition for extension of an existing adjusted standard applicable to Illinois-American’s public

water supply treatment facility in Alton, Illinois (Alton facility). Illinois-American, AS 99-6

(Sept. 7, 2000 as modified on reconsideration Oct. 19, 2000). AS 99-6, scheduled to expire by

its terms on October 16, 2007, provides that the effluent standards for offensive discharges, TSS,

and total iron do not apply to the discharges from the Alton facility.

See

35 Ill. Adm. Code

304.106, 304.124. Also pursuant to AS 99-6, the general use water quality standard for offensive

discharges shall not apply to a one-mile stretch of the Mississippi River that receives effluent

from the Alton facility and is immediately downstream from the Alton facility’s discharge.

See

35 Ill. Adm. Code 304.203.

In AS 99-6, the Board granted Illinois-American an adjusted standard so that it could

implement a sediment reduction project in the Piasa Creek watershed known as Piasa Creek

Watershed Project (PCWP or Project), expected to reduce soil loading into the Mississippi River

by two tons for every ton of solids in the Alton facility’s effluent. In granting the AS 99-6

petition, the Board required Illinois-American to assess the effectiveness of the project at the

October 2005 five-year mark, and imposed a seven-year sunset provision in case the project

failed to meet expectations.

The Board accepted the AS 07-2 petition by order of December 7, 2006. Petition of

Illinois-American Water Company’s Alton Public Water Supply Replacement Facility Discharge

to the Mississippi River for Adjusted Standard From 35 Ill. Adm. Code 304.124, 304.106, and

302.203, AS 07-2 (Dec. 7, 2006). Illinois-American stated that the project had already achieved

its goal, saving 6,600 tons of soil, four years ahead of schedule. Illinois-American also observed

that the project has won awards and exceeded its goals in reducing total iron loading from the

Piasa Creek watershed. Illinois-American asked the Board to extend the current adjusted

standard indefinitely.

Id.

, slip op. at 1.

The Agency sought and received two extensions of time to file its Recommendation to

the petition.

See

415 ILCS 5/28.1 and 35 Ill. Adm. Code 104.416. Illinois-American filed an

amended petition for adjusted standard on April 2, 2007, which by its terms superseded the

original petition.

In the amended petition, Illinois-American Water stated it “waives a hearing on

its request for extension of its adjusted standard, except to the extent that the Petition is opposed

Among other amendments, the amended petition eliminated the request for relief from 35 Ill.

Adm. Code 302.203 as it relates to offensive discharges.

See infra

, at p. 5.

and the relief requested herein by Illinois-American Water may be granted in part only or

denied”. Am. Pet. at para. 120, p. 45.

The Agency sought and received a third extension of time to file its Recommendation.

The Recommendation in opposition to grant of the petition was timely filed on June 18, 2007.

The Agency stated it had reversed its position since AS 99-6, and now considers the relief

request to be insufficiently justified and contrary to federal law. Petitioner timely filed its

response in support of grant of its petition on July 2, 2007. Petitioner did not include a specific

request for hearing in its response. By order of July 26, 2007, the Board directed that the matter

be set for hearing.

Hearing was held in Edwardsville on August 28, 2007 by Board Hearing Officer Carol

Webb. Each of the parties presented witness testimony and exhibits, and three members of the

public made oral comments. Pursuant to schedule, each of the parties filed opening briefs on

September 10, 2007 and reply briefs on September 18, 2007. During the course of the

proceeding, the Board received 10 written public comments

, expressing both support and

opposition to the grant of a new adjusted standard.

Finally, on September 28, 2007, the petitioner filed a sur-reply accompanied by a motion

for leave to file. In its motion, Illinois-American stated that the sur-reply was necessary to

address factual matters that the Agency could have raised at hearing but that it raised only in its

reply brief. IAWC also requested that Agency’s portions of the Agency’s closing briefs and

attachments be stricken. On October 3, 2007, the Agency filed a response in opposition,

accompanied by a motion for leave to file. Illinois-American’s motion for leave to file a sur-

reply is hereby granted, as is the Agency’s motion for leave to file a response.

But, the motion

to strike portions of the Agency’s reply brief and its attachments (Pet. Sur-Rep. at 5-6) is denied.

The following public comments were filed in support of continuation of the adjusted standard:

PC 1, Donald E. Sandidge, Mayor of the City of Alton (Alton) ; PC 2 by Michael Campion,

Mayor of the Village of Godfrey (Godfrey), PC 3; James E. Schrempf, adjoining landowner and

attorney for Alton and Godfrey; PC 4 Alan J. Dunstan, Chairman of the Madison County Board;

PC 5 Alley Ringhausen, Executive Director of the Great Rivers Land Trust. The public

comments in opposition to the adjusted standard were filed by: PC 6 Environmental Law and

Policy Center; PC 8 Joyce Blumenshine, Conservation Chairperson of the Illinois Chapter, Sierra

Club; PC 9 American Bottom Conservancy, PC 10 Harry R. Walton. One public comment noted

the “problems with granting the adjusted standard and the problems with the consequences of not

granting it”. PC 7 Jim Bensman, Conservation Chair Piasa Palisades Group, Sierra Club. (

But

see also

PC 8)

The Board cites the components of the record as follows: amended petition (Am. Pet); Agency

recommendation (Ag. Rec.); IAWC’s response (Pet. Resp.), the hearing transcript (Tr.), exhibits

(Exh.), appendices and attachments within exhibits or other documents (App.) and (Attach.)

respectively; the parties’ opening briefs (Pet. Br.) and (Ag. Br.) respectively; their response

briefs as ( Pet. Resp. Br.) and (Ag. Resp. Br.) respectively; and IAWC’s sur-reply (Pet. Sur-Rep.)

and the Agency’s response (Ag. Resp. Sur-Rep.) respectively.

In summary, the Board has reviewed all filings, documents, and attachments submitted

by the parties. The documents and attachments speak for themselves, and the Board will

determine the appropriate weight to be given them.

SITE HISTORY

The Illinois-American public water treatment facility has been the subject of site-specific

treatment for some time. As the Board noted its last order in AS 99-6, granting Illinois-

American an adjusted standard set to sunset on October 16, 2007:

IAWC’s [previously-] existing public water treatment facility ([previously-] existing

facility) in Alton had been subject to a site specific rule that allowed untreated effluent

into the Mississippi. However, parts of the [previously-] existing facility were over 100

years old, and it was prone to flooding which caused a service disruption to customers in

1993. IAWC constructed its new facility in approximately the same area as the existing

facility, albeit 50 to 60 feet higher in order to avoid flooding. IAWC’s new facility will

serve the same customer base as the old facility, and the new facility’s effluent is similar

to the [previously-] existing facility’s effluent. Nov. Pet. Exh. 2 at 2; Nov. Pet. Exh. 4 at

12; Pet. at 2, 12, 13, 16, Attach. B at 1-1, 3-3; In re Site-Specific Exception to Effluent

Standards for Alton Water Treatment Plant (March 8, 1984), R82-3;

codified as 35 Ill. Adm. Code 304.206.

