BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
Complainant,
vs.
COMMUNITY LANDFILL COMPANY, INC.,
an Illinois corporation, and
the CITY OF MORRIS, an Illinois
municipal corporation,
Respondents.
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PCB No. 03-191
(Enforcement-Land)
NOTICE OF FILING
PLEASE TAKE NOTICE that we have today, October 19, 2007, filed with the Office
of
the Clerk of the Illinois Pollution Control Board, by electronic filing, Complainant'sClosing
Argument and Post-Hearing Brief, and Complainant's Appeal
of Hearing Officer ruling, copies
of which are attached and herewith served upon you.
Respec~fully
submitted,
PEOPLE OF THE STATE OF ILLINOIS
ex rei.
LISA MADIGAN
Attorney General
of the
State
0 Illinois
BY:
STOPHER GRANT
sistant Attorneys General
Environmental Bureau
69 W. Washington Street,
18
th
FIr.
Chicago, IL 60602
(312) 814-5388
Electronic Filing, Received, Clerk's Office, October 19, 2007
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
Complainant,
vs.
COMMUNITY LANDFILL COMPANY, INC.,
an Illinois corporation, and
the CITY OF MORRIS, an Illinois
municipal corporation,
Respondents.
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)
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PCB No. 03-191
(Enforcement-Land)
COMPLAINANT'S APPEAL OF HEARING OFFICER RULING
NOW COMES Complainant, PEOPLE OF THE STATE OF ILLINOIS, and requests that
the Board reverse an evidentiary ruling made by the Hearing Officer at hearing on September
11,
2007, and incorporate the excluded testimony of witness Brian White into the record. In support
thereof, Complainant states, as follows:
I.
EVIDENTIARY RULING
In its case in chief, Complainant called Illinois EPA Bureau of Land Compliance Unit
Manager Brian White as one
of its witness. On objection, the Hearing Officer excluded Mr.
White's testimony regarding an offer made by Frontier Insurance Company in Rehabilitation
("Frontier") in response to the State's surety bond claim. Specifically, the Hearing Officer
excluded testimony that Frontier had offered to settle the State's $17.4 MM claim for $400,000.
The Bonds were issued to ensure closure and post-closure costs for the Morris Community
Landfill, and were the subject
of a permit appeal hearing between the Parties in 2001.
See:
Complainant's Exhibit
4.
Mr. White testified that Illinois EPA had made a claim on the Bonds, which have a face
Electronic Filing, Received, Clerk's Office, October 19, 2007
value of approximately $17.4 million dollars1. He was then asked how much Frontier had
offered to pay on the Bonds. The following exchange is in the record:
Q. Has Frontier offered to pay on a
claim, to your knowledge?
A. Yes, they made an offer.
Q. Okay. Do you know how much that offer
was for?2
At this point, Counsel for the City of Morris objected, and, after discussion, the Hearing
Officer ruled as follows:
HEARING OFFICER HALLORAN: Excuse me,
Mr. Grant. I kind of do find it somewhat
relevant. But the problem is that this
settlement is still up in the air and it's
heavy in conjecture and there's nothing that
I don't think from what I've heard so far is
substantive. So I'm going to sustain
Mr. Porter's objection. However, I will let
it in as an offer of proof, if you so choose,
and the Board can consider it in their own
way.
MR. GRANT: Yes. We'd like to
continue on as an offer of proof.
HEARING OFFICER HALLORAN: Okay. Let
me know when the offer of proof is finished.
Thank you.
MS. TOMAS: Do you know if Frontier
will be paying on those claims?
THE WITNESS: I don't know if Frontier
will be paying on those claims, no.
MS. TOMAS: To your knowledge, have
they made an offer to pay on those claims?
19/11/07 Tr., p.179. Note: The transcripts for each day of hearing begin with 'page 1'.
Citations to the transcript will therefore be made date specific.
29/11/07 Tr., p.184
Electronic Filing, Received, Clerk's Office, October 19, 2007
THE WITNESS: Yes.
MS. TOMAS: And what was that amount?
THE WITNESS: 400,000.
MS. TOMAS: That's the end of the
offer of proof.
HEARING OFFICER HALLORAN: Thank you.
3
II.
TESTIMONY REGARDING FRONTIER'S OFFER IS ADMISSIBLE
Clearly, in excluding this evidence, the Hearing Officer misinterpreted the general
rule that offers
of settlement are inadmissible. Specifically, this Rule applies only where the
evidence is used to prove liability. See:
Stathis
v.
Gelderman, Inc.
295 Ill. App. 3d 844, 861 (1 sl
Dist. 1998). If the evidence is entered to prove an issue other than liability, its admission rests
within the discretion
of the court.
Id
4
•
The State does not offer Frontier'sresponse to the State'ssurety bond claim to prove
liability, which was established through summary judgment. And since Frontier Insurance
Company in Rehabilitation is not a party to this matter, the information could not possibly be
used to establish liability against
Frontier. Rather, the State offers this evidence to show the
,39/11/07 Tr., pp. 187-188
4S
ome
Illinois cases, and Federal Rule
of Evidence 408, also call for exclusion where the
evidence is used to establish the
amount
of the claim. Mr. White's uncontested testimony and
Complainant'sExhibit 9 have already established the State'sbond claim at $17,427,366.00.
Testimony regarding Frontier'soffer is therefore not intended as
proof of the amount of the
State'sclaim against it.
-
5As of the date of hearing, the State'sbond claim was
not
the subj ect of a lawsuit filed by
the State
of Illinois, but rather was being processed according to the State of New York's
insurance company rehabilitation procedures. Thus the excluded statement was not an offer to
settle ongoing litigation, but rather Frontier'sresponse to a claim on its surety bonds. Counsel for
Frontier Insurance Company in Rehabilitation was consulted prior to hearing in this case, and
had no objection to the State'suse
of its $400,000.00 offer as evidence.
Electronic Filing, Received, Clerk's Office, October 19, 2007
woefully inadequate amount of funds available for closure and post-closure care of the Landfill.
The evidence in question goes directly to several relevant factors, including the degree
of
injury and interference with the general welfare [4.15 ILCS 5/33(c)(i)], and the gravity of the
violation [415 ILCS 5/42(h)(1)]. At hearing, Illinois EPA inspector Mark Retzlafftestified that
in August, 2007 he observed leachate seeps, gas odors, cover erosion6, uncovered refuse7, and
other problems. The Landfill is clearly deteriorating. Permit Engineer Christine Roque testified
that closure was due for Parcel B8. The fact that only $400,000 is available to satisfy closure and
post closure obligations
of$17.4 MM indicates a serious and grave injury to the general welfare.
See: People
v.
ESG Watts Inc. (Sangamon Valley),
PCB 96-237 (February 19, 1998) 1998 WL
83678, at 5 (failure to provide sufficient financial assurance is a substantial interference with
public welfare).
Excluding Brian White'stestimony on the Frontier'soffer, which indicates the amount
of
funds available for closure and post closure, wOl,lld result in the Board being misinformed on a
key issue. After more than four years
of litigation and the
expendit~re
of significant resources,
the Board is entitled to consider all
of the relevant facts.
For the reasons stated herein, the Board should reverse the Hearing Officer'sruling,
admit the evidence contained in the State'soffer
of proof into the record, and give due
consideration to all relevant facts presented at hearing.
69111107 Tr., p. 68
79111/07 Tr., p.65
89/11/07 Tr., p. 219
Electronic Filing, Received, Clerk's Office, October 19, 2007
RESPECTFULLY SUBMITTED,
PEOPLE OF THE STATE OF ILLINOIS,
LISA MADIGAN, Attorney
General
oft
State of Illinois
BY:
-~------=----
.stopher Grant
ssistant Attorney General
Environmental Bureau
69 W. Washington, #1800
Chicago, Illinois 60601
(312) 814-5388
Electronic Filing, Received, Clerk's Office, October 19, 2007
. BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
Complainant,
vs.
COMMUNITY LANDFILL COMPANY, INC.,
an Illinois corporation, and
the CITY OF MORRIS, an Illinois
municipal corporation,
Respondents.
