BEFOP~
TRR
ILLINOIS
POT
JLUTION CONTROL BOARD
vs.
Respondents.
Complainant,
COMMUNITY LANDFILL COMPANY,
INC., an Illinois corporation, and
the CITY OF MORRIS, an lliinois
municipal corporation,
PCB No. 03-191
(Enforcement)
PEOPLE OF THE STATE OF ILLINOIS, )
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NOTICE OF FILING
TO: Christopher Grant
Environmental Bureau
Assistant Attorney General
69 West Washington
18th Floor
Chicago, Illinois
60602
Bradley Halloran
Hearing Oftlcer
Illinois Pollution Control Board
100 West Randolph
Suite 11-500
Cllicago, Illinois 60601
Charles F. Helsten.
Richard S. Porter
Hinshaw
&
CUlbertson, LLP
100 Park Avenue
P.O.
Box 1389
Rockford, Illinois 61105-1389
S.cott B.elt
Scott Belt and Associates, PC
105 East Main Street
.Suite 206
Morris, Illinois 60450
PLEASE TAKE
l""~OTICE
that on
l"~ovember
30, 2007, the undersigned caused to be
filed electronically before The Illinois Pollution Control Board RESPONDENT
COMMUNITY LANDFILL COMPANY,
INC.'S CLOSING ARGUMENT AND POST-
HEARING BRIEF with the Clerk of the Illinois Pollution Control Board, 100
W.
Randolph
Street, Suite
11-500, Chicago, Illinois 60601, a copy of which is attached and hereby served
upon you.
Mark
A. LaRose
Clarissa C. Grayson
LAROSE
&
BOSCO, LTD.
200 North LaSalle Street, Suite 2810
Chicago, TIlinois 60610
(312) 642-4414
TIDS FILING IS SUBMITTED ON RECYCLED PAPER
Electronic Filing: Received, Clerk's Office, November 30, 2007
BEFORE THE ILLINOIS POLLUTION CONTROL BOi\PJ>
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.
)
PCB No. 03-191
(Enforcement)
RESPONDENT COMMUNITY LANDFILL COMPANY, INC.'S
CLOSING ARGUMENT AND POST-HEARING BRIEF
Respondent, COMMUNITY LANDFILL COMPANY, INC., by and through its attorneys
Clarissa C. Grayson
and Mark A. LaRose ofLaRose
&
Bosco, Ltd., and pursuant to Hearing Officer
Bradley P. Halloran's October 5,2007 Hearing Order, hereby subrnits its Closing
i~rgument
and
Post-Hearing Brief.
RESPONDE~T
COMMUNITY LANDFILL CO., INC.'S CLOSING ARGUMENT
Hearing - September 10-12, 2007
First and foremost, this is a hearing about the reasonabieness of the conduct of the
respondents, Community Landfill Co., Inc. and the City of Morris in the context of events that lead
to the present hearing. The Board ordered the present hearing in order for the parties to present
evidence concerning the 33(c), 42(f) and 42(h) factors. The State has dropped its request for
attorneys fees and costs so the evidence presented herein will focus on the 33(c) alld 42(11) factors.
In regard to the 33 (c) factors, there has not been any testimony that there is any interference
with the protection ofthe health or general welfare ofthe public. There has been testimony that CLC
1
Electronic Filing: Received, Clerk's Office, November 30, 2007
never intended to run or operate the landfill yvithout financial assurance. There has been testimony
that landfills have social and economic value
which gives them a positive function in society. There
has been testimony that the location
ofthe landfill is proper, since it is away from residential areas.
There has
been extensive testimony that closure and post-closure activities are occurring at the
landfill, and, finally, there has been testimony
that CLC is doing what it can given its very limited
financial resources, through no fault
ofits own. All ofthese factors weigh against the assessment of
a penalty against the Respondents.
In regard to the 42(h) factors,
most critically, the Board must take a long hard look at the
evidence
of due diiigence on the part of CLC in attempting to provide financial assurance. All that
CLC did was to follow the directions ofthe Agency. When all three bonds were issued, Frontier was
licensed
by the Illinois Dept. of Insurance and was on the u.s. Dept. of Treasury's 570 list of
approved sureties. The situation that CLC is in today is a direct result of tile l1.>..gency's corlduct in
approving the Frontier bonds in August 2000, at the sarne tirne knowing that Frontier
had been
removed from the Treasury 570 list on June 1,2000.
