ILLINOIS POLLUTION CONTROL BOARD
April 4, 2002
ESG WATTS, INC. (Sangamon Valley
Landfill, Taylor Ridge/Andalusia Landfill, and
Viola Landfill), an Iowa corporation,
Petitioner,
v.
ILLINOIS ENVIROMENTAL PROTECTION
AGENCY,
Respondent.
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PCB 01-139
(Permit Appeal - Land)
LARRY A. WOODWARD, CORPORATE COUNSEL, APPEARED ON BEHALF OF
PETITIONER; and
DANIEL MERRIMAN, ASSISTANT COUNSEL, ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY, APPEARED ON BEHALF OF RESPONDENT.
OPINION AND ORDER OF THE BOARD (by G.T. Girard):
On July 5, 2001, ESG Watts, Inc. (ESG Watts) filed a petition for review of a February
28, 2001 decision by the Illinois Environmental Protection Agency (Agency). The Agency’s
denial letter stated that the Agency “refuses to release any existing financial assurance tendered
by ESG Watts including any funds from the ESG Watts trust fund.” R. at 0084. The trust fund
provides financial assurance for three facilities owned by ESG Watts.
On December 27, 2001, a hearing was held in Springfield before Board Hearing Officer
Steven Langhoff. On January 25, 2002, ESG Watts filed a brief (Pet. Br.) in this proceeding. On
February 19, 2002, the Agency filed a brief (Resp. Br.) and a motion for extension of time to file
the brief (Mot.). On March 7, 2002, ESG Watts filed a motion to strike the respondent’s brief
(Mot.S.), a response to the motion for extension of time, and a reply brief (Reply). On March 25,
2002, the Board received the Agency’s response to the motion to strike (R.Mot.S.). The Board
will discuss the motions below.
For the reasons given in the opinion, the Board reverses the Agency’s refusal to release
existing financial assurance. However, the Board cannot lawfully direct the release of funds in
the ESG Watts trust fund.
MOTIONS
Before considering the merits of this case, the Board must first address the outstanding
motions relating to the filing of the Agency’s brief. First, the Agency filed a motion for an
2
extension of time to file the brief. The Agency acknowledges the lateness of the brief but asserts
that there was no “intention to willfully disregard the Hearing Officer’s scheduling order, cause
any undue delay or any material prejudice to any party” nor was there “any bad faith” on the part
of the Agency. Mot. at 2. Furthermore, the Agency stated that the attorney for the Agency
became aware of “a significant development” in this matter “on or about February 7, 2002.”
Mot. at 1. The Agency “felt” that the “significant development” should be brought to the
Board’s attention and a new section needed to be added to the brief to do so.
Id
.
ESG Watts argues that the Agency’s brief should be stricken. First, with regards to the
“significant development” the Agency discusses, ESG Watts argues the Agency did not support
the allegations in the motion with an affidavit or any other sworn testimony. Mot.S. at 1.
Furthermore, the dated information provided by the Agency demonstrates that the materials
would have been available at the hearing in this matter if the Agency had exercised due
diligence.
Id
. Also, the information was discussed in the presence of the Agency in December
of 2001.
Id
. Finally, ESG Watts asserts that the information is not material to any issue in PCB
01-62, PCB 01-63, or PCB 01-64 as the materials deal with United Capitol Insurance Company,
and the policies at issue in those cases were issued by Frontier Pacific Insurance Company.
Mot.S. at 1-2.
ESG Watts also argues that the brief was filed “to introduce prejudicial bias” into this
proceeding. Mot.S. at 2. Specifically, ESG Watts maintains that the Agency is suggesting that
the release of surplus financial assurance would leave the State of Illinois without financial
assurance when the Agency “knows that the policies have been replaced by other policies for the
time period beginning January 26, 1998 to January 25, 2002, and by policies covering the period
January 26, 1998 to January 25, 2003.” Mot.S. at 2.
The Agency’s response argues that the information included in the brief, “while
admittedly outside the record” is relevant to the Agency’s argument that the appeal is moot.
R.Mot.S. at 3-4. Furthermore, the Agency argues that the brief had attached to it a “Verification
of Facts Not of Record by Certificate.” R.Mot.S. at 4. The Agency tenders a “correction” by
stating that the certificate applies to the motion for extension of time.
Id
.
