~ECE~VE~
CLERK’S OFFICE
ILLINOIS POLLUTION
CONTROL BOARD
W~R082004
STATE OF
tLLIN0~s
PEOPLE OF THE STATE OF ILLINOIS
)
Pollution
Control Board
)
Complainant,
)
)
v.
)
PCB 04-81
)
)
)
EMMETT UTILITIES, INC. an Illinois
)
Corporation, and RUSSELL D. THORELL,
)
individually and as president of EMMETT
)
UTILITIES, INC.,
)
)
)
Respondents.
)
RESPONSE
TO COMPLAINANT’S MOTION TO
STRIKE THORELL’S
MOTION TO DISMISS
NOW COMES the Respondent, Russell D. Thorell, and for his response to
Complainant’s Motion to
Strike states as follows:
1.
Russell D. Thorell admits that copies ofthe complaint were served on him
by the Attorney General.
However, the Respondents did not seek counsel at the time;
instead, they prepared a completely inadequate and inartfully drafted response to the
complaint,
and sent it to the Attorney General. That response is attached hereto as Exhibit
A.
2.
Subsequently, Thorell was notified by the Administrative Law Judge that
he should seek counsel and that he could not represent the corporation. As a result, the
Respondents engaged the services of John M. Myers, the undersigned attorney to
represent them in these proceedings.
Undersigned counsel then filed the appropriate
responses to
the complaint, those responses being, in the case of the corporate
respondent, an answer to the complaint, and in the case of the individual respondent, a
Motion to Dismiss.
3.
The Attorney General states in the Motion
to Strike that the Commission
can allow a late filed Motion to Dismiss ifmaterial prejudice would otherwise result.
Obviously, this is such a situation; Thorell’s Motion to Dismiss demonstrates
that
Russell Thorell has a serious and
bonafide
defense to the allegations against him. The
motion should be heard in the interest ofjustice.
4.
Contrary to the allegations in the Motion to
Strike, the first time
undersigned counsel became aware that these proceedings had actually been filed was
when he received a phone call from Assistant Attorney General Tom Davisjust in
advance ofthe January 16, 2004
conference with AU
Sudman, wherein Mr. Davis stated
that the matter had been set for status conference and asked whether Thorell was being
represented by undersigned counsel. While it is true that undersigned counsel had been
informed ofthe likelihood ofthe filing of a complaint and was supplied with a copy of a
draft
complaint, undersigned counsel was not favored with an actual copy ofthe
complaint when it was initially filed, apparently in November.
Undersigned counsel did
not see a copy ofthe actual complaint until late January, 2004; the answer and motion to
dismiss were promptly filed the first week of February, 2004.
WHEREFORE, the Motion to Strike should be denied, and the Commission
should hear the Motion to
Dismiss.
Respectfully Submitted,
John M. Myers
RABIN, MYERS, HANKEN & DURR,
P.C.
1300 South Eighth Street
Springfield, IL 62703
217.544.5000
fax:
217.544.5017
Emmett Utilities and Russell D. Thorell,
Defendants,
By:
Their Attorney
email:
jmyers~springfie1dlaw.com
EMMETT UTILITIES,INC.
RR2
Box 58N
Oquawka, II. 61469
DECEMBER 30, 2003
Thomas Davis, Chief
Environmental Bureau
500 South Second Street
Springfield, Illinois 62706
Dear Mr. Thomas:
I received your letter dated November 6, 2003 and the accompanying
complaint.
I have read the allegations in the complaint. They are absurd and
simply not true; therefore, I deny all of
them. The Company isn’t
polluting anything and the Water
is
safe.