Former Agency Bureau of Land Permit Manager Joyce Munie knew that if the bonds were
not accepted, no additional financial assurance \vould be tendered by CLC and the Agency would be
left with the
then existing $1.4 million in financial assurance. However, the Agency, in the words of
Joyce Munie, got CLC "on the hook for $17 million" in financiai assurance. Then, the Agency
pulled the rug
out from under CLC by denying its supplemental permit application to receive
approval for the construction
of a separation layer and receive authorization for the acceptance of
waste for disposal in a newly constructed area. This effectively shut down the landfill and eliminated
its ability to remain economically viable. One
ofthe grounds for denial was that the bonds were no
2
Electronic Filing: Received, Clerk's Office, November 30, 2007
good because Frontier had been delisted
=
even though the .LL\:Lgency kne\v that at the time the
significant modification permit was issued. Nonetheless, it was reasonable for CLC and the City to
believe the bonds were still
in force. Blake Harris testified that he understood that Section
811.712(b)
of the regulations could be interpreted to require a bonding company to be licensed to
transact business or
be on the Treasury 570 list, even though the Agency ultimately determined that
both factors were required. Harris testified that the bonds were valid through 2005 at a minimum.
Blake Harris further agreed with Agency employee Beverly Anderson'sposition in January 2004 that
Frontier was providing financial assurance. Surely,
ifthe Agency thought that Frontier was providing
financial assurance in January 2004,
isn'tit reasonable that CLC and the City would also think it was
providing financial assurance?
However, CLC was
on the Agency'shook and was left with the responsibility ofmore than
$1 7 million ill nllaIlcial assurance but it "vas "vithout the peIlllits required vvhich \vould allo\v it to
accept waste arId generate sufficient incorne to even pay the prellliulllS much less save any money for
the future. Ifthe Frontier bonds had not been approved by the Agency in August 2000, no additional
financial assurance would have
been tendered by CLC or the City and in that case, CLC would have
been responsible for only one year'spremium on $1.4 million, approximately $26,850. Instead, CLC
was
on the hook for more than $200,000 per year in premiums which totals more than $1 million
over five years. CLC
in fact made payments for the bond premiums in 2000 and 2001 totaling
$426,572, plus approximately $200,000
in cash collateral for the bonds. CLC's payments of more
than $600,000
show the extent of the due diligence and the good-faith conduct on the part of CLC
following the
Agency'sbad-faith conduct in leading CLC where it is today.
Any allegations
of so-called economic benefit to CLC are ludicrous. The State has tried to
3
Electronic Filing: Received, Clerk's Office, November 30, 2007
argue that CLC has avoided making the payments it should have made on the Frontier bonds. The
idea that CLC would make payments on bonds that the Agency had determined were no good - at
least not good enough to allow issuance
of a special permit so that the company could operate and
make a profit - is also ludicrous. Too add insult to injury, the Agency has also refused to release the
collateral that CLC posted in 2000. Blake Harris, who wrote the letter to Frontier on behalf
of the
Agency refusing to refund the collateral, is not even sure
ifthere is regulation that allows the State to
keep collateral for bonds that are determined to be non-compliant.
There has been no economic benefit to CLC in this entire situation. Without an operating
permit to dispose
of waste, CLC has no funds available to substitute the financial assurance. CLC
has done what is can under the circumstances. It diligently paid the premiums on bonds for the entire
duration
ofthe permit appeal until there was no point in doing so any longer because the bonds were
determined to be no good. What
eLC
can't do is have its collateral refullded because the Agency
\vill not release it. What CLC is also unable to do is make any money to provide alternate financial
assurance. The Agency has seen to that. While CLC acted in good faith in procuring the Frontier
bonds with the express approval
of the Agency, now it cannot even have its collateral released nor
can it make any money, thanks to the Agency.
CLC's conduct has been reasonable under the
circumstances.
RESPONDENT COMMUNITY LANDFILL CO., INC.'S POST-HEARING BRIEF
I.
INTRODUCTION
First and foremost, this is a hearing about the reasonableness of the conduct of the
respondents, Community Landfill Co., Inc. (hereinafter referred to as "CLC") and the City
ofMorris
(hereinafter referred to as "City") in the context
of events that resulted in the landfill not having
4
Electronic Filing: Received, Clerk's Office, November 30, 2007
financial assurance. The Board ordered the present hearing in order for the parties to present
evidence concerning the 33(c), 42(f) and 42(h) factors. The People
ofthe State of Illinois ("State")
has dropped its request for attorneys fees and costs so the evidence presented herein will focus on the
33(c) and 42(h) factors.
When the Illinois Pollution Controi Board granted summaryjudgment in favor ofthe State on
February
16,2006, it directed the parties to hearing on the issue ofremedy, including penalty, costs,
and attorney fees,
if appropriate.
(See People'sExh. 2, p. 16, emphasis added). The Board directed
the parties to present evidence that is relevant under Sections 33(c), 42(f) and 42(h)
ofthe Act and to
provide specific figures and justifications for any proposed penalty. (Id.)
On June 1, 2006, in
clarifying its February
16,2006 Order, the Board again ordered a hearing to analyze the 33(c) and
42(h) factors regarding an appropriate remedy, including civil penalty,
if any.