In its September 7, 2000 opinion and order, the Board found that IAWC

demonstrated that the factors surrounding the request for the adjusted

standard . . . substantially and significantly different than the factors con-

sidered by the Board in adopting these regulations. In light of the substantial

costs associated with treating the new facility’s effluent, the Board was per-

suaded that treatment would be economically unreasonable and would result

in little increased environmental protection. The Board granted IAWC an

adjusted standard from Sections 302.203, 304.106, and 304.124 as Section

304.124 applies to TSS. The Board did not grant an adjusted standard from

Section 304.124 as it applies to iron because it deemed the relief unnecessary.

The Board found that IAWC’s estimated dissolved iron effluent concentration

of .009 mg/L was far less that the total iron standard of 2 mg/L standard at 35

Ill. Adm. Code 304.124. In re Petition of Illinois American Water Company

(September 7, 2000), AS 99-6.

The Board also ordered that IAWC enter into a contract to provide a minimum

of $4,150,000 in year 2000 dollars to GRLT [Great Rivers Land Trust, a local

land conservancy] for a sediment loading reduction project (GRLT Project)

over the next ten years. GRLT estimated that the project would offset sediment

discharges from the new facility by a ratio of two to one. Illinois-

American, Water Company’s Alton Public Water Supply Replacement Facility

Discharge to the Mississippi River for Adjusted Standard From 35 Ill. Adm.

Code 304.124, 304.106, and 302.203

, AS 07-2 (Oct. 19, 2000, slip op at 1-2.)

In its order on reconsideration, the Board also proceeded to grant the requested AS from

the effluent standard for total iron at 35 Ill. Adm. Code 304.124. The Board also specifically

addressed the sunset provision, which it had not done in its original opinion and order, as

follows:

The Board notes that the Agency plans to study the GRLT Project in five years to

determine its effectiveness. If the GRLT Project is on schedule, it will be halfway

complete in five years.

See

In re Petition of Illinois American Water Company

(September 7, 2000), AS 99-6, slip op. at 22. In order for the Board to consider the

results of the Agency’s determination of effectiveness, IAWC must request an extension

of this adjusted standard for the GRLT Project past its seventh year. The seven-year

sunset provision should provide enough time for the Agency to conduct its determination

of effectiveness and enough time for IAWC to apply for the extension to the adjusted

standard. Illinois-American

, AS 07-2, slip op at 4-5 (Oct. 19, 2000).

ILLINOIS-AMERICAN’S PRESENTATION

Illinois American’s factual presentation consists of its April 2, 2007 amended petition

and attachments

, August 21, 2007 answers to questions contained in the Board hearing officer’s

August 6, 2007 order, pre-filed testimony, and its presentation at the Board’s August 28, 2007

hearing, and attachments to its post-hearing briefs.

At the beginning of the hearing, IAWC’s counsel requested that, if the Board could not

render a decision on its request for a new adjusted standard prior to the expiration of AS 99-6 on

October 16, 2007, any new adjusted standard be granted retroactive to AS 99-6’s expiration date.

Tr. at 7. Witnesses whose testimony was presented at hearing are listed by name in order of their

presentation, followed by title or other description, followed by the exhibit number given their

pre-filed testimony

•

Cindy Hebenstreit, American Water Works Service Co., Inc. as Central Region Director,

Environmental Management and Compliance (Exh. 1, Tr. 18);

•

Paul Keck, Illinois American Water, Environmental Management and Compliance

Group, Water Supervisor for Southern Illinois (Exh. 2, Tr. 19-21);

•

Jeffrey T. Kaiser, Black & Veatch, Project Manager in Water Division whose group

produced the report

Evaluation of Residuals Discharged from Illinois-American Water

Company’s Alton Water Treatment Plant (October 2006) (Am. Pet. Attach C)

(Exh. 3 Tr.

21-29);

The attachments are Attachment A: Affidavit of Alley Ringhausen, Executive Director of Great

Rivers Land Trust; Attachment B: Great Rivers Land Trust, Piasa Creek Watershed Project Report

(October 2006);

Attachment C: Black

Veatch Corporation, Evaluation of Residuals Discharged

from Illinois-American Water Company's Alton Water Treatment Plant (October 2006); Attachment

D: Affidavit of Paul Keck, the water quality supervisor at Illinois-American Water Company's Alton

facility; Attachment

E: Affidavit of Howard O. Andrews, Jr., an engineer at Black & Veatch

Corporation; and Attachment F: Proposed Order of the Board.

•

Alley Ringhausen, Executive Director of Great Rivers Land Trust, administrator of Piasa

Creek Watershed Project (Exh. 5, Tr. 30-34);

•

Terry L. Gloriod, American Water Works Service Co., Inc., Central Region President

(Exh. 6, Tr. 36-38);

•

Donald E. Sandidge, Mayor of the City of Alton (Exh. 7, Tr. 38-39;

see also

PC 3);

•

Michael J. Campion, Mayor of the Village of Godfrey (Exh. 8, Tr. 39;

see also

PC 1);

•

Mr. James Schrempf, Attorney for the City of Alton and Village of Godfrey, and

homeowner adjacent to Alton plant (Exh. 9, Tr. 40-44;

see also

PC 3).

Illinois-American also presented various other exhibits not mentioned above:

Exh. 4

IEPA Illinois Clean Lakes Program Project Summary dated August 6,

2007

Am. Exh. 10 AS 07-2 Deposition Testimony Taken by Petitioner August 16, 2007

of Scott A. Tomkins, IEPA, Division of Water Pollution Control,

Environmental Protection Specialist, Watershed Management Section,

Nonpoint Source Pollution Unit

Am. Exh. 11 AS 07-2 Deposition Testimony Taken by Petitioner August 16, 2007

of Robert G. Moser, IEPA, Division of Water Pollution Control,

Supervisor of Water Quality Standards Unit

Exh. 12

40 C.F.R. Section 125.1-125.11

Exh. 13

AS 99-6 Testimony of Thomas G. McSwiggin, IEPA, Bureau of

Water, then-Manager of Permit Section

Exh. 14

United States Environmental Protection Agency (USEPA), Office of

Water, Water Quality Trading Policy, January 13, 2003

Also testifying at hearing, in response to questions contained in the August 6, 2007 hearing

officer order, and in response to questions from Illinois-American, was

•

Toby Frevert, IEPA, Bureau of Water, Manager, Division of Water Pollution Control

(Tr. 56-96)

Persons making oral public comment, all in favor of continuation of the adjusted

standard, were

•

Jim Bensman, Conservation Chair Piasa Palisades Group, Sierra Club (Tr. 98-101,

see also PC 7);

•

Anita Cooper, Godfrey resident and GRLT volunteer (Tr. 102);

•

Tim Garber, Executive Director, Trails West Council, Boy Scouts of America

(Tr.103-104).

Finally, in its reply briefs, Illinois-American attached e-mail between its employees and

USEPA employees concerning the renewal of permits for the Piasa Creek facility. Pet. Br. Exh.

1A, 1B, 1C.

