awrence W. Falb
One of its Atto
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
EMERALD PERFORMANCE
MATERIALS; LLC (as purchaser of
Noveon, Inc.)
Petitioner,
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PCB 04-102
(Permit Appeal – Air)
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
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
Monday, August 18,
2008, the undersigned filed
with the Clerk of the Office of the Illinois Pollution Control Board,
Petitioner's Post-Hearing
Reply Brief,
a copy of which is herewith served upon you.
Dated: August 18, 2008
Respectfully submitted,
EM
CE MATERIALS, INC.
Roy M. Harsch, Esq. ARDC # 11414
Lawrence W. Falbe, Esq. ARDC #62 4888
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
therriajipcb.state.il.us
CH01/ 25211660.1
CERTIFICATE OF SERVICE
I, Lawrence W. Falbe, an attorney, hereby certify that on
Monday, August 18,
2008 a
copy of the foregoing
Petitioner's Post-Hearing Reply Brief,
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
hallorabP,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
THIS FILING IS BEING SUBMITTED ON REYCLED PAPER
BEFORE THE ILLINOIS POLLUTION CONTROL BOAR
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Petitioner,
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ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
PCB 04-102
(Permit Appeal – Air)
PETITIONER'S POST-HEARING REPLY BRIEF
I.
?
INTRODUCTION
The Illinois Environmental Protection Agency's
66-page
Response Brief boils down to
this: IEPA wants to reverse course on over 25 years of consistent application of the SO2
exception under 35 III. Adm. Code 214.382(a) to the Emerald facility, even though there is no
change in factual circumstances that would warrant such a flip-flop. IEPA explains that it
"historically made erroneous state operating permitting decisions" with regard to Emerald.
(Response Brief, at 66) Thus, IEPA contends that it should not be bound to perpetuate its own
flawed interpretation of the applicable regulation (regardless of how long this interpretation
stood) because, among other reasons, allowing Emerald the benefit of the exception
(notwithstanding the legalities or equities as to Emerald) would be 'bad for the environment.'
Despite the rampant obfuscation that pervades IEPA's super-sized brief, the truth of this
matter really is quite simple. IEPA
correctly
interpreted the application of the SO
2 exception as
to Emerald for decades, before IEPA reversed itself (prompted, as the evidence shows, by the
THIS FILING SUBMITTED ON RECYCLED PAPER
EMERALD PERFORMANCE
MATERIALS, LLC (as purchaser of
Noveon, Inc.)
assignment of a new engineer, Dan Punzak, to the Emerald permit review) and decided that it did
not like the results of that interpretation. Simply put, there is a vast difference between realizing
that a regulation has been interpreted incorrectly, and belatedly deciding that one does not like
the results of a long-standing interpretation.
What IEPA fails to acknowledge and admit is that 35 Ill. Adm. Code 214.382(a) contains
what IEPA would consider a "loophole": the plain language of the regulation contains none of
the limiting criteria that IEPA contends should apply to determine which facilities are eligible for
the SO2 exception and which are not eligible.
The remedy for closing such a so-called loophole is not to legislate by permit denial or
limitation. Rather, IEPA must do what it should have done when it determined in its collective
`agency wisdom' that it was injudicious to allow the Emerald facility to escape the SO2
emissions limitations that would have applied, but for the exception under 35 Ill. Adm. Code
214.382(a). That is, IEPA should propose a new or revised regulation and undertake the normal
rulemaking procedures, including notice, public comment, hearing, and adoption by the Board,
before IEPA can narrow the scope of the SO
2
exception and impose the qualifications on an
entity like Emerald that IEPA now (despite years of contrary agency position) deems should
apply. Only after IEPA complies with such procedures (and assuming IEPA is successful in
promulgating such a new regulation) can IEPA deny the benefit of the SO
2
exception to Emerald
for not meeting what IEPA thinks should be the qualifying criteria.
For the reasons set forth herein, and in Emerald's opening brief, 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
THIS FILING SUBMITTED ON RECYCLED PAPER
2
instructions to re-issue the permit with the acknowledgment that the Facility is entitled to the
SO2
exception, and is not subject to the 2000 ppm SO
2 limitation set forth in 35 III. Adm. Code
§ 214.301.
II. ARGUMENT
A. THE BOARD SHOULD APPLY A
DE NOVO
STANDARD OF REVIEW
TO THE IEPA'S INTERPRETATION OF THE SO
2 EXCEPTION
IEPA asserts that Petitioner's burden of proof in this case is to show that the record
establishes that the issuance of the permit will not violate the Act or Board rules, citing to
(among other cases)
Des Plaines River Watershed Alliance, Livable Communities Alliance,
Prairie Rivers Network and Sierra Club v. Illinois EPA and Village of New Lenox,
PCB 04-99,
slip op. 2 (July 12, 2007). (Response Brief, at 8-10) None of the various cases cited by IEPA,
however, deals with the circumstance where the primary issue in the case is whether IEPA
appropriately determined that an exception to an emissions limitation was applicable or not.
Rather, as explained by Petitioner in its Opening Brief, where the question involved is one of
law, such as the proper interpretation of a statute or regulation, the decision-making agency's
determination is not binding on the reviewing body (in the case, the Board), 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.").
