### ·' 

### Electronic Filing -Received, Clerk's Office, 08/20/2012

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

AMEREN ENERGY RESOURCES,

Petitioner,



### v.

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

Respondent ) ) } ) ) ) ) ) ) ) PCB 12-126 (VruiMce-Air)

NOTICE

TO: John Tlle!Tiault, Assistant Clerk Illinois Pollution Control Board James R. Thompson Center 100 West Rruldolph St., Suite 11-500 CJ1icago, IL 60601

Carol Webb Hearing Officer Illino.is Pollution Control Board 1021 N. Grand Ave. East P.O. Box 19274 Springfield, IL 62794-9274 A,-uy Antonio1li Renee Cipriano Gabriel Rodriguez Schiff Hardin LLP 233 South Wacker Drive Suite 6600 Chicago, !L 60606

PLEASE TAKE NOTICE that I .have today filed with the Office of the Pollution

Control Board the POST-HEARING COMlVIENTS OF THE ILLINOIS

ENVIRONMENTAL PROTECIION AGENCY, a copy of which is herewith served

upon you.

DATED: August 20,2012 1021 North Grand Avenue East P.O. Box 19276 Springfield, Illinois 627.94-9276 217.782.5544 217.782.9143 (TDD) ILLINOIS ENVIRON1viENTAL PROTECTION AGENCY

By:

# ~~b'tk::-" Gina Roocaforte Assistant Counsel Division of Legal Counsel

THIS FILING IS SUBMITTED ON RECYCLED PAPER



### ATIACHMENT

__ _

### Electronic Filing- Received, Clerk's Office, 08/20/2012

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

AMEREN ENERGY RESOURCES, ) ) ) ) ) ) ) ) ) ) Petitioner,



### v. PCB 12-126 (Variance- Air)

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

POST-HEARING COMMENTS OF THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

NOW COMES the Illinois Environmental Protection Agency ("Illinois EPA"), by its

attorney, and respectfully submits its post-hearing comments in the above proceeding. The

Illinois EPA has reviewed the transcript of the hearing held on August 1, 2012, and responds to

the information requests as fullows:

1. As one of the proposed variance conditions on page 11 of AER 's response to the July 6, 2012 Hearing Officer order, AER indicated it v.vuld be willing to provide progress reports on construction activities related to the Newton scrubber by the end of each calendar year during the term of the variance to both the Board and the Agency. Would Illinois EPA please indicate which address and which contact person such reports should be submitted? (Tr. at 54)

Such reports should be sent to the Illinois EPA as follows:

lllinois Environmental Protection Agency Attn: Ray Pilapil, Manager Birreau of Air-Compliance Section 1021 N. Grand Ave. East P.O. Box 19276 Springfield, IL 62794-9276

and

Illinois Environmental Protection Agency Attn: Gina Roccaforte, Assistant Counsel Division of Legal Counsel-Air Regulatory Unit 1021 N. Grand Ave. East P.O. Box 19276 Springfield, IL 62794-9276 ._, 

### ..2. 

### Electronic Filing- Received, Clerk's Office, 08/20/2012

Question J(b) in the July 25, 2012 Hearing Officer Order asked Ameren to comment on the assertion by the Illinois Attorney General's Office that the MPS was not intended to be a 12-year averaging period of pollution reduction. Does the Agency have anything to add to Ameren 's response and testimony on this issue? (Tr. at 55)

The Illinois EPA stated, in part, in its Recommendation filed July23, 2012, with

the Board as follows regarding this issue:

Furthermore, the J\.1PS was created and designed to achieve significant S0 2 and NOx reductions in exchange for mercury control flexibility in the Illinois Mercury Rule. The timing of the J\.1PS reductions was negotiated and the result of the consideration of many variables, including Petitioner's ability to install pollution control equipment in a timely manner and a desire to achieve the greatest amount of reductions within a reasonable amount of time. (Rec. at 21-22)

The Illinois EPA notes its previous comments on this issue and that a primary

aspect of the comment by the Office of the Attorney General appears to be in regard to

Ameren's use of emission reductions to offset any additional increase in emissions. The

Illinois EPA acknowledged that the use of emission offsets is a normal part of certain

regillatory processes.

3. Ameren has requested a response from the Rlinois EPA to Question 2(c) of the Hearing Officer Order dated July 25, 2012: "lfthe heat input values are not the same, please explain which value is most appropriate for calculations to support a SIP revision. " (Tr.

at 55-56}

The Illinois EPA will work with the United States Environmental Protection

Agency ("USEP A") Region 5 to determine the appropriate year to be used for heat input

values to support a future SIP revision. It is likely that the original2002 baseline year

heat input will be used. The Illinois EPA has had preliminary discussions with USEP A

Region 5 regarding a SIP revision for pending variance requests and no adverse issues

were identified. Illinois EPA's Regional Haze SIP used the 2002 baseline year in

accordance with the USEP A memorandum entitled 2002 Base Year Emission Inventory

SIP Planning: 8-hr Ozone, PM2.5 and Regional Haze Programs, dated November 18,

2

### Electronic Filing- Received, Clerk's Office, 08/20/2012

2002, 1 that identifies 2002 aS the emission inventory base year 

### tor the SIP planning

process.

DATED: August 20, 2012

l 021 North Crrand Avenue East P. 0. Box 19276 Sp1ingfield, IL 62794-9276 2171782-5544 Respectfully submitted, ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

# By:~~· Gina Roccaforte Assistant Counsel Division of Legal Counsel

THIS FILING IS SUBMITTED ON RECYCLED PAPER

' http:liwv,w.epa.govi\Wchicl!ei oocs/2002hasei:u:ven _102502new. pdf 3

# .. Electronic Filing- Received, Clerk's Office, 08/20/2012

STATE OF ILLL"\OIS

COUNTY OF SANGAMON ) } ) ) ) 

## ss

CERTIFlCATE OF 

### SERVICE

I, the undersigned, an attorney, state that I have served electronically the attached

POST-HEARING C0M}.1ENTS OF THE ILLINOIS ENVIRONMEJ\1AL

PROTECTION AGENCY npon the fullowing person:

John Therriault, Assistant Clerk Illinois Pollution Control Board James R. Thompson Center 100 West Randolph St., Suite 11-500 Chicago, IL 60601

and electronically and by mailing tl1em by first-class mail from Springfield, Illinois, ;vith sufficient postage affixed to the following persons:

Carol Webb Hearing Officer Illinois Po !lution Control Board l 021 N. Grand Ave. East P.O. Box 19274 Springfield, IL 62794-9274

DATED: August 20, 2012

I 021 North Grand Avenue East P.O,Box19276 Springfield, IL 62794-9276 217.782..5544 211-782,9143 (TDD) An1y 1\ntoniolli Renee Cipriano Gabriel Rodrit,'Uez Schiff Hardin LLP 233 South Wacker Drive Suite 6600 Chicago, IL 60606

1LLINOIS ENVIRONl\IENTAL 

### PROTECTION AGENCY, 

# cJ-;**~--** Gina Roccafurte Assistant Counsel Division of Legal Counsel., i 

### •· 

### Electronic Filing- Received, Clerk's Office, 8/23/2012

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

AMEREN ENERGY RESOURCES, ) ) ) ) } ) ) ) ) } Petitioner,



### v.

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

Respondent

NOTICE OF FILING

To; ALL PARTIES ON TilE ATTACHED SERVICE UST PCB12·126 (Variance- Air)

PLEASE TAKE NOTICE that we have 

### today electronically .filed with the Office of the Clerk of the illinois Pollution Control Board a MOTION TO FILE INSTANTER and PETITIONER'S POST-HEA,..lUNG COMMENT,**copie~** of 

### which are herewith served uponyo\L

Dated: August 23, 2012

Renee Cipriano Gabriel Rodriguez Amy Antoniolli SCHIFF HARDIN LLP 233 South Wacker Drive Suite 6600 Chicago, Illinois 60606 312-258-5500 

### Amy Antoniolli

ATTACHMENT

___ _

### Electronic Filing" Received, Clerk's Office, 8/23/2012

CERTIFICATE OF SERVICE

I, the undersigned, certify that on this 23rd day of August, 2012, I have served electronically the attached MOTION TO FILE 

### INSTANTER and PETITIONER'S POSTHEARING 

### COMMENT, upon the following 

### persons:

John 

### Therriault, Assistrurt Clerk Carol 

### Webb, Hearing 

### Offic:er Illinois Polluti<m 

### Control Board James 

### It Thompson Center Suite 11-500 100 

### West Randolph Chicago, illinois 

### 6060 I

and electronically and by first class mail, postage affixed, upon:

Gina 

### Roccaforte Assistant Counsel Division ofLegal Counsel Illinois Environmental Protection Agency I 021 North Grand Avenue, 

## East P.O. 

### Boxl9276 Springfield, illinois 62794-9276

Renee Cipriano Gabriel Rodriguez Amy Antoniolli 

### SCHIFF HARDIN LLP 233 South 

### Wacker Drive Suite6600 

### Chicago, Jllinois 60606 312-258"5500 \**-~·**

### Electronic Filing- Received, Clerk's Office, 8/23/2012

SERVICE LIST (PCB 12-126)



### John Therriault, Assistant Clerk Gina 

### Roccaforte Carol Webb, Hearing Officer Assistant Counsel Illinois Pollution Control Board Division ofLegal Counsel James R. Thompson Center Illinois Environm.ental Protection Agency !00 West Randolph Street, Suite 11-.500 1021 North Grand Avenue, 

### East Chicago, lliinois 60601 P.O. Box 19276 therriaj @iQcb.state. il.us Springfield, Illinois 62794-927(/

### Electronic Filing- Received, Clerk's Office, 8/23/2012

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

AMEREN ENERGY RESOURCES, ) ) ) ) ) 

### ) ) ) ) ) Petitioner,



### v. PCB 12-126 (Variance- Air)

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

MOTION TO FILE INSTANTER

NOW COMES THE PBTITIONER, AMEREN ENERGY RESOURCES ("AER"), by

and through its attorneys, SCHIFF 

### HARDIN, LLP, and pursuant to 

### 35111. Adm. Code 101.522,

and respectfully 

### states as follows:

L Section !01.522 of the Illinois Pollution Control Board ("Board")'sprocedural

rules provides:

The Board or hearing officer, for good 

### cause shown on a motion 

### after notice to the opposite party, may extend the time for filing any document

or doing any act which is required by these rules to be done within a 

### limited period, either before or after the expir;:ltion of time. 

### 35 Ill. Aam. Code 101.522.

2. At hearing in this proceeding a member of the Illinois Pollution Control Board

{"Board''} asked about AER's plan for compliance With the Cross-State Air Pollution Rule

("CSAI'R"). Hearing Officer Webb set August 10, 2012 as the deadline for filing post-hea-ring

public comments. AER timely file(! its**post~bearing** brief on August 15, 2012;

3. On Augilst 21, 2012, the United

.. States 

### Court of Appeals for 

### the D.C. CircJJit

vacated the CSAPR.

### Electronic Filing- Received, Clerk's Office, 8/23/2012

4. AER 

### states that 

### because. the vacatur directly relates to 

### a question by 

### a Board

Member at hearing, AER has shown 

### good cause for an extension of 

### time 

### to file a public

comment which it files concurrently with this 

### motiOJ:J.

WHEREFORE, the Petitioner respectfully requests 

### that the Pollution Control Board grant



### this Motion 

### to File Instanter and 

### accept Petitioner's Post-Hearing 

### Comment as timely fiied.

Dated: August 23, 2DU



### Renee 

### Cipriano Gabriel Rodriguez AmyAmoniolli 

### Schiff Hardin,. LLC 233 South Wacker Drive, Suite 6600 

### Chicago, IL 60606 Respectf\,illy 

### submitted,



### AMEREN ENERGY RESOURCES, Petitioner.

### Electronic Filing -Received, Clerk's Office, 8/23/2012

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

AMERENENERGY RESOURCES,

Petitioner,

v.



### ILLINOIS Em'JRONMENTAL PROTECTION AGENCY,

Respondent. ) ) ) ) 

### ) ) ) ) ) 

### ) 

### PCB 12-126 (Variance-Air}



### PETITIONER'S POST-HEARING COMMENT

NOW COMES AMEREN ENERGY 

### RESOURCES ("AER"), by 

### and through its

attorneys, SCHIFF HARDIN, LLP, and, 

### pursuant to Section. !04.224(d} of the Illinois Pollution

Control Board's ("Board") procedural rules (35 Ill. Adm. Code 104

.. 220). On August 21,2012,



### the United States Court of Appeal$ f.;>r the D,C. Circuit vacated the Cross-S;ate Air Pollution

Rule ("CSAPR''}, holding that 

### the United States Environmental Protection Agency ("USEPA")

exceeded its 

### authority U!Wer the Clean Air Act (''CAA'') by requiring upwind states to reduce

more pollution than 

### necessary and denying states a post-Rule opportunity to set up their 

### own

state 

### implementation plans before federally•promulgated Federal Implementation Plans (''FIPs'')

took effuct. 

### EMEliomer City 

### Gerzetaticm, LP. v. 

### EPJ., et 

## at., No. ll-1302 (D.C. Cir., Aug. 21,

2012). The 

### coUI! vac<Ued the rule and sent 

### USEPA back to the 

### drawing board to address

interstate 

### air pollution Under the CAA.

At hearing, Board Member 

### Zalewski asked 

### "lfCSAPR 

### does go 

### into effect, does Ameren

have a compliance plan?" (Tr. 41). lti 

### response, in Petitioner's post-hearing brief, 

### Ameren

Energy Resources ("AER") stated**~[d]etermining** 

### AER's CSAPR compliance plan requires a bit

of forecasting because 

### we can not ):lecessarily l!Sljume that 

### the rule will be upheld in its 

### full and

### Electronic Filing -Received, Clerk's Office, 8/23/2012**H~aring** Brief, pg. 46. Now we knowthe rule has not been upheld in its full ai!d current form.

With the D.C. Circuit's vacatur of CSAPR several aspects of the CSAPR, including the states'

emission budgets and emission alloWai!ces for power plants under the US EPA-promulgated FIPs

will not be part of equivalent federal legislation. Based on the August 21, 2012 decision, 

### it is

also unclear at 

### this: point when a replacement rule will be promulgated, let alone what it would

require in terms of emission reductions or when new compliance deadlines would take effect. To

further answer Board Member Zalewski's question, a compliance plan for CSAPR is no longer

necessary at this time.

WHEREFORE, Ameren Energy Resources asks the Illinois Pollution Control Board to

accept this comment as a supplement to its answer given at bearing and in its post-hearing brief.

Dated: August23,2012

Renee Cipriano Gabriel Rodriguez Amy Antoniolli Schiff Hardin, LLC 233 South Wacker Drive, Suite 6600 Chicago, IL 606()6 Respectfully submitted,

AMEREN ENERGY RESOURCES, Petitioner;

### ILLINOIS POLLUTION CONTROL BOARD September 20 , 2012

AMEREN ENERGY RESOURCES

,
Petitioner,

v.

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

Respondent. ) ) ) ) ) ) ) ) ) ) PCB 12

- 126 ( Variance

- Air)

AMY ANTONIOLLI, GABRIEL RODRI G UEZ AND RENEE CIPRIANO , SCHIFF HARDIN LLP, APPEARED ON BEHALF OF PETITIONER; AND

GINA ROCCAFORTE , ASSISTANT COUNSEL, APPEARED ON BEHALF OF RESPONDENT.

OPINION AND ORDER OF THE BOARD (by J.A. Burke ):

Ameren Energy Resources (A ER ) seeks a variance from the sulfur dioxide (SO 2 

### ) emission rate in the multi

- pollutant standard (MPS) rules applicable to the AER MPS Group of facilities in Illinois . The AER MPS Group includes the following seven coal

- fired electric generating plants: Coffeen Energy Center ( Montgomery Co unty ) , Duck Creek Energy Center ( Fulton County ) , E.D. Edwards Energy Center ( Peoria County ) , Joppa Energy Center ( Massac County ) , Hutsonville Energy Center ( Crawford County ) , Meredosia Energy Center ( Morgan County ), and Newton Energy Center ( Jasper County ) . Pet. at 4

- 5. AER ’s variance petition (petition) seeks relief from 35 Ill. Adm. Code 225.233(e)(3)(C)(iii) for five years beginning January 1, 2015 and ending December 31, 2019, and relief from 35 Ill. Adm. Code 225.233(e)(3)(C)(iv) for three y ears and fifteen days , beginning January 1, 2017 and ending January 15, 2020. Pet. at 1; AER ’s Response to the Board’ First Set of Questions (A ER First Resp.) at 1.

On July 23, 2012, t he Illinois Environmental Protection Agency (Agency) filed its

“ Recommendation ” in response to the petition ( Agency R esponse) stat ing that the Agency “neither supports nor objects to the [Board] granting the Petition subject to the terms and conditions contained herein.” Agency Resp. at 1. T he Agency determined that no environmenta l harm w ould result if the Board were to grant a variance requiring compliance with

an overall annual SO 2 

### emission rate of 0.35 lb/mmBtu 1 

### from 2013 through 2019

, considering that AER has already ceased operation of the Meredosia and Hutsonville stations. Id. at 11. The Agency also states that such a variance would be “acceptable” to the Agency. Id. at 7.

1 

### “mmBtu” stands for million British thermal units or 1,000,000 Btu.

### 2

The Board received 2,023 public comments in favor of granting the petition, and 1,072 comments opposed, including several spoken at hearing and many w ritten. The Board appreciates the extraordinary time and effort of State and local officials, individual citizens, and

c itizens g roups who provided their professional opinions, personal stories, and concerns in this
matter.

The Environmental Protection A ct (Act) gives the Board authority to grant a variance from a Board regulation when it finds that compliance with the regulation would impose an arbitrary or unreasonable hardship on the petitioner. 415 ILCS 5/35(a) (2010). For the reasons set forth belo w, the Board finds t hat requiring AER to comply with Section 225.233(e)(3)(C)(iii) in 2015 and 2016 and with Section 225.233(e)(3)(C)(iv) starting in 2017 would impose an arbitrary or unreasonable hardship. Additionally, the Board finds that the requested variance will result in an overall reduction in emissions and therefore has no significant negative impact on the public or the environment. The Board also finds that the requested variance is consistent with federal law. The Board, therefore, grants th e variance subject to certain conditions.

PROCEDURAL BACKGROUND

On May 3, 2012, AER filed a petition for a variance from the overall SO 2 

### annual emission rate in the MPS applicable to the seven coal

- fired electric generating stations in the AER MPS Group

. See 35 Ill. Adm. Code 225.233(e)(3)(C)(iii) and (iv) . Pet. at 4

- 5. AER states that, as of January 2012, it generates electri city at five of these seven stations, having ceased operation s at the Meredosia and Hutsonville stations in December, 2011

. Id. at 5 , Pet. Exh. 6 at 4

. AER seeks relief from Section 225.233(e)(3)(C)(iii) for five years beginning January 1, 2015 and ending December 31, 2019, and relief from Section 225.233(e)(3)(C)(iv) for approximately three y ears, beginning January 1, 2017 and e nding January 15, 2020. Pet. at 1; AER First Resp. at 1.

The Act requires the Agency to provide public notice of a variance petition, including notice by publication in a newspaper of general circulation in the county where the facility is located

, withi n 14 days after the petition is filed. 415 ILCS 5/37(a); 35 Ill. Adm. Code 104.214. A ER ’s petition was filed on May 3 , 2012. Therefore, publication of newspaper notice was required by May 17 , 2012 . T he Agency placed newspaper notices in newspapers in each of the seven counties where facilities in the AER MPS Group are located on dates between May 10 and May 16, 2012

. The Agency inform ed the Board that it also mailed notices of the petition to elected officials, consistent with 35 Ill. Adm. Code 104.21 4(b). Agency Resp. at 3.

The Act requires the Agency to investigate each variance petition and “make a recommendation to the Board as to the disposition of the petition.” 415 ILCS 5/37(a); 35 Ill. Adm. Code 104.216. On July 23 , 2012, the Agency filed a document titled “Recommendation” stating that the Agency “neither supports nor objects to the [Board] granting the P etition subject to the terms and conditions contained herein .” Agency Resp. at 1 . Within 14 days after service of an Agency recommendatio n, the petitioner may file a response to the Agency recommendation or an amended petition. 35 Ill. Adm. Code 104.220. A ER made no such filing.

### 3

The Board will hold a hearing on a variance petition (1) if the petitioner requests a hearing; (2) if the Agen cy or any other person files a written objection to the variance within 21 days after the newspaper notice, together with a written request for hearing; or (3) if the Board, in its discretion, concludes that a hearing is advisable. See 415 ILCS 5/37(a); 3 5 Ill. Adm. Code 104.224, 104.234. In the petition, AER waived hearing. Pet. at 32. On May 31 , 2012, t he Board received two objections to the petitions, discussed in more detail below : (1) Objection of Environmental [sic] Illinois, Environmental Law and Policy Center (ELPC) , Natural Resources Defense Council, Respiratory Health Association of Metropolitan Chicago (RHA) , and Sierra Club; and (2) Objection of Environment Illinois, E LPC , R HA , and Sierra Club . However, each of these objections expressly sta ted that they do not request a hearing pursuant to 35 Ill. Adm. Code 104.224(c). Nevertheless, b ased on the filings received, including numerous public comments, the Board concluded that a hearing was warranted in this case. See also, infra , p. 6, n. 3.

In advance of the hearing, the Board’s hearing officer, Carol Webb, issued two sets of questions to AER to clarify points raised in the petition. The hearing officer issued the first set of questions on July 6, 2012 and the second set of questions on Jul y 25, 2012. AER filed two sets of responses to the hearing officer’s questions on July 30, 2012: AER’s Responses to the Illinois Pollution Control Board Technical Unit’s Questions (AER First Resp.); AER’s Responses to the Illinois Pollution Control Board Technical Unit’s Second Set of Questions (AER Second Resp.).

The Board held the public hearing on August 1 , 2012 in Springfield. AER and the Agency appeared as participants in the hearing. AER presented testimony from two witnesses. In addition to hea ring testimony, the Board received 90 oral public comments during the hearing. The Board received the transcript of the August 1, 2012 hearing on August 2, 2012. AER filed a post

- hearing brief ( AER Post Br.) on August 15, 2012. IEPA filed a post

- hearing brief on August 20, 2012. On August 23, 2012, AER filed an additional post

- hearing comment (AER post comment) and a motion to file the comment instanter

. In addition to the oral public comments received at the hearing, the Board has received 3,002 writt en public comments. Two comments were submitted to the Agency and the Agency attached the letters to its response. These two comments are substantially similar to public comments filed with the Board by the same parties. The deadline for filing public c omments was August 10 , 2012. The Board notes that the number of public participants is greater than the 3,002 comments received, as some public comments were signed by more than one individual. See, e.g., PC#2197 (signed by six individuals), and PC#2648 (signed by 85 individuals). The B oard received an additional 119 public comments following the close of the public comment deadline. 2

2 

### Public comments 2,995 through 3,005 consist of 2,372 letters urging the Board to deny AER’s variance request. In the interests of administrative economy, the Clerk’s Off ice batched a number of identical, late

- filed public comments, assigning one number to groups of comments with similar text.

### 4

AER POST

- HEARING MOTIONS

On August 15, 2012, along with AER ’s post

- hearing brief, AER filed a motion for waiver of pa ge limitation (Waiver Mot.). AER states it

cannot adequately address the numerous questions, public comments, both oral and written, and the various issues raised in those questions and comments, in the 50

- page limit provided in the Board’s procedural r ules. Waiver Mot. at 1.

AER therefore requests that the Board grant it a waiver of the 50

- page limitation. Id. at 2. The Board did not receive any objections to granting of the motion. The Board has received a total of 3,005 public comments in this do cket.

On August 23, 2012, AER filed a motion to file instanter (AER Post Mot.) a public comment regarding an August 21, 2012 decision of the United States Court of Appeals for the D.C. Circuit. AER Post Mot. at 1 ; see also Petitioner’s Post

- Hearing Com ment at 1, citing E.M.E. Homer City Generation, L.P. v. Environmental Protection Agency, et al. , No. 11

- 1302 (D.C. Circuit, Aug. 21, 2012) . The Court’s decision vacated the Cross

- State Air Pollution Rule ( CSAPR ) and AER noted that the vacatur “directly re lates to a question by a Board member at hearing.” Id. at 2.

To ensure a complete record, the Board grants both of AER ’s motions.

STATUTORY BASIS FOR ISSUING VARIANCE

A “variance is a temporary exemption from any specified rule, regulation, requirement or order of the Board.” See 35 Ill. Adm. Code 104.200(a)(1). Under Title IX of the Act (415 ILCS 5/35

- 38), the Board is responsible for granting variances when a petitioner demonstrates that immediate compliance with a Board regulation would impose an “ arbitrary or unreasonable hardship” on petitioner. 415 ILCS 5/35(a). Specifically, the Act provides:

The Board may grant individual variances beyond the limitations prescribed in this Act, whenever it is found, upon presentation of adequate proof, that compliance with any rule or regulation, requirement or order of the Board would impose an arbitrary or unreasonable hardship. However, the Board is not required to find that an arbitrary or unreasonable hardship exists exclusively because the regulatory s tandard is under review and costs of compliance are substantial and certain. 415 ILCS 5/35(a); see also 35 Ill. Adm. Code 104.200, 104.208, 104.238.

The Board may grant a variance, however, only to the extent consistent with applicable federal law. 415 ILCS 5/35. Further, the Board may issue a variance from any regulation with or without conditions, and for a period of time not exceeding five years. See 415 ILCS 5/36(a) and (b)

. The burden of proof is on the petitioner. 415 ILCS 5/37(a); 35 Ill. Adm . Code 104.200(a)(1), 104.238(a). The petitioner must prove that immediate compliance with Board

### 5

regulations would cause an arbitrary or unreasonable hardship that outweighs public interest in compliance with the regulations. See Willowbrook Motel v. PCB , 135 Ill. App. 3d 343, 349

- 50, 481 N.E.2d 1032, 1036

- 37 (1st Dist. 1985).

BACKGROUND OF THE MULTI

- POLLUTANT STANDARD

In 2005, the United States Environmental Protection Agency ( USEPA ) promulgated regulations requiring reduction of nitrogen oxide (NO x 

### ), SO 2 

### , and mercury. See 70 Fed. Reg. 25162 (May 12, 2005); 70 Fed. Reg. 28606 (May 18, 2005). The Agency proposed rules to the Board to implement both federal rules. The first rulemaking was Proposed New 35 Ill. Adm. Code 225 Control of Emissions from Lar ge Combustion Sources (Mercury) , R06

- 25 (Dec. 21, 2006). This rule amended 35 Ill. Adm. Code Part 225 Subpart A and added Subpart B. The second rulemaking was Proposed New Clean Air Interstate Rules (CAIR) SO 2 

### , NO x 

### , Annual and NO x 

### Ozone Season Trading Pr ograms, 35 Ill. Adm. Code 225, Subparts A, C, D, E, and F , R06

- 26 (Aug. 23, 2007).

As a result of these rulemakings, under Part 225 “ Control of Emissions from Large Combustion Sources, ” affected utilities are provided with two compliance options for reduc ing emissions: O ne option imposes stringent limits on mercury emissions alone and the other option requires implementing mercury control technology in conjunction with emission limits for SO 2 

### and NO x 

### . This second option is found at Section 225.233 and is referred to as the Multi

Pollutant Standard ( M PS). 35 Ill. Adm. Code 225. 233

. On December 27, 2007, AER opted into the MPS for the AER MPS Group. Pet. at 12.

In 2008, AER petitioned the Board for a variance from the 201 3 and 2014 SO 2 

### emission
rates (0 .33 lb/mm B tu or a rate equivalent to 44% of the Base Rate of SO 2 

### emissions, whichever is more stringent) found at Section 225.233(e)(2) . Pet. at 6; Ameren Energy Generating Co. et al. v. Illinois Environmental Protection Agency , PCB 09

- 21 (Jan. 22, 2009). The Board denied that variance request as not being the proper regulatory relief mechanism

. Id. AER then participated in the rulemaking captioned Amendments to 35 Ill. Adm. Code 225: Control of Emissions from Large Combustion Sources (Mercury Monitorin g) , R09

- 10 (June 18, 2009). As a result, the Board promulgated a final rule which included adding subsection (3) to Section 225.233(e) , titled “Ameren MPS Group Multi

- Pollutant Standard

. ” Accordingly, Sections 225.233(e)(3)(C)(iii) and (iv), which are th e subject of this variance request, became effective on July 15, 2009. Id. at 6

- 7; Agency Resp. at 5.

The specific rule provisions from which AER now seeks relief are:

Section 225. 233 Multi

- Pollutant Standard (MPS)

e) Emission Standards for NO x 

### and SO 2



### . . .
3) Ameren MPS Group Multi

- Pollutant Standard

### 6

. . .
C) SO 2 

### Emission Standards

. . .
iii) Beginning in calendar year 2015 and continuing in calendar year 2016, for the EGUs in the Ameren MPS Group, the owner and operator of the EGUs must comply with an overall SO 2 

### annual emission rate of 0.25 lb/million Btu.

iv) Beginning in calendar year 2017 and continuing in calendar year thereafter, for the EGUs in the Ameren MPS Group, the owner and operator of the EGUs must comply with an overall SO 2 

### annual emission rate of 0.23 lb/million Btu.

On June 24, 2011, the Agency submitted a revision to the Illinois S tate I mplementation P lan (SIP) addressing regional haze. See 77 Fed. Reg. 3966 (Jan. 26, 2012); Pet. at 2 9 . The Illinois regional haze plan addresses Section 169A of the Clean Air Act (CAA) (42 U.S.C. 7491) to remedy impairment of visibility in Class I areas such as national parks and wilderness areas. 77 Fed. Reg. 3966. The Illinois submittal to USEPA included adding Sections 225.233(e)(3) (C)(iii) and (iv), the subject of this variance petition, to the Illinois SIP. Pet. at 30

, Ex h . 12

. On January 26, 2012, USEPA proposed approval of Illinois’ submittal. 77 Fed. Reg. 3966. As of the date of filing the petition, USEPA had not yet taken f inal action on this proposal. Pet. at 29. On July 6, 2012, during this variance proceeding, USEPA approved the Illinois submittal. 77 Fed. Reg. 39943. USEPA granted final approval for Illinois’ Regional Haze SIP as proposed by Illinois which means Sect ions 225.233(e)(3)(C)(iii) and (iv) are part of the Illinois SIP effective August 6, 2012 3



### . Id.

AER ’S VARIANCE PETITION

A ER petitioned the Board for a variance from Section 225.233(e)(3)(C)(iii) and (iv) of the M PS seeking additional time to comply with the overall SO 2 

### annual emission rates because:

among other things, declining power market prices have resulted in an insufficient cash flow necessary to finance and maintain the construction completion schedule of flue gas desulfurization (FGD) equipment at the Newton Energy Center (Newton FGD [p] roject) in time to meet those rates. By seeking relief now, which is critical from a timing standpoint, A ER will conserve cash flow and stave off draconian operational measures with the hope that stability will eventually return to the marketplace thereby allowing the completion of the Newton FGD project. Pet. at 1

- 2.

3 

### Since the MPS is now part of the Illinois SIP, the State of Illinois must hold a public hearing or provide the public the opportu nity to request a public hearing on this variance request. 40 C.F.R. § 51.102(a).

### 7

AER states that, contrary to positions advocated by the Citizens Groups, its decision to opt

- in to the MPS “was not an ‘agreement’ or the ‘funct ional equivalent of a contract’ . . . but rather a decision to be subject to one Illinois regulation as opposed to another.” AER Post Br. at 6. AER believes that its request “fulfills the purpose of the variance process” and that asking for more time to comply “is the responsible thing to do given that [A ER ]’s compliance plan offsets any potential adverse impacts to human health and the environment.” Id.

Corporate Structure

AER is a subsidiary of Ameren Corporation. Affidavit of Ryan J. Martin ( Pet. E xh. 6 ) at 2. Ameren Corporation is a public utility holding company whose primary assets are the common stock of its subsidiaries, including AER , Ameren Missouri and Ameren Illinois. Id. Ameren Corporation’s subsidiaries “are separate, independent legal entities with separate businesses, assets, and liabilities.” Id. AER consists of merchant generating operations that include Ameren Energy Generating Company (GENCO) and Ameren Energy Resources Generating Company (AERG). Id. GENCO is AER ’s only public ly

- registered and rated
company. Id. GENCO is a registered company with the Securities and Exchange Commission, and its financials are publicly reported. Id. at 3.

Illinois deregulated its electricity market in 1997. Pet. at 3, fn. 3. At that time, A meren Corporation’s rate regulated utilities transferred generating facilities formerly owned by Central Illinois Public Service Company (CIPS) and Central Illinois Light Company (CILCO) into GENCO and AERG. AER owns, respectively, the former CIPS plants (Newton, Coffeen, Meredosia and Hutsonville) and the former CILCO plan t s (Duck Creek, E.D. Edwards). Id. In addition, AER owns 80% of the common stock of Electric Energy, Inc., which operates the Joppa Energy Center. Id.

Facilities

AER owns seven coal

- fired electric generating stations in Illinois. Pet. at 4. These seven stations constitute the AER MPS Group and include 21 electric generating units. Pet

. at 4, n. 6. As of January 2012, AER ceased operation of the Meredosia (Morgan County) and Hutso nville (Crawford County) stations but generates electric ity at the remaining five stations : Coffeen (Montgomery County), Duck Creek (Fulton County), E.D. Edwards (Peoria County), Joppa (Massac County), and Newton (Jasper County). Pet at 4

- 5. AER employs approximately 7 50 persons at the facilities in the AER MPS Group . Pet. at 6.

The principal emissions at AER ’s plants are SO 2 

### , NO x 

### , and particulate matter. Pet. at 5. The counties where AER plants are located are designated as atta inment for all polluta nts. Id. AER controls SO 2 

### emissions with pollution control equipment , specifically three flue gas desulfurization units at the Duck Creek and Coffeen stations

, and by using low

- sulfur coal or blending low sulfur coal with Illinois coal. Id. AER control s NO x 

### emissions using low NO x 

### burners, over

- fired air, selective catalytic reduction systems , and burning combinations of low

sulfur coal

. Id. AER controls particulate matter using flue gas conditioning and electrostatic precipitators. Id. AER controls mercury emissions using scrubbers and sorbent injection. Id.

### 8

Relief Requested

In its initial petition, AER seeks a variance from Section 225.233(e)(3)(C)(iii) for five
years , beginning January 1, 2015 and ending December 31, 2019

, and from Section 225. 233(e)(3)(C)(i v ) for four years

, beginning January 1, 2017 and ending December 31, 2020. Pet. at 7. In its response to questions from the Board, AER informs the Board that

, after discussions with the Agency, AER revise s its request to return to complianc e with Section 225.233(e)(3)(C)(i v ) regarding the 0.23 lb/ mm Btu rate on January 15, 2020

, rather than December 31, 2020. AER First Resp. at 1

, AER Post Br. at 4

. The date for return to compliance with the 0.25 lb/ mm Btu rate will remain January 1, 2020. AER Post Br. at 4.

To meet the current overall SO 2 

### annual emission rates for 2015 and 2016 in Section 225.233(e)(3)(C)(iii)

, and for 2017 and beyond in Section 22 5.233(e)(3)(C)(i v ), AER planned to install flue gas desulfurization equipment at the Newton s tation

. Id. AER asserts that inadequate cash flow and borrowing restrictions make it unable to complete construction. Id. If the variance is not granted, AER claims that it “will need to mothball multiple units across [A ER ’s] coal fleet, which may incl ude E.D. Edwards, Joppa, and/or Newton units, so as to comply with the MPS overall SO 2 

### annual emission rates until such time as market prices recover to the level that the Newton FGD [p] roject is financially viable and installation can be completed.” Pet. at 7

- 8. AER believes this to be its “only other viable compliance alternative.” AER Post Br. at 2.

AER seek s th is variance w e ll in advance of the 2015 and 2017 compliance deadlines. Pet. at 7. AER asserts that the total length of the variance from bo th requirements “would allow for power price market conditions to improve and regulatory certainty at the federal level to crystallize.” Pet. at 8. AER argues that this variance does not request a variance exceeding five
years. Id.

AER does not seek a change to NO x 

### limits or mercury control requirements. Pet. Ex h . 7.

Compliance Plan

AER states it has complied wi th mercury and NO x 

### requirements set forth in the MPS. AER Post Br. at 32. AER would further implement a compliance plan that “results in a net environmental benefit” and “mitigates the environmental impact represented by extending the SO 2 

### compliance dates set forth in the MPS” if the variance is granted. Id.

In its initial petition, AER proposes that the AER MPS Group will meet an overall S O 2 

### annual emission rate of 0.38 lb/mmBtu from 2012 through 2019 . Pet. at 9. AER anticipates achieving this rate by continuing t o not operate at the Hutsonville and Meredosia stations and “maximizing FGD performance” at Duck Creek and Coffeen. Id. AER w ill continue to burn low

- sulfur coal from the Powder River Basin at the five operating stations

. Id.

In its response to questions from the Board, AER inform ed the Board that AER has revise d its proposed compliance plan. AER proposes to return to compl iance with the 2015 overall SO 2 

### annual emission rate on January 1, 2020 and with the 2017 overall SO 2 

### annual rate

### 9

by January 15, 2020. AER First Resp. at 1

- 2. In addition, AER proposes to meet an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from 201 3 through 2019, lowered from 0.38 lb/mmBtu. Id. at 1. AER will meet this revised rate by not operating the Hutsonville and Meredosia stations during the variance term. Id. at 2. AER will also operate FGD systems at the Duck Creek and Coffeen stations a t a higher level of control. Id. Specifically, AER will ope rate the FGD systems at a 98%

- 99% SO 2 

### removal rate rather than 95% which will also require “auxiliary power, the increased sizing of equipment, and increased limestone usage.” Id. at 8. AER
est imates that capital expenditures to operate the Duck Creek and Coffeen stations FG D systems
at 98%

- 99% will be $5 million in capital costs and $173,337 in annual operating and management costs. Id. AER also intends to procure lower

- sulfur coal for its op erations. AER Post Br. at 5. AER asserts that, by taking these steps, it will achieve an emission rate of 0.35 lb/ mm Btu. Id. at 5. AER contends that this compliance plan “provides a net environmental benefit with respect to SO 2 

### emission s .” Id. at 3.

AER expects to continue construction at Newton to complete the FGD project. Pet. at 9. AER has procured “all major equipment components” needed for the Newton FGD project. Id. AER “expects to continue” site preparation, foundation work, and duct work f abrication “over the next few years.” Id. Field construction “could take approximately 24 months to complete once the project ramps back up.” Id. Extending site preparation and construction over several years will “position A ER for compliance with the 2015 [overall] SO 2 

### annual emission rate by January 1, 2020.” Id. AER has incurred $237 million in the Newton FGD project to date. Id. at 1 9

. By the end of 2012, AER will have spent over 50% of the project cost. Id.

In response to questions from the Board, AER provided additional detail on the construction plans for the Newton FGD project. AER has scheduled construction work during 2012 and 2013. AER First Resp. at 6. During this time, all major equipment will be delivered to the site and rough set ; AER will also fabricat e ductwork and construct the absorber building. Id. Engineering design is 65% complete. Id. Engineering design will be completed in 2014. Id. AER has budgeted $16 million per year from 2013 to 2016 and greatly increased capita l expenditures in 2018 and 2019 to complete the Newton FGD project. Pet. at 19; AER First Resp. at 6; Tr. at 32; AER Post Br. at 38, 40.

