EMERALD PERFORMANCE
MATERIALS, LLC
(as purchaser of Noveon, Inc.)
Petitioner,
v.
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
EERK'S
OFFICE
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JUN 2 7 2008
PCB 04-102
(Permit Appeal — Air)
ence W. Falbe
e of its Attorne
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
NOTICE OF FILING
To: John Therriault, Assistant Clerk
Illinois Pollution Control Board
James R. Thompson Center
100 West Randolph Street — Suite 11-500
Chicago, IL 60601
Bradley P. Halloran
Hearing Officer
Illinois Pollution Control Board
James R. Thompson Center
100 W. Randolph Street — Suite 11-500
Chicago, IL 60601
Sally Carter
Assistant Counsel
Illinois Environmental Protection Agency
1021 North Grand Avenue East
P.O. Box 19276
Springfield, IL 62794
PLEASE TAKE NOTICE
that on Friday, June 27, 2008, the undersigned filed with the
Clerk of the Office of the Illinois Pollution Control Board, Petitioner's Post-Hearing
Memorandum, a copy of which is herewith served upon you.
Dated: June 27, 2008
Respectful submitted,
ER D PERFORMAy E MATERIALS, INC.
Roy M. Harsch, Esq. ARDC # 114148
Lawrence W. Falbe, Esq. ARDC #622
Drinker Biddle & Reath LLP
191 N. Wacker Drive - Suite 3700
Chicago, IL 60606
(312) 569-1441 (Telephone)
(312) 569-3441 (Facsimile)
THIS FILING IS BEING SUBMITTED ON RECYCLED PAPER
John T. Therriault
Hearing Officer
Illinois Pollution Control Board
James R. Thompson Center, Suite 11-500
100 W. Randolph Street
Chicago, IL 60601
therriaj(&)ipcb.state.il.us
CERTIFICATE OF SERVICE
I, Lawrence W. Falbe, an attorney, hereby certify that on Friday, June 27, 2008 a copy of
the foregoing Petitioner's Post-Hearing Memorandum, was sent to the following via first class
mail:
Bradley P. Halloran
Hearing Officer
Illinois Pollution Control Board
James R. Thompson Center, Suite 11-500
100 W. Randolph Street
Chicago, IL 60601
halloraW,ipcb.state.il.us
Sally A. Carter
Illinois Environmental Protection Agency
1021 N. Grand Avenue East
P.O. Box 19276
Springfield, IL 62794-9276
Sally.Carterillinois.gov
CH01/ 25169619.1
EMERALD PERFORMANCE
MATERIALS, LLC (as purchaser of
Noveon, Inc.)
Petitioner,
RECEIVED
CLERK'S OFFICE
JUN 2 7 2008
STATE OF ILLINOIS
PCBOWIttheen
Control Board
(Permit Appeal – Air)
v.
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PETITIONER'S POST-HEARING MEMORANDUM
Petitioner, EMERALD PERFORMANCE MATERIALS, LLC (as purchaser of Noveon,
Inc.) ("Emerald")
1
hereby submits its post-hearing memorandum in the above-captioned matter.
I.
QUESTION PRESENTED
The issue in this permit appeal is whether, if Petitioner's Facility would otherwise be
subject to the 2000 part-per-million (ppm) sulfur dioxide (SO
2
) limitation set forth in 35 III.
Adm. Code § 214.301, is it exempt from this limitation under the exception provided under 35
Ill. Adm. Code § 214.382(a) because the Facility has "existing processes designed to remove
sulfur compounds from the flue gases of petroleum and petrochemical processes." Related to
this primary question is the issue of whether the Illinois Environmental Protection Agency
An agreed motion to change petitioner's name from "Noveon" to "Emerald Performance
Materials, L.L.C." to reflect the latter's
May 2006 purchase of the facility whose permit
is the
subject of this
appeal was granted by the Board on February 7, 2008.
(See also
Testimony of
David Giffin, 9:20-13:12). To avoid confusion, all references to Emerald/Noveon shall be to
"Petitioner" or "Emerald," regardless of the actual name of the company at the time.
("IEPA") should be estopped from changing its long-standing interpretation of 35 Ill. Adm. Code
§ 214.382(a) as applied to this particular Facility, despite a lack of changed circumstances.
IL STATEMENT OF THE CASE
On its face, this case is about whether the 2000 ppm
SO
2 emission limitation set forth
under 35 III. Adm. Code § 214.301 applies to Petitioner's Facility, given that Petitioner contends
that it is entitled to the exception for certain processes that is provided under 35 III. Adm. Code
§ 214.382(a) (the "SO2
exception"). This exception states that "Section 214.301 shall not apply
to existing processes designed to remove sulfur compounds from the flue gases of petroleum and
petrochemical processes." The regulation does not specify minimum criteria or standards for
these processes, how they are designed, or how they relate to the rest of the system; indeed, the
sole requirement is that the facility has "processes" that "are designed to remove sulfur
compounds...." The regulation at issue is plainly-worded and unambiguous. Thus, this would
seem to be a simple, straightforward, fact-based determination as to whether the processes that
exist at Petitioner's Facility uses are so designed.
As set forth herein, the Record clearly indicates that Petitioner's Facility meets the
requirements for the SO2
exception. Moreover, given that Petitioner's Facility previously had in
place an air pollution control operating permit granted by IEPA that recognized the applicability
of the SO2
exception to its processes, and this exception had been in place for over 25 years
(since 1975), and further that no material changes in the Facility's processes had taken place
during this period, it would appear that the answer to this question would be a no-brainer. Yet,
in
2003, the IEPA decided to change course and overturn more than 25 years of its consistency in
THIS FILING SUBMITTED ON RECYCLED PAPER
2
administering the Facility's air permit, and decided that the exception really shouldn't apply to
the Facility, after all.
