Page
1
ECEVED
CLERK’S
OFFICE
JUN
232609
STATE
OF
ILLINOIS
Pollution
Control
8o
TRANSCRIPT OF PROCEEDINGS
had in the
above-entitled
cause
on 18th
day
of
June, A.D.,
at
1:00 p.m.
BEFORE: Kathleen M. Crowley, Hearing Officer,
Illinois Pollution Control Board
100 West
Randolph Street
Suite 11-500
Chicago, Illinois 60601
312-814-6929
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF:
NOx TRADING PROGRAM SUNSET
)
R09-
PROVISIONS FOR ELECTRIC
GENERATING UNITS:
AMENDMENTS TO 35 ILL.
ADM. CODE PART
217.SUBPART
W)
(Rulemaking-Air)
Page 2
1
APPEARANCES:
2
KATHLEEN
M.
CROWLEY,
Hearing Officer
3
ANAND
RAO,
Environmental Scientist
4
SHUNDAR LIN, Coordinating
Board Member
5
ANDREA
S.
MOORE, Board
Member
6
GARY BLANKENSHIP, Board Member
7
8
SCHIFFHARDIN, LLP,
9
6600 Sears Tower
10
Chicago, Illinois 60606
11
312-258-5567
12
MS. KATHLEEN C. BASSI,
13
appeared on behalf of Midwest Generation;
14
15
ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
16
217-524-3337
17
MS. RACHEL
DOCTORS,
18
appeared on behalf of the EPA;
19
20
OFFICE
OF THE
ATTORNEY
GENERAL,
21
MS. WHEELER.
22
23
REPORTED BY:
SHARON BERKERY, C.S.R.
24
CERTIFICATE
NO. 84-4327.
Page 3
1
THE HEARING OFFICER:
Good afternoon.
2
This is
a
hearing being conducted
3
by
the Illinois Pollution Control Board in
4
the matter of Nitrogen Oxide, or NOx, Trading
5
Program Sunset Provisions for Electric
6
Generating Units, 35 Illinois Administrative
7
Code,
217.751, which
is the
Board’s
docket,
8
RO9-20.
9
My name is Kathleen Crowley, and I
10
am
the hearing officer in this proceeding.
11
And
to
my immediate right is the coordinating
12
board member,
Dr.
Shundar
Lin.
Seated to his
13
right is board member Gary Blankenship,
14
seated to
my immediate left is environmental
15
scientist
Anand Rao, and
seated to
his left
16
is
board member Andrea
S.
Moore.
17
We have
a
very small group today,
18
including only representatives
from the
19
Illinois Environmental Protection Agency, the
20
Attorney General’s Office and --
21
MS. BASSI:
The regulated community.
22
THE HEARING OFFICER:
Thank
you.
23
So
I’m going
to
dispense with some
24
of the usual opening remarks.
Page 4
1
This is a hearing being conducted
2
on the
Illinois
Environmental Protection
3
Agency’s
April
21st, 2001 -- excuse me --
4
2009 regulatory
proposal.
5
Dr. Lin
wanted to make a couple of
6
remarks,
so
we’l1 let him
do so.
7
MR. LIN:
Good afternoon.
8
on behalf of the Board, I welcome
9
everyone
to
this hearing
to
consider NOx
10
Trading Program Sunset Provision. Thank
you
11
for your time and effort
to
participate
and
12
invest in building the record of this
13
rulemaking process at this time.
14
We
do
hold
to
the testimony and
15
the questions
today.
Thank
you.
16
THE HEARING OFFICER:
The -- at this
17
point, I think I will
just let the Illinois
18
EPA begin its presentation.
19
MS. DOCTORS:
I
just
have
a
short
20
presentation.
21
My name is Rachel Doctors, and
I’m
22
representing the Illinois Environmental
23
Protection Agency
today.
24
On behalf
of the director, I’d
Page
5
1
like
to
thank the
Board for its consideration
2
of this rulemaking
proposal and the
3
opportunity
to
provide testimony
in support
4
of R09-20. I have asked
the
Board
if it
5
would
be
acceptable
to
have Mr.