The Agency also responds to the ESG Watts argument that the Agency attempted to
introduce prejudice by asserting that the assertions of fact are not accompanied by an affidavit.
R.Mot.S. at 9. Further, the Agency asserts such information is outside the record of the
proceeding.
Id
. Finally, the Agency states that there has been no approval of financial assurance
by insurance policies for ESG Watts.
Id
.
The Board grants the motion for extension of time to file the brief. The Board believes
that accepting the brief will allow for a more comprehensive discussion and resolution of the
issues in the case. However, the Board does agree with ESG Watts in part and therefore the
Board will strike portions of the Agency’s brief from this record.
The Agency included in the brief a court order from the Circuit Court of Cook County
that was entered on November 14, 2001. The court order was not before the Agency when the
Agency’s decision was made. Therefore, the Board cannot now consider that court order. The
3
Board also strikes the attachment from the brief and any argument relating to the attachment.
See
West Suburban Recycling and Energy Center, L.P. v. IEPA, PCB 95-199 and 95-125 (Oct.
17, 1996); Panhandle Eastern Pipe Line Company v. IEPA, PCB 98-102
(Jan. 21, 1999); Alton Packaging Corp. v. PCB, 162 Ill. App. 3d at 738, 516 N.E.2d at 280 (5th
Dist. 1987).
FACTS
At hearing, the parties introduced Joint Exhibit A (J.Exh. A) which is a stipulation by the
parties to certain facts in this case. The following discussion summarizes the pertinent facts from
the stipulation and adds additional facts from the hearing transcripts and the record of the case
where necessary. Included in the summary of facts are facts surrounding the ESG Watts, Inc.
(Sangamon Valley Landfill) v. IEPA, PCB 01-62 (Apr. 4, 2002) and ESG Watts, Inc. (Viola
Landfill) v. IEPA, PCB 01-63, 64 (consol.) (Apr. 4, 2002). These facts are necessary to
understand the interrelated nature of the financial assurance for all three of the ESG Watts
facilities.
On November 27, 2000, ESG Watts was the licensed operator for the Taylor
Ridge/Andalusia landfill and Viola landfill and had an obligation to provide financial assurance
for the closure/post-closure care of the facility. J.Exh. A at 1. ESG Watts was not the licensed
owner of Sangamon Valley Landfill, but ESG Watts had not been released by the Agency from
the obligation to supply financial assurance.
Id
.
On November 27, 2000, ESG Watts submitted requests to approve substitute financial
assurance for the Sangamon Valley landfill (R. at 00001-0076d), the Taylor Ridge/Andalusia
landfill (R. at 0094-0171) and the Viola landfill (R. at 0188-0273) in the form of surplus lines
“Pollution Liability Policies” issued by United Capitol Insurance Company for the period
January 26, 1999 to January 26, 2001. J.Exh. A at 1. ESG Watts further requested that excess
financial assurance, in the form of a trust,
1
be released for the Sangamon Valley landfill, the
Taylor Ridge/Andalusia landfill and the Viola landfill.
Id
. ESG Watts also asked that United
Capitol Insurance Company and ESG Watts be released from any financial assurance obligation
for Sangamon Valley landfill.
Id
.
United Capitol Insurance Company of Atlanta, Georgia offered the pollution liability
coverage. R. at 0003., J.Exh. A at 1. United Capitol Insurance Company was an insurer licensed
to transact the business of insurance in Illinois when the policies were provided to the Agency.
J.Exh. A at 1. The policies provided for financial assurance for closure/post-closure in the
amount of $3,197,798 for Sangamon Valley landfill, $2,031,549 for Taylor Ridge/Andalusia
landfill and $397,080 for Viola landfill. J.Exh. A at 1-2.
1
In ESG Watts Inc. (Sangamon Valley) v. IEPA, PCB 01-62 (Apr. 4, 2002), ESG Watts argues
that there are three separate trusts while the Agency maintains there is only one trust account.
Based on the Board decision in PCB 01-62, the Board will refer to a single trust.
4
ESG Watts had four trust agreements on file with the Agency at the time of the
submission of the insurance policies: one dated February 28, 1985 (PCB 01-63, 64
2
Vol. II R. at
0316-0319) and three dated March 9, 1994 (PCB 01-63, 64 Vol. II R. at 0336-0339, PCB 01-63,
64 Vol. II R. at 0344-0347 and PCB 01-63, 64 Vol. II R. at 0352-0355). On November 27, 2000,
the trust account had $1,455,993.95. J.Exh. A at 2.