Thus, what this case is really about is whether IEPA improperly overstepped its authority
by mandating criteria for the SO 2 exception that do not exist in the regulation, and reversing
course on decades of consistent interpretation of the regulation, despite no change in the
regulations or the factual circumstances. Why did IEPA do this, after years of consistently
determining that the exception applied? As discussed herein, the Record shows that this change
occurred after a new IEPA engineer, Dan Punzak, was assigned to the Facility's permit file in
1993.
Mr. Punzak decided that, despite the previous and consistent decisions made by IEPA
over many years (since 1975) as to the appropriateness of the exception as applied to Petitioner's
Facility, he had a different opinion. As clearly indicated in the Record, when Mr. Punzak was
assigned to review the Petitioner's air permit renewal application, he took issue with two aspects
of the Petitioner's process that he determined disqualified the Facility for the exception. The two
issues identified by Mr. Punzak were that, first, the sulfur removal process removed 'only' about
23% of the sulfur. Mr. Punzak was dissatisfied with this percentage and thought that the plant
should be able to do better. Second, Mr. Punzak looked at the process itself and decided that the
particular design of the process made it appear to him to be more of a "recovery" device than a
"control" device, 2
which essentially meant that Mr. Punzak felt the sulfur recovery was
2 As explained
infra,
the applicable regulation speaks
in terms
of "processes" and does not
discuss types of devices,
whether they might be deemed "control"
devices or "recovery" devices,
at all.
THIS FILING SUBMITTED ON RECYCLED PAPER
3
integrated into the manufacturing process to recover raw material, as opposed to a late-stage
device strictly intended to capture emissions (like a scrubber).
Thus, Mr. Punzak's determination that the exception did not apply to Petitioner's Facility
was clearly based on his reading two requirements into the regulation that plainly do not exist.
In fact, the evidence in the Record is clear that, until Mr. Punzak became the reviewing engineer,
IEPA was consistent in its position that the 50
2
exception did apply to Petitioner's facility,
starting with the issuance of the operating permit in 1975, and each renewal thereafter (until
2003). Therefore, the issue in this case is really whether IEPA can set a standard for the
efficiency and/or design of a process where none currently exists in the rules, simply by
changing its long-standing position on whether a specific process at a specific facility meets this
definition, even though no other facts have changed.
The answer to this question is clearly "no." IEPA does not have the right to arbitrarily
incorporate additional criteria in a regulation such as 35 Ill. Adm. Code § 214.382(a) where such
criteria do not exist in the language of the regulation. Such action plainly constitutes
rulemaking, which is the purview of the Pollution Control Board, not the IEPA. Moreover,
IEPA does not have the unfettered discretion to ignore over 25 years of its own precedent as to
the interpretation of this regulation, where the processes and circumstances at the Facility have
not changed.
For these reasons, and as further discussed herein, the Board should find that IEPA
inappropriately determined that the exception under 35 III. Adm. Code § 214.382(a) did not
apply to the Facility, and the permit determination should be remanded to IEPA with instructions
THIS FILING SUBMITTED ON RECYCLED PAPER
4
to re-issue the permit with the acknowledgment that the Facility is not subject to the 2000 ppm
SO2
limitation set forth in 35 Ill. Adm. Code § 214.301.
III. BACKGROUND FACTS AND PROCEDURAL HISTORY
Petitioner's Facility is a petrochemical manufacturing plant located at 1550 County Road,
1450 N in Henry, Illinois (Facility ID No. 123803AAD). The Facility manufactures organic
chemicals, specifically antioxidants and accelerators to be used in the manufacture of rubber and
plastics, coatings used in the electronics industry and personal care products used for personal
hygiene such as hair conditioners. (See Public Hearing Transcript, Testimony of David Giffin,
13:21-15:12).3
In addition, the Facility houses storage tanks for raw material, intermediates and
finished products and operates a wastewater treatment facility and a small process fluid heater
for process heat.
Since prior to 1972, the Facility has operated processes designed to remove sulfur
compounds from the flue gases of petrochemical processes as part of its manufacture of a
substance known as crude sodium MBT, which once purified, is then sold. (Testimony of D.
Giffin, 15:13-16:6; 24:4-8). The sulfur is removed as carbon disulfide by the means of
condensers. These condensers were part of the original process design prior to the 1960s.
(Testimony of D. Giffin, 54:5-10). This operational configuration has historically exempted the
Facility from the general SO
2 emission limitation of 2000
ppm
found at 35 III. Adm. Code
§ 214.301.
3 All
references to testimony
will
be from the public hearing which was held before Hearing
Officer Bradley P. Halloran on February 5, 2008.
THIS FILING SUBMITTED ON RECYCLED PAPER
5
Since the original air permitting in 1975, there have been no significant changes to the
operation of the chemical manufacturing portion of the Facility, with the exception of the
installation of a sodium hydrosulfide recovery system (known as a "NaSH" unit) 4
at the end
point of the process. (Testimony of Dave Giffin, 13:13-20; 24:4-8).
On March 7, 1996, IEPA received a timely application for a Clean Air Act Permit
Program ("CAAPP") permit (Application No. 96030152) for Emerald's Facility. (TSR -
000001- 002115).
5
On September
17,
2003, IEPA issued a draft CAAPP permit to the Facility
and opened the 30-day public comment period soliciting comments about that permit.
Id.
During the public comment period, Emerald submitted detailed comments to IEPA regarding
certain draft permit conditions. (R - 001253-1267). Among other comments, Petitioner noted
that the draft permit "ignores the fact that the MBT-C reactor/blow down tank system is
equipped with a system that recovers sulfur compounds from the flue gases of petroleum
processes and this is subject to the exclusion set forth in 35 IAC 214.382."
(Id.
at R - 001260).
4
The NaSH unit produces sodium hydrosulfide from the flue gas that previously went to be
burned in a flare. The NaSH system recovers the carbon disulfide (CS
2 ) that is not removed in
the condensers, which is then returned to the reactor. The remaining hydrogen sulfide (H
2 S) gas
stream is cleaned of impurities and reacted to produce sodium hydrosulfide, which is sold as a
useful product. (Testimony of D. Giffin, 19:12-21:5). While the installation of the NaSH unit
brings the Facility into compliance with the applicable air regulations even without the
application of the SO
2
exception, Petitioner has never abandoned its legal position that it is
entitled to the SO2
exception, and has valid reasons for continuing this appeal. (Testimony of D.