MahajanTs
6
testimony admitted
as
read and
go directly
to
7
questions.
8
And, I believe, Ms. Crowley, that
9
that would
be
okay.
10
THE HEARING OFFICER:
The persons here
11
today
-- we have -- seem
to be
in
agreement
12
that
that would be fine. We
T
ve also
got
13
copies of the prefiled testimony, which
is
14
very short, for anyone who was not able
to
15
fully review it.
16
So, yes,
I think we can
do that.
17
Thank
you.
18
I
will
mark that testimony
as
19
Exhibit 1.
20
(WHEREUPON,
a
certain
document
21
was marked Exhibit No. 1 for
22
identification, as of
23
6/18/09.)
24
MS. DOCTORS:
So
it has been
admitted?
Page
6
1
THE
HEARING OFFICER:
Yes.
2
(WHEREUPON,
said document,
3
previously marked Exhibit
1
4
for identification,
5
was
offered and received in
6
evidence.)
7
MS. DOCTORS: m
TI
going
to just
make
a
8
very brief opening statement,
so,
on the
9
record, we
have
a
summary of what the
10
proposal
covers, and then we can
go directly
11
to
questions from Mr.
Mahajan.
12
THE HEARING OFFICER:
Great.
13
MS.
DOCTORS:
The purpose of this
14
proposal is the Sunset
Provisions of Part 217
15
Subpart W, beginning with the 2009 control
16
period
consistent with the Clean Air
17
Interstate Rule
adopted by the Board in
18
Part 225. The CAIR rule replaced the NOx
SIP
19
Call
trading program with
a
program that
20
contains both
a
NOx
emissions annual and an
21
ozone season trading program.
22
The Illinois EPA is proposing
to
23
Sunset
any requirements related
to
the NOx
24
SIP Call trading
program after the 2008
Page 7
1
control period
as set
forth in Subpart W
2
beginning in 2009, the control period, and
3
thereafter. The provisions will remain in
4
effect for violations that occurred in the
5
control periods prior
to
2009.
6
In this case, the rule
is
being
7
proposed to
prevent
a
burden
on
affected
8
sources and replaces
a
rule that is no
longer
9
being implemented
by
USEPA.
They no longer
10
are giving
out
allowance for the NOx program,
11
only allowances for the CAIR
program.
12
The adoption of the proposal will
13
not result in injury or substantial prejudice
14
nor an abrupt
departure from
a
15
well-established practice. Hence, adoption
16
of this proposal is appropriate to prevent
a
17
burden on affected EGUs.
18
And that really is all I’d like
to
19
say at
this time. I’d like
to
open it for
20
questions,
as
appropriate.
21
THE
HEARING OFFICER:
I think we will
22
first ask that the court reporter swear in
23
the witness.
24
Page
8
1
(WHEREUPON,
the witness
was
duly
2
sworn.)
3
THE HEARING
OFFICER:
And I will
just
4
ask that
Exhibit 1 represents
the
testimony
5
that
you
would
be
prepared
to
give
today
--
6
THE WITNESS:
Thank
you.
7
THE HEARING
OFFICER:
-- and
you
T
re
8
sworn
to
the truth
of that,
as
well.
9
Thank
you.
10
THE WITNESS:
Yes.
11
THE HEARING
OFFICER:
Okay.
12
Questions?
13
YOGINDER
MAHAJAN,
14
called
as a witness
herein,
having
been first
duly
15
sworn, was
examined
and
testified
as follows:
16
DIRECT
EXAMINATION
17
BY MS.
BASSI:
18
Q.
Hello,
my name
is Kathleen
Bassi,
19
I am with
the law firm
SchiffHardin,
IJLP, and
I
T
m
20
here
today representing
Midwest
Generation.
21
I have questions
--
I have
just
a
22
couple series
of
questions
that are
related
to two
23
issues.