(See People'sExh. 3,
p. 5, emphasis added). The Board stated that it would consider the factors set forth
in SectiorlS 33(c)
and 42(h)
of the
L~~ct
to fashion an
appropriate
remedy for the violation. (Id.).
The Board further stated that it
would first consider the Section 33 (c) factors in determining
what to order the respondent to do to correct an ongoing violation,
if any, and second, whether to
order the respondent to pay a civil penaity. (Id.) The factors provided in Section 33(c) include the
reasonableness
of the circumstances surrounding the violation, such as the character and degree of
any resulting interference with protecting public health, the technical practicability and economic
reasonableness
of compliance, and whether the respondent has subsequently eliminated the violation.
(Id.)
Continuing, the Board further stated that if, after considering the Section 33(c) factors, the
Board decides to impose a civil penalty
on the respondent,
only then
does the Board consider the
5
Electronic Filing: Received, Clerk's Office, November 30, 2007
Act's Section 42(h) factors in determining the appropriate amount ofthe civil penalty. (Id.) Section
42(h) sets forth factors that
may mitigate or aggravate the civil penalty amount, such as the duration
and gravity
ofthe violation, whether the respondent showed due diligence in attempting to comply,
any economic benefit that the respondent accrued from delaying compliance, and the need to deter
further violations by the respondent and others similarly situated. (Id.)
II.
WITNESSES AND EXHIBITS
A.
Community Landfill Co., Inc. Witnesses
1.
Edward Pruim
Secretary/Treasurer
of Community Landfill Co., Inc
B.
Exhibits and Stipulations
All Exhibits were entered into evidence by agreement of the parties. Respondent CLC's
Exhibits were entered as CLC's Exhibits 1-18. (9/12/07 Tr. pp. 11-12).1
CLC's Exhibit 1 is also marked as Hearing Officer Exhibit A which comprises various key
materials from a previous Board proceeding, Community Landfill Co., Inc. and City
ofMorris v. the
Illinois
EnviroI1J11ental Protection Agency, PCB 01-170. The materials were admitted by the Hearing
Officer upon
CLC'sRequest to Incorporate Materials from Prior Proceeding, filed on September 6,
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s are
relevant to the proceeding in order to
sho\v how and why the landfill is in the situation it is today.
The testimony is particularly relevant as concerns the Frontier bonds, the subject matter that
1
References to the September 10-12,2007 Hearing Transcript will be cited as:
"(9/,,=j07,
Tr. _". References to
Exhibits from the Sept. 10-12,2007 Hearing will be referenced by the party who offered the exhibit and the number
and cited
as the follow example indicatess: "(CLC Exh. 2)".
Materials from an PCB-170 (October 15-17,2001) were admitted by the Hearing Officer pursuant to CLC's
Request to Incorporate Materials from Prior Proceeding. They were entered into the record
as Hearing Officer
Exhibit A. References to those materials will include the Hearing Officer Exhibit A designation, the date of the
previous hearing, and the page number of the transcript or the exhibit number. They will be cited as: "(Hearing
6
Electronic Filing: Received, Clerk's Office, November 30, 2007
underlies this entire proceeding. Further, contrary to the Complainant's view, these matters were
addressed at hearing and will be more fully developed in
CLC's post-hearing brief.
III.
ARGUMENT
A.
THE 33(c) FACTORS WEIGH AGAINST AN ORDER THAT RESPONDENT CLC
PAY A CIVIL PENALTY.
The factors to be considered by the Board may include: (i) the character and degree of injury
to or interference with the protection
of the health, general welfare and physical property of the
people; (ii) the social and economic value
ofthe pollution source; (iii) the suitability or unsuitability
of the pollution source to the area in which it is located; (iv) the technical practicability and
economic reasonableness
of reducing or eliminating the emissions, discharges or deposits resulting
from such pollution source; and (v) any subsequent compliance. As was shown at the hearing, and
as will be shown in CLC's post-hearing
brief~
the landfill is not in the deteriorating that the State
V/ould have the Board believe; CLC is in the position it is in thJough no fault of its own; CLC made
attempts at compliance; and, it is not economically reasonable or technically feasible for CLC to
achieve full compliance.
In general, there is no dispute that
CLC's location, in a rural area near other landfills, is a
suitable location for the landfill. (9/11/07, Tr. 167). Similarly, there is no dispute that landfills have
great social and economic value. (9/11/07, Tr. 167-168).
1.
The landfill is not deteriorating as the State would have the Board believe.
The State argues that the landfill is deteriorating. (State Brief, pp. 7-8). However, Blake
Harris testified that he is not aware
of any environmental damage or damage to personal health,
safety or welfare at the landfill caused by the lack
ofalleged posting offinancial assurance. (9/11/07,
Officer Exhibit A -
(101_101
hearing, p. _.)"
7
Electronic Filing: Received, Clerk's Office, November 30, 2007
Tr. 167). In addition, there "vas no evidence \vhatsoever presented beyond F,-etzlaffs eyeball opinion
that any waste is being or has been deposited outside the permitted area. (9/11/07, Tr. 92).
