ILLINOIS POLLUTION CONTROL BOARD
    December 18, 1997
    FOREST PRESERVE DISTRICT OF
    DUPAGE COUNTY, ILLINOIS, a body
    politic and corporate in the County of
    DuPage, State of Illinois,
    Complainant,
    v.
    MINERAL AND LAND RESOURCES
    CORPORATION, a Delaware corporation,
    SOUTHWIND FINANCIAL, LTD., an
    Illinois corporation, f/k/a ABBOTT
    CONTRACTORS, INC., and BLUFF CITY
    MATERIALS, INC., an Illinois corporation,
    as assignee of ABBOTT CONTRACTORS,
    INC.,
    Respondents.
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    PCB 96-84
    (Enforcement - Land)
    ORDER OF THE BOARD (by M. McFawn):
    This case is before the Board on “Mineral and Land Resource’s Motion for a Finding
    in its Favor and Against Complainant” (Finding Motion), filed on October 23, 1997. Also
    before the Board are two related motions: a “Motion for Leave to File Reply” (Reply Motion)
    filed on November 4, 1997, by respondent Mineral and Land Resource Corporation (MLR),
    and “Complainant’s Motion to Strike Respondents Southwind Financial, Ltd.’s and Bluff City
    Materials, Inc.’s Response” (Motion to Strike), filed on November 5, 1997, by complainant
    the Forest Preserve District of DuPage County, Illinois (FPD). Both motions were filed in
    connection with the Finding Motion.
    Each of the above motions is contested. After reviewing the evidence submitted and
    considering the arguments of the parties, the Board grants MLR’s Finding Motion and both
    related motions.
    PROCEDURAL HISTORY
    A “Complaint for Environmental Remediation” (Complaint) was filed by FPD on
    October 19, 1995. The Complaint alleges that the respondents collectively violated various
    provisions of Sections 12 and 21 of the Environmental Protection Act (Act), 415 ILCS 5/12,
    21 (1996). Hearings were held on September 23, 24, and 25, and October 21, 22, and 23,
    1997. FPD concluded the presentation of its case-in-chief on October 23. Upon completion
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    of FPD’s case, MLR brought its Finding Motion, seeking a finding in its favor based on an
    asserted lack of any evidence establishing MLR’s liability for the violations of the Act alleged
    in the complaint. Hearings were continued indefinitely pending the Board’s ruling on this and
    other motions.
    On October 29, 1997, FPD filed “Complainant’s Response and Opposition to
    Respondent Mineral and Land Resources’ Motion for a Finding in its Favor and Against
    Complainant” (Response). On November 4, 1997, MLR filed its Reply Motion and “Mineral
    and Land Resource Corporation’s Reply to Complainant’s Response to its Motion for a
    Finding in its Favor” (Reply). FPD filed “Complainant’s Response and Objection to Mineral
    and Land Resources Corporation’s Motion for Leave to File Reply” (FPD Objection) on
    November 10, 1997.
    Additionally, on October 31, 1997, the other respondents in this case, Southwind
    Financial, Ltd. (Southwind) and Bluff City Materials, Inc. (Bluff City), filed “Respondents
    Southwind Financial, Ltd.’s and Bluff City Materials, Inc.’s Response to Complainant’s
    Response and Opposition to Respondent Mineral and Land Resource’s Motion for a Finding in
    its Favor and Against Complainant” (Respondents’ Response). FPD responded with its
    Motion to Strike on November 5, 1997. On November 12, 1997, Southwind and Bluff City
    filed “Respondents Southwind Financial, Ltd.’s and Bluff City Materials, Inc.’s Objection to
    Complainant’s Motion to Strike Respondent’s Response” (Respondents’ Objection).
    MOTION FOR LEAVE TO FILE REPLY
    MLR, in its Finding Motion, asserts that FPD has produced no evidence establishing
    liability of MLR for any of the violations alleged in the Complaint. In its Response, FPD
    raised for the first time the theory that MLR is vicariously liable for violations because one of
    the other respondents was its agent. By its Reply Motion, MLR seeks leave to file a reply
    presenting its contrary position on the issue of agency. Under 35 Ill. Adm. Code 101.241, a
    moving party may file a reply only with the Board’s permission, to prevent material prejudice.