One
of
them
relates
to
enforcement,
and
one
24
of them
relates
to
the distribution
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Page 10
1
And in her
opening statement, I
2
believe
Ms.
Doctors
stated that enforcement of
3
Subpart W from
2000 -- from the 2008
ozone season
4
and
previous
to then, would remain in
effect. And
5
that the proposal
was written
to
preserve the
6
Agencytsand
USEPA’s ability
to
enforce for
past
7
violations.
8
My first question
is
just to
9
confirm, and I
guess
I would
state it, please
10
confirm
that
the last truly applicable
provisions of
11
Subpart W,
as you
have
proposed
to
amend it
today,
12
occurred
at
the end of the ozone
season in 2008.
13
MS.
DOCTORS:
Okay.
Thank
you.
14
BY MS. BASSI:
15
Q.
All right. And then, the
second
16
question is, wouldn’t the Agency -- or would not
the
17
Agency already know
today, or
at
least within
a
18
short period of time, whether or not
there have been
19
violations
under Subpart W
as
of the end of the
2008
20
ozone season?
21
And all of
this is just, I guess,
22
questioning why we need
to
preserve enforcement,
23
even though we
always
do
that.
24
My
second
set
of questions --
Page 11
1
THE HEARING OFFICER:
Let me
just
make
2
sure -- this witness is not
going
to
address
3
that; is that correct?
4
MS. DOCTORS:
Mr. Mahajan won’t.
5
THE HEARING
OFFICER:
That’s fine.
6
MS.
DOCTORS:
David Bloomberg,
our
7
manager
of compliance, will be
available
at
8
the second --
9
THE HEARING
OFFICER:
Fine.
I just
10
wanted it clear
before she began with
11
something
else. Thank
you.
12
MS. BASSI: And just
also
to
clarify,
13
I have no plans at
this point in
time
to
14
attend
the second hearing.
And
so,
I will
be
15
reviewing the transcript
of the second
16
hearing -- or somebody,
apparently,
will read
17
the
questions and respond to
them -- and then
18
we will deal with
whatever remaining issues
19
there are
through comments or
something like
20
that.
Unless they’re really bad,
and then
21
we’ll do
something else.
22
The second set
of questions
that
I
23
have
goes
to the
distribution
of unused
24
allowances.
Subpart W
provided that
certain
Page
12
1
allowances
that
were
not distributed but were
2
retained
by the Agency would be
distributed
3
back
to
the EGUs that were part of that
4
program.
5
My question is, whether all such
6
allowances have been distributed back
to
the
7
EGUs
as
of the end of the 2008 ozone season.
8
If they
have not
been
distributed back
to the
9
EGU5, those that are available for
10
distribution back, when will they
be
11
distributed back?
12
And then,
thirdly,
are
there
13
allowances that are not under the umbrella of
14
returned distribution, if you will?
And,
if
15
so,
what is the Agency’s plan for those
16
allowances? That’s it.
17
MR. RAO:
I have
a
follow-up to
18
Ms. Bassi’s
question. And
to
your earlier
19
your response, saying that this rule doesn’t
20
deal with allowances.
21
But
the existing Subpart W
does
22
deal
with allowances.
So
it was not clear
to
23
me when
you
said --
24
MS. DOCTORS:
It doesn’t
affect them.
Page 13
1
I’m sorry, that probably
wasnTt
clear.
2
The allowances that -- what
-- can
3
I -- I
guess
I can
say
what
I’m going
to say,
4
because
it’s
a
true statement,
it’s
a
factual
5
statement
out
of the
CAIR Rule. Is that any
6
allowances that
remained in anybody’s
7
account,
including the Agency’s, the State’s
8
account,
just got
moved over
into their CAIR
9
account.
10
So no allowances
are created or
11
destroyed.
There’s no change in the number
12
of
allowances
because
of this
rule.
13
MR. RAO:
Okay.
14
MS. BASSI:
But only
through vintage
15
2008; is that correct?