The Board requested that AER provide an estimated timeline for phases of the compliance plan including engineering, site preparation, foundation work, duct work, fabrication, field construction activities, startup, and any other significant phases. AER proposes instead to provide the Board with progress reports on construction activities. AER First Resp. at 6. AER s tates this is because it is difficult to provide a specific and targeted prospective schedule beyond the categories of work previously provided to the Board. AER Post Br. at 38. A ER contends that a specific timeline establishing construction and project milestones cannot be provided until an in

- service date is fixed. Id. AER states “ [o]nce the Company ‘green lights’ the project, AER project management and its general contractor Advatech will reestablish a hard and fixed schedule that ‘backtracks’ from t he service date and takes into account work already completed. Id. AER does note that if relief is granted, AER ’s current budget projections

### 10

call for greatly increased capital expenditures commencing in 2018 and 2019 so that AER will be in a position to comply with the MPS once the proposed variance term expires on January 15, 2020. Id.

AER further states that it is unable to provide a date certain by which AER will know if completion of the scrubber project is feasible before the January 15, 2020 dead line. AER Post Br. at 40. However, AER contends that its compliance plan is premised on a commitment “that meaningful engineering, procurement and construction activities” will continue throughout the variance period, committing to spend roughly $16 mill ion per year from 2013 to 2016 with a call for greatly increased capital expenditures in 2018 and 2019 to complete the Newton FGD project. Pet. at 19; AER First Resp. at 6; Tr. at 32; AER Post Br. at 38, 40.

Arbitrary or Unreasonable Hardship

AER argue s that compliance with the 2015 and 2017 overall SO 2 

### annual emission rate s in the MPS by the current deadlines will impose an arbitrary or unreasonable hardship for AER

. Pet. at 11. AER states that this hardship was not self

- imposed ( AER Post Br. at 7), but rather that AER is the victim of a “crippling double

- whammy.” Pet. at 11. First, Illinois promulgated regulations to implement the federal Clean Air Mercury Rule ( CAMR ) and Clean Air Interstate Rule ( CAIR )

. Id. These federal rules were subsequently invalidated while the Illinois MPS remained in effect. Id. In the absence of these federal rules, Illinois requirements are more strict than surrounding states. Id. Second, Illinois electric generators must fund capital projects such as pollution cont rol equipment with revenues rather than captive consumer rates. Id. Illinois’ deregulated electric market also creates a disadvantage for Illinois generators compare d to competitors in nearby states. Id.

AER states that it did not delay in choosing a plan to comply with the MPS or in deciding to seek relief from the Board. AER Post Br. at 7. Rather, AER knew it did not have the cash flow to timely complete the Newton FGD project within o nly a few short months of the sharp decline in power prices due to lowest demand in decades because of the recession, the exceptionally mild winter, and an increased supply of natural gas. Id.

Regulatory Uncertainty

AER contends that it opted into the MPS in 2007 with the expectation that future federal regulatory r equirements were imminent. Pet. at 11. AER summarizes the development of certain federal air pollution rules and their implementation in Illinois. Pet. at 11

- 16. In 2005, USEPA promulgated regulations requiring reduction of NO x 

### and SO 2 

### emission known a s CAIR, 70 Fed. Reg. 25162 (May 12, 2005) and reduction of mercury emissions know n as CAMR, 70 Fed. Reg. 28606 (May 18, 2005). Both rules applied to coal

- fired electric generating units, and specifically to AER ’s coal

- fired electric generating units. Pet . at 11

- 12.

The Agency proposed rules to the Board to implement both federal rules. The first rulemaking was Proposed New 35 Ill. Adm. Code 225 Control of Emissions from Large Combustion Sources (Mercury) , R06

- 25 (Dec. 21, 2006). The second rulemaking was Proposed New Clean Air Interstate Rules (CAIR) SO 2 

### , NO x 

### , Annual and NO x 

### Ozone Season Trading

### 11

Programs, 35 Ill. Adm. Code 225, Subparts A, C, D, E, and F

, R06

- 26 (Aug. 23, 2007). AER recounts that during these proceedings, AER approached the Agency wi th a comprehensive proposal to address mercury in coordination with other air emission requirement s . Pet. at 12. These negotiations between AER and the Agency resulted in promulgating Section 225.233 in the Board’s R06

- 25 proceeding. Id.

Subsequently , in February 2008, a federal court vacated the federal CAMR. Pet. at 13, citing State of New Jersey v. Environmental Protection Agency , 517 F.3d 574 (D.C. Cir. 2008). Shortly thereafter, a federal appellate court remanded the federal CAIR to the lower c ourt but ordered that CAIR remain effective until replaced with a new rule . Pet. at 13, citing North Carolina v. Environmental Protection Agency , 550 F.3d 1176 (D.C. Cir. 2008). After these decisions, the MPS presented “significantly more confining const raints for Illinois generating companies that had opted into the MPS.” Pet. at 13

- 14. AER states “the impacts of having an uneven playing fiel d [then] began revealing themselves.” Pet. at 14.

AER states “these judicial decisions, coupled with pending g reenhouse gas emission regulations, sever e market liquidity conditions, and the near collapse of the banking system first presented difficulty for the [ A ER] MPS Group in 2008.” Pet. at 14. At that time, AER sought additional time to comply with the 2013 SO 2 

### overall annual emission rate in the MPS “to avoid stranded costs of compliance.” Id. This additional time allowed AER “to make more educated and sustainable investment decisions on how to comply with the MPS in light of the regulatory uncertainty on both the federal and regional levels.” Id. ; see also Ameren Energy Generating Co., et al v. IEPA , PCB 09

- 21 (Jan. 22, 2009); and Amendments to 35 Ill. Adm. Code 225: Control of Emissions from Large Combustion Sources (Mercury Monitoring) , R09

- 10 (Jun. 18, 2009).

In August 2011, USEPA adopted CSAPR to replace CAIR . Pet. at 14; 76 Fed. Reg. 48208 (Aug. 8, 2011). CSAPR was challenged in federal court and the court stayed implementation of the rule. Pet. at 14, citing EME Homer City LP v. Environmental Pro tection Agency , No. 11

- 1302 (D.C. Cir. Dec. 30, 2011). In its petition, AER contends that the fate of CSAPR is uncertain and argues that “the very basis of the MPS

– that is, an effective and permanent federal program

– has yet to become a reality.” Pet. at 14. AER argues that it will suffer arbitrary and unreasonable hardship if required to comply with the MPS due to the uncertainty of whether the CSAPR will be implemented. Id. at 15. AER states that it ceased operations at the Hutsonville and Meredos ia stations because it faced “deteriorating market conditions and compliance with what was anticipated to be an effective CSAPR program in 2012 compounded by other environmental mandates.” Id.

AER argues that the federal court order staying implementat ion of CSAPR has national implications

, exacerbated in Illinois. Pet. at 15. AER makes two arguments as to why Illinois

specific MPS requirements cause it an arbitrary or unreasonable hardship.

First, the MPS requires Illinois electric generating units to control NO x 

### and SO 2 

### emissions “even in the absence of a permanent and effective federal emission program like CAIR.” Pet. at 15. CSAPR, t he replacement for CAIR, was scheduled to take effect on January 1, 2012 but was stayed. AER concludes that “it i s now unknown when or if CSAPR will become

### 12

effective.” Id. 4 

### AER argues that it is arbitrary and unreasonable to require it to comply with the MPS if there is no federal program requiring that level of control. Id.

Second, AER argues that Illinois

- speci fic MPS requirements place it at a competitive disadvantage with nearby states. Pet. at 16

- 17. AER asserts that it faces “significant challenges that limit their ability to access third party capital to continue to invest in state and federally

mandated environmental control equipment.” Id. at 16. AER states that it does not have revenue from a captive consumer base to fund environmental compliance costs because it is a “merchant generator in an unregulated or consumer choice market.” Id. AER claims t hat it competes with generators in nearby states “that have neither deregulated their energy markets nor invested significant capital in environmental pollution control projects.” Id. These companies are able to recover compliance costs through rates. I d. AER , as an unregulated power company, is only able to recover its costs through market driven prices and margins. Affidavit of Gary M. Rygh (Pet. Exh. 5) at 6. Further, AER claims it is at a significant financial disadvantage as a firm with coal

- fire d generating assets compared to companies with less carbon

- intensive portfolios. Id. If the CSAPR had become effective on January 1, 2012, the CSAPR would have “level[ed] the playing field” between Illinois generators and competitors in nearby states. P et. at 16

- 17. AER also states that, in contrast to comments received by the Board, AER did not seek deregulation. AER Post Br. at 9. Rather,

it was one of the primary purposes of the [Illinois] Electric Service Customer Chose and Rate Relief Law of 199 7 to, in fact, incent the utilities to move their generating plants into either affiliates or third parties, where they could no longer be controlled by the utilities and would, instead, compete in a wholesale power market to provide power to retail custom ers at prices determined by competition.

***

While it is true [AER] was not compelled to effectuate this transfer, there was at the time a much greater incentive to do so than . . . portrayed in [the testimony of Mr. Rob Kelter on behalf of ELPC]. Id. a t 9, 10.

AER claims that retail customers in Illinois are the great beneficiaries of the 1997 l aw and the Illinois Power Agency Act enacted in 2007. AER Post Br. at 12. AER had to provide $185 million in rate relief to customers “and other payments” as a result of the 2007 legislation. Id. AER ’s benefit from opting into the MPS was that the compliance date for one aspect of the regulation (compliance with the removal efficiency requirement ) was delayed from July 2009 to January 2015. Id. at 49

- 50. AE R concedes that its intended benefit

4 

### The Board notes that, on August 21, 2012, during the pendency of this action, the United States Court of Appeals for the D.C. Circuit issued a ruling vacating CSAPR. E.M. E. Homer City Generation, L.P. v. Environmental Protection Agency, et al. , No. 11

- 1302 (D.C. Circuit, Aug. 21, 2012)

.

### 13

was to align the MPS’s NO x 

### and SO 2 

### emission requirements with what AER believed to be its control strategy for compliance with then pending CAIR regulations. Id. at 51.

AER contends that this intended benefit has no t occurred but “substantial and real reductions of NO x 

### and SO 2 

### are still occurring.” Id.

Costs of Compliance

AER argues that the costs of compliance with the MPS are substantial and certain. Pet. at 17. AER had analyzed these costs when the MPS was pr omulgated. Id. As noted above, the MPS was adopted during a proceeding to adopt controls on mercury emissions. Id. at 12. AER asserts that it “is on track” to meet the mercury emission requirements effective in 2015 which was “the driver behind the MPS .” Id. at 17. However, AER claims that compliance with the 2015 and 2017 [overall] SO 2 

### annual emission rates is “no longer economically reasonable.” Id.

AER identifies various previous expenditures to comply with the MPS. AER installed three scrubbers at two plants to control SO 2 

### , mercury, and hazardous gas emissions. Pet. at 18. AER installed selective catalyst reduction (SCR) equipment to control NO x 

### at three plants. Id. AER installed mercury controls. Id. AER spent over $1 billion “on the inst allation of pollution control facilities, including scrubbers, SCRs, landfills, cooling basins and towers, and precipitators, at Duck Creek, E.D. Edwards, Coffeen, and Newton, not including the Newton FGD [p] roject.” Id. at 18, 21. Specifically, AER has already installed scrubbers on three of its generating units at a cost of over $813 million and has started construction of the fourth and fifth pollution control facilities ( i.e.

, the Newton FGD project) at a cost of over $237 million. AER Post Br. at 31

. AER also provides a chart that “details the various pollution control devices installed at the Coffeen, Duck Creek, E.D. Edwards, Joppa and Newton Energy Centers.” Id. at 32

- 36.

AER plan s to construct two FGD units at the Newton station . Pet. at 18. The project include s constructing a new chimney with separate flues for each unit, new induced draft fans for each unit, and gypsum and limestone handling facilities. Id. at 19. AER has obtained a construction permit for the project and started “enginee ring, procurement and construction activities.” Id. AER claims that it has spent $237 million to date on the project. Id. Through 2012, AER will have spent “over 50% of the project cost.” Id. AER has slowed work on the project and will not complete i t in time to meet the 2015 or 2017 overall SO 2 

### annual emission
rates. Id. AER intends to proceed with the project in time to comply with the 2015 SO 2 

### emission rate by January 1, 2020 and the 2017 rate by January 1 5 , 202 0

. Id. ; AER First Resp. at 6.

AER claims that it can no longer fund the Newton FGD project in time to comply with the 2015 and 2017 SO 2 

### emission rates. Pet. at 19. Certain covenants within GENCO’s bond indenture restrict GENCO’s ability to incur additional indebtedness from external sou rces. Pet. Exh. 6 at 4. AER expects that, by the end of 2012, GENCO’s interest coverage ratio “will fall below the minimum level required for GENCO to incur additional external debt.” Id. at 5. GENCO “will not be able to borrow additional funds from th ird

- party lenders to finance . . . the

### 14

installation of scrubbers at Newton” unless power price market conditions improve dramatically in the near term. Id. AER attributes the declining power prices to “the recession, the exceptionally mild weather this w inter, and an increased supply of natural gas from shale gas.” Pet. at 19. As evidence of declining prices, AER states that in 2006 and 2007 the price per megawatt hour was approximately $60 and in 2012 the price ranges from $29.50 to $33.60 per megawatt hour. Id. at 20.

Further, as of August 2012, AER ’s stock “hovers around $34, ” in contrast to its $50

- $54 asking price at the end of 2007 ( AER Post Br. at 12 ) and AER ’s return on equity in 2010 was

- 3.9% and in 2011 was 4.3%

. Id. at 13. AER states that there is currently uncertainty as to when its financial predicament will improve because, as a merchant generator, “[AER] has significant exposure to market prices, swings in load demand and commodity price volatility.” Id. Declining power prices ha ve reduced operating proceeds and adversely impacted AER ’s access to short

- term and long

- term financing. Id. With regards to capital that GENCO currently holds, AER states that “it is vitally important that GENCO preserve cash until market prices recover

, o pe rating results and cash flows improve, and borrowing capacity is restored.” Pet. Exh. 6 at 6. This is in part due to an approximate $825 million in long

- term public bonds that GENCO currently has outstanding. Id. An inability to pay these bonds wh en due “would likely lead to a GENCO bankruptcy.” Id.

Additionally, AER contends that receiving funding from Ameren Corporation is not possible because AER as a “merchant business segment must be self

- funding and its expenditures must be supported by its operating revenues.” Pet. at 22. Ameren Corporation cannot assume unsecured debt on behalf of AER without a secure revenue stream to support such an obligation. Id. AER has no direct access to public financial markets because it is not a publicly

- regi stered company

. AER First Resp. at 4. According to AER , “credit rating agencies have been very clear” that adverse financial consequences on the ratings of Ameren Corporation would result if it were to lend additional monies to AER . Pet. at 22

, see also Pet. Exh. 6 at 10

- 11 . This is due to an “increasing negative view” of AER and its subsidiaries that prevents Ameren Corporation from investing in AER without adversely affecting its own credit quality and access to capital. AER First Resp. at 4. Accord ing to AER , the “credit rating agencies . . . have . . . made it abundantly clear that further support from the parent [Ameren Corporation] will have negative consequences on the credit quality of [Ameren Corporation] and its o ther subsidiaries.” Pet. Exh . 5 at 10.

AER states that the People’s criticism of Ameren Corporation’s requirements that its subsidiaries stand on their own , in terms of maintaining viable cash flow

, are unfounded. AER Post Br. at 14. AER notes that Ameren Corporation owns the comm on stock of AER and for Ameren Corporation to act as an ongoing funding source for AER “that cash flow would have to

co me from an operating unit such as one of the regulated utilities.” Id.

AER , as a merchant power generator, has “significant exposure to market prices, swings in load demand and commodity price volatility.” Pet. Exh. 5 at 2. AER ’s “financial health and access to capital have both been severely degraded.” Id. at 3. This is partially due to low natural gas prices which have kept margins and cash flow under pressure for most unregulated power producers, including those that generate electricity using coal. Id. Since 2008, GENCO has seen

### 15

its credit rating cut three notches by Standard and Poor’s and four notches by Moody’s Investor Servic es. Id. These downgrades, in part, are because of “a precipitous decline in net income and cash flow during that time period.” Id. AER states that the prospects of sourcing additional third

- party capital are “bleak” given the experience of previous inv estors. Id. at 12. Therefore, AER ’s operating margins and cash flows “represent AER ’s only mechanism for funding both operating activities and capital investment. Pet. Exh. 6 at 9. The current depressed levels of AER earnings and cash flows “are insuff icient to fund large

- scale capital projects such as the installation of the scrubbers [at Newton] .” Id. at 3.

Plant Closures

AER asserts that with no “viable funding mechanism” for the Newton FGD p roject, AER ’s “only other compliance alternative” to com ply with the overall SO 2 

### annual emission rate in the MPS is to close at least two plants, such as Joppa, E.D. Edwards, or Newton. Pet. at 23. AER hired consultant Development Strategies to perform an analysis of the economic impact of the E.D. Edwards an d Joppa stations on Illinois and local economies. Id. at 24, Ex h . 10. The report concludes that AER puts $44.4 million in the local economy near the E.D. Edwards plant and $124,071,000 in the State’s economy due to the plant. Id. The report concludes t hat AER puts $76.7 million in the local economy near the Joppa station and $214,221,000 in the State’s economy due to the Joppa station

. Id. The two plants employ 274 persons and “supported an additional 1209 total jobs held by Illinois residents.” Id.

AER claims that closing plants “will indirectly impact Illinois electricity consumers.” Pet. at 25. AER sells power into a regional transmission organization known as the Midwest Independent Transmission System (MISO). Affidavit of Shawn E. Schukar ( Pet. Exh. 11) at 2. According to Mr. Schukar, the Newton, Joppa and Edwards plants are among the more efficient units in the MISO footprint. Id. This efficiency is measured in heat rates where a lower heat rate indicates more efficient units. Id. The closing of these plants would lead to “ a greater utilization of generating units that are less efficient and have higher marginal costs.” Id. The market would need to replace the energy from those units with energy from other units that cost more

. Id. A s a result “there will be less competition in AER ’s area, which will negatively affect markets.” Pet. at 25. AER concludes that “power prices would likely increase appreciably for consumers.” Id.

Natural Gas

AER notes that the current economic con ditions that it faces “go beyond any price declines that were foreseeable when the 1997 l aw was passed or even when the MPS was enacted in 2006.” AER Post Br. at 10. Additionally, the new methods of gas extraction are a “game

- changing” technology that ha ve “fundamentally altered” the outlook for gas supplies and pricing. Id. AER contends that the MPS was premised on the expectation that the power market would continue to support the capital expenditures necessary to meet proposed emission rates. Id. H owever, “[m]arket conditions and new technologies and policies that have come about since that time were not self

- imposed and simply not foreseeable.” Id.

### 16

Environmental Impact

AER contends that it has “ exceeded the legal standard of ‘ to minimize the im pact, ’ ” and has structured the requested variance to “offset the impact resulting in a net environmental benefit.” AER Post Br. at 25. AER notes that the Agency concurs with this position. Id.

Sulfur Dioxide

AER claims it has achieved “a steady and si gnificant decline in SO 2 

### emissions across [AER’s] fleet

-- 79% since 1990 and 23% over just the last four years.” AER Post Br. at 30. For 2011, AER stated its overall SO 2 

### emission rate for the AER MPS Group , including the Meredosia and Hutsonville stations

, w as 0.46 lb/mmBtu. Pet. at 5 ; AER First Resp. at 7

. Using 2011 as a baseline and removing the contributions of the Meredosia and Hutsonville stations, AER projects that its overall SO 2 

### annual emission rate in 2012 will be 0.40 lb/mmBtu. AER First Resp . at 7

- 8. Section 225.233(e)(3)(C)(i) require s AER to achieve a rate of 0.50 lb/mmBtu in 2011 and 2012 . 35 Ill. Adm. Code 225.233(e)(3)(C)(i).

In Table 1 of its petition, AER presents its estimated SO 2 

### emissions fro m 2010 through 2021 using the currentl y required overall SO 2 

### annual emission rates in Section 225.233(e)(3)(C)(i), (ii), (iii), and (iv) . Pet. at 26. AER used a baseline heat input of 340,446,252 mmBtu /year

, which was the input AER used to support its proposed addition of Section 225.233(e)( 3) in R09

- 10 in 2009 , averaging 2006, 2007, and 2008 data, and includes Hutsonville and Meredosia . Pet. Ex h . 7 at 3 , 5 ; AER First Resp. at 8

- 9 , fn. 11. In its petition, AER estimates that SO 2 

### emissions from the AER MPS Group will total 694,510 tons from 2010 through 2021 i f the variance is not granted and AER complies wit h the MPS. Pet. at 26. AER refers to this calculation as its MPS baseline SO 2 

### emissions. Id. In response to question s from the Board, AER applied the same rationale to calculate its M PS baseline SO 2 

### emissions from 2010 through 2020 as 655,359 tons

, which is consistent with Table 1 of the petition if emissions from 2021 are not included. AER First Resp. at 8

- 9, Table 2.

As presented in AER ’s initial petition Table 1 , i f the variance i s granted allowing AER to

use an overall SO 2 

### annual emission rate of 0.38 lb/mmBtu from 2012 through 2019, 0.25 lb/mmBtu in 2020, and 0.23 lb/mmBtu in 2021, AER estimates that it will emit 665,294 tons from 2010 to 2021. Pet. at 26. AER also used a heat input of 340,446,252 mmBtu/year, multiplied by the proposed variance emission rates to calculate emissions of “variance SO 2 

### tons” in Table 1. Pet. at 26; AER Second Resp. at 4. In its initial petition, AER calculates that the se proposed variance conditio ns result in 29,217 fewer tons of SO 2 

### emissions from 2010 through 2021 than compliance with the MPS

. Pet. at 26.

AER contends that its proposal for meeting an earlier

, more stringent SO 2 

### emission rate than what is required by the MPS will result in low er SO 2 

### emissions and a net benefit to Illinois during the variance

. Pet. at 26. Specifically, in its initial petition, AER proposes an overall SO 2 

### annual emission rate of 0.38 lb/mmBtu on a yearly system average (with a 0.55 lb/mmBtu or less SO 2 

### coal on non

- scrubbed units) from 2012 through 2019

, which is lower than what currently is required by Section 225.233(e)(3)(C ) for 2012, 2013, and 2014 but higher in 2015

- 2019

. Id. at 26

- 27

. AER asserts that its total SO 2 

### emission s from 2012 through 2021 will be lower if the

### 17

variance is granted. Id. at 27. These calculations rely on AER not operating the Hutsonville and Meredosia stations through 2021. Id. at 26.

In AER ’s initial petition, AER includes SO 2 

### emissions for past years 2010 and 2011 in demonstra ting the projected emissions reductions . Pet. at 26, Table 1. The values for 2010 and 2011 under the column “variance SO 2 

### tons” are 70,560 and 72,539. Id. In response to questions from the Board, AER states these values are actual SO 2 

### emissions in 2010 and 2011, respectively. AER Second Resp. at 4. In 2010 and 2011, AER ’s actual SO 2 

### emissions were less than the baseline SO 2 

### tons due to “operation of FGD systems at high efficiencies and other operational measures to reduce emissions.” Id. at 4

- 5. AER included 2010 and 2011 in its analysis of the impact of the variance on SO 2 

### emissions “to show the total tons of SO 2 

### reduc ed during the MPS period by the end of the requested variance term.” Id. at 5.

AER subsequently revised its emission calculations r esulting from the variance to account for its revised proposed SO 2 

### emission rate of 0.35 lb/mmBtu during the years 2013 through 2019. AER First Resp. at 9. In Table 2, AER used a heat input of 312,003,694 mmBtu for years 2012 through 2020 based on histor ic data from 2006, 2007, and 2008 but eliminating the heat inputs for the Meredosia and Hutsonville stations. AER First Resp. at 9, Table 2. Under Table 2, i f the revised variance request is granted allowing AER to use an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from 2013 through 2019, AER estimates that it will emit 6 47,589 tons from 2010 t hrough 202 0. Id. AER calculates that the revised proposed variance conditions would result in 34,895 fewer tons of SO 2 

### emissions overall by 2020 than compli ance with the MPS

. Id. Using the same data in Table 2, AER provides another assessment of SO 2 

### emissions in Table 4, excluding years 2010 and 2011. AER calculates that from 2012 through 2020, the revised proposed variance conditions would result in 7,700 fewer tons of SO 2 

### emissions overall by 2020 than compliance with the MPS. AER Second Resp. Table 4.

In AER ’s Table 3 and post

- hearing brief Exh. 4, AER accounted for “SO 2 

### Reduced Tons” based on lower actual emissions in 2010 and 2011 and fewer emissions from not operating Hutsonville and Meredosia. To be conservative, AER deducted from the reduced tons twice the new emissions from the FutureGen Project as 590 tons SO 2 

### per year before calculating the cumulative reductions that would result from the propo sed SO 2 

### variance. AER Post Hearing Br. at 38

- 40, Exh. 4. 5 

### AER then calculates SO 2 

### tons under the variance based on the baseline heat input of 340,446,252 mmBtu, resulting in emissions of 691,106 tons of SO 2 

### under the variance and representing 60,669 fewe r tons of SO 2 

### from 2010 through 2020 than compliance with the MPS

. AER Post Br. at 38

- 40, Pet. Exh. 4.

5 

### AER explained that FutureGen is a zero emission coal plant project being considered for the Meredosia Energy Center, however, the projec t is years away and would not impact operations at Meredosia during the variance period. AER went on to explain that, because emission offsets may be required for permitting of the project in the future, the Agency did not want offsets to be “double coun ted” in A ER ’s calculations of net environmental benefit. A ER therefore conservatively factored, by deducting from the SO 2 

### reduced tons, two times the projected emissions to account for FutureGen project (two times the projected FutureGen SO 2 

### emissions is 590 tons). A ER Post Br. at 29, 39

- 40.

### 18

AER commissioned a review of the health effects of SO 2 

### in response to Board questions presented at hearing. AER Post Br. at 26 ; AER Post Br. Ex h . 3

. This report concludes that AER ’s emissions under the SO 2 

### variance are lower than the MPS emissions between 2012 and 2014

, and higher from 2015 to 2019. Id. at 27. AER contends that the People, in determining excess emissions, have ignored emission reduc tions that will commence immediately. Id. at 28. AER ’s report determines that granting the variance “would result in an overall net benefit in terms of health effects.” Id. at 43. AER’s report also notes that

simply establishing that a person who has been exposed to SO 2 

### experienced bronchoconstriction or a reduced expiratory volume is not proof that the exposure caused the effect. This is because in any individual, these effects could have been caused by a number of different factors, for example, ind oor or outdoor allergens, smoking or passive exposure to cigarette smoke, or viral pathogens. Id. (internal citations omitted).

AER’s report also refutes the People’s position that additional harm would occur despite the overall reduction in tonnage of S O 2 

### emissions over the term of the variance. Id . at 44. Rather, AER’s report concludes that there would be fewer adverse health effects overall. Id.

AER also cites a USEPA report prepared in support of the most recent SO 2 

### N AAQS review which found no ca usal relationship between long

- term exposure to SO 2 

### and asthma, bronchitis, or respiratory symptoms. AER Post Br. at 44. AER does note that the report found a causal relationship between respiratory morbidity and short

- term exposure to SO 2 

### , but that thes e associations were very small and questions were raised regarding whether exposure and effect were causally associated. Id. In responding to public comments, AER states its report

consistently showed that generalized comments claiming SO 2 

### caused respir atory illnesses including asthma relied on studies that either did not show statistically significant results or could not isolate the effects associated with SO 2 

### from confounding co

- pollutants. Id. at 44

- 45.

These studies further do not control for life style variables or regional disease patterns. AER Post Br. at 45. AER’s report also contradicts the People’s position “that a ny harm done cannot be offset through earlier emissions.” Id.

Nitrogen Oxides

AER has achieved “a steady and significant drop in NO x 

### emissions since 1990.” AER Post Br. at 30. In 2011, the overall NO x 

### emission rate for the AER MPS Group was 0.11 lb/mmBtu. Pet. at 5. Section 225.233(e)(3)(B)(ii) required AER to achieve a rate of 0.14 lb/mmBtu. 35 Ill. Adm. Code 225.233(e)(3)( B)(ii). Beginning in 2012, AER is required to achieve a rate of 0.11 lb/mmBtu. 35 Ill. Adm. Code 225.233(e)(3)(B)(iii). AER does not seek a change to applicable MPS NO x 

### limits. Pet. Ex h . 7.

### 19

Mercury

Starting January 1, 2015, each electric generating u nit covered by the MPS must meet an emission standard of 0.008 lb mercury/GWh 6 

### gross electrical output. Pet. at 28; 35 Ill. Adm. Code 225.233(d)(1). AER does not seek a change to MPS mercury control requirements. Pet. Ex h . 7.

AER installed activated ca rbon injection systems on twelve units at four stations to control mercury emission s at a capital cost in excess of $20 million. Pet. at 28. AER spends $17 million in annual operating costs for these systems , including purchasing activated carbon and fue l additives. Id. AER has installed four SCRs and three wet flue gas desulfurization systems to control mercury, NO x 

### and SO 2


### . Id. AER spent $813 million to install the three wet flue gas desulfurization systems and spends approximately $3.5 million in a nnual operating and maintenance costs. Id. AER spent $177 million to install the SCRs and spends approximately $3.9 million in annual operating and maintenance costs. Id.

AER states, “The mercury reductions from AER’s fleet are being achieved three y ears ahead of the compliance deadline set forth in the MPS.” AER Post Hearing Br. at 40. AER contends that “ [e]arlier than anticipated mercury reductions will also provide a benefit to human, plant, and animal life impacted by mercury emissions from the [AER] MPS Group fleet.” Pet. Exh. 7.

Greenhouse Gases

AER asserts that it “continues to support research into clean coal technologies, voluntarily reduce greenhouse gas emission, and purchase offsets to address climate change.” Pet. at 29. AER lists various examples and contends that it “continues to take action to reduce greenhouse gases.” Id.

Examined Alternatives

In response to Board questions, AER explains that it evaluated a range of compliance alternatives. AER First Resp. at 2; AER Second Resp. at 2. AER notes that the installation of two scrubbers at Newton “would reduce emissions by approximately 17,500 tons of SO 2 

### ,” which would result in lower emissions than the 16,000 tons of SO 2 

### AER would need to reduce to comply with the 2017 MPS emi ssion rate

. AER Post Br. at 15. AER contends that “[n]o other commercially available technology pro duces that level of removal efficiency.” Id. AER contends that, contrary to positions taken by the People and the Citizens Groups

, AER has considered all viable alternatives. Id. at 16. AER believes that measures suggested by public
commenters

are either (a) ineffective because they do not allow AER to achieve compliance with the MPS emission standards and/or trigger excessive co

- pollutant emissions

6 

### “ lb mercury/GWh ” stands for pound of mercury per gigawatt hour.

### 20

and requiring costly additional controls; or (b) would affirmatively worsen AER’s financial predicament. Id.

Curtailing Operations

AER considered curtailing generation and determined that curtailing operations is not a viable compliance alternative

. AER F irst Resp. at 2 ; AER Second Resp. at 2

- 3 ; Tr. at 22

. AER contends that, although curtailing operations will reduce emissions, f ixed operating costs essentially remain the same because the units are still operating, and less revenue is generated to pay tho se costs. AER First Resp. at 2

. AER concludes that curtailing operations “puts AER as a whole in greater financial peril than unit shuttering.” Id. This alternative “puts a greater number of jobs at risk” and “does not allow AER to recover financially so that the funding of the scrubber can be continued.” Tr. at 22

- 23.

AER states that it examined the viability of reducing operations at Newton, Edwards and Joppa by varying degrees. AER Post Br. at 16. For AER to comply with the MPS SO 2 

### rates, it woul d have to lower capacity factors on such units between 22% and 38%. Id. AER states that the result of these tests was a negative cash flow and an inability to fund ongoing operations. Id. at 17.

Low

- Sulfur Coal

As for burning low

- sulfur coal, AER note s that the Coffeen and Duck Creek stations have wet FGD systems which allow them to burn a range of coals including higher

- sulfur coal from the Illinois B asin. AER First Resp.

, n. 2. However, the Newton, Joppa, and E.D. Edwards stations burn low

- sulfur c oal as a compliance mechanism. Id. Although AER initially stated that it will “continue to burn low

- sulfur coal from the Powder River Basin and manage operations as necessary to maintain compliance” ( Pet. at 9 ), AER later committed to the use of ultra lo w

- sulfur coal for some stations

. AER Post Br. at 25. In order to comply with a SO 2 

### emission rate of 0.35 lb/mmBtu, AER states it will

limit the use of Illinois Basin coal (roughly 6.2 lb/mmBtu[]) and the higher SO 2 

### content Powder River Basin Coal (rough ly 0.8 lb/mmBtu) to the Duck Creek and Coffeen Energy Centers. Ultra

- low sulfur coal ( 0 .55 lb/mmBtu) wil l be used at the Edwards, Newton and Joppa Energy Centers. AER currently has 17 million tons of ultra

- low sulfur coal under contract through 2014. AE R Post Br. at 25.

Natural Gas

AER performed a screening analysis with respect to the feasibility of natural gas conversion of E.D. Edwards and Joppa Energy Centers as a compliance alternative. AER Post Br. at 23. AER states, under current market condi tions,

natural gas conversion at Joppa would adversely impact the current capacity levels and current operating regime of this facility would be reduced to the point where it would operate on a seasonal basis only. Id. at 23

- 24.

### 21

The resulting drop in u tilization would lead to a reduction in revenue generated to cover fixed costs at the facility and across AER ’s system, and would result in a reduction in workforce. Id.

Control Equipment

AER states that it continues to implement operational measures to reduce emissions, which AER has done “voluntarily at a cost even prior to coming to this Board to ask for relief.” AER Post Br. at 17. In response to questions from the Board, AER notes it has revised its proposed compliance plan to include operating FG D systems at the Duck Creek and Coffeen stations

, at a higher level of control. AER First Resp. at 8; AER Second Resp. at 2. Specifically, AER will operate the FGD systems at a 99% SO 2 

### removal rate rather than 95% which will also require “auxiliary power , the increased sizing of equipment, and increased limestone usage.” AER First Resp. at 8. Elsewhere, AER states that the FGD systems will operate with a range of 98% to 99% removal efficiency. AER Second Resp. at 2. AER estimates that capital expendit ures to operate FG D systems at 99% will be $5 million in capital costs and $173,337 in annual operating and management costs. AER First Resp. at 8

. AER states that even with maximizing the FGD systems, “compliance margins remain narrow and AER will need to employ operational strategies such as low

- sulfur coal procurement and generation utilization in order to comply with the proposed emission rate.” AER Second Resp. at 2.

AER has also evaluated dry sorbent injection to reduce SO 2 

### emissions. AER Second Resp. at 2. AER states that it would be difficult to use sorbent injection as a compliance method because removal levels range widely from 10% to 90% and would reduce its effectiveness as a compliance alternative

. Id. In addition, sorbent injection incr eased mass loading on electrostatic precipitators ( ESPs ) which may trigger the need for additional controls such as a baghouse to control particulate matter. Id. AER already uses activated carbon injection on its non

- FGD units which adds to mass loading on the ESPs. Id. AER summarizes “to comply with the MPS via sorbent injection would entail installation of such controls (and baghouses) at virtually all of AER ’s uncontrolled units across the system. The cost of such alternative would exceed the cost
t o complete the Newton scrubber.” Id. Further, AER states that the use of dry sorbent injection would result in a significant increase above threshold levels of PM, “due to the size of the existing particulate control equipment and the use of [activated c arbon injection ( ACI )] for mercury control.” AER Post Br. at 19. AER states that neither the People nor the Citizens Groups adequately account for the impact that such pollution control technologies would have on pollutants other than SO 2


### . Id. AER ’s pr eliminary permitting analysis

reflects that the use of such materials in the quantities required to comply with the 2015 and 2017 SO 2 

### emission rates would exceed applicable particulate requirements thereby triggering significant additional capital and ma intenance expenses to address such emission requirements. Id.

To comply with both the SO 2 

### and PM emission limit s, AER would need to install additional particulate controls such as a fabric filter when using dry sorbent injection

. Id. at 22. AER retaine d third

- party engineering firms to assess the viability of “a host of technologies,” at Joppa and Edwards, including the use of dry sorbent injection. AER Post Br. at 15. The cost of

### 22

installing dry sorbent injection plus fabric filters at Joppa and Edwar ds was $433 million and $280 million, respectively. Id. This well exceeds the approximate $200 million to $250 million needed to complete the Newton FGD project. Id. at 23. AER concludes “there is no cost effective or otherwise viable alternative that ‘minimizes the deviation.’” Id.

In response to the People’s comments (PC#2410 at 3), AER differentiated the option of dry sorbent injection from dry scrubbers. AER Post Br. at 18. AER explained that dry sorbent injection would require relatively minor pieces of equipment to feed the sorbent material into ductwork, in addition to controls, such as baghouses, at virtually all of AER’s uncontrolled units across the system. Id. ; AER Second Resp. at 2. The cost of installing dry sorbent injection plus fabr ic filters at Joppa and Edwards was $433 million and $280 million, respectively, and exceeds the costs to complete the Newton FGD project. AER Post Br. at 15

, 23. In contrast, AER explained that a dry scrubber would require construction of a multi

- storie d building and spray tower. Since dry scrubbers have removal efficiencies in the low 90% range, AER would need to install six dry scrubbers at Joppa to achieve the reductions approaching those projected for the wet FGD project at Newton. AER estimated c osts for installation of dry scrubbers would be $460 million, nearly twice the cost of completing the FGD project at Newton. Id . at 18. Further, AER notes that installation of dry scrubbers “may be ineffective in addressing hazardous gas emissions and, w ithout additional add

- on controls, could adversely affect impact particulate emissions.” Id.

Compliance with Federal Law

AER contends that the Board may grant the requested variance consistent with federal law, and specifically, the Clean Air Act. Pet. at 29. On June 24, 2011, the Agency submitted a revision to the Illinois SIP to satisfy Illinois’ obligation under the Clean Air Act to develop a Regional Haze SIP. See 77 Fed. Reg. 3966; Pet. at 29, 30. This submittal included adding Sections 225.233( e)(3)(C)(iii) and (iv), the subject of this variance petition, to the Illinois SIP. Pet. Ex h

. 12

. AER concluded, at the time of its petition, that the proposal was not yet final and it was not clear when or if final adoption would occur. Pet. at 29 ; Bu t see, supra , p. 6, citing 77 Fed. Reg. 39943 (final USEPA granted effective August 6, 2012).