Very truly yours,
Russell D Thorell
President
Copies sent to:
Bob Bland
Dave Kentner
Jenna Link
John Myers
John Sullivan
Lf11
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy ofthe RESPONSE
TO
COMPLAINANT’S MOTION TO
STRIKE
THORELL’S MOTION TO DISMISS
was served upon all counsel of record by placing same in the United States Post Office
mail box, postage prepaid in Springfield, Illinois on March
5,
2004 and addressed to:
Thomas Davis, Assistant Attorney General
Office of the Attorney General
Environmental Bureau
188 W. Randolph Street, 20th Floor
Chicago, IL 60601
Carol Sudman
Hearing Officer
Illinois Pollution Control Board
1021 North Grand Avenue East
P.O. Box 19274
Springfield, IL 62794-9274
and that the original was filed with the Clerk ofthe Court in which said cause is pending.
R EC E
V E!
CLERKS OFFICE
MAR
08
2004
ILLINOIS POLLUTION
CONTROL BOARD
STATE OF ILLINOIS
Pollution
Control Board
PEOPLE OF THE STATE OF ILLINOIS
)
)
Complainant,
)
)
v.
)
PCB 04-8 1
)
)
)
)
EMMETT UTILITIES, INC. an Illinois
)
Corporation, and RUSSELL D. THORELL,
)
individually and as president ofEMMETT
)
UTILITIES, iNC.,
)
)
)
Respondents.
)
RESPONSE OF EMMETT UTILITIES, INC.
TO
MOTION TO
STRIKE
ANSWER
NOW COMES, Emmett Utilities,
Inc., and for its response to Petitioner’s Motoin
to
Strike Answer, states as follows:
1.
It is true that the answer filed on behalf ofEmmett Utilities, Inc. by
undersigned counsel was not timely under the rules.
2.
However, as set forth more fully in the Respondent Thorell’s Response To
Complainant’s Motion To Strike Thorell’s Motion To Dismiss, it is also true that Emmett
Utilities, Inc., without benefit ofcounsel, attempted to answer the complaint on
December 30,
2003.
A copy ofthis attempted, inartfully drawn and obviously inadequate
answer is attached hereto as Exhibit A.
As inartful as the answer is, it clearly contains a
general denial of the charges in this matter.
3.
In her order ofJanuary 16, 2004, the Administrative Law Judge ordered
T’horell to consult with counsel because he could not represent Emmett Utilities,
Inc. in
these proceedings. Thereupon he did consult counsel, retained undersigned counsel, and
undersigned counsel filed a proper answer on his behalf.
4.
Mr. Thorell is
over 70 years old; he is in ill health; he has limited funds;
his company, Emmett Utilities,
Inc., is broke and losing money;
Mr. Thorell lives alone
in a little rural town
and his income is primarily Social Security; he can hardly afford an
attorney.
His
failure to
comply with the rules
should be excused.
WHEREFORE the Motion to
Strike the Answer ofEmmett Utilities,
Inc. should
be denied.
John M. Myers
RABIN, MYERS, HANKEN & DUTRR, P.C.
1300 South Eighth Street
Springfield, IL 62703
217.544.5000
fax:
217.544.5017
email:
jmyers~springfieldlaw.com
Respectfully Submitted,
Emmett Utilities and Russell D. Thorell,
Defendants,
By:
Their Attorney
EMMETT UTILITIES,INC.
RR2
Box 58N
Oquawka, II. 61469
DECEMBER 30, 2003
Thomas Davis, Chief
Environmental Bureau
500 South Second Sfreet
Springfield, Illinois 62706
Dear Mr. Thomas:
I received your letter dated November 6, 2003 and the accompanying
complaint.
I have
read the allegations in the complaint. They are absurd and
simply not true;
therefore, I deny all of them. The Company isn’t
polluting anything and the Water
is
safe.
Very truly yours,
Russell D Thorell
President
Copies
sent to:
Bob Bland
Dave Keutner
Jenna Link
John Myers
John Sullivan
EXHIBIT
CERTIFICATE
OF
SERVICE
The undersigned hereby certifies that a copy ofthe RESPONSE
OF
EMMETT
UTILITIES, INC.
