Midwest Generation v. Ill. Pollution Control Bd.

240 N.E.3d 119

2024 IL App (4th) 210304

MIDWEST GENERATION, LLC, Petitioner-Appellant,

v.The ILLINOIS POLLUTION CONTROL BOARD, Respondent-Appellee.

Dynegy Midwest Generation, LLC; Illinois Power Generating Company; Illinois Power Resources Generating, LLC; Electric Energy, Inc.; and Kincaid Generation, LLC, Petitioners-Appellants,

v.The Illinois Pollution Control Board, Respondent-Appellee.

AmerenEnergy Medina Valley Cogen, LLC; and Union Electric Company, d/b/a Ameren Missouri, Petitioners-Appellants,

v.The Illinois Pollution Control Board, Respondent-Appellee.

NOS. 4-21-0304, 4-21-0309, 4-21-0310 cons.

Appellate Court of Illinois, Fourth District.

Filed March 13, 2024

Petition for Direct Administrative Review of the Order of the Illinois Pollution Control Board. PCB No. R20-19.

Kristen L. Gale, Susan M. Franzetti, and Vince Angermeier, of Nijman Franzetti LLP, of Chicago, for appellant Midwest Generation, LLC.

Michael L. Raiff, of Gibson, Dunn & Crutcher LLP, of Dallas, Texas, and Joshua R. More, Robert A.H. Middleton, and Sarah L. Lode, of ArentFox Schiff LLP, of Chicago, for appellants Dynegy Midwest Generation, LLC, Illinois Power Generating Company, Illinois Power Resources Generating, LLC, Electric Energy, Inc., and Kincaid Generation, LLC.

Claire A. Manning, Anthony D. Schuering, and Garrett L. Kinkelaar, of Brown, Hay & Stephens, LLP, of Springfield, for other appellants.

Kwame Raoul, Attorney General, of Chicago (Jane Elinor Notz, Solicitor General, and Jonathan J. Sheffield, Assistant Attorney General, of counsel), for appellee.

OPINION

JUSTICE STEIGMANN delivered the judgment of the court, with opinion.

¶ 1 In 2019, the Illinois General Assembly directed the Illinois Pollution Control Board (Board) to adopt rules establishing requirements for the construction, design, operation, and closure of coal ash surface impoundments. See Pub. Act 101-171 (eff. July 30, 2019) (adding 415 ILCS 5/22.59).

¶ 2 In April 2021, the Board issued its final order adopting part 845 of the Illinois Administrative Code (35 Ill. Adm. Code 845), which, among other things, (1) defined coal combustion residue (CCR) "surface impoundment" to include impoundments that no longer contain water (also called "dry impoundments") (see 35 Ill. Adm. Code 845.120 (2021)), (2) required the owner or operator of a CCR surface impoundment to conduct monthly groundwater elevation monitoring (id. § 845.650(b)), (3) required an owner or operator of a CCR surface impoundment who elected to close an impoundment by removing all of the CCR to also remove the impoundment liner (id. § 845.740(a)), and (4) required the owner or operator of a CCR surface impoundment who elected to close an impoundment by leaving the CCR in place to install a final cover system that is at least six feet thick (id. § 845.750(c)).

¶ 3 In May 2021, three separate petitions for administrative review were filed, challenging portions of part 845 on the basis that the Board either exceeded its authority or acted arbitrarily and capriciously. The petitions were filed by (1) Midwest Generation, LLC (Midwest); (2) Dynegy Midwest Generation, LLC, Illinois Power Generating Company, Illinois Power Resources Generating, LLC, Electric Energy, Inc., and Kincaid Generation, LLC (collectively, Dynegy); and (3) AmerenEnergy Medina Valley Cogen, LLC, and Union Electric Company, d/b/a Ameren Missouri (collectively, Ameren). On the Board’s motion, we have consolidated the three petitions for review.

¶ 4 We disagree with petitioners that the Board acted arbitrarily and capriciously or exceeded its authority and affirm the final order of the Board adopting part 845 as Illinois’s first set of statewide standards regulating the storage and disposal of coal ash in surface impoundments.

¶ 5 I. BACKGROUND

¶ 6 A. CCR and Surface Impoundments

¶ 7 When a power plant burns coal, it produces CCR, which contains contaminants like mercury, cadmium, and arsenic. Depending on the type of coal used, CCR can also contain such chemical constituents as barium, chromium, fluoride, lead, lithium, radium 226 and 228, and thallium. Because these chemical constituents of CCR are soluble and mobile, they pose a risk absent proper management of contamination to soil, surface water, and groundwater near power plants.

¶ 8 CCR is a major form of industrial waste. In 2014, coal-burning facilities in the United States generated about 130 million tons of CCR. CCR can take the form of either wet sludge or dry powder. Dry CCR can be disposed of at a landfill. Wet CCR is generally sluiced by a pipe to an on-site surface impoundment.

