ILLINOIS POLLUTION CONTROL BOARD
August 1, 1996
PEOPLE OF THE STATE OF ILLINOIS,
Complainant,
v.
MICHEL GRAIN COMPANY, INC., d/b/a
MICHEL GRAIN FERTILIZER, an Illinois
corporation, and CARYLE MICHEL,
Respondents.
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PCB 96-143
(Enforcement - Water)
ORDER OF THE BOARD (by C.A. Manning):
This matter is before the Board on several motions including respondents’ motion to
dismiss filed on February 6, 1996, complainant’s April 25, 1996 filing of an amended
complaint, and respondents’ motion to strike the amended complaint filed on May 8, 1996.
On December 27, 1995 the Illinois Attorney General, on behalf of the People of the State of
Illinois and at the request of the Illinois Environmental Protection Agency (Agency), filed a
two-count complaint against respondents, Michel Grain Company, Inc., d/b/a Michel Grain
Fertilizer (Michael Grain, Inc.) and Mr. Caryle Michel (Michel), alleging violations of the
water pollution provisions of the Environmental Protection Act (Act) (Sections 12(a) and (d))
and violations set forth at 35 Ill. Adm. Code 302.203, 304.105, 304.106 and 306.102(b) of
the Board’s regulations, concerning pesticide and fertilizer spills at a grain elevator and liquid
agrichemical facility in the Village of Ina, Jefferson County, Illinois (Ina facility), and seeks a
declaration concerning the State’s rights to past and future cost recovery pursuant Section 22.2
of the Act. Complainant’s filing of an amended complaint alleges, in addition to the original
two counts, groundwater contamination at a liquid and dry fertilizer and agrichemical facility
located in the Village of Broughton, Hamilton County, Illinois (Broughton facility), and also
alleges the unlawful disposal of waste at both facilities.
Respondents request that we dismiss the original two-count complaint concerning the
Ina facility as to both parties, Michel Grain Company, Inc. and Michel, on the basis that they
each received a discharge from the United States Bankruptcy Court for the Southern District of
Illinois on February 27, 1990. Alternatively, respondents seek dismissal on the grounds that
the original two-count complaint is substantially insufficient at law and fails to state claims
upon which relief may be granted. In addition, respondents request that we strike the amended
complaint because the amended complaint realleges identical violations contained in the
original complaint regarding the Ina facility and also includes new violations at the Broughton
facility which, respondents argue, are identical to alleged violations at the Ina facility. In the
alternative, respondents request time to file their response to the amended complaint after the
Board’s ruling on the motion to dismiss.
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For reasons more fully explained below, we hereby deny the motion to dismiss as to
both party respondents, Caryle Michel and Michel Grain, Inc. We deny the motion to strike
the amended complaint and allow respondents to file an answer to the amended complaint on
or before September 3, 1996.
PROCEDURAL HISTORY
On December 27, 1995 complainant filed its complaint alleging that respondents
violated Sections 12(a) and (d) of the Act and 35 Ill. Adm. Code 302.203, 304.105, 304.106
and 306.102(b) of the Board’s regulations and alleging that respondents were statutorily liable
for past and future removal costs pursuant to Section 22.2 of the Act. Respondents filed their
motion for leave to file instanter a motion to dismiss the complaint and the motion to dismiss
the complaint on February 6, 1996.
On February 15, 1996 complainant objected to respondents’ motion for leave to file
instanter their motion to dismiss and the motion to dismiss on the basis that the motion to
dismiss was filed with the Board more than 21 days after service of the complaint and on the
basis that the motion to dismiss was filed instanter. Complainant argued that respondents’
motion was untimely and should be rejected by the Board. Respondents filed a reply on
February 27, 1996 accompanied by a motion for leave to file instanter conceding that the
motion to dismiss was untimely filed, yet argued good cause for the Board to extend time for
filing such a motion. On March 7, 1996 complainant submitted a motion to strike
respondents’ reply stating that respondents failed to either request the Board’s permission to
file the motion to dismiss or show that material prejudice would have resulted but for the filing
of the motion to dismiss.