AER asserts that its requested variance is consistent with federal regional haze requirements , including Best Available Retrofit Technology ( BART ) . Pet. at 30

- 3 1. In its Regional Haze SIP revision submittal, the Agency relies on the MPS to address regional haze and argued that Part 225 S O 2 

### emission rates , including the rates applicable to the AER MPS Group, provide greater reductions than applying presumptive BA RT to BART

- eligible units. Pet. at 30

.
Nevertheless, AER contends that its requested delay in complying with the MPS SO 2 

### emission rates will be consistent with federal BART requirements. Pet. at 30. First, AER claims that the Agency concluded that pa rticulate emissions from Illinois BART sources have negligible visibility impact using the threshold that a source contributes to reduced visibility if it impairs visibility by 0.5 deciviews

. Id. Second, AER ’s proposed variance does not impact the Agency ’s BART demonstration in its Regional Haze SIP submittal

. Id. at 31. Th e Agency relied on SO 2 

### emission reductions required under Part 225 by 2015

. Id. at 30

- 31. AER believe s the proposed

### 23

variance will provide even greater reductions than submitted by t he Agency because AER proposes to reduce its emissions to 0.38 lb/mmBtu beginning in 2012 as opposed to 0.50 lb/mmBtu through 2013 and 0.43 lb/mmBtu during 2014. Id. at 31. Accordingly, AER ’s variance will result in lower SO 2 

### emissions than the Agency’s estimates and does not impact the state’s BART demonstration. Id. AER contends that, under the variance, emission reductions by AER ’s energy centers would be even greater by the BART compliance deadline in 2017 than would be achieved under the MPS. AER Post Br. at 36.

AER states it will comply with CSAPR when it becomes effective , which it believes to be less stringent than the MPS . Pet. at 31. AER contends determining a CSAPR compliance plan requires forecasting since it cannot assume that CSAPR will be upheld in its current form. AER Post Br. at 46. However, AER notes, based on the substance of the current form of CSAPR, AER’s compliance strategy for CSAPR and the MPS overlap. Id. If the second phase of CSAPR goes into effect, AER

anticipates t hat it would need to implement additional technology measures such as completing the Newton scrubber or installation of a sorbent injection system or modify the utilization rates at certain units. Id.

AER also states that it will comply with the federal Mercury and Air Toxic s Standards ( MATS ) which became effective on April 16, 2012. Pet. at 32.

In AER ’s August 23, 2012 post

- hearing comment, AER noted that the United States Court of Appeals for the D.C. Circuit vacated CSAPR in an August 21, 2012 decis ion and “sent USEPA back to the drawing board to address interstate air pollution under the CAA.” AER Post Comment at 1. AER states that a compliance plan for CSAPR is “no longer necessary at this time.” Id. at 2 ; see also E.M.E. Homer City Generation, L.P. v. Environmental Protection Agency, et al. , No. 11

- 1302 (D.C. Circuit, Aug. 21, 2012)

. Suggested Variance Conditions

In response to Board questions, AER proposes that in addition to being subject to a n overall SO 2 

### annual emission rate of 0.35 lb/mmB tu from 2013 through 2019, AER agrees to the following variance conditions:

1. AER agrees not to operate the Hutsonville and Meredosia Energy Centers for power generation purposes during the pendency of the variance

, except that the FutureGen project which is currently proposed for the Meredosia Energy Center site is exempt from this restriction.

2. During the term of the variance, AER agrees to file progress reports with the Board and the Agency as to the status of construction activities relating to the New ton scrubber annually by the end of each calendar year. Furthermore, in the event completion of the FGD system become infeasible, AER agrees to advise the Board and the Agency of alternative plans for compliance during the remaining term of the variance.

### 24

AER First Resp. at 11.

AER contends that the People’s suggested two

- year variance term

does not create a sufficient period of economic certainty and AER would have little choice but to begin transitioning into mothballing of its uncontrolled units

a nd/or plants. This is due to the regulatory structure of the MPS, the anticipated construction timeline required prior to the compliance date, and the high level of certainty that power markets will not sufficiently return over the next two years such tha t a capital funding option is available. AER Post Br. at 47.

AER requests a five

- year term based upon the regulatory structure of the MPS, the control strategy and construction timeline needed to comply, and the economic outlook over the next several yea rs. AER Post Br. at 47. AER states the current request for relief is also based upon the need to synchronize both the construction and financing of the Newton FGD project. Id. at 48.

AGENCY RE SPONSE

T he Agency filed a document titled “Recommendation” stating that the Agency “neither supports nor objects to the [Board] granting the Petition subject to the terms and conditions contained herein.” Agency Resp. at 1. The Agency informs the Board that it “has engaged in conversations” with AER and reached “an understanding regarding SO 2 

### emission rates” that would be “acceptable” to the Agency. Id. at 7. Specifically, the Agency and AER have agreed to an alternative variance proposal where AER commits to complying with an overall SO 2 

### annual emission rate o f 0.35 lb/mmBtu from January 1, 2013 through December 31, 2019. Id. at 21. The Agency states that this alternative compliance proposal satisfies the Agency. Id. An overall SO 2 

### annual emission rate of 0.35 lb/mmBtu, together with ceasing operations at t he Meredosia and Hutsonville stations, “would result in a net environmental benefit through 2021 greater than initially proposed” in the petition. Id.

In its response , the Agency stated it had received two written comments, but no requests for hearing. The Agency attached to its response the written comments from Michael Unes, State Representative, 91st District, and the Office of the Attorney General. Agency Resp. at 3, Agency Resp. Exh. 1 and 2.

Agency Investigation of Facts in the Petition

The A gency summarizes AER ’s variance petition and requested relief

. Agency Resp. at 1

- 2. The Agency recounts AER ’s description of its facilities and installation of pollution control equipment

. Id. at 2, 4, 6

. The Agency states that it “has investigated the facts alleged in Petitioner’s Petition for Variance.” Id. at 9. The Agency does not affirmatively state whether AER ’s presented facts are accurate but neither does it point to any errors by AER

.

### 25

Environmental Impact

The Agency confirms that AER has at tached to its petition information as to nearby air emission monitoring stations. Agency Resp. at 10. The Agency agrees with AER that the seven counties where AER facilities are located are designated attainment for all pollutants. Id. at 2.

The Agen cy notes that AER has “voluntarily offered to meet an earlier more stringent SO 2 

### emissions rate in mitigation resulting in total SO 2 

### mass emissions lower than the projected emissions under the current MPS overall SO 2 

### annual emission rates.” Agency Resp. a t 10. The Agency notes that AER asserts that “by offering to meet this mitigation rate, the total projected SO 2 

### emissions from the [AER] MPS Group will be lower than anticipated under the current MPS from 2012 through 2021.” Id. The Agency describes AER ’s request as offering to meet an overall SO 2 

### annual emission rate of 0.38 lb/mmBtu SO 2 

### from 2012 through 2019 which is more stringent than the existing 2012 and 2013 rate of 0.50 lb/mmBtu and the 2014 rate of 0.43 lb/mmBtu. Id. at 10

- 11. The Agency note s that AER calculated that the variance would result in an overall SO 2 

### reduction of 29,217 tons for years 2010 through 2021 compared to the MPS. Id. at 11.

The Agency informs the Board that it has discussed with AER an alternative variance proposal “that will result in a greater decrease in SO 2 

### emission than contained under the MPS.” Agency Resp. at 11. The Agency suggests that AER commit to complying with an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from 2013 through 2019. Id. at 11. The Agen cy informs the Board that it has evaluated AER ’s SO 2 

### emission calculations and agrees that this alternative “will result in a greater net environmental benefit.” Id. at 11. Thus, the Agency and AER agree that AER ’s compliance with an overall SO 2 

### annual e mission rate of 0.35 lb/mmBtu yields an overall SO 2 

### reduction of 64,964 tons for years 2010 through 2021 as compared to expected SO 2 

### emissions under the MPS. Id. The Agency concludes “the Illinois EPA does not believe that any environmental harm will res ult if the Board were to grant” a variance requiring compliance with an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from 2013 through 2019 together with ceasing operation of the Meredosia and Hutsonville stations

. Id. The Agency notes that projecte d SO 2 

### emissions under the MPS are 694,510 tons for years 2010 through 2021 using 2009 heat input and projected SO 2 

### emissions under the alternative variance proposal are 629,547 tons for the same years. Id. at fn. 11.

In response to Board questions at hea ring about the assertion by the Illinois Attorney General’s Office that the MPS was not intended to be a 12

- year averaging period of pollution reduction (PC # 249 at 4), the Agency reiterated statements made in it s recommendation, stating, “The Illinois EPA acknowledged that the use of emission offsets is a normal part of certain regulatory processes.” Ag ency Post Br. at 2.

In order to provide support for an SIP revision, the Agency stated

, [the Agency] has had preliminary discussions with USEPA Region 5 regarding a SIP revision for pending variance requests and no adverse issues were identified. Ag ency Post Br. at 2.

### 26

The Agency stated it will work with USEPA to determine the appropriate years for heat input values to support the SIP revision. Since the Agency’s Regional Haze SIP used a 2002 baseline year in accordance with USEPA 7 

### , the Agency noted that the SIP revision will likely use the same values. Ag ency Post Br. at 2

- 3.

Arbitrary or Unreasonable Hardship

The Agency recounts AER ’s hardship arg uments that “ inadequate cash flow and restrictions on additional borrowing s” preclude completing the installation of FGD units at the Newton station. Agency Resp. at 12

- 14. The Agency notes that AER claims that if the variance is not granted

, AER will cl ose multiple units which may include units at E.D. Edwards, Joppa, or Newton. Id. at 12.

The Agency notes that Board rules require the Agency to estimate the cost that compliance would impose on AER and on others. Agency Resp. at 12

, citing 35 Ill. Adm. Code 104.216(b)(5). The Agency summarizes an analysis attached to AER ’s petition which concludes that AER puts $44.4 million into the local economy surrounding the E.D. Edwards station and that station has a $124,071,000 impact on the Illinois econom y annually. Agency Resp. at 16. The report also finds that AER puts $76.7 million into the local economy surrounding the Joppa station and that station has a $214,221,000 impact on the Illinois economy annually. Id. However, the Agency concludes that i t “is not able to estimate the costs that compliance would impose on [A ER ]” because AER did not include itemized calculations or supporting data as to cost factors. Id. at 17.

Consistency with Federal Law

The Agency summarizes AER ’s assertion that the r equested variance is consistent with federal law and AER ’s supporting arguments relating to compliance with BART, CSAPR, and MATS. Agency Resp. at 17

- 18. The Agency concludes that AER “is correct that there is currently no authority that precludes granti ng the instant variance request.” Id. at 19. However, the Agency notes that “Illinois must still develop plans to attain and maintain the ozone and PM 2.5 

### National Ambient Air Quality Standards” and, “more importantly, must address its impact on downwind states pursuant to Section 110(a)(2)(D) of the [Clean Air Act].” Id.

The Agency notes that USEPA approved revisions to the Illinois SIP addressing regional haze. Agency Resp. at 19 citing 77 Fed. Reg. 39943 (July 6, 2012). Accordingly, the Agency infor ms the Board that it will submit the variance order, if granted by the Board, for approval as a revision to the Illinois SIP. Agency Resp. at 19. The Agency stated the “[Agency] has had preliminary discussions with USEPA Region 5 regarding an SIP revisio n for pending variance requests and no adverse issues were identified.” Agency Post Br. at 2.

7 

### USEPA memorandum entitled “2002 Base Year Emission Inventory SIP Planning: 8

- hr Ozone, PM 2.5 

### and Regional Haze Programs”, November 18, 2002 (http:/ /www.epa.gov/ttn/chief/eidocs/2002baseinven_102502new.pdf)

. Ag ency Post Br. at 2

- 3.

### 27

Compliance Plan

The Agency recounts AER ’s compliance plan as initially proposed in its petition as providing: (1) compliance with an overall SO 2 

### annual emissio n rate of 0.38 lb/mmBtu from 2012 through 2019; (2) the proposed rate commits AER to ceasing operations at Meredosia and Hutsonville; (3) the proposed rate commits AER to maximizing FGD performance at the Duck Creek and Coffeen stations; (4) burning low

- s ulfur coal from the Powder River Basin and managing operations as necessary to maintain compliance. Agency Resp. at 19. The Agency notes that AER expects to maintain “a continuous program of construction at the Newton Energy Center so as to be in a posit ion to have the Newton FGD [p] roject completed and operational to meet compliance obligations.” Id. at 20. The Agency states that after discussions with AER

, AER has agreed to comply with an even lower overall SO 2 

### annual emission rate of 0.35 lb/mmBtu fr om January 1, 2013 through December 31, 2019. 8 

### Id.

Suggested Variance Conditions

The Agency stated its recommendation was contingent upon AER ’s petition “subject to the terms and conditions contained herein.” Agency Resp. at 1. These terms consisted of requiring compliance with an overall 0.35 lb/mmBtu annual emission rate from January 1, 2013 through December 31, 2019 and maintained closures of the Meredosia and Hutsonville electric generating units through the pend ancy of the variance.

AER also pro posed providing progress reports on construction activities related to the Newton scrubber by the end of each calendar year during the term of the variance to both the Board and the Agency. AER First Resp. at 11. In response to Board questions at hearing (Tr. at 54), the Agency stated such reports should be sent to the Illinois EPA as follows:

Illinois Environmental Protection Agency Attn: Ray Pilapil, Manager Bureau of Air

- Compliance Section 1021 N. Grand Ave. East P.O. Box 19276 Springfield, IL 62794

- 9 276

and

Illinois Environmental Protection Agency Attn: Gina Roccaforte, Assistant Counsel Division of Legal Counsel

- Air Regulatory Unit 1021 N. Grand Ave. East P.O. Box 19276 Springfield, IL 62794

- 9276

8 

### Ameren requested the beginning of the variance to commence on January 1, 2015. Pet. at 1. Ameren revised the proposed variance term to conclude on January 15, 2020. Ameren Second Resp. at 5.

### 28

Ag ency Post Br. at 1.

Agency Response and Agency C onclusion

As discussed above, the Agency informs the Board that it has discussed with AER an alternative variance proposal where AER commits to complying with an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from January 1, 2013 through December 31, 2 019. Agency Resp. at 21. The Agency states that this alternative compliance proposal satisfies the Agency. Id. The Agency concludes that an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu, together with ceasing operations at the Meredosia and Hutson ville stations, “would result in a net environmental benefit through 2021 greater than initially proposed” in the petition. Id.

There is no regulatory requirement that AER ’s Meredosia and Hutsonville stations remain shut down so granting this variance would ensure that these two stations remain shut down during the term of the variance. Agency Resp. at 21. The Agency points out that using emission reductions from facility shutdowns to offset emission increases “is an acceptable part of the established regulatory process.” Id. The Agency recognizes such reductions to offset potential emission increases under other regulatory programs such as New Source Review and Prevention of Significant Deterioration permitting programs. Id. Thus, the Agency concl udes that “the emission reduction offsets that [A ER ] is seeking to rely on are creditable and allowable.” Id.

The Agency also explains key points as to the background of the MPS. Agency Resp. at 21

- 22. The Agency notes that the MPS “was created and des igned to achieve significant SO 2 

### and NO x 

### reductions in exchange for mercury control flexibility in the Illinois Mercury Rule.” Id. at 21. The MPS was negotiated in consideration of AER ’s “ability to install pollution control equipment in a timely manner and a desire to achieve the greatest amount of reductions within a reasonable amount of time.” Id. at 22. The Agency specifically states that “the MPS was not designed to address the new 2010 1

- hour SO 2 

### National Ambient Air Quality Standard, which

was no t proposed at the time the MPS was being negotiated.” Id.

The Agency also notes that granting the variance under the alternate proposal agreed between the Agency and AER will have “no detrimental impact in the ability to rely on the new variance

- adjust ed MPS emission reductions in the Illinois SIP s , as needed.” Agency Resp. at 22.

The Agency concludes that granting the variance imposing an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from January 1, 2013 through December 31, 2019 results in a
net environmental benefit. Agency Resp. at 22. Further, the Agency “does not believe that any environmental harm would result therefrom.” Id.

OBJECTION S

On May 31, 2012, the Board received two objections to the petitions, as discussed below. Environment Illinois, ELPC , Natural Resources Defense Council, Respiratory Health Association of Metropolitan Chicago, and Sierra Club ( the Citizens Groups) filed an objection

### 29

the AER ’s petition which the Board clerk docketed as PC#6. The Citizens G roups, except for Natural Resources Defense Council, filed an additional objection which the Board clerk docketed as PC#7. The Citizens Groups also filed a post

- hearing comment on August 13, 2012 (PC#2409).

The Citizens Group s’ Objection (PC#6 and PC#2409 )

The Citizens Group s object to granting AER ’s variance petition. PC#6 at 1. The Citizens Groups make six points, as follows.

First, the Citizens Group s argue that the variance should be denied because AER should be required to comply with the MPS which AER itself neg otiated. PC#6 at 2. AER “agreed to, opted into, and benefitted from the standards it now seeks to undermine.” Id. The Citizens Groups characterize the MPS as allowing owners “to meet mercury limits less stringent than would otherwise be required as lon g as they meet certain emission standards and technology requirements for SO 2 

### and NO x 

### .” Id. Under the MPS, owners opted in to the MPS in exchange for “the right to delay compliance with numeric or input

- based mercury limits until at least 2015.” Id. The Citizens Groups contend that the MPS mercury control requirements are less stringent than the requirements of the Illinois mercury rule which required electric generating units to meet the same mercury standards as the MPS six years earlier than the MPS a nd without the compliance option of injecting activated carbon. Id. at 2

- 3, fn. 4. Thus, granting the variance

wo uld give AER the benefit of less stringent mercury standard s for several years without

me eting the prescribed SO 2 

### limits which were part of t he “laboriously negotiated” deal. Id. at 3

- 4.

The Citizens Groups next argue that, “AER’s agreement with the State and other parties to enter into and abide by the MPS is the functional equivalent of a contract.” The Citizens Groups cite court cases r egarding contract disputes and state that changing market conditions are foreseeable and should not excuse AER from fulfilling its commitment. PC#2409 at 23

- 24, citing to Northern Ill. Gas Co. v. Energy Coop., Inc. , 122 Ill. App. 3d 940 , 952

- 53 (3d Dist. 1984); YPI 180 N. LaSalle Owner, LLC , 403 Ill. App. 3d 1; Bank of America, N.A. v. Shelbourne Development Group , LLC, No. 09 C 4963, 2011 U.S. Dist. Lexis 21258 (N.D.Ill. Mar. 3, 2011).

Second, the Citizens Groups state that AER only suggested two options , the variance or the shuttering of multiple generating stations. In so doing, the Citizens Groups argue that AER failed to address other strategies or a combination of strategies for complying with the MPS: (1) curtailing power production at AER ’ s plant s with higher SO 2 

### emission rates

, (2) using dry sorbent injection, (3) using ultra low

- sulfur coal, (4) maximizing/optimizing existing scrubbers, (5) maximizing operations and capacity at units with scrubbers, ( 6 ) natural gas conversions, and ( 7 ) seeking f inancing from its parent company to comp l ete installation of scrubbers at its Newton plant.” PC#6 at 4 , PC#2409 at 11. The Citizens Groups suggest that a combination of strategies would at least bring AER closer to the MPS requirements to further reduce emissions during the variance period. PC#2409 at 9

- 10. The Citizens Groups argue that AER must show that these other compliance options are not viable in order to demonstrate a hardship. PC#2409 at 9, citing Allaert Rendering , 91 Ill. App. 3d at 162 and Willowbrook Motel P’ship , 135 Ill. App. 3d at 349

.

### 30

As to curtailing power production, t he Citizens Groups assert that AER has not presented reasons why it could not vary degrees of curtailment at the unscrubbed units or combine curtailment with other s trategies. PC#2409 at 10.

With respect to the use of dry sorbent injection , the Citizens Groups note that AER dismissed this option because variability in removal rates from 10%

- 90% reduced its effectiveness, injection of the dry sorbent would overburd en ESPs and require baghouses on all units, and costs would be prohibitive. PC#2409 at 12

- 16. The Citizens Groups cite to AER ’s dry sorbent injection pilot testing at Joppa, noting that when operators controlled the injection rate to achieve 50% SO 2 

### remo val, the actual removal rate ranged from 42% to 67%, not 10% to 90% as AER suggested. PC#2409 at 12

- 13, PC#2409 Exh. 2. Additionally, the Citizens Groups argue that the Joppa pilot test suggests that dry sorbent injection did not impact the operations of the ESP or necessitate a baghouse. PC#2409 at 14

- 15. As to costs, the Citizens Groups refer to the comments of Kimberly Gray, PhD, who noted,

p erhaps the biggest advantage of dry sorbent injection is lower cost compared to wet FGD with dry sorbent inj ection averaging 10

- 25% of the cost of wet FGD. PC#2409 at 16, PC#2409 Exh. 3.

The Citizens Groups contend that dry sorbent injection could be installed and operated at a rate that would be short of compliance with the MPS but that would not overburden the existing ESPs and still provide significant emission reductions during any variance period. PC#2409 at 10

- 16.

The Citizens Groups also suggest that the use of ultra low

- sulfur coal and natural gas conversion, in combination with other strategies, could also achieve significant progress toward compliance with the MPS. PC#2409 at 16

- 19. The Citizens Groups point out that AER is already using low

- sulfur coal in Missouri, in combination with other strategies, to meet federal SO 2 

### requirement s . As to repowering plants with natural gas, the Citizens Groups believe the viability of this option has increased over recent years with the fall in natural gas prices. PC#2409 at 17

- 18.

In terms of financing, t he Citizens Groups question AER ’s argument that its parent company cannot provide funding for the Newton FGD p roject. PC#6 at 5. The Citizens Groups argue that AER has not met its burden to show that this funding is not possible , contending that Ameren Corporation “could in principle finance its subsi diary, but has chosen not to for business reasons.” Id. , PC#2409 at 35. The Citizens Groups offer that the parent corporation has “promised to provide a guaranteed $100 million to AER upon the sale of three natural gas plants” which may be a possible fun ding mechanism. PC#6 at 5.

Third, the Citizens Groups argue that granting AER ’s variance request sets a precedent for other owners to seek variances which would undo important gains in controlling mercury, SO 2 

### , and NO x 

### . PC#6 at 6 , PC#2409 at 49

- 50 . T he Citizens Groups are concerned because AER ’s justifications for a variance apply to other owners, reasons such as “financial distress due to low power demand, higher natural gas supplies, and inability to recuperate costs via rate recovery, as well as su pposed regulatory uncertainty.” Id. The Citizens Groups predict that

### 31

other companies would seek similar variances if AER ’s request is granted. PC#6 at 6. In addition, the Citizens Groups contend that the Board should deny the variance so that one negot iating party in a large

- scale multi

- party negotiation “does not thwart opportunities to craft stronger, widely

- supported regulations in the future.” Id. The Citizens Groups claim that many of the negotiating parties at that table will have no reason to p articipate in negotiating future complex regulatory schemes if they can be disregarded in bad times. Id.

Fourth, the Citizens Groups contend that AER has not provided a definite compliance plan or shown that it will comply with a proposed compliance plan . PC#6 at 7 , PC#2409 at 2

. The Citizens Groups characterize AER ’s petition as “ not definite ” because it requires that power prices must improve before investments in SO 2 

### control equipment will be economically feasible

, which AER itself acknowledges is un certain

. PC#6 at 8 , PC#2409 at 2

- 3 . The Citizens Groups point to statements in AER ’s supporting documents and testimony that prices may never increase

, which may mean that AER will never be able to comply with the SO 2 

### requirements. Id.

The Citizens G roups point to Standard & Poor’s ratings showing future power prices will quite possibly remain low, and Moody’s ratings finding an improvement in AER ’s cash flow linked to a “recovery in power prices, which may not occur.” PC#2409 at 5. Should the facto rs not change in the near future, the Citizens Groups suggest the State will be subjected to “a revolving door of variance requests.” Id. at 6. The Citizens Groups assert that the Board should only grant a variance for a temporary reprieve from regulator y requirements, “rather than a mechanism for indefinitely propping up a failed business model.” PC#6 at 9. Additionally, the Citizens Groups state that although AER referenced time frames for ongoing construction activities, AER has not provide d a time s chedule for the most important phases of the FGD construction. PC#2409 at 6. The Citizens Groups argue that such a vague time schedule does not meet the legal standard of a “detailed compliance plan” under the Board’s petition content requirements for va riances at 35 Ill. Adm. Code 104.204(f). Id.

Fifth, the Citizens Groups argue that AER ’s proposed variance will worsen air quality, not create any net air quality benefit , and that AER has not presented an honest appraisal of the health and environmental impacts . PC#6 at 9 , PC#2409 at 36

.

With AER ’s claim of a net benefit, t he Citizens Groups object to AER using emission reductions from closing the Hutsonville and Meredosia plants to mitigate increase d emissions from delaying compliance with the 2015 and 2017 SO 2 

### emission standards. PC#6 at 9. The Citizens Groups argue that it is improper to consider the Hutsonville and Meredosia closures

, stating that these closures and resulting emission reductions would occur regardless of whether the variance is granted because the plants are uneconomical to operate and the shutdowns are necessary for lowering the fleet

- wide rate to comply with the MPS and a reinstated CSAPR. Id.

, PC#2409 at 41

- 46

.

The Citizens Groups also question AER ’s inclusion of 2010 and 20 11 emission reductions because they pre

- date the variance request. PC#6 at 9, PC#2409 at 41

- 46. The Citizens Groups contend that if the air quality impact is properly evaluated, “it is clear that the variance will in fact significantly increase harmful S O 2 

### pollution and thereby worsen air quality.” Id. The Citizens Groups present what they term as a “corrected” version of AER ’s Table 1,

### 32

eliminating the emissions reductions AER credited for the shutdowns of Meredosia and Hutsonville and the actual emissi ons during 2010 and 2011 as well as the heat input associated with the two shutdown plants. PC#2409 at 38

- 40. The Citizens Groups claim their revised calculations suggest the variance would allow AER to emit 32, 76 0 more tons of SO 2 

### during the period of 2 012 to 202 0 , and not result in a net reduction as AER claims. Id. at 38

- 41.

As to the public health impacts, the Citizens Groups refer to letters signed by health professionals in Illinois who cite to the harmful effects of SO 2 

### emissions and voice concer n at the efforts to weaken the MPS. The health professionals explain that SO 2 

### is a precursor to fine particle pollution in the atmosphere. Particulate matter with a diameter less than 2.5 microns, or PM 2.5 

### , can be transported over long distances and impa ct populations miles away from the

source. The health professionals note the link between exposure to PM 2.5 

### and premature mortality and cardiovascular effects, stating,

f

ailure to lower [AER’s SO 2 

### emissions] on the agreed upon schedule would be expected to keep rates of asthma attacks and other health problems higher than they would be at the agreed upon, lower levels. PC#2409 at 47

- 48, PC#2409 Exh. 5, PC#1174, PC#1919.

From a 2010 National Research Council study 9 

### (PC#1918) referenced by the health
p rofessionals, the Citizens Groups estimate a cost for damages per ton of SO 2 

### , ranging from $4,850 (at Newton) to $6,580 (at E.D. Edwards). PC#2409 at 48. The Citizens Groups characterized the damages as “externalities associated with local and global air pollution for individual coal

- fired and gas

- fired power plants in the United States.” Id. Based on the Citizens Groups estimates that the variance would result in 32,760 more tons of SO 2 

### than compliance with the MPS, the Citizens Groups calculate that t he variance would result in damages ranging from $159 million to $216 million

. Id.

Sixth, the Citizens Groups argue that AER ’s hardship is self

- imposed, and not arbitrary or unreasonable as required by the Act. PC#2409 at 7

, referring to 415 ILCS 5/35, 37. The Citizens Groups contend that the hardship AER now faces is from AER ’s own business decisions to opt into the MPS and operate their Illinois generating plants through a deregulated entity. PC#2409 at 7. The Citizens groups argue that changes in p ower prices and market conditions were foreseeable when AER opted into the MPS. Although AER stated at hearing that the MPS was “premised on the expectation that the power market would continue to support costly installation of pollution control equipment over the schedule of the MPS”, the Citizens Groups argue that AER was aware that opting into the MPS “did not make compliance with the MPS contingent on a robust power market.” Id. at 22

- 23. The Citizens Groups cite to Board cases where variances were d enied where the petitioner’s hardship was self

- imposed or foreseeable. Id. at 19

- 20 , citing Marathon Oil Co v. IEPA , PCB 94

- 27 , slip op. at 10

- 11 (May 16, 1996) ; Ekco Glaco v IEPA , PCB 87

- 41 (Dec. 17, 1987) ; Allaert Rendering, Inc. v. IPCB , 91 Ill. App. 3 d 160, 162 (3d Dist. 1980); Willowbrook Motel P’ship v. IPCB , 135. App. 343, 345 (1 st Dist. 1985); IEPA v. Lindgren Foundry Co. , PCB 70

- 1 , slip op. at 8

- 13 (Sept. 25, 1970)

.

9 

### National Research Council, “Hidden Costs of Energy: Unpriced Cons e quences of Energy Production and Use” (2010).

### 33

Where AER argues that hardship is also based on “regulatory uncertainty”, the C itizens Groups cite to a Board decision to grant a variance in part based on regulatory uncertainty, but only under “unique circumstances” where “unprecedented uncertainty exists

. ” PC#2409 at 24

, citing ExxonMobil Oil Corp v. IEPA , PCB 11

- 86, 12

- 46 , slip op. at 30 (Dec. 1, 2011) . The Citizens Groups argue that the regulatory uncertainty in AER ’s case is not comparable to the unique circumstances or unprecedented uncertainty in the ExxonMobil case since “it is and has been clear to AER that CSAPR is coming soon

. . . . ” PC#2409 at 24

- 25.

Additionally, the Citizens Groups argue that any hardship AER faces is outweighed by the benefits AER gained by opting into the MPS and choosing to enter the deregulated market. PC#2409 at 26

- 29. Although AER testifie d in the R06

- 25 hearing that the MPS provision would be more costly for AER , the Citizens Groups recall that AER stated that the MPS provides important financial and operational benefits by allowing companies to spread capital investment costs and construc tion management over a longer period of time. Id. at 27, referring to Proposed New Ill. Admin. Code 225 Control of Emissions from Large Combustion Sources , R06

- 25 (July 28, 2006) . Because of the benefits of opting into the MPS, the Citizens Groups point out that the Agency specified in the R06

- 25 proceeding that the MPS is a “once

- in, always

- in” provision, otherwise companies could opt

- out after receiving the benefits of mercury control flexibility. PC#2409 at 28

- 29. As to the benefits of deregulation, the Citizens Groups refer the testimony of ELPC’s Mr. Kelter who said,

[b] y transferring those plants to unregulated affiliates [AER] was able to reap benefits from the plants that it would have never earned under traditional regulation, and customers we re subject to market prices when the freeze ended. For many years, [AER]’s decision paid off for the company. PC#2409 at 33, citing Tr. at 71.

Although the Citizens Groups object to granting the variance, the Citizens Groups suggest that if the Board we re to grant the variance, that the Board only do so subject to strict conditions and a shorter variance period. PC # 2409 at 2, 51

- 52. The Citizens Groups recommend that before the Board grants any variance to AER

, AER should better demonstrate its assessme nt of options, including a combination of control strategies that would result in emission reductions below the 0.35 lb/mmBtu proposed. The Citizens Groups note that AER ’s testimony regarding efforts to meet future CSAPR requirements, such as the use of m ore low

- sulfur coal or additional sorbent injection, show that AER can do better. Id. at 9, 11

, referring to Tr. at 41

- 42. The Citizens Groups believe AER can “[do] it now, pursuant to a variance or the MPS, instead of later under CSAPR.” PC#2409 at 11, 51

- 52. The Citizens Groups also suggest that any grant of a variance require AER to provide a detailed description of the work it will perform and a binding schedule for completion. Id. at 51. Finally, the Citizens Group suggest the variance period be n o longer than two years to allow all the parties an opportunity to reassess AER ’s prospects for future compliance. Id. at 52.

### 34

The Citizens Group s’ ( Except for NRDC ) Objection (PC#7)

The Citizens Groups, except for Natural Resources Defense Council, file d an additional objection on the same day as the objection detailed above. This additional objection restates, nearly verbatim, th e first argument outlined above . Accordingly, it is not again summarized here.

ILLINOIS ATTORNEY GENERAL’S POSITION (PC#249 AND PCB# 2410 )

The Illinois Attorney General , on behalf o f the People of the State of Illinois (People)

, initially stat ed

the Board should deny the petition for variance filed by [A ER ] or, in the alternative, grant it only with conditions that would min imize the amount of excess pollution allowed in the years 2015 through 2019.” PC#249 at 1.

The People argue that AER has failed to meet its burden of showing that the hardship of compliance outweighs harm to the environmental and public health caused by the variance. Id.

Using AER ’s SO 2 

### emission calculations in Table 1 of AER ’s petition, the People point out that if the variance is granted and AER complies with an overall SO 2 

### annual emission rate of 0.38 lb/mmBtu

, AER will increase SO 2 

### emissions betwee n 2015 and 2019 as compared to the MPS. PC#249 at 3. The People accuse AER of “gloss[ing] over this pollution increase by framing its alternative compliance plan in terms of the cumulative, or overall, number of tons that will be emitted from 2010

- 2021 a s compared to what is anticipated under the MPS.” Id. at 4.

The People argue that “the MPS was not intended to be a 12

- year averaging period of pollution reduction.” PC#249 at 4. The MPS “was designed to ratchet down emissions of SO 2 

### and other pollutan ts over a period of time by triggering incremental clean ups of AER ’s coal fleet.” Id. The People argue that lower SO 2 

### emissions from 2010 to 2014 result from AER “having its coal plants dispatched less and less and also from previous business decisions made by [AER] to mothball uneconomic units (Hutsonville and Meredosia).” Id.

The People assert that “SO 2 

### is not a pollutant that should be subjected to a long

- term averaging analysis because its primary public health impacts occur relatively quickly af ter being released.” PC#249 at 5. Environmental and health impacts from SO 2 

### emissions include short

term respiratory exposure, formation of particulate matter, and acid rain deposition. Id. The People argue that early reductions in SO 2 

### emissions are of little value because “a ton of SO 2 

### avoided in 2010 does not help an asthmatic . . . exposed to emissions in 2018 or the lake that receives acid rain pollution in that later year.” Id.

The People argue that any alleged hardship in complying with the MP S sh ould be analyzed by considering “the alternative measures [AER] would have to take assuming i t s preferred compliance plan (scrubbers at Newton) is unavailable.” PC#249 at 6. The People

### 35

believe that AER ’ s i nability to obtain financing for the Newton F GD project due to difficult economic conditions is not a hardship. Id.

The People state that AER ’ s petition presents only one compliance alternative to the Newton FGD project which is closing at least two AER plants. PC#249 at 6.

The People origina lly suggest ed the following compliance options: (1) optimizing scrubbers to further reduce emissions ; (2) other less expensive control technologies; (3) reduce production on certain units; (4) other operational management measures. PC#249 at 7.

Following AER’s hearing testimony , the People continue to believe that the information provided by AER

is still not sufficient to determine whether various pollution control strategies, either alone or in combination with one another, are available to reach compl iance or to minimize the gap of non

- compliance. PC#2410 at 2.

Should the Board grant the variance, the People believe that the following conditions should be added:

**•** Setting of a revised SO 2 

### emission rate based on additional measures AER might take to limit excess pollution,

**•** The Hutsonville and Meredosia stations remain non

- operational,

**•** Require the use of dry sorbent injection or other dry scrubbing applications as a partial if not full compliance measure,

**•** Require the partial curtailment or derating of certain units to assist with compliance,

**•** Require AER to operate the Duck Creek and Coffeen scrubbers at 98

- 99% SO 2 

### removal efficiencies,

**•** If AER continues to procure low

- sulfur coal as an operational step to meet emission rates, require AER to procure the lowest

- sulfur coal available and to submit regular verified certifications, and

**•** Any other conditions as determined by the Board that would minimize deviation from the MPS and provide a more proper balance between the hardship to AER and the harm to pu blic health and the environment that the variance would allow.

PC#2410 at 8. The People make these condition requests in light of comments presented by AER

. Id. at 5, 6, 7.

### 36

The People emphasize that AER ’s witness testified only that “ ‘ probably’ anywher e from one to three plants could ‘very likely’ need to shut down.” PC#2410 at 2. The People also request that AER be required to submit the details of its evaluation of dry sorbent injection and any other dry scrubbing technologies for Board review. Id. at 5. The People do not believe that AER has demonstrated that it has thoroughly analyzed the viability of using dry sorbent injection and any other dry scrubbing technologies in light of these applications being “cheaper, faster ways to reduce SO 2 

### emiss ions.” Id.

The People believe AER should provide evaluation and analysis on unit curtailments or deratings because there could be cost effective pollution reductions through partial curtailment “that, when combined with other compliance strategies, would bring [A ER ] closer to complying with the MPS.” PC#2410 at 5.

The People further request that the variance be limited to two years with the ability for AER to petition for an extension. PC#2410 at 8. The People believe that a two

- year variance

would provide [A ER ] with the relief it needs now but provide the added benefit of allowing the Board and the [Agency] an opportunity for reassessment if, two years from now, A ER still believes it needs more time under a variance. Id. at 8

- 9.

The People furthe r state a number of factors, including a rise in natural gas prices, compliance with CSAPR and MATS, economic improvement, weather patterns, price of coal and renewable energy policy could lead to an increase in power prices and an improvement in AER ’s fin ancial position. PC#2410 at 9

- 10. However, it is not possible to know for sure how all of these dynamics will play out. Id. at 10. The People contend a two

- year variance

would allow [AER] to maintain the decelerated status of the Newton scrubber proje ct and to hold off on making any decisions about placing plants in cold standby. But it would also preserve the chance for the Board to keep the MPS on track to the fullest extent possible and to keep excess pollution to a minimum. PC#2410 at 9.

HEARING

The Board held the public hearing on August 1 , 2012 in Springfield. AER and the Agency appeared as participants in the hearing. AER presented sworn testimony from two witnesses: Michael Menne and Gary Rygh. The Agency did not present any testimony. A s a public comment, ELPC presented sworn testimony from Robert Kelter. The Board received two documents as hearing exhibits: Testimony of Michael L. Menne ( Exhibit 1 ) ; and Comments of Robert Kelter, and Ameren Corporation’s Performance Under the Illinois Electric Service Customer Choice and Rate Relief Law of 1997 ( Exhibit 2 )

. Ninety

- five individuals provided public comments.

### 37

Testimony

Michael Menne , Ameren Services Company

Michael Menne is the Vice President of Environmental Services for Ameren Serv ices Company, which provides business and administrative service to Ameren Corporation and its subsidiaries, including AER. Mr. Menne worked with the Agency on the development of the MPS. Tr. at 12

- 13, Hearing Exh. 1 at 1.

Mr. Menne began by describing AER’s coal

- fired power plants in Illinois: Edwards, Duck Creek, Meredosia, Coffeen, Newton, Hutsonville, and Joppa. Mr. Menne also spoke of the
gas

- fired turbines in AER’s fleet. Mr. Menne went on to say, “These plants are an integral part of the commun it i es in which they’re located

. . . . ” Tr. at 14

- 15.

Mr. Menne then describe d AER’s progress in reducing emissions across its fleet, showing charts depicting the decline in SO 2 

### emissions of 79% since 1990 and 23% over the last four
years. Mr. Menne e mphasized that AER made these reductions despite a significant increase in coal utilization within AER’s fleet over the years. Tr. at 15

- 16, Hearing Exh. 1 at 1

- 2. The charts show historical SO 2 

### emissions for the MPS units declining from approximately 33 0,000 short tons in 1990 to 70,000 in 2011, while coal consumption increased from approximately 10 million tons in 1990 to 17 million tons in 2011. Hearing Exh. 1 at 11. Mr. Menne explained,

AER has achieved these reductions through a number of investm ents in pollution control equipment and continuing efforts to improve and maximize efficiencies and operating performances. Hearing Exh. 1 at 2.