    FPD asserts in the FPD Objection that MLR would not be prejudiced by being denied
    an opportunity to respond to arguments raised for the first time in its Response. The asserted
    basis for this position is that FPD’s arguments in its Response are self-evidently correct, and
    so there is no point in allowing MLR to submit contrary arguments. FPD also asserts that the
    arguments made by MLR in its Reply should have been set forth in its initial brief,
    notwithstanding that the agency issue had not yet been raised.
    FPD’s arguments are meritless. The Board hereby grants MLR’s Reply Motion and
    accepts its Reply.
    MOTION TO STRIKE RESPONSE
    FPD has moved to strike Respondents’ Response, on the basis that it was filed without
    authorization as required under 35 Ill. Adm. Code 101.241. Section 101.241 provides in part:
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    b)
    Within 7 days after service of a motion, a participant or
    party may file a response to the motion. * * *
    c)
    The moving person shall not have the right to reply,
    except as permitted by the Board or the hearing officer to
    prevent material prejudice.
    Because Respondents’ Response addresses FPD’s Response to the Finding Motion,
    rather than the Finding Motion itself, FPD argues that filing of Respondents’ Response is not
    authorized under Section 101.241. Accordingly, FPD contends that Respondents’ Response
    should be stricken. In Respondents’ Objection, Southwind and Bluff City argue that
    Respondents’ Response should be considered a reply, and allowed by the Board to prevent
    material prejudice. Res. Obj. at 3.
    Even if we consider Respondents’ Response a reply subject to filing under Section
    101.241(c), Southwind and Bluff City did not obtain permission to file a reply prior to filing
    Respondents’ Response. Neither have they identified any material prejudice that they will
    suffer if Respondents’ Response is not accepted. They have not asserted that Respondents’
    Response directs the Board to evidence relevant to determination of the Finding Motion, or
    that it raises any legal argument as to whether the Finding Motion should be granted or denied.
    (In fact, Respondents’ Objection includes the statement, “Respondents’ Response was not filed
    in support of, or in opposition to, the Finding Motion.” Res. Obj. at 2.) Rather,
    Respondents’ Response is described as requesting that the Board “avoid unnecessarily
    interpreting” certain contracts which the parties have cited as relevant to resolution of the
    Finding Motion. Res. Obj. at 2. The contracts are also the subject of a lawsuit pending in the
    Circuit Court of DuPage County, and Southwind and Bluff City assert an interest in having the
    contracts interpreted by the circuit court. Res. Obj. at 2.
    To the extent interpretation of the contracts is necessary to resolution of the case before
    the Board, Southwind and Bluff City have not explained why interpretation of the contracts by
    the Board, rather than the circuit court, would result in material prejudice to them. Only
    necessary interpretations would have any effect in the pending circuit court case;
    “unnecessary” interpretations would not collaterally estop the parties. Congregation of the
    Passion, Holy Cross Province v. Touche Ross & Co., 159 Ill.2d 137, 153-54, 636 N.E.2d
    503, 510 (1994) (doctrine of collateral estoppel applies only to controlling facts or questions
    material to the determination of both causes). Accordingly, the Board finds no basis to permit
    filing of Respondents’ Response, and FPD’s Motion to Strike is granted.
    MOTION FOR FINDING IN MLR’S FAVOR
    Arguments Of The Parties
    FPD’s Complaint alleges that “Respondents” have violated Sections 21(a), (b), (d), (e),
    (o)(1), (o)(7), (o)(10), and (p)(4), and 12(d), of the Act (415 ILCS 5/21(a), (b), (e), (o)(1),
    (o)(7), (o)(10), and (p)(4); 415 ILCS 5/12(d)). The Complaint does not attribute particular
    actions violating the Act to particular respondents. MLR claims that no evidence has been
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    presented that MLR, as opposed to either of the other respondents, participated in or controlled
    any activity which resulted in the alleged violations of the Act. F. Mot. at 1. FPD, in its
    Response, does not argue that there is any evidence of direct participation by MLR. Rather, it
    asserts that a “Sublicense Agreement” between MLR and co-respondent Abbott Contractors,
    Inc. (Abbott)
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    establishes that Abbott was the agent of MLR, and consequently under doctrines
    of vicarious liability and
    respondeat superior
    MLR is liable for the activities of Abbott. Res.
    at 2. MLR replies that the Sublicense Agreement does not create a principal/agent relationship
    between MLR and Abbott. Reply at 2-5. FPD also argues that MLR exercised sufficient
    control over Abbott for the Board to find that MLR “allowed” violations of the Act. Res. at
    4.