Complainant filed an amended complaint on April 25, 1996 adding new allegations
against respondents’ Broughton facility and alleging violations concerning the unlawful
disposal of waste at both facilities. On May 8, 1996 respondents filed a motion to strike the
amended complaint stating that complainant did not file a motion requesting leave of the Board
to file its amended complaint and stating that the new allegations were procedurally and
substantively defective. Complainant subsequently filed a motion for leave to file its amended
complaint on May 17, 1996.
BACKGROUND
Ina Facility
According to the allegations of the complaint and amended complaint,
1
Michel Grain,
Inc. is a grain elevator and liquid agrichemical facility located in the Village of Ina, Jefferson
1
The Board will refer to the amended complaint filed on April 25, 1996, for all alleged
violations occurring at the facility located in the Village of Ina, Jefferson County, Illinois, and
all alleged violations occurring at the facility located in the Village of Broughton, Hamilton
County, Illinois. References to the April 25, 1996 amended complaint will be cited to as
(Comp. at ___.). References to respondents’ motion to dismiss will be cited to as (Mot. to
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County, Illinois. The Ina facility has a mixing area with three 5,000-gallon fertilizer tanks
situated on one side and a drainageway bordering the other. The Ina facility is situated near
the water main for the Ewing-Ina water system, located less than ten feet downgrade of the
adjacent drainageway, and less than one mile from Rend Lake, which serves as a source of
public drinking water for approximately 12,000 people. (Id. at 2-3.) The complaint alleges
that Rend Lake and the drainageway are both “waters of the State” as defined in Section 3.56
of the Act. (415 ILCS 5/3.56) (Id. at 3.)
Complainant states that the Agency inspected the Michel Grain, Inc. Ina facility on
May 8, 1989 in response to concerns of the Village of Ina Water District regarding potential
contamination of the public water supply. The Agency observed that, for a period of time
prior to May 8, 1996, respondents had operated the Ina facility in a manner resulting in the
discharge of pesticides, fertilizers and herbicides onto the ground and in the drainageway. (Id.
at 4, 6.) The amended complaint alleges that these practices included failure to install or use
impervious drip pads for washing trucks, storing herbicide containers and mixing chemicals,
lack of an on-site collection system for rinsate, and failure to place dikes around the fertilizer
tanks. (Id. at 4.)
The complaint further alleges that during the May 8, 1989 inspection and, subsequently
during a second inspection on January 8, 1990, the Agency inspector collected water and soil
samples from the Ina facility. The samples were taken from two pools of liquid from the
mixing area and from the parking area east of the mixing area. The sampling contained a
milky white liquid and showed the presence of three pesticides on site: atrazine, alachlor, and
pendimethalin. (Id. at 5.) During the January 8, 1990 inspection, the Agency collected water
and soil samples from a nearby field, a water tap, and from the main ditch/drainageway.
These samples showed the presence of four pesticides: atrazine, alachlor, metolachlor, and
pendimethalin. (Id.)
The amended complaint also alleges that on or before May 8, 1989 respondents caused
or allowed pesticides, fertilizers, and herbicides to be discarded onto the ground at the facility.
(Id. at 8-9.) Complainant further alleges a cost recovery claim seeking a Board determination
that respondents are liable for the State’s past and future cleanup costs “at all times relevant”
to the complaint for the release of pesticides at the Ina facility. (Id. at 14.) Complainant
argues that respondents have failed to take any preventative or corrective action to address the
release of pesticides, thus triggering the State’s cost recovery rights under Section 22.2 of the
Act.
Based on respondents’ operational practices and the sampling data, complainant
requests that the Board find Michel Grain, Inc. and Michel in violation of Sections 12(a) and
12(d) of the Act and 35 Ill. Adm. Code 306.103(b), 302.203 and 304.106 of the
corresponding Board regulations. (Id. at 6-7.) Complainant also requests that the Board find
Dismiss at ___.) References to complainant’s response to the motion to dismiss will be cited
to as (Resp. at ___.) References to respondents’ motion to strike will be cited to as (Mot. to
Strike at ___.)