Mr. Menne recounted how AER has spent over $1 billion on pollution control equipment for its fleet. In order to meet the MPS, Mr. Menne stated that AER has already spent over $813 million to install scrubbers on three of its generating units and $237 million to start construction on the fourth (Newton). AER has spent over $177 million to install SCR equipment t o reduce NO x 

### emission at three of its plants, and incurs costs over $7 million each year in operating costs. For mercury control, AER has also spent over $20 million installing ACI technology on twelve units at four plants, with $17 million in operating c osts to date. Tr. at 16

- 17, Hearing Exh. 1 at 3.

Mr. Menne testified that AER has been voluntarily operating its scrubbers at SO 2 

### removal efficiencies higher than necessary to meet the current MPS and federal requirements. Additionally, Mr. Menne explai ned that AER is continuing to test and evaluate methods to enhance mercury removal. To date, Mr. Menne believes that most of AER’s generating units are very close to meeting MATS regulations and Newton Unit 2 already is already meeting the MPS
mercury con trol requirements ahead of schedule. Tr. at 17

- 18, Hearing Exh. 1 at 3.

Mr. Menne emphasized that in proposing the MPS in R06

- 25,

[ A ER] stepped forward on its own with no pressure from the environmental
groups

– the MPS was not a settlement of an enfo rcement case or adversary proceeding. Hearing Exh. 1 at 4, Tr. at 19.

### 38

Mr. Menne explained that AER premised the MPS proposal on an expectation that the power market would support the costs to comply with the schedule proposed. Tr. at 19, Hearing Exh. 1 at 4. However, for the scrubber at Newton, Mr. Menne stated,

[e] ven though A E R knew the [economic] forecast was looking grim, AER committed the capital dollars to begin the very costly installation for the scrubbers in order to be prepared to meet the very stringent 2015 MPS SO 2 

### rate. Tr. at 18

- 19, Hearing Exh. at 3

- 4.

As construction of the Newton scrubber proceeded, Mr. Menne stated, “ t he economic climate became more troublesome from a financing perspective.” Tr. at 20, Hearing Exh. 1 at 4

- 5. M r. Menne also explained that AER made a commitment to continue with the project, but to decelerate construction activities. Id.

Mr. Menne explained that, w ithout the financial resources to complete construction of the Newton scrubber on schedule, AER evaluated a number of compliance options . These includ ed curtailment of operations and installation of less expensive pollution control equipment at other plants. Tr. at 20

- 21. Mr. Menne discussed the option of curtailing operations, acknowledging that

, while it would reduce emissions, AER would still incur the fixed costs associated with operating the plant. Id. at 22. With less power produced and less power sold, Mr. Menne said that curtailment would not allow AER to recover financially so that fundi ng could be achieved to complete the Newton scrubber. Id. at 22

- 23. Mr. Menne testified that curtailment of operations would put AER in “a worse position financially than it would if it had to close down plants .” Id. at 22; see also Hearing Exh. 1 at 5.

Mr. Menne stated that AER also considered less expensive technologies for reducing SO 2 

### emissions, including scrubbers and sorbent injection. Tr. at 23. For sorbent injection, Mr. Menne stated that AER’s evaluation found efficiencies ranging from 10% to 90%. Hearing Exh. 1 at 6. Mr. Menne explained that such variability would reduce the effectiveness of sorbent injection as a compliance alternative. Id. Additionally, AER found that sorbent injection could impair performance of the ESP s , unless AER either built bigger ESPs or installed additional controls such as a baghouse to control particulate matter. Tr. at 24, Hearing Exh. 1 at 6. When considered from a comprehensive approach, Mr. Menne stated that the total cost of sorbent injection would ex ceed that for completion of the Newton scrubber already underway. Id

. In preparing the variance request, Mr. Menne testified that AER considered steps to address any environmental impact that might result. Tr. at 24. AER proposed to comply with a “mit igation emission rate” during the variance period of 0.38 lb/mmBtu from 2013 through 20 19 , which would reduce SO 2 

### emissions earlier in the variance period than required by the MPS. Id. , Hearing Exh. 1 at 7. Since filing the petition and meeting with the Agency, AER has agreed to an even lower SO 2 

### mitigation emission rate of 0.35 lb/mmBtu beginning in 2013 through 2019 . Tr. at 24

- 26, Hearing Exh. 1 at 6

- 7, 9. Mr. Menne explained that

, to achieve the lower rate, AER will need to fully maximize operation o f the FGD systems at the Duck Creek and Coffeen Energy Centers to removal efficiencies between 98%

- 99%. Tr. at 25, Hearing Exh. 1 at 7. Mr. Menne added that AER does not normally operate scrubbers at such high efficiency

### 39

removal levels because it degrade s the plant and pollution control systems over time. Tr. at 25

- 26. Mr. Menne stated that AER will also need to turn to other operational strategies to comply with the mitigation emission rate, such as low

- sulfur coal procurement and generation utilizatio n. Tr. at 26, Hearing Exh. 1 at 7.

As to AER’s compliance plan during the variance period, Mr. Menne stated that AER is committed to spending approximately $16 million each year during the variance for the continuing work on the Newton scrubber, with mo re expenditures in the last couple of years of the variance. Mr. Menne explained that during the variance period, AER would be continuing to install ductwork, complete engineering, and install absorber units. Mr. Menne stated that AER would also provide annual updates on costs and activities. Tr. at 32

- 33. Mr. Menne stated that at this time, AER would not be able to predict a last possible date at which point AER would know if completion of the Newton FGD would not be accomplished by the January 15, 202 0 compliance date. Tr. at 37

- 38.

Additionally, Mr. Menne stated that the only way for AER to meet the 0.35 lb/mmBtu mitigation emission rate is to not operate the Meredosia and Hutsonville Energy Centers. Mr. Menne relayed that the Agency specifically asked AER to commit to not operating the two facilities during the variance period. Mr. Menne stressed, “AER’s commitment to keep these plans shut down during the pendency of the variance is a real and meaningful commitment with consequences.” Tr. at 26

- 27, Hearing Exh. 1 at 7

- 8.

Mr. Menne stated that both energy centers are fully permitted and could be operated. Tr. at 26. Had the CSAPR not issued as final with a 2012 initial year of compliance, Mr. Menne stated that these two plants would be operat ing today. Id. at 27. Mr. Menne stated that it is because of the requirements to meet air pollution reductions, including the MPS, that these plants were shuttered. Tr. at 2 7

- 28, 39

- 40, Hearing Exh. at 7

- 8. Although CSAPR was stayed by the court in the eleventh hour, Mr. Menne stated, “ [b] y that time, it was a little late. Everybody was gone and things were closed down.” Tr. at 39

- 40.

Mr. Menne noted that the Agency’s recommendation explained that offsets for plant shutdowns and other commitments a re fully creditable and allowed in the established regulatory practice for the New Source Review (NSR) and Prevention of Significant Deterioration (PSD)
programs. Tr. at 27. Furthermore, Mr. Menne stated that emission credits for plant shutdowns

are a pr imary part of the federal goal to reduce all forms of emissions nationally from coal

- fired power plants. Tr. at 28, Hearing Exh. 1 at 8. Mr. Menne stated that if CSAPR were reinstated, AER anticipat es the need to take additional measures for SO 2 

### reductio ns, such as us e of more low

- sulfur

, or lower

- sulfur

, coal, additional sorbent injection, or purchase of SO 2 

### allowances, but Mr. Menne cautioned, “ w e don’t know what CSAPR is going to end up being.” Tr. at 41

- 43.

In terms of the environmental impact, Mr. Menne explained,

[t] he net environmental benefit comes from the fact that total SO 2 

### emissions are lower with this variance in place than originally expected or anticipated over the entire MPS compliance period. Tr. at 28

- 29, Hearing Exh. at 9.

### 40

Final ly, if the variance is not granted, Mr. Menne explained that AER will likely have to shut down one or two or all of the Joppa, Edwards, and Newton plants by 2015 when the lower MPS SO 2 

### emission rate takes effect. Tr. at 21.

Gary Rygh , Barclays Capital

G ary Rygh is managing director in the Global Power and Utility group of Barclays Capital, covering the power and energy investment banking business. Tr. at 10

- 11, 44

- 45.

Mr. Rygh described how the financial health of GENCO has eroded due to a number of factors, including Illinois’ air emission regulations, the drop in natural gas prices, and AER’s status as a merchant power generator. Tr. at 45

- 46. GENCO is AER’s only rated subsidiary. Mr. Rygh explained that , as a merchant generator, AER is exposed t o market prices, swings in load demand, and volatility of commodity pricing. Id. at 46. Mr. Rygh stated that AER is now facing shrinking margins in the face of increasing state requirements to invest in capital for pollution control equipment ; however, A ER no longer has access to capital to complete the Newton FGD project on time. Tr. at 46

- 47. Since credit rating agencies view GENCO ’s credit quality as poor, Ameren Corporation has little incentive to invest additional capital into AER. Id. at 47. If A meren Corporation were to invest in the unregulated merchant subsidiaries, Mr. Rygh stated that Ameren Corporation’s own credit and access to capital would be adversely impacted. Id.

Mr. Rygh responded to a suggestion by the Citizens Groups who cited t o an earnings call where an AER representative referenced a “Put Option Agreement” as a means to provide financing. Tr. at 47

- 48. Mr. Rygh explained, “ [t] he Put Option Agreement is essentially an agreement between two unregulated subsidiaries for the sal e of assets.” Id. at 48. Mr. Rygh stated, “ [w] hile the Put Option may temporarily stabilize the subsidiary’s liquidity profile, it does not provide capital financing for AEG or for the Newton scrubber project.” Id.

As to the statement made by the Citiz ens Groups that granting the variance would be

“ propping up a failed business model, ” Mr. Rygh disagreed, stating, “ [c] oal

- fired electricity generation remains an integral and necessary part of the nation’s energy portfolio.” Tr. at 48. Mr. Rygh believes that, o nce CSAPR or some similar federal legislation becomes law, AER’s peers in other states that are not subject to the MPS will be placed on more equal footing. Id. at 49. Mr. Rygh predicted that when that happens, market prices for electricity will likely rise and eventually AER will have access to capital to complete the Newton F G D project. Id. AER has already spent over $237 to start construction, and from an investor’s perspective, GENCO wants to complete the project. Id.

Robert Kelter, ELPC

Robert Kelter is a Senior Attorney for ELPC and was previously Director of Litigation at the Citizens Utility Board (CUB). Tr. at 67. While working at CUB, Mr. Kelter testified that he was involved in negotiating and drafting the Electric Service Custom er Choice and Rate Relief Law of 1997 (1997 law)

. Id. Mr. Kelter testified regarding the background on the 1997 law and his perspective on AER’s variance petition. Id. at 67

- 68.

### 41

Mr. Kelter explained that before the 1997 law was passed, the previous reg ulatory framework meant that utilities recovered the costs of building power plants, and investors earned a return on their investment. Tr. at 69. Customers paid for upgrades and repairs and received all of the benefits, such as the proceeds from the sal e of excess power. Id. Utility shareholders would not receive these benefits. Id. Mr. Kelter stated that the 1997 law was intended to allow utilities to earn unlimited returns in exchange for removing risks from ratepayers. Id.

Mr. Kelter continued t hat the 1997 law gave customers rate relief, and in turn, gave the utilities flexibility to sell their power plants to independent third parties or spin them off as unregulated affiliates. Tr. at 68. Mr. Kelter stated that the A ER companies transferred t he plants to their unregulated affiliates. Id. at 70. Mr. Kelter testified,

[b] y transferring those plants to unregulated affiliates, [ A ER] was able to reap benefits from the plants that it would never have earned under the traditional regulation and c ustomers were subject to market prices when the freeze ended. Tr. at 71.

Mr. Kelter stated that as the freeze came to an end in 2006, CUB performed a study showing that A ER ’s stock outperformed the S&P 500 and other utility stocks. Tr. at 71, Hearin g Exh. 2.

Mr. Kelter agrees with A ER ’s arguments that other utilities in the region are not burdened by the Illinois air pollution regulations and that ratepayers in other states do pay the costs for compliance . Tr. at 71. But , Mr. Kelter argues that these risks were foreseeable when A ER transferred the plants. Id. Mr. Kelter adds that while merchant generators are dependent on market prices as A ER states, AER ’s petition does not show its profits and losses over the last decade. Id. at 72. Mr. Kel ter concluded,

[ A ER] benefitted from the market when environmental regulation was more relaxed. It now requests relief from environmental regulations that were within the realm of reasonable expectation. Tr. at 73.

Public Comment s at Hearing

In addit ion to hearing testimony, the Board received ninety

- five oral public comments during the hearing

. Hearing Comments in Support of Granting the Variance

The Board received sixty

- three comments in support of granting the variance petiti on during the heari ng

. See Attachment A

– Hearing Commenters in Support of Ameren Energy Resources Requested Variance.

Included among these commenters were Senator Gary Forby, 59th District (Tr. at 56); Representative Brandon Phelps, 118th District ( Id. at 59); and Repre sentative David Reis, 108th District ( Id. at 63). The Board also received comments from the Mayors of Newton ( Id. at 79),

### 42

Joppa ( Id. at 102), and Metropolis ( Id. at 103). The Board received other public comments ranging from representatives of the Illino is AFL

- CIO ( Id. at 76) and the Jasper County Board ( Id. at 81) to current employees of AER ( See, e.g.

, id. at 131 ) and residents of the communities surrounding the AER plants ( See, e.g.

, id. at 226 ). The Board also received comments from educators includi ng the Jasper County School Board ( Id. at 106), Shawnee Community College ( Id. at 111) and Joppa

- Maple Grove School District Unit 38 ( Id. at 113) ; as well as comments from business groups including the Economic Development Council for central Illinois ( Id. at 189) and West Central Building Trades ( Id. at 122)

. In general, the commenters acknowledged the environmental impact currently facing the Board

. S ee, e.g. Tr. at 61, 78 , 103 . However, c ommenters also focused on the financial impact currently faced b y AER ( see, e.g. , id. at 60) , and the impact to AER’s employees and surrounding areas that would result from the shutdown of plants if the variance is not granted. See, e.g.

, id. at 58 (asking the Board to help “Joppa and the people in southern Illinois t o keep their jobs”), 62 (noting “the devastating impact economically that [denying AER’s request] would have on [Massac County]”), 64 (emphasizing “the serious economic impact of shutting down the largest private employer in Jasper County”)

. Commenters al so noted how the “AER family of companies . . . pay taxes critical supporting the schools, emergency response systems and city governments in dozens of communities across the state.” Id. at 78

, see also id. at 102

. Jasper County Board Member Bill Weber n oted that the Newton facility “represents a little over 51 percent of the total tax revenue for the county” and foresaw “bankruptcy for our county” if the Newton plant were to shut down. Id. at 82.

AER employees emphasized their concern for AER’s envir on mental impact, noting that this was a focus for them in their jobs. See, e.g. , Tr. at 136 , 165 , 175 , 198 , 257

. Employees also noted the pollution controls that AER has already installed to reach environmental compliance. Id. at 212, 233. Bill Miller, a n employee at the E.D. Edwards station, noted the “traumatic experience” of going through the closing of the Meredosia station and stated that “it’s not something that I look forward to going through again.” Id. at 142. Mike Woo, also employed at the Edw ards Station, emphasized the

progress I have seen in 40 years and the commitment of three companies to be a good steward of the environment and produce electricity needed for economic growth in Peoria County and the surrounding tri

- county area. Tr. at 1 54

- 155.

AER employee Dan Barnett also agreed with AER’s position that granting the variance “will lead to a greater overall reduction in SO 2 

### over the life of the agreement.” Tr. at 171

, see also id. at 206

- 207 . Mike Killebrew, employed at the Edwards st ation, stated that AER “is the most honest company I’ve ever worked for” and that he does not feel AER is misleading its employees regarding AER’s variance request. Id. at 174. Commenters also echoed AER’s concerns regarding the current economic state of the country and Ameren’s attempts to recover from the recession ( Id . at 178), as well as the inability to forecast the current energy market. Id. at 193. Lastly, AER employees raised concerns over losing the source of their income if any of the AER stat ions are to shut down. Id. at 202

.

### 43

Hearing Comments Opposing Granting the Variance

At hearing, t he Board received thirty

- two public comments objecting to granting the variance petition

. See Attachment B

– Hearing Commenters Opposing Ameren Energy Res ources Requested Variance.

A number of environmental groups presented comments at the hearing, including the Peoria Families Against Toxic Waste (Tr. at 126), Sierra Club ( Id. at 132), ELPC ( Id. at 115, 137, 142 , 150 ), Green Peace in Illinois ( Id. at 162 ) , Prairie Rivers Network ( Id. at 186), and the Heart of Illinois Sierra Club (253). The Board received a comment on behalf of Faith in Place, a partnership of 900 religious congregations in Illinois ( Id. at 185). The Board also heard statements from he alth professionals and representatives of health groups, including RHA ( Id . at 97), and Dr. Samuel Dorevitch of the University of Illinois in Chicago School of Public Health ( Id. at 150)

.

James Gi gnac, Illinois Attorney General’s Office

. James Gignac , a n Assistant Attorney General, appeared on behalf of the People. Tr. at 84. Mr. Gignac urged the Board to

ensure that [AER] has taken all the steps that it should to minimize the deviation from the [MPS] before [the Board] grants any sort of variance. Id. at 84

- 85.

Mr. Gignac noted the “heavy burden” on AER to demonstrate that the hardship AER would endure by complying with the MPS outweighs the harm to the environment and public health. Id. at 86. Mr. Gignac stated the People’s initial concern as “a lack of explanation or documentation . . . regarding alternative compliance options.” Id. at 87. Mr. Gignac urged the Board to require a “complete analysis from [AER] on the costs and feasibility” of compliance alternatives. Id. at 88. Mr. Gignac requ ested that the Board grant a two year variance because granting the full variance now

would lose that opportunity to see an updated justification for the variance, and we would lose the opportunity to revisit the issue and keep the MPS on track to the gr eatest extent possible. Tr. at 92.

Mr. Gignac believes that a two year variance would allow the company to change its compliance strategy and approach based on any changes in cash flow conditions. Id. at 91.

The Citizens Groups Objections. The Citize ns Groups were represented at hearing by members of ELPC (Tr. at 115, 137, 142, 1 49 ), Sierra Club ( Id. at 132, 233, 253), and RHA ( Id. at 97).

Brian Urbaszewski, the director of environmental health programs at RHA , stated his concerns regarding lung di sease such as asthma and chronic obstructive pulmonary disease, ( Id. at 98), and the effects that air pollution from coal power plants have on these and other diseases. Id. at 99. Mr. Urbaszewski acknowledges that the 2006 Illinois rule “was stricter tha n federal requirements in place,” but notes that since 2006, national air quality standards have required deeper reductions, such as in SO 2 

### , and will continue to be tightened. Id. at 100.

### 44

Faith Bugel, appearing on behalf of ELPC, emphasized that grantin g the variance does not guarantee that the Joppa and E.D. Edwards plants, “old plants that do not have modern pollution controls,” will not be shut down. Tr. at 116

- 117. Ms. Bugel notes the layoffs that have already occurred at the Joppa station as “tell ing” in this regard. Id. at 117. Ms. Bugel also believes that denial of the variance request does not guarantee that these plants would be shut down, noting AER’s compliance alternatives such as conversion to natural gas, use of ultra low

sulfur coal, op timizing capacity at certain plants, and the use of dry sorbent injection. Id. at 118

- 121. Jared Policicchio, also appearing on behalf of ELPC, emphasized statements made relating to the 2006 MPS, by then Agency Director Doug Scott testifying in front of the U.S. Congress in 2009, as well as statements made during the 2006 rulemaking before the Board by AER experts testifying on AER’s behalf. Id . at 137

- 141. Jennifer Cassel read into the record a letter signed by eighty

- five health professionals opposin g AER’s variance request. Id. at 142

- 146, see also PC#2648. Lastly, Andrew Armstrong read into the record a comment on behalf of Dr. Dorevitch, also opposing the variance request. Id. at 150

- 153, see also PC#1919

. Terry Grace, repr esenting Sierra Club , states his problem as not being the prospect of cleaner energy, but rather with “management decisions that jeopardize everyone’s health, long

term prosperity, and possibly the welfare of [A ER]’s workers.” Tr. at 133. Mr . Grace further questions AER’s l ong

- term planning responsibility and states that AER “should not be rewarded for irresponsible decisions by their management.” Id. at 133

- 134. Christine Nannicelli, also with Sierra Club, noted that AER’s “agreement to reduce air pollution is vital in pr otecting public health and the environment throughout Illinois and the Midwest.” Id. at 234.

Joyce Blumenshine, chair of the Heart of Illinois Sierra Club, stated that she is concerned about possible nonattainment in Peoria from additional pollution fro m the E.D. Edwards and Duck Creek stations. Tr. at 254. Ms. Blumenshine contends that the greater Peoria economy “would suffer incredibly due to added sulfur and pollution” if the area was forced out of attainment, and urged the Board to look at the “gre ater picture for what other communities have at risk.” Id. Ms. Blumenshine believes that AER’s economic statements to be “inadequate and self

- serving” and raised a concern over AER’s lack of attention given to the health impacts of the variance request. Id. at 254

- 255. Ms. Blumenshine concluded by noting the health concerns relating to short

- term exposure to SO 2 

### and requested that the Board carefully evaluate this position. Id. at 255.

Other Organizations and Individuals. T he Board received comments at hearing opposing granting AER’s variance request from a number of other organizations and individuals.

These comments emphasized AER’s 2006 MPS agreement and urged the Board to not allow AER to alleviate itself of these requirements. See, e.g.

, Tr. a t 156, 169, 171 , 191

. Edward Warden noted that granting the variance “is not fair to . . . other companies who also agreed to this time allotted” or “to the people who have to breathe the air that will continue to be as dirty as it has been.” Id. at 156

- 157. Many commenters were also aware of the financial and economic implications that AER, and specifically AER’s employees, were facing. Id. at 129 , 177 , 196

.

### 45

However, commenters also focused on the health effects of increased levels of SO 2 

### , contendin g that granting the variance would result in increased negative health effects throughout Illinois. See, e.g., i d. at 183 , 199, 206 . Judy Weimer, a bilateral lung transplant recipient, noted that “we need to keep the air clean, if not for my generation, for our children and grandchildren.” Id. at 93. Norman Eckstein recalled a friend who lost both parents to lung cancer, and while no specific reason was determined, Mr. Eckstein states that the belief is “that it’s mostly environmental.” Id. at 94. Bri an Sauder, appearing on behalf of Faith in Place, asked the Board to deny the variance “for the future health of our generations here in Illinois.” Id. at 186. Allison Fisher, speaking on behalf of Mary Ellen DeClue, raised a concern that AER “does
not a ccept the harm to health and to the environment” caused by coal emissions. Id. at 221.

Commenters also raised concerns about the precedent that would be set regarding other companies subject to similar standards if the Board grants AER’s variance request

. See, e.g.

, Tr. at 166. Melissa Marks noted that AER was “misleading” its employees “for an industry that’s soon to be obsolete.” Id. at 173. Marissa Lieberman

- Klein stated that it “is not the job of this Board to protect the company’s bottom line.” Id. at 196.

Tracy Cox, appearing on behalf of Peoria Families against Toxic Waste, contends

there have been enough indicators and enough time and enough money that there is no reason to grant a variance to [AER] in this matter. Tr. at 126.

Ms. Cox als o emphasizes that the environmental protections that AER is being asked to do and the disparity with other states “have been in effect for six years.” Id. at 127. Ms. Cox does not believe that there is anything new that meets the burden of a unique hards hip. Id. Ms. Cox also questioned where various sums of money that AER had saved on previously performed cost

cutting measures had gone. Id. at 128

- 129.

Edyta Sitko, appearing on behalf of Green Peace Illinois, questioned whether AER would simply retur n in five years requesting an other variance. Tr. at 162. Ms. Sitko also raised concern that, if AER is granted the variance, “what’s to stop other coal plants in Illinois from getting the same thing.” Id. at 164.

Katie Mimnaugh, appearing on behalf of Prairie Rivers Network, noted that AER has not demonstrated that installing dry scrubbers is technically infeasible or economically unreasonable. Tr. at 187. Ms. Mimnaugh also states that AER has not offered Illinois any environmental benefits, and that AER should have been able to anticipate its current position. Id. at 187

- 188. Ms. Mimnaugh echoed previous concerns regarding the precedential value of gran ting the variance, and emphasized that the Board is unable to grant a site

- specific law that is i nconsistent with federal law. Id. at 188

- 189.

### 46

FILED PUBLIC COMMENTS

Comments Filed on or before August 10, 2012

In addition to the ninety

- five oral public comments during the hearing , the Board received 2,886 written public comments prior to the deadli ne for such comments on August 10

, 2012. 10 

### These public comments have been made available on the Board’s website.

Public Comments in Support of AER’s Variance Request

The Board received 1,864 written public comments in support of granting AER’s variance request. These include comments filed by: State Representative David B. Ruis, 108th District (PC#2); State Representative Michael Unes, 91st District (PC#3); State Senator Dale A. Righter, 55th District (PC#4) ; and State Representative Brandon W. Phelps, 118th District (PC#8)

. The Board received public comments from the Mayors of Newton (PC#1 and PC#146), Peoria (PC#139 and PC#150), Metropolis (PC#147), Joppa (PC#310), Effingham (PC#318), East Peoria (PC#319), Morton (PC#326) and Palestine (PC#1137). A dditionally, the Board received public comments in support of granting AER’s variance request from a number of other public offices, e.g. , the Jasper County Board (PC#5), the Massac County Board of Commissioners (PC#313) and the Board of the Village of Pal estine (PC#1139).

The Board also received comments in support from organizations ( s ee, e.g., PC#133 from Illinois AFL

- CIO), businesses ( see, e.g. , PC#148 from the Outdoor Sportsman’s Lodge), and individuals ( see, e.g. , PC#814) , including plant employees ( see, e.g. , PC#2195)

. Commenters generally voiced concerns relating to property taxes received by the AER plants ( see, e.g. , PC#1) and the loss of jobs th at would result from closing any of the plants. See,
e.g. , PC#2. Commenters emphasized the difficult y that the current laws place on Illinois companies trying to compete with out

- of

- state energy producers, n oting that prices will increase

. PC#9. C ommenters also noted the unpredictable economic climate surrounding AER resulting from

a warmer than norma l winter, a nationwide economic down turn lasting more than four years, a large amount of natural gas availability, due to shale fracturing, driving down the price of natural gas, all of which has kept the price [AER] can sell [its] power for at an all tim e low. One or two of these factors may have been foreseeable but not all of them coming together at one time. PC#2195 at 2.

The Board also received a number of letters in support of the variance noting that AER “simply needs more time to make the costly upgrades” and urging the Board to grant AER’s

10 

### The Board notes that three public comments (PC#1232, PC#2713 and PC#2729) have been erroneously included. Addit ionally, PC#10 and PC#1920 do not support or object granting AER’s variance request.

### 47

variance request so that AER will not have “to jeopardize jobs and livelihoods of Illinois residents.” See, e.g. , PC#980.

Public Comments Opposing AER’s Variance Request

The Board received 1,017 writ ten pub lic comments opposing granting AER’s variance request. These include comments filed by the People (PC#249 and PC#2410) and the Citizens Groups (PC#6 and PC#2409). The Board also received comments from environmental groups ( see, e.g. , PC#2194 from Prairie Rivers Network, and PC#2412 from Peoria Families against Toxic Waste), medical professionals ( see, e.g. , PC#1919 and PC#2648), and other concerned individuals ( see, e.g. , PC#11).

The Board received a public comment signed by eighty

- five health profession als, expressing their support for the MPS and urging the Board “to vote against any action eroding MPS standards.” PC#2648 at 1. The health professionals noted the health impacts of SO 2 

### , but also noted that SO 2 

### and NO x 

### are “precursors to other harmful po llutants such as fine particulate matter and ground

- level ozone.” Id.

, see also PC#1919.

Commenters generally noted AER’s previous commitment “to a schedule for reducing its SO 2 

### and NO x 

### pollution in return for more time to make its mercury pollution redu ctions,” requesting that the Board hold AER “to the standard passed in 2006.” PC#11. Other commenters contend that people in Illinois

should not now have to suffer from years of extra pollution so that [AER] can continue to run old, dirty coal plants w ithout modern pollution controls. PC#151.

Commenters also emphasized that all of the market factors contributing to AER’s hardship were foreseeable, and that AER cannot contend that it faces a hardship when it expressly agreed with the MPS terms six year s ago. PC#2412 at 1.

Comments Filed After August 10, 2012

The Board received 119 public comments following the public comment filing deadline

, which have been made available on the Board’s website

. These included ninety

- six comments in support of AER’s variance request, and twenty

- three comments opposing the request . The Board recognizes that public comments 2,995 through 3,005 consist of 2,372 individual letters opposing AER’s variance request.

Included in the post

- deadline public comments was a one

- page letter in support of AER’s variance request signed by U.S. Representatives Jerry Costello, John Shimkus and Aaron Schock. PC#2643. The Representatives emphasize the “significant hardships” that the MPS regulations place on AER’s ability to operate its facilities in Illinois. Id. The Representatives urge the Board to approve the variance petition “[g]iven the potential impact to good

- paying jobs and affordable energy for our constituents.” Id. The Representatives believe that AER “is acting in go od faith to meet its environmental obligations under the economic circumstances it faces.” Id.

### 48

DISCUSSION

The Act authorizes the Board to grant variances “beyond the limitations prescribed in this Act, whenever it is found, upon presentation of adequate proof, that compliance with any rule or regulation . . . would impose an arbitrary or unreasonable hardship.” 415 ILCS 5/35(a). AER seeks relief from the requirements in Sections 225.233(e)(3)(C)(iii) and (iv) to comply with an overall SO 2 

### annual emissi on rate limit of 0.25 lb/mmBtu in 2015 and 2016 and 0.23 lb/mmBtu in 2017 and thereafter. Pet. at 1. AER requests a variance for five years beginning January 1, 2015 and ending December 31, 2019 from Section 225.233(e)(3)(C)(iii) for the overall SO 2 

### annu al emission rate limit of 0.25 lb/mmBtu and a variance for three years and fifteen days beginning January 1, 2017 and ending January 15, 2020 from Section 233.255(e)(3)(C)(iv) for the overall SO 2 

### annual emission rate limit of 0.23 lb/mmBtu. Pet. at 1; AER First Response at 1.

To obtain a variance, AER must establish that the hardship from denying the variance from Sections 225.233(e)(3)(C)(iii) and (iv) “outweighs any injury to the public or the environment” from granting the variance. Marathon Oil Co. v . EPA , 242 Ill. App. 3d 200, 206, 610 N.E.2d 789, 793 (5th Dist. 1993). If AER only shows that compliance will be difficult, “that proof alone is an insufficient basis” for granting the variance. Id. Thus, “only if the hardship outweighs the injury does the evidence rise to the level of an arbitrary or unreasonable hardship.” Id.

The Board has received a number of public comments raising concern over AER ’s perceived contract to enter into the MPS. See e.g. , PC#2409 at 23

- 24 ( The Citizens Group’s
sta te that “AER’s agreement with the State and other parties to enter into and abide by the MPS is the functional equivalent of a contract.”). T his Board has long held that it does not have the authority to enforce contractual agreements, and such disputes a re more appropriately brought in a court of law. See, e.g., Schilling, et al. v. Hill, et al. , PCB 10

- 100 slip op. at 8

- 9 (Aug. 4, 2011). However, Section 104.200(a)(1) of the Board’s regulations defines a variance, in part, as “a temporary exemption fr om any specified rule, regulation, requirement or order of the Board, which may be granted by the Board with or without conditions for a period of time not to exceed five years. . . .” 35 Ill. Adm. Code 104.200(a)(1) ; see also 415 ILCS 5/35 (2010)

. The M PS is a Board rule. 35 Ill. Adm. Code 225.233. Therefore , the Board must look at the specific portions of the MPS from which AER seeks relief and determine whether AER has met its burden so that the request may be granted.

Accordingly, the Board will an alyze the injury to the public and the environment from granting the requested variance, the hardship to AER from compliance with the rule, and weigh the hardship against the injury to determine whether AER has demonstrated that it would suffer

an arbitrar y or unreasonable hardship if the variance is not granted

.
As discussed below, the Board finds that AER has adequately addressed its alternatives for complying with the current MPS requirements; that AER has demonstrated that the requested variance will result in a net benefit to the environment ; that AER would suffer an arbitrary or unreasonable hardship if forced to comply with the deadlines in Sections 225.233(e)(3)(C)(iii) and (iv); that granting AER’s petition for variance with conditions in the

### 49

orde r below would be within the State’s current obligation under the Illinois SIP to attain and maintain compliance with the National Ambient Air Quality Standards ( NAAQS ) ; and that granting AER a variance from the rule is consistent with federal law.

Complia nce Alternatives

The Citizens Groups and the People state that AER only suggested two compliance alternatives, the variance or the shuttering of multiple generating stations. In so doing, the Citizens Groups and the People argue that AER failed to addre ss other strategies or a combination of strategies for complying with the MPS. PC#2409 at 9

- 11, PC#2410 at 2. The Citizens Groups and the People suggest AER more thoroughly analyze a combination of strategies to bring AER closer to compliance with the MP S during the term of the variance, including: (1) curtailing power production or derating, (2) using dry sorbent injection, (3) using ultra low

- sulfur coal, (4) maximizing/optimizing existing scrubbers, and (5) maximizing operations and capacity at units w ith scrubbers. PC#249 at 7, PC#2409 at 11, PC#2410 at 2, 5. Additionally, the People also suggest use of dry scrubbers. PC#2410 at 3

- 5. The Citizens Groups also suggest AER more fully address natural gas conversions and seeking financing from its paren t company to complete the Newton FGD project. PC# 6 at 4, PC#2409 at 11.

The Board does not agree with the conclusions of the Citizens Groups and the People. The Board finds that AER adequately detail ed the range of compliance alternatives that AER

ex amined in support of its petition. Nothing in this record contradicts AER’s assessment of the compliance alternatives set forth below. The Board notes that the Agency respo n se has not argued for availability of other compliance technologies, but rather h as supported a 0.35 lb/mmBtu emission rate for AER’s compliance plan. Agency Resp. at 11.

As to the first suggestion to curtail generation, AER acknowledged that this would reduce emissions, however, the fixed operating costs would remain essentially the same while less revenue would be generated to pay those costs. AER concluded that curtailing generation would put jobs at risk, result in a negative cash flow, and not allow AER to recover financially in order to fund the Newton FGD project. AER First R esp. at 2; AER Second Resp. at 2

- 3; Tr. at 22

- 23.

Regarding the second alternative of using dry sorbent injection, AER identified two main drawbacks: wide

- ranging removal efficiencies from 10% to 90% and increased mass loading to the ESPs. AER Second Resp. at 2. AER explains that the variability in removal efficiencies reduces the effectiveness of dry sorbent injection as a compliance alternative. AER also explained that the increased mass loading from the dry sorbent injection to the ESPs would pote ntially trigger the need for bigger ESPs or additional controls, such as baghouses, to control particulate matter. AER projected that use of dry sorbent injection to comply with the MPS would require installation of dry sorbent injection equipment plus ba ghouses at virtually all of AER’s uncontrolled units across its system. AER Second Resp. at 2, Tr. at 20

- 24, Hearing Exh. 1 . AER estimated the cost of installing dry sorbent injection plus fabric filters at Joppa and Edwards at $433 million and $280 mill ion, respectively, and noted that this would exceed the cost to complete the Newton FGD project. AER Post Br. at 15

, 23.

### 50

As to the third alternative of using ultra low

- sulfur coal, AER explains that the Coffeen and Duck Creek stations already have wet FGD systems which allow them to burn higher

- sulfur Illinois Basin coal, while the Newton, Joppa, and Edwards stations use lower

- sulfur coal as a compliance mechanism. In support of its variance request , AER commits to limit use of the higher SO 2 

### content I llinois Basin and Power River Basin coal to just the Duck Creek and Coffeen stations, and use ultra low

- sulfur coal at the Edwards, Newton, and Joppa stations in order to comply with a SO 2 

### emission rate of 0.35 lb/mmBtu. AER First Resp. at fn. 2, AER Post Br. at 25.

As to the fourth and fifth alternatives of maximizing and optimizing existing scrubbers and operations, AER commits in its filings to support the variance to fully maximize operation of the existing FGD systems at the Duck Creek and Coffeen sta tions at a 98

- 99% SO 2 

### removal rate rather than 95%. AER Second Resp. at 2. AER notes that the scrubbers are not normally operated at such high efficiency removal levels because it degrades the plant and pollution control systems over time. Tr. at 25

- 26. AER’s estimates its commitment will require $5 million in capital costs and $173,337 in annual operation and management costs. AER First Resp. at 8.

As to the People’s suggestion to use dry scrubbers, AER explained that a dry scrubber would require c onstruction of a multi

- storied building and spray tower. With removal efficiencies in the low 90% range, AER estimated six dry scrubbers would be needed at Joppa to achieve the reductions approaching those projected for the wet FGD project at Newton. AER estimated costs for the dry scrubbers at $460 million, nearly twice the cost of completing the FGD project at Newton. AER Post Br. at 18. Further, AER notes that installation of dry scrubbers “may be ineffective in addressing hazardous gas emissions and , without additional add

- on controls, could adversely affect impact particulate emissions.” Id.

Regarding the alternative of natural gas conversions, AER considered the feasibility of conversions at the Edwards and Joppa stations. AER found that under the current market conditions, a natural gas conversion at Joppa would reduce operations to a seasonal basis only and lead to reduced revenue and a loss of jobs. AER Post. Br. at 23

- 24.

Concerning the issue of seeking financing from the parent company, AER explain ed that as a merchant business, AER must be self

- funding and support its expenses through its own operating revenues, however, AER’s earnings and cash flows “are insufficient to fund large

- scale capital projects such as the installation of the scrubbers [at Newton].” Pet. at 22, Pet. Ex h . 5 at 3. Since AER is not a publicly

- registered company, it has no direct access to public financial markets. AER First Resp. at 4.

Additionally, without a secure revenue stream, AER states that its parent company, Ameren Corporation, cannot assume unsecured debt on AER’s behalf. Pet. at 22. According to AER, the

credit rating agencies . . . have . . . made it abundantly clear that further support from the parent [Ameren Corporation] will have negative consequences on the

### 51

credit quality of [Ameren Corporation] and its other subsidiaries. Pet. Ex h . 5 at 10.

Instead, AER has committed $16 million per year from 2013 to 2016 with greatly increased capital expenditures in 2018 and 2019 to complete the New ton FGD project, funds which AER states are within its budget. AER will also spend $5 million in capital and $173,337 in annual
expenses t o fully maximize the existing FGD systems at Duck Creek and Coffeen . Pet. at 19; AER First Resp. at 6

- 8, Tr. at 32, AER Post Br. at 38, 40.