TO MOTION TO
STRIKE ANSWERwas served upon all
counsel
Df
record by placing same in the United
States Post Office mail box, postage prepaid in
Springfield, Illinois on March
5,
2004 and addressed
to:
Thomas Davis, Assistant Attorney General
Office of the Attorney General
Environmental Bureau
188 W. Randolph Street, 20th Floor
Chicago, IL 60601
Carol Sudman
Hearing Officer
Illinois Pollution Control Board
1021 North Grand Avenue East
P.O.
Box 19274
Springfield, IL 62794-9274
and that the original was filed with the Clerk ofthe Court in which said cause is pending.
UJt2R~~/’
l1D~~~L
RECE~VED
CLERK’S OFFICE
ILLINOIS POLLUTION
CONTROL BOARD
~1AR
082004
PEOPLE OF THE STATE OF ILLINOIS
)
STATE OF ILLINOIS
)
Pollution Control
Board
Complainant,
)
)
v.
)
PCB 04-8 1
)
)
)
EMMETT UTILITIES, INC. an Illinois
)
Corporation, and RUSSELL D. THORELL,
)
individually and as president ofEMMETT
)
UTILITIES, NC.,
)
)
)
Respondents.
)
SUPPLEMENT TO MOTION FOR STAY OF PROCEEDINGS
Now
come Respondents, by their attorney, John M. Myers, and supplement the
previously filed Motion for Stay ofProceedings, as follows.
As disclosed to the AU
Sudman at the status conference ofthis matter, after the
Motion for Stay ofProceedings was
filed, the hearing examiner for the Illinois
Commerce
Commission entered an Order dismissing the Petition to Abandon Service.
Thorell has filed exceptions to the hearing examiner’s recommendation, and the matter
will be heard by the Illinois Commerce Commission. A copy of the Hearing Examiner’s
recommended decision, and Thorell’s exceptions thereto, are attached hereto.
Respectfully Submitted,
Russell D.
His Attorney
John M. Myers
RABIN, MYERS, HANKEN & DURR, P.C.
1300
South Eighth Street
Springfield, IL 62703
217.544.5000
fax:
217.544.5017
email:
jmyers~springfieldlaw.com
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
Emmett
Utilities,
Inc.
04-0065
Petition to Abandon afld Discontinue
Service.
ADMINISTRATIVE LAW JUDGE’S PROPOSED ORDER
By the Commission:
On
February
2,
2004,
Emmett
Utilities,
Inc.
(“Petitioner”) filed
with
the
Illinois
Commerce Commission (“Commission”) a verified
Petition to Abandon and DIscontinue
Service
(“Petition”).
Petitioner
states that
it
operates
a water and
sewer utility with 22
customers in McDonough County,
Illinois, and is experiencing financial difficulties.
Petitioner
also
states
that
it
is
subject
to
an
Order
from
the
Circuit
Court
of
McDonough
County
in
Peoplev.
Emmett
Utilities
et al.,
No.
01-CH-2
(“Court Order”),
which was
attached. to the Petition.
The Court Order, dated
April
29,
2003, mandates
system upgrades and payment of penalties to the Environmental Protection Trust Fund
by January 31, 2004.
Part
D
of the Court
Order, entitled
“Jurisdiction”, states
in
relevant part that the
Circuit
COurt
of
McDonough
County
“shall
retain
jurisdiction
of
this
matter
for
the
purpose of enforcing this order and for the purpose of adjudicating all matters of dispute
among the parties.”
Court Order at 8.
Part C of the
Court Order,
entitled
“Compliance”, establishes
January 31,
2004,
as the deadline for completion of the required actions.
!~
It also, at one time, stated:
2.
....
In
the
alternative
to
implementing
corrective
action,
Defendant
shall secure, from the Illinois Commerce Commission, an Order allowing it
to terminate or abandon
service
pursuant to
Section 8-508
of the
Public
Utilities Act.
3.
Any
petition
to
terminate
or abandon
service
shall
be filed
with the
Illinois Commerce Commission within 60 days of the date of this Order.
A
copy
of any
such
petition,
and
all
other motions
and
papers filed by the
Defendant in the Commission, shall
be served
upon the Attorney General,
Environmental
Bureau.
