BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

PEOPLE

OF THE STATE OF ILLINOIS"

Complainant,

v.

COMMUNITY LANDFILL COMPANY, INC.,

an Illinois Corporation, and

CITY OF MORRIS,

an Illinois Municipal Corporation"

Respondents.

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NOTICE OF FILING

TO:

All counsel of Record (see attached Service List)

PCB No. 03-191

Please

take notice that on July 22, 2009, the undersigned electronically filed the following

documents:

(1)

CITY OF MORRIS' MOTION FOR RECONSIDERATION OF THE

POLLUTION CONTROL BOARD'S ORDER OF JUNE 18, 2009

and

(2)

CITY'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR

RECONSIDERATION

WITH ATTACHED EXHIBITS

with the Illinois Pollution Control Board, 100 West Randolph Street, Chicago, Illinois 60601.

Dated:

July 22, 2009

Charles F. Helsten

Nancy G. Lischer

Nicola Nelson

Hinshaw

&

Culbertson LLP

100 Park

Avenue

P.O. Box 1389

Rockford, IL

61105-13 89

815-490-4900

Respectfully submitted,

On behalf of the CITY OF MORRIS

/s/ Nicola Nelson

One of Its Attorneys

70608102vl 806289 52944

Electronic Filing - Received, Clerk's Office, July 22, 2009

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BEFORE THE POLLUTION CONTROL BOARD

PEOPLE OF THE STATE OF ILLINOIS,

ex

reZ.

LISA MADIGAN, Attorney General of

the State of Illinois,

Plaintiff,

v.

COMMUNITY LANDFILL CO., an Illinois

Corporation,

and the CITY OF MORRIS, an

Illinois Municipal Corporation,

Defendants.

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PCB 03-191

(Enforcement - Land)

RECONSIDERATION OF THE ORDER OF JUNE 18,2009

NOW COMES the City of Morris, by and through its attorneys, and pursuant to

Section

101.520 of the General Rules of the Illinois Pollution Control Board, moves the

Pollution Control Board to reconsider its order of June

18,2009. The City respectfully

requests this Board to find that no penalty lies

and that the City is not responsible to

provide financial assurance for the reasons set forth

herein) Alternatively, the City

respectfully requests this Board to not impose any penalty.

The Board's order held both the City

and CLC must "submit revised cost

estimates,

and update financial assurance in accordance with approved revised

estimates"

(6/18/09 Order at 3).

If

this Board declines to reconsider its requirements

regarding the posting of financial assurance, it is respectfully requested alternatively

that the Board reconsider the amount

and reduce the City's obligation to the amount of

1

This Board is well-aware of the facts leading

up to its decision and the

City's position. The City has attempted to avoid repetition of the facts

and proceedings

except where relevant or raised

at the 2007 hearing.

6466108vl 806289 52944

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its original bond. Alternatively, the City seeks reconsideration of the timing of

submitting financial assurance

and cost estimates. This Board recognized that it had the

authority to require revised cost estimates

and to order that the financial assurance

would be updated in accordance with those revised estimates

(6/18/09 Order at 3).

This Board's order requires the posting of financial assurance in an amount that was

determined nine years ago. The uncontroverted evidence at the hearing is that the

actual cost is estimated to be

$7.0 million less than the last permitted amount.

However, this Board has the authority to first require a determination of the updated

cost estimates prior to the posting of financial assurance.

Thus, the City respectfully requests this Board to first require the submission of

updated cost estimates within a time certain from the ruling

on this motion,2 that the

Illinois Environmental Protection Agency

(IEP A) be directed to review the updated cost

estimates

and determine the proper, updated amount within a certain time frame,3 and

that additional time then be authorized for the City to post financial assurance based on

the approved revised cost estimates.

A revised timetable will allow the City's audit to be completed

and for the City

to complete its investigation on

how much it can post in a government guarantee and

seek other means to comply. A revised timetable will permit time for the IEP A to

2

This Board provided for a

60-day deadline, but the June 18, 2009 order is

automatically stayed

upon the filing of this motion. 35 IllAdm.Code. §101.902.

3

The testimony established that revised cost estimates were provided twice

to the IEPA (in

2005 and July 2007), but it has yet to act on them

(see infra).

2

6466108vI 806289 52944

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review the revised cost estimates. Meanwhile, it is respectfully requested that the State

be ordered not to settle any claim with Frontier without the City's involvement and

agreement.

I.

This Board's Order Makes the City the Insurer for the Insolvent Surety and

Landfill Company and Imposes a Crushing Burden on a City with Less than

9,000 Adults According to the Last Census.

This Board imposed a joint and several obligation on CLC (which claims

insolvency) and the City to post a

$17.4 million financial assurance and imposed a

penalty on the City of about

$400,000 (6/18/09 Order).

It

found that the purpose of the

financial assurance regulations is to prevent a situation where

"the State, at taxpayer

expense, [must] clean

up or even close a facility" (6/18/09 Order at 2 (quoting 2/16/07

Interim Order».

However, the Board's Order imposes a multi-million dollar obligation - in the

aftermath of an operator's insolvency and surety's receivership -

on the few thousand

taxpayers of a small town. The City's population at the last census was less than

12,000,

and, of those individuals, only 8,620 citizens were 20 years or older.

http://city.mornet.org/html/populationage.htm.This Board's Order overlooks the

fact that its order would require

8,620 city taxpayers to pay the $17.4 million price for an

insolvent corporation and surety, plus another

$400,000 as a penalty.

Although

it

is not the City's fault that Frontier went into receivership, or that

CLC has apparently been run into the ground, the City is now left holding the bag for

the costs of a landfill it has not operated in the last

27 years. As the dissent noted, the

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penalty under these circumstances is arbitrary, and imposes an unreasonable financial

hardship

(6/18/09 Order, dissent). 415 ILCS 5/42(h) (2006).

Because of the current status of CLC and Frontier, the Board's Order effectively

requires the City to come

up with 100% of the $17.4 million bond, notwithstanding the

evidence that the City also continues to bear the cost of treating the landfill's leachate at

its publicly owned treatment works (POTW),

and also continues to incur the cost of

payments to its environmental consultants, who were retained to protect the health

and

safety of City residents once it became clear that CLC had abdicated its responsibilities.

This Board declined to order Parcel B closed,

but ordered that no additional waste could

be accepted (6/18/09

Order at 3, 44). Thus, the landfill will not generate income, but

even

if

it did, payment to the City is limited by the terms of the lease. In light of the

dire impact of its decision, the City respectfully requests this Board to reconsider its

order.

II.

This Board Should Vacate the Penalty.

The Board's June 18,2009 Order held that one of the "aggravating factors" was

that the City (and CLC)

"continued to argue against the cost requirements" for the

financial assurance, which the

Order characterized as "[clinging] steadfastly to their

interpretation of the financial assurance requirements for surety bonds"

(6/18/09 Order

at 40). The Board also held that the City "benefited economically by putting off

spending money to achieve compliance with the financial assurance rules," although it

acknowledged there is no evidence in the record regarding

any "economic benefit" to

the City because of the failure to replace the Frontier bonds

(6/18/09 Order at 40-41).

4

6466108vl 806289 52944

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The Board then assessed as a penalty the sum paid to the City as "dumping royalties or

tipping fees from the Landfill operations in the years

2001-2005/1

while ignoring the fact

that the City incurred substantial costs (close to a million dollars

(Exh. A, Enger

Affidavit» retaining engineers to monitor the landfill (6/19/09 Order at 41).

It

is

respectfully submitted that the Board's June

18, 2009 order overlooked facts and

misapplied the law.

A.

The City's Exercise of Its Statutory Right to Litigate the Agency's

Interpretation of Its Regulations Was Improperly Found to

Be an

U

Aggravating Factor."

This Board characterized the City's exercise of its statutory right to challenge and

appeal various issues as an

"aggravating factor." This misapprehends the law of the

case doctrine.

On remand, while the lower court (here, an agency) and appellate court are

bound by the ruling of an appellate court, a litigant may preserve those issues for

review by challenging the appellate court decision upon remand as palpably erroneous.

Garibaldi v. Applebaum,

194 Il1.2d 438, 447-48,742 N.E.2d 279, 283-84 (2000). In this way,

the issue is preserved in a second appeal and,

if

the Illinois Supreme Court accepts

review of the second appellate decision,

it

may also review the first appellate decision-

even

if

the Supreme Court had already declined to review the first appellate decision.

This is exactly the factual circumstance in

Garibaldi,

in which the Supreme Court

rejected the argument that

it

lacked the authority to consider the first appellate decision

(decided about five years earlier) under the law of the case doctrine.

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Moreover, the City's position was not frivolous, but the subject of internal debate

in the

IEPA, as one of the State's witnesses testified. IEPA's Blake Harris testified at the

2007 hearing that John Taylor, a former financial assurance analyst for the Bureau of

Land, believed that the Frontier bonds did, in fact, comply with the relevant regulations

(9/11/07 Tr. 134, 137, 169). Taylor told others at IEPA that as he read the regulation,

the Frontier Bonds were compliant

(9/11/07 Tr. 134). Taylor concluded that three

acceptable performance bonds totaling

$17,427,366 had been provided for the Morris

Community Landfill,

and that "the bonds appear to comply with the relevant

regulations in all respects"

(9/11/07 Tr. 137). Harris acknowledged that because of the

internal dispute over the proper interpretation of an ambiguous regulation, the

IEP A

held an internal meeting to decide whether the regulation required that a surety

company only

had to be licensed to transact insurance

in

Illinois by the Department of

Insurance, or whether it required that a surety

must also be listed on the Treasury

Department Circular

(9/11/07 Tr. 154). At the 2007 hearing, Harris agreed it was

reasonable for the City to conclude that the Frontier bonds showed on their face that

financial assurance was still in place through the

end of 2006 (9/11/07 Tr. 171-172).