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PCB No. 03-191
(Enforcement-Land)
COMPLAINANT'S CLOSING ARGUMENT AND POST-HEARING BRIEF
NOW COMES Complainant, PEOPLE OF THE STATE OF ILLINOIS, by LISA
MADIGAN, Attorney General
of the State of Illinois, and pursuant to Hearing Officer Bradley P.
Halloran's October
5, 2007 Hearing Order, presents its Closing Argument and Post-Hearing
Brief.
I.
INTRODUCTION
On September 11-12,2007, the Board held hearing on the sole issue of remedy in this
case. The Board had already found that Respondents COMMUNITY LANDFILL COMPANY,
INC., and the CITY OF MORRIS failed to provide for financial assurance for closure and post-
closure care
of the Morris Community Landfill ("Landfill"), and as a result violated 35 Ill. Adm.
(The People'sClosing Argument and Post Hearing
Brief relies on prior rulings in this
case, matters
of which the Board is entitled to take notice, and on the record made during the
September
11
and 12,2007 hearing. The record includes the trial transcript, exhibits admitted
into evidence, and evidence propounded on offer
ofproof, if the Board so rules. Because the
transcript for each day
of hearing begins with 'page I', citations to the transcript are date specific.
1
Electronic Filing, Received, Clerk's Office, October 19, 2007
Code 811.700(f) and 811.712(b). The Board also found that, by violating these regulations, the
Respondents violated Section
21 (d)(2) of the Illinois Environmentall?rotection Act ("Act"), 415
ILCS 5/21 (d)(2) (2004)2. The Board directed the parties to hearing
on the issue of remedy,
including
pemilty, costs, and attorney fees, and specifically requested that the parties only provide
evidence relevant to Sections 33(c) and 42(h)
of the Act, 415 ILCS 5/33(c) and 5/42(h) (2004),
and provide specific figures and justifications for
penalty3.
The evidence shows that the Board must order the Respondents to provide financial
assurance for closure and post-closure care
of the Landfill, and take other remedial action. The
evidence also proves that a substantial penalty is appropriate in this case.
II. HEARING WITNESSES, EXHIBITS, AND OFFER OF PROOF
A. State's Witnesses
1.
Mark Retzlaff, Inspector, Illinois EPA Bureau of Land FOS, Des Plaines,
Illinois.
2.
Blake Harris, Accountant, Illinois
EPA Bureau of Air (formerly Bureau of Land).
Springfield, Illinois.
3.
Brian White, Illinois
EPA Bureau of Land Compliance Unit Manager,
Springfield, Illinois.
4.
Christine Roque, Permit Engineer, Illinois
EPA Bureau of Land, Springfield,
Illinois.
2The
Board's February 16, 2006 Order granting summary judgment is in the record as
Complainant's Group Exhibit A, Exhibit 2 ("Complainant's Exhibit 2"). The
Board'sOrder
denying reconsideration is in the record as Complainant'sExhibit 3.
3February 16, 2006 Board Order, Complainant'sExhibit 2, p.
18
2
Electronic Filing, Received, Clerk's Office, October 19, 2007
5.
Robert Pruim, President of Community Landfill Company4.
B. Exhibits
&
Stipulations
All Exhibits were entered into evidence by agreement of the parties. Complainant's
Exhibits were entered as People'sGroup Exhibit
A, Exhibits 1 through 14
5
.
C.
Incorporation of Prior Hearing Testimony
The Respondents requested incorporation of various materials from
Community Landfill
Co. and City ofMorris
v.
Illinois EPA,
PCB 01-170. Complainant understands that the Board
has substantial discretion in reviewing prior proceedings, and therefore did not formally object to
the Motion to Incorporate. However, Complainant does not believe that this prior hearing
testimony is relevant to this hearing, as it has no bearing on the Section 33(c) or 42(h) factors.
Moreover, the testimony sought to be included is almost seven years old, and was not used for
any purpose at hearing. Complainant requests that the Board give no weight to this prior
testimony.
D. Complainant's Offer of Proof
Along with this Post-Hearing Brief, Complainant has appealed an evidentiary ruling by
the Hearing Officer. The excluded testimony relates to the estimated value
of the State'sright to
recover under a claim on the Frontier Insurance bonds.
If the Board grants Complainant's
appeal, it should consider the evidence in its evaluation
of the gravity of the violations.
4In lieu
of calling Mr. Robert Pruim as a witness in the State'scase, the parties agreed to
stipulate that Community Landfill Company'sinterrogatory responses would be admissible as
Mr. Pruim'stestimony. Robert Pruim had provided the verifications for these interrogatory
responses.
9111107 Tr., p. 13
59/12/07
Tr., pp. 9-10
3
Electronic Filing, Received, Clerk's Office, October 19, 2007
III.
RELIEF SOUGHT BY COMPLAINANT
The Complainant seeks a final order from the Board containing both affirmative relief
and a civil penalty.
A. Order for Financial Assurance:
The Complainant seeks an order requiring the Respondents to post financial assurance in
the amount of$17,427,366.00, submit revised cost estimates, and update financial assurance in
accordance with approved revised estimates.
B. Closure of Parcel B
The Board should order the Respondents to close Parcel B of the Landfill in accordance
with 35 Ill. Adm. Code 811.110, and the provisions
of Permit No. 2000-156-LFM6.
C. Civil Penalty:
Complainant requests that the Board assess a civil penalty against the Respondents,
jointly and severally, in the amount
of $1,059,534.00, and an additional civil penalty against
Respondent City
of Morris in the amount of $399,967.40.
IV.
ANALYSIS OF THE 33(c) FACTORS DEMONSTRATES THAT THE BOARD
MUST
ORDER THE RESPONDENTS TO PROVIDE COMPLIANT
FINANCIAL ASSURANCE
In
its June 1,2006 Order affirming summary judgment on liability, the Board stated that
it considers the Section 33(c) factors to determine what to order a respondent to do to correct an
ongoing violation7. The record shows that the Respondents have failed to provide any financial
assurance, and therefore continue to violate the Act and Board regulations. During the period
of
6Complainant's Exhibit 12, Permit No.2.
7June 1,2006 Board Order, Complainant'sExhibit 3, p. 5
4
Electronic Filing, Received, Clerk's Office, October 19, 2007
violation of these regulations, they allowed the Landfill to fall into serious disrepair, and have
failed to perform closure
on Parcel B. The evidence shows that the Board must order specific
affirmative relief,
i.e.
an order to obtain financial assurance, and closure of Parcel B, to protect
the interests
of Illinois taxpayers and to abate a serious threat to the environment.
In
support,
each
of the 33(c) factors is analyzed below.
1. 33(c)(i):
The character and degree ofinjury to, or interference with the protection ofthe
health, general welfare andphysical property
ofthe people;
a.
The Evidence Demonstrates a Substantial Interference
with Protection
of the General Welfare
Illinois EPA Bureau of Land Compliance Unit manager Brian White testified regarding
financial assurance requirements for landfills. He first noted that, pursuant to the regulations,
the owner
or the operator of a landfill must provide the required amount of closure/post closure
financial assurance8.
He also testified that if the operator did not post the required amount of
financial assurance, the landfill owner was required to do S09. Mr. White testified that the only
financial assurance that had been provided at the Landfill under the 811 regulations was the non-
compliant Frontier Bonds
lO
• Since the Bonds were issued in 2000, neither Respondent has
provided Illinois
EPA with any other financial assurance for the Morris Community Landfill
conforming with the 811 regulations, nor have they notified Illinois
EPA that they intend to do
89/11/07 Tr., p. 178
99/11/07 Tr., p. 182
10
9/11/07 Tr., p. 183
119/11/07 Tr., p. 190
5
Electronic Filing, Received, Clerk's Office, October 19, 2007
The evidence also shows that closure of Parcel B is approximately
11
years overdue.
According to
CLC's Response to the State'sInterrogatory No. 20, entered as the testimony of
Robert Pruim by stipulation of the Parties, the last receipt of waste in Parcel B was in 1996
12
.
Pursuant to Board regulations, closure should have been completed within 210 days
of the last
receipt
ofwaste
13
•
However, closure of Parcel B still has not been performed
l4
.