Repeal of Section 304.206

In the 1980’s, the Board granted a site-specific rule for the Alton Water Company, the

predecessor to IAWC, from the effluent requirements of 35 Ill. Adm. Code 304.124. The site-

specific rule provides that:

Section 304.206 Alton Water Company Treatment Plant Discharges

This Section applies to the existing 18.3 million gallons per day potable drinking

water treatment plant owned by the Alton Water Company that is located at, and

discharges into, river mile 204.4 on the Mississippi River. Such discharges shall

not be subject to the effluent standards for total suspended solids and total iron of

35 Ill. Adm. Code 304.124. (Source: Added at 8 Ill. Reg. 3687, effective March

14, 1984)

In AS 99-6, the Board noted that since the Alton Water Company facility would be

replaced by the new facility, the site-specific rule at Section 304.206 would no longer be

necessary. Illinois-American, AS 99-6, slip op. at 4 (Sept. 7, 2000). IAWC agrees Section

304.206 is no longer necessary and would not oppose an action to repeal it. IAWC Written

Answers to Board Questions at 21.

AGENCY PRESENTATION

The Agency’s presentation consists of its 18-page June 18, 2007 Recommendation, Toby

Frevert’s hearing testimony, and attachments to its post hearing briefs. The Recommendation, in

summary, urges the Board to deny the requested relief:

In the intervening years since relief was granted, concepts of pollutant trading

and the importance of providing reasonable treatment have been refined at the

federal level. The Agency thus believes that the requested relief is no longer

consistent with applicable federal law. Moreover, Illinois American has not

established that factors relating to its Alton facility are substantially and

significantly different from the other facilities in the State. In fact, these other

facilities have been consistently complying with the effluent limits and

requirements regarding TSS, total iron, and offensive discharges. Further,

many of these facilities find it economically beneficial to conduct soil

conservation programs to ensure a good quality water source for their operation.

Consequently, the Illinois American’s requested relief does not meet the

requirements established under 35 Ill. Adm. Code Section 104 .426 as well

as Sections 27(a) and 28 .1 of the Act. The Agency urges the Board to deny

the Petitioner’s request for extending this relief. Like other facilities in the

State, Illinois American should be required to meet the State effluent standards.

Rec. at 15-16.

The Agency further explained that the granting of an adjusted standard is no longer

consistent with federal law, because:

USEPA allows pollution trading to help facilities that may otherwise find

compliance with water quality standards or total maximum daily load

(“TMDL”) limits impossible. While Illinois EPA believes that trading may be

appropriate when treatment to meet water quality standards is technically in-

feasible or economically unreasonable, the State effluent standards for which

Illinois American seeks relief have long been considered technically feasible

and economically reasonable. As these State effluent standards are technology

based rather than water quality based, USEPA policy supports our position that

trading in this case is not permissible . . . (citing Final Water Quality Trading

Policy, US EPA, Office of Water (January 13

, 2003)[Exh.14]). Illinois

American does not meet the USEPA’s criteria for allowable pollutant trading,

and therefore, must be required to provide necessary treatment of its wastewater.

Illinois American traded pollution in order to be relieved from a technology-

based effluent limit,

i .e.,

the 35 Ill. Adm. Code Part 304 limits. Pollutant trading

for technology-based limits that a vast majority of other similar businesses must

adhere to is inconsistent with the central intent of the Clean Water Act and

USEPA’s trading policy. Contrary to Petitioner’s belief, pollutant trading must

not be defined as the most economical way to remove a given amount of pollution

normally regulated by technology based limits, but rather as a last resort for those

entities that cannot meet WQBELs or TMDL limits. In the case of Illinois

American and the Piasa Creek Watershed, no TMDL exists and relief from a

WQBEL is not involved. Ag. Rec. at 9.

As an additional reason to deny the petition, the Agency also referenced USEPA’s efforts

to develop categorical effluent limits for water supply treatment plant effluents in federal

regulations. The Agency stated that, as of the time of its Recommendation, the federal timeline

for publishing the draft rules is July 2008 with rule adoption projected by December 2009. The

Agency commented that

Adoption of federal categorical effluent limits would supersede any limits previously

adopted by states unless the state limits were more stringent. Federal action would

therefore negate any continued relief granted by the Board regarding Illinois American’s

petition for extended relief. Rec. at 10-11.

In its reply brief, and in its response to IAWC’s sur-reply, the Agency also provided e-

mail between various IEPA and USEPA personnel concerning the USEPA Trading Permit

Database. Ag. Rep. Br. Attach 1-2, Ag. Resp. Sur-Rep. Attach 1-2. The Agency argues that this

information demonstrates that USEPA would not approve of the grant of AS 07-2.

The hearing record makes it clear that the Agency has been of two minds concerning

IAWC’s “no treatment, sediment offset” proposal since its inception. Then IEPA Manager of the

Bureau of Water Permit Section, Thomas G. McSwiggin, initially “signed off” on an Agency

Recommendation to deny the AS 99-6 request. But, he changed his mind and recommended a

grant; based on his review of USEPA’s August 1999 TMDL-related regulations, he stated his

“opinion that the implementation of the Piasa Creek sediment reduction program through Illinois

American’s NPDES permit is consistent with the Illinois and federal regulations for the National

Pollutant Discharge Elimination System (NPDES). Exh. 14 at 1, 3. Mr. Frevert testified that he

disagreed with Mr. McSwigggin’s opinion in 1999 and “that [there] were some fairly strong

differences of opinion back then”. Tr. at 72. Mr. Frevert testified that

in the year 2007, my agency and my testimony is this [adjusted standard] is not

good policy and it is not consistent with what we believe the Clean Water Act is

intended. . . .The point here is for the State of Illinois to reach its environmental goals,

[so] we need both point source control programs and nonpoint source control programs,

not one in lieu of the other. Tr. at 77-78.

UNDISPUTED FACTS CONCERNING SUCCESS OF

PIASA CREEK WATERSHED PROJECT

The Agency does not dispute the facts concerning the success of the Project, considering

it a successful one. Ag. Br. at 22. The Agency believes, however, that the Project’s success or

failure is irrelevant to the issue of whether Illinois-American is required to treat its discharges

into the Mississippi River. The uncontested facts are laid out below.

In assessing compliance options in its AS 99-6 petition, IAWC identified technically

feasible treatment options ranging from $7.4 to $20 million in capital and $420,00 to $1.3

million in annual operating costs. By the end of the ten-year contract, IAWC will have invested

$4.15 million in the Piasa Creek Watershed Project. Mr. Gloriod testified, “I would never have

been able to convince my Board to spend an ‘extra’ $4 million on the PCWP merely to postpone

the construction of solids handling facilities, some seven years later.” Exh. 6 at 6. Mr. Gloriod

acknowledged risk was involved in the decision, but IAWC “decided the benefits of the project

justified taking that risk”

Id.

According to IAWC, the Agency did not advise the company that

it was no longer willing to support the adjusted standard extension until February 2007. Am.

Pet. at 4.

In AS 99-6, the Board ordered IAWC to enter into a contract with GRLT for a sediment

loading reduction project. AS 99-6, slip op. at 5 (Oct. 19, 2000). GRLT proposed to IAWC a

watershed project to reduce silt loadings from Piasa Creek into the Mississippi. The Piasa Creek

watershed is approximately 121 square miles (78,000 acres).

Id.

at 14, Am. Pet. at 7. Piasa

Creek empties into the Mississippi near Godfrey 5.5 miles upstream of the IAWC discharge.