Giffin, 41:24-42:2; 46:13-47:7). Among other reasons, Petitioner has voluntarily complied with
the SO
2 limitation so that, if its appeal is successful, it will be able to market SO
2 reduction
credits. Petitioner also intends to seek modification of its construction permit for the NaSH
system so that it can utilize its flare as its NESHAP control device for periods when the NaSH
system is inoperable. (Id.)
5
There were two records complied by IEPA for the permit appeal; one was composed of
documents for which Petitioner claimed trade secret protection, and the other was an unprotected
`public' record. Citations to the Trade Secret Record will be to TSR - XXXXXX, and citations
to the public record will be to R - XXXXXX.
THIS FILING SUBMITTED ON RECYCLED PAPER
6
On November 24, 2003, IEPA issued to Emerald a final CAAPP permit that became
effective upon issuance. (R — 001980 — 002070). While IEPA modified some conditions of the
final CAAPP permit in response to Emerald's comment letter, it did not modify the final CAAPP
permit to respond to all of Emerald's significant comments. Petitioner filed the instant permit
appeal, claiming that IEPA's failure to modify the final CAAPP permit, as requested, is
inconsistent with the Illinois Environmental Protection Act and the corresponding regulations.
While most of the other objections raised by Petitioner have been addressed, mooted or
dismissed, the remaining issue is whether the condition set forth in the Permit that rejected the
applicability of the under 35 Ill. Adm. Code § 214.382(a) was appropriate.
On February 5, 2008, a public hearing was held before Hearing Officer Bradley P.
Halloran, although members of the public were excluded due to presence of trade secret
information that was discussed as part of the Record. Emerald, through its attorney Roy Harsch,
presented three witnesses:
1)
David Giffin,
who is currently the health, safety and
environmental manager at the Facility. Mr. Giffin has been
employed at the Facility for almost 38 years, and is the engineer
assigned to the process at issue in this case. (Testimony of David
Giffin, 9:20-10:12).
2)
Michael R. Corn,
who is president of AquAeTer, an
environmental consulting firm. Mr. Corn has 33 years of
experience as an environmental consultant and first became
involved with the Facility in 1988. He and his firm were retained
by Emerald to assist the company in the preparation of its first
Title V air permit in the mid-1990s. (Testimony of M. Corn, 66:2-
67:12).
3)
Bernard 0. Evans,
who is currently employed by Environmental
Resources Management (ERM). Mr. Evans supports the air
program
for ERM and has been consulting with industry on air
matters for 30 years. He has been working with the company since
THIS FILING SUBMITTED ON RECYCLED PAPER
7
1988, and has been working with the Facility in particular since
2003. (Testimony of B. Evans, 80:2-82:14).
IPEA presented only the testimony of engineer Dan Punzak. Subsequent to the public
hearing, Hearing Officer Halloran set a schedule for the parties' post-hearing briefing.
IV.
ARGUMENT
A.
PETITIONER'S FACILITY MEETS THE REQUIREMENTS OF
35
ILL.
ADM. CODE
§ 314.382(a)
AND IS ENTITLED TO THE SULFUR
DIOXIDE EMISSION EXCEPTION
The requirements to qualify for the SO
2 exception under 35 Ill. Adm. Code § 214.382(a)
are simple. The plain language of the regulation states:
Section 214.301 shall not apply to existing processes designed to
remove sulfur compounds from the flue gases of petroleum and
petrochemical processes.
As set forth in the Record, since prior to 1960 (which also predated the Illinois air
emission regulations), the Facility has operated processes designed to remove sulfur compounds
from the flue gases of petrochemical processes. (Testimony of D. Giffin, 54:5-10). This
operational configuration has historically exempted the Facility from the general SO
2
emission
limitation of 2000 ppm found at 35 Ill. Adm. Code § 214.301. IEPA has not disputed that the
Facility is a petrochemical plant (Testimony of D. Giffin, 24:9-19), nor does either party dispute
that, but for the § 214.382(a) exception, the § 214.301 SO
2 limitation would be applicable.
Pursuant to 35 Ill. Adm. Code § 2I4.382(a), the general SO
2 emission limitation of 2000
ppm does not apply to existing processes, like the Facility's, that have processes in place to
remove sulfur compounds from the flue gases of its petrochemical
manufacturing process. The
emissions from the Facility's petrochemical batch reactor processes vent to condensers that
THIS FILING SUBMITTED ON RECYCLED PAPER
8
remove a substantial portion of the carbon disulfide (CS
2 ), a sulfur compound, from the emitted
gases and recycle that material back into the process. That recycling activity reduces
approximately 23% percent of the total sulfur from the batch process gases. Without these
condensers, the sulfur captured by this process would be released out of the system.°
Each of the witnesses presented by Petitioner at the public hearing confirmed that he
believed that 35 Ill. Adm. Code § 214.382(a) properly applied to the Facility.
(See
Testimony of
D. Giffin, 25:5-26:1; Testimony of M. Corn, 70:4-24); Testimony of B. Evans, 86:9-87:7). As
succinctly stated by Mr. Corn, in the context of his review of the Facility's permit application for
its first Title V permit in the mid-1990s, he believed the exception properly applied to the
Facility because in order to meet the exception, "it had to be a petrochemical process, and it had
to remove sulfur. And from our review, both of those conditions were met." (Testimony of M.
Corn, 72:7-11).
Importantly, 35 Ill. Adm. Code § 214.382(a) does not expressly state a level of sulfur
reduction that must be achieved for a source to be exempt from the 2000 ppm standard.
Therefore, in the absence of such a standard in the regulation, IEPA may not arbitrarily impose
one in the CAAPP permitting process. Similarly, 35 Ill. Adm. Code § 2I4.382(a) does not
specify how the processes must be designed, how they relate to the rest of the system, or how
they actually function, as long as the end result is that the process reduces sulfur emissions.