The
language quoted above
has been stricken by hand, however.
Each stricken
line bears
the initials of the Judge that entered the Court Order.
.~
jç~
at 8.
Based on
04-0065
AU’s Proposed Order
the
language
of
Part
D,
and
the
language
that
was
stricken
from
Part
C,
the
Commission concludes that it lacks jurisdiction over the Petition at this time.
The Commission, having reviewed the Petition and the attachments thereto, is of
the opinion and finds that:
(1)
Emmett Utilities,
Inc.
is
an
Illinois
corporation
engaged
in the
provision of
water and sewer service to the public in
Illinois,
and, as such,
is
a public
utility within the meaning of Section 3-105 of the Public
Utilities Act;.
(2)
the Commission
ordinarily would have jurisdiction
over Petitioner and over
the subject matter of this proceeding;
(3)
jurisdiction
in
this
matter
has~
been
retained
by
the
Circuit
Court
of
McDonough County;
accordingly, the Commission lacks jurisdiction
in this
matter;
.
.
.
(4)
the Petition should be dismissed without prejudice for lack ofjurisdiction;
(5)
Commission
Staff
should
monitor
the
status
of
the
Petitioner
and
the
McDonough
County
proceeding
discussed
herein
to
ensure
that,
consistent with the
public
interest and
necessity,
customers of Petitioner
are provided safe, adequate,
and reliable water and sewer service.
IT
ISTHEREFORE ORDERED
by the
Illinois
Commerce
Commission that
the
verified
Petition
to
Abandon
and
Discontinue
Service,
filed
on
February
2,
2004,
by
Emmett
Utilities,
Inc. be, and the same
is hereby, dismissed without prejudice.
IT
IS
FURTHER ORDERED that Commission
Staff should monitor the
status of
the Petitioner and the McDonough
County proceeding discussed
herein to ensure that,
consistent with the
public
interest and
necessity,
customers
of
Petitioner are
provided
safe, adequate, and reliable water and sewer service.
IT
IS FURTHER ORDERED that, subject to the
provisions of the Section
10-113
of the
Pub!ic
Utilities Act
and
83
Ill.
Adm.
Code
200.880,
this
Order is
final;
it
is
not
subject to the Administrative Review Law.
.
.
DATED:
.
.
February 10, 2004
BRIEF ON EXCEPTIONS DUE:
February 24, 2004
Ian Brodsky,
Administrative Law Judge.
2
ILL~~’IS
STATE OF ILLINOIS
coi~iERc~
Gij~
ILLINOIS
COMMERCE COMMISSION
?U0LI
FE~
2L1
p
~
O~
Emmett Utilities, Inc.
)
CHEF
CLERK’S
OFF IC~
)
04-0065
Petition to Abandon and Discontinue Service
)
EXCEPTIONS TO PROPOSED ORDER
Emmett Utilities, Inc., (“Emmett”)
by its attorney, John M. Myers, hereby
respectfully submits its exceptions to the proposed order ofFebruary
10, 2004, (the
“Proposed
Order”)and states as follows:
1.
The Proposed Order cites an order entered by the Circuit Court of
McDonough County in
People
v. Emmett Utilities,
No.
01-CH-2, (April 29, 2003), which
mandated repairs to Emmett’s water and sewer system.
(the “Circuit Court Order”).
The
Proposed Order takes the position that the Circuit Court has,
in
effect, ousted the
jurisdiction of this Commission to
consider abandonment of service.
The Proposed Order
points to certain portions ofthe Circuit Court Order which were lined
out and which
would have provided, in effect, that Emmett Utilities could in lieu of making ordered
repairs, file a petition to
abandon service in this Commission.
2.
Preliminarily, and to
clear up
any possible confusion, we represent to the
AU
and to the Commission that the lined-out portions of the Circuit Court Order were
proposed language submitted by Emmett to the Circuit
Court, and which were rejected by
the trial judge when he entered the Circuit Court Order.