At the time of the submittals by ESG Watts, the amounts tendered by the policies were
equal to the closure/post-closure care cost estimates for the landfills. J.Exh. A at 2. Prior to the
Agency’s final decision in this matter, the Agency approved a revised closure/post-closure care
estimate for Viola landfill. J.Exh. A at 2. That revised estimate was $313,294.
Id
.
Until January 18, 1994, the Agency had treated the trust agreement submitted by ESG
Watts as a unified trust. On January 18, 1994, the Agency transmitted trust agreement forms to
ESG Watts. J.Exh. A at 2. On March 9, 1994, ESG Watts submitted four trust agreements on
file with the Agency: one dated February 28, 1985 (PCB 01-63, 64 Vol. II R. at 0316-0319) and
three dated March 9, 1994 (PCB 01-63, 64 Vol. II R. at 0336-0339, PCB 01-63, 64 Vol. II R. at
0344-0347 and PCB 01-63, 64 Vol. II R. at 0352-0355). The Agency never indicated that the
trust agreements submitted on March 9, 1994, failed to establish a trust for each individual
landfill. J.Exh. A at 2. On January 19, 1996, the Agency stated that there were separate trusts
for each individual landfill and that funds could not be transferred from one trust account to
another without complying with administrative regulations relating to excess funds. J.Exh. A at
2-3.
On February 28, 2001, the Agency issued a single denial letter in response to November
27, 2000, requests by ESG Watts. R. at 0084. In that letter, the Agency refuses to release any
existing financial assurance instrument tendered by ESG Watts including the ESG Watts trust
fund. R. at 0084. The letter indicates that the Agency “in separate actions” has refused to accept
closure insurance policies offered by ESG Watts as substitute financial assurance for Taylor
Ridge/Andalusia landfill and Viola landfill.
Id
. The letter also states that the Agency has
“reason to believe” that the cost for closure/post-closure care at Taylor Ridge/Andalusia landfill
and Viola landfill will be “significantly greater” than the total financial assurance offered by
ESG Watts.
Id
.
STATUTORY AND REGULATORY BACKGROUND
A municipal solid waste landfill (MSWLF) is an area that receives household waste and
may also receive commercial waste. 415 ILCS 5/3.85 (2000). MSWLFs are subject to the
Board’s rules at 35 Ill. Adm. Code Subtitle G, which include requirements for closure and post-
closure care of the units. The rules also require that adequate financial assurance be in place to
insure that if the operator cannot do so, proper closure and post-closure care can be undertaken
without cost to the State. Section 21.1 of the Act provides in part:
2
The hearing officer allowed the filing of the record in this case which incorporates the record
from ESG Watts , Inc. v. IEPA, PCB 01-63,64 (consol.) (Apr. 4, 2002). The record from that
proceeding will be cited as “PCB 01-63, 64 Vol. II. R. at ___” in this proceeding.
5
(a) Except as provided in subsection (a.5), no person other than the State of
Illinois, its agencies and institutions, or a unit of local government shall
conduct any waste disposal operation on or after March 1, 1985, which
requires a permit under subsection (d) of Section 21 of this Act, unless
such person has posted with the Agency a performance bond or other
security for the purpose of insuring closure of the site and post-closure
care in accordance with this Act and regulations adopted thereunder.
(a.5) On and after the effective date established by the United States
Environmental Protection Agency for MSWLF units to provide financial
assurance under Subtitle D of the Resource Conservation and Recovery
Act, no person, other than the State of Illinois, its agencies and
institutions, shall conduct any disposal operation at a MSWLF unit that
requires a permit under subsection (d) of Section 21 of this Act, unless that
person has posted with the Agency a performance bond or other security
for the purposes of:
(1) insuring closure of the site and post-closure care in accordance with
this Act and its rules; and
(2) insuring completion of a corrective action remedy when required by Board
rules adopted under Section 22.40 of this Act or when required by Section
22.41 of this Act.
The performance bond or other security requirement set forth in this
Section may be fulfilled by closure or post-closure insurance, or both, issued by
an insurer licensed to transact the business of insurance by the Department of
Insurance or at a minimum the insurer must be licensed to transact the business of
insurance or approved to provide insurance as an excess or surplus lines insurer
by the insurance department in one or more states. 415 ILCS 5/21.1(a) and (a.5)
(2000).