The City's good faith legal challenge to the Agency's interpretation should have

been considered a mitigating factor.

See Park Crematory, Inc. v. Pollution Control Bd., 264

I11.App.3d 498, 506, 637 N.E.2d 520, 525 (1994);

Harris-Hub Co. v. Illinois Pollution Control

Bd.,

50 Ill.App.3d 608, 612, 365 N.E.2d 1071, 1074 (1977) (holding that good faith is a

factor to be considered in mitigation).

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6466108vl 806289 52944

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The City assures this Board that it was not acting in a contumacious manner in

preserving these issues for further review.

It

is submitted that taking a legal position in

good faith is not

an "aggravating" factor justifying a penalty against a unit of local

government.

B.

This Action Is the First Time the Board Has Held that the City Is

"Conducting" Landfill Operations.

This Board held another aggravating factor is that City has disregarded its

obligation to post financial assurance (6/18/09

Order at 40).

It

is respectfully submitted

that this proceeding is the first time that this Board has adjudicated the City's

individual obligation to post financial assurance,

and only with its June 18,2009 Order

has the amount been adjudicated.

It

cannot be controverted that the prior decisions involved different issues. In

Community Landfill Co. v. PCB,

331 Ill.App.3d 1056, 772 N.E.2d 231 (3d Dist. 2002) (PCB

No. 01-170), the appellate court held that the Frontier bonds were invalid because

Frontier was removed from the federal list of approved sureties. The decision refers to

the City

and CLC collectively as the

/I

company," but does not address the specific issue

of who (between the City

and eLC) must post the $17.4 million in financial assurance.

In the other proceeding, this Board upheld the permit condition that refused to

lower the amount of financial assurance based on the City's leachate treatment

and held

that

an additional $10.0 million plus in financial assurance had to be posted.

Community

Landfill Co. and City of Morris v. Illinois EPA,

cons. nos. 01-48 and 01-49 (April 5, 2001).

The appellate court affirmed.

Community Landfill Co. and City of Morris v. Illinois EP A,

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6466108vl 806289 52944

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No. 3-01-0552 (Ill.App. Oct. 29,2002) (Rule 23). This 2002 decision also does not address

the specific issue of

who (between the City and CLC) must post the $17.4 million in

financial assurance.

Because no decision

by this Board or the appellate court has adjudicated the

obligation of CLC versus the City to post financial assurance, those decisions are

not

precedent for imposing an independent obligation to post financial assurance on the

City.

If

the issue was never "raised, decided or discussed," then a decision has no

"precedential weight."

Epstein v. Chicago Bd. of Educ.,

178 Il1.2d 370, 378, 687 N.E.2d

1042,

1046 (1997). "A judicial opinion is a response to the issues before the court, and

these opinions, like others, must be read in the light of the issues that were before the

court for determination."

Nix

v. Smith,

32 Il1.2d 465, 470, 207 N.E.2d 460, 463 (1965).

C.

This Board Misinterpreted

§42

Perceived Economic Benefit.

Section 42(b )(3) of the Act provides that this Board should consider, in

determining the appropriate penalty to be imposed, "any economic benefits accrued by

the respondent because of delay in compliance with requirements, in which case the

economic benefits shall

be determined by the lower cost alternative for achieving

compliance."

415 ILCS 5/42(h)(3). The statute thus contemplates that the amount of

the penalty should be determined

by assessing the benefit that was gained by

noncompliance, stating that the penalty should be "as great as the economic benefits

if

any, accrued by the respondent as a result of the violation." 415 ILCS 5/ 42(h).

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6466108vl 806289 52944

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Here, the Board found the violation was in posting financial assurance. As

shown above, however, the first time that this Board adjudicated the City's independent

obligation to post financial assurance was in this case in its interim order. However,

that interim order was not a final adjudication until this Court's

2009 order and was

subject to revision until this Board resolved all issues.

See, e.g., Rowe v. State Bank of

Lombard,

125 Il1.2d 203, 213, 531 N.E.2d 1358 (1988) (a trial court has the authority to

revise

any non-final order until the entry of judgment);

see

PCB Rules 101.520 101.902.

Regardless, the State had the obligation to prove that there was a link between

the violation

and the benefit to determine the appropriate amount of the penalty. Here,

however, it wholly failed to produce any evidence showing a benefit as a result of the

claimed violation. As this Board acknowledged, there was no evidence of

"profit"

gained by noncompliance with the financial assurance provisions (6/18/09 Order at

41). Because there was no evidence of any profit, the Board turned to what it called "the

only undisputable economic benefit figure quantified in this record," i.e., the alleged

"profit" the City made through royalties and tipping fees. In fact, the City has not

profited in any way.

To date, the City has spent $901,991 in engineering and

mOnitoring costs plus $57,000 for leachate treatment - over twice the penalty based on a

purported

"profit" (Exh. A, Enger Affidavit 4JI4; Exh. B, Good Affidavit 4JI6). This

Board's analysis misconstrues the plain words of the statute, to which this Board

must

give effect.

Harshman v. DePhillips,

218 IlL2d 482, 493, 844 N.E.2d 941, 948 (2006). The

statute requires a benefit from the violation (here, posting financial assurance), not just

any benefit.

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Here, the City derived no benefit from any delay. The evidence at the hearing

demonstrated that it would have cost the City nothing to post a local government

guarantee in the amount of its bond,

and it had the current funds to cover the small

shortfall

(9/12/07 Tr. 24-37). 415 ILCS 5/42(h)(3). This is not the situation today (Exh.

A,

Enger Affidavit; Exh. D, Crawford Affidavit).

Again, until this Board's final order, the legal determination of whether the City

was required to post financial assurance as a

person" conducting" landfill activities and

the amount had not been made. The fact that the City did not

sua sponte

post a

guarantee or bond prior to this Board's order, but instead awaited a final determination

by the Board concerning its responsibilities, should not be deemed an aggravating

factor.

It

should be viewed in the context of a municipality's duty not to assume debts

or responsibilities where its responsibility to do so is in doubt.

III.

The Penalty Should Not Be Imposed Given All the Circumstances.

There are mitigating factors that weigh against

any penalty. As explained above,

before this enforcement action, there was no adjudication that the City

had the

individual obligation to post financial assurance because it "conducted" landfill

operations.

On its own volition, before this Board issued its Interim Order, the City

hired

Shaw Environmental approximately six years ago to monitor the landfill and

assess its safety in order to safeguard the health and safety of its citizens and the

environment.

Shaw is currently monitoring the landfill at the City's cost. The total

spent

by the City on engineering fees from May 2001 to date is $901,991 (Exh.

A,

EngerAffidavit).

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6466108vl 806289 52944

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That the City did not

sua sponte

post financial assurance does not mean that the

City was disregarding this Board's Interim

Order.

It

has taken steps in response to the

2006 Interim Order. For example, it has expanded the TIF district so that revenues can

be generated - although the amount is impossible to predict given the recession and the

depressed housing market

(Exh. A, Enger Affidavit). Moreover, although a law has

passed the House and

Senante and is on the Governor's desk to extend the TIF District

another

12 years, the Governor could veto this bill.

It

appears that the bill was sent to

the Governor on June 12,2009, so

if

the Governor does not veto it, it becomes the law in

60 days, or the beginning of August. ILLINOIS CONSTITUTION OF 1970, art. IV §9(b).

The City has also taken steps to collect the vast amount of soil required for cover.

It has required developers and the contractors who have excavated as part of a large

sanitary sewer project to place excess soil on City property so that soil for a final cover

would accumulate

(Exh. A, Enger Affidavit).

It

has spent almost a million dollars

monitoring the landfill for safety (Exh. A, Enger Affidavit). In 2002, before either of this

Board's orders, the mayor prohibited depositing any waste at this landfill

(Exh. E) 4 All

of these steps establish that the City has acted in good faith.

This Board should vacate the penalty on reconsideration.

Since the City lent its

name for a Frontier bond (that eLC was to pay the premium on), it has been embroiled

in litigation. As simply the last man standing, it appears that the City will be required

4

As this Board recognized, CLC is the operator who handles the daily

operation and is on site. The City does not have a guard posted at the landfill and

cannot prevent persons from delivering waste.

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to pay millions for a landfill it has not operated since 1982. This Board should vacate

the penalty of

$399,308.98 imposed on this small town under these circumstances.

IV.

This Board Should Reconsider Its Financial Assurance Rulings.

A.

This Board Should Revise its Order Regarding the Remedies.

It

is manifestly unfair to hold the City jointly and severally liable for $17.4

million in financial assurance, when the City Council only agreed to a $10.0 million

bond for the treatment of leachate (see attached Exh.

F, Ordinance R-99-6). This Board

should reconsider its order

and only require the City to be responsible for the original

amount of the bond.

It

should be noted that if this Board modifies the timetable of its

Order so that the revised estimates are first submitted (which turn out to be

approximately

$10.0 million, according to Shaw), this turns out to be approximately the

same amount of the bond on which the City's name appears.

