I~

fl

RECEIVED

CLERWS0;

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

STATE OF

ILLINOIS

Pollution

Control

Board

PEOPLE OF THE STATE OF ILLINOIS,

Complainant

v.

)

PCB No.

(Enforcement)

LAKEWOOD HOMES,

INC.,

an Illinois

corporation,

Respondent.

NOTICE

OF FILING

TO;

See Attached Service List

PLEASE TAKE NOTICE that we have today filed a Complaint,

Motion to Request Relief from the Hearing Requirement,

Stipulation and Proposal for Settlement and a Certificate of

Service on behalf of the People of the State of Illinois,

copies

of which are attached herewith and served upon you.

NOTIFICATION

YOU ARE HEREBY NOTIFIED that financing may be available

through the Illinois Environmental Facilities Financing Act

(20

ILCS 3515/1

et

seq.

1994)

to correct the alleged pollution.

Respectfully submitted,

PEOPLE OF THE STATE OF ILLINOIS,

JAMES

E.

RYAN,

Attorney General

State of Illinois

BY;

_____________

CHRISTINE

S.

B

KO

Assistant Attorney General

Environmental Bureau

188

W.

Randolph St.

-

20~Fir.

Chicago,

IL

60601

(312)

814-3401

DATED:

Z2~14t

29,

26a/

\1akewood~nof

THIS

FILING

IS

SUBMITTED

ON

RECYCLED

PAPER

---

SERVICE LIST

Via Certified Mail

John

H.

Nays,

Registered Agent

Lakewood Homes,

Inc.

222 N. LaSalle Street,

Ste. 800

Chicago,

Illinois

60601

Via Regular U.S.

Mail

Bill Forcade

Jenner

&

Block

One IBM Plaza,

37t~h

Fir.

chicago, Illinois

60606

---

jUt1

2 9

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

~iS

STATE0F 1U~Lt

rd

p0HutIOfl control

Boa

PEOPLE OF THE STATE OF ILLINOIS,

Complainant

v.

)

PCBNo.

(Enforcement)

LAKEWOOD HOMES,

INC.,

an Illinois

corporation,

Respondant.

COMPLAINT

Now comes Complainant,

People of the State of Illinois,

by

JAMES

E.

RYAN,

Attorney General

of the State

of Illinois,

and by

MICHAEL J.

WALLER,

State’s Attorney of Lake County,

and complains

of Respondents,

LAKEWOOD HOMES,

INC.,

as follows;

I.

WATER QUALITY VIOLATION

1.

This complaint

is brought by the Attorney General on

his own motion and upon the request of the Illinois Environmental

Protection Agency

(“Illinois EPA” or “Agency”),

and the State’s

Attorney of Lake County,

Illinois,

pursuant to the terms and

provisions

of Section

31

of the Illinois Environmental Protection

Act

(“Act”),

415

ILCS 5/31(2000).

2.

The Illinois EPA is an administrative agency of the

State

of Illinois,

created pursuant to the Act,

415

ILCS 5/4

(2000),

and charged,

inter alia,

with the duty of enforcing the

Act.

3.

Respondent LAKEWOOD HOMES,

INC. (“Lakewood”)

is an

Illinois corporation, headquartered at 2500 Higgins Road,

Suite

1250,

Hoffman Estates, Cook County,

Illinois.

Lakewood is a

developer and builder of residential homes and commercial real

---

estate.

4.

On information and belief,

in

1998,

Lakewood purchased

a parcel of property in Round Lake Beach,

Lake County,

Illinois,

commonly known as Coventry Estates Subdivison

(“Site”), and

is

currently the owner of this Site as of the date of the filing of

this Complaint.

5.

Beginning in 1998,

on such dates as better known to

Respondent,

and continuing to the present, Lakewood has been and

is developing the Site for residential use.

6.

Storm water runoff from the Site is collected by

various storm water sewers and drainage swales throughout the

Site.

This system channels the storm water runoff into an on-site

retention basin.

This retention basin discharges via a directly-

connected storm sewer into Fourth Lake.

7.

Section 3.56 of the Act,

415 ILCS 5/3.56

(2000),

provides the following definition:

“Waters” means all accumulations of water,

surface and

underground, natural and artificial, public and

private,

or parts thereof,

which are wholly or

partially within,

flow through,

or border upon this

State.

8.

Fourth Lake is

a

“water” as that term is defined by the

Act,

415 ILCS 5/3.56

(2000).

Water which enters the storm sewer

from the retention basin flows directly into Fourth Lake and also

meets the definition of

“waters”

as that term is defined by the

Act,

415 ILCS 5/3.56

(2000).

9.

Section 3.06 of the Act,

415 ILCS 5/3.06

(2000),

provides the following definition;

“Contaminant”

is any solid,

liquid,

or gaseous matter,

any odor,

or any form of energy,

from whatever source.

2

---

10.

Silt and sediment are “contaminants” as that term is

defined by the Act,

415

ILICS 5/3.06

(2000).

11.

From at least April

16,

1999 and continuing to the

present,

Lakewood caused or allowed the discharge of storm water

containing silt and/or sediment from the Site.

12.

Section 12(a)

of the Act,

415 ILCS 5/12(a)

(2000),

provides as follows;

No person shall:

a.

Cause or threaten or allow the discharge

of any

contaminant into the environment in any State so

as

to cause or tend to cause water pollution in

Illinois, either alone or in combination with

matter from other sources,

or so as to violate

regulations or standards adopted by the Pollution

Control Board under this Act;

13.

Section 302.203

of the Illinois Pollution Control Board

(“Board”) Water Pollution Regulations,

35 Ill.

Adm.

Code 302.203,

provides in pertinent part as

follows:

Offensive Conditions

Waters of the State

shall be free from sludge or bottom

deposits,

floating debris,

visible oil,

odor,

plant or

algal

growth,

color or turbidity of other than natural

origin.

14.

From

at

least

April

16,

1999

and

continuing

until

the

present, Lakewood caused or allowed storm water discharges from

the site.

These discharges contained contaminants,

to wit:

silt

and/or sediment, which are deposited into the waters of the

State,

to wit:

Fourth Lake.

These discharges caused water

pollution at Fourth Lake

in that unnatural color,

turbidity and a

silt plume occurred.

15.

From at least April

16,

1999 and continuing to the

present, Lakewood caused water pollution at Fourth Lake.