This area is known as the Great Rivers Confluence, where the Missouri and Illinois Rivers also

meet the Mississippi. AS 99-6, slip op. at 4 (Oct. 19, 2000).

In 2000 when IAWC and GRLT proposed the project in connection with the adjusted

standard, the waters of the Piasa Creek had a foul odor, were loaded with sediment, and were

impacted by severe stream bank erosion.

Id.

at 14. GRLT attributed the condition of Piasa

Creek to increased urbanization, and noted that urban growth in the watershed was expected to

continue.

. at 14. Years of wetland loss and urban development hampered the ability of the

watershed to absorb floodwaters, trap pollutants, and mitigate erosion and had lead to increased

sediment loading in the creek.

Id.

at 14.

GRLT had already been working with the Piasa Creek Watershed Conservancy for the

five years prior to 2000, but IAWC provided a new source of funding to manage the project. Id.

at 14. As a condition of AS 99-6, IAWC entered into a contract with GRLT to provide $415,000

per year for 10 years for the Piasa Creek Watershed Project.

. at 15.

The Piasa Creek Watershed Project was to involve acquisition of land and easements, as

well as educating local landowners and civic organizations.

. at 15. With the acquisition of

land and easements, stream bank stabilization measures would be implemented using such

measures as peak stone protection, debris removal, tree planting, and willow post plantings in

eroded areas. Id. at 16. Water basins, wet ponds, and water retention structures would be

constructed to reduce flow rates and sedimentation during storm events. More than 50 silt dams

would be built, and sediments would be dredged.

Id.

at 16.

By the ninth year into the 10-year project, GRLT hoped to document the prevention of

sediment from entering the Mississippi by a 2 to 1 ratio of sediment prevented to TSS discharged

by IAWC.

Id.

at 16. In AS 99-6, IAWC predicted that the new facility would discharge

approximately 3,360 tons of residual solids per year back into the Mississippi.

Id.

at 3. Based on

actual conditions of the facility, IAWC currently estimates only 1600 tons of TSS per year are

discharged. Am. Pet. at 10. According to IAWC and the GRLT, by the fifth year, the Piasa

Creek Watershed Project had achieved a savings of approximately 6,487 tons of soil per year.

Am. Pet. at 8. By the sixth year, the Project had saved 6691 tons of soil per year, representing a

4.2 to 1 offset ratio. Am. Pet. at 9-10. The GRLT’s Mr. Ringhausen estimated that the Project

would achieve a savings of no less than 10,000 tons per year by the tenth year. Am. Pet. at 9. In

addition to soil savings, sediment reductions have also prevented approximately 79 tons of total

iron per year from entering the Mississippi, offsetting the estimated 21 tons per year that IAWC

discharges by a ratio of 3.8 to 1. Am. Pet. at 10-11.

Mr. Ringhausen explained the Project is implemented through the construction of rural

sediment basins, retention basins, and urban water detention/retention basins. GRLT has

implemented riparian treatment measures that involve riparian corridor protection and

restoration, stream bank stabilization, sedimentation reduction, and wetland restoration. To date,

over 200 erosion reduction structures have been completed throughout the watershed, and GRLT

is continuing to work on other soil conservation projects to benefit the watershed. PC 5 at 2. In

addition, GRLT provides educational outreach on watershed planning to area residents, students,

landowners, farmers, and community leaders. PC 5 at 2.

Mr. Ringhausen explained that the erosion reductions achieved by the Project will

continue year after year with proper stewardship. PC 5 at 3. Mr. Ringhausen and Mayor

Campion characterized the funds received from IAWC as “seed money to attract funding from

other sources”. Exh. 5 at 6, Exh. 8 at 3. Although Mr. Ringhausen stated that additional

funding by IAWC will be needed beyond 2010, the Project is expected to eventually be sustained

without future outside funding. PC 5 at 3. Mr. Ringhausen estimated that beyond 2010,

maintenance of the soil savings will cost approximately $136,800 per year for 10 years. Exh. 5

at 8.

Beyond the soil savings, Mr. Ringhausen added

benefits of the Project include reduced erosion, improved water quality, storm

water control, reduction of flash flooding, enhanced fish and wildlife habitat,

protection of sensitive ecosystems, public education on watershed management,

and financial incentives to farmers and landowners to implement conservation

practices.” PC 5 at 4.

Mr. Ringhausen noted that the Project has also resulted in employment opportunities and

purchase of local materials. Exh. 5 at 5-6.

Tim Garber, along with Mr. Ringhausen, highlighted one of the achievements of the

PCWP: restoration of the 40-acre Boy Scout Lake of Camp Warren Levis in Godfrey. Tr. at 31-

32,104. Mr. Garber commented that, “thanks to this project and the Great Rivers Land Trust, we

now have a working body of water and a wetland at our camp that literally close to 1,000 people

[kids] in one year have already had the opportunity to enjoy.” Tr. at 31, 104. As Mr.

Ringhausen described, a “ripple effect” of the restoration work on Boy Scout Lake and the

wetland was the archaeological discovery of remains relating to the history of the Underground

Railroad in the area. The GRLT helped the area to receive recognition as one of the seven

designated Underground Railroad sites in Illinois by the National Park Service. Tr. at 31-32.

Mr. Ringhausen listed several awards

that GRLT has received in recognition of the

Project from State and federal government agencies, as well as private entities. Mr. Ringhausen

also noted some of the Statewide and nationwide events as well as publications where the Project

has been discussed. PC 5 at 4, Exh. 5 at 6-7.

Availability of Alternative Funding for Non-Point Source Programs

At hearing, witnesses discussed the availability of funding for sediment reduction

programs such as the Project, other than from sources such as Illinois-American. Mr. Frevert

voiced the support of the Agency and USEPA for nonpoint source programs, saying “We

provide funding, all sorts of support for those programs.” Tr. at 59.

Mr. Kaiser presented a summary of IEPA’s Clean Lakes Program Projects as of August

6, 2007. Exh. 4, Tr. at 25. The summary lists 51 projects receiving grant money from the

Illinois Clean Lakes Program totaling $6,199,690. Exh. 4. But, none of the projects listed

received a grant from the Clean Lakes Program approaching the $415,000 per year that IAWC

invests in the GRLT. The list indicates the highest amount awarded to a single project from the

These include the Illinois Governor’s Pollution Prevention Award for the Community Group

Category; the Innovate Illinois Award; the Illinois Buffer Partnership Award; a National

Resource Conservation Service’s Conservation Academy Award; a United States Department of

Agriculture’s Earth Team Volunteer Program Ward; one of three Soil and Water Conservation

Society’s National Merit Awards, and an award from the National Parks Service identifying

Rocky Fork, a stream in the Piasa Creek Watershed, as a site that makes a significant

contribution to an understanding of the underground railroad. Am. Pet. Attach. A.

Clean Lakes Program was $300,000 for FY 2006. As for matching funds provided by other

sources, the number of projects receiving more than $415,000 was two out of 51. Ex. 4.

During her comment in support of IAWC’s petition, Alton resident and GLTC volunteer

Ms. Anita Cooper stated

It is important to remember that this wonderful project did not exist before the

funding by Illinois-American Water. It is grossly unfair to assume that if the

funding by the Water Company should go away that the community would

somehow come up with the missing funding and continue the project.