This Board has ordered that the

$17,427,366 financial assurance may be "reduced

by any amount IEP A has or will received from its claim against the Frontier bonds"

(6/18/09 Order at 35). Given this Board's order, the State has every incentive to settle

for a

de minimus

amount with Frontier with regard to the bonds because the State will

obtain the ordered financial assurance, regardless of the recovery from Frontier. Thus,

it is respectfully requested that this Board should order that the State is precluded from

settling the multi-million dollar bond claims with Frontier without the approval of the

City, whose taxpayers (there are less than

9,000 adults) will have to pay for Frontier's

(and CLC's) financial debacle.

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B.

The Amount of Financial Assurance Required Under the Order Is Based

On Outdated Calculations that Were Shown to Have Been Improperly

Calculated, and Ignores the Revised Estimates That Have Been

Repeatedly Submitted

to IEPA, But Never Acted Upon.

This Board's Order requires that the City jointly and severally (with a company

that claims insolvency) post financial assurance in the amount of

$17.4 million. The

amount of financial assurance required under the

Order is based on calculations

performed almost a decade ago as

part of a negotiation with CLC and IEPA (9/18/09

Order at 43; 9/11/07 Tr. 215-16; People's Exh. 12 p.44 CJI6; p.33 CJI6).

The $17.4 million figure was apparently the result of negotiations with the

Agency (and based

on improper modeling). On August 13, 1999, before the City was

involved in the bond,

CLC filed an addendum to a permit application recalculating the

financial assurance from

$17.4 million to $7.0 million.

Community Landfill Co. v. Illinois

EPA,

PCB Cons. Nos. 01-48, 01-49, slip op. at 25-26 (4/5/01 PCB op.). The permit

request was denied,

and an appeal taken (PCB Cons. Nos. 00-66,00-67). An agreement

was thereafter reached to resubmit the application under protest with closure/post-

closure costs of approximately

$17.4 million, and to exchange the financial assurance

documents with the Agency in exchange for drafts of the permit, with the

understanding that the resolution of the financial assurance amount would be

postponed to a later date.

Community Landfill Co. v. Illinois EPA,

PCB Cons. Nos. 01-48,

01-49, slip op. at 25-26 (4/5/01 PCB op.). Pursuant to that agreement, the closure/post-

closure cost estimate was set at

$17.4 million. In its opinion, this Board took

"administrative notice" of the facts of those proceedings (6/18/09 Order at 28).

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There was testimony that a significant modification application must be

submitted to change the amount of financial assurance

(9/11/07 Tr. 216). However, a

renewal application was submitted to

IEP A in 2005 which included an addendum with

a revised cost estimate of the closure

and post-closure costs (based on the old modeling)

(9/11/07 Tr. 216-18). These cost estimates were again revised in response to IEPA

comments in November 2005 (9/12/07 Tr. 111-13, 118). This record shows no response

by the IEPA.

In 2007, revised cost estimates were again submitted to the IEP A by Shaw

Environmental, which developed and submitted a closure plan based on proper

modeling. The only basis for the

$17.4 million figure was the figures in the nine-year

old

CLC application, and this amount was incorrect because it is based on improper

modeling

(9/12/07 Tr.77-78, 83-891, 104). For example, the modeler used a Darcy

velocity that was off

by a factor of 40,000 (9/12/07 Tr. 78-79,87-88).

Therefore, in July 2007, Shaw submitted a revised plan for closure and post-

closure with a revised cost estimate of

$10,061,619 to the IEPA (9/12/07 Tr. 83-84). At

the 2007 hearing, Christine Roque, the IEPA permit supervisor, testified that the revised

cost estimates continued to simply remain "under review"

(9/11/07 Tr. 217-18). For

reasons that are unclear,

IEP A has continued to refuse to address the revised cost

estimates. This Board, meanwhile, criticized the City

and CLC for a failure to submit

revised estimates

(9/18/09 Order at 41 n.14). This Board overlooked that the IEPA has

not acted on revised estimates

(id.).

At this point, it appears that Shaw will have revised

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Electronic Filing - Received, Clerk's Office, July 22, 2009

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estimates by mid-August, but it will take additional time to schedule the planned work

(Exh. C, Varsho Affidavit).

With its June

18, 2009 Order, the Board now imposes on the City alone (as a

practical matter) the obligation to post the full (outdated

and based on an erroneous

model)

$17.4 million. The Board has the authority to order the posting of financial

assurance,

an updated cost estimate, and a reduced financial assurance (6/18/09 Order

at 3), so it obviously also has the authority to establish the order in which these steps are

taken. Moreover, this Board should consider the fact that the IEPA has

had revised

estimates in its possession for years,

but failed to take action. This Board should

accordingly reconsider its Order

and make provision for the timely review by IEP A of

the revised estimates

and plan.

e.

This Board Should Reconsider and Revise the Schedule in Its Order.

If

this Board reconsiders its order so that the financial assurance is based on an

updated plan and revised estimates, then it should also revise the due dates

in

its

Order.

Additional time is needed for the City to comply with this Board's order on

financial assurance because, although the Act permits a government guarantee, that

amount cannot be definitively ascertained until the City's audit is complete, which is

anticipated to be

in October (Exh. A, Enger Affidavit). At this point, the amount

expected to qualify is between

$8.0 and $8.5 million (Exh. D, Crawford affidavit). There

are no current City funds available to post the other

$9.1 to $9.4 million in financial

assurance (Exh. A, Enger Affidavit). As the City's budget director has explained, there

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are simply no funds available, and this is not a situation where funds can be transferred

from all of the various accounts (Exh. A, Enger Affidavit). Although monies in some

funds can be transferred, they are needed to fulfill the City's operating expenses

and its

contractual obligations.

An additional issue arises from this Board's order because it inconsistently held

that the landfill may not accept any waste,

but that Parcel B is not to be closed. The

order effectively closes the landfill for operations, without ordering a formal closure.

Until this Board clarifies its order, it is impossible to

know whether any revenues will

be generated

by the landfill - although under the lease, the vast majority of the revenue

will not go to the City,

but to CLC.

Moreover, there are limited means by which a municipality can generate funds,

all of which take time or simply are unrealistic. 5 For example, a city could generate

funds through a general obligation bond issue,

but this requires a referendum under

state law. 65 ILCS 5/8-4-1. This Board, a creature of statute, cannot order a

municipality to violate state laws in order to generate funds to comply with this Board's

Order.

Flagg Creek Water Reclamation Dist. v. Village of Hinsdale,

2006 WL 2869930 at

*

(IPCB No. 06-141) (PCB recognized that it has limited authority and citing

Concerned

Adjoining Owners v. Pollution Control Bd.,

288 Ill.App.3d 565, 577, 680 N.E.2d 810, 819

5

If

this were a tort judgment, then the City could levy tax under the Illinois

Local Governmental

and Governmental Employees Tort Immunity Act. 745 ILCS 10/9-

104. Here, there is a civil penalty and a direction to post $17.4 million in financial

assurance.

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6466108vl 806289 52944

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(1997) 6 (holding the Board's authority does not extend to matters arising under the

Municipal Code)). Administrative agencies' actions that extend beyond its statutory

authority are void.

Bd. of Trustees v. Washburn,

153 Ill.App.3d 482, 484, 505 N.E.2d 1209,

1211 (1987).

It

is unknown if any surety will agree to post a bond as financial assurance under

these circumstances, where this Board has ordered that Parcel B need not be closed,

but

simultaneously ordered the City and CLC not to accept any waste (6/18/09 Order at 3,

41 11:9).

If

the landfill is permitted to operate, the majority of those funds will go to CLC

under the lease, not the City. There is evidence that any bond would have to be fully

collateralized

by a surety (9/12/07 Tr. 109) or, prior to this Board's order, would have

required

70-80% collateral (9/12/07 Tr. 161-62). The City does not currently have the

funds to collateralize any bond

by 80-100% (Exh. A, Enger Affidavit).

It

is difficult to

imagine that a surety would agree to issue any bond, given these uncertain facts

and a

nonfunctioning landfill. Additional time is needed for the City to investigate if a surety

would be willing to issue any bond.

Finally,

Shaw apparently will have revised estimates within the time this Board

ordered,

but the finalized plan cannot be completed for at least another two months

(Exh. C, Varsho Affidavit). IEPA's Christine Roque indicated that before revised cost

estimates would be considered, she must review a revised closure plan that

corresponds to the cost estimate

(9/11/07 Tr. 229-31). Thus, additional time is needed

6

Concerned Adjoining Owners

was abrogated on other grounds

in

Town

&

Country Utilities, Inc. v. Illinois Pollution Control Bd.,

225 Ill.2d 103, 866 N.E.2d 227 (2007).

17

6466108vl 806289 52944

---

for Shaw to finalize the closure plan, and for the IEP A to complete its review (Exh. C,

Varsho Affidavit).

There will be no threat posed

by the current condition of the landfill

if

this Board

modifies its decision so that financial assurance can be posted based

on appropriate

modeling (Exh. C,

Varsho Affidavit). The landfill is being monitored (Exh. C, Varsho

Affidavit). The City's independently retained engineers have spent more than 1,000

man hours, and over 10,000 groundwater and air monitoring tests have been performed

over the past four years. The results include:

•

Monthly monitoring of the permitted perimeter below-grade landfill gas

probes previously installed on the landfill property

by CLC began in June

of

2005, to determine whether below grade gas migration is occurring at

the Site. Readings for landfill gas within perimeter below-grade landfill

probes indicate that the below-grade landfill gas concentrations are not

increasing.