3

---

16.

Lakewood, by its conduct described above, has knowingly

and repeatedly violated Section 12(a)

of the Act,

415 ILCS

5/12(a) (2000),

and Section 302.203

of the Board Water Pollution

Regulations,

35 Adm. Code 302.203.

WHEREFORE,

Complainant,

PEOPLE OF THE STATE OF ILLINOIS,

respectfully requests that the Board enter an order against

Respondent,

LAKEWOOD HOMES,

INC.,

for the following relief:

1.

Authorize

a

hearing

in

this

matter

at

which

time

the

Respondent

will

be

required

to

answer

the

allegations

herein;

2.

Find that Respondent has violated Section 12(a)

of the

Act

and

35

Ill.

Adm.

Code

302.203;

3.

Order Respondent to cease and desist from any further

violations

of

Section

12(a)

of

the

Act

and

35

Ill.

Adm.

Code

302.203;

3.

Order

Respondent

to

remediate

the

environmental

damage

caused

to

Fourth

Lake;

5.

Assess

against

Respondent

a

civil

penalty

of

Fifty

Thousand Dollars

($50,000.00)

for each violation of the Act and

Board regulations,

and an additional civil penalty of Ten

Thousand

Dollars

($10,000.00)

for

each

day

each

violation

occurred;

6.

Order

Respondent

to

pay

all

costs,

pursuant

to

Section

42(f)

of

the

Act,

415

ILCS

5/42

(f)

(2000)

,

including

attorney,

expert witness and consultant fees expended by the State in its

pursuit

of

this

action;

and

7.

Grant such other relief as the Board deems appropriate

and just.

4

---

Ix.

CREATING A WATER POLLUTION

IhZARD

1-li.

complainant

realleges

and

incorporates

by

reference

herein Paragraphs

1 through 11 of Count

I

as Paragraphs

1 through

11 of this Count

II.

12.

Section 12(d)

of the Act,

415 ILCS 5/12(d)

(2000),

provides

as

follows;

No

person

shall:

d.

Deposit

any

contaminants

upon

the

land

in

such

place

and

manner

so

as

to

create

a

water

pollution

hazard.

13.

From at least April

16,

1999 until on or about May 26,

1999,

Lakewood

constructed

a

temporary

discharge

trench

from

the

retention basin to a partially constructed storm sewer that

directly

flows

into

Fourth

Lake.

Lakewood

caused

or

allowed

open

soil

excavations

at

this

location

on

the

Site

to

come

into

contact

with

storm

water

flow

from

the

Site.

These

open

soil

excavations

created

a

water

pollution

hazard

in

that

a

contaminant,

to

wit;

silt

and/or

sediment,

was

added

to

the

storm

water runoff from the Site,

which in turn was discharged directly

into

Fourth

Lake.

14.

From

at

least

May

1999

and

continuing

until

present,

Lakewood

caused

or

allowed

additional

open

soil

excavations

at

its

Site

to

come

into

contact

with

storm

water

flow

from

the

Site.

These additional open soil excavations created

a water

pollution hazard in that a contaminant,

to wit: silt and/or

sediment,

was

added

to

the

storm

water

runoff

from

the

Site,

which

in

turn

was

discharged

directly

into

Fourth

Lake.

S

---

15.

From

at

least

April

16,

1999

continuing

to

the

present,

Lakewood

caused

or

allowed

a

water

pollution

hazard

at

Fourth

Lake.

16.

Lakewood,

by

its

conduct

described

above,

has

knowlingly

and

repeatedly

violated

Section

12(d)

of

the

Act,

415

ILCS

5/12(d)

(2000).

WHEREFORE,

Complainant,

PEOPLE

OF

THE

STATE

OF

ILLINOIS,

respectfully

requests

that

the

Board

enter

an

order

against

Respondent,

LAKEWOOD

HOMES,

INC.,

for

the

following

relief:

1.

Authorize a hearing in this matter at which time the

Respondent will be required to answer the allegations herein;

2.

Find that Respondent has violated Section 12(d)

of the

Act;

3.

Order Respondent to cease and desist from any further

violations of Section 12(d)

of the Act;

4.

Order Respondent to remediate the environmental damage

caused to Fourth Lake;

5.

Assess against Respondent

a civil penalty of Fifty

Thousand

Dollars

($50,000.00)

for

each

violation

of

the

Act,

and

an

additional

civil

penalty

of

Ten

Thousand

Dollars

($10,000.00)

for

each

day

of

violation;

6.

Order Respondent to pay all costs,

pursuant to Section

42(f)

of the Act,

415 ILCS 5/42(f) (2000),

including attorney,

expert witness and consultant fees expended by the State

in its

pursuit

of

this

action;

and

7.

Grant such other relief as the Board deems appropriate

and

just.

6

---

In.

DISCHARGE WITHOUT PERMIT

1-11.

complainant realleges and incorporates by reference

herein Paragraphs

1 through 11 of Count

I as Paragraphs

1 through

11

of

this

Count

III.

12.

Section

12(f)

of

the

Act,

415

ILCS

5/12(f)

(2000),

provides

as

follows;

No

person

shall:

f.

Cause

or

threaten

or

allow

the

discharge

of

any

contaminant

into

the

waters

of

the

State,

as

defined herein,

including but not limited to,

waters

to

any

sewer

works,

or

into

any

well

or

from

any

point

source

within

the

State,

without

an

NPDES

permit

for

point

source

discharges

issued

by

the

Agency

under

Section

39W)

of

this

Act,

or

in

violation

of

any

term or condition imposed by such

permit,

or

in

violation

of

any

NPDES

permit

filing

requirement established under Section

39 (b),

or

in

violation

of

any

regulations

adopted

by

the

Board

or

of

any

order

adopted

by

the

Board

with

respect

to the NPDES program.

13.

Section

39W)

of

the

Act,

415

ILCS

5/39W)

(2000),

provides in pertinent part as follows;

The Agency may issue general NPDES permits for

discharges from categories of point sources which are

subject to the same permit limitations and conditions.

Such general permits may be issued without individual

applications and shall conform to regulations

promulgated under Section 402

of the Federal Water

Pollution Control Act,

as now or hereafter amended.