The lined-out portions ofthe
order are therefore not and have never been part ofthe relief ordered by the Circuit Court.
3.
There is nothing in the Circuit Court Order which ousts the Commission of
jurisdiction over this Petition.
Nor is there anything in the Public Utilities Act suggesting
that a court oflaw can, even in principle, oust the Commission ofjurisdiction to hear
cases which are expressly provided for by statute.
4.
As the Proposed Order notes, the Circuit Court Order did mandate certain
system repairs.
Emmett recentlyhad a modest rate increase under a simplified rate case,
but as shown by the annual report for 2003
attached to the Verified Petition, the modest
rate increase has not been sufficient to put Emmett’s finances in the black.
As stated in
the Verified Petition, the simple truth is that there is no
money to do the repairs and zero
likelihood of obtaining funds to
do the repairs.
Emmett is precluded by the Commission
from borrowing funds from its sole shareholder, Russell Thorell, to
do the repairs
(see
letter from Commission dated
July 2, 2003, attached
as Exhibit A, threatening penalties
for shareholder loans).
And even assuming that Emmett could find a willing lender or
investor (who would have to be blind, or naive, or both) this Commission would have to
approve the transaction.
5.
Emmett was plainly in
a “Catch 22” situation before it filed this case.
It is
subject to an order ofa court to make system repairs, but there are no
funds with which to
make the repairs.
It cannot get the funds from its shareholder;
it cannot borrow the funds
from a third party.
It cannot shut its system down without permission ofthis
Commission, but it cannot operate its system in accordance with the stringent mandates
ofthe Illinois EPA.
-2-
6.
The Proposed Order compounds Emmett’s “Catch 22” problem, for if
adopted, the Commission wouldbe saying in
effect that it has no jurisdiction over
Emmett Utilities.
Under the view of the Circuit Court Order propounded in the proposed
order, if the hypothetical naive and blind lender could be found to
fund the system
repairs, the Commission would lack jurisdiction to
approve the loan.
7.
The Proposed Order says the Verified Petition is dismissed “without
prejudice” for lack ofjurisdiction.
We respectfully suggest that dismissal for lack of
jurisdiction and without prejudice is a contradiction in terms. The proposed order
nowhere suggests how or under what circumstances the Verified Petition could be
reinstated.
That is prejudice, pure and simple.
8.
It may well be that after staff review, presentation of evidence and a hearing,
that the Commission might determine that abandonment ofservice is improper.
However, Emmett is entitled by statute to
the Commission’s consideration of its Verified
Petition and a hearing thereon.
Emmett should not be left in limbo with no hearing—
which is exactly what the Proposed Order does.
WHEREFORE, Emmett takes exception to the Proposed Order, which should not
be entered at all.
Rather than this case being dismissed, this case should proceed.
Respectfully Submitted,
EMMETT UT
TIE
,
INC.
John M. Myers
B~ItS~~
~
RABIN, MYERS, HANKEN & DURR, P.C.
1300 South Eighth Street
Springfield, IL 62703
217.544.5000
fax:
217.544.5017
email:
jmyers~springfield1aw.com
-4-
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
July 2, 2003
Russell 0. Thorell
Emmett Utilities, Inc.
RR2 Box58N
Oquawka,
IL
61469
RE:
Emmett Utilities, Inc.
Dear Mr. Thorell:
The
Staff
of
the
Illinois
Commerce
Commission
(“Commission”)
has
become aware that
Emmett
Utilities
has been
borrowing
funds
in excess of the
$40,000
limit
the
Commission
authorized
in
its
Order
in
Docket
No.
83-0091,
dated September
22,
1989.
ln the
Section of the Order titled “Affiliated
Interest
Transactions,” the Commission adopted Staffs recommendations to (1) authorize
loans by Russell Thorell to Emmett Utilities,
documented by notes,
in an amount
not to exceed a total of $40,000,
and
at an
interest rate not to
exceed
the prime
rate
plus
two
percent
and
(2)
require
further
approval
for
loans
made
after
January
1,
1991.