16
MS.
DOCTORS:
Right.
Because 2009 are
17
then
CAIR allowances.
18
MR. PAO:
Okay.
Yeah, because, you
19
know, I was a
little confused when you
said
20
it
doesn’t deal with it.
21
-
THE HEARING OFFICER:
Well, and I’m
22
sure
you
would have
that made clear in
23
Mr.
Bloomberg’s testimony?
24
MS. DOCTORS:
I believe
since his unit
Page
14
1
is the
unit that
does
the distribution of
2
allowances and deals with
CAIvIDI,
the Clean
3
Air Market
Division, that they would have
the
4
best -- the greatest ability
to
answer
5
allowance --
6
THE HEARING
OFFICER:
And so, you will
7
have that statement made
by
sworn -- in
sworn
8
testimony --
9
MS.
DOCTORS:
Yes.
10
THE HEARING
OFFICER:
-- at
the next
11
hearing?
12
MS. DOCTORS:
Yes.
13
THE HEARING
OFFICER:
Thank
you.
14
MS. BASSI:
I have another follow-up
15
along these
lines then. Would
you
also
16
confirm, then, that
the -- what I’m referring
17
to as
Subpart W allowances are NOx SIP
Call
18
allowances, or,
you
know, whatever
19
terminology we want
to
give
them, become CAIR
20
allowances under the new -- the CAIR
21
—
system and retain whatever value they may
22
have
as
CAIR allowances?
23
MS. DOCTORS:
Is your question
-- is
24
that an allowance that’s currently worth one
Page 15
1
ton
of emission still worth one ton?
2
MS. BASSI:
Yes.
3
MS.
DOCTORS:
Okay.
4
MS.
BASSI:
That
Tsit.
5
THE HEARING
OFFICER:
That’s the end
6
of your questions?
7
MS. BASSI:
Those are the only
8
questions I have, that I can think of.
9
THE HEARING
OFFICER:
Any more
10
questions from
the Board?
11
MR. LIN:
I have
a
question for
you
12
(indicating)
13
THE WITNESS:
Uh-huh.
14
BY MR. LIN:
15
Q.
On
your Page 2, about
nine
out
of
ten.
16
Locate
to
the 21091. What is that unit
out
of
that,
17
pound
or milligram or --
18
A.
NOx allowances -- each
allowance
is
19
one ton.
20
21
-
Q.
Ton?
22
A.
One ton.
So
2000
pounds.
23
Q.
Shouldn’t
you put
ton in? Because
24
that’s
a
unit of that number.
Page
16
1
A.
Each
allowance is
one ton. So
if you
2
have
it written
somewhere, it
could have
been
much
3
easier
for
you to
understand,
but
each
allowance is
4
one ton
of
NOx.
5
BY MR.
RAO:
6
Q.
Mr.
Mahajan, isn’t
allowance defined
7
in
the rules?
8
A.
Yeah, it
is.
9
Q.
As one
ton?
10
A.
One
ton.
11
THE HEARING
OFFICER:
So
putting ton
12
in
would
be a
redundancy.
The rule defines
13
allowance
as
ton.
14
THE WITNESS:
Yes.
15
BY MR.
RAO:
16
Q.
Along
the same
lines Mr.
Lin
was
17
asking,
if
you go
down
a
few more
lines,
you have
18
estimated
NOx
emission
reduction
from NOx SIP
Call
19
were
85,777
per
year. There’s
no
units
there.
20
A.
It should be
tons.
21
MS.
MOORE:
That’s
what I thought.
22
THE
HEARING OFFICER:
That
should
be
23
tons.
24
BY
THE
WITNESS:
Page 17
1
A.
I’m sorry, yeah, this is tons.
2
BY MR. RAO:
3
Q.
And that is the estimated
reductions
4
under
the NOx
SIP Call --
5
A.
Yes.
6
Q.