*

*

*

The Agency shall adopt filing requirements and

procedures which are necessary and appropriate for the

issuance of NPDES permits,

and which are consistent

with the Act or regulations adopted by the Board,

and

with the Federal Water Pollution Control Act,

as now or

hereafter amended,

and regulations pursuant thereto.

14.

Regulations promulgated under Section 402

of the

Federal Water Pollution Control Act include Part 122 of the Code

of Federal Regulations, Title 40

(40 CFR 122

et

seq.).

Section

7

---

122.1(b) (2) (iv),

40 CFR 122.1(b) (2) (iv), provides as follows:

(b)

Scope of the NPDES permit requirement.

(2)

The following are point sources requiring

NPDES permits for discharges;

(iv) Discharges of storm water as set forth

in §122.26.

15.

Storm water discharges associated with industrial

activity are defined in Section 122.26(b) (14) (x)

,

40 CFR

122.26(b) (14) (x)

,

as including certain construction activities:

§

122.26

Storm water discharges

(applicable to State

NPDES programs,

see

§ 123.25).

(b)

Definitions.

(14) Storm water discharges associated with

industrial activity means the discharge from

any conveyance which is used for collecting

and conveying storm water and which is

directly related to manufacturing, processing

or raw materials storage areas at an

industrial plant.

.

.

.

The following

categories

of facilities are considered to be

engaging in “industrial activity” for

purposes of this subsection:

(x)

Construction activity including

clearing, grading and excavation

activities except:

operations that

result in the disturbance of less than

five acres of total land area which are

not part of a larger common plan of

development or sale.

16.

Beginning in late 1998 on dates better known to

Respondent,

and continuing to the present,

Lakewood initiated and

continued construction activity at the Site in the form of

excavation, grading and clearing.

This construction activity

disturbed,

and continues to disturb,

an area greater than five

(5)

acres.

The construction activity at the Site meets the

definition of

“industrial activity”

for which an NPDES permit for

B

---

storm water discharges is required.

17.

Section 122.26(c) (1),

40 CFR 122.26(c) (1), allows

individuals to seek coverage under a general storm water permit:

c.

Application requirements for storm water

discharges associated with industrial activity

1.

Individual application.

Dischargers

of storm

water associated with industrial activity are

required to apply for an individual permit,

apply for a permit through a group

application,

or seek coverage under

a

promulgated storm water general permit.

18,

Section 122.28(b) (2),

40 CFR 122.28(b) (2), requires

that a notice of intent to be covered by the general permit be

filed to comply with the requirements that

a permit be obtained

prior to discharging:

§ 122.28

General permits

(applicable

to State NPDES

programs,

see

§ 123.25).

(b)

Administration.

(2)

Authorization to discharge.

Diischargers.

.

.

seeking coverage under

a

general permit

shall submit to the Director a

written notice of intent

to be covered by the

general permit.

A discharger.

.

.

who fails

to submit a notice of intent in accordance

with the terms

of the permit is not

authorized to discharge.

.

.

A complete and

timely, notice of intent

(NOI),

to be covered

in accordance with general permit

requirements,

fulfills the requirements for

permit applications for purposes of

§5 122,6,

122.21 and 122.26.

19.

Section 309.102(a)

of the Board Water Pollution

Regulations,

35

Ill.

Adm.

Code 309.102(a), provides the

following;

NPDES Permit Required

a.

Except as

in compliance with the provisions

of the

Act,

Board regulations,

and the CWA

Clean

Water

Act,

and the provisions and conditions of the

9

---

NPDES permit issued to the discharger,

the

discharge of any contaminant or pollutant by any

person into the waters of the State from a point

source or into a well shall be unlawful.

20.

From late 1998

on dates better known to Respondent,

until May 27,

1999,

Lakewood did not file

a Notice of Intent for

coverage under the general storm water discharge permit for the

Site.

21.

From late 1998 on dates better known to Respondent,

and

continuing until May 27,

1999,

Lakewood discharged storm water

from the Site as

a result of industrial activity without an NPDES

permit.

22.

Lakewood, by its conduct described above,

has knowingly

and repeatedly violated Section 12(f)

of the Act,

415 ILCS

5/12(f) (2000),

and Section 309.102 (a)

of the Board Water

Pollution Regulations,

35 Adm. Code 309.102(a).

WHEREFORE,

Complainant,

PEOPLE OF THE STATE OF ILLINOIS,

respectfully requests that the Board enter an order against

Respondent,

LAKEWOOD HOMES,

INC.,

for the following relief:

1.

Authorize

a hearing in this matter at which time the

Respondent will be required to answer the allegations herein;

2.

Find that Respondent has violated Section 12(f)

of the

Act and Section 309.102(a)

of the Board Water Pollution

Regulations,

35 Adm. Code 309.102(a);

3.

Order Respondent to cease and desist from any further

violations of Section 12(f)

of the Act and Section 309.102(a)

of

the Board Water Pollution Regulations,

35 Adm. Code 309.102(a);

3.

Order Respondent to remediate the environmental damage

caused

to Fourth Lake;

10

---

4.

Assess against Respondent

a civil penalty of Ten

Thousand Dollars

($10,000.00)

for each day of each violation of

the Act and the Board regulations;

6.

Order Respondent

to pay all costs, pursuant

to Section

42(f)

of the Act,

415 ILCS 5/42 (f) (2000)

,

including attorney,

expert witness and consultant fees expended by the State

in its

pursuit

of this action;

and

7.

Grant such other relief as the Board deems appropriate

and just.

Iv.

DISCHARGE

IN VIOLATION OF

PER14IT

1-12. Complainant realleges and incorporates by reference

herein Paragraphs

1 through

12 of Count

III

as Paragraphs

1

through 12 of this Count

IV.

13.

Section 309.102(a)

of the Board Water Pollution

Regulations,

35

Ill.

Adm.

Code 309.102(a), provides the

following:

NPDES Permit Required

a.

Except

as in compliance with the provisions of the

Act, Board regulations,

and the CWA

Clean

Water

Act,

and the provisions and conditions of the

NPDES permit issued to the discharger,

the

discharge of any contaminant or pollutant by any

person into the waters of the State from a point

source or into a well shall be unlawful.

14.

On May 27,

1999,

Lakewood submitted a Notice of

Intent

to discharge storm water to the Illinois EPA and was covered

under the Illinois EPA’s General National Pollutant Discharge

Elimination System

(“NPDES”)

Permit to Discharge Storm Water No.