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respondent in violation of the unlawful disposal of waste pursuant to Section 21(d)(2) of the
Act. (415 ILCS 5/21(d)(2) (1994).) Complainant finally requests that the Board find
respondents liable for past and future removal costs incurred by the State and that the Board
order respondents to take response action at the Ina facility. (Id. at 14.)
Caryle Michel d/b/a Michel Grain Company and Michel Fertilizer Company filed a
voluntary petition pursuant to Chapter 11 of the United States Bankruptcy Code on July 18,
1989. (11 USC 1100 et seq.) A one-paragraph letter was written by Caryle Michel to
William Busch of the Agency on November 6, 1989. The letter stated that the Michel
Fertilizer Company, Ina facility, was in Chapter 11 and stated that a plan of reorganization
would be submitted November 18, 1989. (Mot. to Dismiss at 2; Attachment 1.) The State did
not partake in the bankruptcy proceeding nor did the State file a claim as a creditor. Michel
Grain, Inc. was involuntary dissolved by the Illinois Secretary of State on November 1, 1991.
Caryle Michel was the “owner and sole proprietor” of Michel Grain, Inc. prior to November
1, 1991. (Comp. at 2.)
In the case styled In Re: Caryle and Catherine Michel, Case No. BK89-40672, the
U.S. Bankruptcy Court for the Southern District of Illinois released the debtors, Caryle and
Catherine Michel, from all dischargeable debts on February 27, 1990. (Mot. to Dismiss at 3.)
On July 30, 1990 respondents submitted a proposed Site Assessment Plan (SAP) after repeated
notifications by the Agency of the conditions at the Ina facility. (Comp. at 6-7.) The Agency
subsequently notified respondents of numerous deficiencies in the SAP and requested
revisions. Respondents submitted a revised SAP on September 20, 1991 as a result of the
deficiencies and, on October 16, 1991, the Agency notified respondents of the deficiencies in
the revisions. Finally, on January 16, 1992 respondents submitted a SAP which the Agency
approved on January 29, 1992. Due to respondents’ inaction in implementing the agreed SAP
and due to the continuing water pollution violations, complainant filed this action.
Broughton Facility
The additional counts alleged in the second half of the amended complaint were not
previously alleged in the original complaint. The second facility, added in the amended
complaint, is a liquid and dry fertilizer and agrichemical facility located in the Village of
Broughton, Hamilton County, Illinois. The amended complaint describes the Broughton
facility as having three above-ground storage tanks, a storage building for dry and bulk
fertilizer, loading pad and station, mixing area, workshop, packaged warehouse, and office
area. (Id. at 15.) The Broughton facility formerly consisted of 16 above-ground storage tanks
ranging from 3,000 to 30,000 gallons in size. Two underground drains discharge from the
Broughton facility to a drainageway which is tributary to an unnamed tributary of the North
Fork Saline River, which are each “waters of the State” as defined in Section 3.56 of the Act
(415 ILCS 5/3.56). Complainant alleges that respondents leased the Broughton facility to an
unnamed third party who operated the facility for a period of time. (Id.)
The complaint recites that on January 9, 1992 the Agency inspected the facility in
response to a complaint from the Illinois Department of Agriculture. The inspection revealed
that, though the facility had been abandoned for approximately three years, several outdoor
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bulk storage tanks containing liquids remained on the site. (Id. at 16.) Also, the warehouse
contained “several liquid jugs of pesticide or insecticide product and approximately two tons of
damp fertilizer.” Upon inspection, the Agency also found that a small drain extending from
the former liquid blending area was discharging an unknown white-colored liquid. A second
inspection on January 28, 1992 revealed discolored soil and gravel, and trenches with apparent
contamination at the Broughton facility’s former operational area. (Id.) During the second
inspection, soil samples were taken from the excavation area and from the exposed area in one
of the trenches which resulted in various concentrations of alachlor, atrazine, and trifluralin.
Complainant alleges that on or before January 9, 1992, respondents caused or allowed
pesticides, herbicide, fertilizer, and fuels to be discarded upon the ground and contaminated
the soils and water entering the drainageway at the Broughton facility. Complainant also
alleges the existence of a cost recovery action at the Broughton facility, similar to the cost
recovery claim alleged at the Ina facility. Complainant asserts that respondents have failed to
take any preventative or corrective action to address the contamination of past and present
discharges and/or leaching of pesticides at the Broughton facility. (Id. at 20.)