Tr. at 103.

REQUIREMENTS OF FEDERAL LAW

In AS 99-6, concerning federal law, the Board found that:

There are no federal categorical effluent regulations for drinking water

facilities. 33 U.S.C. § 1314(b) (1998). In place of these regulations, the

Agency issues National Pollutant Discharge Elimination System (NPDES)

permits to public water supplies on a case-by-case basis pursuant to the

Clean Water Act. 33 U.S.C. § 1342 (1998); 40 C.F.R. §§ 125.3(c)(2) and

125.3(d) (1998). The Board has stated previously that federal directives

give [the Board] “broad discretion in determining the appropriate standard

of control to apply to discharges from water treatment plants.” Site Specific

Exception to Effluent Standards for the Illinois American Water Company,

East St. Louis Treatment Plant (February 2, 1989), R85-11, slip op. at 10.

Illinois American, AS 99-6, slip op. at 4-5 (Oct.19, 2000).

Federal law issues were discussed by the Center for Environmental Law and Policy (PC

6), in addition to being addressed by the Agency. The parties dispute whether there has been a

change in federal law since 2000 or only in the Agency’s interpretation of it. They also dispute

whether USEPA approves, or would continue to approve, the Project as being consistent whether

federal law.

Technology-Based Effluent Limitations and Standards

Section 104.406(b) of the Board’s procedural rules for adjusted standards, requires the

petition to address:

whether the regulation of general applicability was promulgated to implement, in

whole or in part, the requirements of the [Clean Water Act or] CWA (33 USC

1251

et seq

.), Safe Drinking Water Act (42 USC 300(f)

et seq

.), Comprehensive

Environmental Response, Compensation and Liability Act (42 USC 9601

et seq.

CAA (42 USC 7401 et seq.), or the State programs concerning RCRA, UIC, or

[National Pollutant Discharge Elimination System or] NPDES [415 ILCS 5/28.1];

While explaining during the hearing that the federal effluent guidelines under 40 C.F.R.

Subchapter N regulations do not apply to drinking water treatment plants discharging their

wastewater directly to waters of the nation, Mr. Frevert quoted provisions from 40 C.F.R. 122.44

relating to the NPDES program and the federal Clean Water Act (CWA). Tr. at 47-48.

40 C.F.R. 122.44 (a)(1) requires each NPDES permit to include, as conditions,

Technology-based effluent limitations and standards based on: effluent limitations

and standards promulgated under section 301 of the CWA, or new source

performance standards promulgated under section 306 of the CWA, or case-by-

case effluent limitations determined under section 402(a)(1)

of CWA, or a

combination of the three. 40 C.F.R. 122.44(a)(1).

Since there are presently no federal effluent guidelines that apply to IAWC, Mr.Frevert

explained that “the only remaining applicable component of this three-tiered approach” is

case-by-case effluent limitations. Tr. at 48.

40 C.F.R. 125.3(c)(2)(Exh. 12) provides that, in issuing individual NPDES

permits, the permitting authority must consider

The appropriate technology for the category or class of point sources of

which the applicant is a member, based upon all available information,

and

ii)

Any unique factors relating to the applicant.

To meet the Agency’s NPDES permitting responsibilities, Mr. Frevert stated the Agency has

historically relied upon effluent limitations contained in the Board’s regulations as part of the

case-by-case determination of technology-based effluent limits determined case-by-case under

section 402(a)(1) of the CWA are a necessary part of the NPDES permitting.

Id.; see also

Ag.

Br. at 4-5. The Agency contends that the effluent standards must be applied to the IAWC

facility, as compliance with them is both technically feasible and economically reasonable as

demonstrated during the rulemaking process. The Agency contends that it need not perform a

site-specific Best Professional Judgment (BPJ) analysis when technology-based effluent

standards exist in 35 Ill. Adm. Code Part 304. Ag. Re. Br. at 4-5.

Section 402(a)(1) of the CWA, 33 U.S.C. 1251

et seq.

, states

(a)(1) Except as provided in sections 318 and 404 of this Act, the Administrator

may, after opportunity for public hearing, issue a permit for the discharge of

any pollutant, or combination of pollutants, notwithstanding section 301(a), upon

condition that such discharge will meet either (A) all applicable requirements

under sections 301, 302, 306, 307, 308, and 403 of this Act, or (B) prior to

taking of necessary implementing actions relating to all such requirements,

such conditions as the Administrator determines are necessary to carry out the

provisions of this Act.

The Agency contends that the Project is not a “substantially and significantly different

factor” (within the meaning of Section 28.1) than those considered by the Board in the general

rulemakings underlying the effluent standards. The Agency also contends that the Project is not

a “unique factor” within the meaning of 40 C.F.R. 125.3(c)(2)(ii).

In its comments, citing the applicable federal and state law, the Environmental Law and

Policy Center (ELPC) articulates a position similar to that of the Agency. ELPC believes that

The granting of [IAWC’s] request would allow [IAWC] to avoid satisfying TBELs

by implementing sedimentation contols at the Great Rivers Land Trust, a secondary

location. However beneficial such an arrangement may be, trading or organizing offsets

to avoid TBELs is unacceptable under the Clean Water Act. PC 6 at 1;

see also

PC 8.

ELPC’s sentiments were echoed by two other commenters. The American Bottom Conservancy

comments that “[o]nce sediment is removed from the river it should not be returned.” PC 9 at 1.

Mr. Harry Walton closes his comment with the rhetorical question and answer

Is it acceptable for a point source to discharge wastewater into surface water without

Treatment? There can only [be] one answer: NO! PC 10 at 1, emphasis in original.

IAWC, for its part, contends that the Project has been previously found by the Board in

AS 99-6 to be both a Section 28.1“substantially and significantly different factor” and a 40

C.F.R. 125.3(c) (2)(ii) “unique factor”. IAWC points out that it commissioned its environmental

consultant to perform a BPJ analysis in 1999 as part of its proof in AS 99-6, and that the report

concluded that “no effluent limitation is the appropriate control technology under BPT [Best

Practicable Technology] and BCT [Best Conventional Technology]. IAWC. Br. at 5. IAWC

urges that, as a matter of collateral estoppel and good public policy, that the Board should not

now re-examine these issues that were not explicit reasons for the imposition of sunset

provisions in AS99-6. IAWC Resp. Br. at 25-30.

Potential Drinking Water Treatment Effluent Guidelines

In its recommendation to deny the proposed adjusted standard, the Agency referenced

USEPA’s stated intentions to potentially establish drinking water treatment effluent guidelines

that would apply to discharges from IAWC. Tr. at 11. Mr. Frevert testified that USEPA would

be developing categorical effluent guidelines for sources that do not discharge to a POTW. Tr. at

49.

USEPA announced the potential drinking water treatment guidelines in its 2004 Effluent

Guidelines Program Plan.

69 Fed. Reg. 53705 (Sept. 2, 2004). The announcement indicated

Section 304(m) of the CWA provides for a schedule of review for the effluent guidelines. This

provision prompts the USEPA to identify categories of sources not previously published and to

establish effluent guidelines for those sources. To this end, USEPA publishes a Effluent

Guidelines Program Plan every two years.