1LR103814.

This permit was reissued on June

1,

1998 under NPDES

11

---

Permit No.

ILR1O,

with an expiration date of May 31,

2003

(See

Exhibit

A)

.

Lakewood’s coverage under this general permit began

on May 27,

1999.

15.

Section 309.146(a)

of the Board Water Pollution

Regulations,

35

Ill. Adm.

Code 309.146(a), provides as follows:

a)

The Agency shall require every holder of an NPDES

Permit,

as a condition of the NPDES permit issued

to the holder,

to

1)

Establish,

maintain and retain records;

2)

Make reports;

3)

Install,

calibrate,

use and maintain

monitoring equipment or methods

(including

where appropriate biological monitoring

methods)

4)

Take samples of effluents

(in accordance with

such methods, at such locations,

and at such

intervals,

and in such manner as may be

prescribed); and

5)

Provide such other information as may

reasonably be required.

16.

Part IV,

Section D.

4. of General NPDES Permit No.

ILR1O

(Exhibit

A)

provides as follows:

Part IV.

STORM WATER POLLUTION PREVENTION PLANS

D.

Contents of the Plan.

4.

Inspections.

Qualified personnel

(provided

by the permittee)

shall

inspect disturbed areas of the

construction site that have not been

finally stabilized,

structural control

measures,

and locations where vehicles

enter or exit the site at least once

every seven calendar days and within 24

hours

of the end of a storm that is 0.5

inches or greater or equivalent

snowfall.

d.

The permittee shall complete and

submit within 5 days an “Incidence

of Noncompliance”

(ION)

report for

12

---

any violation of the storm water

pollution prevention plan observed

during an inspection conducted,

including those not required by the

Plan.

Submission shall be on forms

provided by the Agency and include

specific information on the cause

of noncompliance, actions which

were taken to prevent any further

causes of noncompliance,

and a

statement detailing any

environmental impact which may have

resulted in noncompliance.

17.

Part V,

Section A.

of General NPDES Permit No.

ILR1O

provides as follows;

Part V.

RETENTION OF RECORDS

A.

The permittee shall retain copies of storm

water pollution prevention plans and all

reports and notices required by this permit,

and records of all data used to complete the

Notice of Intent to be covered by this

permit,

for a period of at least three years

from the date that the site is finally

stabilized.

This period may be extended by

request of the Agency at any time.

18.

From on or about May 27,

1999 and continuing to at

least April

20,

2000,

Lakewood failed to inspect disturbed areas

of the construction site that had not been finally stabilized,

structural control measures,

and locations where vehicles enter

or exit the site within 24 hours

of the end of a storm that

is

0.5 inches or greater,

as required by NPDES Permit No.

ILR1O.

19.

From on or about May 27,

1999 and continuing to the

present, Lakewood failed to submit Incidence of Noncompliance

reports to the Illinois EPA,

as required by NPDES Permit No.

ILR1O.

20.

From on or about May 27,

1999 and continuing to the

present, Lakewood failed to establish, maintain and retain

13

---

records and make reports,

as required by 35

Ill.

Adm. Code

309.146(a).

21.

Lakewood, by its conduct described above, has violated

Section 12(f)

of the Act,

415

ILCS 5/12(f)

(2000),

Sections

309.102(a)

and 309.146(a)

of the Board Water Pollution

Regulations,

35 Adm. Code 309.102(a)

and 309.146(a)

and NPDES

Permit No.

ILR1O.

WHEREFORE,

Complainant,

PEOPLE OF THE STATE OF ILLINOIS,

respectfully requests that the Board enter an order against

Respondent, LAKEWOOD HOMES,

INC.,

for the following relief:

1.

Authorize a hearing in this matter at which time the

Respondent will be required to answer the allegations herein;

2.

Find that Respondent has violated Section 12(f)

of the

Act,

415 ILCS 5/12(f) (2000),

Sections 309.102(a)

and 309.146(a)

of the Board Water Pollution Regulations,

35 Adm.

Code 309.102(a)

and 309.146(a)

and NPDES Permit No.

ILR1O;

3.

Order Respondent to cease and desist from any further

violations

of Section 12(f)

of the Act,

415

ILCS 5/12(f) (2000),

Sections 309.102(a)

and 309.146(a)

of the Board Water Pollution

Regulations,

35 Adm.

Code 309.102(a)

and 309.146(a)

and NPDES

Permit No.

ILR1O;

3.

Order Respondent to remediate the environmental damage

caused to Fourth Lake;

4.

Assess against Respondent

a civil penalty of Ten

Thousand Dollars

($10,000.00)

for each day of each violation of

the Act and the Board regulations;

6.

Order Respondent to pay all costs, pursuant to Section

14

---

42(f)

of the Act,

415 ILCS 5/42(f),

including attorney,

expert

witness and consultant

fees expended by the State in its pursuit

of this action;

and

7.

Grant such other relief as the Board deems appropriate

and just.

PEOPLE OF THE STATE OF ILLINOIS,

ex rel.

JAMES

E.

RYAN,

Attorney General of the

State of Illinois

MATTHEW J.

DUNN,

Chief

Environmental Enforcement/Asbestos

Litigation Division

BY:____

Environmental Eure

Assistant Attorney

eneral

ex rel. MICHAEL J. WALLER

State’s Attorney of I~ak county

/

ART

.

OUILLER

Chie

eputy,

Civil Division

Assistant State’s Attorney

Of

Counsel:

CHRISTINE

S.

BUCKO

LISLE A.

STALTEIR

Assistant Attorney General

Assistant State’s Attorneys

Environmental Bureau

Civil Division

188 W. Randolph St.

-

20th Fl.

18 North County Street,

3rd

~

Chicago,

IL

60601

Waukegan,

IL

60085

(312)814-3401

(847)360-6426

\lakowood\col

15

---

RECEIVED

CLERK’S OFFICE

JUN

2 92001

BEFORE THE ILLINOIS POLLUTION CONTROL

BOARD

STATE OF ILLINOIS

Pollution

Control

Board

PEOPLE OF THE STATE OF ILLINOIS,

Complainant

v.

)

PCBN0.OLPI

(Enforcement)

LAKEWOOD HOMES,

INC.,

an Illinois

corporation,

Respondent.