Additionally,
Retzlaff testified that he did not perform any tests or borings to determine whether
there was sufficient cover over the existing waste. (9/11/07, Tr. 93-94). He testified that any lack of
adequate cover did not show up in the photographs because the weeds were so thick and that having
weeds \vas better than just having blank soil which would allow for more erosion. (9/11/07, Tr. 97-
98).
He admitted that there is no regulation that prohibits weeds from being used as cover. (9/11/07,
Tr. 101). He further admitted that there are times when it is necessary to uncover leachate wells.
(9/11/07, Tr. 103). Whiie Retzlaff testified that he used instruments to determine the cornposition of
alleged odors, he was unable to fully describe the results as he does not know all of the technical
aspects. (9/11/07, Tr. 68-69).
He even testified that he could not be sure that aii of the odors came
from
eLC
and that it was possible tllat tiley callIe from the adjacent landfill site. (9/11/07, Tr. 85=
86).
Further, according to Retzlaff, there is
in fact quite a bit of activity at the landfill which
would contradict the State'sposition that it is deteriorating. He testified that the gas flare has been in
operation since fall 2006. (9/11/07, Tr. 104). Monthly sampling of perimeter gas probes has
occurred since summer 2005. (9/11/07, Tr. 104). Quarteriy sampling of surface methane has
occurred since January 2007. (9/11/07, Tr. 104) Groundwater
monitoring wells have been sampled
since 2005. (9/11/07, Tr. 104-105). Gas extraction wells have been sampled since March 2007.
(9/11/07, Tr. 104-105). All monitoring systems were evaluated in summer 2005. (9/11/07, Tr.106).
The landfill gas system was evaluated in February 2006. (9/11/07, Tr. 106-107). Finally, Retzlaff
knows that a revised closure plan and cost estimates have been developed and submittted to the
8
Electronic Filing: Received, Clerk's Office, November 30, 2007
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All of the above described activity at the landfill along with Retzlaffs own testimony as to
the current condition
of the landfill makes it clear that conditions are not deteriorating as the State
would have the Board believe. This factor should weigh in factor
of the Respondents due to the
ongoing activity.
2.
CLC was Diligent in its Efforts to Comply with the Financial Assurance
Requirements.
CLC was diligent in its efforts to comply with financial assurance requirements. As Edward
Pruim testified, CLC never intended to operate the landfill without financial assurance. (9/12/07, Tr.
169).
CLC first proposed a significant modification permit to the IEPA in 1999 (9/12/07, Tr. 152).
Prior to that application, the closure and post-closure bond was about $1.4 million. (9/12/07,
Yr.
152). In that application, CLC proposed about $7 million in financial assurance. (9/12/07, Tr. 152).
Additionally, the City
of Morris had agreed to handle the collection and treatment of the
groundwater, leachate and condensate from the landfill which would cost approximately $10 million.
(9/12/07, Tr. 152). When CLC filed the sigmod in 1999, the IEPA rejected the $7 million proposal
and requested a bond for the entire $17 million. (9/12/07, Tr. 155). CLC and the City reached an
agreement whereby approximately $7 million in bonds would be funded by and in the name
ofCLC
and approximately $1 0 million in bonds would be in the name of the City but would be funded by
CLC. (9/12/07, Tr.155-56).
CLCandtheCityagreedthatCLCwouldpaytheannualpremiumon
the City'sbond for the 5-year period. (9/12/07, Tr. 156).
The approximate annual premiums for the
$1 7 million worth ofbonds was slightly more than
9
Electronic Filing: Received, Clerk's Office, November 30, 2007
$200,000 per year. (9/12/07, Tr. 157). Frontier also required collateral in the amount ofjust under
$200,000. (9/12/07, Tr. 157).
The IEPA reviewed drafts
ofthe Frontier bonds before they were issued. (9/12/07, Tr. 158).
The
IEPA approved of the bonds before CLC committed to purchasing them. (9/12/07, Tr. 158).
The concept was as follows: CLC
would purchase the bonds and would give them to the IEPA in
exchange for the sigmod permit. (9/12/07, Tr. 158). Specifically, from June to August 2000, a
procedure was established between
CLC's counsel, Mark LaRose, Agency financial assurance expert
John Taylor, and Agency lawyer John Kim, whereby CLC would tender copies ofthe bonds that had
been issued to petitioners by Frontier Insurance, Taylor would review the
bonds to see ifthey were
acceptable, and
if acceptable, the parties would have a "closing" whereby CLC and the City would
tender the original bonds and the Agency would tender the permits. (Hearing Officer Exh. A.
(10/16/0 l11earing, pp. 484-485 and Exhs. 64, 65 and 66)).