•

The majority of landfill surface scans taken since January 2007 have not

detected methane levels above

500 ppm background levels (i.e. the

regulatory limit). Surface scans that did measure methane levels above

500

ppm background levels during the original scan did not confirm the

methane levels during the mandatory re-sampling period,

and therefore

comply with the appropriate state regulations.

•

Since the beginning of 2009, only one below-grade perimeter landfill

probe has recorded a

LEL (Lower Explosive Limit) greater than 50% for

methane (over

140 LEL measurements have been preformed since the

beginning of

2009). This is significant because the LEL is the percentage of

methane within the air that could cause explosion

and thereby a potential

threat to the

human health and safety.

(Exh. C,

Varsho Affidavit).

The "current conditions at the Morris Community Landfill do not constitute a

present,

and immediate or imminent and substantial or material threat to human health

18

6466108vl 806289 52944

---

or the environment"

(id.).

Mr. Varsho has also explained that "conditions at the landfill

can be more than adequately addressed

by the routine corrective action measures called

for

by the state and federal regulations governing the landfill in question" (Exh. C,

Varsho Affidavit). Because the City is continuing the mOnitoring of the landfill,

if

any

problems arise, they can be promptly dealt with. A revised schedule will not

harm the

environment or public.

V.

The Board's Interim Holding that the City Was Liable for Alleged Financial

Assurance Violations Was Wrongly Decided.

The City is aware that many of the issues involved in the arguments below have

in large

part been previously addressed by the Board. However, there was additional

evidence

at the 2007 hearing. Moreover, this Board overlooked certain facts and legal

arguments.

So that these issues are preserved for appeal

(Garibaldi),

the City seeks

reconsideration for the following reasons, in addition to those previously set forth.

A.

The

holding that the City was "an operator of the landfill" is contrary to

the evidence

and contrary to Illinois law.

Although the Board has found that

CLC managed and operated the landfill, it

also found that the City, too, was

"an operator of the landfill" because it allegedly:

[1] financed the operation, [2] litigated in conjunction with CLC, as well as

[3] profited from and treated the leachate from the Morris Community

Landfill. While these activities alone may not constitute

"operating" a

waste disposal site, [the City] also

had [4] discretion regarding the

decisions

at the site and [5] took responsibility for some of the ancillary

site operations such as the treatment of leachate from the landfill.

(6/19/09 Order at 4).

This Board failed to support the conclusions cited above with references to the

evidence in the record.

It

is axiomatic that the Board "cannot base its findings on

19

6466108vl 806289 52944

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information not in the record."

City of Waukegan v. Pollution Control Bd.,

57 Il1.2d 170,

183,311 N.E.2d 146, 153 (1974) (citing

North Shore Sanitary Dist. v. Pollution Control Bd.,

2

Ill.App.3d

797, 802, 277 N.E.2d 754, 757 (1972». "Findings must be based on evidence

introduced in the case."

Hazelton v. Zoning Bd. of Appeals,

48 Ill.App.3d 348, 351, 363

N.E.2d 44, 47 (1977);

see also Seul's, Inc. v. Liquor Control Comm'n,

240 Ill.App.3d 828, 831,

608 N.E.2d 530, 532 (1st Dist. 1993) ("Illinois law requires that an administrative agency

limit its decision to facts, data,

and testimony which appear in the record.")

The reason decisions must be based on evidence is because

"all parties [must]

have

an opportunity to cross-examine witnesses and to offer evidence in rebuttal."

Seul's,

240 Ill.App.3d at 831, 608 N.E.2d at 532-33. In addition, such decisions create a

pragmatic problem for reviewing courts, because meaningful review is impossible; the

appellate court cannot determine if the decision is against the manifest weight of the

evidence.

Chase v. Dept. of Profl Reg.,

242 Ill.App.3d 279, 288, 609 N.E.2d 769, 775 (1993).

Finally, the Act itself mandates that "[a]ny final order of the Board under this Act shall

be based solely

on evidence in the record." 415 ILCS 5/ 4l.

As shown below, the five factors used to support the finding that the City was

"an operator" of the landfill facility are not supported in the evidence and/ or do not

bring the City within the ambit of the regulations definition of

an "operator." As a

result, this Board's conclusion that the City

"conducted" landfill operations should be

reconsidered

and modified.

20

6466108vl 806289 52944

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1.

The City did not ufinance the operation"

This Board concluded that the City "financed the operation" (6/19/09 Order at

4). Presumably, this refers to the fact that the City was a named principal on one of the

bonds. However, the City was never responsible for,

and indeed never paid any

premiums for, that bond. Rather, it was

CLC who paid (i.e. "financed") the premiums

on the bond, pursuant to the express terms of the parties' lease

addendum (City's Exh.

7(f); 9/12/07 Tr. 159, 168, 177-79). As such, there is no evidence to support a finding

that the City

"financed the operation" through the purchase of a surety bond.

Even

if

the City provided financial assurance, this would not render it an

"operator" who "conducted" landfill operations, as this Board held (6/18/09 Order at

41). The evidence at the hearing and regulations established that a person other than an

operator may post financial assurance. Brian White, supervisor of the EPA's Bureau of

Land Compliance Unit,

and the individual charged with overseeing the Financial

Assurance Program

(9/11/97 Tr. 176-77), testified that the regulations regarding the

local government guarantee were designed so that a local government "that's neither

the owner or operator" could use the guarantee mechanism

(Tr. 9/11/97 at 204-05).

Thus, EPA's own financial assurance supervisor admitted that a municipality might

provide financial assurance (in the form of a guarantee) when it is neither

an operator

nor an owner.

Moreover, the regulations expressly contemplate situations where financial

assurance may be provided

by a third party who is neither an owner nor an operator.

See e.g.

35 Ill.Adm.Code §811.712(h) ("The Agency shall release the surety

if,

after the

21

6466108vl 806289 52944

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surety becomes liable on the bond, the owner or operator or another person provides

financial assurance for closure

and post closure care ... ") (emphasis added); 35

Ill.Adm.Code §811.713(h)(I)

(liThe

Agency shall release the financial institution if, after

the Agency is allowed to

draw on the letter of credit, the owner or operator or another

person provides financial assurance for closure

and post closure care ... ") (emphasis

added). Under the regulations, providing financial assurance does

not make the person

who provides

it an "operator," nor does it show he is "conducting operations at a

landfill."

Finally, the financial assurance regulations are clear that the person who is to

post financial regulations is the owner or operator "of the facility." They do not provide

that the person who owns the land must post financial assurance. The definitions

contained in Part

810 apply to Part 811. 35 Ill.Adm.Code §811.101(b):

("

All general

provisions of

35 Ill.Adm.Code 810 apply to this Part."). Part 810 defines "operator" as

"the person responsible for the operation and maintenance of a solid waste disposal

facility." An owner is differentiated

and defined as "a person who has an interest

directly or indirectly, in land, including a leasehold interest on which a person operates

and maintains a solid waste disposal facility." The

"owner"

is the "operator" - but

II

only if there is no other person who is operating and maintaining a solid waste

disposal facility."

35 Ill.Adm.Code §810.103 (emphasis added).

A review of the financial assurance regulations makes clear that they apply to the

operator or owner

"of a MSWLF unit."

See, e.g.,

35 Ill.Adm.Code §§811.704(k)(I),

811.705(d), 811.706(c),

811.710(£), 811.712(a), 811.713(a). They do not apply to the owner

22

6466108vl 806289 52944

---

"of the property." In addition, these provisions obviously apply to only the operators

and owners of the facility (not property) because there are provisions relating to

abandoning or ceasing operations of the facility. The City, as a land owner, cannot

abandon the land or cease operations.

See, e.g.,

35 Ill.Adm.Code §§811.713(e)(2)(A),

811.714(e)(1),811.715(d).

As a matter of public policy, this Board should reconsider its decision.

If

the act

of providing "financing" for a landfill causes a person to be deemed a person

"conducting" operations of a landfill

and held responsible in the event of insolvency,

commercial lenders

and financial institutions would be unwilling to provide the

financing necessary to operate.

2.

The fact that the City "litigated in conjunction with CLC" was

irrelevant to the question of whether the City "conducted"

landfill operations.

The Board's second basis for concluding that the City was an operator was its

history of having

"litigated in conjunction with CLC" (6/19/09 Order at 4). The reason

the City litigated the first two actions

(PCB Nos. 01-48

&

01-49 and PCB No. 01-170) was

because it was

an interested person and its name was listed as a principal on a bond

posted

and paid for by CLC as financial assurance. The conclusion that somehow the

City was operating the landfill with

CLC because it participated in two litigated matters

overlooks evidence, the history of this litigation, and administrative law principles.

The first proceeding

(PCB Nos. 01-48, 01-49) concerned the amount of the bond,

and whether the fact that the City was treating the leachate at its publicly owned

treatment works

(POTW) under its lease would mean that CLC could reduce the

23

6466108vl 806289 52944

---

amount of financial assurance (Citts Exh. 7(e». When the IEPA declined to reduce the

bond because of the leachate treatment,

CLC then asked the City

if

the City's name

could be

put on a five-year bond if CLC paid for the premium for it, and the City agreed

(9/12/07 Tr. 155-56, 168; CLC's Exh. 15-17). CLC never looked to the City for any

financial support for the bond,

and CLC paid the premium (9/12/07 Tr. 156-57).