Illinois EPA inspector Mark Retzlaff described the deteriorating condition
of the Landfill.
Inspections made in June and August, 2007 showed cover erosion in severallocations
l5
, landfill
gas escaping to the atmospherel6, leachate escaping from the waste disposal area
l7
, and
12Complainant'sExhibit 13, CLC Response to Second Set of Interrogatories, p. 2.
13
35 Ill. Adm. Code 811.110 provides, in pertinent part, as follows:
e)
The owner or operator
of a MSWLF unit shall begin closure activities for each
MSWLF unit no later than the date determined as follows:
1)
30 days after the date on which the MSWLF unit receives the final receipt
of wastes;
**
*
f)
The owner or operator of a MSWLF unit shall complete closure activities for each
unit in accordance with closure plan no later than the dates determined as follows:
1)
Within 180 days ofbeginning closure, as specified in subsection (e) of this
Section.
14
9/11/07 Tr., p. 219
15
9/11/07 Tr., pp.68-69
16
9/11/07 Tr., pp. 63,68,71
17
9/11/07 Tr., pp. 63, 64, 74
6
Electronic Filing, Received, Clerk's Office, October 19, 2007
uncovered refuse
l8
19. He also found evidence of recent and ongoing waste disposal in Parcel A
of the Landfill
20
. This parcel is not currently pennitted for the receipt of waste.
Edward Pruim testified that Community Landfill Company had not paid premiums for
financial assurance since 2001
21
. He also testified that they were now unable to pay the
Company'soutstanding obligations
22
. City of Morris consultant Devin Moose said that the City
was funding some repair activities on a 'limitedbasis' but did not know how much money had
been provided to Community Landfill
CompanY3. He did not know if his client was willing to
perfonn actual closure
of Parcel B
24
.
b.
Discussion
The Board has found that financial assurance violations are the most insidious in
character and result in a significant degree
of interference with the protection of health, welfare
and property.
People v. ESG Watts, Inc.
(Viola Landfill), PCB 96-233 (February 5, 1998).
The evidence proves that the Respondents' violations have created an extreme degree
of
interference with the protection of the general welfare. At the Landfill, the interference is no
longer a theoretical
or intangible threat. The existing condition of the Landfill shows that the
18
9/11107 Tr., pp. 58,60,61,62,63,64,65,66,67, 72, 73.
19See also, photographs included in People'sGroup Exhibit 1, Exhibits 7-8.
2°9/11107 Tr., pp. 60, 61, 65, 66, 67.
21
9/12/07 Tr., p. 165
229/12/07 Tr., p. 164
23
9/12/07 Tr., pp. 134-135
24
9/12/07 Tr., p. 148
7
Electronic Filing, Received, Clerk's Office, October 19, 2007
unavailability of financial assurance has resulted in ongoing environmental harm.
The Respondents have allowed
11 years to pass without performing closure of Parcel B of
the Landfill. The effects of their inaction are clear. As observed by Mark Retzlaff, the landfill's
surface is eroding, exposing previously-disposed waste to the environment. Leachate is seeping
from the Landfill surface. Landfill gas is escaping uncontrolled into the atmosphere.
Respondent Community Landfill Company contends that it has insufficient funds for even basic
maintenance, and 19 months after being found in violation, the City
of Morris has still not
provided any assurance that its own Landfill would be properly closed and maintained.
There can be no clearer illustration
of the reason for requiring financial assurance than the
existing condition
of the Landfill. No compliant financial assurance in place since November 14,
2000, when Illinois EPA issued its violation notices to the Respondents
25
. The Respondents have
neither taken action themselves, nor provided financial assurance which would allow the State to
perform closure
on Parcel B, or to correct the deteriorating conditions.
The evidence clearly shows a substantial and serious interference with the protection
of
the general welfare.
2. 33(c)(ii):
The social and economic value ofthe pollution source;
a.
The Evidence Demonstrates that the
Landfill
has no Social or Economic Value
The Landfill is divided into two parcels, designated'A' and 'B'. Each is separately
permitted
26
. Parcel B last received waste in 1996, and is overdue for closure
27
. No evidence was
25Complainant's Exhibits 10
&
11
26See: Complainant's Exhibit 12.
27Complainant's Exhibit 13, CLC Response to Second Set
of Interrogatories, p. 2.
8
Electronic Filing, Received, Clerk's Office, October 19, 2007
presented at hearing regarding available space in Parcel A. However, event if Parcel 'A'has
remaining capacity, it is not covered by an operating permit allowing the deposit
of waste
therein
28
.
b.
Discussion
The Landfill is not permitted to accept waste and has in fact become an environmental
liability due to the neglect
of the Respondents. The Landfill therefore does not have any social or
economic value. See:
People
v.
ESC Watts, Inc. (Viola Landfill),
PCB 96-233 (February 5, 1998,
slip op. at 10).
3. 33(c)(iii):
The suitability or unsuitability ofthe pollution source to the area in which it is
located, including the question
ofpriority oflocation in the area involved;
a.
Evidence and Discussion
Illinois EPA Bureau of Land Engineer Christine Roque testified that, over the years the
City
of Morris had obtained approximately 50 to 55 permits for the Morris Community Landfill,
and that Community Landfill Company had obtained approximately 50 permits
29
.
Aside from the
fact that Illinois
EPA issued these permits for the Landfill, no other evidence was entered at
hearing regarding suitability
of the location of the Landfill. Complainant asserts that this factor is
not significant in the Board'sconsideration
of a remedy.
4. 33(c)(iv):
The technical practicability and economic reasonableness ofreducing or
eliminating the emissions, discharges or deposits resultingfrom such pollution
source;
a.
The Evidence Shows that Compliance is Both Practical
and Economically Reasonable
28
9/11/07 Tr., p. 225. See, also, Complainant'sExhibit 5.
29
9/11/07 Tr., p. 214
9
Electronic Filing, Received, Clerk's Office, October 19, 2007
Illinois EPA Accountant Blake Harris testified that he was involved with review and
evaluation
of the Landfill'sFrontier Insurance Company Bonds in 2000, that the annual bond
premium was shown on the face
of each of the three bonds
30
, and that premium amounted to two
percent (2%)
of the face value of the Frontier Bonds. Mr. Harris stated that around the time that
the Respondents were issued violation notices, a total
of thirty (30) landfills in Illinois were using
Frontier Insurance Company surety bonds for financial assurance. All
of these landfills were sent
notices ofviolation
31
. These violation notices advised that the Bonds had become noncompliant,
and requested that substitute financial assurance be provided.
Of these thirty facilities, twenty
eight subsequently replaced their Frontier Bonds with compliant financial assurance
32
. Of the
two landfills that took no action one, Dowty, went out
of business and is now on the State's list
of abandoned Landfills
33
. The other is the Morris Community Landfill.
Mr. William Crawford, the auditor for the City
of Morris, testified that the City of Morris
is in a strong financial position
34
. He stated that the City'snet assets had increased more than $4
MM between 2005 and 2006
35
to a total of$35 MM
36
. He had also calculated the City'sability
to provide a local government guarantee pursuant to 35 Ill. Adm. Code Sections 811.716 and
3°9/11/07 Tr., p. 125.
31
9/11/07 Tr., p. 126
32
9/11/07 Tr., p. 129
339/11/07 Tr., p. 129.
34
9/12/07 Tr., p. 54
35
9/12/07 Tr., p. 57
36
9/12/07 Tr., p. 56
10
Electronic Filing, Received, Clerk's Office, October 19, 2007
811.717. He estimated that the City could provide a maximum guarantee of $9.1 MM
37
as of
fiscal year 2007, up from $7.1 MM for fiscal year 2005
38
•
During the period from 2000 through
2007, $9.1
MM was the highest amount available
39
.
Community Landfill Company Treasurer
Edward Pruim testified that Company funds are very limited and no funds are now available for
financial assurance
40
.
He stated that they would be unable to arrange for even $7 MM of the
approximately $17.4
MM of financial assurance required
41
.
b.