AER explains that AER has considered all viable alternatives and determined that the installation of two scrubbers at Newton “would reduce emissions by approximately 17,500 tons of SO 2 

### ,” which would result in lower emissions than t he 16,000 tons SO 2 

### AER would need to reduce to comply with the 2017 MPS emission rate. AER Post Br. at 15

- 16. Until the Newton FGD project is complete, AER will meet the interim compliance emission rates by not operating the Hutsonville and Meredosia sta tions preceding and during the variance term. AER will also maximize efficiency of the FGD systems at the Duck Creek and Coffeen stations. AER First Resp. at 1

- 2. AER has also committed to purchasing low

- sulfur coal for use at Edwards, Newton, and Joppa

.
The Board observes that, i n addition to the compliance alternatives AER suggested in its petition, AER also examined each of the options suggested by the Citizens Groups and the People. AER Post Br. at 15

- 25. AER found the other options suggested n ot viable either because they would not achieve compliance with the MPS, they would create co

- pollutant emissions requiring costly additional controls, or they would worsen AER’s financial situation. The Board observes that AER’s proposal to complete the Newton FGD project would realize emission reduction s greater than those required by the 2017 MPS requirements.

The Board finds that AER has adequately addressed its alternative s for complying with the current MPS requirements. Based on the analyses of compliance alternatives by AER, the Citizens Groups, and the People, the Board agrees that AER’s chosen alternative to proceed with completion of the Newton FGD project, as well as maintain closures of the Hutsonville and Meredosia stations and comply w ith the proposed interim compliance emission rates during the variance period is appropriate.

Environmental Impact of Requested Variance

Environmental Net Benefit

A ER states that it

has voluntarily offered to meet an earlier more stringent SO 2 

### emissi ons rate in mitigation resulting in total SO 2 

### mass emission s lower than the projected emissions under the current MPS [overall] SO 2 

### annual emission rates, and providing a net environmental benefit to the State. Pet. at 26.

### 52

The Citizens Groups argue tha t A ER ’s proposed variance will worsen air quality and not create any net air quality benefit . PC#6 at 9, PC#2409 at 36. The Citizens Groups present what they call a “corrected” version of AER’s Table 1, eliminating the emissions reductions AER credited f or the shutdowns of Meredosia and Hutsonville and the actual emissions during 2010 and 2011 as well as the heat input associated with the two shutdown plants. PC#2409 at 38

- 40. The Citizens Groups claim their revised calculations suggest the variance wou ld allow AER to emit 32,760 more tons of SO 2 

### during the period of 2012 to 2020, and not result in a net reduction as AER claims. Id. at 38

- 41.

In response to the Citizens Groups’ concerns and Board questions regarding calculations in AER’s tables, AER re sponded by providing a new table (Exhibit 4) comparing reductions in SO 2 

### emissions under the MPS and the requested variance. To aid in a better review and understanding of the information, AER included two columns of additional data and explanatory
notes. AER Post Br. at 38

- 39, Exh. 4. Unlike the Citizens Groups ’ version of the data, AER includes the heat input associated with Meredosia and Hutsonville as well as “SO 2 

### Reduced Tons” for not operating these facilities. AER also recognizes the possible inc rease in emissions from the proposed FutureGen Project by conservatively factoring in two times the projected SO 2 

### emissions. This results in “SO 2 

### reduced tons” of 7,699 for years 2012 through 2020. Comparing years 2010 through 2020, AER calculated the “C umulative Reductions in SO 2 

### Variance Tons” would reflect a net benefit of 60,669 tons. AER Post Br. 38

- 40, AER Post Br. Ex h . 4.

The Agency has “investigated the facts alleged in Petitioner’s Petition for Variance” as required by 35 Ill. Adm. Code 104.216 (a). Agency Resp. at 9. The Agency does not disagree with AER’s emission calculations, either in the Agency’s response to the initial petition or in any response to AER’s later filed Tables 2, 3, 4, or Exhibit 4. The Agency agrees with AER’s approach wh ich includes the heat input and reductions associated with Meredosia and Hutsonville, explaining, “providing credit for actions ( e.g. , unit shutdowns) that result in emission reductions is an acceptable part of the established regulatory process.” Agency Resp. at 11, 21. The Agency goes on to explain,

the Illinois EPA is accustomed to recognizing and allowing such reductions to offset potential emission increases under the New Source Review and Prevention of Significant Deterioration permitting regulati ons. Agency Resp. at 21.

The Agency agrees that AER’s compliance with an emission rate of 0.35 lb/mmBtu from January 1, 2013 through December 31, 2019

, in conjunction with not operating the Meredosia and Hutsonville stations

, “would result in a net env ironmental benefit.” Id. at 21, 22. Further, the Agency “does not believe that any environmental harm would result therefrom.” Id. at 22.

The Agency also discusses the variance request within the context of the State’s obligations under the Illinois SIP. As discussed above, on July 6, 2012, USEPA approved the revisions to the Illinois SIP addressing regional haze . 77 Fed. Reg. 39943 (July 6, 2012). I f the Board grants the instant variance, the Agency states that it will submit the variance order as a SIP revision. Agency Resp. at 19

. The Agency state s ,

### 53

[t he Agency ] ’s analysis of the Petition indicates that if such relief is granted under the terms and conditions contained herein, there will be no detrimental impact in the ability to rely on the new variance

- adjusted MPS emission reductions in the Illinois SIPs, as needed. Agency Resp. at 22.

Regarding a future SIP revision that would account for the instant variance, the Agency
state s , “ [t] he Illinois EPA has had preliminary discussions with U SEPA Region 5 regarding an SIP revision for pending variance requests and no adverse issues were identified.” Ag ency Post Br. at 2.

USEPA explained the nature of the regional haze problem and its relationship with SO 2 

### in USEPA’s proposed approval of Illi nois’ Regional Haze SIP:

Regional haze is visibility impairment that is produced by a multitude of sources and activities located across a broad geographic area that emit fine particles (PM 2.5 

### ) (e.g., sulfates, nitrates, organic carbon, elemental carbo n, and soil dust) and its precursors

— [SO 2 

### ], [NO x 

### ], and in some cases ammonia (NH 3 

### ) and volatile organic compound (VOCs). Fine particle precursors react in the atmosphere to form fine particulate matter. Aerosol PM 2.5 

### impairs visibility by scattering and absorbing light. Visibility impairment reduces the clarity and distance one can see. PM 2.5 

### can also cause serious health effects and mortality in humans and contributes to detrimental environmental effects such as acid deposition and eutrophication. 77 Fed. Reg. 3967 (Jan. 2, 2012).

In response to questions regarding the heat input values which would be most appropriate for calculations to support a SIP revision, the Agency responded that the original 2002 baseline year heat input is likely the value to be used in accordance with an USEPA memorandum on SIP Planning. Agency Post Br. at 2. In the notice of proposed approval of the Illinois SIP addressing regional haze, USEPA stated,

[t] he MPS and CPS provide emission reduction well in excess of simply implementing BART on subject units

. . . Illinois estimated that its plan will require 96,927 [ tons per year ( TPY ) ] lower SO 2 

### emissions than simply requiring BART. [US]EPA believes that Illinois has thereby demonstrated that the emission limits on the sub ject BART units covered by MPS and CPS satisfy the BART requirements. 77 Fed. Reg. 3973 (January 26, 2012).

AER states that the proposed interim SO 2 

### emission rates under the variance would result in mass emissions of SO 2 

### even lower than Illinois’ state wide estimates under the current MPS requirements by the 2017 BART compliance deadline. AER also points out that the net reduction in SO 2 

### emissions continues to 2020 and beyond. AER Second Resp. at 7. AER states,

“ [a] ccordingly, an amendment to the SIP incorporating this variance request would only serve to enhance Illinois’ ability to comply with the Clean Air Act and Regional Haze Rule.” AER Second Resp. at 8.

### 54

As discussed below and considering all of the above points , the Board finds that A ER has demonstrated that the requested variance will reduce SO 2 

### emissions during the term of the variance and result in a net benefit to the environment.

The Board finds that AER has demonstrated that by complying with an overall SO 2 

### annual emission rate of 0. 38 lb/mmBtu in 2012, 0.35 lb/mmBtu in 2013 through 2 019, and 0.23 lb/mmBtu thereafter , together with not operating the Meredosia and Hutsonville stations through 2020, AER will reduce SO 2 

### emissions as compared to projected emissions under the MPS for the

s ame time period . Specifically, AER estimates that it will emit 60,669 tons less SO 2 

### under the variance than under the MPS from 2010 through 2020 based on AER’s latest table in Exhibit 4

. T he Board finds that the relevant period for analyzing the environm ental impact of the variance is 2012 through 2020

. T he Board finds that subtracting the “SO 2 

### reduced tons” for years 2010 and 2011 would still result in a net environmental benefit of 33,544 tons 11



### . The Board recognizes that AER ’s emission estimates s how that it will emit more SO 2 

### under the variance than under the MPS in years 2015 through 2019. Specifically, from 2015 through 2019, the values presented in AER ’s Exhibit 4 show that AER will emit 259,395 tons of SO 2 

### under the variance compared to 202,5 65 tons of SO 2 

### under the MPS Baseline. In effect, AER will emit 56,830 more tons of SO 2 

### during these years 12 

### . However, the Board finds that the higher SO 2 

### emissions during the variance period are offset by the reduced SO 2 

### emissions during the calendar yea rs of 2012, 2013, 2014 and 2020. Specifically, in 2012, 2013, 2014 and 2020, AER ’s Exhibit 4 shows that it will emit 192,196 tons of SO 2 

### under the variance compared to 282,571 tons of SO 2 

### under the MPS

, i.e. AER will emit 90,375 fewer tons of SO 2 

### during t hese
years 13



### . As noted above, t his results in a net benefit to air quality of reducing SO 2 

### emissions by 33,545 tons from 2012 through 2020 14



### .

Health Effects

A number of commenters raised concerns regarding the health impact of granting AER’s variance peti tion, with many public comments citing specifically to personal health issues where they or a close friend or family member has suffered from asthma or lung cancer. See e.g. , Tr. at 93, 94, 146

- 147, 183, 185, 206. The Citizens Groups also raised concerns regarding the health impacts of “thousands of tons of additional emissions of SO 2 

### annually between 2015 and 2019 . . . .” PC#2409 at 47

- 48. The Citizens Groups presented letters signed by health professionals in Illinois who cite to the harmful effects o f SO 2 

### emissions and voice concern at efforts to weaken the MPS. The health professionals explain, “[h]igh levels of SO 2 

### and NO x 

### can exacerbate respiratory symptoms in at

- risk individuals (including children and the elderly), including asthma and [Chronic Obstructive Pulmonary Disease (COPD)] attacks.” PC#2409 Exh. 5 at 1.

11 

### 60,669

– 14,522 (for 2010) and 12,573 (for 2011) = 33,544 tons
12 

### (Net Variance SO 2 

### Tons 51,879 x 5 years )

– (MPS Baseline SO 2 

### Tons (42,556 x 2) + (39,151 x 3)) = 56,83 0
13 

### (MPS Baseline SO 2 

### Tons (85,112 x 2) + 73,196 + 39,151)

– (Net Variance SO 2 

### Tons 56,986 + (51,879 x 2) +34,452 = 90,375
14 

### 90,375

– 56,830 = 33,545 or 60,669

– 14,522 (for 2010) and 12,573 (for 2011) = 33,544 tons

### 55

Explaining that SO 2 

### is a precursor to PM 2.5 

### , the health professionals refer to studies linking exposure to PM 2.5 

### and premature mortality and cardiovascular effects. Id

.

Dr. Samuel D orevitch, a medical doctor and associate professor at the University of Illinois at Chicago School of Public Health, stated, “[i]n light of the health impacts of even moderate levels of SO 2 

### pollution, and the long term health risks of PM 2.5 

### pollution, fail ure to lower them on the agreed upon schedule would be expected to keep rates of asthma attacks and other health problems higher than they would be at the agreed upon, lower levels.” PC#1919 at 1.

The People argue that averaging AER’s projected emissio ns over twelve years does not meet the intention of the MPS. The People assert a long

- term averaging does not recognize health impacts that occur relatively quickly after SO 2 

### is emitted. PC#249 at 5. Therefore, the People argue that early reductions in SO 2 

### emissions are of little value because “a ton of SO 2 

### avoided in 2010 does not help an asthmatic . . . exposed to emissions in 2018 . . . .” Id.

In order to respond to questions raised about health effects, AER commissioned a review of AER’s variance request and the potential health effects related to SO 2 

### emissions . AER Post Br. at 26; AER Post Br. Ex h . 3. AER’s report, citing a USEPA report 15 

### , found no causal relationship between long

- term exposure to SO 2 

### and respiratory symptoms. AER Post Br. at 44

. AER ’s report further contends that, while there was a causal relationship found between short

term SO 2 

### exposure and respiratory symptoms, these findings were small and raised questions whether exposure and effect were causally associated. Id. AER ’s re port further refutes the relationship between respiratory symptoms and SO 2 

### exposure by noting that none of these studies isolated the effects from SO 2 

### alone nor did they properly account for external factors such as smoking or allergens. Id. at 43, 44

- 45. AER contends that the People, in determining excess emissions, have ignored emission reductions that will commence immediately. Id. at 28. AER’s report concludes that granting the variance “would result in an overall net benefit in terms of health effe cts.” Id. at 43. The B oard finds nothing in the record to undercut this assessment.

As explained above, AER’s emission calculations show a net reduction in SO 2 

### emissions under the requested variance resulting in a net benefit to the environment whi ch co rrelates to a net benefit to public health. Emission standards are risk

- based standards which consider impacts to public health

. 

### The Agency agrees with AER’s demonstration of a net environmental benefit, and notes that offsetting potential delays in emis sion decreases through unit shutdowns is an acceptable part of the regulatory process. Agency Resp. at 21. The Agency stated, “the emission reduction offsets that [AER] is seeking to rely on are creditable and allowable.” Agency Resp. at 21. The Agency plans to submit the variance order if granted for approval as a SIP revision, noting that the interim SO 2 

### emission standards will not result in a detrimental impact in the emission reductions in the Illinois SIP. Agency Resp. at 11, 19, 22. After prelim inary discussions with USEPA Region 5 regarding pending variance requests, the Agency stated that no adverse issues were identified. Agency Post Br. at 2.

15 

### Integrated Science Assessment for Sulf ur Oxides

- Health Criteria, EPA

- 600/R

- 08/047F (Sept. 2008).

### 56

Further , the Agency noted, “[t]he MPS was not designed to address the new 2010 1

- hour SO 2 

### [NAAQS]

, which was not proposed at the time the MPS was being negotiated.” Agency Resp. at 22. The Board notes that the new 1

- hour SO 2 

### NAAQS addresses short term exposure and sets into motion a requirement for the states to assess attainment. 77 Fed. Reg. 46295 (Aug. 3, 2012). Based on the record at this time, the Board does not have enough information to determine if AER’s variance will interfere with the State’s ability to attain or maintain the new 1

- hour SO 2 

### NAAQ S or the proposed PM NAAQS because the MPS an d current Illinois SIP do not yet address these standards. However, the Board finds that granting AER’s petition for variance with the conditions in the order below would be within the State’s current obligation under the Illinois SIP to attain and mainta in compliance with the NAAQS.

Meredosia and Hutsonville Closures

The Board notes that the above emission projections of 33,545 fewer tons of SO 2 

### under the variance than under the MPS use an annual heat input of 340,446,252 mmBtu

, which is the heat input AER used in 2009 during the R09

- 10 rulemaking proceeding and includes heat inputs for the Meredosia and Hutsonville stations. AER also projected SO 2 

### emissions resulting from the variance using an annual heat input of 312,003,694 mmBtu

, which does not incl ude heat inputs for the now closed Meredosia and Hutsonville stations , of 7,700 fewer tons SO 2 

### under the variance than under the MPS

. The Board accept s the validity of us ing these respective heat inputs

. T he Board finds that the requested variance result s in a net benefit to air quality, and in so doing, has accounted for the SO 2 

### emission reductions resulting from not operating the Meredosia and Hutsonville stations from 2012 through 2020.

The Board is not persuaded by the Citizens Groups ’ object ion to using emission reductions from closing the Meredosia and Hutsonville stations to mitigate emission increases under the variance on the grounds that these closures would occur regardless of whether the variance is granted. PC#6 at 9 ; PC#2409 at 41

- 46 . Ho wever, the Board agrees with the Agency that “providing credit for actions (e.g., unit shutdowns) that result in emission reductions is an acceptable part of the regulatory process” and “emission reduction offsets that Petitioner is seeking to rely on are creditable and allowable.” Agency Resp. at 21. The Board f urther echoes the Agency expla nation that the Board and Agency are “accustomed to recognizing and allowing such reductions to offset potential emission increases under the New Source Review and Pr evention of Significant Deterioration permitting regulations.” Id. The Board reminds that it has recently considered SO 2 

### emission reductions due to unit shutdowns in analyzing the environmental impact of a requested variance. See Midwest Generation, LLC

– Waukegan Generating Station v. IEPA , PCB 12

- 121, slip op. at 16 (Aug. 23, 2012)

. The Board finds it appropriate to account for emission reductions achieved through not operating the Meredosia and Hutsonville stations in determining the effect of the va riance on SO 2 

### emissions. The AER MPS Group includes seven facilities, including Meredosia and Hutsonville, and the overall SO 2 

### annual emission rates in the MPS apply to all the facilities in the AER MPS Group. It is significant to note the MPS does not r estrict the AER MPS Group from employing any specific methods to reach the required emission rates. Furthermore, there is no current regulatory requirement that these facilities must remain closed so granting this variance

### 57

with such a condition would ensu re that these two stations remain closed during the term of the variance.

Length of Dual Variance Period s

The Board finds initially that

, although the total length of the requested combined dual variance period s is five years and 15 days , th e variance pe riod s do not run afoul of the Act’s requirement that the Board may issue a variance for a period not to exceed five years. See 415 ILCS 5/36( b ). AER seeks relief from 35 Ill. Adm. Code 225.233(e)(3)(C)(iii) for five years beginning January 1, 2015 and en ding December 31, 2019, and relief from 35 Ill. Adm. Code 225.233(e)(3)(C)(iv) for three years and fifteen days , beginning January 1, 2017 and ending January 15, 2020. Pet. at 1; AER First Resp. at 1.

The Board believes AER accurately points out that

the structure of AER’s requested relief is such that compliance with both the 0.25 and 0.23 lb/ mm Btu SO2 emission standards is separated by two only [sic] weeks (December 31, 2019 and January 15, 2020, respectively). That is because the control technology needed to achieve both of these rates, is the same

– the completion of the Newton scrubber. In reality, achievement of one is the achievement of the other.” AER Post Br. at 47 (emphasis in original).

Accordingly, the Board believes that the total len gth of the combined dual variance periods can be kept to 5 years. T he Board will grant a variance from two separate regulatory requirements, each of which does not exceed five years, and cumulatively cover s precisely five years from January 1, 201 5 throug h December 31

, 20 19 . As discussed below, the Board has considered various issues raised by the petition, AER ’s calculations, the Agency’s response, and public comments with respect to this period of time.

The Board finds that the relevant period for anal yzing the environmental impact of the variance is 2012 through 2020. The Board did not include emission estimates from 2010 and 2011 in finding that the variance will result in an overall reduction of SO 2 

### emissions. AER includes emission calculations for 2010 and 2011 in its petition, as well as in Tables 1, 2, and 3, and explains that it did so “to show the total tons of SO 2 

### reduced during the MPS period by the end of the requested variance term

. ” AER Second Resp. at 5. AER also states that it included 2010 and 2011 “to illustrate that AER would be in the same position or better by the end of the variance term than as was projected under the MPS (that is, to make a true comparison, the entire period needs to be considered).” AER First Resp. at 10.

H owever, the Board finds that 2012 is the appropriate start point because the variance will be granted in 2012 and commits AER to complying with a more stringent overall SO 2 

### annual emission rate starting in 2012 of 0.38 lb/mmBtu , decreasing to 0.35 lb/mmBtu in 2013 as a prerequisite to the dual variance periods themselves . In addition, AER’s demonstration and the variance conditions rel y on the shutdown of the Meredosia and Hutsonville stations and these facilities ceased operations in December 2011 (Pet. E x h . 6 at 4 ; AER Post Br. Ex h . 4 ).

### 58

The Board has included emission estimates for the full calendar year of 2020 in its analysis here of the environmental impact of the variance

, because the variance requires that AER return to compliance with the 0.23 lb/m mBtu overall SO 2 

### annual emission rate in 2020. In addition, AER relies on the closure of the Meredosia and Hutsonville stations through 2020 to demonstrate that the variance will result in net benefit to the environment. Consequently, the Board includes the continued closure of Meredosia and Hutsonville through the end of 2020 as one of the conditions of the variance in the order below.

The People criticize AER ’s variance request stating that

the problem with this framework [framing its compliance plan in terms of cumulative net emissions from 2010

- 2021] is that the MPS was not intended to be a 12

- year averaging period of pollution reduction. PC#249 at 4.

However, the Agency response explains that the timing of the emission reductions in the MPS con sidered many variables, including AER ’s “ability to install pollution control equipment in a timely manner and a desire to achieve the greatest amount of reductions within a reasonable amount of time.” Agency Resp. at 21

- 22. For its part, AER disagrees w ith the Peoples ’ characterization stating that its petition seeks “to delay the 2015 and 2017 rates such that it can complete installation of the pollution control equipment necessary to meet those rates.” AER Second Resp. at 8. The Board notes that Sect ion 104.204(g) of its rules requires AER to provide “[t]he nature and amount of emissions . . . of the constituent in question if the requested variance is granted, compared to that which would result if immediate compliance is required.” AER ’s Tables 1, 2, 3, and 4 and Exhibit 4 provide this required information in various formats for the requested variance term.

T he People argue that it is not appropriate to use a “long

- term averaging analysis” because public health impacts from SO 2 

### occur quickly after being released. PC#249 at 5. In other words, the People object to offsetting emission increases in 2015 through 2019 with emission decreases in 2010 through 2014. Id. However, the Agency notes that the MPS “was not designed to address the new 2010 1

- ho ur SO 2 

### National Ambient Air Quality Standard, which was not proposed at the time the MPS was being negotiated.” Agency Resp. at 22.

As set forth above, the Board finds that it is appropriate to compare estimated SO 2 

### emissions under the MPS to estimated SO 2 

### emissions under the variance for 2012 through 2020 to determine the environmental impact of granting the variance. See supra at p. 49. Section 225.233(e)(3)(C) of the MPS, the subject of this variance petition, expressly provides for declining overa ll SO 2 

### annual emission rates over time in four increments from 2010 through 2017. The variance as granted adjusts the overall SO 2 

### annual emission rate during 2012 through 2019 and returns the company to compliance with the 2015 and 2017 standard s in 2020. Although the numerical limits in the variance differ from Section 225.233(e)(3)(C), the Board finds that the intent to reduce SO 2 

### emissions by lowering the overall SO 2 

### annual emission rate over time is consistent between the variance and the MPS.

The Bo ard rejects t he suggestion of the Citizens Groups and the People that the variance be limited to two years. PC#2409, PC#2410 at 8. T he variance provisions of Section

### 59

104

. Subpart B require the petitioner’s compliance plan to address achieving full complia nce. See 35 Ill. Adm. Code 104.204(f)(1). AER’s demonstration shows that full compliance cannot be achieved in two years by December 31, 2017. 415 ILCS 5/5(d). While the provisions of Section 233.225(e)(3)(C)(iii) cover only the years 2015 and 2016, a variance that only covers these two years would not recognize AER’s compliance plan addressing achieving full compliance by December 31, 2019. Consequently, the Board finds that the record contains no adequate support for shortening the variance period to two years.

In summary, t he Board finds that AER has demonstrated that the requested dual variance
terms to 2020 are reasonable to allow AER to budget money and resources toward completion of the Newton FGD project and the costs of additional mitigation m easures, including maximizing operation of the existing FGDs and purchasing low

- sulfur coal during the interim

. Further, the Board finds that the requested variance is consistent with the Act, which provides that the Board may grant a variance from a regu lation for a period not to exceed five years. Here, the dual variance periods overlap, each one running five years or less, such that the total length of the dual variance terms spans precisely five years , commencing January 1, 2015 and ending December 31 , 2019

. Mercury Emissions

T he Board notes that the Illinois Mercury Rule promulgated in R06

- 25, specifically Section 225.230, provides numerical emission limits for existing EGUs and generally requires such units to meet a mercury emission limit of 0.0 080 lb/GWh gross electrical output or a minimum 90 percent reduction of input mercury by July 1, 2009. 35 Ill. Adm. Code 225.230(a). For companies opting in to the MPS, the requirement to meet this same numerical limit is extended to January 1, 2015. 35 Ill. Adm. Code 225.233(d)(1). However, during this interim period, facilities covered by the MPS are required to operate mercury emission control devices, generally either halogenated activated carbon injection systems or selective catalytic reduction
sy stems and SO 2 

### scrubbers. 35 Ill. Adm. Code 225.233(c).

The Board finds that there is no impact on mercury emissions attributable to the variance request, based on the information discussed below. AER seeks a variance from the overall SO 2 

### annual emission rate in Sections 225.233(e)(3)(c)(iii) and (iv). Granting a variance from Sections 225.233(e)(3)(c)(iii) and (iv) has no effect on mercury emissions. AER will continue to be subject to mercury control requirements in Section 225.233(c) and will be subje ct to the 0.0080 lb/GWh in January 2015 under Section 225.233(d)(1).

Many commenters argue that AER’s variance petition should be denied because AER negotiated and opted in to the MPS in order to be subject to less stringent mercury standards in exchange for reducing SO 2 

### and NO x 

### emissions. See, e.g. , PC#11. By opting in to the MPS, commenters allege AER benefitted from delaying compliance with mercury standards until 2015.

In response, AER states,

[t]he benefit to the company was that the compliance d ate for one aspect of the regulation (compliance with the removal efficiency) was deferred from July 2009

### 60

to January 2015. Notably, the obligation to install control technology and to inject activated carbon was not deferred. AER Post Br. at 49

- 50.

Th e record demonstrates that AER has installed such mercury control equipment. Specifically, AER installed activated carbon injection systems on twelve units at four stations to control mercury emissions at a capital cost in excess of $20 million. Pet. at 28. AER spends $17 million in annual operating costs for these systems. Id. AER installed four SCRs and three FGD systems to control mercury as well as NO x 

### and SO 2


### . Id. AER spent $177 million to install the SCRs and spends approximately $3.9 million i n annual operating and maintenance costs. Pet. at 28. AER spent $813 million to install the FGD systems and spends approximately $3.5 million annually in operating and maintenance costs. Id. AER is continuing to test the equipment to achieve more effec tive control. Pet. at 28, AER Post Br. at 50. At five units, AER has already recorded mercury emissions below the 2015 standard, and AER continues to test various control methodologies and reagents at nine other units. AER asserts, “[t]he mercury reduc tions from AER’s fleet are being achieved three years ahead of the compliance deadline set forth in the MPS. There is no question that the environment in Illinois is benefitting from these early reductions.” AER Post Br. at 50.

AER expressly states that it does not seek a change to applicable mercury requirements and will comply with the 0.0080 lb/GWh limit by January 1, 2015. Pet. at 28, Pet. Ex h . 7 at 2. The federal standard under the new MATS program limits mercury emissions to 0.013 lb/GWh by 2015 which may be extended under certain circumstances. 77 Fed. Reg. 9304 (Feb. 16, 2012). AER further points out that the Illinois requirement is stricter than the federal requirement. Pet. at 28.

Based on the above, the Board finds grant of the variance h as no impact on mercury emissions.

Alleged Hardship to A ER from Scheduled Compliance

AER asserts that compliance with the 2015 and 2017 overall SO 2 

### annual emission rates in Sections 225.233(e)(3)(C)(iii) and (iv) creates an arbitrary or unreasonable hard ship on AER

. Pet. at 4, 11. AER contends that the following events were not foreseen when Sections 225.233(e)(3)(C)(iii) and (iv) were adopted and therefore impose an undue hardship on AER : (a) legal challenges to federal regulations underpinning the MP S; and (b) declining power prices. Pet. at 10

- 11.

Effectiveness of Adopted Federal Regulations Delayed

AER contends that it opted into the MPS in 2007 with the expectation that future federal regulatory requirements for its EGUs were imminent. Pet. at 11. Now that these federal rules (CAIR, CAMR, and CSAPR) have been challenged, stayed, and remanded in various federal court proceedings, AER argues that Illinois

- specific MPS requirements cause it an arbitrary and unreasonable hardship for two reasons.

### 61

First, AER asserts that the MPS requires Illinois electric generating units to control NO x 

### and SO 2 

### emissions “even in the absence of a permanent and effective federal emission program like CAIR.” Pet. at 15. CSAPR, the replacement for CAIR, was scheduled to take effect on January 1, 2012 but was stayed. AER argues that it is arbitrary and unreasonable to require it to comply with the MPS if there is no federal program requiring that level of control. Id.

Second, AER argues that Illinois

- specific MPS re quirements place it at a competitive disadvantage with generators in nearby states. Pet. at 16

- 17. AER claims that it competes with generators in nearby states “that have neither deregulated their energy markets nor invested significant capital in enviro nmental pollution control projects.” Id. at 16. These companies are able to recover compliance costs through rates but AER does not have revenue from a captive consumer base to fund environmental compliance costs. Id. If the CSAPR had become effective on January 1, 2012, the CSAPR would have “level[ed] the playing field” between Illinois generators and competitors in nearby states. Id. at 16

- 17.

In contrast to commenters opposing grant of the variance, AER states that it did not seek de regulation (AE R Post Br. at 9) and that its intended benefit from opting in to the MPS has not occurred

. AER Post Br. at 51. This benefit was the alignment of the MPS’s NO x 

### and SO 2 

### emission requirements with AER’s control strategy for compliance with then

- pending CAIR regulations. Id.

Declining Power Prices

AER had analyzed the costs of compliance with the MPS when the MPS was promulgated in 2006. Pet. at 17. AER claims that compliance with the 2015 and 2017 overall SO 2 

### annual emission rates is “no longer economic ally reasonable.” Id.

AER plans to construct two FGD units at the Newton station. Pet. at 18. AER states that it has spent $237 million to date on the project. Id. Through 2012, AER will have spent “over 50% of the project cost.” Id. AER claims tha t it can no longer fund the Newton FGD project in time to comply with the 2015 and 2017 SO 2 

### emission rates. Id. at 19. AER attributes its lack of available funds to declining power prices due to “the recession, the exceptionally mild weather this winter, and an increased supply of natural gas from shale gas.” Id. AER states that in 2006 and 2007 the price per megawatt hour was approximately $60 and in 2012 the price ranges from $29.50 to $33.60 per megawatt hour. Id. at 20. AER states that “power pric es over the next three years are not expected to improve to the level to support the installation of the Newton FGD [p] roject by either 2015 or 2017.” Id. at 20

, citing Pet. Ex h . 9.

AER claims that declining power prices have reduced operating proceeds a nd adversely impacted AER ’s access to short

- term and long

- term financing. Pet. at 20. AER states that net income for Ameren Energy Generating Company, owner of the Newton station, has dropped by over 95% since 2008. Id. citing Pet. Ex h . 5. AER claims t hat it is unable to borrow funds to complete the project because its interest rate ratio is expected to fall below the required minimum contained in existing debt covenants. Id. at 21

- 22. AER also contends that it is unable to obtain funding from Ameren Corporation. Id. at 22; AER First Resp. at 4

- 5.

### 62

AER asserts that with no “viable funding mechanism” for the Newton FGD p roject, AER ’s “only other compliance alternative” to comply with the overall SO 2 

### annual emission rate in the MPS is to close at least two plants, such as Joppa, E.D. Edwards, or Newton. Pet. at 23. AER ’s consultant reports that AER puts $44.4 million in the local economy near the E.D. Edwards plant and $124,071,000 in the State’s economy due to the plant. Id. at 24. The report conclu des that AER puts $76.7 million in the local economy near the Joppa station and $214,221,000 in the State’s economy due to the Joppa station. Id. The two plants employ 274 persons and “supported an additional 1209 total jobs held by Illinois residents.” Id.

Weighing Environmental Impact against Hardship to AER

The Board has previously found that the environmental impact of the requested variance is a net benefit to air quality. See supra at p. 50. AER has shown that the variance will result in
a net decrease of 33,545 tons of SO 2 

### emissions from 2012 through 2020. AER will achieve this net reduction in emissions by taking credit for the closure of the Meredosia and Hutsonville stations

, operating FGD equipment at the Coffeen and Duck Creek stations at a higher efficiency 98%

- 99% SO 2 

### removal rate , and using low

- sulfur coal . The Agency agrees that granting a variance imposing an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from January 1, 2013 through December 31, 2019 , together with closing the Me redosia and Hutsonville stations, results in a net environmental benefit. Agency Resp. at 22. Further, the Agency “does not believe that any environmental harm would result therefrom.” Id. Accordingly, the Board is persuaded that the overall reduction in SO 2 

### emissions resulting from this variance favors granting the variance.

The People argue that the environmental impact of increased SO 2 

### emissions from 2015 to 2019 is the environmental impact which should be weighed against the hardship claimed by A ER

. PC#249 at 5. However, as discussed above, the Board has determined that the environmental impact of the requested variance from 2012 through 2020 is the impact to be weighed against any hardship to AER

. In light of the overall reduction in SO 2 

### emiss ions from the requested variance, the Board consider s the alleged hardships to AER from not granting the variance. The public comments made at hearing and received by the Board do not persuade the Board to find that A ER ’s asserted hardship is self

- imposed

. AER contends that the new methods of gas extraction are a “game

changing” technology that have “fundamentally altered” the outlook for gas supplies and pricing. AER Post Br. at 10. This competition has led to a decline in cash flow to the AER MPS Grou p. Id. at 7. None of the commenters opposing gr anting the variance directly refute this position

. Instead

, they state that market changes should be foreseeable and not excuse AER from meeting its MPS requirements. See, e.g.

, PC#2409 at 24. The Board f inds that the hardship is not self

imposed.

In considering hardship, t he Board has also taken into account that AER has already spent $237 million ( nearly 50% of the cost ) on the Newton FGD project , and that AER has also budgeted $16 million per year from 2013 to 2016 with greatly increased capital expenditures in 2018 and 2019 to complete the Newton FGD project . Pet. at 19; AER First Resp. at 6 ; Tr. at 32; AER Post Br. at 38, 40

. AER has further spent over $813 million to install scrubbers on three of

### 63

it s generating units, and has provided the Board with a detailed chart outlining the various pollution control devices installed at the Coffeen, Duck Creek, E.D. Edwards, Joppa and Newton Energy Centers. AER Post Br. at 31

- 36. In addition, the Board has co nsidered the decline in electricity prices from approximately $60 per megawatt hour in 2006 and 2007 to $29.50 to $33.60 per megawatt hour for June 2013 through May 2014 and AER ’s representation that “power prices over the next three years are not expected to improve to the level to support the installation of the Newton FGD Project by either 2015 or 2017.” Id. at 20

, citing Ex h . 9.

The Agency concludes that the revised variance proposal is “acceptable” to the Agency. Agency Resp. at 7. Specifically, th e Agency and AER have agreed to an alternative variance proposal where AER commits to complying with an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from January 1, 2013 through December 31, 2019. Id. at 21. The Agency states that this revised compl iance proposal satisfies the Agency. Id.

Considering the overall reduction in SO 2 

### emissions during the term of the requested variance, the Board finds that requiring AER to comply with the December 31, 2015 deadline in Section 225.233(e)(3)(C)(iii) and the December 31, 2017 deadline in Section 225.233(e)(3)(C)(iv) would impose an arbitrary or unreasonable hardship on AER

. Consistency with Federal Law

The Board has authority under Section 110 of the Clean Air Act to adopt regulations that are part of the State’s plan for implementation, maintenance, and enforcement of air quality standards. The variance procedure to grant relief from a Board regulation is consistent with the authority granted to the states under Section 110 of the Clean Air Act. The Agency informs the Board that it will submit the variance order, if granted by the Board, for approval as a revision to the Illinois SIP. Agency Resp. at 19. The Agency states it “has had preliminary discussions with USEPA Region 5 regarding an SIP revi sion for pending variance requests and no adverse issues were identified.” Agency Post Br. at 2. The Agency also notes that granting the variance under the alternate proposal agreed between the Agency and AER will have “no detrimental impact in the abili ty to rely on the new variance

- adjusted MPS emission reductions in the Illinois SIP, as needed.” Agency Resp. at 22. Upon reviewing the entire record, the Board finds that granting AER’s petition for variance with the conditions in the order below would be within Illinois’ current obligation under the Illinois SIP to attain and maintain compliance with the NAAQS. The Board, therefore, finds that granting AER a variance from the rule is consistent with federal law.

The Board notes, as AER recognizes, t hat if federal rules, such as a CAIR or CSAPR replacement

, ultimately go into effect, AER might need to implement additional controls. Additionally, the Board notes that USEPA adopted a new primary NAAQS for SO 2 

### of 0.75 ppb on June 22, 2010, which became effective on August 23, 2010. 75 Fed. Reg. 35520 (June 22, 2010). USEPA gave the states until June 3, 2013 to promulgated initial area designations for attainment. 77 Fed. Reg. 46295 (August 3, 2012). USEPA stated

any State containing an area design ated as nonattainment with respect to the SO 2 

### NAAQS would need to develop for submission to [US]EPA a SIP meeting the

### 64

requirements of part D, Title I, of the CAA, providing for attainment by the applicable statutory attainment date . . . all components of the SO 2 

### part D SIP must be submitted within 18 months of the effective date of an area’s designation as nonattainment. 75 Fed. Red. 35577 (June 22, 2010).

Later on June 29, 2012, USEPA also proposed to make revisions to the primary and secondary NAAQS fo r particulate matter (PM 2.5 

### and PM 10 16 

### ). 77 Fed. Reg. 38890 (June 29, 2012).

Since many rules at the federal level impact State regulations, the new federal rules have the potential to trigger related rulemakings on a statewide basis. As a result, the Bo ard notes that the regulatory sections from which AER seeks relief might necessarily be amended as a result at some point in time. Because AER’s requested dual variance period s would not commence until 2015 and 2017, this would allow the requested relief to occur farther into the future when changes at the State level might be implemented that would impact the sections from which AER currently seeks relief. Lastly, a ny changes to the Board rules will proceed through the rulemaking process, and all parties here will have an opportunity at the time to reassess AER ’s prospects as suggested by the Citizens Groups.

Compliance Plan

For the reasons below, the Board finds that AER’s compliance plan is sufficiently definite to support grant ing the variance.

AE R’s Intent to Comply

The Citizens Groups argue that AER’s compliance plan is not definite because of its reliance on market conditions and , further, that AER has not shown it will comply with a proposed compliance plan. PC#6 at 7, PC#2409 at 2.

The Bo ard notes that

, although the rate of AER’s progress would be dependent on market conditions, the dual variance periods would not be. AER would be required to achieve compliance with the 0.23 lb/mmBtu and 0.2 5 lb/mmBtu annual SO 2 

### emission rates starting on January 1, 2020. Furthermore, the compliance plan explicitly requires AER to meet an annual SO 2 

### emission rate of 0.35 lb/ mmBtu through 2019.

The Board notes that AER is committing significant financial resources that AER states are already budgeted. A ER has already spent $237 million o n the Newton FGD project as of May 2012, and by the end of 2012, AER will have spent over 50% of the project cost. Pet. at 19. AER has budgeted roughly $16 million per year from 2013 to 2016 with greatly increased capit al expenditures in 2018 and 2019 to complete the Newton FGD project . Pet. at 19; AER First Resp. at 6; Tr. at 32; AER Post Br. at 38, 40. AER will also spend $5 million in capital and $173,337 in annual expenses to fully maximize the existing FGD systems at Duck Creek and Coffeen during the course of the variance. AER First Resp. at 8. Additionally, AER will bear

16 

### Particles generally less than or equal to 2.5 and 10 micrometers in diameter, respectively. 77 Fed. Red. 38890 (June 29, 2012).