\'1/henall trilee ofthe bonds vvere issued,
Frontier was both licensed
by the Illinois Department of Insurance and was on the U.S. Dept. of
Treasury'sCircular 570 List ofapproved sureties. (Hearing Officer Exh. A - (10/16/01 hearing, pp.
490-493 and Exhs.
15, 16 and 17)).
On August 4, 2000 these bonds vlere accepted by the i\.gency pursuant to the
recommendation
of its own financial assurance expert John Taylor who wrote on August 3,2000:
"Community Landfill has tendered three acceptable bonds totaling $17,427,366. The bonds appear
to comply with the relevant regulations
in all respects. John P. Taylor." (Hearing Officer Exh. A-
(10/16/01 hearing, p. 499 and Exh. 1 (p.214))).
Christine Roque testified that the permit was
granted
in August 2000 because CLC posted adequate financial assurance. (9/11/07, Tr. 238).
Taylor testified that he recommended the bonds be accepted
in August 2000 because they complied
10
Electronic Filing: Received, Clerk's Office, November 30, 2007
with eve11 tIle 1110st stringent intel1Jretation ofthe regulations. (Hearing Officer Exh.
i~~
=
(10/16/01
hearing, pp. 490-491)). CLC did
not know at the time the bonds were issued that Frontier was going
to
be removed from the Treasury Circular list the next day. (9/12/07, Tr. 170). When the bonds
were approved on August 4, 2000, John Taylor, John Kim and then-Bureau ofLand Permit Manager
Joyce Munie all
knew that Frontier had been removed from the Dept. ofTreasury 570 list on June 1,
2000. (Hearing Officer Exh. A - (10/16/01 Hearing, pp. 490-492)).
John Taylor testified that Joyce Munie was aware that
if the bonds were not accepted, no
additional financial assurance would be tendered and the Agency would be left with only $1.4
million in financial assurance covering the entire site. (Hearing Officer Exh. A - (10/16/01 Hearing,
pp. 496-497)).
John Taylor further testified that Joyce Munie directed him to "find a way to accept
the bonds and
put the operators on the hook for $1
7
million" in financial assurance. (Hearing Officer
Exh. A -
(10/16/01
Heariilg, pp. 497-498)). However, as Edward Pruim testified, iftIle
IEPi\
had
rej ected the bonds when it knew that Frontier had been de-listed,
eLC
would have closed the landfill
pursuant to the permit requirements with the $1.4 million bond. (9/12/07, Tr. 159).
John Taylor
testified that they all understood that
if the bonds were found to be unacceptable, no permit would
issue and no additional financial assurance v/ould be tendered. (Hearing Officer Exh. A - (10/16/01
Hearing, pp. 496-497). Instead,
when the IEPA approved the bonds, CLC put up the collateral and
purchased the bonds for the first year
premium of $208,730. (9/12/07, Tr. 159; CLC Exh.2 (No.
5(4)) and Exh. 18).
CLC
then field a supplemental permit application to receive approval for the construction of
a separation layer and to receive authorization for the acceptance of waste for discposal in a newly
constructed area. It
then spent the next year building and developing the new cell. (9/12/07, Tr.
11
Electronic Filing: Received, Clerk's Office, November 30, 2007
160).
In spite of the absence of any lay¥', rule or regulation, i1,.gency employee Blake Harris
recommended on May 9, 2001 that the Frontier bonds be denied because Frontier was no longer on
the 570 list. (Hearing Officer Exh. A - (10/16/01 hearing, p. 343). Harris testified that he made this
determination without even looking at the bonds or determining their effective dates. (Hearing
Officer Exh. A - (10/16/01 hearing, pp. 352-353). Harris' recommendation was accepted without
question by Permit Manager Joyce Munie. (Hearing Officer Exh. A - (10/15/01 hearing,
p. 224)).
0
the contrary, John Taylor's opinion was that the bonds still conformed with the most stringent
reading
ofthe Act and the regulations as ofMay 2001 since: (1) they were issued when Frontier was
listed on the 570 list; and (2) there is no provision
of the Act, rules or regulations that requires or
even allows the Agency to deny permits based
on a subsequent removal from the 570 list. (Hearing
Officer Exh.
A- (10/16/01 hearing, pp. 501-503). CLC was then informed by the IEPA that the very
same Frontier bonds that had been previously approved were no good. (9/12/07, Tr. 160). The
i~,.gency
denied the permit on that basis even though it k.new that Frontier had been de-listed at the
time it pre-approved the bonds in August 2000. (9/12/07, Tr. 160). The permit denial was
subsequently upheld by the Pollution Control Board and the Illinois Appellate Court. (9/12/07, Tr.
161).
It is uncontradicted that
if the Frontier bonds had not been approved in August 2000, no
additional financial assurance would have been tendered by CLC or the City. (Hearing Officer Exh.
A - (10/16/01, p. 484-485)). In that case, CLC would have been responsible for one year'spremium
on only $1.4 million or approximately $26,850. (Hearing Officer Exh. A - (10/16/01, pp. 678-679)).
