In a move that could lead to dirtier air in Chicago and other downwind communities as far away as New York, Gov. Bruce Rauner’s administration is pushing to overhaul stringent limits on lung-damaging pollution from some of the last coal-fired power plants in Illinois.

Proposed amendments to state rules would scrap limits on the rate of pollution from a fleet of eight coal plants in central and southern Illinois owned by Dynegy Inc. Instead, the state would impose annual caps on tons of sulfur dioxide and nitrogen oxide emitted by the fleet — a subtle but significant change that could stall or reverse efforts to reduce Dynegy’s contributions to smog, soot and acid rain.

Drafted with extensive input from the company’s Chicago-based attorneys, the proposed pollution caps are significantly higher than what Dynegy’s fleet emitted during each of the past two years, according to a Tribune analysis of federal pollution data.

Alec Messina, director of the Illinois Environmental Protection Agency, said the goal is to keep the financially struggling coal plants open by giving Houston-based Dynegy more flexibility to operate individual generating units, several of which are not equipped with modern pollution controls. Before joining the Rauner administration, Messina worked as a lobbyist for a trade group that represents the company’s interests in Illinois.

State standards would still be tougher than federal requirements, Messina said, and company spokeswoman Meredith Moore noted emissions could still increase if the state’s rate-based limits were kept in place.

But if a state rule-making panel approves the proposed changes, expected to be formally introduced this month, the new limit on sulfur dioxide would be nearly double what Dynegy’s existing fleet emitted last year and higher than every year since 2012, according to the Tribune’s analysis. The cap on nitrogen oxide emissions would be 79 percent higher than what came out of the smokestacks in 2016.

In an Aug. 25 letter to the state EPA, Attorney General Lisa Madigan’s office questioned why the new regulations are necessary unless Dynegy plans to operate its dirtier coal plants more frequently and its cleaner plants less often.

The proposed pollution caps are set so high that the state would end up encouraging Dynegy to pollute more, Madigan’s office said.

“We want to make sure the public is getting the full benefit of the pollution standards the company agreed to meet,” James Gignac, Madigan’s environmental counsel, said in an interview. Changing the standard now could roll back years of progress, he said.

Dynegy also secured a provision that would keep the pollution caps fixed at the same amounts — 55,000 tons of sulfur dioxide and 25,000 tons of nitrogen oxide annually — even if it decided to shut down individual generating units or scuttle entire plants.

An EPA draft would have automatically tightened limits on Dynegy’s fleet to reflect plant closures, according to emails obtained by the nonprofit Environmental Law and Policy Center and shared with the Tribune. Chicago attorney Renee Cipriano, a former Illinois EPA director who represents Dynegy and other companies she once regulated, lined out or replaced language in the state’s draft, the emails show.

“We are making those types of tweaks to the rule language, so hopefully they address your issues,” Dana Vetterhoffer, an EPA attorney, responded in a May 31 email to Cipriano. “OK great,” Cipriano wrote back four minutes later.

Howard Learner, the environmental group’s president, said the changes would allow Dynegy to avoid installing pollution controls at its dirtiest plants and turn off the equipment at others.

“The company’s strategy is to run these plants on the cheap for as long as possible, like an old Chevy beater,” Learner said. “If the Rauner administration goes ahead with this, they’re effectively passing on the health costs of Dynegy’s pollution to the rest of Illinois and beyond.”

Moore, the Dynegy spokeswoman, said in an email to the Tribune that swapping the state’s current system for caps on the fleet’s emissions “would mean real environmental benefits.”

The EPA director echoed the company’s comments. “For the first time there is a cap on this fleet. That’s a big deal,” said Messina, who took over the state agency last year after serving as a top aide in Rauner’s office. He previously was a lobbyist for the Illinois Environmental Regulatory Group, an association that represents industries subject to state pollution regulations.

Dynegy doubled down on coal after emerging from bankruptcy five years ago. Like other coal-dependent energy companies, the firm has found it increasingly difficult to cash in on its bet as a surge of cleaner-burning natural gas and pollution-free wind power drove down the wholesale cost of electricity.