See

http://www.epa.gov/guide/plan.html

. Section

that data suggest that some drinking water treatment and supply facilities may be discharging

non-trivial amounts of toxic and non-conventional pollutants, stating

[US]EPA has decided to identify the drinking water supply and treatment

industry sector in this final Plan and to complete an effluent guidelines rule-

making for this industry within three years.” 69 Fed. Reg. at 53720.

In its conversations with USEPA, the Agency intimated USEPA’s schedule for

promulgating effluent guidelines would be to publish the draft rules by July 2008 and adopt final

rules by December 2009

. Tr. at 11.

The Agency notes that if federal categorical effluent limits were to be adopted, they

would supersede limits adopted by states unless the state limits were more stringent. Rec. at 11.

Although USEPA has not issued a draft rule, IAWC notes that USEPA’s Water Quality Trading

Policy states, “[US]EPA will consider including provisions for trading in the development of

new and revised technology-based effluent guidelines and other regulations to achieve

technology-based requirements, reduce implementation costs and increase environmental

benefits.” Exh. 14 at 6, IAWC Resp. Br. at 17-18.

IAWC acknowledges that if USEPA does promulgate effluent standards for drinking

water treatment, the adjusted standard may be modified or terminated, and the petition proposes

language to account for such a possibility. IAWC Resp. Br. at 23.

USEPA’s Water Quality Trading Policy

In support of its petition, IAWC included in its post hearing brief e-mail

between IAWC’s Cindy Hebenstriet and USEPA’s George Acevedo, who identifies himself as

USEPA Region 5 NPDES Nutrients and Water Quality Trading Coordinator. IAWC Br. Ex.1A,

1B, 1C. In Exhibit 1A, among other things, Mr. Acevedo references a discussion about

“concerns you have on the permit re-issuance of the Piasa Creek facility”. Mr. Acevedo

provides Ms. Hebenstreit with a link to the trading policy (Exh. 14), and states in closing “I think

you may get some use out the (sic) these materials to understand that we want this program [the

Project] to be successful”. In Exhibit 1B, Ms. Hebenstreit reports IEPA’s opposition to renewal

of IAWC’s adjusted standard, based on the “explanation that a ‘philosophical change’ has

occurred in how the [IEPA] views this issue. Ms. Hebenstreit seeks advice on how to get

USEPA input into this matter, attaching a Piasa Creek Watershed Project Fact Sheet. Exhibit 1C

is an e-mail from Mr. Acevedo to Ms. Hebenstreit stating in part

304(m)(1)(c) of the CWA requires promulgation of effluent guidelines no later than 3 years after

the publication of the plan.

The Board notes that, as of today, it has been more than 3 years since publication of the 2004

Effluent Guidelines Program Plan. Review of the USEPA rulemaking docket EPA-HQ-OW-

2004-0035 does not indicate a draft rule for comment. The last notice issued in the docket was

on July 19, 2006 and the last entry in the docket was August 21, 2006. EPA-HQ-OW-2004-

0035, http://www.regulations.gov

I understand that your NPDES permit is up for renewal and that you are

concerned about the process. However, I encourage you to continue working

with the [IEPA] in this matter, as they are the designated permitting authority.

The NPDES permit and variance from water quality standards you are seeking

for this facility are issued by the State of Illinois.

I believe that the situation is salvageable and I will work with the State to that

end. IAWC Br. Ex.1C.

In recommending against grant of a continued adjusted standard in AS 07-2, the Agency

argues that current USEPA policy would not allow the offset proposed. In discussing USEPA’s

2003 Water Quality Trading Policy (Ex. 14), the Agency points to a statement in the frequently

asked questions section of USEPA’s web site:

When can trading occur? . . . the Trading Policy does not allow trading to

meet a technology-based effluent limit (TBEL). Ag. Rec. at 10 (citing

http://www.epa.gov/owow/watershed/trading/tradingfaq.html)

USEPA’s 2003 Water Quality Trading Policy also states “[US]EPA does not support trading to

comply with existing technology-based effluent limitations except as expressly authorized by

federal regulations.” Exh. 14, 68 Fed. Reg. 1610-1611. This approach is consistent with

USEPA’s 1996 “Effluent Trading in Watersheds Policy Statement” providing that “[t]o take

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

applicable technology-based limits.” 61 Fed. Reg. 4995 (Feb. 9, 1996).

In his opening remarks at hearing, IEPA’s counsel stated, “The simple fact is that Illinois

does not have a promulgated trading policy.” Tr. at 17. Mr. Frevert testified, “At this time, the

Agency is not considering water quality trading as an option for point source discharges in

waterways with TMDLs. An analysis of the applicability of trading has not been evaluated by

the EPA yet.” Tr. at 49.

The Agency believes that e-mail between its employees and USEPA employees clearly

indicates that USEPA would not approve of the “trading” authorized in AS 99-6 or proposed for

continuation in the AS07-2 petition. The Agency enclosed e-mail between USEPA’s Mr.

Acevedo and IEPA’s Mr. Frevert addressed to “Water Quality Trade Colleagues” and asking for

confirmation of water quality data. Mr. Acevedo requested recipients to review an attached

spreadsheet apparently prepared by USEPA’s Kavya P. Kasturi “ORISE Intern” as part of

USEPA’s Trading Permit Database Annual Update. USEPA’s Region V Trading List from

August 20, 2007 noted that IAWC’s NPDES Permit IL 0000299 is:

No longer considered a trade in R5. Permit never included trading

provisions? Issued Jan 1, 2001, Expired Dec 31;Will be reissued at

some point.” Ag. Rep. Br. at 13, Attach. 2.

Besides the single reference for Illinois to IAWC’s NPDES permit, USEPA’s Region 5

Trading List includes permits with active trading in four of the other five Region 5 states:

Michigan, Minnesota, Ohio, and Wisconsin. Ag. Rep. Br. at Attach. 2. In a review of eight of

the other NPDES permits listed in the USEPA’s Region 5 Trading List, permits included the

term “trading” directly or referenced “alternative load reduction projects” where “loading

reductions achieved by one stakeholder may be credited to it or to any other stakeholder(s)”.

See

NPDES Permits: WI0020354, OH0007960, OH0028207, OH0028193, OH0026590,

OH0040592, OH0025381, OH0021644 referenced in “Water Quality Trading Toolkit for Permit

Writers,” Appendix A, August 2007, EPA-833-R-07-004 and/or

http://www.epa.state.oh.us/dsw/permits/permits.html.

BOARD DISCUSSION AND DETERMINATION

As previously stated in its opinion in AS 99-6, the Board ordered a termination of the

original adjusted standard to allow for a formal determination as to the success of the GRLT

Project.

See

Illinois American

, AS 99-6, slip op. at 22 (Sept. 7, 2000). Based on the uncontested

facts, the Board finds that the Piasa Creek Watershed Project has more than fulfilled the

expectations leading the Board to grant the original adjusted standard. IAWC currently estimates

the Alton facility discharges 1600 tons of TSS per year. According to IAWC and the GRLT, by

the fifth year, the Piasa Creek Watershed Project had achieved a savings of approximately 6,487

tons of soil per year. By the sixth year, the Project had saved 6691 tons of soil per year,

representing a 4.2 to 1 offset ratio. In addition to soil savings, sediment reductions have also

prevented approximately 79 tons of total iron per year from entering the Mississippi, offsetting

the estimated 21 tons per year that IAWC discharges by a ratio of 3.8 to 1.