Instead, thanks to Joyce
Munie's directive that Taylor "find a way to accept the bonds" and the
agency'sacceptance
ofthe bonds, CLC and the City tendered an additional $15.6 million in financial
12
Electronic Filing: Received, Clerk's Office, November 30, 2007
assurance bonds, with a five-year cornrnitrnent to pay armual premiums totaling more than $200,000.
(Hearing Officer Exh. A - (10/16/01, pp. 497-498)).
Because the permit was denied, CLC was unable to accept waste, a situation which
"would
certainly eventually shut the facility down", in the words of CLC engineer Michael McDermont.
(Hearing Officer Exh. A - (10/17/01 hearing, p. 685)). Nevertheless, during the permit appeal
process, in good faith, CLC paid its 2
nd
year premium of $217,842. (9/12/07, Tr. 161; CLC Exh.
No. 2(5)).
By this time, therefore, CLC had paid more $600,000 in cash collateral and premiums
while the IEPA
was taking the position that the bonds were no good and CLC could not operate the
landfill. (9/12/07, Tr. 162).
Again in good-faith; CLC investigated the possibility
of obtaining substitute financial
assurance. (9/12/07, Tr. 162). CLC asked the broker who had worked with it on the Frontier bonds
to exhaust all available avenues offinancial assurance that CLC could possible afford. (9/12/07, Tr.
162). Ed"vard Pruim testified that he brolcer searched for other bonding companies but that due to
the lapse in time, CLC was informed that the collateral required to obtain a $17 million
bond would
be 70-80%
of the bond value. (9/12/07, Tr. 162). In other words, in order to obtain a $17 million
bond, CLC would have had to post approximately $14-15 million in cash. (9/12/07, Tr. 162). Funds
available to CLC were nothing like that. (9/12/07, Tr. 162). The company was not generating any
income to be able to afford a
bond for that amount. (9/12/07, Tr. 162). CLC was informed that the
only way it could
be done was through a bond for which CLC did not have collateral. (9/12/07, Tr.
163).
The foregoing describes the events which have lead to the present situation. Clearly, CLC
was diligent in its efforts to obtain financial assurance. It was not simply trying to avoid its
13
Electronic Filing: Received, Clerk's Office, November 30, 2007
obligation, as the State would have the Board believe. CLC
v~ould
have preferred having the ability
to provide financial assurance as it would have mean that it was a functioning, viable landfill with
the necessary permits to accept waste and generate income. Instead, it was left with no means to do
so, thanks to the actions
of the State.
The State's argument that "the Respondents simply failed to retain sufficient capital from
landfill operations to assure the landfill's ultimate closure" is without merit. (State Brief, p. 12).
Obviously, CLC
put up the money to provide for just that through the Frontier bonds. It is through
the State'sconduct
of approving the bonds, then disapproving the bonds and refusing to provide the
operating permit that would allow it to generate revenue that CLC does not have sufficient funds.
This is what should be obvious to the Board.
3.
CLC and the City Were Reasonable in Their Belief that Frontier was Providing
Financial Assurance
Blake Harris testified the bonds \vere valid through 2005 at a minimum, and 2006 with an
automatic one year extension. (9/11/07, Tr. 158). He further testified that he agreed with IEPA
employee Beverly
A...
nderson's position in January 2004 that Frontier was providing financial
assurance. (9/11/07, Tr. 170-172; CLC Exh. 12). Surely,
if the IEPA thought that Frontier was
providing financial assurance in January 2004, it is more than reasonable that CLC and the City
\vould
thirJ<: the same. The Board should reach the same conclusion reached by Beverly Anderson
and Blake Harris: that Frontier was providing financial assurance.
B.
ANY ORDER REQUIRING THE POSTiNG OF
FI[~Ar~CIALASSURAl~CE
V,rOULD
NOT BE APPROPRIATE AS IT WOULD SERVE NO PURPOSE
The State has now taken the position that the Board should" ...order specific affirmative
Relief,
i. e.,
an order to obtain financial assurance, and closure of Parcel B. (State Brief, p. 5). If a
14
Electronic Filing: Received, Clerk's Office, November 30, 2007
bond was to be posted for the amount of closure and post-closure care based on the most recent
approved cost estimates, a bond in the amount
of more than $1 7 million dollars would be required.
(9/12/07, Tr. 84).
If closure is required by the Board, and an insurance company or the bonding
agency understood that the bond would be called or the insurance company would be called upon to
pay the cost immediately after issuance, it would affect the rate significantly. (9/12/07, Tr. 98-99).
Devin Moose, the City
of Morris' expert witness, testified that in his experience with financial
assurance, which is considerable, he is unaware
of any situation where someone had to purchase a
bond that was going to be called immediately. (9/12/07, Tr. 99). Due to the risk-based nature, he
cannot imagine anybody not requiring full collaterization
of the bond if it is going to be called
immediately. (9/12/07 Tr. 109).