AGREED MOTION TO REQUEST RELIEF

PROM TIlE REARING REQUIREMENT

NOW COMES Complainant,

PEOPLE OF THE STATE OF ILLINOIS, by

their attorneys JAMES

E.

RYAN, Attorney General of the State

of

Illinois,

and MICHAEL J. WALLER,

State’s Attorney of Lake County,

Illinois,

at the request of the Illinois Environmental Protection

Agency

(“Illinois EPA”),

and Respondent,

LAKEWOOD HOMES,

INC.,

an

Illinois corporation, by its attorneys,

JENNER

& BLOCK,

and

request relief

front the hearing requirement in the above-

captioned matter.

In support thereof,

the parties state as

follows:

1.

The parties have filed

a Stipulation and Proposal for

Settlement with the Illinois Pollution Control Board in the

matter.

2.

Section 31(c) (2)

of the Illinois Environmental

Protection Act

(“Act”),

415 ILCS 5/31(c) (2) (2000),

provides:

1

---

Notwithstanding the provisions of subdivision

(1)

of

this subsection

(c)

,

whenever

a complaint has been

filed on behalf

of the Agency or by the People of the

State of Illinois,

the parties may file with the Board

a stipulation and proposal for settlement accompanied

by a request for relief from the requirement of a

hearing pursuant to subdivision

(1)

.

.

.

3.

The parties hereto have filed a Stipulation and

Proposal for Settlement and agree

that a formal hearing is not

necessary to conclude this matter and wish to avail themselves of

Section 31(c)

(2)

of the Act.

2

---

WHEREFORE,

Complainant and Respondent request relief from

the hearing requirement pursuant to Section 31(c) (2)

of the Act.

Respectfully submitted,

Complainant

Respondents

PEOPLE OF THE STATE OF ILLINOIS

JAMES

E.

RYAN

Attorney General

State of Illinois

MATTHEW ~T.

DUNN,

Chief

Environmental Enforcement/

Asbestos Litigation Division

ROSEMARIE CAZEAU,

Chief

Environmental Bureau

By:

(‘1n3&

64~c

CHRISTINE

~T

BUCKO

Assistant Attorney General

Dated:

6-24-a,

MICHAEL J. WALLER

State’s Attorney

Lake County,

Illinois

MARGARET A.

MARCOUILLER

Chief Deputy,

Civil Division

By:

LI

LE A. STALTER

Assistant State’s Attorney

Dated:

-

—~

~

LPSKEWOOD HOMES,

INC.

Dated:

__________

\lakewood\mohrgwvr

By:

3

---

RECEIVED

CLERK’S

OFFICE

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

JUN

2

92001

STATE

OF ILLINOIS

PEOPLE OF THE STATE OF ILLINOIS,

)

Pollution ~~fltrOl

Boad

Complainant

v.

)

PCE No.

(Enforcement)

LAKEWOOD HOMES,

INC.,

an Illinois

corporation,

Respondent.

STIPULATION MID PROPOSAL FOR SETTLEMENT

Complainant,

PEOPLE OF THE STATE OF ILLINOIS, by their

attorneys JAMES

E.

RYAN, Attorney General of the State of

Illinois, and MICHAEL

J. WALLER,

State’s Attorney of Lake County,

Illinois,

at the request of

the Illinois Environmental Protection

Agency

(“Illinois EPA”),

and Respondent,

LAKEWOOD HOMES,

INC.,

an

Illinois corporation,

by its attorneys,

JENNER

& BLOCK,

do hereby

submit this Stipulation and Proposal for Settlement

(“Stipulation”)

.

The parties agree that the statement of facts

contained herein represents a fair summary of the evidence and

testimony which would be introduced by the parties if a full

hearing were held.

The parties further stipulate that this

statement of facts is made and agreed upon for purposes of

settlement only and that neither the fact that a party has

entered into this Stipulation, nor any of the facts stipulated

herein,

shall be introduced into evidence,

or used for any

purpose,

in this or any other proceeding except to enforce the

terms hereof by the parties to this Stipulation.

Notwithstanding

the previous sentence,

this Stipulation and any Illinois

Pollution Control Board

(“Board”) Order accepting

saute may be

1

---

used in any future enforcement action as evidence of a past

adjudication of

a violation of the Act for purposes

of Section

42W)

of the Illinois Environmental Protection Act

(“Act”),

415

ILCS 5/42 (h) (2000)

.

This agreement shall be null and void unless

the Board approves and disposes of this matter on each and every

one of the terms and conditions of the settlement

set forth

herein.

I.

JTJRISDICTION

The Board has jurisdiction of the subject matter herein and

of the parties consenting hereto pursuant to the Act,

415 ILCS

5/1 et

seq.

(2000)

II.

AUTHORIZATION

The undersigned representatives for each party certify that

they are fully authorized by the party whom they represent to

enter into the terms and conditions of this Stipulation and to

legally bind them to this Stipulation.

In.

APPLICAflLITY

This Stipulation shall apply to and be binding upon the

Complainant and Respondent,

as well as each and any officer,

director,

agent,

employee or servant of Respondent and

Respondent’s successors and assignees.

The Respondent

shall not

raise as a defense to any enforcement action taken pursuant to

this Stipulation the failure of its agents,

servants or employees

to take such action as shall be required to comply with the

provisions of this Stipulation.

2

---

IV.

A.

Parties

1.

The Attorney General of the State of Illinois and

State’s Attorney for Lake County have commenced this action on

their own motion and at the request

of the Illinois EPA pursuant

to Section 31

of the Act,

415 ILCS 5/31

(2000)

2.

The Illinois EPA is an agency of the State of Illinois

created pursuant to Section 4

of the Act,

415 ILCS 5/4

(2000),

and is charged,

inter alia,

with the duty of enforcing the Act.

3.

Respondent LAKEWOOD HOMES,

INC. (“Lakewood”)

is an

Illinois corporation,

headquartered at 2500 Higgins Road,

Suite

1250,

Hoffman Estates,

Cook County,

Illinois.

Lakewood is

a

developer and builder of residential homes.

B.

Site Description

1.

In mid-to-late 1998,

Lakewood purchased a parcel of

property in Round Lake Beach,

Lake County,

Illinois, commonly

known as the Coventry Estates Subdivision

(“Site”)

.