In exchange for the increased bond amount, the IEP A agreed to give CLC the

SigMod permit (9/12/07 Tr. 158). On December 13, 1999, the City and CLC signed an

addendum to the lease stating that IEPA's demand for an additional $10 million bond

was excessive

and that they would be appealing that demand (City's Exh. 7(f)). The

addendum makes clear that the bond amount was contested, and would be appealed

if

the IEP A did not agree to reduce the amount to about $7.0 million and to terminate the

City's

$10.0 million bond (City's Exh. 7(f)). Again, the regulations provide for another

person, not

an operator and not an owner, to provide financial assurance.

See, e.g., 35

I11.Adm.Code §§811.711(g)(3), 811.711(h)(I), 811.713(h)(I)). Therefore, the fact that the

City took these acts

did not establish that it was

II

an operator" and was

1/

conducting

landfill operations."

However, in the wake of the bond controversy, the City

had become an

interested party, having lent its name as principal on a $10.0 million bond (9/12/07 Tr.

152-52,

176-77). The fact that it participated in litigation seeking a finding that its $10.0

million bond was not required does not prove

it

was conducting landfill operations.

The City's interest

in

this litigation was simply to argue that its bond was unnecessary

because of the off-site leachate treatment. The appeal was unsuccessful,

but the fact that

24

6466108vl 806289 52944

---

both CLC (which paid the premium on the City's bond) and the City (which sought to

have the bond eliminated) participated in the litigation of

an appeal regarding the bond

does not establish that the City was

1/

conducting" landfill operations under the meaning

of

§811.700(f).

Similarly, the second proceeding (PCB No. 01-170) did not establish that CLC

and the City were co-operators of the landfill. When Frontier was removed from the

Federal list of approved sureties, the City was involved in the litigation of necessity

because it was then a named principal on a Frontier bond.

The rules for participating in any appeal are liberal,

and a person who

participated in the administrative hearing need only file

an appearance.

See

Ill.S.Ct.R.

335, Committee Comments. The fact that there were two petitioners involved in prior

litigation does not prove they were co-operators of the landfill.

3.

The City did not Uprofit" as this Board held.

The next basis for finding that the City was an operator was the Board's finding

that the City

"profited" from the landfill. "Profit" is not the standard under the

regulations.

"Profit" to a landowner is absent from the definition of "operator," is

absent from the regulation addressing who is a person who

1/

conducts" waste disposal

operations,

and absent from the definition of what is meant by an owner "of a facility."

See

35 Ill.Adm.Code §§810.103, 811.700.

As this Board recognized in its Interim Order, host agreements between local

governments

and landfill operators are common, and the units of government who

enter into them do not, thereby, become the

"operators" of area landfills (2/16/06

25

6466108vl 806289 52944

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Order at 10). The reason local units of government agree to site landfills is, in part,

because they derive some benefit from the siting of the facility. And no local unit of

government would ever agree to site a landfill and accept tipping fees and royalties

knowing it will be deemed a "co-operator with all the attendant obligations, including

liability for the facility's closure/post-closure costs.

Here, the agreement between the City and

CLC provided costs and benefits to

each party.

CLC obtained the use of City land and received treatment of the landfill's

leachate at the City's

POTW; the City, in return, received tipping fees and royalties.

(People's Exh. 7). The fact that the City, for its part, received tipping fees and royalties

cannot be reasonably construed to establish that the City was an operator of the landfill.

It

is simply incorrect that the City "profited" from the treatment of leachate; it has lost

$57,000 on leachate treatment between 2001 to 2005 (Exh. B, Good Affidavit).

The Board's finding that the profit generated by the City from landfill operations

made the City an operator is not only illogical, it incorrectly presumes that the City has

actually "profited." As shown above, it has not profited, but instead has paid a total of

$787,698 in engineering fees ($730,698.18) and treatment of leachate ($57,000) during the

same time period

(2001-05) that this Board held the City had a "profit" of $399,308.98

(6/18/09 Order at 41)

(see

Exh. A, Enger Affidavit; Exh. B, Good Affidavit). Between

2001-2005, the City has not realized any "profit," which is defined as a "gain," as this

Board held, but a loss of $388,389.02. BLACKS LAW DICTIONARY at 1378 (4th ed.). And, to

date, it has suffered a loss of

$502,682.02 (Exh. A, Enger Affidavit).

26

6466108vl 806289 52944

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4.

The Board's finding that the City is an operator because it

"treated the leachate" and took responsibility for "ancillary site

operations such as the treatment

of leachate from the landfill" is

erroneous.

The Board relies on the fact that the City treats leachate at its publicly owned

treatment works

(POTW) as proof that the City was" conducting operations" and took

responsibility for "ancillary site operations" (6/18/09

Order at 4). This finding

misapprehends the regulations.

The regulations themselves contemplate that landfill operators, who are

responsible for leachate treatment, may arrange to have leachate sent off-site for

treatment by others at a municipal or other wastewater treatment facility.

See 35

Ill.Adm.Code §811.309(a). 7 Section 811.307(e) provides that a landfill operator may

7 Section

811.309, entitled "Leachate Treatment and Disposal Systems" provides:

a)

Leachate shall be allowed to flow freely from the drainage and collection

system. The [landfill] operator

is responsible for the operation of a

leachate management system designed to handle all leachate as it drains

from the collection system. The leachate management system shall consist

of any combination of storage, treatment, pretreatment, and disposal

options designed and constructed in compliance with the requirements of

this Section.

* * *

e)

Standards for Discharge to an Offsite Treatment Works

a.

Leachate may be discharged to an offsite treatment works that

meets the following requirements:

(a)

All discharges of effluent from the treatment works shall

meet the requirements of

35 Ill. Adm. Code 309.

(b)

The treatment systems shall be operated by an operator

certified under the requirements of

35 Ill. Adm. Code 312.

27

6466108vl 806289 52944

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discharge leachate to an offsite wastewater treatment facility for treatment as long as

the landfill operator has

"secur[ed] permission from the offsite treatment works for

authority to discharge to the treatment works."

35 Ill.Adm.Code §811.307(e)(2). The use

of

an offsite wastewater treatment facility, therefore, does not make that offsite facility

part of the landfill operations.

Under these regulations, the fact that a

POTW or other facility treats leachate for

a landfill does not,

ipso facto,

mean that POTW (or other facility) is "conducting" landfill

operations. Although there is a limited exception

when 50% of the off-site facility's

treatment capacity is attributable to the treatment of a landfill's leachate, this is not the

case here (it is less than

1%)

(see

Exh. B, Good affidavit). The regulations are clear that

the landfill

"operator is responsible for securing permission from the offsite treatment

works for authority to discharge to the treatment works."

35 Ill.Adm.Code

§811.309(e)(1)(C)(2).

Here, the landfill operator, CLC, negotiated with the City

and obtained

permission (via a contract) to do exactly that which is contemplated

by the regulations:

discharge leachate from the landfill to a

POTW for treatment. The plain language of

Section

811.309 makes clear that an offsite POTW is not part of the landfill operation

unless the offsite facility is primarily used to treat the leachate, which is determined

by

(c)

No more than 50 percent of the average daily influent flow

can be attributable to leachate from the solid waste disposal

facility.

Otherwise, the treatment works shall be considered

a

part of the solid waste disposal facility.

28

6466108vl 806289 52944

---

examining whether the leachate sent to the offsite facility constitutes greater than 50%

of the total amount of influent received at that offsite facility. Here, CLC's leachate is

less than

1% of the daily influent at the City's POTW.

(see

Exh. B, Good affidavit).

This Board nevertheless construed the City's treatment of leachate

at its POTW to

constitute evidence that the City

was" conducting operations" at the landfill, and held

that this established the City was responsible for "ancillary site operations"

(6/18/09

Order at 4). Except for the off-site treatment of leachate - permitted by the regulations

and part of the contract between CLC and the City - there is nothing in the record

indicating the City is involved in any "ancillary site operations"

(6/19/09 Order at 4).

The City may be inspecting and monitoring through Shaw Environmental, but it is not

"conducting" operations - ancillary or otherwise.

Moreover, this Board's holding that the entity treating leachate is

"conducting"

landfill operations creates a dangerous precedent.

If,

as the Board held here, a

municipality can be deemed the operator and guarantor of landfill operations merely

because its publicly owned waste water treatment facility processes leachate, no city or

POTW is likely to be willing to accept landfill leachate because of the risk that it could

be deemed the guarantor of a landfill company that claims insolvency, or surety that

goes into receivership.

5.

There is no evidence that the City has "discretion regarding the

decisions

at the site" as this Board found.

This Board found that the City retained "discretion regarding decisions at the

site," yet pointed to no evidence showing that the City

had any right to make decisions

29

6466108vl 806289 52944

---

- discretionary or otherwise - regarding the site operations. A review of the record

conclusively shows that there is no such evidence.

It

is well settled that an agency

II

cannot base its decisions upon facts, data and

testimony which do not appear in the record. [citations] Findings must be based on

evidence introduced in the case."

Hazelton v. Zonding Bd. of Appeals,

48 Ill.App.3d 348,

351,

363 N.E.2d 44, 47 (1977). The Board must limit its decision to facts, data, and

testimony which appear in the record.