THIS FILING SUBMITTED ON RECYCLED PAPER
3
Thus, the proper framework for the legal analysis in this case is for the Board to review
the IEPA's determination of whether the Emerald facility was entitled to the 50
2
exception was
correct or incorrect. In order to do that, the Board must review the IEPA's interpretation of the
regulation in light of the facts as applied to Emerald's facility.
In a sense, if the IEPA's determination as
to
the applicability of the exception to Emerald
was correct, then the permit as applied for by Emerald would have violated the Act, and if IEPA
was incorrect and Emerald was entitled to the exception, than Emerald's permit, as applied for,
would not have violated the Act. But this way of looking at the legal analysis is unhelpful, as it
essentially begs the real question, which is whether Emerald is or is not entitled to the SO2
exception. Thus, Emerald submits that the more precise legal analysis to focus on in this case is
the determination as a matter of law of whether the regulation should or should not apply to
Emerald. As this involves the interpretation of the regulation by the Board, the applicable
authority is clear that such an analysis is performed under the
de novo
standard of review.
Commensurate with Petitioner's request for relief that the Board remand the permit
decision to IEPA with instructions to re-issue the permit with the acknowledgment that the
Facility is entitled to the SO
2
exception, Petitioner need not prove at this stage of the proceedings
that the permit as issued would not have violated the Act.' That argument can be made, and that
standard applied, if needed, on any appeal, once IEPA revisits its permit decision with the
question of the applicability of the SO
2
exception already resolved.
If, on the other hand, IEPA is correct and Petitioner is wrong, then there seems to be little question that
had IEPA ruled that the SO
2
exception applied to Emerald's permit request, granting the permit would not
have violated the Illinois Environmental Protection Act, and it does not appear that IEPA seriously
contests this point, especially since essentially identical permits have been issued for the facility by IEPA
since 1975.
THIS FILING SUBMITTED ON RECYCLED PAPER
4
B THE PLAIN LANGUAGE OF THE SO
2
EXCEPTION SHOWS THAT
IEPA'S FIRST AND LONG-STANDING INTERPRETATION OF THE
REGULATION
WAS
CORRECT
As noted above, for over 25 years, 2
IEPA interpreted the plain language of the SO2
exception under 35 Ill. Adm. Code 214.382(a) to apply to the Emerald facility. The language of
the regulation itself is quite simple:
Section 214.301 shall not apply to existing processes designed to
remove sulfur compounds from the flue gases of petroleum and
petrochemical processes.
IEPA agrees that the language of 35 Ill. Adm. Code is clear and unambiguous (Response
Brief, at 14-16)(stating in subheading (ii), "The applicable regulatory text, 35 III. Adm. Code
214.382, is clear on its face."))
3
Broken down, the regulation imposes only three criteria on a
permit applicant that seeks to avail itself of this exception:
1)
It must be a existing process;
2)
that is designed to remove sulfur compounds from the flue gases;
3)
of petroleum and petrochemical processes.
2
Inexplicably, IEPA takes issue with Petitioner's assertion that IEPA has consistently interpreted the
S02 limitation for over 25 years. By Petitioner's calculations, IEPA first issued the Emerald facility's
permit in 1975 and successively renewed it several times, most recently in 1993, until 2001 when IEPA
claims it informed Emerald that it no longer considered the SO
2
exception applicable to Emerald's facility
(by means of a request for additional information regarding Emerald's processes). Even if one would
accept IEPA's apparent argument that IEPA in fact first notified Emerald of IEPA's 'doubts' as to
whether the exception should apply as evidenced by IEPA's request in February 2001 and again in May
2001 (see Response Brief, at 2), and that this notification (as opposed to an actual permit denial or
modification) was sufficient, this still adds up to more than 25 years. More important than quibbling over
whether IEPA held this view for 20 or 25 years, however, is Petitioner's point that IEPA should not be
allowed to withdraw from this long-standing position without a change in factual circumstances, or a new
rulemaking.
3
It is a well-accepted rule of statutory construction, and IEPA does not argue otherwise, that the initial
source for determining intent of the regulation is the plain meaning of the language used, and where
unambiguous, the
plain meaning of the language controls.
See, e.g., Board of Trustees of Southern
THIS FILING SUBMITTED ON RECYCLED PAPER
5
IEPA breaks up the language of the regulation somewhat differently in its Response Brief (see
pp. 15-16), but as a practical matter, IEPA concedes that the "the MBT-C is an existing process
and that sulfur compounds stem from the flue gases of a petroleum and petrochemical
process...." (Response Brief at 16) IEPA disputes, however, that Petitioner has shown that the
process was actually
"designed"
for the purpose of removing sulfur compounds. (Id.)
IEPA's narrow and disproportionate emphasis on this single word in the regulation is
misplaced, and its argument confused. While Petitioner agrees with IEPA that as a general rule
of statutory construction, all words of an enactment should be given effect, if possible, IEPA
seeks to expand the single word "designed" to encompass far more that is merited from the
context of the regulation and was intended by the Board in adopting this language.
For starters, IEPA focused on determining the meaning of the word "design," because it
is not specifically defined in the regulation. Thus, IEPA looked to the commonly-understood
definition of the term to ascertain its meaning in the context of the regulation. According to the
dictionary consulted by IEPA (Webster's Ninth New Collegiate Dictionary)(Response Brief at
17), the term "design" means "devise for a specific function or end." Fair enough—but IEPA
never explains why it apparently "mistakenly" interpreted this simple word for 25 years, or what
definition of "design" it previously used when considering this regulation, such that it had
concluded (for all of Emerald's prior permit applications) that the MBT-C process was designed
to "remove sulfur compounds from the flue gases of petroleum and petrochemical processes."