Again, in the absence of such criteria in the regulation, IEPA cannot supplant the Board's role in
rulemaking by mandating compliance with design standards or specifications that do not exist.
6
Notably, Mr. Giffin, testified that it was perfectly possible to run the MBT reactors without the
condensers; such a circumstance would merely mean that the CS
2
that is usually recovered by the
condensers would not be recovered. (Testimony of D. Giffin, 27:2-23; 54:11-56:6;
see also
Testimony of M. Corn, 75:2-12).
THIS FILING SUBMITTED ON RECYCLED PAPER
9
As noted above, what led IEPA to turn its back on its decades-long interpretation of 35
Ill. Adm. Code § 214.382(a) was the assignment of a new engineer, Dan Punzak, to review
Petitioner's permit renewal application. Despite the fact that IEPA had, for years, determined
that the Facility was entitled to the SO2 exception, and despite Mr. Punzak's knowledge of the
IEPA's prior determination on this issue, Mr. Punzak concluded that two aspects of the
Petitioner's process disqualified the Facility.
First, Mr. Punzak noted that the sulfur removal process removed about 23% of the sulfur.
(R – 001545). To Mr. Punzak, this percentage was "questionable" and not good enough to
qualify for the exception. (Testimony of D. Punzak, 115: 18-22). The Record shows that Mr.
Punzak engaged in his own research of industrial plants in other states, such as West Virginia,
Louisiana and South Carolina. (Testimony of D. Punzak, 122:18-23). The point of this research
was to determine what percentage removal might be expected from a "true sulfur removal
system." (Testimony of D. Punzak, 115:18-21). However, it does not appear that Mr. Punzak
conducted this research with an open mind; rather, he sought data that would confirm his opinion
that the condensers used in the Petitioner's process did not remove enough sulfur for his
satisfaction. As he explained in a June 2001 e-mail to his contact with the West Virginia state
EPA, Mr. Punzak hoped to use this information to "help us justify the operation here [Emerald]
requiring better control." (R- 001553).
While one may assume that Mr. Punzak's objective in developing an argument that the
§ 214.382(a) exception should not apply to Petitioner's Facility was the otherwise laudable goal
of trying to further reduce sulfur emissions from the Facility, it is clear that Mr. Punzak went
about this
the wrong way. In other words, by attempting to write into the regulation an
THIS FILING SUBMITTED ON RECYCLED PAPER
10
efficiency mandate that is not present, IEPA is attempting to administratively amend the actual
rule. Absent appropriate rulemaking action by the Board, IEPA simply does not have the
authority or discretion to demand regulatory compliance with an emissions criteria that exists
nowhere except in the creative mind of one of its engineers.
In addition to his concern over the percentage of sulfur recovery that the Facility
achieves, Mr. Punzak took issue with the fact that the reflux condensers that removed the sulfur
made it appear to him to be more of a "recovery" or "process" device than a "control" device.
Although the § 214.382(a) exception speaks only of requiring "processes" that remove sulfur
compounds, Mr. Punzak interpreted this to mean a "control device." (R - 001543) Mr. Punzak
believed that because the reflux condensers were designed to return captured sulfur to the system
(in the form of CS
2
), which was essentially recycled as raw material, such devices would be
"considered to be process condensers and shouldn't be given any credit in terms of efficiency as
a control device." (Testimony of D. Punzak, 115:24-116:2). Mr. Punzak also seemed to believe
that if the sulfur was returned to the system during the process at any point, rather than somehow
completely removed from the production process, this also disqualified the process from the SO2
exception, no matter how much sulfur was removed from the flue gas. (Testimony of D. Punzak,
160:3-15).
Once again, however, Mr. Punzak's determination (as adopted by IEPA) to mandate a
more stringent degree of sulfur removal by Petitioner's Facility was without a regulatory basis.
It is unquestionable that the regulation makes no reference to "devices" of any type, much less
differentiates them on the basis of whether they meet undefined specifications as "control"
devices, "process" devices, or what-have-you. Tellingly, Mr. Punzak himself realized that his
THIS FILING SUBMITTED ON RECYCLED PAPER
11
attempt to write such a criteria into the regulation would be vulnerable to attack. He suggested in
a February 2001 e-mail to Ms. Rachel Doctors, an IEPA lawyer, that before making this
argument, he would attempt to determine if the Facility had made any material increases in its
production levels, whereby Mr. Punzak might be able to require additional controls under the
Prevention of Significant Deterioration (PSD) rules. As Mr. Punzak admitted to Ms. Doctors, "If
we can show that they [Emerald] have made changes, we may be able to use the PSD rules to
require control and not have to get into the semantics of whether the condenser is a control or
recovery device."' (R- 001543).
Mr. Punzak admitted on cross-examination that the requirements IEPA was demanding in
order to agree to the applicability of the SO
2 exception appeared nowhere in the regulatory
language, and also that the CS
2
that was captured by the condenser was removed from the flue
gases and not emitted to the atmosphere:
Q.
Does the term "pollution control device" appear in that rule
[214.382]?
A.
No. It does not.
Q.
Does the word "reflux condense?' appear in that rule?
A.
No. It does not.
Q.
Do the words "process condenser" appear in that rule?
A.
No. It does not.
Q.
I think you testified on direct that this is a petrochemical
process; the Agency accepts that?
As admitted by Mr. Punzak under cross-examination at the public hearing, Petitioner's answers
to IEPA's inquiry as to any possible changes in conditions with Petitioner's process did not
support a PSD argument, and so Mr. Punzak was eventually forced to confront the `semantics'
that
he had hoped to avoid
in mustering support to compel a reduction in emissions at the
Facility. (Testimony of D. Punzak, 144:13-145:12).
THIS FILING SUBMITTED ON RECYCLED PAPER
12
A.
Yes.
Q.
And it's clearly an existing process at the time that the
Board wrote these rules?
A.
Yes.
Q.
Carbon disulfide is a sulfur compound?