### 65

lost revenue from the continued closures of Hutsonville and Meredosia, and higher costs for the purchase of low

- sulfur coal at the Edwards, Ne wton and Joppa stations

. AER adds,

AER has every incentive to complete the [Newton FGD] project and it cannot even begin to recoup its financial investment unless and until the project is completed[]. AER Post Br. at 37.

Newton FGD Project Progress Reports

The Board notes that AER proposed, as a condition of the variance, to provide annual progress reports on the status of construction activities relating to the Newton FGD project. AER First Resp. at 6. The Board may specify periodic progress re ports in granting a variance pursuant to 415 ILCS 5/36(b) and has required such reports as a condition of the variance. Although AER proposes providing both the Board and the Agency with annual progress reports, the Board notes that once a case is closed, providing progress reports to just the Agency instead would be more appropriate. The Board will include the requirement for annual progress reports to be submitted to the Agency in the conditions of the variance.

Newton FGD Project Time Schedule

The Ci tizens Groups argue that AER’s compliance plan is not definite because it lacks a time schedule for important phases of the Newton FGD p roject required by 35 Ill. Adm. Code 104.204(f). PC#2409 at 2

- 6.

AER did not submit a detailed compliance plan with its petition. In written questions to AER, the Board requested that AER provide an estimated timeline for phases of the compliance plan including engineering, site preparation, foundation work, duct work, fabrication, field construction activities, startu p, and any other significant phases. AER provided general information on certain construction activities but no detailed timeline of specific activities. AER First Resp. at 6. The Board then asked follow

- up questions at the August 1 hearing on the timin g of activities needed to complete the Newton FGD p roject. In its post

- hearing brief, AER again declined to provide a detailed timeline , stating it is difficult to provide a specific and targeted prospective schedule beyond the categories of work previous ly provided to the Board. AER Post Br. at 38. A ER contends that a specific timeline establishing construction and project milestones cannot be provided until an in

- service date is fixed. Id. AER states

[o]nce the Company ‘green lights’ the project, A ER project management and its general contractor Advatech will reestablish a hard and fixed schedule that ‘backtracks’ from the service date and takes into account work already completed. ” Id.

AER does note if relief is granted, AER’s current budget pr ojections

call for greatly increased capital expenditures commencing in 2018 and 2019 so that AER will be in a position to comply with the MPS once the proposed variance term expires on January 15, 2020. Id.

### 66

The Board has extracted from the record the f ollowing information as to AER’s anticipated timeline for completing the Newton FGD p roject. AER stated all the major equipment components for the Newton FGD project have already been procured. Pet. at 9. AER has already scheduled construction work thro ugh the end of 2013. AER First Resp. at 6. AER stated that engineering design is expected to be complete in 2014. Id. AER stated that work on the electrical systems and piping connections will be deferred. Id. AER lists other work that will be perfor med during the dual variance period including site preparation and foundation work, delivery of major equipment sets that will be rough set into position at the site, ductwork that will be fabricated and insulation that will be applied, and the absorber bu ilding that will be constructed. AER First Resp. at 6, Tr. at 31

- 32. AER has budgeted $16 million per year from 2013 to 2016 to complete the Newton FGD p roject and AER explains “[e]verything that can be done on the ground including the construction of th e new chimney stack will be performed.” AER Post Br. at 38. In 2018 and 2019, AER will need to greatly increase its capital expenditures to comply with the MPS by January 2020. Id. When the “project ramps back up,” field construction is expected to tak e 24 months. Pet. at 9.

The Board agrees with the Citizen s Groups that AER has not provided a sufficient compliance plan as required by Section 104.20 4 (f) despite several opportunities to do so. AER stated that it plans to comply with the overall SO 2 

### annual emission rate under 35 Ill. Adm. Code 225.233(e)(3)(C)(iii) and (iv) by completing the FGD project at the Newton station by the end of the variance period. Pet. at 9. Throughout this proceeding, AER has not indicated that it would use any other eq uipment at any other plant to meet the annual SO 2 

### emission rates. While AER provided some information regarding expected dates and timeframes for completing the Newton FGD p roject to achieve compliance, AER did not propose a specific time schedule for imp lementation of all phases of the Newton FGD project. Pet. at 9, AER First Resp. at 6; AER Post Br. at 37, 38, 40. The Board finds that AER’s compliance plan must include specific dates to demonstrate progress toward achieving compliance with the applicab le requirements. Based on the information in the record, AER’s estimation that field construction activities could take approximately 24 months to complete, and an in

- service date of no later than January 1, 2020 for the Newton FGD equipment, the Board wi ll assign dates to the elements of AER’s Newton FGD
p roject in the variance conditions under the order below. The Board notes that AER may file a motion for modification of internal variance compliance dates under 35 Ill. Adm. Code 104.212.

AER states th at it is unable to provide a date certain by which AER will know if completion of the scrubber project before January 2020 is feasible. Tr. at 32

- 33; AER Post Br. at 40. Therefore, AER proposes, “in the event completion of the FGD system become infeasibl e, AER agrees to advise the Board and the Agency of alternative plans for compliance during the remaining term of the variance.” AER First Resp. at 11. The Board notes that if AER were to develop “alternative plans for compliance,” AER would not be able to amend the instant variance but would need to seek new relief.

Additional Variance Conditions

As discussed below, the Board will additionally impose variance conditions agreed to be the parties, as outlined in the Board’s order. The Board has previous ly discussed and rejected

### 67

suggestions by the Citizens Groups and the People for inclusion of conditions shortening the term of the variance and imposing new compliance plan restrictions, and therefore, these will not be repeated here.

AER ’s petition did n ot include proposed language for the variance conditions but generally discussed terms that m ight be included in a Board order, including a requirement to comply with an overall SO 2 

### annual emission rate of 0.38 lb/mmBtu through the end of 201 9

. Pet. at 8

- 9. In response to questions from the Board, AER pro posed the following additional variance conditions and agreed to comply with an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu during the variance period :

1. AER agrees not to operate the Hutsonville and Meredosia Energy Centers for power generation purposes during the pendency of the variance; except that the FutureGen project which is currently proposed for the Meredosia Energy Center site is exempt from this restriction.

2. During the term of the varian ce, AER agrees to file progress reports with the Board and the Agency as to the status of construction activities relating to the Newton scrubber annually by the end of each calendar year. Furthermore, in the event completion of the FGD system become infe asible, AER agrees to advise the Board and the Agency of alternative plans for compliance during the remaining term of the variance. AER First Resp. at 10

- 11.

The Agency response did not provide specific draft language for the variance conditions

. B ut
, the response finds acceptable impos ition of an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from 2013 through 2019 in conjunction with requiring the continued closure of the Meredosia and Hutsonville stations.

T he Board finds it appropriate to impo se conditions to account not only for the interim SO 2 

### emission rates, but also for emission reductions achieved through not operating the Meredosia and Hutsonville stations in determining the effect of the variance on SO 2 

### emissions through 2020 as provided in AER’s demonstration. See AER Post Br. Exh. 4. Furthermore, since there is no current regulatory requirement that these facilities must remain closed, the Board will impose a condition ensur ing that these two stations remain closed through the end of 2020.

As a condition of the variance, AER has also agreed to provide annual progress reports on the status of construction activities relating to the Newton FGD project. In addition, the Board has added conditions to the variance presenting a detailed s chedule for completion of the Newton FGD project

. The Board will provide conditions to the variance, consistent with this opinion, in the order below.

### 68

CONCLUSION

While the Board today grants AER’s request for variance, the Board is cognizant that this is AER’s second request for a change in the MPS requirements. AER filed a joint proposal during the Board’s R06

- 25 rulemaking to adopt the MPS and later proposed AER

- specific revisions to the MPS in the Board’s R09

- 10 rulemaking. AER has now been given multiple opportunities to comply with SO 2 

### , NO x 

### and mercury emissions requirements, and to develop a compliance plan that AER can implement.

The Board finds that AER has demonstrated that requiring compliance with the overall SO 2 

### annual emission rates in S ections 225.233(e)(3)(c)(iii) and (iv) by 2015 and 2017, respectively

, will impose an arbitrary or unreasonable hardship on AER

. AER has committed to

an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu from 2013 through 2019 in conjunction with the conti nued closure of the Meredosia and Hutsonville stations

, increased efficiency of the FGD units at the Coffeen and Duck Creek stations , and the use of low

- sulfur coal . T he Board finds t his compliance plan is satisfactory, as it results in an overall reducti on of SO 2 

### emissions from 2012 through 2020 , and provides a net benefit to Illinois air quality.

Accordingly, the Board grants AER combined dual variance s for the period beginning December 31, 2015 until December 31, 2019 from the requirements of 35 Ill. A dm. Code 225.233(e)(3)(C)(iii) and for the period beginning January 1 , 2017 until December 31, 2019 from the requirements of 35 Ill. Adm. Code 225.233(e)(3)(C)(iv), subject to the conditions outlined in the order below.

ORDER

The Board grants Ameren Ener gy Resources (AER) combined dual variances for the electrical generating units in AER’s multi

- pollutant standard (MPS) Group from the applicable requirements of 35 Ill. Adm. Code 225.233(e)(3)(C)(iii) for a period beginning January 1, 2015 through December 31, 2019 and 35 Ill. Adm. Code 255.233(e)(3)(C)(iv) for a period beginning January 1, 2017 through December 31, 2019 , subject to the following conditions.

1. From the date of this order through December 31, 2012, AER must comply with an overall SO 2 

### annual e mission rate of 0.38 lb/mmBtu.

2. From January 1, 2013 through December 31, 2019, AER must comply with an overall SO 2 

### annual emission rate of 0.35 lb/mmBtu.

3. Beginning January 1, 2020, AER must comply with an overall SO 2 

### annual emission rate of 0.23 lb/mmBtu

.

4. From the date of this order through December 31, 2020, AER must not operate the electrical generating units at Meredosia and Hutsonville Power Stations. The FutureGen project at the Meredosia Energy Center is exempt from this restriction.

### 69

5. Regarding th e Flue Gas Desulfurization project at the Newton Power Station (I.D. No. 079808AAA) (Newton FGD project):

a

. On or before July 1, 2015, AER must complete engineering work on the Newton FGD project.

b

. On or before December 31 , 2017, AER must obtain a new or extended construction permit, if needed, for the installation of the FGD equipment at the Newton Power station.

c

. On or before December 31, 2018, AER must complete construction of the absorber building on the Newton FGD project.

d

. On or before July 1, 2019, AER must complete steel fabrication of ductwork and insulation activities on the Newton FGD project.

e

. On or before July 1, 2019, AER must complete installation of electrical systems and piping on the Newton FGD project.

f

. On or before Septem ber 1, 2019, AER must set major equipment components into final position on the Newton FGD project.

g

. Beginning with calendar year 2012 and continuing through 2019, AER must file annual progress reports with the Agency as to the status of construction ac tivities relating to the Newton FGD project by the end of each calendar year. AER’s annual progress reports must include an itemization of activities completed during the year, activities planned to be completed in the forthcoming year, progress of the Ne wton FGD project to comply with the timelines specified in this variance, and the estimated in

service date. Annual progress reports must be submitted to :

Illinois Environmental Protection Agency Attn : Ray Pilapil, Manager Bureau of Air

- Compliance Sect ion 1021 N. Grand Ave. East P.O. Box 19276 Springfield, IL 62794

- 9276

and

Illinois Environmental Protection Agency Attn : Gina Roccaforte, Assistant Counsel Division of Legal Counsel

- Air Regulatory Unit 1021 N. Grand Ave. East P.O. Box 19276 Springfield , IL 62794

- 9276

### 70

IT IS SO ORDERED.

If petitioner choose s to accept this variance, petitioner must, within 45 days after the date of this opinion and order, file with the Board and serve on IEPA a certificate of acceptance and agreement to be bound by all the terms and conditions of the granted variance. “A variance and its conditions are not binding upon the petitioner until the executed certificate is filed with the Board and served on the Agency. Failure to timely file the executed certificate with th e Board and serve the Agency renders the variance void.” 35 Ill. Adm. Code 104.240. The form of the certificate follows:

### 71

CERTIFICATE OF ACCEPTANCE

I (We), __________________________________________, having read the opinion and order of the Illinois Pollution Control Board in docket PCB 12

- 126, dated September 20, 2012, understand and accept the opinion and order, realizing that this acceptance renders all terms and conditions of the variance set forth in that order binding and enforceable.

Petiti oner: AMEREN ENERGY RESOURCES

By:

_________________________________ Authorized Agent

Title:

__________________________________

Date:

__________________________________

Section 41(a) of the Environmental Protection Act provides that f inal Board orders may be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the order. 415 ILCS 5/41(a) (2010); see also 35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706. Illinois Supreme Court Rule 335 establishes f iling requirements that apply when the Illinois Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335 . The Board’s procedural rules provide that motions for the Board to reconsider or modify its final orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code 101.520; see also 35 Ill. Adm. Code 101.902, 102.700, 102.702.

I, John Therriault, Assistant Clerk of the Illinois Pollution Control Board, certify that the Board adopted the a bove order on September 20 , 2012, by a vote of 4

- 0

.

___________________________________ John Therriault, Assistant Clerk Illinois Pollution Control Board

### Attachment A

– Hearing Commenters in Support of Ameren Energy Resources Requested Vari ance

The f ollowing list consists of commenters who appeared at the Board’s August 1, 2012 hearing in support of Ameren Energy Resources variance request. The commenter ’ s name appears on the left , with the citation to the August 1, 2012 hearing transcript appearing on the right

.

Name Transcript Page Number

Senator Gary Forby, 59 th District 56 Representative Brandon Phelps, 118 th District 59 Representative David Reis, 108 th District 63 Tim Drea 76 Mark Bolander, Mayor of Newton 79 Bill Weber, Jasper County Board Member speaking

for Brad Mitchell, Chairman of the Board 81 Julie Johnson, Mayor of Joppa 102 Billy McDaniel, Mayor of Metropolis 103 Dan Cox 106 Jean Ellen Boyd 111 Steve Ptacek 1 13 Kelly Stratemeyer 114 Robert Lawless 122 Paul King 131 Alan Bogardus 134 Bill Miller 141 Roderick Bland 149 Mike Woo 154 Greg Crawford 157 Keith Dollar 161 Prentiss Carter 164 Robe rt McFarlen 167 Dan Barnett 170 Anthony Robertson 172 Mike Killebrew 174 Mike Norman 178 Lynn Markum 181 Vicky Clark 189 Bill Sheppard 192 Mike Pullen 197 Anthony Jones 201 Jeremy Ba rnhill 202 John Bower 204 Rick Wolford 206 Rick Myers 207 Roger Kerley 211

### 2

Bruce Parker 212 Julie Wilke 216 Andy Todd 218 Charles Henderson 219 Larry Millspaugh. 223 Deborah Goodwi n 224 Tab Walker 225 Gary Washburn 231 Ed Worthey 231 Andy Bloemer 232 Chris Hankins 236 Gerod Briggs 236 John Marschewski 236 Travis Blake 238 Roland Chapman 238 Kenny Johnson 239 Twyla Harvey 240 Paul Hardiek 240 Roger Bass 241 Larry Quick 242 Lindell Wenthe 245 J. D. Weaver 246 Brad Beisner 249 Skip Moore 251 Mitch Seibert 252 Chris Skates 256 Mi ke Pierson 258

### Attachment B

– Hearing Commenters Opposing Ameren Energy Resources Requested Variance

The f ollowing list consists of commenters who appeared at the Board’s August 1, 2012 hearing opposing Ameren Energy Resources variance request . The commenter ’ s name appears on the left , with the citation to the August 1, 2012 hearing transcript appearing on the right

.

Na me Transcript Page Number

James Gignac 84 Judy Weimer 92 Norman Eckstein 94 Bryan Urbasze wski 97 Faith Bugel 115 Tracy Cox 126 Terry Grace 132 Jared Policicchio 137 Jennifer Cassel 142 Andrew Armstrong, on behalf of Dr. Samuel Dorevitch 149 Edward Warden 155 Sandy Carter 158 Edyta Si tko 162 Gabriel Rojkind 165 Simon Wiener 168 Rachel Grannemam 171 Priyanth Manjooran 176 Gloria Fallon 179 Shannon Weigel 182 Brian Sauder 185 Katie Mimnaugh 186 Stephanie Simowski 19 1 Marissa Lieberman

- Klein 195 Amanda Guinn 199 Mayte Guerrero 205 David Jakubiak 209 Seth Johnson 213 Allison Fisher 220 Patty Rykhus 228 Christine Nannicelli 233 Art Meyer 243 Joyce Blumenshin e 253

### Electronic Filing- Received, Clerk's Office, 10/30/2012

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

AMEREN ENERGY RESOURCES,

Petitioner,



## v.

ILLINOIS :&""'¥1RONMENTAL PROTECTION AGENCY,

Respondent. ) ) ) ) ) ) ) 

### ) ) ) PCBl2-U6**(Varlan~e-** Air)

NOTICE OF FILING



### John Therrlaul4 Assist!lrlt Clerk**Cart:~l** 

### Webb, Hearing Officer Illinois Pollution Control Board James 

### R. 'Ib:ompson Center i 00 West Randolph Street, Sui!,e ll-500 

### Chicago, Illi:oois 6060 l 

### t.'lcrriaifiillpcb.sll!le. il.us l::Webb.!:tsll!.tcJl.us Gina Roccaforte 

### Assislant Coonsel Dh'i!;iono!Legai Counsel 

### Illinois Environmental PrQteetion Agency 1021 North Grand A Vll!'!lle, 

### East 

### P.O. Box 

### 19276 Springfield, Illincis 62794-9276

PLEASE T.!U<E NOTICE ilia! we have 

### today electronically filed with 

### the Office of the 

### Ck:J:k of the illinois 

### Pollation 

### Control Boord a 

### CERTIFICATE OF 

### ACCEPTANCE, c.opiel! cf 

### which are herewith served upon you.



### Dated:· October 30, 201.2 

### Renee Cipriano Gabriel Rodriguez Amy Antomolli 

### SCHIFF HARDIN LLP 

### 231! South 

### Wacker Drive Swte 6600 Chicago, Illi:oois 60606 312-258-5500 

### aantomolli@scltiffhardin.com

# ~

# ~ · AmyC.Antoniolli

ATTACHMENT 

# 1 (,

### Electronic Filing- Received, Clerk's Office, 10/30/2012

71



### CERTIFICATE OF AC:CEPTANCE

### LA~**t~** 

# !>" A-jlfl**f'#'f~~~' cr-<t~Y**  P->F jo..t l'.t:("**~** I {We), /"L cl.**~"'1** 

### t.. i"1("J>.if>£ Or' having read the opinion and order of the .illinois Pollution Control. Board in docket PCB 12426,. dated September 20; 2012. understand and accept the opinion and order, real.izing that this acceptance renders all
terms and conditions of the variance set forth in that order binding and enforceable.

Petitioner: 

### AMEREN ENERGY RESOWCES**By~**

# ~d.-9 y

# ~1f==~-- • ,r Authorized Ag

. t

..

Title: 

## Jl., b'

### f/o;·J~~+- 

### J?**.t•Ji/tYo-t-r/"'l.,:,.,-r7;+~** J,;fi!..V,-ct'J

Date: /'0.- .)D-/2-..

Settion 

### 41( a) of the Environmental Protection 

### Act provides that final Board orders may .be appealed directly to the llllnois Appellate Court within 35 days after the Board serveS the order. 415 ILCS 5/41(a) (2010); see also 35 

## ru. Adm. Code 101.300( d)(2), 101.906, 102.706. lllin!>is Supreme Court Rule 335 establishes filing requirements that apply when the illinois Appellate Court, by Statute, directly reviews administrative orders. 172 

### ill. 2d R. 335. The BOard's procedural roles provide that motions for the Board to reconsider or modify its fmal orders may be filed with the Board within 35 days after. the order is received. 35. 

## m. Adm. Code 101.520; see also 35 TIL Adm. Code 101.902, 102.700, 102.702.

I,, John**Th~rriault,** Assistant Clerk of**th~** lllinois Pollution Control BOard, certify 

### that the BOard adopted the above order on September 20, 2012, by a vote of 4-0.

# ~~=

John Therriault, Assistant Clerk 

### illinois Pollutio.n Control Board

### Electronic Filing- Received, Clerk's Office, 10/30/2012

CERTIFICATE OF SERVICE



### I, the 

### undersigned, certi:fY that on 

### this 30th 

### day of October, 

### 2012, I nave served electronically the attached CERTIFICATE OF ACCEPTANCE, upon the following persons:

John TherriaUlt, Assistant Clerk 

### Carol Webb, Hearing Oftieer 

### illinois Pollution Control Board 

### James R. Thompson 

### Center Suite 11-500 100 West 

### Rlindolph Chicago, Dlinois 60601 tllerriai@,ipgb.s!atejL us**cwebMilipgb.sweJLu~**

and 

### electronically 

### and by 

### first class mail, postage affixed, upon:

Gina 

### Roccaforte Assistant 

### Counsel Division of Legal Colll1Sel llfumls Environmental Ptoteetion Agency 

### 1021 North Grand Avenue, East P.O. Box 19276 

### Springfield, Illinois 62794,9276

Renee Cipriano Gabriel 

### RodrigueZ: Amy AntonioUi SCHIFF HARDlN LLP 233 South Wacker Drive Suite6600 

### Chicago, lllinois 60606**3!2~25.8c:5500 Mml:m:rlolli~S~;hii:Thardin.com** 



## . '

.

# 2012

R E 

# G I 

# S T E R**~~~:r~~ental** Agencies

Volume 36

, Issue 51

December 21

, 2012

_ Pages 17636-18064

Index Department Administrat i v e C ode Di v isi o n 111 E

. Monroe St. Springfield

, IL 6 27 56 217-7 8 2-7017

Pri nt ed by au t h o ri ty of t he S ta te o f Il l i no i s

. De c ember 2 01 2

- 7 5 

## PUBLISHED BY JESSE WHITE· SECRETARY OF STATE

### i TABLE OF CONTENTS

December 21, 2012 Volume 36, Issue 51

PROPOSED RULES CENTRAL MANAGEMENT SERVICES, DEPARTMENT OF Extensions of Jurisdiction 80 Ill. Adm. Code 305..........................................................................17636 State of Illinois Dependent Care Assistance Plan 80 Ill. Adm. Code 2110........................................................................17640 State of Illinois Medical Care Assistance Plan 80 Ill. Adm. Code 2120........................................................................17646 Commuter Savings Program 80 Ill. Adm. Code 2190........................................................................17658 The Travel Regulation Council 80 Ill. Adm. Code 3000........................................................................17663 FINANCIAL AND PROFESSIONAL REGULATION, DEPARTMENT OF Lending Limits 38 Ill. Adm. Code 330..........................................................................17671 HUMAN RIGHTS, DEPARTMENT OF Procedures Applicable to All Agencies 44 Ill. Adm. Code 750..........................................................................17686 OFFICE OF THE AUDITOR GENERAL Purchases and Contracts 44 Ill. Adm. Code 500..........................................................................17694 PUBLIC HEALTH, DEPARTMENT OF Emergency Medical Services and Trauma Center Code 77 Ill. Adm. Code 515..........................................................................17778 SECRETARY OF STATE Commercial Driver Training Schools 92 Ill. Adm. Code 1060........................................................................17801 ADOPTED RULES BOARD OF HIGHER EDUCATION Public Information, Rulemaking, and Organization 2 Ill. Adm. Code 5050..........................................................................17847 Grow Your Own Teacher Grants 23 Ill. Adm. Code 1085........................................................................17852 ILLINOIS COMMERCE COMMISSION Obligations of Retail Electric Suppliers 83 Ill. Adm. Code 412..........................................................................17886 STATE BOARD OF EDUCATION The 'Grow Your Own' Teacher Edu cation Initiative (Repealer) 23 Ill. Adm. Code 60............................................................................17911 WORKERS' COMPENSATI ON COMMISSION, ILLINOIS Arbitration

### ii 50 Ill. Adm. Code 7030........................................................................17913 Commission Review Board Procedures 50 Ill. Adm. Code 7500.......................................................................17920 PEREMPTORY RULES AGRICULTURE, DEPARTMENT OF Meat and Poultry Inspection Act 8 Ill. Adm. Code 125...........................................................................17930 OTHER INFORMATION REQUIRED BY LAW TO BE PUBLISHED IN THE ILLINOIS REGISTER IL ENVIRONMENTAL PROTECTION AGENCY Notice of Public Information......................................................................17938 REGULATORY AGENDA ATTORNEY GENERAL Attorney General's Procurement 44 Ill. Adm. Code 1300.......................................................................17940 BOARD OF HIGHER EDUCATION Performance Metrics for Budget Recommendations 23 Ill. Adm. Code 900.........................................................................17944 POLLUTION CONTROL BOARD General Rules 35 Ill. Adm. Code 101.........................................................................17947 PROPERTY TAX APPEAL BOARD Practice and Procedure for Hearings Be fore the Property Tax Appeal Board 86 Ill. Adm. Code 1910.......................................................................18028 SECOND NOTICES RECEIVED JOINT COMMITTEE ON ADMINISTRATIVE RULES Second Notices Received............................................................................18030 EXECUTIVE ORDERS AND PROCLAMATIONS PROCLAMATIONS Electoral Proclamation - Constitutional Amendment 2012-353..............................................................................................18032 Electoral Proclamation - Electoral College Electors 2012-354..............................................................................................18032 Electoral Proclamation - Electoral College 2012-355..............................................................................................18033 Electoral Proclamation - Congress, Senators and Representatives 2012-356..............................................................................................18036 Electoral Proclamation - Regiona l Superintendents of Schools 2012-357..............................................................................................18047 Electoral Proclamation - Trustees of the Prairie Dupont Levee and Sanitary District 2012-358..............................................................................................18048 Electoral Proclamation - Judicial Vacancies 2012-359..............................................................................................18049 Electoral Proclamation - Retention

### ILLINOIS REGISTER 17938 12 ENVIRONMENTAL PROTECTION AGENCY

NOTICE OF PUBLIC INFORMATION

The Illinois Environmental Protection Agency (Il linois EPA) Bureau of Air is accepting public comment on variances granted by the Illinois Po llution Control Board (Board) to Midwest Generation, LLC - Waukegan Generating Stati on (Midwest Generation) and Ameren Energy Resources (Ameren) for the purpose of submitting such variances to the United States Environmental Protection Agency (USEPA) as a revision to the Illinois State Implementation Plan (SIP) under the Clean Air Act (CAA), 42 USC § 7401 et seq . In order for a variance to be considered for approval as a revision to the SIP, the State must submit it in accordance with the requirements of 40 Code of Fe deral Regulations (CFR) § 51.104.

On April 10, 2012, Midwest Generation requested a variance from the provisions of the Illinois Combined Pollutant Standard (CPS), 35 Ill. Adm. Code 225.296(a)(l) a nd (c)(1), for the 12- month period beginning December 31, 2013, and ending December 31, 2014, thereby allowing Midwest Generation an extra year to insta ll pollution controls on Unit 7 at its Waukegan Generating Station. Midwest Generation, LLC – Waukegan Generating Station v. Illinois Environmental Protection Agency , PCB 12-121. On August 23, 2012, the Board granted the variance to Midwest Gene ration, subject to cert ain conditions.

On May 3, 2012, Ameren, with power plants in Montgomery County, Fulton County, Peoria County, Massac County, Crawford County, Morgan County, and Jasper County filed a Petition for Variance with the Board. Ameren Energy Resources v. Il linois Environmental Protection Agency , PCB 12-126. Ameren requested a variance from both the 2015 and 2017 sulfur dioxide (SO 2 

### ) emission rate provisions of the Illinois Multi- Pollutant Standard (MPS), 35 Ill. Adm. Code 225.233, specifically the SO 2 

### emission standards set forth in Section 225.233(e)(3)(C)(iii) and (iv). On September 20, 2012, the Board granted the va riance for the electrical generating units in Ameren's MPS Group from the applicable requirements of 35 Ill. Adm. Code 225.233(e)(3)(C)(iii) for a period beginning January 1, 2015, through December 31, 2019, and 35 Ill. Adm. Code 255.233(e)(3)(C)(iv) for a period beginning January 1, 2017, through December 31, 2019, subject to certain conditions.

The CPS and MPS are a multi-pollutant comprehensive approach to reduce emissions of nitrogen oxides, SO 2 

### , and mercury. Sections 225.233(e) and 225.296( a) and (c) are approved rules of the Illinois SIP. On July 6, 2012, the USEPA approve d the Illinois plan submitted to address the visibility protection requirements of Sec tion 169A of the CAA, 42 U.S.C. § 7491, and the Regional Haze Rule, as codified in 40 CFR § 51.308. See , 77 Federal Register 39943 (July 6, 2012). The Illinois plan includes Sections 225.23 3(e) and 225.296(a) and (c). Accordingly, since the petitions for variance sought relief from provi sions of the CPS and MPS and such relief was granted by the Board, the variances must be submitted to the USEPA for approval as a SIP revision addressing the visibility requiremen ts under the CAA and the Regional Haze Rule.

### ILLINOIS REGISTER 17939 12 ENVIRONMENTAL PROTECTION AGENCY

NOTICE OF PUBLIC INFORMATION

The Illinois EPA will accept writte n comments from the public. The written comments must be postmarked by January 21, 2013, unless a public hearing is requested. Comments and requests for hearing should be mailed to:

Dean Studer, Hearing Officer Illinois EPA 1021 North Grand Avenue East P.O. Box 19276 Springfield, Illinois 62794-9276 Telephone: 217/558-8280 or TDD: 217/782-9143

If a timely request for a public hearing is re ceived by January 21, 2013, a public hearing will be scheduled through a separate no tice and held to receive comme nts regarding the proposed SIP revision. If a public hearing is conducted, the written public comme nt period will be extended as provided for in the separate notice.

If no request for a public hearing is received by the Illinois EPA by U.S. Mail, carrier mail, or hand delivered by January 21, 2013, no hearing will be scheduled. Verification of a public hearing will be posted on January 28, 2013, on the Illinois EPA's website at http://www.epa.state.il.us/public-not ices/. Interested persons may also contact Dean Studer, the Illinois EPA’s Hearing Officer, at the phone number listed above to in quire as to the status of a public hearing.

Copies of the proposed SIP revision may be vi ewed by the public on Illinois EPA's website at http://www.epa.state.il.us/public-notices/ or during regular busine ss hours (Monday through Friday 8:30 a.m. until 4:30 p.m, except for State ho lidays) at the following Illinois EPA offices: 1021 North Grand Avenue East, Springfield, Illinoi s; 9511 W. Harrison St., Des Plaines, Illinois; and 2009 Mall Street, Collinsville, Illinois. No walk -in requests for copies of this material will be accommodated, unless advance notice is provid ed. Requests and public inquiries should be directed to Dean Studer, the Illinois EPA's H earing Officer, at the address and phone number listed above.

If a hearing request is received, th e hearing will be held in accorda nce with the provisions of the Illinois EPA's "Procedures for Informational and Qu asi-Legislative Public Hearings," set forth at 35 Ill. Adm. Code 164. This notice is intended to satisfy the requirements of Section 110(l) of the CAA (42 USC § 7410(l) (publ ic notice for SIP revisions)).

### No Public Hearing Requested

On December 21,2012, the Illinois Environmental Protection Agency published a Notice of
Public Information in the Illinois Register noticing a public conunent period on variances granted by the Illinois Pollution Control Board to Midwest Generation, LLC- Waukegan Generating Station and Ameren Energy Resources tor the pm1Jose of submitting such variances

to the United States Environmental Protection Agency as a revision to the Illinois Stale Implementation Plan under the Clean Air Act. See, 36 Ill. Reg. 17938. Provision was also given
in the notice for a public hearing to be scheduled in this matter, if a timely request for a public hearing was received by January 21, 2013.

Pursuant to the published notice, the Illinois EPA is required to post verification of a public hearing on its website on January 28, 2013. Since no request for a public hearing has been received, no hearing will be scheduled. The public comment period has ended, but the Illinois
EPA will accept any public comments in this matter that have been postmarked on or before January 21, 2013.

# ~-~ Dated: January 25, 2013
Dean Studer
H caring OfficerFebruary 13, 2013

Response to Comments Submitted by Sierra Club

Background

Illinois EPA received comments on January 19,2013, regarding proposed revisions to the Illinois Regional Haze SIP. The c01mnents were in response to proposed revisions to the SIP to reflect variances granted to Ameren and Midwest Generation allowing revisions to how the companies will be implementing some provisions of the MPS and CPS.

In general, Sierra Club's c01mnents conflict with the interpretations ofboth Illinois EPA and USEPA regarding Regional Haze SIP requirements, as well as the interpretation of the Federal Land Managers and others consulted in the original Regional Haze SIP submittal.

Attached to the January 19 Sierra Club cOJmnents was a document containing older c01mnents previously submitted by the Environmental Law and Policy Center ("ELPC"), Little Village Enviromnental Justice Organization, National Parks Conservation Association, Respiratory Health Association of Metropolitan Chicago, and Sierra Club itself dating back to the COJmnent period for the original SIP submittal. These c01mnents were already addressed and rejected by USEPA in the original approval oflllinois' Regional Haze SIP. As such, there is little reason to rehash each of the previously-submitted individual co1mnents, so the focus of the remainder of this response is on the January 19 c01mnents. However, it is first worth noting what USEPA's
response had to say regarding the previous c01mnents that were submitted that Sierra Club was a party to, though they are referred to as co1mnents from.ELPC. The response is taken from USEPA's approval of Illinois' alternative plan in the Regional Haze SIP and addresses the previously stated concerns regarding the alternative plan:

ELPC appears to misunderstand the applicable test for alternate strategies for addressing BART. In particular, ELPC appears to believe that under the alternative approach, Illinois must require BART-level controls at each unit subject to BART. In fact, the underlying principle of EPA's guidance on alternative measures is to offer states the flexibility to require less control at BART units than BART-level control, provided the states provide additional control at non-BART units that more than compensates for any degree to which control at BART units falls short of BART. Illinois is using precisely this flexibility. Irrespective of the degree to which control at individual power plant BART units may be less stringent than the limits that for those particular units would be defined as BART, Illinois is requiring control across a universe of sources that includes many sources that are not subject
to BART, thereby providing reductions that under EPA's rules and BART guidelines on alternative measures can compensate for any shortfall in control at BART units 1

1 77 Fed. Reg. 39945 (July 6, 2012).Sierra Club's Further Objections

In the beginning of Sierra Club's new cmmnents, they claim that "IEPA cannot revise the SIP to reflect these variances because these variances are in violation of the Illinois' Regional Haze SIP." However, this entire process is taking place because Illinois EPA has proposed revisions to the Regional Haze SIP so that the provisions of the variances are included in the SIP. As such, Sierra Club's statement is self-contradictory.

Sierra Club goes on to detail reasons it believes the revisions would not be consistent with Regional Haze Rule requirements in 40 CFR 51, as discussed below.

Sierra Club again objects to Illinois EPA utilizing an altemative emissions reduction plan, as it did in the initial SIP submittal, because in order to do so a state is required to meet three criteria:

Under current regional haze regulations, to utilize an altemative emissions reduction
program instead of BART, a state must meet several requirements. Crucially, the
state must "demonstrate that an emissions trading program or other alternative will achieve greater reasonable progress [toward natural visibility conditions] than would have resulted from the installation and operation of BART at all sources subject to BART in the State and covered by the alternative program." 40 C.F.R. § 51.308(e)(2)(i). Second, a State must require that "all necessary emissions reductions take place during the period of the ftrst long-term strategy for regional haze." 40 C.F.R. § 51.308(e)(2)(iii). Third, a State must demonstrate that "the emissions reductions resulting from the

... alternative measure will be surplus to those reductions resulting from measures adopted to meet requirements if the CAA

as of the baseline date of the SIP." 40 C.F.R. § 51.308(e)(2)(iii).

Sierra Club claims that revising the SIP to include the variances would mean that (1) Illinois' altemative plan would not "achieve greater reasonable progress" toward natural visibility goals, and (2) that "all necessary emissions reductions" will not "take place during the period of the first long tenn strategy for regional haze."

The first assertion, that the Illinois plan including the variances will not achieve greater progress toward natural visibility goals, was raised in the aforementioned initial co1mnents and was dismissed in USEPA's approval of the SIP. Illinois EPA, in technical support documents, provided a demonstration that the reductions in S0 2 and NOx emissions would be far greater under the altemative plan than if BART control had been applied to only the units subject to BART. The variances in question apply only to S0 2 reductions, so the remainder of this response will be limited to S02.

Ameren Variance

Illinois EPA estimated that applying BART to Ameren's subject-to-BART units would result in a reduction of69,154 tons ofS02 annually from baseline emissions at the end of the first long-term strategy period in 2018 2

. Illinois EPA also estimated that applying a fleet-wide average of0.23

2 Technical Support Document for Best Available Retrofit Technology Under the Regional Haze Rule, AQPSTR 09- 06, April29, 2011, at 30.

2lbl!runBtu to all Ameren units, per the MPS, would result in a reduction of 134,464 tons ofS0 2 annually in 2018 fi-mn baseline emissions. If Illinois' Regional Haze SIP were revised to reflect the Ameren variance, Illinois EPA estimates that applying a fleet-wide average of0.35lb/mmBtu
to all Ameren units would result in a reduction of 115,920 tons ofS02 annually in 2018 from baseline emissions. Tins clearly satisfies the criteria that (1) "greater reasonable progress" toward natural visibility goals is achieved.

The above estimates show reductions of194% of the anticipated BART-only reductions in the originally-approved alternative plan, and reductions of I 67% compared to BART -only reductions when the SIP is revised to reflect the variance in the alternative. This addresses Sierra Club's second assertion that (2) the altemative plan including the variance does not ensure that "all
necessary emissions reductions" will "take place during the period of the first long term strategy for regional haze." In fact, the above estimates demonstrate that anticipated reductions in 2018, at the end of the first Iong-tenn strategy period, will still be greater than the reductions required by BART. While the variance for Ameren delays the fleet-wide average of0.23 lbhrunBtu for three
years to 2021, "all necessary emissions reductions"- and more- will indeed "take place during the period of the first long term strategy for regional haze." Additionally, greater reductions will continue after 2021 when the variance ends and will continue in perpetuity thereafter.

The estimates above are based upon the BART TSD that was included in the initial SIP submittal. The smrunary table from that document can seen below in Table I along with an additional two columns of that table that show estimates of reductions reflecting the proposed revisions to include the variance. The base year in this table is 2002, and estimates are given for reductions due to implementing BART control on subject-to-BART units only, reductions from the MPS in 2018, and the added estimates for reductions from the alternative plan including the variance. Figures above are a comparison of Ameren fleet-wide reductions for each scenario totaled at the bottom of these colmm1s.