Thus, this would seem to support Petitioner's point that IEPA did not mistakenly interpret
the SO2
exception regulation, or any of its terms, such as "design." Rather, IEPA simply decided
Illinois University Governing Southern Illinois University, Edwardsville, Illinois Environmental
Protection Agency,
2005 WL 2040591, PCB 02-105 (August 4, 2005), at * 11.
THIS FILING SUBMITTED ON RECYCLED PAPER
6
that it did not like the end result of having this exception apply to the Emerald facility. This is
different, however, than claiming that it mistakenly applied a different definition of the term
"design" all these years, and only recently has realized its error.
IEPA also appears to argue that because Petitioner did not produce a live witness that was
present at the facility prior to 1960 who can personally testify as to the actual development of the
MBT-C manufacturing process and its "design," or any "design specifications," Petitioners
cannot meet their burden of showing that the equipment is "designed" to remove sulfur
compounds. (Response Brief, at 23) This is nonsense. IEPA admits that the process does, in
fact, remove sulfur compounds from the flue gases. (Response Brief, at 20) Unless IEPA is
actually trying to argue that sulfur compounds are removed from the flue gases by
accident,
it
seems self-evident that the MBT-C process, including the condensers, is "designed" to remove
sulfur compounds because that is—unquestionably and undisputedly—what it does. Moreover,
if any so-called "design specifications" might still exist for this decades-old equipment, it is
unclear what such documents would reveal aside from what is already clear—the process is what
the process is, and it does what it does.
Although IEPA takes a long time to get there, its real argument appears to be that the
term "designed" really means 'designed exclusively,' as in, the equipment must be designed to
remove sulfur compounds, but it cannot also return such removed sulfur (in any form) to the
process to be re-utilized as raw material, or (apparently) perform any other function. Put another
way, IEPA also appears to contend that the term "remove" in the regulation means 'remove from
the system' and cannot apply to a process (like the one at the Emerald facility) that removes the
sulfur compounds from the flue gases (i.e., prevents them from being emitted through the flue
THIS FILING SUBMITTED ON RECYCLED PAPER
7
gases) but re-directs those compounds back into the system, as opposed
to eliminating them from
the system entirely (i.e., like a scrubber). The plain language of the regulation, however,
provides no support for either of the interpretations that IEPA insists on reading into the text of
the exception.
IEPA provides copious information regarding the details of the MBT-C process to point
out that the removal of sulfur compounds (specifically, carbon disulfide (CS
2 )), is accomplished
by using reflux condensers. (Response Brief, at 17-25) IEPA, without any authority or
justification, simply offers its opinion that the SO
2
exception cannot apply to "[r]eflux or process
condensors...as they are merely devices
designed to recover
raw materials." (emphasis in
original)(Response Brief, at 21) IEPA believes that because the condensers perform in the
process as a "material recovery device," such a function is mutually exclusive of also meeting
the definition of being "designed to remove sulfur compounds from the flue gases of petroleum
and petrochemical processes." (Response Brief, at 22)
4
Once again, there is no support in the
plain language of the regulation for IEPA's interpretation.
If that weren't enough, IEPA then goes on to contend that while the regulation admittedly
doesn't require a specific category of control equipment (belying its argument above that reflux
condensers cannot qualify under the exception), "there is a connection between a process
As noted in Petitioner's Opening Brief, at fn. 6, Petitioner's witness Mr. Giffin testified that it was
perfectly possible to run the MBT reactors without the condensers; such a circumstance would merely
mean that the CS2
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). Thus, in such a circumstance, the
CS
2
would be emitted to the flare and burned up, emitting to the atmosphere as SO
2
. While IEPA
criticizes Emerald on this point for the notion
that Emerald has not always operated in compliance with
its
permit (assumedly under the principle that to qualify for the exception, the equipment that removes sulfur
would have to operate 100% of the time)(Response Brief, at fn. 19 and accompanying text), IEPA
overlooks the fact that
if
the condensers were
not a part of the process, the sulfur that IEPA contends
is
recycled would be emitted into the atmosphere in the form of SO
2
. Thus, it would seem that IEPA's own
objection on this issue proves Petitioner's point that the condensers do act as sulfur removal devices.
THIS FILING SUBMITTED ON RECYCLED PAPER
8
designed
to remove sulfur compounds and the percent removal achieved by a process
purportedly designed to remove such compounds." (emphasis in original)(Response Brief, at 24)
With all due respect to the agency, IEPA simply made this up. There is not a shred of
justification anywhere in the language of the regulation to suggest that a specific percentage of
sulfur recovery or effectiveness of removal is required to qualify for the exception. Yet, IEPA
insists that lilt can hardly be stated that a process was designed to remove sulfur compounds
when it admittedly recovers no more than 20 to 25 percent of sulfur compounds." (Response
Brief, at 24) Thus, now IEPA equates "designed to remove" with 'designed to remove all (or
almost all) sulfur compounds.' Once again, the simple language of the regulation contains
absolutely nothing to so limit the exception as IEPA would like, nor even to imply that the Board
intended such a limitation when it adopted the regulation.