A.
Yes, it is.
Q .
What happens to the carbon disulfide that is condenses in
the condenser and sent back to the reactor?
A.
Well, it's available for reaction.
Q .
So it is tied up and reacts –
A.
Yes.
Q.
-- with the other raw materials?
A.
Yes.
Q.
So that carbon disulfide that's removed from a condenser
and sent back to the reactor doesn't emit to the atmosphere,
correct?
A.
Yes. If it reacts, that's correct.
(Testimony of D. Punzak, 130:7-131:10).
Mr. Punzak's conclusions were refuted at the public hearing by Emerald's witnesses. Mr.
Corn, for example, stated as follows:
Q.
What is your understanding of the evolving Agency's
decision?
A.
That ... the condenser does not recover enough sulfur, a
certain percentage of sulfur. There is nothing is the regulation that
gives a percentage of sulfur recovery.
The second thing, I think he [Mr. Punzak] is claiming that a
reflux condenser makes it a process and not a sulfur removal
process. Regardless of whether it recovers that CS
2
, carbon
THIS FILING SUBMITTED ON RECYCLED PAPER
13
disulfide, and sends it back to the process, it's still recovering
sulfur; and that's the requirement of the regulation of the
exception. So that seems to be a moot point. It's not classified in
a regulatory language of how much sulfur you have to recover.
Q.
Does the exemption in your view turn on whether the
device is a process device or a control device, a reflux condenser,
or something called a red apple?
[objections and colloquy omitted]
A.
It does not require a specific type of control equipment.
Most environmental regulations do not specify the type of control
equipment you put on to reduce emissions, just that you reduce
emissions. That's for a purpose. We as engineers have to put our
stamp on that, not the regulators.
Q.
So is it your opinion that the fact that it condenses CS
2
and
returns it back to the process makes any difference?
A. Based on my reading of the regulations, that should not
make any difference to the interpretation that it removes sulfur
from the flue gases.
(Testimony of M. Corn, 73:5-74:15).
In summary, although Mr. Punzak might be commended for his tenaciousness in trying to
find a way to compel increased efficiencies of sulfur removal at Petitioner's Facility, his strategy,
and ultimately that of IEPA's, of effectively writing into the regulation requirements that clearly
do not exist, was improper and should not be upheld. Illinois law provides that "where the
language of a regulation is clear and certain, an administrative agency's interpretation of the
regulation which runs counter to the regulation's plain language is entitled to little, if any, weight
in determining the effect to be accorded the regulation."
Central Illinois Public Service Co. v.
Pollution Control Bd.,
165 Ill. App. 3d 354, 363 518 N.E.2d 1354 (4th Dist. 1988)(citing
Chicago Transit Authority v. Industrial Comm'it
141 Ill. App. 3d 930, 491 N.E.2d 58 (1st Dist.
THIS FILING SUBMITTED ON RECYCLED PAPER
14
1986)); accord
Dean Foods Company v. Pollution Control Board,
143 III. App. 3d 322, 334, 492
N.E. 2d 1344, 1353 (2d Dist. 1986). Even where the language of a regulation is debatable
(although not the case here), and circumstances have not changed, "an administrative agency is
bound by a long-standing interpretation of the regulation."
Central Illinois Public Service Co.,
165 III. App. 3d at 363, 518 N.E.2d at 1359. It is clear from the above discussion that, under the
plain language of the § 214.382(a) exception, the Facility is entitled to the benefit of this
exception, and is therefore exempt from the 2000 ppm SO
2
limitation set forth in 35 III. Adm.
Code § 214.301.
B. IEPA IS ESTOPPED FROM REVERSING COURSE ON ITS 25-YEAR
CONSISTENT DETERMINATION THAT PETITIONER'S FACILITY IS
ENTITLED TO THE SULFUR DIOXIDE EMISSION EXCEPTION
As noted above, IEPA has, over the last 25 years, consistently approved the Facility's
permits including the exception. Not only has Petitioner shown that it is entitled to the exception
based on the plain language of the regulation, and the status of the Facility, as discussed above,
IEPA should also be estopped from changing its mind after years of consistent application of the
regulation to the Facility.
Mr. Punzak was informed when he was assigned the permit review for the Facility in
1993 that the IEPA had previously determined that the Facility was exempt from 35 111. Adm.
Code § 301 because the exception on 214.382(a) applied to the Facility. (Deposition of Dan
Punzak at 11:23-12:5). Previously, other engineers at IEPA had performed the permit review.
(Deposition of Dan Punzak at 11:14-18). Although Mr. Punzak came to a different conclusion,
and even solicited internal legal review at IEPA to support his interpretation of the regulation,
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15
apparently a final decision was not made at that time to formally reject the application of the SO2
exception to Petitioner's permit 8 It was not until 2003, in the context of IEPA's comments to
Petitioner's permit renewal application, was the issue of IEPA's new determination that the
exception did not apply even raised with the Petitioner. Thus, after the initial permit was issued
in 1975, and during subsequent renewal analyses conducted by IEPA in 1978, 1983 and 1993,
each time, IEPA formally determined that the SO
2 exception applied to the Facility. (R —
001474). Thus, the first time IEPA formally expressed its new interpretation that the SO2
exception did not apply to the Facility, was the receipt by Petitioner of the IPEA comments to
Petitioner's CAAPP permit application in 2003.
To its credit, IEPA has openly acknowledged that its new position on the non-
applicability of the exception constitutes a change in position, even though there have been no
changes to the regulation in question, nor a change in any of the applicable circumstances at the
Facility:
For the purposes of [Emerald's] claim that the Illinois EPA held a
contrary permitting position for approximately twenty years with
regard to the applicability of 35 III. Adm. Code 214.382, the
Illinois EPA concedes the point.