Respondent

alleges that in 1996,

the Village of Round Lake Beach,

Illinois

(“Village”)

approved the prior owner’s plans for the Site in

Village Ordinance 96-25-55, which included the Site stormwater

management plan.

After acquisition, Lakewood began developing

the Site for residential use.

As each parcel

of land was

developed into a residential home,

Lakewood sold that parcel to

individual homeowners. Respondent asserts that title already has

passed to individual homeowners for approximately 95

of the

parcels of property at the site.

Respondent further asserts that

the remaining 5

of the parcels of property at the Site are the

3

---

subject

of contracts between Lakewood and individual homeowners,

and title is to be conveyed to these homeowners

in the future.

2.

Stormwater runoff from the Site is collected by various

stormwater sewers and drainage swales throughout the Site.

This

system channels the storutwater runoff into certain on-site

retention basins.

The retention basin discharges via a directly-

connected storm sewer into Fourth Lake.

V.

VIOLATIONS

The Complaint alleges the following violation of the Act,

415 ILCS 5/i,

et

seq.

(2000),

and the Board Water Pollution

Regulations,

35

Ill. Adm. Code,

Subtitle

C,

and is outlined as

follows:

COUNT

I

-

WATER QUALITY VIOLATION:

Violation of

Section 12(a)

of the Act,

415

ILCS

5/12(a) (2000),

and Section 302.203

of

the Board Water Pollution Regulations,

35 Ill. Adm. Code 302.203

COUNT II

-

CREATING A WATER POLLUTION HAZARD:

Violation of Section

12(d)

of the Act,

415 ILCS 5/12(d) (2000)

COUNT III

-

DISCHARGING WITHOUT PERMIT: Violation of

Section 12(f)

of the Act,

415 ILCS

5/12(f) (2000),

and Section 309.102(a)

of

the Board Water Pollution Regulations,

35 Ill. Adm.

Code 309.102(a).

COUNT IV

-

DISCHARGING

IN VIOLATION OF PERMIT:

Violation of Section 12(f)

of the Act,

415 ILCS 5/12(f) (2000),

Sections

309.102(a)

and 309.146(a)

of the Board

Water Pollution Regulations,

35

Iii.

Adm.

Code 309.102(a)

and 309.146(a),

and

Part

IV,

Section D.4.

and Part

V,

Section A.

of General NPDES Permit No.

ILR1O.

4

---

VI.

NATURE OF RESPONDENT’S OPERATIONS

Lacewood

is in the residential real estate development and

construction business.

Lakewood purchased the Site from the

prior owner in 1998.

VII.

EXPLATATION

OF PAST FAILURES TO COMPLY WITH THE ACT

Lakewood alleges that its contractual arrangement with the

prior owner required that the property conveyed be fully

permitted.

Lakewood was informed and believed that the prior

owner’s consulting engineer had submitted all required

documentation to the Illinois EPA to secure all necessary permits

for the Site.

Lakewood alleges that in October 1998,

it began implementing

the prior owner’s plans that the Village had approved in 1996 for

Site development.

In November 1998,

Lakewood constructed a

stormwater detention pond

(“Pond”)

at the Site,

as delineated on

the plans that the Village had approved.

Lakewood alleges that

it constructed and operated the Pond as specified in the approved

plans, and the Village inspected and approved the installation.

Lakewood further asserts that it believed that it was in

compliance with its environmental obligations at the Site at all

times.

Lakewood alleges

that,

during a period of heavy rainfall

in

April

1999,

the Pond filled to capacity.

On April

16,

1999,

Village officials ordered Lakewood to dig a channel from the Pond

to the portion of the storm sewer discharge line that had already

been completed.

This was done to protect downstream homeowners’

5

---

properties from flooding.

Lakewood alleges that

it complied with

the Village’s emergency order.

In June 1999,

the Illinois EPA issued Lakewood

a Violation

Notice

(“VN”), alleging that

(1) water quality violations had

occurred when the water that flowed from the channel dug on the

Village’s emergency order discharged into Fourth Lake;

and

(2)

Lakewood had discharged stormwater without an NPDES permit.

Lakewood alleges that

it believed that

it substantially,

if

not fully,

complied with its pollution prevention and permitting

obligations.

Lakewood further alleges its belief that a proper

stormwater management plan was prepared, approved and implemented

at the Site.

Lastly,

Lakewood alleges its belief that the

alleged sediment-containing stormwater discharge observed in 1999

was due to the Village’s emergency order.

VIII.

FUTURE PLANS

OF

COMPLIANCE

Respondent

shall cease and desist from future violations of

the Act and the Board regulations,

including but not limited to,

those Sections of the Act and Board regulations that were the

subject matter of the Complaint as outlined in Section V.

of this

Stipulation.

IX.

IMPACT ON THE PUBLIC RESULTING FROM NON-COMPLIANCE

Section 33(c)

of the Act,

415 ILCS 5/33(c)

(2000),

provides

as follows:

In making its orders and determinations,

the Board

shall take into consideration all the facts and

circumstances bearing upon the reasonableness of the

emissions,

discharges,

or deposits involved including,

but not limited to:

6

---

1.

The character and degree of injury to,

or

interference with,

the protection of the health,

general welfare and physical property of the

people;

2.

The social and economic value of the pollution

source;

3.

The suitability or unsuitability of the pollution

source to the area

in which it is located,

including the question of priority of location in

the area involved;

4.

The technical practicability and economic

reasonableness of reducing or eliminating the

emissions,

discharges or deposits resulting from

such pollution source; and

5.

Any subsequent compliance.

In response to these factors the parties state as follows:

1.

The purpose of obtaining a stormwater discharge permit

prior to beginning actual construction is to protect the public

from the threat of or actual water pollution,

as well as to allow

the Illinois EPA to review the adequacy of water pollution

control projects prior to initiating work.

In this case,

the

Complainant alleges that these public policy concerns were not

addressed prior to stormwater being discharged from the Site,

such that excess silt entered Fourth Lake and increased

sedimentation in that shallow body of water and altered the

biological and ecological system for at

least one year.

2.

The parties agree that Respondent’s development is

of

social and economic benefit.

3.

The parties agree that Respondent’s development is

located in a suitable area.

4.

The Complainant alleges that it was practicable and

economically reasonable for the Respondent to obtain the

7

---

appropriate Illinois EPA permit prior to beginning construction,

to develop and implement a stormwater pollution prevention plan

(“SWPPP”)

and to ensure adequate personnel to conduct inspections

and implement the SWPPP at the Site in compliance with its

permit, and alleges that subsequent damage to the Fourth Lake

environment could have been avoided.