Finally, IEPA also contends (once again, completely without support) that because the
Emerald process removes only sulfur in the form of CS
2 , but not does remove any H
2
S (which is
also present in the reaction, but is subsequently burned off in the flare) that such process cannot
satisfy the regulation's requirement to "remove" sulfur compounds. (Response Brief, at 17-19)
Once again, there is no more support in the plain language of the regulation to suggest that all
types
of sulfur compounds must be removed, any more than there is to suggest that all (or most)
sulfur compounds by percentage must be removed.
In sum, the regulation does
not
say that the process designed to remove sulfur
compounds from the flue gases cannot also serve other functions, such as recover that sulfur; the
regulation does
not
say that the equipment designed to remove the sulfur compounds must
remove them completely from the system, or that the removed sulfur cannot be re-used in the
THIS FILING SUBMITTED ON RECYCLED PAPER
9
process; the regulation does
not
say that the process at issue must be designed to remove all (or
almost all) of the sulfur compounds; and, the regulation does
not
say that all types of sulfur
compounds must be removed.
While IEPA criticizes Petitioner's interpretation of the regulation as not rational, Emerald
submits that it is IEPA that stretches the plain language of the regulation way past the breaking
point to accomplish its desired goal. Therefore, as explained above, Petitioner has met its burden
to prove that it is entitled to the exception, just as it did for each of its previous permits that were
issued by IEPA to Emerald in 1978, 1983 and 1993, and for which permits IEPA agreed that
Petitioner had met the requirements in the regulation each and every time it had come up for
review. Petitioner has satisfied each of the criteria specified in the regulation, and IEPA has not
explained how its previous treatment of Emerald's facility (with no change in circumstances)
was a "mistake" under the plain language of the regulation. The dissatisfaction of current IEPA
personnel with the fact that the Emerald facility clearly qualifies under the simple and plain
language of the regulation is not grounds for imposing criteria upon Emerald that exist nowhere
in the regulation. If IEPA wishes a different treatment of processes like Emerald's under the
regulations, it must comply with the procedures for a change in rulemaking, not simply re-
interpret an existing regulation in a new way to achieve its desired result.
C. IEPA'S RELIANCE ON EXTRINSIC EVIDENCE TO SUPPORT ITS
INTERPRETATION OF THE SO
2 EXCEPTION IS IMPROPER AND
UNAVAILING
Realizing that the simple, plain and admittedly unambiguous language of the SO2
exception regulation is its greatest challenge to supporting IEPA's tortured interpretation of the
regulation, IEPA appeals to extrinsic evidence, including its own "institutional knowledge" of
THIS FILING SUBMITTED ON RECYCLED PAPER
10
the background of the original rulemaking in 1972, "information from regulators in other states,"
and
U.S.
EPA "guidance."
5
Even assuming that use of such extrinsic sources was proper under
well-accepted rules of statutory interpretation (which it is not, considering IEPA's admission that
the language of the regulation is clear and unambiguous), the references made by EPA do not
compel the Board to adopt the interpretation of the SO
2
exception urged by IEPA.
1.?
IEPA's "Institutional Knowledge" Existed Since 1972
IEPA's reliance on its so-called "institutional knowledge" is odd, considering that any
such knowledge was obviously in existence and available to IEPA personnel long before the
agency recently `changed its mind.' Indeed, IEPA's appeal on this point is focused on the
rulemaking for the original regulation from
1972
(Docket R 71-23). Nowhere does IEPA
explain why or how, for 25 years, it supposedly misinterpreted the background information that
it now relies upon, or what that contrary interpretation was. Whatever the case, an examination
of the actual discussion of the air regulations promulgated back in the early 1970s shows that
IEPA's
current
interpretation is fatally flawed. Simply put, IEPA got it right the first time.
As borne out by rulemaking docket 71-23 as cited by IEPA on its own behalf, the original
comprehensive air regulations at issue, as a whole, were meant to deal with the somewhat
panicked realization in the 1970s that air pollution was a serious problem, especially in the
Chicago area. The various exceptions that were provided in the new emission control scheme
were intended to balance the hardship on existing sources and make wise decisions about where
5 In a bit of extreme irony that apparently is lost on the agency, IEPA fails to recognize that while it
appeals to certain types of so-called "institutional knowledge" as a basis for its re-interpretation of the
SO
2
exception, it steadfastly refuses to acknowledge that IEPA's engineer Dan Punzak reviewed the most
pertinent "institutional knowledge" that IEPA possessed on the issue—the files concerning the prior
permit application of Emerald, and the inter-agency discussions, memos and documents that were part of
these files. (See discussion
infra,
at section II.E.)
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11
mandating new technologies and retrofitting of plants would be efficient, and where it would be
a waste of resources.6
A review of the original rulemaking docket for the 1972 air standards, focusing on Rule
204 (the precursor to 214.382), shows that the concern of IEPA at that time was much broader
than just petroleum refineries, which in fact appeared to be only a segment of the various
industrial processes that IEPA determined were a source of sulfur dioxide pollution that needed
to be reduced, especially as to new sources. The discussion of Rule 204 in the 1972 rulemaking
begins as follows:
Rule 204: Sulfur Dioxides. Illinois is long overdue in regulating
the emission of sulfur dioxides, which constitute a major pollution
problem in certain parts of the State. Emitted principally as a
result of coal combustion and to a lesser extent from certain
industrial processes, sulfur dioxide is a gas which, together with
particulate matter, has been responsible for catastrophes such as
the London killer smogs.