(See IEPA's Response to [Emerald's] Motion to Supplement the Record, filed January 29, 2008,
at 13). In fact, IEPA even attached an affidavit from Dan Punzak in which Mr. Punzak
acknowledged that "since at least 1975 through 1993, IEPA issued permits authorizing the
source to operate the process exempt from the requirement in 35 Ill. Adm. Code 214.301 based
8
The Record appears to show that IEPA's reason for not informing Petitioner in 1993 that it had
changed its mind about the applicability of the exception
to
the Facility was that IEPA expected
that new
MACT standards would soon be promulgated that might address the issue. (R —
001542).
THIS FILING SUBMITTED ON RECYCLED PAPER
16
on the applicability of 35 Ill. Adm. Code 214.382."
(See
Affidavit of Dan Punzak, attached to
IEPA's Response to [Emerald's] Motion to Supplement the Record).
Counsel for IEPA also admitted this at the public hearing, where IEPA attorney Carter
stated, "We had a contrary position for 20-some years. And we don't dispute that fact."
(Public Hearing Transcript, Argument by Ms. Carter, IEPA Counsel, 152:8-10).
While unabashed in its admission that it did an about-face in interpreting the regulation,
IEPA does not, however, explain the basis for its belief that it may arbitrarily rewrite years of
consistent application of this regulation in the context of the permit program, simply because a
new engineer assigned to the permit review adopted a different opinion on the applicability of
the regulation to the Facility. Rather, IEPA seems to assume that whatever the prevailing
opinion of the day is at the agency, that's the way it is, regardless of whether today's opinion is
consistent with yesterday's (or indeed, the past 25 years') opinion. IEPA is wrong.
While an administrative agency's findings of fact should not be disturbed unless they are
against the manifest weight of the evidence, the rule does not apply where the question involved
is one of law, such as the proper interpretation of a statute. In such cases, the governing board's
finding is not binding on the court, and such review is under the
de novo
standard.
Village of
Fox River Grove v. Pollution Control Board,
299 Ill. App. 3d 869, 877-78, 702 N.E.2d 656, 662
(2d Dist. 1998)(citing
Envirite Corp. v. Illinois Environmental Protection Agency,
158 Ill. 2d
210, 632 N.E.2d 1035 (1994));
see also Peoria Disposal Co. v. Illinois Environmental Protection
Agency,
PCB 08-25, slip. op. at 31 (January 10, 2008)("[W]hen the Agency has resolved a legal
question such as interpretation of a statutory provision, the Agency's determination is not
binding upon the Board."). It is well-accepted that when interpreting a regulation that a
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17
governmental agency is charged with administering, assuming that the factual circumstances
have not changed, the administrative agency is bound by a long-standing interpretation of the
regulation.
Central Illinois Public Service Ca,
165 Ill. App. 3d at 363, 518 N.E.2d at 1359
(citing
United States v. Leslie Salt Co.
350 U.S. 383, 396 (1956)). Illinois courts have likewise
held that administrative agencies are bound by their long-standing policies and customs of which
affected parties had prior knowledge.
Id., 165 Ill. App. 3d
at 363, 518 N.E.2d at 1360 (citing
Gatica v. Department of Public Aid,
98 Ill. App. 3d 101, 423 N.E.2d 1292 (1st Dist. 1981);
Holland v. Quinn,
67 Ill. App. 3d 571, 385 N.E.2d 92 (1st Dist. 1978)).
The reasons for this policy should be self-evident: governmental agencies in the position
of administering regulations and statutes that affect the rights of private and corporate citizens
must adhere to an expected level of reasonableness and consistency, regardless of the personal
viewpoints of any of the employees who might be employed at such agency at any given time.
Otherwise, there would be no way for citizens and businesses to plan their affairs, for fear of
capricious and ever-shifting interpretations of statutes and regulations, even though the laws
themselves have not changed.
In sum, given the IEPA's long-standing interpretation, and the obvious reliance of the
Petitioner on this exception for decades, and the lack of any change in the regulations or factual
circumstances, it should be clear that the IEPA's "new" interpretation of 35 Ill. Adm. Code
§ 214.382(a) is improper, is not entitled to deference, and IEPA should be bound by its previous
interpretation of the instant regulation.
THIS FILING SUBMITTED ON RECYCLED PAPER
18
C.
THE HEARING OFFICER ERRED IN DENYING PETITIONER'S MOTION TO
SUPPLEMENT THE RECORD WITH EVIDENCE RELATED TO IEPA'S
PRIOR PERMITTING DECISIONS, AND ALSO ERRED BY SUSTAINING
IEPA'S OBJECTIONS
AS TO ANY
DISCUSSION OF IEPA'S PRIOR
PERMITTING DECISIONS AT THE HEARING
As a result of Petitioner's appeal of the improper permit conditions, and as required under
the Act and applicable Board regulations, IEPA prepared the Record on Appeal and submitted
the Record to the Board on April 26, 2007. Absent from the Record, however, were a number of
pertinent documents (detailed below) that related to IEPA's many internal discussions over the
years as to whether the Facility was in fact entitled to the SO
2 exception.
Upon receipt of the Record, Petitioner reviewed the documents that were included in the
Record and found two internal Memoranda that predated the filing of the CAAPP Application on
March 7, 1996 which pertain to the issue of whether Petitioner is entitled to the exemption.
These documents are a Memorandum with the subject of Request for Legal Interpretation of
Rule 214 Subpart K from Don Sutton and Dan Punzak to Robert Sharpe, dated April 13, 1993 (R
- 001477-001479) and a Memorandum with the subject of Legal Interpretation of Rule 214
Subpart K, from Rachel Doctors to Kathleen Bassi, dated May 13, 1993 (R - 001474-00176).
These internal IEPA documents are clearly relevant to the issue on appeal and were included in
the Record by the IEPA as part of the basis for IEPA's permitting analysis and decision. These
documents pertain to the issuance of a renewal of the state operating permit NO. 72110935 for
the facility (R - 001477). Furthermore, these documents clearly state that the IEPA had
questioned the application of the exemption as part of the application for an operating permit in
1973, its subsequent issuance in 1975, and again as part of the subsequent issuance of operating
permit renewals in 1978, 1983 (R - 001474). Finally the Request for Legal Interpretation of Rule
THIS FILING SUBMITTED ON RECYCLED PAPER
19
214 Subpart K, from Don Sutton and Dan Punzak to Robert Sharpe, dated April 13, 1993, states
that: "Attached are copies of former analysis notes and some responses from BFG
9
to
inquiries."(R - 001477). These referenced attachments were not included in the Record that was
filed by IEPA.