Discussion
Compliance was Technically Feasible and Economically Reasonable
The financial assurance required for the Morris Community Landfill is approximately
$17.4 Million. Based on William Crawford'stestimony, the City
of Morris could not have
posted a local government guarantee for this amount at any time from 2000 to the present.
However, there is every indication that the City
of Morris could have provided surety bonds
during that period.
At a premium of two percent of face value, surety bonds would have cost the
City of Morris, or Morris and Community Landfill Company together, approximately
$348,000.00. The City of Morris had sufficient financial resources to comply with the Act and
Board regulations throughout the noncompliance period. Providing financial assurance was
therefore technically feasible for the City
of Morris.
37
9/12/07 Tr., p. 29
38
9/12/07 Tr., p. 40
39
9/12/07 Tr., p. 53
4°9/12/07 Tr., p. 164
41
9/12/07 Tr., p. 167
11
Electronic Filing, Received, Clerk's Office, October 19, 2007
Community Landfill Company claims that it was unable to arrange for substitute financial
assurance once the Frontier Bonds were deemed invalid, and now has no funds available.
However, by the year 2000 Community Landfill Company had conducted waste disposal
operations at the Landfill for almost 20 years. Permit No. 2000-156-LFM, which both
Respondents had sought, was issued for development and
closure
of Parcel B
42
. By the time the
Respondents investigated replacing the deficient Frontier Bonds, closure
of Parcel B of the
Landfill was already several years overdue.
It
is unsurprising that prospective financial assurance
providers would have required the Respondents to post a substantial amount
of collateral
43
. That
problem could have been avoided
if the Respondents had simply performed closure of Parcel B
when it was due.
Obviously, the Landfill had to be properly closed at some point. The Respondents
simply failed to retain sufficient capital from their Landfill operations to assure the Landfill's
ultimate closure. Their failure to properly conserve resources for the inevitable closure
of the
Landfill should not be considered a defense, and the Board should find that compliance was
feasible.
Meeting the financial assurance requirements was also economically reasonable. The
regulations place all
of the cost of closure and post closure care on those with a direct financial
stake in the landfill. Requiring such assurance from owners and operators is inherently
reasonable. Illinois taxpayers should never have to assume a risk that they must fund closure and
maintenance
of a Landfill that they neither owned nor operated. The regulations put the
42Complainant's Exhibit 12, Permit 2, p. 2
. 43See: 9/12/07 Tr., p. 162
12
Electronic Filing, Received, Clerk's Office, October 19, 2007
Respondents on notice that they would be required to ensure the cost of closure, and to guarantee
that future maintenance issues would be addressed. Earnings from Landfill operations should
have been retained for this purpose.
The Respondents knew the amount
of required financial assurance because it was based
on their own cost estimate. To obtain the Significant Modification Permits, they provided three
surety bonds in the amount
of $17,427,366.00
44
. The City of Morris provided $10,081,630.00,
more than half. As testified to
by Illinois EPA Permit Engineer Christine Roque, financial
assurance amounts may be reduced
by seeking and obtaining a permit modification from Illinois
EPA
45
. However, the Respondents did not seek a permit modification until July 2007, more than
seven years after they applied for the Significant Modification Permit using the $17.4
MM cost
estimate
4647
.
The City
of Morris alone has more than sufficient assets to fund a compliant surety bond.
Based
on the facts in this case, compliance with the financial assurance provisions of the Act
and regulations is economically reasonable.
The evidence shows that it is both technically feasible and economically reasonable to
require the Respondents to obtain financial assurance. Therefore, the Respondents must be
required to provide financial assurance in the amount
of $17,427,366.00 immediately, provide
annual revisions
of the closure/post-closure costs, and update the amount of financial assurance
44Complainant's Exhibit
9.
45
9/11/07 Tr., p. 216
46
9/11/07 Tr., p. 217
47The July 7,2007 application is currently under review with Illinois EPA.
13
Electronic Filing, Received, Clerk's Office, October 19, 2007
in conformance with the most recently approved Illinois EPA permit or permit modification.
5. 33(c)(v):
Any subsequent complianc;e.
a.
The Evidence Shows Continued Noncompliance
Illinois EPA Bureau of Land Compliance Unit Manager Brian White testified that the
only financial assurance provided under the 2000 Significant Modification Permit was the non-
compliant Frontier Insurance Company Bonds
48
•
Since that time, neither the City of Morris nor
Community Landfill Company has submitted information to Illinois EPA sufficient to
demonstrate compliance with any of the methods for providing financial assurance authorized
under 35 Ill. Adm. Code 811.700, including information to support a local government
guarantee
49
•
Illinois EPA Permit Engineer Christine Roque testified that, although required by
the Respondents' Significant Modification Permits and the regulations, neither Respondent had
submitted annual updates
of the cost estimates for closure/post-closure ofthe Landfi1l
50
•
Between 2000 and July 2007, neither Respondent sought a permit modification to reduce the
financial assurance amount
51
.
Edward Pruim, treasurer of Community Landfill Company, testified that the last payment
was made
on the Frontier Bonds in 2001.
b.
Discussion
Neither Respondent has provided compliant financial assurance since receipt of Illinois
48
9/11107 Tr., p. 182
49
9/11/07 Tr., p. 190
5°9/11107 Tr., p. 217
51Id.
14
Electronic Filing, Received, Clerk's Office, October 19, 2007
- -------------------------------------......
EPA's violation notice on November 16,2000
52
. They made the last payment for financial
assurance
of any kind in 2001. Even after the Board found the Respondents in violation of the
financial assurance regulations, the Respondents did nothing to comply.
Summary of 33(c) Factors
The evidence shows that an order for affirmative relief is necessary to achieve compliance
with the financial assurance regulations pertaining to landfills. Affirmative relief, in the form
of
an order to obtain financial assurance, is also necessary for protection of the general welfare,
now threatened
by deteriorating landfill conditions, lack of proper maintenance, and failure to
perform closure on Parcel
B.
The evidence shows that the Landfill has no further social benefit, and that it is both
technically feasible and economically reasonable to achieve full compliance.
Finally, the evidence shows that the Respondents have done nothing to come into
compliance for the past 7 years. A penalty is both appropriate and necessary to deter further
violations, recover the economic benefit
of the Respondents' continued noncompliance, and to
reflect the duration and gravity
of the violations.
V.
AFTER CONSIDERATION OF THE 42(h) FACTORS, THE BOARD SHOULD
ASSESS A SIGNIFICANT
CIVIL PENALTY AGAINST THE RESPONDENTS
TO RECOVER THE ECONOMIC BENEFIT OF NONCOMPLIANCE AND TO
DETER FUTURE VIOLATIONS.
A. Statutory Maximum Civil Penalty
The Board has determined that the Respondents have violated Section 21 (d)(2) of the
Act, 415 ILCS 5/21(d)(2) (2004), and
35 Ill. Adm. Code Sections 811.700(f) and 811.712(b).
52Complainant'sExhibits 10-11.
15
Electronic Filing, Received, Clerk's Office, October 19, 2007
Because the regulatory violations automatically constitute violations ofthe Act, Complainant
understands the Board to have found at least two (2) individual violations. Pursuant to 415 ILCS
5/42(a) (2006), any person who violates any provision
of the Act or any regulation adopted by the
Board is subject to a penalty
of up to $50,000.00 per violation and up to $10,000.00 for every day
the violation continued.
Section 811.700(f)
of the Board regulations, 35 Ill. Adm. Code 811.700(f), provides, as
follows:
f)
On or after April 9, 1997, no person, other than the State of Illinois, its
agencies and institutions, shall conduct any disposal operation at a
MSWLF unit that requires a permit under subsection (d)
of section 21.1 of
the Act, unless that person complies with the financial assurance
requirements
of this Part.
The evidence shows that from at least November 16, 2000, when both Respondents
received the violation notices from Illinois EPA
53
, until at least September 11, 2007, the first day
of hearing, the Respondents failed to have any compliant financial assurance whatsoever. The
Board should take notice that this constitutes a period
of violation of 35 Ill. Adm. Code
811.700(f) for 2,490
days.