-- from the
base
year of 2007. And
7
further down
you state
that Illinois EPA believes
8
the CAIR NOx ozone trading will provide
reductions
9
in NOx emissions equal to or
greater than the
10
estimated reductions
from
SIP
Call -- NOx SIP Call.
11
So
do you
have an estimate what
12
that number is under CAIR?
13
A.
No, it’s
based
on the presumption,
14
because
the allowances are the same. So
it
should
15
be
the same.
16
And in 2015, the allowances will
17
be
reduced
to
whatever the number is.
18
Q.
Yeah.
19
A.
It’s less than 3.71,
so
the reduction
20
will
be
more it means.
21
Q.
Okay.
22
A.
It will
be
beneficial from the
23
environment presumption.
24
MR. RAO:
Thank
you.
Page 18
1
THE HEARING OFFICER:
Then I’ll ask if
2
we can have -- Mr. Mahajan could make the
3
correction and initial it and have it marked
4
as Exhibit 1
to add
the unit tons.
5
MS.
DOCTORS: The first place that
you
6
wanted it
added?
7
THE HEARING
OFFICER:
Was the
second
8
full paragraph after --
9
MS. DOCTORS:
Eighty-five thousand?
10
THE HEARING OFFICER:
Eight five seven
11
seven seven.
12
MS. DOCTORS: Put your initials.
13
THE
HEARING OFFICER:
Allowances equal
14
tons. This is the only reference that
didn’t
15
have
a
unit (indicating).
16
MR.
MAHAJAN:
So initial it?
17
MS. DOCTORS:
Yeah,
just put
your
18
initials.
19
THE HEARING
OFFICER:
Just
so
that
20
it’s clear that I haven’t
added
anything
that
21
you’re not in agreement with.
22
MS. BASSI:
Put
today’s
date.
23
MS. DOCTORS:
It’s the 18th?
24
THE HEARING OFFICER:
Thank
you.
Page 19
1
Did anyone else have any
questions
2
for either this witness or for
the EPA
to
3
address at some future point?
4
Ms. Wheeler?
5
MS. WHEELER:
No, thank
you.
6
THE HEARING OFFICER:
Thank
you
very
7
much then.
8
The next hearing
in this matter is
9
scheduled for July 23rd, 2009,
also
at
1:00
10
in the video room at the
Board’s Springfield
11
offices.
12
As
a
matter of
housekeeping, I
13
will
mention that in the Board’s May 7th,
14
2009 order, the Board ordered
first notice
15
publication of this
rule. That publication
16
has not
occurred
yet.
The material has been
17
submitted
to
the Secretary of State’s
office,
18
so
that it will be
published, we hope, in the
19
near
future.
20
Once the first notice
publication
21
occurs, of course, there’s a 45-day
comment
22
period
following that. We are aware that we
23
would like
to get
this rulemaking
completed
24
in
a
timely fashion so we
will
see
whether we
Page 20
1
can dovetail
the posthearing comment period
2
following the
second hearing with that
APA
3
45-day
comment period.
4
But again, we’ll
see
if
we need
5
additional time,
because
of anything --
6
testimony that may
be
given
at
the
next
7
hearing, we may have
to
allow additional
8
time. But
we’ll
see
how that works.
9
MS.
DOCTORS:
The Agency is
looking --
10
hoping
that this rule could
be
fully adopted
11
no later than November 30th.
Because that’s
12
when the recordkeeping
requirements of
13
Subpart W become effective, when they
have --
14
the last
day
that they can -- so
that would
15
be
the -- you
know, what we’re trying to
16
avoid
is people having duplicative
17
requirements.
18
THE
HEARING OFFICER:
Thank
you
for
19
giving
us
that specific target date.
We
20
certainly hope to
do
it
more quickly than
21
that. But
it is helpful
to
know what our
22
drop
dead date
is.
23
Yes?
24
MS.
BASSI:
If
I
may, on behalf of
Page
21
1
Midwest Generation, also, I would like
to
2
state
that
Midwest Generation
does
support
3
this sunsetting
rule proposal. And we
4
appreciate the
Agency’s concern with the
5
double -- the duplicative requirements
that
6
would apply otherwise.