Clearly, these earlier internal IEPA documents contained in the operating permit file
relate to the issue of whether the Facility, in the opinion of IEPA personnel, qualified for the SO2
emission exemption. Petitioner was not aware of the existence of these two Memoranda nor the
apparent concern regarding the application of the exception prior to the filing of its CAAPP
application. As was established by testimony at the public hearing, these documents were not
produced by IEPA in response to a Freedom of Information Act ("FOIA") request submitted by
Petitioner to review the operating permit files in advance of the preparation of the CAAPP
application in the mid-1990s. (Testimony of D. Giffin, 29:6-30:15). Nor were they produced by
IEPA in response to a FOIA request submitted to review the operating permit files as they
pertain to the exemption issue which was submitted during the pendency of the CAAPP
application when it became apparent that IEPA did not then believe the exemption applied.
(Testimony of D. Giffin, 49:11-24).
Upon review of the Record, Petitioner began discussions with the attorney for the IEPA
regarding the previous IEPA internal documents from the operating permit files that had not been
included in the Record as filed. In lieu of formal discovery pursuant to agreement of counsel,
Ms. Carter sent a letter dated October 3, 2007, voluntarily providing a number of documents
from the operating permit files pertaining to the process. This letter and its enclosures were
9
In 1993, the Facility was owned by B.F. Goodrich ("BFG").
THIS FILING SUBMITTED ON RECYCLED PAPER
20
attached as Exhibit A to Petitioner's Motion to Supplement the Record. Petitioner requested that
Attachment A be included in the Record as a supplement to that which was filed by the IEPA.
These documents were clearly relevant to the issue at hand, were referenced in documents
included in the Record by IEPA and may in fact have been actual attachments to one such
document. Thus, while some of the documents from the operating permit file relevant to the SO2
emission exemption were included in the Record, the IEPA, in preparing the Record, apparently
picked and chose among a group of relevant documents when preparing the Record it submitted.
The request to supplement the Record with these documents was denied by the Hearing Officer
in an Order dated February 4, 2008.
The Hearing Officer's February 4, 2008 Order denying Petitioner's Motion to
Supplement the Record was in error. Under applicable Board regulations for CAAPP permit
appeals, the IEPA has the responsibility for preparing the Record, and within 30 days after
service of the appeal petition, must file "an answer consisting of
the entire Agency record
of
the CAAPP application including the CAAPP permit application, the hearing record, the CAAPP
permit denial or issuance letter, and correspondence with the applicant concerning the CAAPP
permit application." (emphasis added). 35 Illinois Adm. Code 105.302(f).
Board decisions interpreting the scope of the IEPA's duty to prepare the Record and what
it must contain have held that "the entire record" essentially includes everything existing in the
IEPA's files that pre-dates the final decision on the permit.
See, e.g., Jack Pease, d/b/a Glacier
Lake Extraction v. Illinois Environmental Protection Agency,
PCB 95-118, 1995 WL 314505
(May 18, 1995). Thus, the IEPA is not allowed to pick and choose among documents in its file
to determine what it would like to include in the Record, and what it would like to exclude.
THIS FILING SUBMITTED ON RECYCLED PAPER
21
Even if the IEPA might intend to argue before the Board that certain documents may not be
relevant to the issue on appeal, in that the IEPA did not "rely" on such documents in making its
permit decision, such a position is not grounds for excluding such documents. As the Board has
stated, "To the extent the [Illinois EPA] did not rely on any such documents when it made its
determination, it can make those arguments at the hearing."
Id.
The Board has also previously held that petitioners have broad latitude in requesting that
the Record be supplemented in cases where the Record prepared by the IEPA is incomplete. For
example, in
Joliet Sand and Gravel v. Illinois Environmental Protection Agency,
PCB
86-159,
1987 WL 55908
(February
5, 1987),
the Board held that:
To the extent that the [Illinois EPA] has relied upon information
beyond that contained in the application, such information must be
included in the permit record filed with the Board; if it is not, the
applicant may properly submit such information to the Board
during the course of the Board's hearing. Additionally, if there
was information in the [Illinois EPA's] possession upon which it
reasonably should have relied, the applicant may also submit such
information to the Board for the Board's consideration.
The specific documents in Exhibit A that Petitioner sought to add to the Record are all
part of the IEPA's operating permit file for the Facility. As noted above, these documents relate
to the internal discussions and analysis of SO
2
emission exemption. While some documents
from the operating permit file were included in the Record, most of the documents in Exhibit A
were not. The operating permit program for major sources was replaced by the CAAP program.
Not only should these documents have been included in the Record simply due to their presence
in the IEPA air pollution permit files,
Jack Pease, supra,
but these documents are of the type that
IEPA relied on, or should have relied on, in making its permitting decision.
Joliet Sand and
Gravel, supra.
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22
Even notwithstanding the above, the Record in this case is replete with references to the
fact that IEPA was very concerned about defending the incongruity between its prior decisions
and the conclusion it wished to justify with regard to the present permit. And, contrary to the
position taken by the IEPA in briefing Petitioner's Motion, the testimony at the public hearing
strongly implied that, in fact, Mr. Punzak had reviewed and relied on the permit files for the prior
decisions of the IEPA with regard to the Facility, and specifically, the issue of the application of
the SO2 exception:
Q.
?
[Please read] [t]he last sentence [of document
1542].
A.
Oh, okay. "I have the State operating permit file at my desk
to make a copy for you."
Q.
?
So at the time you were reviewing the initial CAAPP
application that the company submitted, it appears you did, in fact,
have the State operating permit files at your desk and you were
offering to make copies for other Agency employees; is that
correct?