See supra

, p. 13.

The Board finds that Illinois-American has satisfied all of the conditions of the original

adjusted standard. In creating a sunset of AS 99-6 and requiring petitioner to update the Board

on information concerning the projects results, the Board did not intend to embark upon a

novo

re-examination or re-weighing of the merits of the adjusted standard in all of its particulars.

Only one of the original Section 28.1(c) factors is again at issue here: whether or not federal law

prohibits renewal of the adjusted standard. The Board finds that federal law has not changed

since the grant of AS 99-6. For the reasons outlined below, the Board finds that the adjusted

standard can be lawfully extended.

The Board finds that IAWC’s discharge meets the applicable requirements under sections

301, 302, 306, 307, 308, and 403 of the CWA. There presently are no federal effluent guidelines

for TSS or iron applicable to IAWC under 40 C.F.R. Chapter I, Subchapter N. Since there is no

toxic effluent standard or prohibition for TSS or iron, the only other category of effluent

limitations and standards under 40 C.F.R. 122.44 are technology-based ones. Under 40 C.F.R.

In its response to IAWC’s sur-reply and IAWC’s motion to strike, the Agency filed

replacement hard copies of e-mail containing previously missing information.

See

Ag. Resp.

Sur-Rep. Attach. 1-2.

122.44, the technology-based effluent limitations and standards for TSS and iron would be

determined on a case-by-case basis under Section 402(a)(1).

Although the Board’s regulations under Part 304 provide the basis for the Agency’s

determination of the NPDES permitting requirements, the effluent regulations for TSS and iron

are not federal law or part of the Board’s “identical-in-substance” rules mandated under Section

7.2 of the Act. Accordingly, the Board’s Part 304 effluent standards are amenable to change by

the Board in a case-by-case determination and a potential adjusted standard. Any adjusted

standard granted by the Board therefore becomes the technology-based, case-by-case effluent

limitations for IAWC’s TSS and iron discharges within the meaning of 40 C.F.R. 122.44 and

Section 402(a)(1) of the CWA. And Illinois-American has complied with all requirements of its

adjusted standard.

The pendancy of USEPA rulemaking to set federal categorical effluent limits does not

persuade the Board to reach a different result. This record indicates that USEPA’s current

schedule for promulgating effluent guidelines is to publish the draft rules by July 2008 and adopt

final rules by December 2009. This schedule is subject to slippage due to resource constraints or

other priority imperatives. And, in any event, all parties agree that if such standards were to be

adopted, they would supersede limits adopted by states, including any Board adjusted standard.

As to issues of compliance with the USEPA Water Quality Trading Policy, the best

evidence would be a comment in this proceeding by USEPA. But, no such comment was filed

here. The materials presented by the Agency concerning USEPA’s Trading Permit Database

Annual Update are insufficient to allow the Board to reach any conclusions. While it appears

that IAWC’s permit has been taken off the USEPA current list, the reason for the action is

unclear. The record does not shed light on why USEPA noted “Permit never included trading

provisions?” as a question. IAWC’s NPDES Permit No. IL0000299 shows the conditions for the

GRLT contact, monitoring, and reporting were included in the final permit, however, the permit

language did not include the terms “trading” or “credit”. Pet. Attach. C. Without additional

explication from USEPA, the Board can surmise that the permit was taken off the list because of

the wording of AS 99-6.

In AS 99-6, the terms “trading” or “credit” are not used in the Board’s discussion or the

conditions of Illinois-American’s adjusted standard. In the instant petition, the proposed

adjusted standard language also does not use the terms “trading” or “credit”. Am. Pet. Attach. F.

The Board has used the term “offsetting” when discussing past projects similar to the GRLT

Project for East Moline and Rock Island water treatment plants.

The Board has approved projects similar to the GRLT Project in the past.

In adjusted standards for both the East Moline and Rock Island water treat-

ment plants, the Board required both facilities to remove erodible farmland

from cultivation. The Board then ordered both facilities to maintain the land as

fallow, thereby offsetting any potential increase of solids in their discharges.

Petition of City of East Moline and IEPA (May 19, 1994), AS 91- 9, slip op.

at 6-7, 9; Petition of City of Rock Island

(October 19, 1995), AS 91-13, slip

op. at 6, 10.” AS 99-6 (September 7, 2000) slip op. at 17.

While also not determinative, the e-mail presented by IAWC from USEPA’s

Mr. Acevedo would tend to indicate that USEPA is in favor of the project. Although in the

context of a response to IAWC’s NPDES permit concerns, Mr. Acevedo does state that “we

want this program [the Project] to be successful”. IAWC Br. Ex.1C.

The Illinois-American Alton facility has long been a unique one; as the Agency puts it,

the facility “has not had to meet the State’s effluent standards in over 100 years”. Ag. Rep. Br.

at 4, n. 1. The facility has not been a scofflaw, but has sought regulatory relief specific to its site

and situation. In adjudicating AS 07-2, the Board is not writing on a blank slate. The State of

Illinois, through its environmental agencies, has made decisions that cannot and should not be

lightly be undone. While not finding that the formal legal principles of

res judicata

or collateral

estoppel apply here, the Board finds that Illinois-American has reasonably relied on the

professional and legal judgment of the Board and the Agency in making its decision not to install

treatment facilities at the Alton plant and to instead pursue sediment reduction. The company

presented its offset plan, received state approvals, and reached the project goals. Under the

current state of federal and state law, the Board will not ask IAWC to do more.

The Board does not disagree with the opponents of the adjusted standard that, as a matter

of general policy, the purposes of the environment and the CWA are best served by control of

point source and non-point source pollution. The Board agrees that if IAWC had first installed

point source control equipment and then embarked on the non-point source sediment reduction

program, the sediment loading to the Mississippi River would have been decreased by an

additional 1,600 tons. But, the record also makes clear that IAWC would not have embarked on

the Project if it had also been required to install control equipment: As IAWC’s Mr. Gloriod

stated

I would never have been able to convince my Board to spend an “extra”

$4 million on the PCWP merely to postpone the construction of solids hand-

ling facilities, some seven years later.

***

[I]f someone had told me in 2000 that the adjusted standard would terminate in

2007, irrespective of demonstrated success, we would not have gone forward.

We made a permanent commitment in exchange for a permanent solution.

Tr. at 6.

But, the Board also finds that, if the Project had not gone forward, the environmental and

community “ripple effect” benefits testified to by Mr. Ringhausen and others would not have

gone forward either.

The Board also agrees with the Agency that in adjudicating this adjusted standard the

Board has no business setting what is best established by rule: the contours of any Illinois water

quality trading policy. But, in responding to Illinois-American’s request, the Board does not

intend to establish general policy or to establish any generally applicable precedent; at this

juncture, no other Illinois source can claim occurrence of similar events or circumstances.

The Board has expedited its decision consistent with its order of July 26, 2007.