Seul's, Inc. v. Liquor Control Comm'n, 240

Ill.App.3d 828, 831, 608 N.E.2d 530, 532 (1993). Without support in the record, this

finding is against the manifest weight of the evidence and should be reconsidered.

B.

The conclusion that the ilgrand sum" shows that the City jointly

"conducted operations" is not supported

by

the record.

Under the facts of this case - where the landfill operator claims insolvency and

the bonding company is in rehabilitation - it is tempting to hold the City (as merely the

last man standing) responsible. However, neither the Act, the regulations nor the facts

in this case support this Board's finding that the City was

/I

conducting" operations. This

Board's decision shifts all potential closure and post-closure costs from the State to a

small municipality (with an adult population of less than

9,000 in the last census). The

decision thus deals a crippling blow to the citizens of a small town at a time when the

City, like the State, faces severe economic problems due to reduced revenues

(Exh. A,

Enger;

Exh. D, Crawford affidavit).

This Board has repeatedly recognized that it is CLC that operates the landfill and

manages the day-to-day operations at the site (6/19/09 Order at 3; 2/16/06 Order at 1;

30

6466108vl 806289 52944

---

6/1/06 Order at 1; 10/16/03 Order at 1). The Board's finding to this effect squarely

matches the regulatory definition of the term "operator"

and the financial assurance

obligation imposed on a person "conducting" landfill operations.

35 Ill.Adm.Codes

§§810.103, 811.700(f). Because there is no evidence that the City was "responsible for

the operation

and maintenance of a solid waste disposal facility"

(id.),

the Board's

conclusion that the City was conducting landfill operations is palbably erroneous

and

not supported by the record. This Board should therefore grant reconsideration, and

find that because the City did not "conduct any waste-disposal operation," the City has

not committed the violations alleged in the complaint.

CONCLUSION

For the foregoing reasons, the City of Morris respectfully requests that this Board

reconsider its opinion

and enter a modified order:

1.

Holding that the City did not violate the financial assurance regulations,

that no penalty is warranted as against the City,

and that the financial assurance

requirements do not apply to the City.

2.

In the alternative, the City requests this Board to vacate the $399,308.98

penalty.

3.

In the alternative, the City requests that the Board's Order be modified to:

A.

Hold that the City is only individually liable in an amount of its original

bond;

B.

Require that revised and updated cost estimates for the Morris

Community Landfill be submitted to IEPA within

60-90 days from the

date of entry of the Board's ruling on this motion to reconsider;

31

6466108vl 806289 52944

---

C.

Require that upon receipt of the updated cost estimates, that the IEP A be

required to determine the appropriate revised cost estimates for the

Morris Community Landfill facility within a certain time to be determined

by the Board; and

D.

Allow that upon IEP A's determination of the revised cost estimates,

additional time be granted to the City to provide financial assurance in

accordance with the regulations.

4.

To give the City a total of 90 days to post financial assurance so that: the

City's audit may be completed (anticipated to be October), the amount of government

guarantee can be determined, and all avenues to obtain a bond or post other financial

assurance may be investigated and completed.

5.

To order that no person or governmental entity may resolve the claims

against Frontier without the participation of the City.

6.

To clarify that Parcel B is not closed and waste may be received.

7.

Granting such other and further relief as this Board deems proper.

Charles F. Helsten

Nancy G. Lischer

Nicola Nelson

Hinshaw

&

Culbertson LLP

100

Park Avenue, P.O. Box 1389

Rockford,

IL 61105-1389

(815) 490-4947

Scott M. Belt

Belt Bates,

& Associates

105 East Main Street

Suite 206

Morris, IL 60450

(815)941-4675

Respectfully submitted,

lsi

Nicola Nelson

One of the Attorney for the

City

of Morris

32

6466108vl 806289 52944

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BEFORE THE POLLUTION CONTROL BOARD

PEOPLE OF THE STATE OF ILLINOIS,

ex

rei.

LISA MADIGAN, Attorney General of

the

State of Illinois,

Plaintiff,

v.

COMMUNITY LANDFILL

CO., an Illinois

Corporation,

and the CITY OF MORRIS, an

Illinois Municipal Corporation"

Defendants.

)

)

)

)

)

~

)

)

)

)

)

)

PCB 03-191

(Enforcement - Land)

CITY OF MORRIS' MOTION FOR RECONSIDERATION OF THE

POLLUTION CONTROL BOARD'S ORDER OF JUNE 18,2009

NOW COMES the City of Morris, by and through its attorneys, and pursuant to

Section 101.520 of the General Rules of the Illinois Pollution Control Board, moves the

Pollution Control Board to reconsider

and modify its order of June 18, 2009, for the

reasons set forth

in the City's currently-filed memorandum of law, which is fully

incorporated herein

by reference.

Charles

F. Helsten

Nancy

G. Lischer

Nicola Nelson

Hinshaw

&

Culbertson LLP

100 Park Avenue

P.O. Box 1389

Rockford, IL 61105-1389

(815) 490-4947

2

Respectfully submitted,

On behalf of the CITY OF MORRIS

By

lsi

Nicola Nelson

One of Its Attorneys

70608102vl 806289 52944

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MOTION TO RECONSIDER

A

Affidavit of John Enger

B

Affidavit of Larry

D. Good

C

Affidavit of Jesse

P. Varsho

D

Affidavit of William

J. Crawford

E

Mayor Kopczick

October 7, 2002 memo prohibiting any dumping at the

Community Landfill

F

City of Morris Ordinance

R-99-6

---

PEOPLE OF THE STATE OF ILLINOIS,

ex

reI.

LISA MADIGAN, Attorney General of

the State of Illinois,

)

~

Plaintiff,

v.

COMMUNITY LANDFILL CO., an Illinois

Corporation,

and the CITY OF MORRIS, an

Illinois Municipal Corporation,

}

)

)

)

)

PCB 03-191

(Enforcement - Land)

Defendants.

AFFIDAVIT OF JOHN ENGER

I, John Enger, being first duly sworn on oath, do depose and state as follows:

1.

I have been the City Clerk since 1987 and the Budget Officer since 1982 for the

City

of Morris, Illinois.

2.

In my capacity as City Clerk and Budget Officer for the City of Morris, I

assemble, maintain and am the custodian

of all business and financial records

pertaining

to the receipt of revenues by the City of Morris, as well as all outgoing

expenditures. My testimony in this affidavit is based on my personal knowledge

which arises from

my position as City Clerk and City Budget Officer.

3.

I am familiar with the costs incurred by the City of Morris for environmental

oversight and monitoring relating

to the Morris Community Landfill since 1981,

when I served on the City Council

as an alderman.

4.

Documents I maintain in my position as City Clerk and Budget Officer show that

between May

1, 2001 and April 30, 2005, the City of Morris paid Shaw

Environmental (formerly EnvirogenlEmcon) a total of $69,182.93, and for the

same period, the City paid Chamlin

&

Associates $102,111.85 for environmental

oversight and monitoring. From May

1, 2005 to the present, the City has paid

Shaw and Cham lin a combined total of $730,698.18 for environmental oversight

and monitoring. This totals from May

1, 2001 to present $901,991. These figures

exclude legal costs incurred and paid by the City for environmental oversight

of

the landfill facility.

5.

I am familiar with the current City Budget, which includes budgeted items that

arise from the City'S financial obligations. For example, the City is currently

under contract and obligated to pay for a municipal services building. Those

funds are kept in a separate account which are not available for any other purpose.

6.

The City of Morris, on its own volition and in good faith, has attempted to take a

proactive approach

to this situation. One step the City took was to

a~miiiieiiin_d

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EXHIBIT

6466S43v\

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enlarge the boundary of its real property Tax Increment Financing ("TIF")

District in January 2009 to include, among other properties, both parcels of the

Morris Community LandfilL

In addition, the City's TIF plan was amended to

specifically include approved expenditures from the TIF fund for anticipated costs

associated with the landfill.

7.

Creating a TIF District is a process for eliminating blighted areas within a

municipality by establishing a revenue source through tax increments. When the

procedures

of the TIF Act are followed, all the properties' equalized assessed

valuations (EA Vs ) are frozen as

of the effective date that the TIF district is

created (or modified). As time passes, there are presumably new developments

(increasing the

tax basis), and the incremental increase of the base EAV flows

into the TIF fund from all taxing bodies (such as counties, school districts,

townships, library districts, fire districts and municipalities). The other taxing

bodies will continue to receive taxes based on the

"frozen" or base EAV, and the

City receives any incremental increase over the base EA V until the TIF district

expires. The theory

of a TIF district is that as the EAVs increase, the tax

increment (revenues) will presumably increase as well. When property values are

depressed, there is a potential that

the revenue stream could be reduced.

8.

Unless extended by state law, the TIF District in Morris will terminate in

December 2009, eliminating a major funding source for the City and the landfill.

It

is my understanding that the bill to extend the Morris TIF for an additional

twelve years has passed the House and Senate is now on the Governor's desk.

9.

Another proactive action that the City has taken on its own volition is to pass a

resolution requiring that new developments place excess soil on City property

to

be used for cover at the Community Landfill if needed. The City also had a large

sanitary sewer project, during which the contractors were required

to excavate

dirt. They were also required by the City

to place excess soil on City property to

be used for cover at the Community Landfill if needed.

10.