    License and Sublicense Agreements
    On March 26, 1991, FPD and MLR entered into a “License Agreement” (entered into
    evidence as a part of Complainant’s Exhibit 4) under which FPD granted MLR a license to
    mine certain minerals from a parcel of land owned by FPD. The term of the license was five
    years, at the end of which period MLR was to have constructed a wetland on the property.
    The “License Agreement” included specific instructions regarding construction of the wetland.
    FPD retained a right to access to the property during MLR’s operating hours, provided such
    access did not obstruct or delay MLR’s operations. Abbott was specifically referenced as an
    approved subcontractor for the purpose of fulfilling MLR’s obligations under the “License
    Agreement.” FPD retained the right to have a representative periodically observe the work,
    and to stop construction of the wetland if not in accordance with specifications.
    On the same date, MLR and Abbott entered into the “Sublicense Agreement” (entered
    into evidence as part of Complainant’s Exhibit 39). Under the “Sublicense Agreement,” MLR
    granted Abbott its license to mine minerals from the FPD property, and Abbott agreed to
    accept and fulfill MLR’s obligations to FPD under the “License Agreement.” MLR was also
    to receive a royalty on each ton of minerals mined by Abbott. MLR retained the right to have
    representatives inspect the mining operations on the property.
    Analysis
    Agency
    The first issue the Board must resolve in ruling on MLR’s motion is whether the
    “Sublicense Agreement” creates a principal/agent relationship between MLR and Abbott.
    Generally, a principal is liable for the acts of its agent, but not the acts of an independent
    contractor. Lewis v. Mount Greenwood Bank, 91 Ill.App.3d 481, 487, 414 N.E.2d 1079,
    1084 (1st Dist. 1980). So, if the “Sublicense Agreement” creates a principal/agent
    relationship between MLR and Abbott, then MLR is liable for the acts of Abbott within the
    scope of its agency, and the Motion must be denied. If, however, the “Sublicense
    1
    Abbott is now known and participating in this case as Southwind Financial, Ltd. Because the
    parties to the “Sublicense Agreement” were MLR and Abbott, we refer to Abbott in our
    discussion of the “Sublicense Agreement.”
    5
    Agreement” does not create a principal/agent relationship, and Abbott is an independent
    contractor, then MLR has no liability as principal for Abbott’s acts, and we move on to FPD’s
    second argument. In ruling on this issue, the Board first considers the tests applied by Illinois
    courts to determine whether or not two parties are principal and agent. The Board then
    determines whether the relationship between MLR and Abbott established by the “Sublicense
    Agreement” meets the applicable criteria.
    In Illinois, “the test of agency is whether the alleged principal has the right to control
    the manner and method in which work is carried out by the alleged agent and whether the
    alleged agent can affect the legal relationships of the principal.” Moy v. County of Cook, 244
    Ill.App.3d 1034, 1038, 614 N.E.2d 265, 267 (1st Dist. 1993). A more detailed description of
    the second element of this test, affecting legal relationships, is found in the opinion of the
    appellate court in Hoffman & Morton Co. v. American Insurance Co., 35 Ill.App.2d 97,
    102,181 N.E.2d 821, 823 (1st Dist. 1962) (citations omitted):
    The distinguishing characteristic of an agent is that he represents
    another contractually. When properly authorized, he makes
    contracts or other negotiations of a business nature on behalf of
    his principal, by which his principal is bound. An agent is
    generally defined by the Illinois courts as being one who
    undertakes to manage some affairs to be transacted for another by
    his authority, on account of the latter, who is called the
    “principal,” and to render an account.
    The Board has carefully examined the “Sublicense Agreement” and can find no
    provision of that document (or of the “License Agreement”) which gives Abbott the authority
    to contract on behalf of MLR or to negotiate business arrangements to which MLR would be
    bound. Absent such authority, the Board cannot find that Abbott was an agent of MLR. The
    Board finds that Abbott’s relationship to MLR was that of an independent contractor. In light
    of this finding, it is unnecessary to consider whether MLR exercised sufficient control over
    Abbott to have satisfied the other element of the test for agency.