Under Rule 204, emissions of sulfur dioxide into the atmosphere from any "process
emission source" were limited to 2000 ppm. (Rule 204(f)(1)(A)). Subsequent subparagraphs of
Rule 204 exempted from the general emissions limitations some specific processes, namely: new
sulfuric acid manufacturing processes (Rule 204(f)(1)(B)), processes designed to remove sulfur
compounds from the flue gases of fuel combustion emission sources (Rule 204(f)(1)(C)), and
processes designed to remove sulfur compounds from the flue gases of "petroleum and
petrochemical processes." (Rule 204(f)(1)(D)). Thus, it is clear from the original promulgation
6
In addition, the discussion in the text of the rulemaking makes it clear that the focus of the pollution
control strategy outlined in the regulations was on command and control of new operations and facilities
as a practical way to reduce future emissions, and much less so on mandating changes to existing
processes. This greatly undercuts IEPA's emphasis on the word "design," as it is clear that the actual
ability of the existing process to remove
sulfur compounds from the air is what was
important, not that a
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12
of the rule that exceptions were available to a wide variety of process emission sources, not just
petroleum refineries, as wrongly asserted by IEPA.
The specific language from the rulemaking cited by IEPA is misleading, as it relates only
to the application of sulfur recovery in oil refineries. (Response Brief, at 26) Strangely, what
IEPA intentionally overlooks is that the Emerald facility is not a petroleum refinery; it is a
petrochemical facility. Contrary to IEPA's assertion ("sulfur recovery units at petroleum
refineries [are] the units meant to be covered by the rulemaking")(Response Brief, at 3), it
appears clear from the rulemaking history and the title of the regulation itself, that not only
petroleum refineries were intended to be potentially able to qualify for the exception;
petrochemical facilities were also specifically included.
Moreover, a close examination of the rulemaking docket that IEPA references in support
of its argument actually belies its claim that the exception was meant to apply only to petroleum
refineries. The excerpt taken by IEPA from the 1972 rulemaking is as follows:
Because sulfur recovery units in oil refineries serve as pollution
control equipment greatly reducing emissions of noxious sulfur
compounds, existing sulfur recovery systems are exempted from
meeting the 2,000 ppm limit provided they are equipped with tall
stacks.
(Response Brief, at 26)
However if the entire paragraph, from which IEPA excerpted only a snippet, is examined,
the context becomes clear and it is apparent that not only were petroleum refineries not the
exclusive focus of the regulation or the associated exceptions, they were not even the primary
focus:
process had
to be retroactively proven to be 'exclusively' designed for that purpose, or that removed
sulfur compounds could not be reused in the process without disqualifying a process from the exception.
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13
The process sources covered by Rule 204(f) will usually be
sulfuric acid plants and sulfur recovery units. Rook of American
Cyanimid (R. 976-985), Weber of Monsanto (R. 1590-1595) and
Hall of New Jersey Zinc (Ex. 114, No. 52) suggested 2000 ppm as
a reasonable level for existing sulfuric acid plants which could be
achieved under normal operating conditions. A stricter
concentration limit would require plant derating or addition of
auxiliary scrubbing systems and has not been shown to be
uniformly necessary to meet air quality standards.
Because sulfur
recovery units in oil refineries serve as pollution control
equipment greatly reducing emissions of noxious sulfur
compounds, existing sulfur recovery systems are exempted from
meeting the 2,000 ppm limit provided they are equipped with tall
stacks.
(R 71-23 Opinion of the Board, April 13, 1972)(italics signifying IEPA's excerpt).
Thus, while IEPA's expansive explanation about what is 'usual' control equipment and
the like for petroleum refineries (and their corresponding effectiveness in removing sulfur
compounds) clearly does not apply across the board to any kind of petrochemical facility, which
could encompass a large variety of different types of industrial operations. There is no dispute
(even from IEPA) that the Emerald facility qualifies under the regulation (Response Brief, at 12),
and the Emerald facility is clearly not a refinery. Thus, it would seem equally clear and logical
that one cannot apply the criteria that the Board may have had in mind as to petroleum refineries
with a broad brush to all petrochemical facilities that are potentially within the reach of the
regulation. Trying to fit the square peg of petrochemical facilities into the round hole of
petroleum refineries is illogical and unpersuasive.
Subsequent changes to Rule 204 and then 214.382 also show that the Board and IEPA
knew how to specifically reference a "petroleum refinery" when the occasion suited and a
provision of the regulation was intended to apply
only
to such facilities: Section 214.382(c)
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specifically references "any petroleum refinery in the Village of Roxana," a provision that was
added in 1988. (See 12 II. Reg. 20778 (Dec. 5, 1988)).
Thus, for all of the above reasons, it seems clear that the exception under 35 Ill. Admin.
Code 214.382 cannot be intended to only apply to petroleum refineries. IEPA's heavy reliance
on what kinds of operations and specific expectations for the effectiveness of sulfur recovery
equipment typically are found in petroleum refineries are therefore limited at best, in terms of
divining the intent of the Board in adopting section 214.382. If the Board had intended to so
limit the exception, it knew perfectly well how to do so, but chose not to. To pretend that the
214.382(c) exception can only apply to petroleum refinery processes, or that other processes
must be held to the same emission reduction standard as petroleum refineries, is futile, as shown
by the language of the rulemaking itself, and should be disregarded by the Board.