The maximum penalty may be calculated as follows:
$
50,000.00 for violation
2,490 days times $10,000.00
= $24,900,000.00 for days of violation
Total:
$24,950,000.00
Section 811.712(b)
of the Board regulations, 35 Ill. Adm. Code 811.712(b), provides, in
pertinent part, as follows:
b)
The surety company issuing the bond shall be licensed to transact the
53Complainant's Exhibits 11-12
16
Electronic Filing, Received, Clerk's Office, October 19, 2007
business of insurance by the department of insurance, pursuant to the
Illinois Insurance Code, or at a minimum the insurer must be licensed to
transact the business
of insurance or approved to provide insurance as an
excess
of surplus lines insurer by the insurance department of one or more
states, and approved by the U.S. Department
of the Treasury as an
acceptable surety.
The evidence shows that on November 16,2000 the Respondents were advised that the
Frontier Insurance Company surety bonds did not meet the requirements
of the regulations, and
needed to be replaced with compliant financial assurance
54
• The Frontier Bonds expired by their
own terms on June 1,2005
55
. The Board should take notice that failing to replace the Frontier
Bonds with an approved surety during the period constitutes a violation
of 35
Ill.
Adm. Code
811.712 for 1,658 days.
The maximum penalty may be calculated as follows:
$
50,000.00 for violation
1,658 days times $10,000.00
=
$16,580,000.00 for days of violation
Total:
$16,630,000.00
maximum for 811.700(f)
Total both violations
$24,950,000.00
$41,580,000.00
Complainant therefore asserts that the maximum civil penalty for the violations found by
the Board is
$41,580,000.00.
B. 42(h) CIVIL PENALTY FACTORS
In determining the appropriate civil penalty, the Board may consider the factors set forth
in Section 42(h)
of the Act, 415 ILCS 5/42(h) (2006). Complainant's analysis of the evidence is
provided as follows.
55Complainant Exhibit 9.
17
Electronic Filing, Received, Clerk's Office, October 19, 2007
1.
42(h)(l}:
The duration and gravity ofthe violation;
a.
The Evidence Proves Violation for 2,490 Days, with a Hieh Deeree of Gravity
Illinois EPA issued violation notices to the Respondents on November 14, 2000, which
were received
on November 16, 2000
56
. The violation notices advised the Respondents that the
Frontier Bonds were no longer compliant financial assurance, and contained the following
statement:
SUGGESTED RESOLUTIONS
Immediately, provide adequate financial assurance in an amount that equals
or
exceeds the current closure/post closure cost estimate.
As
of September 11, 2007, the Respondents still had not provided any compliant financial
assurance for closure and post-closure care
of the Landfill. This represents a noncompliance
period
of 2,490 days.
In 2001, the Respondents challenged the Agency's finding that the Frontier Bonds
were.
non-compliant through permit appeal. The Board upheld the Agency's decision on December 6,
2001
57
. The Appellate Court affirmed the Board'sdecision on May 15, 2002 and issued its final
opinion
on July 17, 2002
58
. In this case, the Board issued its decision on summary judgment on
February
16,2006, and denied reconsideration on June 1,2006
59
. Throughout this period, and to
the date
of hearing, the Respondents failed to obtain and provide compliant financial assurance,
56Complainant'sExhibits 10-11.
57Complainant's Exhibit 4
58Complainant's Exhibit
5.
59Complainant's Exhibits 2
&
3.
18
Electronic Filing, Received, Clerk's Office, October 19, 2007
despite every opportunity to do so.
Evidence on the gravity
of the violation is substantially the same as the evidence
presented by for Factor 33(c)(1), which Complainant incorporates herein.
b.
Discussion
Complainant asserts that a conservative first date of violation is the date on which Illinois
EPA notified the Respondents, through their receipt
of violation notices, that they needed to
replace the Frontier Bonds with compliant financial assurance. From that
day forward, the
Respondents knew that Illinois EPA, the Agency responsible for administration
of landfill
permitting, compliance and enforcement, had determined that no adequate financial assurance
was in place.
The Respondents were not the only persons affected by the Agency's determination on
the Frontier Bonds. Twenty-nine other landfills also were secured by Frontier Bonds,
~d
were
issued violation notices at approximately the same time as the Respondents
60
. Twenty-eight of
these replaced the Frontier Bonds with compliant financial assurance. One went out of
business
61
. The Respondents did nothing.
The Respondents have failed to demonstrate any good faith in attempting to resolve the
violations. After they were denied an operating permit for lack
of financial assurance, they
appealed the Agency's finding to the Board and the Appellate Court. However, after losing in
both forums the Respondents did....nothing: On February 16, 2006, the Board held them in
violation for failure to have adequate financial assurance. However, even after the Board's
6°9/11/07 Tr.,
p. 126.
61
9/11/07 Tr., p. 129.
19
Electronic Filing, Received, Clerk's Office, October 19, 2007
decision was affirmed on Motion for Reconsideration, the Respondents did....nothing. To the
date
of hearing, a hearing delayed for more than
11
months at their request, the Respondents have
failed to provide financial assurance in any amount to ensure closure and post-closure care
ofthe
Landfill. Complainant therefore urges the Board to find that the violations began, at a minimum,
at the time that they, and all other landfills using Frontier Bonds, were formally notified
of the
violation.
The gravity
of the violations is high. The Board has consistently found that violations of
financial assurance regulations are extremely serious. See:
ESG Watts Inc. (Viola Landfill)
v.
Illinois EPA,
PCB 01-63 (April 4, 2002)
(" .. financial assurance for closure/post closure ofa
landfill is essential to protect the State
ofIllinois from potential liability to care for landfills that
may be abandoned")
(slip op. at 14);
People
v.
Wayne Berger,
PCB 94-373 (May 6, 1999)
("
...the
[financial assurance]
provisions are in place to ensure that other more threatening
violations do not occur, and which provide a safety net to protect the environment
ifthe operator
cannot or
wilinot meet his obligations under the law")
(slip op. at 20-21);
People
v.
ESG Watts,
Inc. (Sangamon Valley Landfill),
PCB 96-237 (February 19, 1998)1998 WL 83678
("...compliance with financial assurance requirements is necessary to assure that the State
of
Illinois wilinot have to payfor correcting environmental harm created by insolvent polluters.
")
(slip op. at 5).
In
this case, a number ofproblems need immediate attention at the Landfill, including the
long-delayed closure
of Parcel B, cover maintenance, correction of leachate seeps, uncovered
refuse, etc. However, there is no financial assurance available for the State to address these
problems. Complainant believes that this factor should be considered a significant aggravating
20
Electronic Filing, Received, Clerk's Office, October 19, 2007
factor for calculation of civil penalty.
2. 42(h)(2):
The presence or absence ofdue diligence on the part ofthe respondent in
attempting to comply with the requirements ofthis Act and regulations thereunder
or to securerelieftherefrom as provided by this Act.
[415 ILCS 5/42(h)(2)]
a.
The Evidence Shows a Complete Absence of Due Dilieence
The Respondents failed to submit required annual updated cost estimates of the amount
required for closure/post-closure expenses
ofthe Landfi1l
62
. After applying for and obtaining the
Significant Modification Permits with financial assurance requirements totaling $17,426,366.00,
they unsuccessfully challenged the amount
of financial assurance before the Board
63
. However,
there is no evidence that the Respondents ever sought regulatory relief following the Board's
April
5, 2001 denial. The Respondents did not submit a permit application requesting a
reduction
of financial assurance until July, 2007
64
•
Since the date that the Frontier Bonds were
deemed non-compliant, the Respondents have posted no compliant financial assurance,
of any
kind or in any amount, for closure/post-closure
of the Landfi1l
65
.
b.
Discussion
The Respondents have made no attempt to comply with the Act or Board financial
assurance regulations. Although they received notice on November 16, 2000 that the Frontier
Bonds were non-compliant, the Respondents took no action until a subsequent operating permit
application was denied. Instead
of obtaining compliant financial assurance at that point, they
62
9/11/07 Tr., p. 217
63Complainant's Exhibit
6.
64
9/11/07 Tr., p. 217.