The three City funds primarily designated for garbage/solid waste include the

Garbage Fund, the Solid Waste Tax Fund. and the Sanitary Landfill Contingency

Fund. The current fund balances

of all three funds have significantly diminished

since

2007. One of the funds - the Garbage Fund - is

proj~cted

to run a deficit of

$60,503 at the end of this fiscal year as of April 30, 2010.

11.

The Solid Waste Tax Fund pays for recycling ($310,615.67) and operations of the

Grundy County Solid Waste Committee ($82,504). The projected balance

as the

end

of the fiscal year will be $111,030.

12.

The balance of the Solid Waste Contingency Fund is projected to be $304,949 at

the end

of the fiscal year.

13.

The municipality operates with about 20 different funds, in addition to the three

funds mentioned above. These funds have limited uses, such as Motel Tax Fund

2

6466S43vl 806289

S2944

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which is limited to use for tourism, promotion and park improvement. The

General Fund must pay salaries and benefits, and the

City's operating expenses,

excluding water and sewer. The funds in the Municipal Building Fund are

already contractually committed. Funds such as the Illinois Municipal Retirement

Fund

or Police Pension Fund cannot be used for anything other that the

designated purposes (described by their titles). Use

of the Motor Fuel Tax fund is

limited to Illinois Department

of Transportation approval for road and bridge

improvements. The Water and

Sewer Fund is an enterprise fund and can only be

used for maintenance and operation

of the City combined water and sanitary

sewer system (including, for example, water/sewer mains, wells, water towers,

and treatment plants). There are two airport funds which are used for the

development

of an expansion to the current City airport. These are largely funded

by the operation

of the existing airport and subsidized if necessary by the City's

General Funds. There are other small funds (such as the Senior Citizen's Van

fund which has

$10,000).

14.

For most of these funds, the City is precluded from transferring the monies from

. fund to fund.

15.

I am familiar with the Pollution Control Board's imposition of the penalty and the

requirement that the

City post financial assurance in the amount in excess of

$17.4 million. The City is without the funds to comply with the Pollution Control

Board's order to pay the penalty or to post $17.4 million

in financial assurance

within the sixty

(60) days ordered by the Pollution Control Board.

16.

If the City were to levy additional taxes to raise the amount of money needed to

comply with the June

18, 2009 Order, I believe this would impose a serious

financial hardship on the

City's taxpayers. Moreover, the City would not realize

any revenues from the real property tax increases until probably the third quarter

of201O.

17.

The audit for the 2008-2009 fiscal year is not yet completed, however, it is

expected to be completed and approved by the Morris City Council in October of

2009.

18.

Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil

Procedure, the undersigned certifies that the statements set forth in this instrument

are true and correct, except as to matters therein stated to be

on information and

belief and as to such matters the undersigned certifies as aforesaid that he verily

believes the same to be true.

Further the Affiant sayeth naught.

-

Dated: July 22, 2009

3

6466S43vl 806289 52944

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PEOPLE OF THE STATE OF ILLINOIS,

ex

reZ.

LISA MADIGAN, Attorney General of

the State of Illinois,

Plaintiff,

v.

PCB 03-191

(Enforcement - Land)

COMMUNITY LANDFILL CO., an Illinois

Corporation, and the CITY OF MORRIS, an

Illinois Municipal Corporation,

Defendants.

AFFIDAVIT OF LARRY D. GOOD

I,

Larry D. Good, being first duly sworn on oath, do depose and state as follows:

1.

2.

3.

4.

5.

6.

7.

I am a licensed professional engineer, and have been continuously employed in

that capacity since 1975.

I am currently employed by Chamlin

&

Associates, Inc., which has been the city

engineer for the City

of Morris since approximately 1955.

I am the engineer primarily responsible for the design, engineering and oversight

of potable water and wastewater treatment facilities. and am personally familiar

with the leachate treatment services provided by the City

of Morris at its publicly

owned treatment works.

The City treats leachate from the Morris Community Landfill at its wastewater

treatment works; based on figures provided by Shaw Environmental, the leachate

from the Morris Community Landfill constitutes less than one percent

(approximately .74%)

of the influent received at the City's wastewater treatment

works.

I am familiar with the costs incurred by the City

of Morris in conjunction with its

treatment

of leachate from the MOlTis Community Landfill. The cost of such

treatment is, on average, approximately

$11,400 per year.

Based on the volume figures provided by

Shaw Environmental and Engineering,

the City's total cost for leachate treatment from the Morris Community Landfill

between

2001 and 2005 was approximately $57,000.

Under

penalties as provided by law pursuant to Section 1-109 of the Code of Civil

Procedure, the undersigned certifies that the statements set forth in this instrument

are true and correct, except as to matters therein stated to be on information and

belief and as to such matters the undersigned certifies as aforesaid that he verily

believes the same to be true'

j

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L~D.

Good

~

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Dated: July

_26-,,--,,_,

2009

!.

EXHIBIT

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BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

PEOPLE

OF THE STATE OF ILLINOIS,

ex

reZ.

LISA MADIGAN, Attorney General of

the State of Illinois,

)

)

)

)

)

)

)

)

)

)

)

)

)

Plaintiff,

v.

PCB 03-191

(Enforcement - Land)

COMMUNITY LANDFILL CO., an Illinois

Corporation, and the CITY OF MORRIS, an

Illinois Municipal Corporation"

Defendants.

AFFIDAVIT OF JESSE P. V ARSHO

I, Jesse P. Varsho, being first duly sworn on oath, do depose and state as follows:

1.

I am currently employed as the Head of Landfill Engineering for the St. Charles,

Illinois office

of Shaw Environmental, Inc. (Shaw), located at 1607 E. Main

Street,

St. Charles, Illinois 60174. Shaw is an international engineering and

consulting firm.

2.

I am a Professional Engineer and Geologist, with over eight years of experience in

the area

of geological, geotechnical and environmental engineering.

3.

My practice focuses on the siting, permitting, construction/development/operation

and closure

of pollution control facilities (most notably landfills), as well as

remedial aspects

of operation and closure of pollution control facilities, and I have

been involved in the siting, permitting, and due diligence review

of over twenty

(20) landfills across the country.

4.

I was retained in December

of 2004 by the City of Morris to undertake a

comprehensive investigation and evaluation, on an ongoing basis, of conditions at

the Morris Community Landfill.

5.

In my role as Project Manager for the Morris Community Landfill ("the landfill"

or "the Site"), I was responsible for supervising the review of the IEPA operating

record, which consisted

of thousands of pages of information.

6.

Working under my supervision, other Shaw personnel (including other

professional engineers, professional geologist, geological engineers and other

licensed experts in the area

of solid waste management), performed numerous site

inspections, and, based upon those site inspections, developed work plans for the

characterization and evaluation

of site conditions and possible corrective action

measures.

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EXHIBIT

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7.

The effort by Shaw at the Site has entailed more than 1,000 man hours, and over

10,000 groundwater and air monitoring tests have been performed over the past 4

years.

8.

Monthly monitoring of the permitted perimeter below-grade landfill gas probes

previously installed on the landfill property

by CLC began in June of 2005, to

determine whether below grade gas migration is occurring at the

Site. Readings

for landfill gas within perimeter below-grade landfill probes indicate that the

below-grade landfill gas concentrations are not increasing.

9.

The majority of landfill surface scans taken since January 2007 did not detect

methane levels above

500 ppm background levels (i.e. the regulatory limit).

Surface scans that did measure methane levels above 500 ppm background levels

during the original scan did not confirm the methane levels during the mandatory

re-sampling period, and therefore comply with the appropriate state regulations.

10.

Since the beginning of 2009, over 140 LEL measurements have been performed

and only one below-grade perimeter landfill probe has recorded a LEL (Lower

Explosive Limit) greater than

50% for methane. This is significant because the

LEL is the percentage

of methane within the air that could cause explosion and

thereby a potential threat to human health and safety.

11.

Based upon

Shaw's review of the IEPA regulatory file on this matter, field

inspections and investigations, numerous analytical and field test results, and

my

professional knowledge and experience, it is my professional opinion that the

current conditions at the Morris Community Landfill do not constitute a present,

and immediate or imminent and substantial or material threat to human health

or

the environment, and that conditions at the landfill can be more than adequately

addressed

by the routine corrective action measures called for by the state and

federal regulations governing the landfill in question.

12.

We are currently at work on the revised cost estimates and believe they can be

completed

by mid-August. However, additional work is needed in order to

develop the schedule

of the required work for the closure and post-closure plans.

I estimate that

Shaw can complete both tasks in not less than two months, or by

mid-September, although three to four months would be much better for Shaw

which has other conflicts.

13.

Under penalties as provided

by law pursuant to Section 1-109 of the Code of Civil

Procedure, the undersigned certifies that the statements set forth in this instrument

are true and correct, except as to matters therein stated to be on information and

belief and

as to such matters the undersi ed certifies as aforesaid that he verily

believes the same to be tru

Date

2

70608043vl 52944

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BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

PEOPLE OF THE STATE OF ILLINOIS,

ex

rei.

LISA MADIGAN, Attorney General of

the State of Illinois,

Plaintiff,

v.

COMMUNITY LANDFILL CO., an Illinois

Corporation, and the CITY OF MORRIS, an

Illinois Municipal Corporation"

PCB 03.191

(Enforcement - Land)

Defendants.

AFFIDAVIT OF WILLIAM J. eRA WFORD

I, William J. Crawford, being first duly sworn on oath, do depose and state as fonows:

1.