2.
?
Information From Regulators In "Other States" Was Not Likely
Considered By the Board In Adopting the SO
2
Exception Limitation
Leaving aside the clear evidence in the record that Mr. Punzak
7
sought out information
from other states not to shed light on the Board's original intent in promulgating the SO2
exception regulation, but rather to support his own interpretation of the regulation that he wished
IEPA to adopt (see Petitioner's Opening Brief, at 10),
8
there is no evidence in the rulemaking
IEPA characterizes Petitioners references to Mr. Punzak as some kind of inappropriate "highly-
charged" personal attack. (Response Brief, at 6) To the contrary, the language of Petitioner's Opening
Brief shows that while Petitioner in fact acknowledged the underlying virtue of Mr. Punzak's goal in
finding a way to achieve reductions in SO
2
emissions, it is clear that Mr. Punzak went about achieving
this goal in a way that, absent appropriate rulemaking, IEPA was simply not authorized to do. (Opening
Brief, at 14) Far from a "caustic denunciation," Petitioner's discussion is professional and matter-of-fact,
simply noting that Mr. Punzak's actions were improper and exceeded IEPA's statutory authority. (Id.)
IEPA's response to Petitioner's assertions in this regard (Response Brief, at 28, fn. 11) is particularly
weak, apparently
suggesting that Mr. Punzak's intent in soliciting information was not so closed-minded,
but that such an impression was inadvertently made due to the lack of articulateness of the e-mails and the
"unfortunate consequences" of modern e-mail conventions in conveying information. Given that in one
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15
record or anywhere else to suggest that IEPA or the Board ever considered how other states
regulated processes similar to Emerald's. Thus, the supposed use of such information to assist
IEPA in divining the intent of the S02
exception is without basis, and should also be disregarded.
3.
?
U.S.
EPA Guidance Also Was Not Likely Considered By the Board In
Adopting the SO
2
Exception Limitation
Similarly, IEPA appeals to U.S. EPA guidance concerning control of VOC emissions
from chemical processes (Response Brief, at 32) as evidence of the Board's intent in
promulgating the SO2 exception and its alleged goal (albeit unstated in the regulation or the
rulemaking) of excluding equipment that is "integral" to the production process, and therefore,
not appropriately characterized as "emission control." IEPA neglects, however, to note that the
U.S. EPA guidance IEPA relied upon was issued in
1994, which clearly was not available to be
considered by the Board in 1972.
There is also absolutely no reference in the rulemaking to the
kind of discussion that IEPA cites from the U.S. EPA guidance on the issue of whether
condensers such as Emerald's should properly be considered an integral part of the process, or
stand-alone emission control devices, or whether that matters.
Moreover, IEPA's basic premise that devices that are "integral" to the production process
cannot also qualify as a process designed to remove sulfur compounds from flue gases under the
plain language of 35 III. Adm. Code
214.382 is not supported by the language of the regulation
or anything in the U.S. EPA guidance. IEPA's dogged attempts to read an exclusion of
of Mr. Punzak's e-mails to the West Virginia EPA thanking the correspondent for the information
with
which Mr. Punzak was provided, Mr. Punzak noted that "[t]he information you have provided so far...can
help us justify the [Emerald] operation here requiring better control,"
it seems that Mr. Punzak's agenda
was very clearly communicated indeed. (R- 001553, emphasis added) There can be little doubt that Mr.
Punzak acquired such information
to justify his own desire to compel a reduction
in emissions for the
Emerald facility, and not to investigate the intent of the Board when it promulgated the original exception.
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"integral" processes from the scope of the SO
2
exception are therefore unavailing, and the U.S.
EPA guidance is helpful neither to understand the intent of the Board, nor why IEPA decided it
was misreading the regulation these many years.
D. WHILE THE DOCTRINE OF "EQUITABLE ESTOPPEL" MAY NOT
STRICTLY APPLY, IEPA SHOULD STILL BE HELD TO ITS PREVIOUS
INTERPRETATION OF THE SO
2
EXCEPTION BECAUSE ITS PRIOR
APPLICATION OF THE REGULATION TO EMERALD
WAS CORRECT
Petitioner acknowledges that it used the term "estoppel" twice in its opening brief in
reference to its argument that IEPA should be bound by its long-standing interpretation of the
502
exception; however, Petitioner's intent was not to invoke the doctrine of equitable estoppel.
Petitioner admittedly should have been more artful in framing its argument, and IEPA is correct
that Petitioner did not address or prove the classic elements of estoppel, which include among
other things, proof of a false or incorrect statement by an employee or agent of the entity against
which estoppel is sought. (Response Brief, 35-52)
Rather, Petitioner's argument was intended to rely on the well-accepted principle that a
governmental agency charged with administering a regulation must adhere to past long-standing
interpretations of that regulation, assuming that the factual circumstances have not changed,
citing to
Central Illinois Public Service Co. ("CIPS'),
165 Ill. App. 3d 354, 363, 518 N.E.2d
1354, 1359
(4
th
Dist. 1988)(Response Brief, at 15-18);
see also Saline Co. Landfill, Inc. v.