65
9/11/07 Tr., p. 190
21
Electronic Filing, Received, Clerk's Office, October 19, 2007
litigated the issue of the non-compliant Bonds through the Appellate Court. On December 5,
2002, when the Illinois Supreme Court denied their petition for appeal, there was no question
that their financial assurance needed to be replaced.
Community Landfill Company showed no diligence thereafter. They stopped paying
premiums on the existing financial assurance in 2001
66
. They did not perform closure on Parcel
B, which would have reduced the amount
of financial assurance required. However, they also
did not cease their waste disposal activities. As shown
by the testimony of Mark Retzlaff,
inspections made in June and August, 2007 found evidence
of recent dumping of general
construction
& demolition debris, including plywood, drywall, cardboard and wood, as well as ,
sewage sludge from the City
of Morris' sewage treatment plant
67
.
The City
of Morris has demonstrated a total lack of due diligence. Since losing the joint
permit appeal in 2002, they have failed to provide financial assurance in any amount, failed to
close Parcel B or direct its closure, and failed to take any significant action to correct the
deteriorating conditions at the Landfill. Although the City
of Morris claims that it
could have
provided a local government guarantee pursuant to
35 Ill. Adm. Code 811.717, they never did so.
Though they possessed the apparent right to take legal action to compel Community Landfill
Company'scompliance with environmental laws and regulations
68
, there is no evidence that they
ever did anything besides jointly litigating with the Company against the State.
Neither Respondent has shown any diligence in attempting to resolve ongoing violations.
669/12/07 Tr., p. 165
67See: Complainant's Exhibits 7-8
68See: City Exhibit No.7
22
Electronic Filing, Received, Clerk's Office, October 19, 2007
Complainant believes that this Factor should be applied in aggravation of penalty.
3. 42(h)(3):
Any economic benefits accrued by the respondent because ofdelay in
compliance with requirements, in which case the economic benefits shall
be determined by the lowest cost alternative
for achieving compliance.
a.
The Evidence Shows that the Respondents Obtained a Substantial
Economic Benefit from the Violations
The Respondents benefitted from the violations in two ways. The Respondents jointly
benefitted from the avoided cost of premiums on financial assurance bonds. Also, the City of
Morris benefitted from dumping royalties received during the period when no financial assurance
was
in place. Complainant requests that the Board recover these economic benefits through civil
penalty.
For simplicity, and because of the substantial penalty Complainant is seeking from a
municipal entity, Complainant is willing to waive recovery
of interest between the date the
benefit was received to the date
of hearing.
A.
Avoided Cost of Financial Assurance
a) Surety Bonds
Illinois
EPA Accountant Blake Harris testified that the annual premium for the Frontier
Bonds provided for the Morris Community Landfill was shown
on the face of the three Bonds,
and represented two'percent(2%)
of each Bonds' face va1ue
69
•
He also testified that, in the
course
of his work, he had reviewed bonds from other sureties and that these bonds also listed the
annual premium
on the face of the bond
70
•
The three Frontier Bonds supplied by the
69
9/11/07 Tr., p. 124.
7°9/11/07 Tr., p. 125.
23
Electronic Filing, Received, Clerk's Office, October 19, 2007
Respondents to Illinois EPA
71
are: Bond No. 91507, with a penal sum (after rider and
continuation certificate)
of $1,439,720, listed premium $28,794.40; Bond No. 158465, penal sum
$10,081,630, listed premium $201,633; and Bond No. 158466, penal sum (after rider)
$5,906,016, with annual
premiuriI listed as $103,540
72
. Using the premiums listed on the Bonds,
the annual cost
of financial assurance would be $333,967.40.
In response to Complainant'sinterrogatory, entered
by stipulation of the parties as the
testimony
of Community Landfill Company President Robert Pruim, Community Landfill
Company paid a $208,730 premium for the three bonds in 2000, and $217,842 in 2001
73
. At
hearing, Edward Pruim testified that annual premiums for the Frontier bonds was "slightly more
than $200,000 per
year"74. By arrangement with the City of Morris, Community Landfill
Company was to pay the premiums
75
. He also stated that 2001 was the last year that premiums
b) Other Financial Assurance
The Respondents could only have achieved compliance using one
of the mechanisms for
financial assurance listed in 35 Ill. Adm. Code 811.706.
Of the ten possible mechanisms, only
71Complainant's Exhibit 9
72Comp1ainant believes that the premium for Bond No. 158466 was understated, and that
the a Continuation Certificate for this Bond would list a premium
of $118,120, or 2% of the face
amount shown on the rider.
73CLC Exhibit No.2, Response to Interrogatories No.5
74
9/12/07 Tr., p. 157
75
9/12/07 Tr., p. 156
76
9/12/07 Tr., p. 165
24
Electronic Filing, Received, Clerk's Office, October 19, 2007
evidence related to performance bonds (811.712), local government guarantee (811.717), and
local government financial test (811.716) were discussed at hearing.
As previously noted, and as admitted
by City Auditor William Crawford, the City could
not, at any time from 2000 until the present, have posted a local government guarantee for
$17,427,366.00, the amount of financial assurance required by the Significant Modification
Permits
77
•
In fiscal year 2005, the maximum amount that the City could have pledged was
approximately $7
MM
78
•
By fiscal year 2007, this had increased to a maximum potential
guarantee
of approximately $9 MM
79
. Regardless, the City of Morris did not post a local
government guarantee in any amount from 2000 to the date
of hearing.
B.
Dumping Royalties Paid to the City of Morris
During the period that the Respondents were in noncompliance with the financial
assurance regulations, active dumping continued at the Landfill, and Community Landfill
Company paid dumping-related royalties and taxes to the City
of Morris. Community Landfill
Company'sinterrogatory response in this regard, admitted by stipulation of the parties as the
testimony
of Robert Pruim, shows that royalties of$399,308.98 were paid to the City of Morris
by Community Landfill Company, just for the years 2001 through 20058°.
779/12/07 Tr., p. 53-54
78
9/12/07 Tr., p. 40
79
9/12/07 Tr., p. 29
8°Complainant's Exhibit 13, Response to Second Set
of Interrogatories, Response No. 23.
Complainant has excluded the year 2000 from its calculations because the noncompliance period
did not begin until November, 2000, and monthly information was not available. Taxes are not
included in this amount.
25
Electronic Filing, Received, Clerk's Office, October 19, 2007
b.
Discussion
The appropriate measure of the economic benefit derived from avoided financial
assurance costs is the avoided premiums for performance bonds. No other financial assurance
mechanism was ever used by either Community Landfill Company or the City
of Morris.
Ordinarily, the proper method for calculating avoided financial assurance costs would be
the cost
of
compliant
financial assurance. Because the Respondents never provided any,
evidence on this cost is not available. However, Complainant requests that the Board consider
the premium cost
ofthe Frontier Bonds as avoided costs. Even though the Bonds were non-
compliant, and therefore not an acceptable 'lowestcost alternative', their cost provides the Board
with a
very conservative
estimate of the avoided economic benefit.
There is conflicting evidence regarding the actual cost
of the Frontier Bonds. As Blake
Harris testified, the annual premium is listed on the face
of these instruments, and the premium
for the Bonds totaled $333,967.40. However,
pa~ent
of premiums on the Bonds was assigned
between the Respondents by contract to be the responsibility
of Community Landfill Company.
Their interrogatory responses show that the annual payment in 2001 was $217,842.00. Edward
Pruim also testified that premiums
Were "slightly more than $200,000.00".
An
annual premium of$217,842.00 represents a cost per day of$596.83. The initial date
of noncompliance is November 16, 2000. From November 16,2000 until September 11,2007
(the first day
of hearing on remedy), the Respondents avoided expenditures for compliant
financial assurance for 2,490 days. Multiplied times a cost per day
of $596.83, this represents an
economic benefit from avoided compliant financial assurance costs
of $1 ,486, 106.70.
If the Board chooses to recognize the Respondents' payments in 2000 and 2001 for the
26
Electronic Filing, Received, Clerk's Office, October 19, 2007
non-compliant Frontier Bonds, it will credit the Respondents for payments of $426,572.00,
resulting in an economic benefit from avoided financial assurance expenditures
of
$1.059.534.70.