Due to the Agency’s findings during the January 9, 1992 and January 28, 1992
inspections at the Broughton facility, complainant alleges that Michel Grain, Inc. and Michel
both violated Section 12(a) and 12(d) of the Act and corresponding Board regulations set forth
at 35 Ill. Adm. Code 302.203, and 304.106. Complainant further alleges that respondents
have unlawfully disposed of waste by causing or allowing contaminants to be discarded in
violation of Section 21(d)(2) of the Act. Therefore, complainant requests that the Board find
respondents in violation, enter a cease and desist order, assess civil penalties, and award
attorney’s fees. (Id. at 18, 19.) Complainant further requests that respondents be found liable
for past and future removal costs incurred by the State and that respondents be ordered to
undertake and complete response action at the facility in accordance with an Agency directive.
(Id. at 21.)
DISCUSSION
Motion to Dismiss
Respondents argue two theories in their motion to dismiss. Respondents argue that the
allegations concerning the Ina facility are discharged due to the bankruptcy case which
absolved Caryle Michel and Michel Grain, Inc. of all liability. Respondents also argue that
the allegations concerning the Ina facility are insufficient at law and fail to state any claim
upon which relief may be granted.
Timeliness of the filings. Complainant initially argues that the motion to dismiss
should be denied since it was not timely filed by respondents. Respondents agreed that the
motion was filed late, yet argued Illinois Supreme Court Rule 183 which states that a court
may, for good cause shown, extend the time for filing any pleading either before or after the
expiration of time. (107 Ill. 2d R. 183.) Respondents argued “good cause” by stating their
need to gather documentation for the filing of their motion to dismiss and to consult with
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respondents’ previous counsel. The Board finds respondents’ arguments convincing and will
not deny the motion on grounds of untimeliness.
Bankruptcy. Respondents argue that both Caryle Michel and Michel Grain, Inc. should
be dismissed from the complaint due to the 1990 bankruptcy case which, respondents argue,
absolves Caryle Michel and Michel Grain, Inc. of all liability. Respondents state that they
notified the Agency of the pending bankruptcy case and the Agency failed to participate in the
bankruptcy proceeding or otherwise file a claim. Respondents argue that the discharge acts as
an injunction against commencing an action to collect on a pre-petition claim against the
bankruptcy debtor. (Mot. to Dismiss at 3-4.)
Complainant states that neither Caryle Michel nor Michel Grain, Inc. are discharged
from this proceeding. Complainant argues that the allegations in the complaint pertain to the
violations occurring during the dates of inspection and also pertain to continuing violations
occurring as a result of ongoing pollution. Complainant argues that because the harmful
releases continue to be a threat and are ongoing, the site at the Ina facility poses an
endangerment to the public health and welfare. Complainant further asserts, citing In re
Chateaugay Corp., 944 F.2d 997, 1006-09 (2d Cir. 1991), that an order for clean up which
mandates the removal of the contamination and prevents any ongoing pollution is not a
dischargeable claim. (Resp. at 2-3.) Complainant further argues that it has a right to force
any debtor to comply with the applicable environmental laws by remedying the existing
hazard. (Resp. at 3,
citing
Chateaugay, 944 F.2d at 1008.) Complainant also states that
penalties for environmental violations are not subject to discharge since civil penalties are
excepted from discharge in the U.S. Bankruptcy Code.
We find that the bankruptcy case does not discharge any of the present allegations
against either Caryle Michel or Michel Grain, Inc. In the U.S. Bankruptcy Court’s
confirmation order, dated February 27, 1990, Caryle and Catherine Michel are specifically
named as individual debtors. Michael Grain, Inc. was not even named as a debtor in the
bankruptcy court proceeding. Nowhere in the order is there mention of any other legal entity,
corporate or otherwise, as being a debtor before the court in that bankruptcy proceeding;
therefore, respondents’ argument that both Caryle Michel and Michel Grain, Inc. are
discharged of all pre-petition liability because of the bankruptcy case is without merit.
Respondents’ only possible claim for discharge would be applicable to Caryle Michel.