Illinois Environmental Protection Agency and County of Saline,
2004 WL 1090244, PCB 04-117
(May 6, 2004).
IEPA correctly points out that
CIPS
is "not an estoppel case," but contends that Petitioner
has not shown that IEPA's current interpretation is inconsistent with prior Board interpretations
of the same regulation. IEPA's point is somewhat unclear, but it seems to be suggesting that
THIS FILING SUBMITTED ON RECYCLED PAPER
1
7
CIPS
is distinguishable because Petitioner in the case at bar has cited to no Board interpretations
of the SO
2
exception. If this is IEPA's point, it is an empty one, as the record is replete with
evidence the IEPA's current interpretation of the SO
2 regulation is inconsistent with its own
long-standing interpretation of the regulation from the agency's perspective. Whether the Board
has or has not had occasion to rule on the correctness of either interpretation is irrelevant; the
point is that IEPA, as the regulating agency and the one charged with implementing the SO2
emission regulations, has by its own admission, interpreted the regulations in a way that is
diametrically opposed to the current interpretation that it wishes the Board to now adopt and to
which it desires Emerald to adhere.
As explained in Petitioner's Opening Brief, the reasons for this well-reasoned legal
doctrine 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. (Opening Brief, at 18)
Tellingly, IEPA acknowledges that Petitioner has a point, but falls back on the notion that
protection of the environment outweighs the niceties of regulatory consistency when necessary:
"While this is admittedly an unfortunate consequence of a shifting regulatory interpretation by an
administering agency, forcing an administering agency to continue with a flawed regulatory
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18
interpretation is particularly troublesome when valuable public interests such as the protection of
the environment are at stake." (Response Brief, at 48)
No one would argue that protection of the environment is not a compelling interest. But
IEPA's suggestion that its duty to protect the environment somehow trumps its obligation to
provide logic and consistency in exercising its regulatory prerogatives is unpersuasive. Indeed,
such an argument could be made as to almost any regulation that IEPA is charged with
administering, as its fundamental obligation is to protect the environment for the benefit of the
citizens of the State. Protection of the environment, no matter how important, does not provide
IEPA with carte blanche to subject industrial operators in the State to arbitrary and capricious
changes in its regulatory scheme, especially where the alternative remedy (new rulemaking) is
clearly the preferred course of action to preserve order and the expectations of the regulated
community. Contrary to what the IEPA would have the Board believe, the Board is not
presented with a Morton's Fork: either capitulate to IEPA's strained and incorrect interpretation
of the SO
2
exception, or allow facilities such as the Emerald facility to emit tons of pollutants
into the atmosphere.
9
Rather, as explained above, the proper relief in this case is for IEPA to
9
The dire consequences presented by IEPA if it did not deny the exception to Emerald, which would
allow "thousands of additional tons of SO
2
into the environment" (Response Brief, at 48) and the frantic
nature of the emergency as presented by the agency, is belied by the Record. The Record shows that
IEPA, through engineer Dan Punzak, had originally started to rethink its position on the applicability of
the SO
2
exception as to Emerald as early as 1993, when Mr. Punzak became involved, but deferred action
at that time anticipating that U.S. EPA would promulgate an applicable federal standard. (R 001542-43).
U.S. EPA never did so, and thus in 2001, Mr. Punzak then conjectured that if Emerald had made
intervening changes to the facility, IEPA could use the Prevention of Significant Deterioration (PSD)
rules to require increased emissions controls "and not have to get into the semantics of whether the
condenser is a control or recovery advice." (R 001543). Only when that strategy also failed was IEPA
forced to try to "re-interpret" the regulation in order to achieve its desired
ends. Thus, the environmental
consequence
that IEPA shrilly warns of in its brief,
while real,
is
hardly the time-critical emergency that
one would imagine from the hyperbole used by the agency to describe the situation. It also shows that
re-
interpretation
of the SO2
regulation was only the final last-ditch effort made by IEPA to find a way to
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19
promulgate a new set of regulations and go through the process of having those regulations
adopted by the Board.
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.
E. THE HEARING OFFICER ERRED BY EXCLUDING DOCUMENTARY
AND TESTIMONAL EVIDENCE RELATED TO IEPA'S PRIOR
PERMITTING DECISIONS
The final issue in this case comes down to whether or not prior permitting decisions of
the IEPA, at least in this specific case, are fair game for inquiry, not only as to the inclusion of
certain pertinent documents that were intentionally omitted from the Record by IEPA, but also as
to the Hearing Officer's refusal to allow counsel for Petitioner to explore this issue at the
hearing. (See Opening Brief, 19-25) IEPA asserts that the entire issue is mooted, either through
revisiting the issue of the completeness of the record, or the exclusion of such testimony at the
hearing, as it unabashedly admits that it made a "mistake" for 20 years. IEPA also warns that
allowing any consideration of material that "pre-dates" the specific permitting decision at issue
open a Pandora's Box that threatens to make "all previous state operating permits for these
condensers dating back to the early 1970s" an issue. (Response Brief, at 61)10
compel a reduction in emissions at the Emerald facility, and was not the premise with which IEPA
originally began this exercise.