The new adjusted standard granted today is effective beginning October 17, 2007 (so that there is

no gap between adjusted standards) and has no sunset date.

As a result, the Board’s effluent

standards for offensive discharges, TSS, and total iron do not apply to the discharges from the

petitioner’s Alton facility to the Mississippi River.

The adjusted standard is granted subject to conditions. The conditions are similar to

those suggested by IAWC, but have been modified to comport with the usual style of Board

order language, and to eliminate potential enforcement problems that can be caused by use of

ambiguous language. The primary condition is intended to insure that the 2:1 sediment offset

ratio is maintained as long as the adjusted standard is in effect. The adjusted standard is subject

to modification or termination under various circumstances, including any failure by Illinois-

American to comply with the adjusted standard’s conditions and adoption of new state or federal

regulations applicable to Illinois-American’s discharges, such as federal drinking water treatment

effluent guidelines.

Finally, the Board will propose repeal of the no-longer-necessary Section 304.206. Due

to resource constraints, the Board will not open a repealer docket today but will include the

repealer in some future docket opening Section 304.

This opinion constitutes the Board’s findings of fact and conclusions of law in this

matter.

ORDER

The Board grants the following adjusted standard, pursuant to the authority of Section 28.1 of the

Environmental Protection Act, 415 ILCS 5/1

et seq

, for the Illinois-American Water Company’s

Alton Public Water Supply Facility Discharge to the Mississippi River at approximately River

Mile 204:

Standards Adjusted

. The effluent standard for total suspended solids and total

iron at 35 Ill. Adm. Code 304.124, and for offensive discharges 35 Ill. Adm. Code

304.106 do not apply to the effluent discharged by Illinois-American from the

Alton facility. This adjusted standard does not apply to any other facilities with

outfalls or discharges to the Mississippi except for the Alton facility.

Duration.

The Board has occasionally granted retroactive adjusted standard relief in unusual

circumstances.

See e.g.

Petition of Central Can Company for An Adjusted Standard from 35 Ill.

Adm. Code Part 218

, AS 94-18 (August 6, 1998).

This adjusted standard begins on October 17, 2007 to prevent any gap

between termination of AS 99-6 and the beginning of AS 07-2.

This adjusted standard will expire only if any of the following

events occur:

The Board determines, in an enforcement action under Title

VIII of the Act, or in any proceeding brought by the parties

to terminate the adjusted standard, that the conditions of the

Mississippi have changed to make the adjusted standard

obsolete or infeasible;

The average offset for the calendar year in question and the

four preceding calendar years fails to reach a 2 to1 offset

for total suspended solids as a result of a change in the

conditions of the Mississippi, increased capacity of the

Alton facility, or for any other reason; or

The savings of the Piasa Creek Watershed Project is

reduced to below 6,600 tons of soil per year.

ii)

In the event that any of the above events occur, this adjusted

standard will expire upon the date that is three years from the

occurrence of such event. Illinois-American may petition the

Board for a new adjusted standard, and may include a request for

delay of the expiration of this adjusted standard.

Compliance Conditions. In lieu of compliance with the effluent standards listed

in paragraph 1, Illinois-American must comply with all of the following

conditions:

Discharge Point

. Illinois-American must send all of discharges from its

Alton facility only to the Mississippi at River Mile 204. Illinois-American

Water must not send discharges from its Alton facility to tributaries of the

Mississippi, to any other body of water, or to land.

Required Contracts and Performance

Illinois-American must comply with the terms of the Consulting

and Performance Agreement between Illinois-American and Great

Rivers Land Trust (GRLT) existing as of the date of this order

throughout the term of that Agreement.

ii)

No later than six (6) months after the adoption of this order,

i.e.

or before April 15, 2008, Illinois-American must enter into a

contract for maintenance of the soil savings achieved by the Piasa

Creek Watershed Project at or above 6,600 tons per year. Such

contract must be entered between Illinois-American Water and

GRLT or such other nonprofit corporation, soil and water

conservation district, or other person or entity selected by Illinois-

American and approved by the Illinois Environmental Protection

Agency (Agency). Denial of Agency approval is appealable to the

Board as a final determination under the procedures of Section

40(a) of the Act and 35 Ill. Adm. Code 105.

iii)

If Illinois-American determines that the amount of solids in its

discharge is likely to exceed 3,300 tons per year and its contract

for maintenance under paragraph 3(B)(ii) above does not provide

for additional savings, Illinois-American Water will enter into a

contract or contracts for additional soil savings to ensure that a 2 to

1 offset ratio is achieved. Additional savings may be attained by

the Piasa Creek Watershed Project or by other projects in the

watershed. Such contract must be entered between Illinois-

American Water and GRLT or such other nonprofit corporation,

soil and water conservation district, or other person or entity

selected by Illinois-American and approved by the Agency.

Denial of Agency approval is appealable to the Board as a final

determination under the procedures of Section 40(a) of the Act and

35 Ill. Adm. Code 105.

iv)

In the event that any of the contracts entered into pursuant to this

subsection are terminated by either party, or Illinois-American

determines that entry into a substitute or additional contract for

maintenance is necessary or desirable, Illinois-American Water

may enter into a contract for maintenance of the Piasa Creek

Watershed Project with a person or entity selected by Illinois-

American Water and approved by the Agency. Denial of Agency

approval is appealable to the Board as a final determination under

the procedures of Section 40(a) of the Act and 35 Ill. Adm. Code

105.

At a minimum, such contracts must specify that:

Illinois-American must provide funds needed to ensure that

the soil savings achieved by the Piasa Creek Watershed

Project are not reduced below 6,600 tons of soil per year,

and that the 2 to 1 offset ratio is maintained by the Project

or by other projects in the watershed.

GRLT, or such other nonprofit corporation, soil and water

conservation district, or other person or entity selected by

Illinois-American, shall submit to the Agency annual

reports detailing the reductions achieved by implementation

of the sediment reduction measures and describing the

sediment load reductions achieved for each measure or

practice implemented.

Within ten (10) days of entering into any such contract for

maintenance, Illinois-American must provide a copy of the

contract to the appropriate personnel at the Agency.

Change in Regulations. Notwithstanding any other terms of this adjusted

standard, if new state or federal regulations are promulgated that limit or prohibit

Illinois-American’s discharges to the Mississippi or otherwise conflict with this

adjusted standard, Illinois-American will be bound by any such regulations, and

this adjusted standard terminates on the compliance date of the new regulations.

The Agency or Illinois-American may petition the Board for modification or

termination of this adjusted standard, including authorization for Illinois-

American to terminate any contracts entered pursuant to this adjusted standard.

IT IS SO ORDERED.

Section 41(a) of the Environmental Protection Act provides that final Board orders may

be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the

order. 415 ILCS 5/41(a) (2006);

see also

35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.

Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois

Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The

Board’s procedural rules provide that motions for the Board to reconsider or modify its final

orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code

101.520;

see also

35 Ill. Adm. Code 101.902, 102.700, 102.702.

I, John Therriault, Assistant Clerk of the Illinois Pollution Control Board, certify that the

Board adopted the above order on October 18, 2007, by a vote of 4-0.

John Therriault, Assistant Clerk

Illinois Pollution Control Board