Lakewood alleges that its

belief that

it did comply with all statutory and regulatory

requirements, and that achieving the objectives stated by the

Illinois EPA was neither practicable nor economically reasonable

in that the April 1999 discharge was a direct result of the

Village’s emergency order.

5.

Complainant also alleges that the Respondent applied

for coverage under Illinois’ general stortnwater permit about

seven

(7) months after it commenced construction at the Site and

that stormwater discharge flow,

with accompanying silt and

sediment accumulation in Fourth Lake,

was not alleviated to any

appreciable degree until late 2000.

Lakewood alleges its belief

that it did comply with Illinois general stormwater permitting

requirements before and during construction at the Site.

Completion of construction and final cover at the Site

is not

anticipated to be completed prior to late spring 2001.

x.

CONSIDERATION

OF

SECTION

42 (ii)

FACTORS

Section 42(h)

of the Act,

415 ILCS 5/42(h)

(2000),

provides

as follows:

In determining the appropriate civil penalty to be

imposed under subdivisions

(a)

,

(b) (1)

,

(b) (2)

,

or

(b) (3)

of this Section,

the Board is authorized to

consider any matters of

record

in mitigation or

aggravation of penalty,

including but not limited to

8

---

CERTIFICATE OF SERVICE

I,

CHRISTINE S.

BtJCKO,

an Assistant Attorney General

in this

case,

do certify that on the 29th day of June 2001,

I caused to be

served the foregoing Notice of Filing,

Complaint, Motion to Request

Relief from the Hearing Requirement and Stipulation and Proposal for

Settlement by first class mail to the persons on the attached service

list by depositing same in the U.S. mail depository located at 100 W.

Randolph St., Chicago,

Illinois in an envelope with sufficient postage

prepaid.

(V,~76~

5ft44

CHRISTINE S.

BUCKO

C:~MyFii~s\WPDOCS\CHRlS\eeServ.wpd

---

the following factors:

1.

the duration and gravity of the violation;

2.

the presence or absence of due diligence on the

part of the violator in attempting to comply with

requirements of this Act and regulations

thereunder or to secure relief therefrom as

provided by this Act;

3.

any economic benefits accrued by the violator

because of delay in compliance with requirement;

4.

the amount of monetary penalty which will serve to

deter further violations by the violator and to

otherwise aid in enhancing voluntary compliance

with this Act by the violator and other persons

similarly subject to the Act; and

5.

the number, proximity in time,

and gravity of

previously adjudicated violations of this Act by

the violator.

In response to these factors,

the parties state as follows:

1.

Respondent’s construction activities began in late 1998

and are anticipated to continue until late spring 2001.

Complainant alleges that,

from late 1998 until May 27,

1999,

Respondent did not have a stormwater discharge permit for the

Site.

The Complainant also alleges that environmental damage to

Fourth Lake occurred during that time and continued into the year

2000 as a result of excess siltation and sedimentation from

stormwater flows from the Site.

Lakewood alleges that it

complied at all times with Illinois stormwater requirements.

2.

Complainant further alleges that the Respondent

obtained a stormwater discharge permit about seven

(7) months

after beginning construction and that alterations

to the drainage

and retention systems at the Site did not take place until mid-

to-late summer 2000.

Lakewood alleges that it complied at all

times with Illinois stormwater requirements.

Final cover is not

9

---

expected at the Site until late spring 2001.

3.

Complainant also alleges that the Respondent received

an economic benefit by reason of non-compliance in that funds

for

compliance were not expended prior to the occurrence of the

violations.

Complainant alleges that these costs include

engineering fees

for preparation of stormwater discharge permit

application,

the preparation of a SWPPP, personnel and equipment

costs to implement the SWPPP,

alterations to the original design

of the site stormwater system and associated construction costs.

In addition, Complainant further alleges that the manner of the

construction of the original stormwater system

(i.e.

construction

of the sewer and ditch prior to completion of the retention

systems)

enabled earlier construction and sale of homes at the

Site,

resulting in a higher cash flow for Respondent for the

remainder of development and construction time at the Site.

The

Respondent alleges that it operated in compliance with Illinois

requirements at all times,

received no economic benefit by reason

of any alleged noncompliance,

and voluntarily expended

significant additional sums to address stormwater management

concerns expressed by the Illinois EPA,

the Village and other

interested parties.

4.

Twenty-Five Thousand Dollars

($25,000.00)

in civil

penalty and payment of an additional Thirty-Five Thousand Dollars

($35,000.00)

to enhance the environmental conditions at Fourth

Lake,

is a reasonable penalty based on the violations alleged by

Complainant and will aid in enhancing voluntary compliance with

the Act.

10

---

5.

Respondent has no history of prior adjudicated

violations with the Illinois EPA.

TERMS OF SETTLEMENT

A.

NONADMISSION:

Respondent specifically denies any violation of Section

12(a),

(d)

and

(f)

of the Act,

415 ILCS 5/12(a),

(d)

and

(f)

(2000), and 35

Ill.

Adm. Code 302.203,

309.102(a)

and 309.146(a),

and denies Complainant’s allegations that damage to the Fourth

Lake environment occurred,

but agrees to this Stipulation to

avoid the cost of litigation.

B.

PENALTY:

1.

Respondent shall pay the Twenty-Five Thousand

Dollars

($25,000.00)

civil penalty within thirty

(30) days from

the date on which the Board adopts a final order approving this

Stipulation.

The payment shall be made to the Illinois

Environmental Protection Agency for deposit in the Environmental

Protection Trust Fund and delivered to:

Illinois Environmental Protection Agency

Fiscal Services Section

1021 N. Grand Avenue East

P.O. Box 19276

Springfield,

IL.

62702-9276

The name and number of the case and Respondent’s FEIN NO.

36-

3710191,

shall appear on the face of the check.

2.

In order to promote the goals of the Act to

restore, protect and enhance the quality of the environment,

Lakewood shall make a payment of Thirty-Five Thousand Dollars

($35,000.00)

to the Lake County Forest Preserve District

11

---

(“District”)

.