11)
In fact, IEPA
goes further and
suggests that to find in favor of Petitioner's argument would compel
IEPA
to
"include each and every underlying permitting decision in the Administrative Record
regardless
of whether the Agency specifically relied upon it or not," with a correspondingly horrendous burden on
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As noted above, it seems supremely ironic that IEPA appeals to many types of so-called
"institutional knowledge" as a basis for its re-interpretation of the SO
2 exception (as well as all
sorts of other 'sources' such as U.S. EPA guidance and other states' experiences), but is adamant
that the files concerning the prior permit application of Emerald, and the inter-agency
discussions, memos and documents that were part of these files, are not properly a part of the
Record and simply cannot be discussed in the context of this permit appeal.
Petitioner will not repeat its thorough treatment of this issue in its Opening Brief.
Petitioner wishes to emphasize, however, that it seems clear that the documents that were
contained in the operating permit file for the Emerald facility that relate to the issue of whether
the Facility, in the opinion of IEPA personnel, qualified for the SO
2
emission exception, were
considered by Mr. Punzak and other IEPA personnel with regard to the
current
permitting
decision.
The Record in this case clearly shows 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. But, IEPA still somehow contends that the presence of these files on the desk of
the permit engineer reviewing the current permit application and his reliance on at least some of
the documents, allows IEPA the ability to parse out which documents were actually relied upon
and which were not. In fact, according to Mr. Punzak, it was the very group of documents that
IEPA to copy warehouses full of files each time a permit was up for review. (Response Brief, at fn. 36)
Needless to say, if IEPA is truly concerned that such would be the result of finding in favor of Petitioner's
argument, then IEPA misses the point of Petitioner's permit appeal. Only in cases where the prior
permitting decision
is specifically relevant to the current decision,
as
in this case where IEPA ignored 25
years of prior precedent, would, under Petitioner's argument, such documents and testimony be relevant.
THIS FILING SUBMITTED ON RECYCLED PAPER
21
were presumably most pertinent to the prior permitting decisions of the agency (and that
contradicted the stance that Mr. Punzak now wished to take) that he did not consider:
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, 147:23-148:19).
Although IEPA half-heartedly attempts to dismiss the presence of these files at Mr.
Punzak's desk during the permit review (as well as his offer to disseminate particular documents
for other IEPA personnel)(Response Brief, at fn. 31), it seems clear from the testimony of Mr.
Punzak 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, and IEPA loses serious credibility when it
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22
claims otherwise." IEPA's argument that any records that pre-date the permit application and
documents that relate to another permit previously issue somehow are automatically excluded
from inclusion into the Record is more artful, but still defy logic, as one would imagine that if
the agency knew it was going to make a decision that was contrary to 25 years of contradictory
permitting decisions, such information would be the most important information for IEPA to
consider—not the information that it would run away from at all costs.
In sum, IEPA is willing to look everywhere it can to find support for its new
interpretation of the SO
2
exception regulation, except the very place where the most pertinent
such information obvious can be found—its own permitting files—precisely because it admits
that the information that resides there contradicts the regulatory position it now wants to defend.
IEPA's position in this regard strains logic and credulity. Moreover, even if such documents
were not considered by IEPA in its permit review, they should have, and therefore should have
been included in the Record. (Opening Brief, at 22-23) The lack of consistency of IEPA's
interpretation of 35 III. Adm. Code § 214.382(a) as it applied to Petitioner's facility is the meat
of this entire permit appeal, and the relevance of this issue should have been fair game at the
public hearing, but was excluded, even after the Hearing Officer was asked to reconsider his
decision in light of Mr. Punzak's testimony regarding his reliance on the excluded documents.
Petitioner should have had the full and unfettered ability to explore and explain, though
documents and testimony, why IEPA got the interpretation of the SO
2
exception right the first
time, more than 25 years ago, and anything less is a denial of justice to Petitioner. This decision
11
IEPA appears to once again blame the impreciseness of Mr. Punzak's statements (this time, in the
context of Mr.
Punzak's
testimony under cross-examination) to explain away the incongruities in IEPA'
s
position. (Response Brief, at fn. 31)
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23
should therefore be overturned, and remanded back for further proceedings, if necessary
depending on the Board's decision on the ultimate interpretation of the applicability of the SO2
exception under 35 Ill. Admin. Code 214.382(a).
III.
CONCLUSION
IEPA does not have the right to engage in rulemaking without going through the formal
process and should not be allowed to regulate by permit denial. It simply does not have the
authority to arbitrarily incorporate additional criteria in a regulation such as 35 Ill. Adm. Code
§ 2I4.382(a) where such criteria do not exist in the language of the regulation. In addition,
IEPA's position that it made a "mistake" in interpreting the SO
2
exception appears much more
likely to be cover for the fact that IEPA now has decided it does not like the results of how that
regulation has been consistently applied to the Emerald facility for over 25 years. IEPA cannot,
however, simply ignore over 25 years of its own precedent as to the interpretation of this
regulation, where the processes and circumstances at the Emerald facility have not changed, and
it cannot even explain the supposed flaws in its reasoning for the last quarter-century.
For these reasons, and as set for in Petitioner's Opening Brief, 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
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B
EME D PERFORMANCE
MA ALS, LLC
One of It
rneys
Dated: August 18, 2008
SO
2 exception, and is not subject to the 2000 ppm SO
2 limitation set forth in 35 III. Adm. Code
§ 214.301.
Respectfully submitted,
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
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