¶ 9 A CCR surface impoundment typically consists of (1) a primary cell, in which the majority of the solid particles settle out of the wastewater and (2) one or two secondary cells, in which the very fine suspended solids settle out of the wastewater (also called a "polishing pond"). Some CCR surface impoundments have a constructed liner, which allows the operator to utilize heavy equipment to remove ash from the surface impoundment and dispose of it off-site.

¶ 10 B. Federal and State Regulation of CCR

¶ 11 In 2008, a dike ruptured at a power plant in Tennessee, releasing 1.1 billion gallons of CCR into a nearby river. The incident prompted the United States Environmental Protection Agency (USEPA) to develop rules, under the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq. (2006)), regulating the storage and disposal of CCR. Simultaneously, the Illinois Environmental Protection Agency (IEPA) developed a coal ash impoundment strategy that required groundwater monitoring at all power plants in Illinois that use coal as a fuel source. Additionally, in 2011, the Board issued site-specific rules for the closure of Ameren’s CCR impoundments at its Hutsonville power plant. See 35 Ill. Adm. Code § 840. After Ameren sought a site-specific rule for the closure of another 16 of its ash ponds at 8 other facilities, the IEPA proposed a rule of general applicability for all coal ash ponds at all power plants in Illinois.

¶ 12 In 2015, before Illinois’s rules were completed, the USEPA issued its final rules regulating the storage and disposal of coal ash. These federal rules—codified in title 40, part 257, of the Code of Federal Regulations (40 C.F.R. § 257.51 (2015))— became effective on October 19, 2015. (We note that we will use terms "federal rule" and "part 257" interchangeably.) The federal rule defined " ‘CCR surface impoundment ***’ [as] a natural topographic depression, man-made excavation, or diked area, which is designed to hold an accumulation of CCR and liquids, and the unit treats, stores, or disposes of CCR." Id. § 257.53.

¶ 13 In 2016, Congress enacted the federal Water Infrastructure Improvements for the Nation Act (WIIN Act), codified in relevant part at section 6945. 42 U.S.C. § 6945(d). The WIIN Act provided for state regulation of CCR "units" in lieu of federal regulation if the state rules are "at least as protective" as the rules in federal part 257. Id. § 6945(d)(1)(B). (In this opinion, we, too, will use the term "unit" to mean a CCR surface impoundment.)

¶ 14 In 2019, the Illinois General Assembly passed Public Act 101-171, commonly called the Coal Ash Pollution Prevention Act, which consisted entirely of amendments to the Environmental Protection Act (Act). See Pub. Act 101-171 (amending 415 ILCS 5/1 et seq.), Through this legislation, the General Assembly added section 22.59 of the Act, which directed the IEPA to promulgate, and the Board to adopt, comprehensive rules governing the construction, operation, and closure of CCR surface impoundments. See 415 ILCS 5/22.59 (West 2020). The legislature directed that "[t]he rules must, at a minimum *** be at least as protective and comprehensive as the federal regulations *** promulgated by the [USEPA] in [federal part 257] governing CCR surface impoundments." Id. § 22.59(g)(1).

¶ 15 C. Rulemaking Under the Amendments

¶ 16 1. The IEPA’s Proposed Rules and the First-Notice Order

¶ 17 In March 2020, the IEPA filed with the Board its proposed new, statewide regulations for CCR surface impoundments, which, if adopted, would be codified at title 35, part 845, of the Illinois Administrative Code. (We will refer to the Illinois regulations as "the State regulations" or "part 845" interchangeably.) The proposed regulations were presented as a 135-page attachment to the IEPA’s "Statement of Reasons," a 45-page document, which (1) explained the federal and state regulatory background of CCR and the purpose and effect of the proposed regulations and (2) contained a section-by-section summary of the proposed regulations.

¶ 18 In April 2020, the Board entered an "Opinion and Order" (the "first-notice order") (1) accepting the IEPA’s proposal for rulemaking, (2) directing the clerk of the Board to publish the first notice of the proposed rules in the Illinois Register, in accordance with the requirements of the Illinois Administrative Procedure Act (see 5 ILCS 100/5-40(b) (West 2020)), and (3) directing "the assigned hearing officer to proceed to hearing under the rulemaking provisions of the Act." The Board attached the IEPA’s proposed rules as an addendum to the April 2020 order.

¶ 19 Relevant to this appeal, the IEPA proposal contained provisions (1) defining "inactive CCR surface impoundment" to mean "a CCR surface impoundment in which CCR was placed before but not after October 19, 2015, and still contains CCR on or after October 19, 2015. Inactive CCR surface impoundments may be located at an active facility or inactive facility," (2) requiring monthly groundwater elevation monitoring, (3) providing that closure of a CCR surface impoundment by removal of the CCR was complete "when the CCR in the surface impoundment and any areas affected by releases from the CCR surface impoundment have been removed," and (4) providing that closure of a CCR surface impoundment by leaving the CCR in place required installment of a "final cover system" at...