The evidence also shows that the City
of Morris received dumping royalties of
$388,967.40 for the period 2001-2005. The City of Morris was in violation of the financial
assurance regulations throughout this period. Moreover; after denial
of their operating pennit
application in 2001, there should have been no dumping
of waste at the Landfill. However, as
shown by the testimony
of Mark Retzlaff, dumping of general construction debris and the City's
sewage sludge continued through the summer
of 2007. Complainant believes that dumping
royalties received
by the City of Morris during this period should be recovered as economic
benefit.
Complainant believes that all economic benefit should be recovered in the fonn
of a civil
penalty. Complainant requests that the Board assess, as part
of its overall civil penalty
calculation, the sum of$1,059,534.70 against the Respondents jointly and severally, and an
additional penalty
of $388,967.40 against the City of Morris.
The sum of$1,059,534.70 must be recovered as avoided financial assurance costs, and
should be joint and several, since both parties are expressly required to provide financial
assurance. For example, 35 Ill. Adm. Code 811.700 provides, in pertinent part, as follows:
a) The owner or operator shall maintain financial assurance equ;al to or greater
than the current cost estimate calculatedpursuant
to Section 811.704 at all times,
except as otherwise
provided by subsection (b).
b)The owner or operator shall increase the total amount offinancial assurance so
as to equal the current cost estimate within
90 days after any ofthe following
occurrences..
..
27
Electronic Filing, Received, Clerk's Office, October 19, 2007
As the Board found in summary judgment, the City of Morris and Community Landfill
Company are each liable for failing to provide closure/post closure financial assurance.
Also, in 2000 the City
of Morris and Community Landfill Company jointly posted the Frontier
Insurance Bonds, with the City providing more than
half of the required amount. Once these
bonds were found non-compliant,
neither party
replaced the bonds with compliant financial
assurance. The fact that the Respondents' lease agreement allocated financial assurance payment
responsibilities to Community Landfill Company does not eliminate the City's independent legal
responsibility, imposed
by the Act and Board regulations, to assure closure and post-closure care.
In addition, the Board should recover the City
of Morris' 2001-2005 royalty income in the
amount
of $388,967.40. During this period, the City of Morris knew that there was no
compliant financial assurance, and knew that operations at the Landfill were proceeding illegally.
If the City had been acting in good faith, any revenue generated from Landfill operations would
have been applied either to closure
of Parcel B or to acquiring at least a portion of the required
amount
of financial assurance. However, despite the 2000 violation notice, the loss of its permit
appeal before the Board and Appellate Court, and the Board's2006 finding
of violation in this
case, the City has yet to provide one penny
of compliant financial assurance for closure and post
closure care
of its Landfill. The City of Morris must not be allowed to benefit financially from
its violations, and the Board should recover its Landfill royalty income through civil penalty.
Pursuant to 415 ILCS 4/42(h)(7) (2006), all economic benefit must be recovered unless it
would work an arbitrary or unreasonable hardship. However, Complainant'srequest is entirely
reasonable.
28
Electronic Filing, Received, Clerk's Office, October 19, 2007
First, Complainant'scalculation of the economic benefit to the Respondents is
extremely
conservative.
It
uses Community Landfill'stestimony regarding premiums actually made, and
not the premium shown on the face
of the Bond, which was more than $100,000 higher on an
annual basis.
It
has used the rates paid for non-compliant bonds.
It
also has not included the
impact
of posting a significant amount of bond collateral 81. Complainant'scalculations also
adjust the penalty to credit a payment made for the Frontier Bonds in 2001, after the
Respondents had been advised
by Illinois EPA that the Bonds were not acceptable. Finally, the
State is not requesting interest on unfunded financial assurance, which the Board routinely has
assessed in civil penalty calculations.
The City
of Morris has benefitted from its failure to fund closure post/closure financial
assurance, and is in excellent financial condition. Revenues for the most recent fiscal year
totaled over
$21 MM
82
. Three City funds related to waste disposal contained over $2.7 MM
83
.
The City had net assets
of almost $35 MM as of April 30, 20068
4,
an increase of almost $5 MM
from the previous fiscal year
85
. The City recently acquired additional airport property at a cost
of $2.2 MM, and planned additional capital expenditures of $24-27 MM, including $10-12 MM
81 According to the testimony of Edward Pruim, up to $15 MM of collateral would have
been required for replacement surety bonds 9/12/07 Tr., p. 162
82
9/12/07 Tr., p. 29
83
9/12/07 Tr., pp 31-32.
84City Exhibit 6, p.18.
859/12/07 Tr., p. 57.
29
Electronic Filing, Received, Clerk's Office, October 19, 2007
for a new city hall/police station
86
.
However, even after being found in violation by the Board, the City took no action to
arrange for financial assurance, although, based on the testimony
of City Auditor William
Crawford, they could have put up a local government guarantee
of approximately $7 MM as of
the end of fiscal 2005, and $9 MM as of the end of fiscal 2007. Clearly, they could have
provided annual payments
of between $217,000 and $333,000 to cover surety bond premiums for
100%
of the required financial assurance. Recovery of the economic benefit from the City's
noncompliance with the Act and Board financial assurance regulations is reasonable.
Community Landfill Company now claims poverty.
As previously argued, this is largely
its
own doing. After almost 20 years of landfill operation, it failed to retain sufficient funds for
closure
of Parcel B or for long term care. Edward Pruim testified that it intended to use revenue
from future operations to fund closure
87
•
However, by the time that Community Landfill
Company arranged for the Frontier Bonds, closure
of Parcel B was 3-4 years overdue. During
the period between 1996
and 2000, neither Community Landfill Company nor the City of Morris
took any action to perform the overdue closure.
4. 42(h)(5):
The amount ofmonetary penal(v which will serve to deterfurther violations by the
respondent and to
othervvise aid in enhancing volzmtmy compliance with this Act
by the respondent and other persons similarly subject to the Act;
a.
Evidence and Discussion
In this case, the factor of deterrence is closely linked to the factor of economic benefit.
Municipalities which
own landfills may contract with other entities for operation, receiving
86
9/12/07 Tr., pp. 32-33.
87
9/12/07 Tr., p. 168
30
Electronic Filing, Received, Clerk's Office, October 19, 2007
royalties and other benefits in return. However, they remain jointly liable under the pertinent
land disposal regulations, and therefore have the responsibility to ensure that their contract
partner operates the landfill in compliance with the law.
In
this case the Board must consider the
,
deterrent affect on others. There are a number of municipally owned landfills in Illinois. These
municipalities must not be allowed to stand
by while their landfills deteriorate, nor must they be
allowed, once dumping revenues have ceased, to shift long term maintenance responsibilities to
the State.
In
our case, City of Morris has ignored its environmental responsibilities, while
spending a significant amount
of funds on other projects. Therefore the penalty assessed in this
matter must make it clear to others that municipalities will not be treated differently from private
owners when violations
of the Act and Board regulations occur at their landfills. At a minimum,
fees and royalty payments made to municipalities during periods
of knowing violation must be
recovered in penalty, so that there is no incentive for continued violations.
Even
if Community Landfill Company can not afford to pay a significant penalty, the
Board should recognize the deterrent value
of such a penalty on other Landfill operators. See:
People
v.
ESG Watts, Inc. (Viola landfill),
PCB 96-233 (February 5, 1998) (slip op. at 13).
Despite the
Board'sfinding of violation in February, 2006, neither Respondent has
arranged for any amount
of closure/post-closure financial assurance at the Landfill nor have they
notified Illinois
EPA of their intention to do S088. Neither party has initiated closure of Parcel B,
despite the fact that closure is
II years past due.
Complainant will leave to the Board'sdiscretion whether a multiple
of economic benefit
realized from
the violations is appropriate for the purpose of deterrence. But the evidence
889/11/07 Tr., p. 190
31
Electronic Filing, Received, Clerk's Office, October 19, 2007
suggests that such action be strongly considered.
5. 42(h)(5):
the number, proximity in time, and gravity ofpreviously adjudicated violations of
this Act by the respondent;
a.