As a result, Dynegy has been trying to cut costs at power plants that are being priced out of energy markets.

During the past year the company has shuttered its Wood River plant near Alton, scrapped a unit at its Newton plant in Jasper County and announced plans to mothball two of the three units at its Baldwin plant in Randolph County. Baldwin and Wood River were equipped with pollution controls, and the company had started upgrading the Newton unit before abandoning the project.

Built in the 1950s, ’60s and ’70s, the Dynegy plants for years were exempt from the toughest provisions of the federal Clean Air Act. But laws and regulations became steadily tougher during the past two decades as scientists documented how pollution drifting from coal plants can trigger lung and heart disease and lead to early deaths far away from the smokestacks.

Burning coal to generate electricity also is contributing to climate change. Dynegy’s Illinois plants emitted more than 32 million tons of heat-trapping carbon dioxide last year, an amount equivalent to the tailpipe exhaust of 6 million cars.

Dynegy became the state’s largest producer of coal-fired electricity in 2013 when it acquired five plants from St. Louis-based Ameren Corp. Both companies had earlier agreed to meet the state’s rate-based pollution standards, which gradually became more stringent over the past decade and were designed to force power companies to clean up coal plants faster than federal regulations require.

Ensuring compliance was relatively easy at the three plants Dynegy owned before the Ameren deal. A federal legal settlement required the company to upgrade the Baldwin plant and the Havana plant in Mason County with equipment that significantly reduced emissions of sulfur dioxide, nitrogen oxide and mercury, a potent neurotoxin.

Under state regulations, the two coal plants and a third one in Putnam County are limited to an annual average of 0.19 pounds of sulfur dioxide per million BTUs (British Thermal Units) of energy generated. The limit for the five former Ameren plants is 0.23 pounds per million BTUs, also averaged across the entire fleet.

Both groups of coal plants met the targets last year. But the average rate of sulfur dioxide from the four cleanest plants was 0.05 pounds per million BTUs. The average rate from the rest: 0.43.

Improvements in pollution control are the main reason why the combined amount of sulfur dioxide emitted by the eight Illinois plants now owned and operated by Dynegy dropped 68 percent between 2010 and 2016. During the same period, the amount of electricity generated by the plants dropped by 26 percent.

“This rule change … would give Dynegy free rein to run its dirtiest plants without meaningful limits, putting communities at risk, said Henry Henderson, Midwest director of the nonprofit Natural Resources Defense Council.

Just three years ago, Dynegy CEO Robert Flexon described attempts by competitors to delay environmental improvements as the “wrong behavior.” “Either invest or retire,” he told the Tribune at the time.

Since then electricity prices have stayed low, making it more difficult for the company to profit from some of its plants. And installing and operating pollution controls costs money.

None of the Dynegy plants burns Illinois coal; the company ships its fuel by train from Wyoming mines that produce coal with a lower sulfur content. But the company employs about 1,000 people in Illinois and the power plants contribute to the tax base of local communities, making their survival a potent campaign issue as Rauner seeks re-election next year.

The push to change state regulations for Dynegy emerged from discussions about a 2016 energy bill that subsidized Chicago-based Exelon, a competitor that had threatened to close money-losing nuclear plants in the Quad Cities and Clinton. Though Rauner and state lawmakers rejected Dynegy’s bid for its own state subsidies, emails show Messina had been discussing other options with the company’s top lobbyist since at least November.

Efficiency standards in the new law, combined with state requirements to boost generation of wind power and other forms of renewable energy, promise to further erode the once-dominant position of coal in Illinois.

Dynegy says the Exelon deal scrambled an already volatile market governed by complex electricity auctions, which set prices lower than the amount Dynegy needs to recoup the cost of operating its coal plants.

Environmental groups contend it isn’t the EPA’s job to assist Dynegy, pointing to a state law requiring the agency to improve air quality “to protect health, welfare, property and the quality of life.”

“Now isn’t the time to go backwards,” said Brian Urbaszewski, director of environmental health for the Respiratory Health Association of Metropolitan Chicago. “The state shouldn’t be putting profits ahead of public health and erasing all the gains we’ve made.”

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