There are significant differences in opinion
as to the appropriate closure and post-closure
costs. (9/11/07, Tr.
233~34
and 9/12/07, Tr. 83-84). The recently submitted revised cost estimates
are $10,061,619 which is more than $7 million less that the previous estimate. (Id.) The estimates
have been submitted to Christine Roque but a response had not yet been made as
of the date of
hearing. (9/12/07, Tr. 94). It stands to reason therefore, that ifthe Board requires the full amount of
the most recent cost estimate to be posted as financial assurance, the funds required to do so may
well be in excess
ofwhat is actually required now as opposed to what may have been required more
than seven years ago, based on the landfill continuing to accept waste. In Devin Moose'sopinion,
any money spent should be spent on the landfill itself. (9/12/07, Tr. 98). It is clear that ordering
respondents to post financial assurance at this point would not be appropriate
as it would be wasteful
and not serve a purpose. As Devin Moose testified, regulations do not always fit squarely within the
situation. (9/12/07, Tr. 125).
15
Electronic Filing: Received, Clerk's Office, November 30, 2007
IV.
THE BOARD SHOULD
~~OT
ASSESS A CIVIL PENALTY AGAINST CLC
BECAUSE CLC WAS DILIGENT IN ITS ATTEMPTS TO PROCURE FINANCIAL
ASSURANCE, NOT HAVING FINANCIAL ASSURANCE HAS NOT RESULTED IN
AN ECONOMIC BENEFIT AND A PENALTY WOULD RESULT IN AN
UNREASONABLE HARDSHIP.
Ifthe Frontier bonds had been found to have been compliant, CLC's operating permit for Cell
A would have been issued and CLC would have gladly paid the premiums for financial assurance.
Hovvever, CLC has been in a classic Catch-22 situation: without the operating permit it anticipated
and for which it was obligated to procure financial assurance for over $17 million based
on the cost
estimate provided assuming it had an operating permit, it could not generate sufficient revenue to pay
for any bond premiums. In reality, the fact that
CLC does not have financial assurance has resulted
in severe economic hardship which would be compounded by assessing a civil penalty.
Nevertheless, CLC attempted in good faith to procure financial assurance despite the fact that it was
tillable to generate any income.
A.
CLC Attempted in Good Faith to Provide Financial Assurance
As stated above, CLC attempted in good faith to provide financial assurance after the
determination was made by the Agency that the Frontier bonds were not compliant. It never intended
to operate the landfill v{ithout financial assurance. (9/12/07, Tr. 169).
CLC investigated the
possibility
of obtaining substitute financial assurance. (9/12/07, Tr. 162). CLC asked the broker
who had worked with it on the Frontier bonds to exhaust all available avenues
offinancial assurance
that CLC could possible afford. (9/12/07,
Tr. 162). Edward Pruim testified that the broker searched
for other bonding companies but that due to the lapse in time, CLC was informed that the collateral
required to obtain a $17 million bond would be 70-80%
of the bond value. (9/12/07, Tr. 162). In
other words, in order to obtain a
$1 7 million bond, CLC would have had to post approximately $14-
16
Electronic Filing: Received, Clerk's Office, November 30, 2007
15 l11illion in cash. (9/12/07, Tr. 162). Funds available to CLC "vere nothing like that. (9/12/07, Tr.
162). CLC was informed that the only way it could be done was through a
bond for which CLC did
not have the collateral to secure. (9/12/07, Tr. 163).
Blake Harris testified the bonds were valid through 2005 at a minimum, and 2006 with an
automatic one year extension. (9/11/07, Tr. 158). He further testified that he agreed with IEPA
employee Beverly
A:Lnderson's position in January 2004 that Frontier was providing financial
assurance. (9/11/07, Tr. 170-172; CLC Exh. 12). Surely,
if the IEPA thought that Frontier was
providing financial assurance in January 2004, it is more than reasonable that CLC and the City
would think the same. The Board should reach the same conclusion reached by Beverly Anderson
and Blake Harris: that Frontier was providing financial assurance.
B.
The State Refuses to Release CLC's Collateral and Premiums from Frontier
The cash collateral posted by CLC was approximately $200,000.
(9i12i07,
Tr.
165~166).
Because the collateral posted was invested by Frontier, CLC believes that the arl10unt is now
between $300,000 and $400,000. (9/12/07, Tr. 166). While Frontier has said that CLC is entitled to
the return
ofthe funds it is holdinQ.
.0:1
the
- -
IEPA will not release them:
-"-"
therefore~
CLC has not received
any ofthe cash collateral back from Frontier. (9/12/07, Tr. 166). Blake Harris testified that he does
not
know if there are any regulations that allow the State to keep the collateral for bonds that are
determined to be non-compliant. (9/11/07, Tr. 146).