Respondents argue that Caryle Michel is discharged because the allegations pertain to pre-
petition claims. What respondents fail to fully consider, however, are complainant’s
allegations of ongoing pollution. Caselaw is clear on the issue of ongoing pollution: a
bankruptcy discharge may not operate as an injunction against the commencement of any
action if pollution continues to be ongoing. (
See
In re Chateaugay Corp., 944 F.2d 997 (2d
Cir. 1991).) If the ongoing nature of an environmental obligation continues, a debtor is
prevented from obtaining a discharge of its liability in a bankruptcy proceeding. (In Re:
Industrial Salvage, Inc. v. People of the State of Illinois, BK93-40767, ADV. 95-4107; In Re:
John Prior v. People of the State of Illinois, BK93-40768, ADV. 95-4108, U.S. Bankruptcy
Court, Southern District of Illinois, June 6, 1996.) Status as a debtor in bankruptcy does not
authorize a company to maintain a current nuisance or otherwise excuse it from current
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compliance with the environmental laws of that state. (Ohio v. Kovacs, 469 U.S. 274, 285
(1985).)
In this matter, we believe that the complaint sufficiently alleges ongoing pollution for
purposes of setting this matter for hearing. Caryle Michel was aware of the obligations to
clean up the Ina facility as evidenced by respondents’ development of a Site Assessment Plan
(SAP).
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Though the complaint does not draw a perfect nexus between the pre-petition claims
and post-bankruptcy continuing pollution, we find that the complaint satisfactorily alleges
ongoing pollution. For these reasons, neither Caryle Michel nor Michel Grain, Inc. are
discharged and this matter shall proceed to hearing. In the event the facts at hearing show that
all of the alleged water pollution has ended prior to the 1990 bankruptcy case, the Board may
entertain a new motion to dismiss this portion of the complaint at the proper time.
Sufficiency of the pleadings. Respondents argue that no water pollution hazard or
threat has been established in the complaint. Respondents state that the complaint neither
properly describes the location or flow of the drainageway. Respondents further assert that the
drainage contains runoff treated with fertilizers and pesticides from other cornfields adjacent to
respondents’ facility. In its motion to dismiss, respondents summarily argue that the complaint
fails to provide proper information showing how the alleged discharges violate Sections 12(a)
and (d) of the Act and 35 Ill. Admin. Code 302.203, 304.105 and 304.106. (Mot. to Dismiss
at 5-7.) Respondents assert that complainant has improperly alleged respondents’ failure to
implement a SAP. Respondents argue that the Act does not require respondents to prepare or
implement a SAP.
Complainant argues that the facts are sufficient and, if proven, would entitle relief to
complainant. Complainant asserts that the direct or indirect path of the “waters” is of little
consequence since the path leads to a body of water, Rend Lake, which serves as public
drinking supply for area residents. (Resp. at 4.) Complainant states that the samples and data
referencing the public water supply show the continuing presence of contamination to area
groundwaters and complainant argues that pollution is amply demonstrated. Complainant
states that the Agency must obtain respondents’ compliance with the SAP so as to insure the
requirements of the Act have been satisfied. Further, complainant states that any challenges to
the source of contamination should be presented at hearing. (Resp. at 6.) Complainant overall
argues that the allegations pursuant to the Act and the Board’s regulations are properly alleged
under these facts.
The Board finds that the complaint is sufficient to proceed to hearing. The complaint
has sufficiently alleged facts which, if proven at hearing, may warrant relief to complainant.
Though the Board acknowledges that the complaint is not fact-specific in all of the allegations
and the Board notes that more facts would be helpful in understanding the issues in this case,
we find the amended complaint satisfactory to proceed to hearing. The Board also notes that,
among other things, the State of Illinois is a notice-pleading state and, as such, does not
require complainant to plead all facts specifically in its complaint. As a result, the Board finds
no merit in respondents’ argument that the complaint is insufficient at law. At this time, we
2
For additional discussion of the SAP,
see
page 8,
infra
.
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will not rule about the sufficiency of the alleged violation of a SAP, but will allow the parties
to further argue the matter in the course of this proceeding.