Midwest Generation Variance

The variance granted to Midwest Generation, again only addressing S02, does not affect emission reductions anticipated in 2018 at the end of the first long-term strategy. Thus, (1) the reductions in 2018 in the alternative plan that were approved in the original SIP submittal are unchanged by the variance, and (2) these reductions will take place in the first long-tenn strategy period. Further, due to the shutdowns of Midwest Generation's Fisk and Crawford units, reductions by 2018 and over the duration of the first long-tenn strategy period will be much greater than in the original approved alternative plan.

Table 2 was also taken from the BART TSD included in the initial SIP submittal. Again the final
two columns of the table have been added to show estimates of reductions that reflect the proposed revisions to include the variance 3 It can be seen in this table that due to the shutdowns of the Crawford and Fisk units, there will be additional reductions of34,654 tons per year in 2018 beyond what were anticipated in the originally submitted alternative plan, providing a total of 270% of the necessary reductions for BART.

3 Technical Support Document for Best Available Retrofit Technology Under the Regional Haze Rule, AQPSTR 09- 06, April29, 2011, at 33.

3Updated S0 2 Estimates

Table 1. Ameren Estimates from Illinois EPA BART TSD and Reductions Updated for Variance

-c- Variance Adjusted

. Base Year Pres urn tive BART MPS Final .· I· 201a

. ·· Lbs/ Lbs/ .. Lbs/ .·· Tons/Year Lbs/ Tons/Ye'ar 1000 Tons/Year Plant Unit mmBTU mmBTU Tons mmBTU Reduction mmBTU Reduction mmBTU Reduction

Coffeen 1 18,570 1.54 14,332 0.15 12,906 0.23 12,163 0.35 11,082

Coffeen 2 37,545 1.49 27,999 0.15 25,155 0.23 23,653 0.35 21,429

Duck Creek 1 22,635 0.97 11,026 0.15 9,280 0.23 8,375 0.35 7,065 ED
Edwards 1 6,417 3.55 11,399 NA NA 0.23 10,652 0.35 10,276

ED
Edwards 2 17,222 1.7 14,666 0.15 13,347 0.23 12,658 0.35 11,652

ED Edwards 3 15,972 1.21 9,683 0.15 8.465 0.23 7,826 0.35 6,888

Hutsonville 5 3,161 4.53 7,163 NA NA 0.23 6,796 0.35 6,610

Hutsonville 6 3.443 4.53 7,791 NA NA 0.23 7.402 0.35 7,188

Joooa 1 13,548 0.51 3.441 NA NA 0.23 1,897 0.35 1,070

Joooa 2 16,258 0.51 4,139 NA NA 0.23 2,276 0.35 1,294

Jonna 3 15,396 0.51 3,947 NA NA 0.23 2,155 0.35 1,253

Joppa 4 13.402 0.52 3,488 NA NA 0.23 1,943 0.35 1,143

Joppa 5 15,094 0.52 3,932 NA NA 0.23 2,189 0.35 1,291

Joooa 6 16,063 0.52 4,182 NA NA 0.23 2,329 0.35 1,371

Meredosia 1 1,134 5.02 2,844 NA NA 0.23 2,716 0.35 2,646

Meredosia 2 1,337 5.02 3,356 NA NA 0.23 3,202 0.35 3,122

Meredosia 3 1,069 5.04 2,694 NA NA 0.23 2,571 0.35 2,507

Meredosia 4 1.406 5 3,518 NA NA 0.23 3,353 0.35 3,272

Meredosia 5 10,810 2.34 12,639 NA NA 0.23 11,405 0.35 10,747

Newton 1 40,631 0.45 9,046 NA NA 0.23 4.469 0.35 1,936

Newton 2 38,533 0.46 8,823 NA NA 0.23 4.431 0.35 2,080

1.099 69,154 134,464 115,920

4Table 2. Midwest Generation Estimates from Illinois EPA BART TSD and Reductions Updated for Variance

. . · . 

## .... I

. Variance Adjusted BaseY ear , 'Presum tive BART CPS Final

. 2018

·
.. ·. 1000 Lbs/ . Lbs/ Tons/Year Lbs/ Tons/Year Lbs/ Tons/Year Plant Unit mmBTU mmBTU Tons mmBTU Reduction mmBTU RedUction mmBTU Reduction

Crawford 7 11,627 0.54 3,142 NA NA 0.11 2,500 0 11,627

Crawford 8 17,348 0.51 4,453 NA NA 0.11 3,470 0 17,348

Fisk 19 14,650 0.52 3,843 NA NA 0.11 3,003 0 14,650

Joliet 29 71 15,034 0.7 5,276 0.15 4,134 0.11 4,435 0.11 4,435

Joliet 29 72 13,824 0.7 4,828 0.15 3,802 0.11 4,078 0.11 4,078

Joliet 29 81 15,585 0.68 5,300 0.15 4,130 0.11 4,442 0.11 4,442

Joliet 29 82 15,403 0.68 5,260 0.15 4,082 0.11 4,390 0.11 4,390

Joliet 9 5 14,369 0.63 4,559 NA NA 0.11 3,736 0.11 3,736

Powerton 51 20,936 0.42 4,444 0.15 2,826 0.11 3,245 0.11 3,245

Powerton 52 21 '137 0.43 4,497 0.15 2,959 0.11 3,382 0.11 3,382

Powerton 61 18,293 0.43 3,964 0.15 2,561 0.11 2,927 0.11 2,927

Powerton 62 18,088 0.43 3,909 0.15 2,532 0.11 2,894 0.11 2,894

Waukegan 17 7,502 0.44 1,642 NA NA 0.11 1,238 0.11 1,238

Waukeoan 7 16,117 0.47 3,754 NA NA 0.11 2,901 0.11 2,901
Waukegan 8 21,950 0.49 5,385 NA NA 0.11 4,171 0.11 4,171 Will County 1 9,398 0.42 1,969 NA NA 0.11 1,457 0.11 1,457

Will County 2 8,293 0.39 1,617 NA NA 0.11 1 '161 0.11 1 '161

Will County 3 15,559 0.47 3,636 NA NA 0.11 2,801 0.11 2,801

Will County 4 27,585 0.47 6,462 0.15 4,414 0.11 4,965 0.11 4,965

0.515 31,440 61,194 95,848

5

# !SIERRA

1 

# CLUB

--------

T 0 U!'•n>r 0 Hi 1..12



### January 19, 2013

VIA Electronic Mail and U.S. Postal Service, First Class Mail

Dean Studer, Hearing Officer Illinois EPA 1021 North Grand Avenue East P.O. Box 19276 Springfield, Illinois 62794·9276 dean. studer@illinois. gov

RE: Revising Illinois State Implementation Plan to Reflect Variances Granted by the Illinois Pollution Control Board to Midwest Generation and Ameren

Dear Mr. Studer,

On behalf of Sierra Club, I thank you for considering these comments on the Illinois Environmental Protection Agency's ("IEP A:') 

### recent proposal to revise the Illinois' State Implementation Plan ("SIP") to reflect variances to the Illinois Multi· Pollutant Standard ("MPS"), 35 Ill. Adm. Code 225.233, and the Illinois Combined Pollutant Standard ("CPS"), 35 Ill. Adm. Code 225.296(a)(l) and (c)(1), granted by the Illinois Pollution Control Board to Ameren Energy Resources ("Ameren") and Midwest Generation. IEP A cannot revise the SIP to reflect these variances because these variances are in violation of the Illinois' Regional Haze SIP.

In 1999, EPA promulgated the Regional Haze Rule. Regional Haze Regulations, 64 Fed. Reg. 35,714 (July 1, 1999). Under that Rule, states are directed
to submit SIPs containing emissions limitations representing Best Available Retrofit Technology ("BART") and schedules for compliance for each BART· eligible

source that may be anticipated to cause or contribute to any visibility impairment in a Class I area. 

### See40 C.F.R. § 

### "51.308(e).

1

### On June 24, 2011, Illinois submitted a proposed Regional Haze SIP to EPA 77 Fed. Reg. 3966. In its Proposed SIP, Illinois stated that, based on modeling completed by the Midwest Regional Planning Organization ("MRPO"), it determined that emissions sources in the state cause or contribute to visibility degradation in 19 national parks and wilderness areas (defined in the CAA as "Class I areas") .I 

### Illinois EPA, 

### Regional Haze State Implementation Plan for Illinois, AQPSTR 10-08 (May 10, 2011) at 8-12 (hereafter "Illinois Regional Haze SIP"). To comply with the BART provisions of the Regional Haze Rule, Illinois evaluated which emissions

sources within the state cause or contribute to visibility degradation in those Class I

areas.

Illinois concluded that 11sources, including 9 Electric Generating Units ("EGUs"), cause or contribute to visibility degradation and are thus "subject to BART." Illinois EPA, 

### Technical Support Document For Best Available Retrofil Technology Under the Regional Haze Rule, AQPSTR 09-06 (Apr. 29, 2011) (hereafter "Illinois TSD for BART") at 12-22. Instead of evaluating and determining BART for all of those sources, Illinois proposed that an "alternative" to BARTostensibly permitted under the Regional Haze Rule- be used for 7 ofthe 9 EGUs. Illinois Regional Haze SIP at 19. Specifically, Illinois proposed that the Multi Pollutant Standard/Combined Pollutant Standard be relied on in lieu of BART to minimize visibility degradation caused or contributed to by those 7 EGUs. 

### Id On July 6, 2012, the U.S. Environmental Protection Agency ("U.S. EPA:') 

### approved the Illinois plan submitted to address the visibility protection requirements of Section 169A of the CAA, 42 U.S. C.§ 7491, and the Regional Haze Rule, as codified in 40 CFR § 51.308. 

### See, 77 Fed. Reg. 39943 (July·6, 2012).

Under current regional haze regulations, to utilize an alternative emissions reduction program instead of BART, a state must meet several requirements. Crucially, the state must "demonstrat[e] 2 

### that an emissions trading program or other alternative will achieve greater reasonable progress [toward natural visibility conditions] than would have resulted from the installation and operation of BART
at all sources subject to BART in the State and covered by the alternative program." 40 C.F.R. § 51.308(e)(2)(i). Second, a State must require that "all necessary

1 Those 19 national parks and wilderness areas are: Sipsey Wilderness Area, Alabama; Caney Creek Wilderness Area, Arkansas; Upper Buffalo Wilderness Area, Arkansas; Mammoth Cave National Park, Kentucky; Acadia National Park, Maine; Moosehorn Wilderness Area, Maine; Isle Royale National Park, Michigan; Seney Wilderness Area, :Michigan; Boundary Waters Canoe Area Wilderness, Minnesota; Voyageurs National Park, Minnesota; Hercules-Glades Wilderness Area, :Missouri; lvlingo Wilderness Area, :Missouri; Great Gulf Wilderness Area, New Hampshire; Brigantine Wilderness Area, New Jersey; Great Smoky Mountains National Park, Tennessee and North Carolina; Lye Brook Wilderness, Vermont; James River Face Wilderness Area, Virginia; Shenandoah National Park, Virginia; and Dolly Sods/Otter Creek Wilderness, West Virginia. Illinois Regional Haze SIP at 12.

2 A state's determination that an alternative will achieve greater reasonable process than would the installation and operation of BART must be based on the clear weight of the evidence. 40 C.F.R. § 51.308(e)(2)(i)(E).

2

### emissions reductions take place during the period of the first long·term strategy for regional haze." 40 C.F.R. § 

### 5L308(e)(2)(iii). Third, a State must demonstrate that "the emissions reductions resulting from the

... alternative measure will be surplus
to those reductions resulting from measures adopted to meet requirements if the CAA as of the baseline date of the SIP." 40 C.F.R. § 

### 5L308(e)(2)(iii).

Revising the SIP to reflect the variances granted by the Illinois Pollution Control Board to Ameren and Midwest Gen would mean that the Illinois MPS/CPS fails to meet two of the three requirements needed to rely on an alternative to BART 8



### Fi"rst, the MPS/CPS with the Ameren and Midwest Gen variances will not "achieve greater reasonable progress" toward natural visibility conditions than would the installation and operation of BART. 40 C.F.R. § 

### 5L308(e)(2)(i). In our comments on Illinois' Proposed Regional Haze SIP, Sierra Club noted several

reasons why the MPS/CPS would not achieve greater reasonable progress toward natural visibility conditions than BART.4 Despite all of these reasons why the MPS/CPS was more deficient than a BART determination, the U.S. Environmental Protection Agency found that the state standards would achieve greater reasonable
progress because it applied to more facilities than the Regional Haze Rule. It was the fact that these non-BART sources were also regulated that allowed the U.S. Environmental Protection Agency to find that the state rules provided greater reasonable progress. 5 If 

### IEP A were to revise the state SIP to reflect the variances granted by the Illinois Pollution Control Board, then it would completely undercut EPA's rationale for this finding. For instance, EPA noted that in the case of Ameren, three of its power plants meet the criteria for being subject to BART, and five coal-fired plants are governed by the sulfur dioxide ("S02") and NOx limits in the MPS. 77 Fed. Reg. at 39,943. After the variance, all five coal-fired plants governed by the MPS do not have to comply with the 2015 and 2017 sulfur dioxide ("S02") emission rate provisions of the MPS. The variance, thus, completely eliminates the rationale for finding that the MPS/CPS is an acceptable BART

3 Sierra Club believes that reliance on the 111PS/CPS even before the variances were granted, violated the Clean Air Act. See Comments submitted in docket ID No. EP A-R05-0AR-2011·0598.

4 Sierra Club's Comments on Illinois' Proposed Regional Haze Rule are attached hereto and incorporated by reference.
5 77 Fed. Reg. at 39943 Qllinois' submittal includes letters from the affected companies choosing the option that includes S02 and NOX emission limits, which pursuant to Illinois' rules establishes these limits as enforceable limits. In the case of Midwest Generation, three ofits power plants meet the criteria for being subject to BART, and six plants are governed by the S02 and NOX limits in the Multi- Pollutant Standards

.... In the case of Ameren, three of its power plants meet the criteria for being subject to BART, and five coal-fired plants are governed by the S02 and NOX limits in the (CPS). In the notice of proposed rulemaking, EPA proposed to conclude that the emission reductions from the Cli1PS) and the (CPS) would be greater than the reductions that would

occur with unit· specific implementation of BART on the subset of these sources that meet the criteria for being subject to BART.

3

### alternative as it will not achieve greater reasonable progress toward natural visibility conditions.

Second, the MPS/CPS with the Ameren and Midwest Gen variances will

mean that "all necessary emissions reductions" will not "take place during the period of the first long·term strategy for regional haze." 40 C.F.R. § 

### 51.308(e)(2)(iiil. The period of the first long·term strategy for regional haze ends in 2018. 40 C.F.R. § 

### 51.308(£). The Ameren variance pushes the already-inadequate emissions reductions required by the MPS to three years after that period ends. To revise the SIP to reflect this variance would mean that the Illinois' SIP fails to ensure that "all
necessary emissions reductions take place during the period of the first long·term strategy for regional haze."

In summary, because the standards on which the U.S. Environmental Protection Agency relied to find that the state· based standards are an adequate alternative to BART would be eliminated if the Ameren and Midwest Gen variances

were incorporated into the SIP, Illinois must not revise its SIP as it would be in violation ofthe Clean Air Act.

Please do not hesitate to contact undersigned counsel with any questions or

concerns.

cc: gina.roccafort.e@illinois.gov

4 

### Sincerely,

Kristin Henry, Staff Attorney Sierra Club 85 Second Street San Francisco, CA 94105 

### Phone: (415) 977-5716 

### Fax: (415) 977-5793 

### kristin.henrv(al,sierraclub. orgFebruary 27, 2012

Attention Docket 1D No. EPA-R05-0AR-2011-0598

Regarding: Approval and Promulgation of Air Quality Implementation Plans; Illinois; Regional Haze; 77 Fed. Reg. 3966 (Jan. 26, 2012)

I. INTRODUCTION

On behalf of the Environmental Law and Policy Center, Little Village Environmental Justice Organization, National Parks Conservation Association, Respiratory Health Association of Metropolitan Chicago, and Sierra Club, we thank you for considering these comments on the Environmental Protection Agency's recent proposal to approve and promulgate Illinois' Regional Haze State Implementation Plan ("SIP").

For the reasons explained herein, EPA cannot approve Illinois' Regional Haze SIP. First, EPA must reject Illinois' proposal to rely on the Multi-Pollutant Standard/Combined-Pollutant Standard ("MPS/CPS") 1 in lieu of BART for numerous sources subject to BART in the state. The plain language of the Clean Air Act ("CAA'') requires installation and operation of BART to achieve reasonable progress toward meeting the national goal of eliminating visibility impairment at Class I areas. See CAA § 169A(b)(2)(A); 42 U.S.C. § 749l(b)(2)(A). Further,

even if it were legally permissible for EPA to authorize states to rely on alternative programs to opt out of BART, the MPS/CPS cannot substitute for BART for several readily apparent reasons:

• In evaluating the MPS/CPS as an alternative to BART, Illinois was required to make a source-specific BART determination for each source subject to BART in the state. 40 C.F.R. § 51.308(e)(2). Illinois did not do so.

• Under applicable regulations, alternatives to BART may only be approved if they "achieve greater reasonable progress toward natural visibility conditions" than would the installation and operation of BART. 40 C.P.R.§ 51.308(e)(2)(i). The MPS/CPS does not satisfy that requirement, because

o BART would require some additional controls at facilities subject to BART, 2
whereas MPS/CPS does not require any additional controls at those sources; 3

1 35 Ill. Admin. Code§ 225.233, known as the Multi-Pollutant Standard ("MPS"), applies to plants in Illinois owned by Ameren and Dynegy. 35 Ill. Admin. Code § 225.293-299, referred to as the Combined Pollutant Standard ("CPS"), covers Illinois facilities owned by Midwest Generation ("MWG").
2 See 42 U.S.C. § 7492(g)(2); 40 C.F.R. § 51.308(e)(l)(ii).
3 Although the CPS does contain requirements that MWG install particular types of controls (i.e., activated carbon injection, flue gas desulfurization) at certain plants, the CPS contains no equipment requirements at all for the M\VG boilers subject to BART. See 35 Ill. Admin. Code §225.293-299. Likewise, the MPS has no control requirements for any plants subject to it; however, a consent decree signed by Dynegy, the U.S. EPA, Illinois and other intervenors in 2005 requires installation of control equipment at Dynegy's Baldwin plant. See http://www.epa.gov/compliance/resources!cases/civil!caa/illinoispower.html. That consent decree is available at http://www.epa.gov/compliance/resources/decrees/civil/caa/dmgfinal-cd.pdf (last visited Feb. 21, 20 12).o If Illinois perfonned an adequate, source-specific BART analysis for each source subject to BART that is covered under the MPS/CPS, Illinois would determine that BART would require steeper reductions than MPS/CPS requirements;

o The MPS/CPS is weaker than even the seven year-old presumptive BART limits, because (i) the MPS/CPS's fleetwide average requirements exceed presumptive BART in several instances, and MWG and Ameren need not meet even those weak requirements at their plants subject to BART; (ii) MPS/CPS emission limits

are based on a much longer averaging period than presumptive BART limits; and (iii) Even presumptive BART, which would be inadequate for each subject-toBART unit in Illinois, would require better control equipment than the equipment which Illinois is allowing to be installed at plants subject to BART.

• Illinois was required, but failed, to ensure that "all necessary emissions reductions take place during the period of the first long-term strategy for regional haze." 40 C.F.R. § 51.308(e) (2)(iii).

• Governing regulations require that BART alternatives provide emission reductions surplus to those resulting from programs implemented to meet other requirements of the Clean Air Act. See 40 C.F.R. § 51.308(e)(2)(iv).lt is not clear that the MPS/CPS, which
may be proposed by Illinois as a mechanism to implement the Transport Rule 4 in the state, can satisfY this requirement.

Moreover, the BART determination for Dominion's Kincaid plant- a plant not covered by the MPS/CPS- cannot stand, because: (i) Dominion's BART analysis failed to compare "apples to apples" in evaluating the emissions reductions that would be achieved by different control technologies, leading to the illogical and incorrect conclusion that the least effective control technology will result in the greatest decrease in visibility impacts; and (ii) the emission limits set as BART for Kincaid are based on a much longer averaging period than BART limits.

Finally, Illinois' Long-Term Strategy ("LTS") is deficient because Illinois relies heavily

on the MPS/CPS and the Transport Rule to satisfY the requirement that it include in its SIP "all

measures necessary to obtain its share of the emission reductions needed to meet the progress goal[s]" at Class I areas for which Illinois sources contribute to visibility impairment. Neither the MPS/CPS nor the Transport Rule ensure that emissions reductions will be made to help achieve reasonable progress goals from two highly-polluting coal plants, Joppa and Marion, which are near Class I areas. See 40 C.F.R. 

### § 51.308. These and other issues are discussed in further detail below.

4 See Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP approvals, 76 Fed. Reg. 48208 (Aug. II, 2011).

2II. BACKGROUND

A. The Clean Air Act's Visibility Program: Protecting Public Lands and People

The Clean Air Act's visibility program requires elimination of visible air pollution at the country's national parks, wilderness areas, and other premier public lands, encompassing a total of !56 protected public lands that include many of the nation's most iconic vistas. Preservation of these views has an obvious and demonstrable intrinsic value; as National Park Service studies confinn, visitors' enjoyment of a national park is tied to visibility. 5 Preserving visibility also helps sustain the healthy tourism industry centered on visits to the nation's iconic landmarks. The same National Parks Service surveys demonstrate that visibility conditions affect the amount of time and money visitors are willing to spend at national parks. 6 In 20 I 0 alone, national parks tourism contributed approximately $3 I billion to the United States economy, sustaining over 250,000 jobs. 7 Nevertheless, EPA has recognized that longstanding visibility problems that have continued to mar the landscape and obscure views of our most treasured -and economically important-landmarks. For example, EPA notes that, "[i]n most of the eastern [National Parks] of the United States, the average visual range is less than 20 miles, or about one-fifth of the visual range that would exist under estimated natural conditions." 76 Fed. Reg. 82219, 82222.

While the visibility program primarily seeks to preserve the iconic vistas across the country, the program provides important ancillary health benefits as well. Haze-forming pollutants, including sulfur dioxide ("S0 2 ") and nitrogen oxides (''NOx"), also contribute to health problems, meaning that any program that requires controls to target and reduce these pollutants will also improve public health. For example, S0 2 and particulate matter ("PM") are associated with serious lung and heart ailments, including premature death, while NOx is a precursor to ground level ozone, or smog, which is associated with respiratory diseases, asthma attacks, and decreased lung function. In 201 I, there were more than 262 exceedances of the EPA's ozone air pollution standard at national parks-the highest number of exceedances since 2008. Even healthy adults are urged to limit outdoor exercise on days with high ozone. Given the overlap between the haze fonning pollutants and health, EPA has estimated that in 2015, reductions in S0 2 and NOx resulting from the Regional Haze Rule will prevent 1,600 premature deaths, 2,200 non-fatal heart attacks, 960 hospital admissions, and over 1 million lost school and work days, benefits valued at $8.4- $9.8 billion annually.

B. Visibility Protection Under the Clean Air Act

Recognizing that manmade haze diminishes visibility and degrades the integrity of many of the nation's national parks and wilderness areas, Congress in 1977 amended the Clean Air

5 National Parks Service, Visibility Effects of Air Pollution: Importance of Visual Air Quality to Visitor Experience, http://www.nature.nps.oov/air/AOBasics/visibilitv.cfm (last accessed February 13, 2012).

6 !d.

7 Southwick Associates, The Economics Associated with Outdoor Recreation, Natural Resources Consen'ation and Historic Preservation in the United States, at 17 (October 10, 2011), available at wwv.r.nfwforg/Content/ContentFolders!NationalFishand\VildlifeFoundation/HomePage/ConservationSpotJightsffhe EconomicValueofOutdoorRecreation.pdf; United States Department of the Interior, Office of Policy Analysis, The Department of the Interior's Economic Contributions, at 9 (June 21, 2011 ), available at

www .doi.oov/ppa/upload/DO I -Econ-Report-6- 21-20 !!.pdf.

3Act, "declar[ing] as a national goal the prevention of any future, and the remedying of any existing, impaim1ent of visibility in mandatory class I Federal areas which impairment results from manmade air pollution." See 42 U.S.C. § 749l(a)(l), CAA § 169A(a)(l); see also 40 C.P.R. pt. 81, subpt. D (listing the !56 protected Class I areas, including certain national parks, wilderness areas, and national memorial parks, as well as certain intemational parks). Among other things, Congress mandated that EPA adopt regulations that would require states to develop SIPs containing measures necessary to make reasonable progress toward the national goal of improving visibility, including installation and operation of BART at BART-eligible sources 8
that could be reasonably anticipated to cause or contribute to visibility impainnent. 42 U.S.C. § 749l(a)(4), (b)(2)(A); CAA § 169A(a)(4), (b)(2)(A).

EPA's visibility program initially focused on controlling plume blight, or visibility degradation caused by air pollution reasonably attributable to a source or small group of sources. To address plume blight, EPA required installation of BART at sources to which visibility impairment at the Class I areas could be reasonably attributed. Thus, under the regulations, 36
states containing Class I areas were required to determine which existing stationary sources should install BART for controlling pollutants that impair visibility. See Visibility Protection for Federal Class I Areas, 45 Fed. Reg. 80084, 80086 (Dec. 2, 1980). The Federal Land Managers play an important role in assessing the need for BART in this context; if a Federal Land Manager certifies to the state that there exists reasonably attributable impairment of visibility in any Class I area, at least 6 months prior to the state's SIP submission or revision, the state is required to identify and analyze BART for those sources and, where appropriate, require installation BART

as expeditiously as practicable. See 40 C.F .R. § 51.302(c)(1); I d. § 51.302(c )( 4). This provision for addressing reasonably attributable visibility impairment ("RA VI") 9 laid the groundwork for reaching the national goal or restoring natural visibility. See, e.g., 40 C.P.R.§ 51.302(c)(l); Id. § 51.302(c)(4). From the outset, however, EPA acknowledged that RA VI BART could only take the nation so far toward remedying the visibility problem. Thus, the agency explained that widespread, regionally homogenous haze also impaired visibility, but in the original rulemaking it deferred action on regional haze until the agency had better monitoring, modeling, and scientific knowledge about the relationship between emission of certain pollutants and visibility. 45 Fed. Reg. at 80086.

In 1999, EPA expanded the visibility program, promulgating the Regional Haze Rule. Regional Haze Regulations, 64 Fed. Reg. 35714 (July 1, 1999). Under that Rule, states are directed to submit SIPs containing emissions limitations representing BART and schedules for compliance for each BART-eligible source that may be anticipated to cause or contribute to any visibility impairment in a Class I area. See 40 C.P.R.§ 51.308(e). BART is determined for each

source based on a case-by-case analysis. Id. at§ 51.308(e)(l)(ii). Thus, in addition to RA VI BART, a source may have to install BART as required to combat regional haze. The EPA further elaborated on requirements for determining BART in its BART guidelines, published on

8 A source is BART -eligible if it is a stationary source within one of 26 enumerated categories, was not in operation before August 7, 1962 but was in existence on August 7, 1977, and has the potential to emit 250 tons per year or

more of any pollutant. 42 U.S.C. § 7491(b)(2)(A), (g)(7); CAA § 169A(b)(2)(A), (g)(7).
9 "Reasonably attributable visibility impairment" is ''visibility impairment that is caused by the emission of air pollutants from one, or a small number of sources." 40 C.F .R. § 51.301. Visibility impairment, in turn, is "any humanly perceptible change in visibility (light extinction, visual range, contrast, coloration) from that which would have existed under natural conditions." Jd.

4July 6, 2005. See Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations, 70 Fed. Reg. 39104 (July 6, 2005) (hereafter "BART Guidelines").

Implementation of the Regional Haze Rule has been slow since many states fell behind in their duty to develop Regional Haze SIPs, triggering EPA's duty to step in and impose federal implementation plans ("FIPs"). In response to litigation to force EPA to take action, EPA is now in the process of determining whether to approve proposed SIPs and proposing and finalizing FIPs around the country. In November 20 I I, EPA agreed that, within one year, it would finalize haze pollution clean-up plans for every state, paving the way for clearer (and cleaner) air in
many national parks and wilderness areas. See Consent Decree, Nat 'l Parks Consen,ation Ass 'n

v. Jackson, No. I :1 1-cv-01 548(ABJ) (D.D.C. Nov. 9, 201 1). The proposed Illinois Regional Haze SIP, at issue in these comments, is one of those plans.

C. Illinois' Proposed Regional Haze SIP

On June 24, 2011, Illinois submitted a proposed Regional Haze SIP to EPA. 77 Fed. Reg. 3966. In its Proposed SIP, Illinois states that, based on modeling completed by the Midwest

. Regional Planning Organization ("MRPO"), it determined that emissions sources in the state

cause or contribute to visibility degradation in 19 national parks and wilderness areas (defined in the CAA as "Class I areas"). 10 Illinois EPA, Regional Haze State Implementation Plan for Illinois, AQPSTR 10-08 (May 10, 2011) at 8-12 (hereafter "Illinois Regional Haze SIP"). To comply with the BART provisions of the Regional Haze Rule, Illinois evaluated which emissions

sources within the state cause or contribute to visibility degradation in those Class I areas. Illinois concluded that II sources, including 9 Electric Generating Units ("EGUs"), cause or contribute to visibility degradation and are thus "subject to BART." Illinois EPA, Technical Support Document For Best Available Retrofit Technology Under the Regional Haze Rule, AQPSTR 09-06 (Apr. 29,201 I) (hereafter "Illinois TSD for BART") at 12-22.

Instead of evaluating and determining BART for all of those sources, Illinois proposed that an "alternative" to BART- ostensibly permitted under the Regional Haze Rule- be used for 7 of the 9 EGUs. Illinois Regional Haze SIP at 19. Specifically, Illinois proposed that the MPS/CPS be relied on in lieu of BART to minimize visibility degradation caused or contributed
to by those 7 EGUs.ld. For the remaining two EGUs, Illinois proposed BART determinations. Illinois TSD for BART at 3 I- 3 8.

To comply with the LTS requirements of the CAA, Illinois used a threshold determination method included in the BART Guidelines to find that only 15 stationary sources in the state must be considered in developing its proposed LTS. Instead of requiring additional

10 Those 19 national parks and wilderness areas are: Sipsey Wilderness Area, Alabama; Caney Creek Wilderness Area, Arkansas; Upper Buffalo Wilderness Area, Arkansas; Mammoth Cave National Park, Kentucky; Acadia National Park, Maine; Moosehorn Wilderness Area, Maine; Isle Royale National Park, Michigan; Seney Wilderness Area, Michigan; Boundary Waters Canoe Area Wilderness, Minnesota; Voyageurs National Park, Minnesota; Hercules-Glades Wilderness Area, Missouri; Mingo Wilderness Area, Missouri; Great Gulf \Vilderness Area, New Hampshire; Brigantine Wilderness Area, New Jersey; Great Smoky Mountains National Park, Tennessee and North Carolina; Lye Brook Wilderness, Vermont; James River Face Wilderness Area, Virginia; Shenandoah National Park, Virginia; and Dolly Sods/Otter Creek Wilderness, West Virginia. Illinois Regional Haze SIP at 12.

5emissions reductions from those sources, however, Illinois claimed that existing or soon-to-beimplemented regulatory programs would require sufficient emissions reductions from those

sources so as to ensure achievement of reasonable progress goals in impacted Class I areas. Illinois Regional Haze SIP at 34.

For the reasons discussed below, Illinois' Regional Haze SIP is defective and thus may not be approved. EPA should disapprove the SIP and instead promulgate a Regional Haze FIP for the state to remedy these deficiencies and ensure compliance with all CAA requirements.

III. ARGUMENT

A. THE PLAIN LANGUAGE OF THE CLEAN AIR ACT PRECLUDES ALTERNATIVES TO BART

EPA cannot authorize states to rely on alternative programs to opt out of BART. Under the Clean Air Act, BART is a mandatory measure that must be implemented to achieve reasonable progress toward restoration of natural visibility conditions. Section !69A(b)(2)(A) expressly requires states to adopt SIPs that "contain such emission limits, schedules of compliance and other measures as may be necessary to make reasonable progress toward meeting the national goal

... including" installation and operation of BART at BART-eligible

sources that emit any air pollutant which may reasonably be anticipated to cause or contribute to any impainnent of visibility in any Class I area. See CAA § 169A(b)(2)(A); 42 U.S.C. § 749!(b)(2)(A) (emphasis added). The only permissible exemption from BART is expressly set forth in§ 169A(c). See CAA § 169A(c); 42 U.S.C. § 749l(c). Under§ 169A(c), a source can be exempt from BART only if EPA, by rule promulgated with sufficient notice and opportunity for public comment, determines that the source does not either by itself or in combination with other

sources "emit any air pollutant which may reasonably be anticipated to cause or contribute to a significant impainnent of visibility in any mandatory clas·s I federal area." CAA § 169A(c)(l); 42 U.S.C. § 749l(c)(l). Further, EPA cannot exempt a fossil-fuel fired power plant with a design capacity of750 megawatts or more, unless the owner or operator of the plant can demonstrate that the power plant is located far enough away from the class I areas that it satisfies the exemption criteria above. CAA § 169A(c)(2); 42 U.S.C. § 749l(c)(2). Likewise, the appropriate Federal Land Manager or managers must agree with the exemption before it can go into effect. CAA § 169A(c)(3); 42 U.S.C. § 749l(c)(3). Thus, EPA's authority to exempt

sources from BART is very narrowly defined. Nowhere in Section 169A did Congress contemplate or sanction sweeping alternative programs that would operate in lieu of source specific BART.

In short, there is no statutory authority for EPA regulations that purport to allow for reliance on alternative programs in place of BART. See 40 C.F.R. § 51.308(e)(2). Nevertheless, the D.C. Circuit Court of Appeals has upheld such regulations, concluding that BART is not mandatory but rather one of many available options that EPA and state agencies may impose at their discretion to achieve reasonable progress. See Center for Energy & Economic Dev. v. EPA, 398 F.3d 653 (D.C. Cir. 2005) ("CEED") (holding that§ 169A did not require use ofBART); Utility Air Regulat01y Group v. EPA, 471 F.3d 1333, 1340 (D.C. Cir. 2006) ("UARG") (relying

6on CEED for the proposition that "EPA may leave states free to implement BART-alternatives

so long as those alternatives also ensure reasonable progress"). In so holding, CEED and UARG effectively read mandatory BART requirements out of the Clean Air Act. Because these cases cannot be reconciled with the plain language of the Clean Air Act, EPA should not rely on them
to exempt Illinois from implementing BART.

B. ILLINOIS ILLEGALLY FAILED TO COMPLETE A BART DETERMINATION FOR EACH SOURCE SUBJECT TO BART IN THE STATE.

Even if we assume for the sake of argument that alternatives to BART are permissible under the CAA, Illinois has not met the regulatory requirements necessary to approve such alternatives. First, Illinois was required, but failed, to make a BART determination for each

source subject to BART in the state. Pursuant to 40 CFR § 51.308(e )(2), for all alternatives to BART that a State proposes, the State "must submit an implementation plan containing the following plan elements and include documentation for all required analyses:

... (C) An analysis of the best continuous emission control technology available and associated emissions reductions achievable for each source within the State subject'to BART and covered by the alternative
program.

. . . [If] the emissions trading program or other alternative measure has been designed
to meet a requirement other than BART

... the State may determine the best system of continuous emission control technology and associated emission reductions for similar types of

sources within a source category based on both source-specific and category-wide information,

as appropriate." (emphasis added).

Illinois' proposed Regional Haze SIP fails to comply with those regulatory requirements. Rather than make a BART detennination for each individual source subject to BART that would be covered by Illinois' proposed alternative to BART program (namely, the MPS/CPS), Illinois simply compared projected emissions reductions from the MPS/CPS to presumptive BART emissions. 77 Fed. Reg. at 3972 ("Illinois did not provide an analysis comparing BART for each subject unit to the alternative," but rather only "compared the emissions reductions from MPS and CPS to the presumptive BART emission levels suggested in EPA's guidance"). In doing so, Illinois entirely ignored the regulatory mandate that it determine BART "

... based on both sourcespecific and category wide information

.... " 40 C.F.R. § 51.308(e)(2)(C). As EPA made clear in its BART Guidelines, presumptive BART levels are not source-specific; rather, they merely provide a general baseline for BART that States may- indeed, must- deviate from if a sourcespecific analysis so indicates. See 40 C.F.R. Part 51, Appendix Y; BART Guidelines at 39171 (presumptive BART limits only apply if no determination made that "an alternative control level is justified based on a careful consideration of the statutory factors" for a given source). Because Illinois entirely failed to use source-specific information or undertake a comprehensive five factor analysis to determine BART, its proposed Regional Haze SIP may not be approved.ll

11 EPA's conclusion that Illinois need not compare the proposed alternative to BART to a "fully analyzed set of BART limits" because the results of such an analysis are "clear even without Illinois conducting a full BART analysis for these units," 77 Fed. Reg. 3972, is thus simply legally wrong.

7C. THE MULTI-POLLUTANT STANDARD/COMBINED POLLUTANT STANDARD (MPS/CPS) IS NOT AN ACCEPTABLE ALTERNATIVE TO BART.

Second, Illinois' proposed alternative to BART does not meet regulatory requirements for such alternatives. Under current regional haze regulations, to utilize an alternative emissions reduction program instead of BART, a state must meet several requirements. Crucially, the state
must "demonstrat[ e ] 12 that an emissions trading program or other alternative will achieve greater reasonable progress [toward natural visibility conditions] than would have resulted from the installation and operation of BART at all sources subject to BART in the State and covered by the alternative program." 40 C.F.R. § 51.308(e)(2)(i). As discussed above, to do so, the State
must include "[a]n analysis of the best continuous emission control technology available and associated emissions reductions achievable/or each source within the State subject to BART and covered by the alternative program." 40 C.F.R. § 51.308(e)(2)(i)(C) (emphasis added). If the proposed alternative to BART was "designed to meet a requirement other than BART," the State
may complete that analysis "based on both source-specific and category-wide information, as appropriate." 40 C.F.R. § 51.308(e)(2)(i)(C) (emphasis added). Second, a State must require that "all necessary emissions reductions take place during the period of the first long-term strategy for regional haze." 40 C.F .R. § 51.308( e )(2)(iii). Third, a State must demonstrate that "the emissions reductions resulting from the

... alternative measure will be surplus to those reductions resulting from measures adopted to meet requirements if the CAA as of the baseline date of the SIP." 40 C.F.R. § 51.308(e)(2)(iii). In this case, Illinois fails to meet any of the three requirements necessary for approval of an alternative to BART.

i. The MPS/CPS Will Not Achieve Greater Reasonable Progress Toward Natural Visibility Conditions Than BART

For several reasons, the MPS/CPS will not "achieve greater reasonable progress toward natural visibility conditions" than would the installation and operation of BART. To begin with, BART imposes emissions limits on individual sources, which emission limits ensure that each individual source that causes or contributes to visibility degradation uses the best available controls to minimize its impact to the Class I area(s). See 42 U.S.C. § 7492(g)(2); 40 C.F.R. § 51.308(e)(l)(ii). The MPS/CPS, in contrast, are fleetwide requirements that impose no specific emissions limits on any single plant or emissions source. 77 Fed. Reg. 3971; 35 Ill. Admin. Code Part 225. As such, Ameren, MWG and Dynegy can meet MPS/CPS requirements without adding
any pollution control equipment at sources subject to BART, and without requiring that those

sources meet BART-level emission limits. 13 Because an appropriate BART determination would

12 A state's determination that an alternative will achieve greater reasonable process than would the installation and operation of BART must be based on the clear weight of the evidence. 40 C.F.R: § 51.308(e)(2)(i)(E).