In addition, Frontier has said that CLC is entitled to
a
refund of the premiums it has paid
which were $208,730 (2000) and $217,842 (2001) for a total
of $426,572. (CLC Exhibit No.2,
Response to Interrogatories
No.5). Ed Pruim testified that Frontier would pay that back to CLC if
the IEPA approved it. (9/12/07, Tr. 167). However, because the IEPA will not release the funds,
17
Electronic Filing: Received, Clerk's Office, November 30, 2007
more than $600,000 cash out ofCLC'spocket for tlle bOllds is still being held by Frontier. (9/12/07,
Tr. 166-167).
C.
CLC Does Not Have the Means to Pay a Penalty
CLC does not have the means to pay a penalty. (9/12/07, Tr. 167-168). When it first applied
for the sigmod in 1999, it intended to close the landfill in 4-5 years. (9/12/07, Tr. 168). However, its
ability to generate adequate revenue to pay any bond premiums
vvas terminated \vhen the Frontier
bonds were determined to be no good, and the operating permit was denied. CLC never intended to
run or operate the landfill without proper financial assurance. (9/12/07, Tr. 169). Even the State's
own witness, Mark Retzlaff, admitted that he "guesses" that CLC does not make any money and that
its not being able to dispose
ofwaste would "hamper the landfill'sability to make money." (9/11/07,
Tr.89).
Edward Pruim testified that there has beell 11lillill1al income and revenue at the landfill
through accepting contaminated soils but that it has been a struggle. (9/12/07, Tr. 162-63). While
CLC had to let 7-8 employees go, it kept a general manager to oversee and maintain the landfill, as
\vell as a part-time secretary,
v~lhile
it tried to resolve some ofthe issues. (9/12/07, Tr. 163). Edward
Pruirn further testified that at the present time, CLC has a lot
of outstanding bills that cannot be paid.
(9/12/07, Tr. 164).
IfCLC paid out what is currently in its checking account and had a zero balance,
there would still be bills to pay. (9/12/07, Tr. 176). In sum, the company is in the red and has no
money to pay a penalty
of any sort. (9/12/07, Tr. 164). Ed Pruim testified that there are no funds
available and no business; there is not the cash flow that once was there, years ago. (9/12/07, Tr.
151 ).
18
Electronic Filing: Received, Clerk's Office, November 30, 2007
Based on the foregoillg, Respondent Communitcj Landfill Co., Inc. respectfully requests that
the Board:
1.
Find that CLC should not be penalized for doing in good faith what it was told to do
by the Agency which was to commit to purchasing the Frontier bonds with the express approval of
the Agency and commit to paying more than $200,000 in annual premiums and in echange, be able
to accept waste and generate sufficient revenue to
make the payments;
2.
Find that CLC acted reasonably and diligently by purchasing the Frontier bonds and
paying the premiums;
3.
Find that CLC acted reasonably and diligently with its attempts to procure alternate
financial assurance;
4.
Find that CLC has not accrued any economIC benefit and In fact has been
economically 11arl11ed due to the State's conduct; and
5.
Find that under the circumstances as set forth herein, any penalty assessed to CLC
would be unfair and inappropriate.
Respectfully Submitted,
COl'Al'ALf1'.JITYLi\NDFILL CO., INC.
~C',GrU/
One of its Attorneys
~
Mark A. LaRose
Clarissa C. Grayson
LaRose
&
Bosco, Ltd.
200 N. LaSalle Street, Suite 2810
Chicago IL 60601
(312) 642-4414
fax (312) 642-0434
19
Electronic Filing: Received, Clerk's Office, November 30, 2007
CERTIFICATE OF SERVICE
I, Clarissa C. Grayson, an attorney, hereby certify that I caused to be served a copy ofthe
foregoing RESPONDENT COMMUNITY LANDFILL COMPANY, INC.'S CLOSING
ARGUMENT AND POST-HEARING BRIEF by electronically filing and by placing the same
in the United States Mail, first-class postage prepaid, this 30th day ofNovember 2007, addressed
as follows:
Christopher Grant
Environmental Bureau
Assistant Attorney General
69 West Washington
18th Floor
Chicago, Illinois 60602
Charles F. Helsten
Richard
S. Porter
Hinshaw
&
Culbertson, LLP
100 Park Avenue
P.O.
Box 1389
Rockford, Illinois 61105-1389
Mark
A. LaRose
Clarissa
C. Grayson
LaRose
&
Bosco, Ltd.
200
t~orth
LaSalle Street, Suite 2810
Chicago, Illinois 60610
(312) 642-4414
Bradley Halloran
Hearing Officer
Illinois Pollution Control Board
100 West Randolph
Suite
11-500
Chicago, Illinois 60601
Scott Belt
Scott Belt and Associates,
PC
105 East Main Street
Suite 206
Morris, Illinois 60450
Electronic Filing: Received, Clerk's Office, November 30, 2007