    Allowance of Violations
    The Board’s finding on the issue of agency precludes findings that MLR was liable for
    most of the violations of the Act alleged in the complaint. Two of the sections of the Act
    implicated, however, include prohibitions against “allowing” open dumping: Sections 21(a)
    and 21(p)(4), 415 ILCS 5/21(a), (p)(4). FPD has suggested in its Response that MLR
    exercised sufficient control over Abbott that by failing to take action to stop Abbott’s
    activities, MLR allowed open dumping by Abbott. Res. at 4. The Board considers whether
    the evidence submitted establishes a relationship between MLR and Abbott such that MLR
    could be found liable for allowing open dumping based on the conduct of Abbott. In many
    cases in which the Board has considered whether a party has “allowed” open dumping, the
    party involved has been an owner of the property. Because MLR is not the owner here, the
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    Board focuses in its analysis on the liability of a party for the acts of its independent
    contractor, as opposed to questions of liability as an owner.
    In determining whether a party who engages an independent contractor is liable for
    “allowing” pollution based on the acts of the independent contractor, “the question for our
    decision is whether, in light of statutory policy, a respondent is in such a relationship to the
    transaction that it is reasonable to expect him to exercise control to prevent pollution.”
    Environmental Protection Agency v. James McHugh Construction Co. (May 17, 1972), PCB
    71-291, slip op. at 3. In the McHugh case, the Board found the City of Chicago liable for the
    acts of its independent contractor where “the City recognized its responsibility [to prevent
    pollution] by inserting in the contract a provision requiring construction and maintenance of
    the settling basin, by placing an engineer on the site to enforce the contract, and by
    participating in later decisions to improve the treatment facilities.” McHugh, Slip op. at 4. In
    Illinois Environmental Protection Agency v. Milam Corp. (January 3, 1974), PCB 72-485,
    however, the Board, applying McHugh to a lessor-lessee relationship,
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    held that “where the
    companies are distinct and unrelated and where the operation is an extensive one, lessor should
    not have the burden of seeing to it that lessee obeys the law.” Milam, slip op. at 4. More
    recently, in County of Madison v. Abert (Dec. 17, 1992), AC 91-55, the Board found that,
    where the contracting party (who was not present when the violations of the Act occurred)
    gave the independent contractor specific instructions, and the violations in question resulted
    from the independent contractor’s exceeding the directions given, the party engaging the
    independent contractor did not “allow” the violation. Abert, slip op. at 6.
    The Board believes that the situation here is more analogous to that in Abert or Milam
    than McHugh. We have no evidence from which we can find that MLR and Abbott are
    anything but distinct and unrelated companies. The operation contemplated in the License
    Agreement and Sublicense Agreement was an extensive one. There is no evidence that MLR
    maintained any physical presence at the site of Abbott’s operations. Through the “Sublicense
    Agreement,” which incorporates the terms of the “License Agreement,” Abbott received very
    specific instructions regarding the work to be done by Abbott as sublicensee. Any violation of
    the Act by Abbott, beyond being an exceedence of its instructions, is a violation of the
    “Sublicense Agreement,” which provides in paragraph 7 that “[d]uring the term of this
    Sublicense, Sublicensee shall comply with all applicable laws[.]” The Board concludes that,
    on the facts of this case, MLR did not have an obligation to undertake physical inspections to
    ensure that Abbott complied with the Act. On the evidence before it, the Board cannot find
    that any violations of the Act committed by Abbott were “allowed” by MLR.
    Conclusion
    The Board finds no evidence establishing liability of MLR for any of the alleged
    violations of the Act, either under an agency theory or under a theory of “allowing” pollution
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    Because the Sublicense Agreement in this case grants a right to use and occupy real estate,
    and is thus to some extent analogous to a lease, the Board finds Milam’s discussion of a
    lessor/lessee relationship relevant and helpful.
    7
    in violation of Sections 21(a) or 21(p)(4) of the Act. The Board accordingly grants MLR’s
    Finding Motion.
    IT IS SO ORDERED.
    Board Member K.M. Hennessey abstained.
    I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, hereby certify that
    the above order was adopted on the 18th day of December 1997, by a vote of 6-0.
    Dorothy M. Gunn, Clerk
    Illinois Pollution Control Board

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