13 EPA asserts that "[t]he limits that Illinois has imposed are sufficiently stringent that the companies have only limited latitude to over control at some facilities in trade for having elevated emissions at other facilities." 77 FR 3971. EPA provides no basis for this assertion, which is contradicted by the MPS/CPS itself. As discussed elsewhere in these comments, the MPS/CPS does not include IDlY control equipment requirements for any of the

sources subject to BART in Illinois. The MPS/CPS does, in contrast, include specific control equipment requirements (i.e., activated carbon injection, flue gas desulfurization) for other covered sources, including MWG's Fisk, Crawford, and Waukegan plants, and boiler unit 3 at Will County. See 35 I.A.C. §225.293-299. Since the MPS/CPS does mandate specific control requirements at sources not subject to BART, plant owners are constrained to make emission reductions at those plants or shut them down. The owners thus have much more "limited latitude"

8require effective emission controls at facilities subject to BART, whereas MPS/CPS does not require any additional controls at those specific sources, proper application of BART will ensure greater improvements in visibility at affected Class I areas than the MPS/CPS. It is therefore illogical and without merit for the state or EPA to suggest, let alone claim, that MPS/CPS would achieve greater reasonable progress towards natural visibility conditions than BART.

Next, Illinois certainly cannot demonstrate that an alternative program would be "better than BART" without first properly determining what BART is. Nonetheless, Illinois has not properly determined BART for !!!!Y ofthe sources subject to BART that are covered by the MPS/CPS. BART determinations must be made on the basis of an up-to-date evaluation of the five statutorily-mandated factors, 14 and must take into account source-specific information. See 42 U.S.C. § 7492(g)(2); 40 CFR § 51.308(e)(2)(C); BART Guidelines at 39171 ("While [presumptive S0 2 BART] may represent current control capabilities, we expect that scrubber technology will continue to improve and control costs continue to decline. You should be sure to consider the level of control that is currently best achievable at the time that you are conducting
your BART analysis"). Because presumptive BART limits were established for an entire source category and were determined at a particular point in time (2005), they are neither based on source-specific infonnation, nor do they represent an up-to-date evaluation of information that
must be taken into account in determining BART. BART Guidelines at 39171. Thus, a State
may not rely on presumptive BART limits in lieu of a full, updated, source-specific BART analysis for each source subject to BART covered by the alternative program. Illinois, however, did just that. 77 Fed. Reg. at 3972. Because Illinois failed to complete a full BART analysis for each source subject to BART that is covered under the MPS/CPS, its Regional Haze SIP may not be approved. 15

Moreover, if Illinois had conducted proper, full BART evaluations for sources subject to BART that are covered by the MPS/CPS, it almost certainly would have determined that the presumptive limits do not represent BART for those sources. Recent BART limits set by EPA make clear that the presumptive BART limits (set at . I 5 lb/MMBtu or 95% removal for S0 2 , and

not to make emissions reductions at those plants, and much greater latitude not to make them at the plants subject to BART. Therefore, contrary to EPA's assertion, the MPS/CPS does not ensure that any individual plant will install BART-level controls, achieve BART -level emission limits, or achieve "greater reasonable progress" than would imposition of BART.

14 BART determinations "shall take into consideration the costs of compliance, the energy and nonair quality environmental impacts of compliance, any existing pollution control technology in use at the
source, the remaining useful life of the source, and the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology." 42 U.S.C. § 7492(g)(2); see also 40 C.F.R. §51.301.
15 Because Illinois did not complete full, proper BART analyses or make BART determinations based on those analyses, it could not- and thus did not- model the visibility impacts that would result from imposition of such
proper BART limits as compared to the MPS/CPS. What is worse, however, is that Illinois did not even model the visibility impacts of its MPS/CPS program as compared to the visibility impacts that would be achieved by presumptive BART emission limits. As such, contrary to law, Illinois entirely failed to consider "the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology," 42 U.S.C. § 7492(g)(2)), in evaluating whether the MPS/CPS is "better than BART." Moreover, Illinois' failure to model the visibility impacts ofMPS/CPS versus those of BART renders Illinois' claim that MPS/CPS will achieve greater reasonable progress than BART utter speculation. A decision by EPA to approve Illinois' Regional Haze SIP in reliance on such naked speculation would be arbitrary and capricious.

9at varying levels at and above .I 0 lb/MMBtu for NOx, depending on boiler type and coal type 16 ),

are at least 2 to 3 times higher than recent BART requirements. For example, EPA recently set a BART limit of0.06lb/MMBtu S0 2 based on a rolling 30-day average for six coal-fired emission units in Oklahoma, 76 Fed. Reg. 81728, 81729 (Dec. 28, 201 !), and a BART limit of0.05 lb/MMBtu NOxon a 30-day average for 4 coal-fired boiler units in New Mexico. 76 Fed. Reg. 49 I, 493-97 (Jan. I 5, 20 I!). In contrast, under the MPS/CPS, the fleetwide average requirements for 201 

### i 7 for NO, and S02 emissions are much higher- at .23 lb/MMBtu of S0 2 for Ameren plants and . I 5 lb/MMBtu of S02 for MWG plants, and . I I lb/MMBtu of NO, for both Ameren and MWG plants- than those recent BART limits. And because these MPS/CPS limits are fleetwide average requirements, Ameren and MWG could permissibly keep emissions considerably higher than those fleetwide average limits at any given plant, including those subject to BART. Thus, if Illinois had conducted proper BART analyses, it is virtually certain that it would have detennined that the MPS/CPS is not "better" than BART for subject sources.

Further, even if it were legally adequate for Illinois to compare its proposed alternative
program to presumptive BART limits, Illinois still would not have made the required demonstration that MPS/CPS is "better than BART." First, fleetwide average requirements for 2017 for Ameren plants exceed presumptive BART requirements for NOx at one of the three plants subject to BART, and far exceed presumptive S02 BART limits at all three Ameren plants subject to BART. Illinois Technical Support for BART at 29-30 (compare fleetwide average NO, limits of .I 1 lb/MMBtu to presumptive BART NO, limits of .10 for Coffeen plant, and fleetwide
average S0 2 Iimits of .23 lb/MMBtu to presumptive BART limits of .15 lb/MMBtu). Fleetwide
average requirements for MWG also exceed presumptive NOx BART limits for the Powerton plant. !d. at 32. And again, because these are fleetwide average emission limits, Ameren and MWG could pennissibly keep emissions well higher than those limits at any given plant, including those plants subject to BART. Because Ameren and MWG's fleetwide average requirements under the MPS/CPS exceed presumptive BART in several instances, and because Ameren and MWG need not meet even those weak requirements at their plants subject to BART, the MPS/CPS is not "better" than presumptive BART limits. See 40 C.F.R. §51.308(e)(3) (requiring that alternative measures result in greater emissions reductions than under BART).

Second, the emission limits required by the MPS/CPS do not ensure greater reasonable
progress toward natural visibility conditions than would presumptive BART due to the long averaging times of those emission limits. Wbile visibility impacts are measured based on a onehour averaging time, the fleetwide average emission limits required by the MPS/CPS are based

on annual averages. 35 Ill. Admin. Code §§ 225.295 and 225.233. The presumptive BART limits, in contrast, are based on 30-day rolling averages. BART Guidelines at 39172. The longer the averaging period, the higher emissions may be in any given hour during that averaging period. Thus, an emission limit based on annual averages allows for much higher short-term emissions- and thus much greater short-term impact on visibility- than would a limit based on

a 30-day rolling average. Since the emission limits required for the MPS/CPS are not only

16 BART Guidelines at 39171-72.

17 Because BART must be implemented no later than five years after a State's Regional Haze SIP is approved, 42 U.S.C. § 749l(b)(2)(A) and (g)(4), assuming the Regional Haze SIP is approved this year (2012), BART requirements would be in place by 2017.

10higher than preemptive BART limits, but also are based on a much longer averaging period, the MPS/CPS allows for much greater visibility degradation than BART.

Third, even if the control equipment that Illinois is allowing to be installed at plants subject to BART were required by the MPS/CPS, 18 Illinois still could not demonstrate that the MPS/CPS is "better" than either presumptive or properly-analyzed BART limits for those facilities. In its Regional Haze SIP proposal, Illinois notes that many of the sources subject to BART in the state already have installed, or will install, additional S02 and NOx controls. Illinois TSD for BART at 25-31. However, much of the control equipment that Ameren and MYG plan

to install at their facilities falls far short of even presumptive BART requirements. For example, while Ameren "is expected to install a new scrubber" 19 at E.D. Edwards unit 3, no such plans are in the works for Edwards unit 2. Id. at 28. Without a scrubber, it is virtually certain that Edwards unit 2 will not meet even presumptive S0 2 BART limits, much less S0 2 limits resulting from a full BART analysis for the source." 0 Illinois essentially admits as much: "Ameren is relying on system-wide reductions required by the MPS to meet BART at Edwards." !d. at 28.

The controls planned for MWG plants subject to BART also are a far cry from BART requirements. For NOx control, MWG "is expected to install selective non-catalytic reduction (SNCR)" on all four Powerton units, the four Joliet units subject to BART, and on Will County unit 4 by 2012. Illinois TSD for BART at 30-31. SNCR is much less effective at removing NOx than is selective catalytic reduction ("SCR"). While SNCR's removal efficiency ranges between 25 and 50%, 21 EPA recognizes the removal efficiency ofSCR as 90%, 22 and at least one study indicates that SCR achieves an even higher percentage removal. 23 Indeed, as noted above, EPA recently set a BART limit of0.05 lb/MMBtu for emissions ofNOx on a 30-day average for 4 coal-fired boiler units in New Mexico, based on the use of SCR. 76 Fed. Reg. at 493-97. Moreover, EPA used SCR as the basis for the 7 year-old presumptive NOx limit (of 0.10 lb/MMBtu) for cyclone boilers. 70 Fed. Reg. 39172. Powerton's four units are all cyclone-type boiler units; thus, at a minimum, SCR must be installed on those units to ensure that at least BART-level emissions reductions are achieved. Because the CPS lacks a requirement that SCR

18 As discussed above, the :MPS/CPS contains absolutely no requirements for specific control equipment to be installed or operated at any source subject to BART in Illinois. See 35 III. Admin. Code§§ 225.233 and 293-299.

19 We reiterate that, although Illinois may state that a plant owner is "expected" to install a particular type of control equipment at a given source, the MPS/CPS includes no source-specific emissions limits or control equipment requirements for sources subject to BART. The MPS/CPS, then, would create no penalty if a plant owner were to change those "expectations." 20 See 70 Fed. Reg. 39132**('~here** is ample data to support the determination that the BART presumptive limits outlined in today's action are readily achievable by new wet or semi-dry FGD systems across a wide range of coal types and sulfur contents based on proven scrubber technologies currently operational in the electric industry"); Technical Supp01t Document for the Best Available Retrofit Technology (BART) Notice of Final Rulema/dng: Setting BART S0 2 Limitsfor Electric Gene,rating Units: Control Technology and Cost-Effectiveness (Apr. 2005) at 15 (included as Appendix A) ("Research conducted by EPA revealed that the pre-existing S0 2 control systems which are typically achieving below 50 percent removal efficiencies are of the dry sorbent injection scrubber type. The EPA does not feel that sorbent injection scrubbers reflect current BART for S0 2 control.

... ")

21 Kevin Dougherty, "Comprehensive NOx Reduction in a Capital Constrained World," MARMA presentation (Jul. 8, 2009) at slide 6 (included as Appendix B).

22 EPA, Technical Support Document: Methodology for Developing BART NOx Presumptive Limits (June 15, 2005)

at 13 (included as Appendix C).

23 Institute of Clean Air Companies, White Paper: Selective Catalytic Reduction (SCR) Control of NOx Emissions from Fossil Fuel-Fired Electric Power Plants (May 2009) at 7 (included as Appendix D)

IIbe installed and operated at the MWG sources subject to BART, in particular at Powerton, the CPS clearly is not "better" than presumptive BART for NO,.

For S0 2 control, MWG is "expected" to install "flue gas desulfurization (FGD) equipment" on all four Powerton units by the end of2013, on the four Joliet units subject to BART by 2019, and on Will County unit 4 by 2019. The FGD equipment that MWG plans to install at Powerton, however, is not wet or dry scrubbers, but rather Dry Sorbent Injection (DSI). 24 And although MWG does not yet have a penn it for the FGD equipment they "expect"
to install at Joliet and Will County unit 4 in 2019, it is highly possible that MWG will plan to install DSI at those plants as well. But EPA has made it crystal clear that DSI is not BART. In its Technical Support document that provides the basis for the presumptive S0 2 BART limits, EPA explained that "[r]esearch conducted by EPA revealed that the pre-existing S0 2 control systems which are typically achieving below 50 percent removal efficiencies are of the dry sorbent injection scrubber type. The EPA does not feel that sorbent injection scrubbers reflect

current BART for S02 control

.... " 25

More recent documents included in Illinois' own SIP submission make clear that DSI is far inferior to wet or dry scrubbers. In the BART analysis for Dominion's Kincaid plant, Dominion" states that wet scrubbers achieve S0 2 removal efficiencies of 90 to better than 95%

on coal-fired boilers, and dry scrubbers (paired with fabric filters) achieve S0 2 removal efficiencies of 80-90%. ENSR, BART analysis for the Kincaid Power Plant (Jan. 2009) at 3-2 (hereafter "Kincaid BART Analysis"). In contrast, Dominion finds that DSI only achieves S0 2 removal efficiencies of 60 to 70%, and that DSI has only achieved 70% removal in certain limited tests. !d. at 3-3

- 3-4. The Institute for Clean Air Companies has similarly found that DSI systems "typically have removal efficiencies ranging from 50-70%" and that DSI systems

are "generally applied when lower removal efficiencies are required." 27 Because the DSI controls that MWG is permitted to install at Powerton, and may install at Joliet and Will County,
cannot achieve the removal efficiency (95%) or emission limit (.15 lb!MMBtu) required for presumptive S0 2 BART, CPS is not "better than BART," and Illinois cannot demonstrate that CPS would achieve greater reasonable progress toward natural visibility conditions than would the installation and operation of BART on subject sources.

Illinois has failed to demonstrate that MPS/CPS will achieve greater reasonable progress toward natural visibility conditions than would the installation and operation of BART at subject facilities. It will not do so, and therefore may not be relied on as an alternative to BART.

24 See Construction Permit, Application No. 10120020, Dry Sorbent Injection Systems and ESP Upgrades for Unit 5, Powerton Generating Station (Feb. 16, 2011) and Construction Permit, Application No. 10120021, Dry Sorbent Injection Systems and ESP Upgrades for Unit 6, Powerton Generating Station (Feb. 16, 2011) (included as Appendices E and F). 25 Appendix A, Technical Support Document for the Best Available Retrofit Technology (BART) Notice of Final Rulemaf...ing: Setting BART S02Limitsjor Electric Generating Units: Control Technology and Cost-Effectiveness (Apr. 2005) at 15 (emphasis added).
26 The BART analysis was prepared by ENSR Corporation for Dominion Energy, Inc. However, to avoid confusion, in these comments we refer to the authors of the analysis as "Dominion."

27 "Acid Gas/S02 Control Technologies," available at http://www.icac.com/i4a/pages/index.cfm?pageid-3401 (last visited February 17, 2012).

12ii. The MPS/CPS Does Not Require that All Necessary Emissions Reductions Take Place During the First Long- Term Strategy for Regional Haze.

In order for an alternative to BART to be approved, a State must require that "all
necessary emissions reductions take place during the period ofthe first long-term strategy for regional haze." 40 C.F.R. § 51.308(e)(2)(iii) (emphasis added). The end of the first long-term strategy period for regional haze is 20 I 8. Illinois Regional Haze SIP at 3 I -32. In Illinois, however, several requirements of the CPS do not even go into effect until that year or later. For example, the CPS does not require that MWG achieve a fleetwide average of .13 Ib/MMBtu S0 2 until 2018, or achieve a fleetwide average of .II lb/MMBtu S02 until 2019. 35 Ill. Admin. Code § 225.295(b). Further, MWG is not "expected" to install FGD at the four Joliet boilers and the Will County boiler until 2019, one year after the long-term strategy period ends. Illinois TSD for BART at 30-31. Because (i) the CPS includes fleetwide requirements that do not take effect until
at or after the end of the first Iong-tenn strategy period, (ii) the CPS, with only fleetwide average requirements, does not ensure that MWG will ever install control equipment on its subject-toBART plants; and (iii) even if the CPS did require MWG to install control equipment on its subject to BART plants, MWG does not plan to install FGD on the Joliet and Will County unit 4 boilers until after the first long-term strategy period ends, Illinois is not requiring that "all
necessary emissions reductions take place during the period of the first Iong-tenn strategy for regional haze." 40 C.F.R. § 51.308(e) (2)(iii) (emphasis added). Thus, the MPS/CPS may not be approved as an alternative to BART.

iii. It Is Not Clear That The Emissions Reductions Resulting from the MPS/CPS Will Exceed Those Reductions Resulting from Measures Adopted to Meet Requirements of the CAA.

Another requirement that a State must meet in order to obtain approval to use an alternative program instead of BART is to demonstrate that "the emissions reductions resulting from the

... alternative measure will be surplus to those reductions resulting from measures adopted to meet requirements of the CAA as of the baseline date of the SIP." 40 C.F.R. § 5!.308(e)(2)(iii). Currently, the MPS/CPS are stand-alone State requirements which are not
necessary to meet CAA requirements. However, there are substantial indications that Illinois will propose to meet the requirements of the Transport Rule using the MPS/CPS. In fact, in an article published November 16, 20 I I, Progress Illinois reported that MWG claims that it will comply with the Transport Rule based on its compliance with the CPS." 8 Although the Transport Rule is currently stayed pending appea!, 29 it may be upheld before Illinois' Regional Haze SIP is approved. If Illinois proposes to comply with the Transport Rule via the MPS/CPS, then any emissions reductions resulting from MPS/CPS will not be "surplus to those reductions resulting from measures adopted to meet requirements" of the CAA as of the baseline date of the SIP.

In sum, because (i) Illinois has not demonstrated that the MPS/CPS would achieve greater reasonable progress toward natural visibility conditions than would the installation and

28 See http://orogressillinois.com/quick-hits/content/20 11/11/16/new-epa-rules-target-coal-plant-emissions (last visiting Feb. 16, 2012).
29 See http:llepa.•ovlairtransportlpdfs/CourtDecision.pdf (last visited Feb. 16, 2012).

13operation of BART on subject sources; (ii) Illinois is not requiring that "all necessary emissions reductions take place during the period of the first long-term strategy for regional haze;" and (iii) it is not clear that any emissions reductions resulting from the MPS/CPS will be surplus to reductions required by the CAA, the MPS/CPS may not be approved as an alternative to BART. Illinois' proposed Regional Haze SIP therefore may not be approved.

D. THE BART ANALYSIS AND DETERJ\1INA TION FOR DOMINION'S KINCAID PLANT
IS SEVERELY FLAWED.

The BART analysis conducted for Dominion's Kincaid plant contains numerous flaws which render the BART detennination unlawful. The most egregious of these flaws is Dominion's failure to compare "apples to apples" in evaluating S02 control technologies. As explained below, because Dominion did not accurately compare the emissions reductions that different controls would achieve, the visibility impacts analysis that the company performed incorrectly predicts that the least effective control technology will result in the greatest decrease in visibility impacts. This illogical and incorrect result cannot be upheld.

In a BART analysis, EPA mandates that controls be compared on an "apples to apples" basis. BART Guidelines at 39166. For that to occur, it is necessary to compare the actual emissions reductions a given control technology will produce, assuming all other factors (i.e., fuel type, amount, etc.) remain equal. This is so because a BART analysis includes an evaluation of the reduction in visibility impacts a control technology will achieve. !d. at 39164. A control technology that achieves fewer emission reductions will likely create more visibility impacts, while a technology that achieves greater emissions reductions will likely produce less visibility impacts.

As Dominion explains, the sulfur content of the fuel burned at a fossil fuel-fired plant determines how much S02 will be created by the combustion process. Kincaid BART Analysis
at 3-1 ("Sulfur dioxide emissions are generated in fossil-fuel combustion units from the oxidation of sulfur present in the fuel..

.. Uncontrolled emissions of S0 2 are directly related to the fuel sulfur content, and not by the firing mechanism, boiler size, or operation"). Logically, then, an emissions control technology with greater removal efficiency will necessarily reduce S0 2 emissions more than a technology with a lesser removal efficiency, if the technologies are applied to fuels with the same sulfur content. Thus, to correctly compare the S0 2 emissions reduction a given control technology will achieve, a proper BART analysis requires that all control technologies be evaluated as applied to fuels with the same sulfur content.

Dominion did not do that here. Rather, contrary to EPA mandates, Dominion evaluated three control technologies by comparing the effectiveness of those technologies as applied to fuels with different sulfur content. Dominion evaluated the following "control scenarios":

• "Case 1: Firing 0.3% sulfur PRB sub-bituminous coal, Dry Sorbent Injection (DSI) with Trona capable of achieving an S0 2 emissions level of .20 lb/MMBtu

.... ;"

• "Case ]a: Firing 0.3% sulfur PRB sub-bituminous coal, enhanced DSI with Trona capable of achieving an S02 emissions level of .18 lb/MMBtu (if achievable)

... ;"

14• "Case 2: Firing 0.5% sulfur PRB sub-bituminous coal, Dry Scrubber/Fabric Filter (DS/FF) capable of achieving an S0 2 emissions level of0.15 lb/MMBtu

... ;" and

• "Case 3: Firing I .62%-sulfur IIJinois Basin bituminous coal, Wet Flue Gas Desulfurization (WFGD) capable of achieving an S0 2 emissions level of0.15 lb/MMBtu

... "

Kincaid BART Analysis at ES-1. By comparing the emissions reductions achieved by Wet FGD

as applied to a fuel with a sulfur content of I .62%, against those achieved by DS/FF as applied to

a fuel with .5% sulfur, against the emissions reductions achieved by DSI as applied to fuel with a sulfur content of .3%, Dominion created an inaccurate, improper comparison of the emissions reductions each control technology would achieve.

To make matters worse, Dominion did so with virtually no justification. Dominion provided no basis whatsoever for evaluating DS/FF as applied to PRB coal with .5% sulfur content, as opposed to PRB coal with .3% sulfur content. The arbitrary nature of that selection is made clear by Dominion's statement that, "[b]ased on historical emissions, the sulfur content of the PRB coal generally does not exceed .3% by weight." Kincaid BART Analysis at 2-1 (emphasis added). And Dominion's explanation of why it evaluated Wet FGD as applied to 1.62%-sulfur Illinois Basin coal is equally unconvincing. Dominion begins by recognizing that Wet FGD has a very high removal efficiency, "ranging from 90% to in excess of95%." !d. at 3- 2. The company then states that those "high S02 control efficiencies would provide Dominion with an opportunity to use higher sulfur IIJinois bituminous coal and still meet the presumptive BART limit of .15 lb/MMBtu." But as explained above, presumptive BART may not be substituted for an up-to-date, source-specific BART analysis. See BART Guidelines, 70 Fed. Reg. 39171. Thus; the fact that Wet FGD could achieve the presumptive BART emissions limits

even as applied to Illinois coal is no excuse for failing to conduct a proper evaluation of Wet FGD's effectiveness and of the emissions reductions it could achieve if agplied to**~el** with the

same sulfur content (i.e., the "baseline" fuel with a sulfur content of .3%' 0 ) as DSI.' 1

If Dominion had accurately compared the several control technology options on an "apples to apples" basis, it undoubtedly would have found that Wet FGD and DS/FF would achieve much greater emissions reductions than DSI. Indeed, Dominion itself admits that Wet FGD achieves S0 2 removal efficiencies of90 to better than 95% on coal-fired boilers, and that DS/FF achieves S0 2 removal efficiencies of 80-90%. Kincaid BART Analysis at 3-2, 3-3. In

30 See Kincaid BART Analysis at ES-5, 3-1.
31 Dominion's two other ')ustifications" for evaluating Wet FGD as applied to high sulfur Illinois coal- first, that PRB coal "could" be as costly as Illinois Basin coal in the future, equalizing the cost factor of the BART analysis for those two types of coal; and second, that using Illinois coal would "improve the Illinois economy," Kincaid BART Analysis at 3-2- are similarly useless. As explained above, a BART analysis must first review the effectiveness of control alternatives, which requires an "apples to apples" comparison of those alternatives without regard to cost. See BART Guidelines at 39164-66. Even if cost were considered as part of a technology's effectiveness in the first step of the BART analysis, the fact that PRB coal might, at some future date, cost the same as Illinois coal (which, Dominion recognizes, is currently more expensive than PRB coal), is irrelevant because a BART analysis must be based on information that is valid at the time of the analysis. See BART Guidelines, 70 Fed. Reg. at 39171. Likewise, whether or not use of Illinois coal would "improve the Illinois economy," that is entirely irrelevant to determining BART and may not be considered in evaluating the effectiveness of a control technology.

15contrast, Dominion estimates that DSI will achieve a 60% S0 2 removal efficiency, 32 and
expresses doubt that even an emissions limit of .18 lb/MMBtu can be achieved using DSI, much less a limit of .15 lb/MMBtu. See id. at 3-3

- 3-4 ("Although the lower S02 emission rate [of .18 lb/MMBtu] is preferred, it may not be achievable, depending on the coal sulfur content and the effectiveness of the Trona removal for this specific application.") Necessarily, then, Wet FGD and DS/FF will remove more S0 2 emissions than DSI, and will thus improve visibility more than would occur ifDSI is used.

The reduced impact on visibility resulting from the use of Wet FGD (as compared to DS/FF or DSI) would have been clear if Dominion had properly modeled the emission reductions achieved by Wet FGD, DS/FF, and DSI as applied to fuel with the same sulfur
content. But because Dominion modeled only the visibility impacts of those three control technologies using the contrived, improper "control scenarios" listed above, Dominion's modeling showed, incorrectly, that DSI- the least effective control technology- would produce the fewest visibility impacts of the three control types. See Kincaid BART Analysis at ES-2- ES-3,6-1- 6-3. This illogical and incorrect result may not be relied upon in determining BART.

A second glaring error in Dominions' BART analysis for S02, which stems in part from its failure to compare controls on an "apples to apples" basis, is its flawed cost analysis. The
cost effectiveness of a control technology must be considered in determining BART. 42 U .S.C. § 7492(g)(2); 40 C.F.R. §51.301; BART Guidelines at 39166-67. '"[E]ffectiveness' is measured in tenus of tons of pollutant emissions removed, while 'cost' is measured in terms of annualized control costs." BART Guidelines at 39167. Here, instead of evaluating the effectiveness of each control option using the proper technique (comparing annual costs of each control technology to the tons ofS0 2 that the technology would remove each year, id.), Dominion improperly compared the annual costs of each technology to the visibility impacts that the company's flawed modeling predicted would result from each "control scenario." See Kincaid BART Analysis at 6- 4- 6-5. By doing so, Dominion incorporated into the cost analysis the flawed, "apples-tooranges" calculation of how much S0 2 each control technology would reduce, rendering the cost analysis entirely unreliable.

Yet another error with Dominion's BART analysis and Illinois EPA's BART detennination for Kincaid pertains to the averaging time for the emission limits. Averaging time is a critical component of BART emission limits because, as explained above, a longer averaging period allows for shorter term emissions spikes which can greatly impact visibility. The BART Guidelines specifY that BART limits for EGUs should be based on 30-day averaging periods. 70 Fed. Reg. at 39172. Because Kincaid is an EGU of greater than 750 MW capacity, presumptive BART limits apply unless an updated, source-specific BART analysis establishes that BART for that source should vary from those limits. Id. at 39131, 39171. Nonetheless, Illinois determined that, beginning in 20 17, BART for S02 at Kincaid is an annual average emission rate of .15 lb/MMBtu S0 2

. 77 Fed. Reg. at 3972. Neither Illinois nor Dominion provided any reason why

32 Later in the same BART Analysis, Dominion proclaims that DSI can achieve S0 2 removal rates of70%. Kincaid BART Analysis at 3-5. However, Dominion clearly explairis why it does not believe 70% can be achieved at Kincaid (for example, "[e]ffective utilization of Trona will be more difficult for Kincaid's much larger 660 MW units

.... ). See id. at 3-3. Therefore, in light of Dominion's own explanation, no more than a 60% removal rate can be assumed for DSI at Kincaid.

16the S0 2 emission limits at Kincaid should be based on a less-stringent annual average, rather than on the 30-day rolling average mandated by the BART Guidelines. In fact, Dominion
appears to acknowledge that BART should be based on the 30-day averaging period. See Kincaid BART Analysis at 3-3 ("Dominion estimates that for the purposes of BART implementation, DSI with Trona injection will be able to achieve an average S0 2 control of;:o;60% and an S0 2 emission rate of .20 lb/MMBtu based upon a 30-day rolling average.") Because an emission rate of .15 lb/MMBtu based on an annual average allows spikes in visibility impacts to go unaccounted for- and it is precisely these spikes, or the worst days of visibility impainnent that BART and the regional haze program more generally are designed to improve- the proposed S02 limits for Kincaid do not satisfy BART requirements.

In summary, because Dominion did not make an "apples to apples" comparison of the three control technologies evaluated, did not model the visibility impacts that would be achieved by the three control technologies as applied to fuel with the same sulfur content, and prepared a flawed cost effectiveness analysis, Dominion's BART analysis is severely flawed. Illinois' BART detem1ination for Kincaid, which was made in reliance on that flawed BART analysis and which further erred by setting emission limits based on an annual average, rather than the required, more stringent 30-day rolling average, thus must be rejected. As such, EPA must disapprove Illinois' Regional Haze SIP and, in its stead, implement a FIP that is compliant with the CAA and its regulations.

E. ILLINOIS' LONG-TERM STRATEGY (LTS) IS DEFICIENT.

Illinois' L TS is deficient because Illinois has failed to demonstrate that it has included in its SIP "all measures necessary to obtain its share of the emission reductions needed to meet the [Reasonable Progress Goals] for the Class I areas affected by Illinois sources." 77 Fed. Reg. at 3973. In particular, Illinois has failed to show that it has imposed or will impose enforceable emissions limitations on two EGUs- Ameren's Joppa power plant and Southern Illinois Power's Marion plant- that are necessary to achieve the RPGs for Class I areas affected by emissions from the state. As described further below, two of the primary regulatory mechanisms that Illinois relies on to cut emissions from those plants do not, in fact, ensure any emissions reductions from those plants at all. Thus, Illinois' Regional Haze SIP fails to meet L TS requirements, and must be rejected.

Under the Regional Haze rules, a state that causes or contributes to visibility impaim1ent in Class I areas in other states is required to develop a L TS which "must include enforceable emissions limitations, compliance schedules, and other measures as necessary to achieve the reasonable progress goals established by States having mandatory Class I Federal areas." 40 C.F.R. § 51.308(d)(3). Specifically, a contributing state "must demonstrate that it has included in its implementation plan all measures necessary to obtain its share of the emission reductions needed to meet the progress goal for the area." Id. A contributing state is further required to "identify all anthropogenic sources of visibility impaim1ent considered by the State in developing its long-term strategy," which should include stationary sources, among others. Id.

In its proposed Regional Haze SIP, Illinois evaluated sources in the state which emit greater than 1000 tons per year of S02, NO,, or the two pollutants combined, and which were

17"not previously evaluated in the subject-to-BART analysis," in order to determine which of those

sources "potentially affect visibility." Illinois Regional Haze SIP at 32. Adopting a method utilized in the BART Guidelines, Illinois calculated a quantity/distance ("Q/D") ratio for evaluated sources, with Q representing the emissions rate in tons per year and D representing the distance from the evaluated source to a Class I area. !d. Concluding that it could exclude emissions sources with a Q/D ratio of less than I 0: I, Illinois found that 15 sources had to be considered in developing the state's LTS. !d. at 32-34. Among those sources are Ameren's Joppa coal plant, which has a Q/D ratio of274, nearly three times larger than any other evaluated

source, and Southern Illinois Power Company's Marion coal plant, with a Q/D of91. Illinois did

not model the visibility impacts ofJoppa, Marion, or any of the 13 other sources with a Q/D ratio greater than I 0 (or any of the sources with a Q/D less than I 0, for that matter.). Nor did Illinois include in its L TS any new restrictions on emissions from any sources, including those with a QID greater than 10. Instead, Illinois claimed that existing or soon-to-be-implemented regulatory programs would require sufficient emissions reductions from those 15 sources so as to

ensure achievement of reasonable progress goals in impacted Class I areas. !d. at 34. In particular, Illinois relied on the MPS/CPS and the Transport Rule, along with two other rules (the NOx SIP Call and Title IV) as providing emissions reductions from EGUs that ensure that reasonable progress goals for impacted Class I areas are met. !d. at 37.

Illinois' LTS is unacceptable for two reasons. First, Illinois' LTS is unsubstantiated due

to the state's failure to model the visibility impacts of those sources with a Q/D ratio greater than I 0. Absent accurate modeling demonstrating that these sources should be exempt from additional emission reductions requirements to help attain reasonable progress goals, Illinois' LTS may not be approved. We request that EPA and Illinois revisit whether these sources were rightly exempt and whether additional control requirements should be affixed these sources as part of a CAA-compliant LTS for the state.

Second, contrary to Illinois' claims, two of the primary regulatory programs on which it relies to provide emissions reductions for the 15 sources with a Q/D ratio greater than 10- namely, the MPS/CPS and the Transport Rule- do not ensure sufficient emissions reductions at plants that contribute to visibility impairment in Class I areas in other states. 33 First, the MPS/CPS will not ensure sufficient reductions from the highly-polluting Joppa and Marion plants. The MPS/CPS does not apply to the Marion plant, which is owned by Southern Illinois Power Company. And although Joppa, owned by Ameren, is subject to the MPS, that regulatory

33 Illinois claims that the most states in which the Class I areas that Illinois sources impact are located told Illinois they are on track to meet their reasonable progress goals, and therefore Illinois need not make additional emission reductions at its visibility-impacting sources to ensure achievement of those goals. See Illinois Regional Haze SIP at 41-4 7. However, the assumptions on which some of these states rely in estimating that they will achieve their RPGs by 2064 are faulty. For example, states in the VISTAS Regional Planning Organization- where several Class I

areas impacted by Illinois are located, including Mammoth Cave National Park in Kentucky, Sipsey Wilderness in Alabama, and Great Smoky Mountain National Park in Tennessee and North Carolina- assume achievement of their RPGs based on controls required by CAIR (which was replaced by the Transport Rule). Id. at 44. As explained herein, the Transport Rule is stayed and, even if it goes into effect, it will not ensure that sources that impact visibility at Class I areas will reduce their haze-creating emissions. Thus, the VISTAS states' claims that their RPGs will be achieved are unreliable, and more emissions reductions beyond those estimated to result from the Transport Rule will be needed to meet those goals. As a state that causes or contributes to visibility impairment in Class I

areas in VISTAS states, Illinois is obligated, but has failed, to take measures sufficient to ensure that it reduces its share of emissions necessary to meet RPGs in those areas.

18program does not ensure that emissions reductions will be made at the Joppa plant. As explained above, the MPS requires Ameren to achieve fleetwide average emissions limits, but does not mandate that Ameren meet those limits by reducing emissions at any specific plant. Ameren could, as such, make reductions at the other 6 Ameren coal plants in Illinois without making any reductions at Joppa. Because Joppa is a II 00 MW plant that emits 31,487 tons per year ofS0 2 and NO,, Illinois Regional Haze SIP at 33, and is within 300 kilometers of the Mingo Wilderness Area in Missouri and Mammoth Cave National Park in Kentucky, failure to require additional emissions reductions from Joppa puts visibility at both of those Class I areas at risk.

The Transport Rule also does not ensure emissions reductions at either Joppa or Marion. First, it is uncertain whether the Transport Rule will go into effect at all, in light of the fact that it has been challenged in court and is currently stayed pending review of those legal challenges. See Order, EME Homer City Generation, L.P. v. EPA, No. 11-1302 (D.C. Cir. Dec. 30, 2011). Illinois cannot rely on an enjoined regulation that may never take effect to provide emissions reductions that the state must make to "obtain its share of the emission reductions needed to meet the progress goal[s]" for Class I areas. See 40 C.F.R. § 51.308(d)(3).

Second, like the MPS/CPS, the Transport Rule does not require emissions reductions at particular plants. Under the Transport Rule, emissions allowances are provided to individual

sources. 76 Fed. Reg. at 48271. Individual sources can meet the Rule's requirements either by reducing their emissions down to the level of their budget or by obtaining additional emission credits from other sources. While there are some restrictions on trading, intrastate trading, and

some interstate trading, is still allowed./d at 48271-72. Thus, under the Rule, a source such as Joppa or Marion that is within the airshed of multiple Class 1 areas can legally emit above its Transport Rule budget by obtaining additional allowances from a source that is far away from the Class 1 area.

Third, Illinois cannot rely on the Transport Rule to reduce visibility impairment in Class I

areas impacted by pollution from the state because that Rule does not protect against very high short-term or seasonal emissions that degrade visibility. Under the Transport Rule, emission allowances are issued for a given year, but sources are under no obligation to ration the allowances out over the year. Instead, a source such as Joppa or Marion might choose to save its allowances for use during the summer ozone period when demand for electricity is at its peak and to idle during the rest of the year, failing to reduce emission during the months when Class I

areas may be most likely to experience the most degradation in visibility. As such, even if the Transport Rule resulted in emission reductions from a source such as Joppa or Marion, there is

no guarantee that those reductions would help ensure achievement of reasonable progress goals

at Class I areas impacted by Illinois sources. In addition, while EPA has proposed to exempt BART sources from source specific BART requirements in reliance on the Transport Rule, nothing supplants the state's obligations or precludes it from issuing additional requirements to

ensure that these non-BART facilities reduce adequate emissions to help ensure the goals of the Regional Haze Rule be met.

In sum, because (i) Illinois relies heavily on the MPS/CPS and the Transport Rule to satisfY the requirement that it include in its SIP "all measures necessary to obtain its share of the emission reductions needed to meet the progress goal[s]" at Class I areas for which Illinois

19sources contribute to visibility impairment, and (ii) neither the MPS/CPS nor the Transport Rule

ensure that emissions reductions will be made- or be made at a time that visibility is most impacted- from two highly-polluting coal plants, Joppa and Marion, which are near Class I

areas, Illinois has failed to meet the requirements of 40 C.F.R. § 51.308(d)(3). Illinois' LTS is deficient, and therefore its Regional Haze SIP must be disapproved.

IV. CONCLUSION

For the reasons stated herein, Illinois' proposed Regional Haze SIP does not comply with CAA requirements, and therefore must be rejected. In its place, EPA should promulgate a Regional Haze FIP that complies will the CAA and implementing regulations.

Please do not hesitate to contact undersigned counsel with any questions or concerns.

20 Sincerely, 

# 1(1

Jennifer L. Cassel Staff Attorney Environmental Law & Policy Center 35 E. Wacker Dr., Suite 1600 Chicago, IL 6060 I jcassel@elpc.org ph (312) 795-3726 fax (312) 795-3730