Staff
believes
that
Emmett
Utilities
has
violated
that
Order.
Loans in excess of $40,000 are outstanding and funds were provided to the utility
after
1991
without
Commission
approval.
In
addition,
other
individuals
have
loaned funds to Emmett Utilities.
Section
6-102(a) of the
Illinois
Public
Utilities Act
(“Act”)
specifies that
a
public
utility
may
issue
evidences
of
indebtedness
payable
at periods of
more
than
12
months after the
date
thereof for any lawful
purpose only after
an order
authorizing
such
issue
is
secured from
the
Commission
in accordance with this
subsection.
Section
7-101
of the
Act
provides
the
Commission
with
authority
over
transactions
with
affiliated
interests.
Section
7-101(3)
of the
Act
states,
among
other things,
that
no financial
contract
made
with
any affiliated
interest
shall
be
effective
unless
it
has
first
been
filed
with
and
consented
to
by the
Commission or is exempted in accordance with the provisions of Section 7-101
or
Section 16-111 of the Act.
To
the
extent
that
Section
7-101
of the Act
applies and
no exemption
is
otherwise
applicable,
it
would
appear
that
the
loans
currently
outstanding
and
regarding
the
“Notes
Payable
to
Associated
Companies”
are
null
and
void.
527 Ea~r
Capitol Avenue, Sp.ringJiel4 Illinois 62701 /TDD (“VJTTY” (217)
782-7434
STATE OF ILLINOIS
ILLINOIS
COMMERCE COMMISSION
Further,
under
Section
6-105,
every
public
utility which
issues
notes
without
required
Commission
approval
is
subject to a penalty of
not
less than
$500 nor
more than $20,000 for each
offense.
The
Company
has
two
options.
It
could
petition
the
Commission
for
authorization for
the
notes
payable
under Section
6-102(a) and
7-101(3) of the
Act.
Alternatively,
the
outstanding
balance
of the
notes
payable
could
be
converted
to equity and reclassified
as “Additional
Paid
In Capital.”
Commission
authorization
is not required
for Additional
Paid
In
Capital.
Further,
if additional
capital
is needed
in the future and
is obtained in the
same manner,
authorization
would
not
be
needed
if
the
funds
were
accounted for
in the Additional
Paid
in
Capital
account.
However,
if
recorded
as
Notes
Payable
to
Associated
Companies with
duration
over
12
months,
Commission
authorization
would
be
necessary.
Please notify me of your intended
course
of
action,
including
a
proposed
completion date,
by July 21, 2003.
Resolution of this matter is necessary for Staff
to complete its review of the Company’s simplified rate case.
If you have any questions regarding this letter,
please contact me by
electronic mail atjfreetly@icc.state.il.us or by telephone at (217)785-5421.
Sincerely,
Janis Freetly
Senior Financial Analyst
Finance Department
Illinois Commerce Commission
527 East Capitol Avenue~.SpringJleld.
Illinois
62701 /TDD
(
V/TTY”
(217) 782-7434
RECE
WED
CLERK’S OFACE
&
STATE OF ILLINOIS
‘~
II ~tI1
k~)J
Ill \
Iris
L_,
Pollution Control Board
The undersigned here
á~r~If
e~th
k
~
~4Jie
SUPPLEMENT TO
MOTION FOR STAY OF PROCEEDINGS
was served upon all counsel ofrecord by
placing
same in the United States Post Office mail box, postage prepaid in Springfield,
Illinois on March
5,
2004
and addressed to:
Thomas Davis, Assistant Attorney General
Office ofthe Attorney General
Environmental Bureau
188 W. Randolph Street, 20th Floor
Chicago, IL
60601
Carol Sudman
Hearing Officer
Illinois Pollution Control Board
1021
North Grand Avenue East
P.O. Box
19274
Springfield, IL 62794-9274
and that the original was filed with the Clerk of the Court in which said cause is pending.