This payment shall be used for the preservation,

protection and perpetuation of the ecological habitat of Fourth

Lake,

including the Fourth Lake Fen and Rollins Savanna.

This

payment shall be used,

as a first priority,

to assist in the

acquisition of purple loosestrife beetles for the above-noted

ecological habitat.

In the event this first priority is

sufficiently met,

as determined by the District,

then any surplus

from this payment may be transferred to the District’s Land

Acquisition Fund.

The payment required under this Section shall

be paid within thirty

(30) days after the Board adopts a final

order approving this Stipulation,

by certified check to the Lake

County Forest Preserve District and delivered to:

Steven K. Messerly, Executive Director

Lake County Forest

2000 N. Milwaukee Ave.

Libertyville,

IL.

60048

The name and number of the case and Respondent’s FEIN 36-3710191

shall appear on the face of the check.

Respondent

shall notify

the Illinois EPA in writing that it has complied with this

provision and shall provide such notice to the Illinois EPA at

the following address:

Charles Gunnarson, Assistant Counsel, DLC

Illinois EPA

1021 N.

Grand Avenue East

P.O. Box 19276

Springfield,

IL

62702-9276

C.

INTEREST:

Pursuant to Section 42(g)

of the Act,

415

ILCS

5/42 (g) (2000),

interest shall accrue on any penalty amount not

paid within the time prescribed herein,

at the maximum rate

12

---

allowable under Section 1003(a)

of the Illinois Income Tax Act,

35 ILCS 5/1003 (a) (2000)

1.

Interest on unpaid penalties shall begin to accrue

from the date the penalty payment is due and continue to accrue

to the date payment

is received;

2.

Where partial payment is made on any payment

amount that is due,

such partial payment shall be first applied

to any interest on unpaid penalties then owing;

3.

All interest on penalties owed Complainant shall

be paid by certified check payable to the Illinois Environmental

Protection Agency for deposit in the Environmental Protection

Trust Fund and delivered to:

Illinois Environmental Protection Agency

Fiscal Services Division

1021 N. Grand Avenue East

P.O. Box 19276

Springfield,

IL

62702-9276

The name and number of the case and Respondent’s FEIN shall

appear on the face of the certified check.

D.

PAYMENT, COLLECTION AND NOTIFICATION:

For purposes of payment, collection and notifications,

the parties may be reached at the following addresses:

Charles Gunnarson,

Ass’t Counsel

Lakewood Homes,

Inc.

Illinois EPA

c/o Jenner & Block

1021 N. Grand Avenue East

One IBM Plaza

P.O. Box 19276

Chicago,

IL.

60611

Springfield,

IL

62702-9276

ATTN: Bill Forcade

Christine S. Bucko,

AAG

Lisle Stalter, ASA

Environmental Bureau

Lake County SAO

188 W. Randolph,

20th

flr.

18

N.

County,

3’~flr.

Chicago,

IL

60601

Waukegan,

IL

60085

13

---

E.

CEASE AND DESIST:

1.

Respondents shall at all times obtain all required

permits prior to conducting their construction activities and

shall comply with their permits and any and all limitations

contained therein.

2.

Respondents shall cease and desist from future

violations

of the Act and Board regulations,

including but not

limited to,

those sections of the Act and Board regulations that

were the subject matter of the complaint as outlined in Section

V.

of this Stipulation.

XII.

COMPLIANCE WITH OTHER LAWS AND REGULATIONS

This settlement agreement in no way affects Respondent’s

responsibility to comply with any federal,

state or local

regulations,

including but not limited to,

the Act,

415 ILCS 5/1,

et seq.

(2000),

and the Board’s Water Pollution Control

regulations.

XIII.

In addition to any other authority,

the Illinois EPA,

employees and representatives,

State’s Attorney of Lake County,

atives,

shall have right of entry to Lakewood’s Coventry Estates

development at all reasonable times,

for the purposes of

conducting inspections.

In conducting any inspection of

Lakewood’s Coventry Estates development,

the Illinois EPA,

its

employees and representatives, the Attorney General and the

State’s Attorney of Lake County,

their agents and represent-

14

---

atives, may take any photographs or samples as they deem

necessary in order to conduct their inspection.

XIV.

SEVERABILITY

It is the intent of the parties hereto that the provisions

of this Stipulation shall be severable and should any provisions

be declared by

a court of competent jurisdiction to be

inconsistent with state and federal law,

and therefore

unenforceable, the remaining clauses shall remain in full force

and effect.

In the event that any provisions of this Stipulation

shall be declared inconsistent with provisions of the Act, 415

ILCS 5/1,

et seq.

(2000),

the provisions of the Act shall be

controlling.

XV.

RELEASE

FROM

LIABILITY

In consideration of and upon Respondent’s payment of the

full amount provided for above in Section XI.B.,

including the

required payment to the Lake County Forest Preserve District

specified in Section XI.B.2.

of this Stipulation and commitment

to refrain from future violations of the Act,

the Complainant

shall release, waive and discharge Respondent from any further

liability and/or penalties from violations of the Act, Board

regulations and permit conditions that were specifically alleged

in the Complaint,

as outlined in Section V.

above.

However,

nothing in this Stipulation shall be construed as a waiver by the

Complainant of the right to redress future violations or obtain

penalties with respect thereto.

15

---

WHEREFORE,

Complainant and Respondent request that the Board

adopt and accept the foregoing Stipulation and Proposal for

Settlement as written

AGREED:

FOR THE COMPLAINANT:

FOR THE

RESPONDENT:

PEOPLE OF THE STATE OF ILLINOIS

LAKEWOOD HOMES,

INC.

JAMES

E.

RYAN

Attorney General

State of Illinois

MATTHEW

J.

DUNN,

Chief

Environmental Enforcement/

Asb

os Litigation Division

By:

En

E~Z~~re

e

~

(.4r

AssistaUt Attorney General

44(L*~I/

Dated:

~

f

Dated:_________________

MICHAEL

J. WALLER

State’s Attorney

Lake County,

Illinois

BcT~~~L(/U~

Ch ef Deputy,

Civil Division

Assist

t

S ate’s Attorney

Dated:________________________

ILLINOIS

ENVIRONMENTAL

PROTECTION AGENCY

By:___

OSEP~E.

SVOBODA

Chief Legal Counsel

Division of Legal Counsel

Dated:

E~—/c’-~O/

\lakewood\pcbstjp3

16