7
And
so,
November 30th is
a
really
8
good
target
date,
so
there’s not double
9
recordkeeping
to be done.
10
Thank
you.
11
THE HEARING OFFICER:
I’m trying
to
12
see
whether
there’s
a
pre-filing
date
in the
13
order for the -- July 10th is the pre-filing
14
date
for
the July 23rd hearing under the
15
May 13th hearing officer
order. Obviously,
16
if it could
be
-- if the Agency’s
comments
17
addressing this can
be
assembled earlier,
18
great.
19
But if not, please
do
try
to
get
20
us
that
material
so
that we can determine
how
21
the next hearing
needs
to go.
22
MS. DOCTORS:
Okay.
23
Yes?
24
MR.
RAO: Is there any possibility
for
Page
22
1
you to
provide
answers to Ms. Bassi’s
2
questions before the hearing?
That way I --
3
THE HEARING OFFICER:
And that’s what
4
I would hope
to see.
5
MR. RAO:
Yeah.
6
MS. DOCTORS:
Let me
see.
Let me
go
7
back and
speak with the affected people.
8
I’ll
get
the
transcript and
9
I’ll -- we’ll have
a
meeting, and I’ll --
10
we’ll discuss and I’ll
get
back
to
the
11
parties.
12
THE HEARING
OFFICER:
The sooner we
13
can
get
the information, the sooner we
know
14
what additional
proceedings need
to
take
15
place in this rulemaking. And
just -- I will
16
just
make
a
warning, if
-- due to budget
17
uncertainties, our travel
budget
is very
18
tight.
19
It is
a
possibly that
you
will
20
see, as the hearing officer for the next
21
hearing, Carol Web
from the Board’s
22
Springfield office,
to eliminate travel on my
23
part.
So you may
be
seeing me or
you
may
be
24
seeing Ms. Web,
we’ll
see
how that all
shakes
Page 23
1
out, as
well.
2
If there
is
nothing else from
3
anyone, then we’ll close this hearing. And
4
thank
you
all very much for your
5
participation.
6
(WHICH
WERE ALL THE MATTERS
7
HEARD IN THE
ABOVE-ENTITLED
8
CAUSE THIS DATE.)
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 24
1
STATE
OF ILLINOIS)
2
)
SS:
3
COUNTY OF
COOK
4
I,
SHARON
BERKERY,
a
Certified
Shorthand
5
Reporter
of
the State
of Illinois,
do
hereby
certify
6
that
I
reported
in shorthand
the
proceedings
had
at
7
the hearing aforesaid,
and
that
the
foregoing
is a
S
true, complete
and correct
transcript
of the
9
proceedings
of said
hearing
as
appears
from
my
10
stenographic
notes
so
taken
and transcribed
under my
11
personal direction.
12
IN
WITNESS WHEREOF,
I do
hereunto
set my
13
hand
at Chicago,
Illinois,
this 22nd day
of
14
June, 2009.
15
16
17
Certified Shorthand
Reporter
18
19
C.S.R.
Certificate
No. 84-4327.
20
21
E
A
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back
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2:12 3:21
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Board’s
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6:20
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Page 25
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6:16
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court 7:22
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6:10
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date
18:22
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day 1:10 20:14
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deals 14:2
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departure 7:14
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DIRECT
8:16
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24:11
directly
5:6 6:10
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4:24
discuss 22:10
Page
26
dispense
3:23
distributed
12:1
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distribution
8:24
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14:3
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3:7
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2:17
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20:16
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Eight
18:10
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19:2
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1:4 3:5
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22:22
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15:1
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6:20
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10:12,19
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enforce
10:6
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8:23
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17:23
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2:3,15 3:14,19
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17:9 18:13
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10:23
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Page 27
matter 1:2 3:4
19:
8,
12
MATTERS
23:6
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9:11
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YOGINDER
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