A.
It appears that way.
Q.?
I show you [document]
1543.
It's your memo to Rachel
Doctors of the same February
2001.
A.
Okay.
Q.
?
In that memorandum you're offering -- you're discussing
your
'93
analysis and offering to bring it up and discuss it with her?
A.
Well, this is where I said we decided to delay our decision
on BF Goodrich until the MACT was issued.
Q.?
If I draw your attention to the first -- I'll read it. "I will be
bringing up to your desk shortly several documents related to the
above subject. One is my analysis notes from
1993
in which we
decided to delay our decision on BF Goodrich until the MACT was
issued." That analysis would have been contained in the operating
permit records that you had at your desk at that time, correct?
THIS FILING SUBMITTED ON RECYCLED PAPER
23
A.
I think -- I think I may have put it in my calculation sheet,
but I'm not 100 percent sure.
Q.
If the operating permit record was at your desk, you were
offering to make copies of it for other Agency people to review as
part of the Title V application. In this memorandum two days later
you are talking about reviewing documents from your permit
decision in 1993 when you were the permit review engineer for the
operating permit, correct?
A.
Yes.
Q.
?
And you're pulling documents, your review notes and
discussing those with Agency people. Explain to me how you are
not relying on those documents as part of your review of the
CAAPP application if you can?
A.
Well, I was relying on the -- some of the memos, not
necessarily every single permit file.
Q.
?
So you were relying on part of the documents but not all of
the documents from the past operating permit files?
A.
Well, I knew I had contradicted some of the past decisions.
So, therefore, why go into the details when I already knew that I
was -- my decision was different than other Agency employees had
made.
(Testimony of D. Punzak, 146:19-148:19).
Thus, the hearing testimony of Mr. Punzak seems to indicate that the contents of the prior
permit files for the Facility were indeed part and parcel of the permit decision that is the subject
of this appeal. Therefore, even under the IEPA's argument, such documents should have been
made part of the Record.
At various times, IEPA seems to argue that any records that pre-date the permit
application simply are not appropriate documents to have placed in the Record, and also that
documents that relate to another permit previously issue somehow are
de facto
excluded from
consideration of the present permit. On its face, it somewhat begs logic and common sense that
THIS FILING SUBMITTED ON RECYCLED PAPER
24
previous permits for the same facility, using the same processes, would not be consulted by
IEPA, if for no other reason, than to maintain consistency from permit to permit as they are
renewed or revised. IEPA's position is not only fairly nonsensical, it is also belied by the
testimony of Mr. Punzak as referenced above.
Thus, it is evident even from the documents that were incorporated into the Record by
IEPA that IEPA was quite concerned over the problem posed by the inconsistent interpretation
that it wished to take, even to the point of requesting a legal interpretation. Yet, IEPA attempted
to parse out whether such documents were relied on by IEPA with respect to this permit
decision, as opposed to all of the prior permits. To argue that these internal discussions are not
relevant to the permit proceeding and were justifiably withheld from the Record seems
disingenuous at best. Moreover, to the extent that Petitioner has made an issue of the lack of
consistency of IEPA's interpretation of 35 Ill. Adm. Code § 214.382(a) as it applied to
Petitioner's Facility, it would seem the relevance of that issue should have been fair game at the
public hearing. 10
The Hearing Officer, however, relied on his previous ruling on Petitioner's
Motion, and excluded any testimony or discussion of the history of IEPA's permitting decisions
and prior interpretations of 35 Ill. Adm. Code § 214.382(a), even after the Hearing Officer was
asked to reconsider his decision in light of Mr. Punzak's testimony regarding his reliance on the
10
Counsel for IEPA repeatedly argued that, because IEPA had admitted the inconsistency in its
interpretation on the SO
2
exception, any discussion of the permitting history was now
superfluous and out-of-bounds at the public hearing. The Hearing Officer erroneously agreed
with IEPA's position, and severely limited Petitioner's counsel from his ability to raise this issue
at the hearing. (Public Hearing Testimony, 31:4-32:24; 34:13-36:19; 71:1-72:2;
133:6-138:19;
148:20-151:19).
THIS FILING SUBMITTED ON RECYCLED PAPER
25
excluded documents. (See Public Hearing Transcript, 148:20-152:24).
11 This decision also was
in error, and should be overruled by the Board.
V.?
CONCLUSION
As set forth above, IEPA does not have the right to arbitrarily incorporate additional
criteria in a regulation such as 35 Ill. Adm. Code § 214.382(a) where such criteria do not exist in
the language of the regulation. Such action plainly constitutes rulemaking, which is the purview
of the Pollution Control Board, not the IEPA. IEPA simply cannot administratively mandate
more stringent standards or requirements than those that exist in the plain language of the SO2
exception regulation. Moreover, IEPA does not have the unfettered discretion to ignore over 25
years of its own precedent as to the interpretation of this regulation, where the processes and
circumstances at the Facility have not changed.
For these reasons, the Board should find that IEPA inappropriately determined that the
exception under 35 Ill. Adm. Code § 214.382(a) did not apply to the Facility, and the permit
determination should be remanded to IEPA with instructions to re-issue the permit with the
acknowledgment that the Facility is entitled to the SO
2
exception, and is not subject to the 2000
ppm SO2
limitation set forth in 35 III. Adm. Code § 214.301.
11 The Hearing Officer did, however, allow counsel for Petitioner to make an offer of proof of
the documents that
were
attached as Exhibit A to Petitioner's Motion to Supplement the Record.
(Public Hearing Testimony, 32:14-33:20).
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26
By:
One of Its At omeys
Respectfully submitted,
EMERALD PERFORMANCE
MATERIALS, LLC
Dated: June 27, 2008
Roy M. Harsch (ARDC # 1141481)
Lawrence W. Falbe (ARDC# 6224888)
Drinker Biddle & Reath, LLP
191 North Wacker Drive - Suite 3700
Chicago, IL 60606
312-569-1000
THIS FILING SUBMITTED ON RECYCLED PAPER
27