Cost recovery. Among other things, respondents argue that complainant is not entitled
to recover any removal costs. Respondents state that the complaint improperly alleges the
contaminants as “hazardous substances.” (Mot. to Dismiss at 9-10.) Respondents argue that
the State must have incurred costs prior to the commencement of a cost recovery action.
(Mot. to Dismiss at 10-11.) Respondents finally argue that the Agency, pursuant to Section 4
of the Act (415 ILCS 5/4(q) (1994)), should have provided notice to any person potentially
liable for a release. (Mot. to Dismiss at 13.)
Complainant asserts, citing Section 33 of the Act (415 ILCS 5/33(a) (1994)), that the
Board has the authority to direct respondents to pay all costs, past or future, related to the
remedial or removal activity incurred by the State of Illinois. Complainant argues it would
have to relitigate the issue of release as the costs are incurred which would, in effect, result in
an inefficient use of resources and possibly foreclose complainant’s further proceedings based
on
res judicata
. (Resp. at 7.) Complainant also asserts its references to the contaminants in
the complaint as “hazardous” is an accurate reference. Complainant further states that it has
the authority to provide notice of liability under Section 4(q), yet it is not clearly required to
provide notice in order for liability to result. (Resp. at 8,9.)
We find that complainant has a right to a determination as to respondents’ liability
before it engages in the costs of cleanup. In this matter, this case will be sent to hearing in
order to ascertain liability for the ongoing pollution. Once liability is determined, a concurrent
action based on cost recovery may be appropriate since it would expedite the proceedings and
prevent undue delay. Because respondents are potentially liable parties, the complainant may
proceed with such cost recovery issues. Section 22.2 of the Act (415 ILCS 5/22.2 (1994))
specifies that responsible parties shall be liable for all costs of removal or remedial action
incurred by the State of Illinois for the release or substantial threat of a release. If complainant
has incurred costs in removal and complainant proves this at hearing, in addition to
respondents’ liability, then complainant may seek costs from respondents. As a result, it
would be premature for the Board to dismiss the cost recovery action in this matter.
Motion to Strike
Respondents argue that the Board should strike and dismiss the amended complaint
filed by complainant on April 25, 1996. Respondents assert that because complainant did not
file a motion requesting leave of the Board to file an amended complaint pursuant to Section 2-
616 of the Illinois Code of Civil Procedure (735 ILCS 5/2-616), complainant has waived its
right to obtain leave of the Board to file the amended complaint. (Mot. to Strike at 3.)
Respondents further assert that the violations in the amended complaint reallege identical
violations in the original complaint with regard to the Ina facility except for the additional
count of a solid waste violation. (Id.) Respondents state that the new violations alleged in the
amended complaint with regard to the Broughton facility are identical to the violations alleged
at the Ina facility and, therefore, the same arguments in respondents’ motion to dismiss may be
applied to the violations alleged at the Broughton facility. (Id.) Overall, respondents argue
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that the amended complaint is both procedurally and substantively defective and should be
stricken. Alternatively, respondents request that the Board grant an extension of time for
respondents to respond to the amended complaint after the Board’s ruling on the motion to
dismiss.
The Board will allow the filing of the amended complaint and further finds that the
amended complaint states a cause of action which shall proceed to hearing. Subsequent to the
filing of complainant’s amended complaint, complainant filed a motion asking leave of the
Board to file an amended complaint, thereby curing any procedural defect in the filing. The
Board has not been presented with any reasons demonstrating that the filing of the amended
complaint would be unduly prejudicial to respondents in this matter. The Board recognizes
that the additional allegations against respondents’ Broughton facility could have been filed as
a new complaint in a separate case; however, we will allow this case to proceed as filed, so
long as the parties realize that all allegations brought against respondents’ Ina facility and
respondents’ Broughton facility are proven separately.
In summary, respondents’ motion to dismiss is denied and respondents’ motion to strike
the amended complaint is denied. Respondent is directed to file an answer to all allegations in
the complaint, as amended, on or before September 3, 1996.
IT IS SO ORDERED.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, hereby certify that
the above order was adopted on the _____ day of ___________, 1996, by a vote of
______________.
___________________________________
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board