Evidence and Discussion
Complainant notes that in the case PCB 97-193, the Board has granted partial
summary judgment against Respondent Community Landfill Company. Also, in 1989,
Community Landfill Company received an Administrative Citation in the case AC 89-6. The
Administrative Citation related to uncovered waste from a previous operating day. A penalty
of
$500.00 was assessed.
Complainant is not aware
of any previously adjudicated violations against the City of
Morris.
6. 42(h)(6):
Whether the respondent voluntarily selfdisclosed, in accordance with subsection
(i) ofthis Section, the non-compliance to the Agency;
a.
Evidence and Discussion
The Respondents did not self-disclose the violations.
7. 42(h)(7):
Whether the respondent has agreed to undertake a 'supplemental environmental
project'....
a.
Evidence and Discussion
No supplemental environmental project has been proposed by the Respondents.
VI.
ATTORNEY FEES AND COSTS
In
its Complaint and Motion for Summary Judgment, the State requested the award of
attorney fees and costs. Pursuant to 415 ILCS 5/42(f) (2006), these are recoverable upon proof
of a willful, knowing or repeated violation. Complainant believes that the Respondents
32
Electronic Filing, Received, Clerk's Office, October 19, 2007
continued failure to correct the violations, particularly after the Board's grant of summary
judgment, constitutes a willful and knowing violation.
However, as the evidence demonstrates, there is a dire need for affirmative relief in the
form
of a court enforceable final order directing the Respondents to provide compliant financial
assurance. Complainant has also asked the Board to consider directing the Respondents to
initiate closure
of Parcel B.
The violations have now continued for seven years.
In
the interest of obtaining a final
order without creating any additional delay related to the award
of attorney fees and costs, the
State waives recovery
of costs and fees in this matter. Complainant requests that the Board take
notice
of this waiver in its evaluation of the reasonableness of Complainant'scivil penalty
recommendation.
VII.
CLOSING ARGUMENT
On February 16, 2006, the Board found the Respondents in violation of 415 ILCS
5/21(d)(2), 35 Ill. Adm. Code 811.700(£), and
35 Ill. Adm. Code 712(b). The violations
continued to the date
of hearing, and neither Community Landfill Company nor the City of
Morris has demonstrated good faith by attempting to come into compliance.
First, the Board must compel compliance with the regulations.
In
crafting its remedy, the
\
Board must recognize the current threat posed by conditions at the Landfill and the Respondents'
consistent failure to comply. The Board must also consider the effect
of its decision on other
landfill owners and operators. Resolution
of this case must send a clear message to others that
noncompliance with financial assurance requirements will not be tolerated, and that violations
will be dealt with harshly. The Board has done so in the past, and it must do so again in this
33
Electronic Filing, Received, Clerk's Office, October 19, 2007
case. The Board must ensure that the Respondents do not reap a financial windfall from the
ongoing violations, and that any penalty fairly reflects the degree
of interference with public
welfare and the gravity
of the noncompliance.
The Board has not hesitated to order corrective action in cases where landfill owners and
operators have violated financial assurance provisions.
In
People
v.
John Prior and Industrial
Salvage, Inc.,
PCB 93-248 (July 7, 1995), the Board stated that an order to 'ceaseand desist'
from violations required an order to come into compliance
(slip op.,
at 23).
In
that case, the
Board specifically ordered the Respondents to perform closure
of the Respondents' landfill in .
accordance with the Act,
Board regulations, and existing permit conditions, and also ordered the
Respondents to post financial assurance (slip op. at 24-25). Similarly, in
People
v.
Wayne
Berger
and Wayne Berger Management,
PCB 94-373 (May 6, 1999), the Board ordered the
Respondents to perform closure
of the subject landfill, in addition to paying a civil penalty (slip
op., at 22).
The Board should also order the Respondents to close Parcel B
of the Landfill. Closure is
seriously overdue, and existing conditions demonstrate that closure-related action needs to be
taken. Once the Respondents perform closure, they will be able to significantly reduce the
amount
of financial assurance required.
In
addition to a corrective remedy, the Board must assess a civil penalty that will aid in
enforcement
of the Act'sprovisions.
In
this case, the Respondents have delayed compliance for
almost seven years. Even after the Board found them in violation, they took no action to achieve
compliance. Throughout this 7 year period, conditions at the Landfill have seriously degraded.
To aid in enforcement
of the Act, the Board must assess a civil penalty sufficient to remove all
34
Electronic Filing, Received, Clerk's Office, October 19, 2007
financial benefit derived by the Respondents, and in such amount that will deter future violations
by the Respondents and others similarly situated.
Neither the Act nor Board regulations exempt municipalities from the civil penalty
provisions, and the appalling lack
of diligence on the part of the City of Morris argues against
creating such an exemption in this case. All landfill owners, municipal and private, are required
to comply with the Act and pertinent regulations. Municipalities must not come to believe that
they will receive a
'pass'if they choose to ignore their requirements and divert funds from
environmental compliance to other purposes.
IV.
CONCLUSION
As remedy for the violations, the Complainant respectfully requests that the Board enter
an order containing the following relief:
1)
Requiring the Respondents, jointly and severally, to post financial assurance
meeting the requirements
of the 35 Ill. Adm. Code 811.700, and current Landfill Permits,
in the amount of$17,427,366.00, within 30 days
of the date of the Board'sfinal order;
2)
Requiring
the Respondents, jointly and severally, to provide an updated cost
estimate meeting the requirements
of 35 Ill. Adm. Code 811.705 (d), within 60
days
of the date of the Board'sfinal order;
3)
Requiring the Respondents, jointly and severally, to upgrade the financial
assurance for closure and post closure, as required
by 35 Ill. Adm. Code 811.701,
within 60 days
of providing an updated cost estimate.
4)
Requiring the Respondents, jointly and severally, to initiate closure
of Parcel B
within 60 days
of the date of the Board'sfinal order, and to complete. closure in
accordance with 35
Ill. Adm. Code 811.110, and Permit No. 2000-LFM-156.
5)
Assessing a civil penalty against the Respondents, jointly and severally, in the amount
of _
$1,056,534.00, and an additional civil penalty against Respondent City
of Morris in the
amount
of $399,967.40,
6)
Ordering the Respondents to cease and desist from further violation
of the Act and Board
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Electronic Filing, Received, Clerk's Office, October 19, 2007
regulations, including but not limited to violations of the financial assurance regulations;
and
7)
Ordering such other relief as the Board deems appropriate and just.
RESPECTFULLY SUBMITTED
PEOPLE OF THE STATE OF ILLINOIS
by
LISA MADIGAN,
Attorney General
of the State of Illinois
MATTHEW
J. DUNN, Chief
Environmental Enforcement!Asbestos
Litigation Division
ROSEMARIE CAZEAU,
Chief
E vi onmental Bureau orth
BY:
CH STOPHER GRANT
JE
IFER TOMAS
Environmental Bureau
Assistant Attorneys General
69 W. Washington Street, #1800
Chicago,IL 60602
(312)814-5388
(312)814-0609
36
Electronic Filing, Received, Clerk's Office, October 19, 2007
CERTIFICATE OF SERVICE
I, CHRISTOPHER GRANT, an attorney, do certify that I caused to be served this 19th
day
of October, 2007, the foregoing Complainant'sClosing Argument and Post-Hearing Brief,
Complainant'sAppeal
of Hearing Officer Ruling, and Notice of Filing, upon the persons listed
below,
by placing same in an envelope bearing sufficient p
Service located at 100 W. Randolph, Chicago Illinois.
Service
List
CHRISTOPHER GRANT
Mr. Mark La Rose
La Rose
&
Bosco
200 N. La Salle Street, #2810
Chicago, Illinois 60601
Mr. Charles Helsten
Mr. Richard Porter
Hinshaw
& Culbertson
100
Park Avenue
Rockford IL 61105-1389
Mr. Bradley P. Halloran
Hearing Officer
Illinois Pollution Control Board
100
W. Randolph Street
Chicago IL 60601
Mr. Scott M. Belt
105 E. Main Street
Suite 206
Moms IL 60450
Electronic Filing, Received, Clerk's Office, October 19, 2007