I am a Certified Public Accountant, whose principal place of business is located at

590 West Perry Street, Coal City, Illinois.

2.

My finn has been the independent auditor for the City of Morris, Illinois for the

past

15 years, with the exception of the fiscal years ended April 30, 2003 and

2004.

In

that regard, I have audited the financial statements of the governmental

activities

of the City of Morris, its business activities, the status of each major

fund maintained by the City, and all other aggregate fund infonnation for the City

of Morris (which information collectively comprises the City's basic financial

statements). My responsibility

as independent auditor is to express opinions on

these financial statements based upon my audit

of these records.

3.

Based upon these responsibilities, I am familiar with the financial statements and

financial records

of the City of Morris. However, the audit for the fiscal year

ending April

30, 2009, is not complete.

4.

I offered testimony on behalf

of the City of Morris in this regard during the course

of the "remedy" hearing which was held in this matter on September 11-13, 2007.

In addition, I have reviewed the Final Order issued by the Illinois Pollution

Control Board in this matter on or about June 18, 2009 (and, more specifically,

pages 42 and

43 of that Order), which includes financial assurance requirements

imposed upon the

City by the Illinois Pollution Control Board and the timeframes

for posting financial assurance. I am also generally familiar with the methods

of

posting closure/post closure financial assurance included in Title 35, Illinois

Administrative Code

Part 811.700

et seq.

for landfills such as the one which is the

subject

of this action.

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EXHIBIT

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5.

During my deposition (before the hearing based upon the April 30, 2005 audit), I

estimated that the amount

of the government guarantee would be around $7.1

million, given the statutory formula. Later, at the 2007 hearing (based upon the

April

30, 2007 audit), I estimated that the figure would be around $9.1 million.

Today, however, there is a recession, and that figure is decreasing. While the

audit is not complete, I would estimate that the amount that the city could

guarantee based on the statutory formula

is between $8.5 and $8.75 million.

6.

I also testified about three funds during my 2007 testimony maintained by the

City (Le., the

Sanitary Landfill Contingency Fund, the Solid Waste Tax Fund and

the Garbage Fund).

Some, but not all, of these funds conceivably could be used

for the financial assurance. However, some

of these funds must be used for

garbage costs (the Garbage Fund) and for recycling costs (the

Solid Waste Tax

Fund). Moreover, these three funds all have significantly lower balances than

were on hand at the time

of my testimony in September, 2007. The figures as of

April 30, 2009, are: $340,479 for the Sanitary Landfill Contingency Fund;

$242,138 for the

Solid Waste Tax Fund; and $402,258 for the Garbage Fund. The

Garbage Fund is no longer receiving any royalties from Community Landfill

Company.

7.

Although the City has other funds, they have been allocated for other critical city

needs or are limited based upon state statute. For example, Motor Fuel Tax Funds

can only be used for approved Motor Fuel Tax projects (such as roadway

construction).

Use of any other funds or monies in the possession of the City to

attempt to post closure/post closure financial assurance would significantly and

adversely impact the City'S ability

to meet its ongoing operational needs.

8.

In my opinion, it would be unlikely, if not impossible for the City of Morris to be

able to post closure/post closure financial assurance in the amount $17,427,366

within sixty

(60) days of the date of the Board's June 18, 2009 Order. This

opinion

is based upon: the assumption that given the current situation with the

landfill, any insurance company would require the City

to provide full

collateralization on the bond; and the facts discussed above. As noted above, the

extent

to which the City is able to self guarantee financial assurance under Section

811.716 is less than the amount I testified to during the September 2007 hearing.

Moreover, the three available funds I previously testified to are significantly

lower than in

2007. Finally. the City has already budgeted the other funds for city

operations.

9.

In addition, the gross City revenues derived from sales and income tax receipts

have begun to decline significantly for the first time in

15 years due to the current

recession. The decrease

in sales and income taxes has accelerated on a monthly

basis. Comparing the month April

2008 with April 2009, there is a decrease in

collections of$136,955, or 23%.

10.

Even if the City were to entertain a real estate tax increase, tax revenues derived

from any such increase in real estate tax rates would not begin to be received until

2

6466309v I 806289 52944

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(at the earliest) the end of June 2010, more likely, significant increases of tax

revenue monies would not be realized by the City until the third quarter

of2010.

11.

In addition, the Tax Increment Finance District (TIF District) (in the funding

mechanism attended thereto) which I refer to in my September

2007 testimony

will tenninate at the end of this year unless extended by state law (which mayor

may not occur).

It

is my understanding that this bill

(I

believe it is HB 1628) is on

the Governor's desk.

12.

If the City was required to levy additional taxes, I believe this would impose a

financial hardship on the

City's taxpayers.

13.

Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil

Procedure, the undersigned certifies that the statements set forth in this instrument

are true and correct, except as

to matters therein stated to be on infonnation and

belief and as

to such matters the undersigned certifies as aforesaid that he verily

believes the same

to be true.

Further the Affiant sayeth not.

3

6466309v1 806289 52944

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MAYOR

Dick Kopczick

CITY CLERK

John

D. Enger

CITY TREASURER

MaryBeth O'Brien

DEP.

CITY CLERK

Beth

A. Walker

DEP. TREASURER

Daria

J. Lynes

FIRST WARD

Joe Kutches

CITY OF MORRIS

320 Wauponsee Street • Morris, Illinois 60450

Phone (815) 942-0103 • Fax (815) 942-0216

TO:

FROM:

DATE:

RE:

DUMPING AT COMMUNITY LANDFILL

Effective immediately, there will be no more dumping

of any kind by the

City

of Morris at the Community Landfill site on Ashley Road. This is

inclusive

of both sides of the road, Parcel A (east side) or Parcel B (west

side).

SECOND WARD

John

Swezy

ALDERMEN

THIRD WARD

Brian Feeney

!.o

EXHIBIT

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FOURTH WARD

Ed Pack

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Ken Seidler

Kenneth Sereno

Jeff Arnold

Tom Hammons

---

RESOLUTION NO:

R-99-6

Be it resolved by the City Council of the City of Morris,

Illinois as follows:

WHEREAS, an addendum to the lease dated July 1, 1982 and as

amended between the City of Morris and CODU11Wlity Landfill Company

concerning the Morris Community Landfill has been recommended by the

Finance Committee of the City of Morris; and

WHEREAS, the addendum is necessary to promote public health and

safety; and

WHEREAS, the Legislature of the State of Illinois has granted

municipalities the authority to enter into such agreements and/or

addendums; and

WHEREAS, the addendum

is

necessary to protect the City of Morris

as to closure and post closure care of the Morris Community Landfill;

and

WHEREAS, the City of Morris is materially interested in the

transaction in which the City of Morris will apply to the Frontier

Insurance Company for a performance bond to secure its obligations for

closure

~nd

post-closure care of the Morris Community Landfill; and

WHEREAS, the Frontier Insurance Company has executed or is

willing to consider the execution of such bond, as surety, upon being

furnished with the written indemnity of the City of Morris; and

WHEREAS, the City of Morris hereby agrees to purchase a

performance bond in the amount of $10,081,630 from Frontier Insurance

Company or its agent in order to insure the performance of the City

of Morris' treatment of leachate and groundwater in the City of Morris

publicly owned treatment facility for the post closure care period of

the Morris Community Landfill; and

WHEREAS, it is necessary to authorize the Mayor to do all things

and sign all documents necessary to secure said performance bond; and

WHEREAS, Community Landfill Company has agreed to pay all bond

premiums

of said bond.

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Electronic Filing - Received, Clerk's Office, July 22, 2009

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IT IS HEREBY resolved that the Mayor and the City Clerk are

hereby authorized to execute any and all documents necessary to secure

said aforementioned performance bond and to enter into the addendum

to the lease dated July l, 1982 by and between the City of Morris and

Community Landfill Company.

Passed this 13th day of

December

A.D.

1999.

7

Ayes

_.....;0:..-..._ Nayes

o

Pass

Approved:

Attest:

~:-

Electronic Filing - Received, Clerk's Office, July 22, 2009

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AFFIDAVIT OF SERVICE

The undersigned, pursuant to the provisions of Section 1-109 of the Illinois Code

of Civil Procedure, hereby

under penalty of perjury under the laws of the United States

of America, certifies that

on July 22, 2009, she caused to be served a copy of the

foregoing upon:

Mr. Christopher Grant

Assistant Attorney General

Environmental Bureau

69 W. Washington St., Suite 1800

Chicago,IL 60602

Mr. John T. Therriault, Assistant Clerk

Illinois Pollution Control Board

100 W. Randolph, Suite 11-500

Chicago,

IL 60601

(via electronic filing)

Mr. Scott Belt

Scott M. Belt

&

Associates, P.C.

105 East Main Street

Suite 206

Morris, IL 60450

HINSHAW

&

CULBERTSON

100 Park Avenue

P.O. Box 1389

Rockford, IL 61105-1389

(815)

490-4900

Mark LaRose

LaRose

&

Bosco, Ltd.

200 N. LaSalle, Suite 2810

Chicago, IL 60601

Bradley Halloran

Hearing

Officer

Illinois Pollution Control Board

100 W. Randolph, Suite 11-500

Chicago,IL

60601

Clarissa

Y.

Cutler

Attorney at Law

155 N. Michigan Ave., Suite 375

Chicago,IL 60601

lsi

Nicola Nelson

Nicola Nelson

3

70608102vl 806289 52944