THE PERMITTING PROCESS
After the Agency’s final decision on a permit is made, the permit applicant may appeal
that decision to the Board. 415 ILCS 5/40(a)(1)(2000). The question before the Board in permit
appeal proceedings is whether the applicant proves that the application, as submitted to the
Agency, demonstrated that no violation of the Act would have occurred if the requested permit
had been issued. Panhandle Eastern Pipe Line Company v. IEPA (Jan. 21, 1999), PCB 98-102;
Joliet Sand & Gravel Co. v. PCB, 163 Ill. App. 3d 830, 833, 516 N.E.2d 955, 958 (3rd Dist.
1987), citing IEPA v. PCB, 118 Ill. App. 3d 772, 455 N.E. 2d 189 (1st Dist. 1983). Furthermore,
the Agency’s denial letter frames the issues on appeal. ESG Watts, Inc. v. IPCB, 286 Ill. App.
3d 325, 676N.E.2d 299 (3rd Dist. 1997).
Section 39(a) of the Act also allows the Agency to impose conditions on permits:
6
In granting permits the Agency may impose such conditions as may be necessary
to accomplish the purposes of this Act, and as are not inconsistent with the
regulations promulgated by the Board hereunder. * * * If there is no final action
by the Agency within 90 days after the filing of the application for permit, the
applicant may deem the permit issued. * * * 415 ILCS 5/39(a) (2000).
Section 40(a)(1) of the Act provides that:
If the Agency refuses to grant or grants with conditions a permit under Section 39
of this Act, the applicant may, within 35 days, petition for a hearing before the
Board to contest the decision of the Agency. 415 ILCS 5/40(a)(1)(2000).
Standard of Review
It is well-settled that the Board’s review of permit appeals of this type is limited to
information before the Agency during the Agency’s statutory review period, and is not based on
information developed by the permit applicant, or the Agency, after the Agency’s decision.
Alton Packaging Corp. v. PCB, 162 Ill. App. 3d 731, 738, 516 N.E.2d 275, 280 (5th Dist. 1987).
However, it is the hearing before the Board that provides a mechanism for the petitioner to prove
that operating under the permit as granted would not violate the Act or regulations. Further, the
hearing affords the petitioner the opportunity “to challenge the reasons given by the Agency for
denying such permit by means of cross-examination and the Board the opportunity to receive
testimony which would ‘test the validity of the information (relied upon by the Agency)’.” Alton
Packaging Corp. v. IPCB, 162 Ill. App. 3d at 738, 516 N.E. 2d at 280, quoting IEPA v. IPCB,
115 Ill. 2d 65, 70 (1986).
Typically, evidence that was not before the Agency at the time of its decision is not
admitted at hearing or considered by the Board. West Suburban Recycling and Energy Center,
L.P. v. IEPA (Oct. 17, 1996), PCB 95-199 and 95-125; Panhandle Eastern Pipe Line Company v.
IEPA (Jan. 21, 1999), PCB 98-102; Alton Packaging Corp. v. PCB, 162 Ill. App. 3d at 738, 516
N.E.2d at 280. Additionally, Section 105.214(a) of the Board’s procedural rules states:
Except as provided in subsection (b), (c) and (d) of this Section, the Board will
conduct a public hearing, in accordance with 35 Ill. Adm. Code 101.Subpart F,
upon an appropriately filed petition for review under this Subpart. The hearing
will be based exclusively on the record before the Agency at the time the permit
or decision was issued, unless the parties agree to supplement the record pursuant
to Section 40(d) of the Act. If any party desires to introduce evidence before the
Board with respect to any disputed issue of fact, the Board will conduct a separate
hearing and receive evidence with respect to the issue of fact. 35 Ill. Adm. Code
105.214(a).
ESG WATTS ARGUMENTS
ESG Watts puts forth two arguments to support its position in this case. First, ESG Watts
argues that the substitute financial assurance for the three landfills for the period
7
January 26, 1999 to January 26, 2001 provided by ESG Watts to the Agency has been approved
by operation of law. Pet. Br. at 5. Second, ESG Watts maintains that the Agency exceeded its
authority in determining that the Agency had reason to believe that the actual closure/post-
closure care costs would exceed the approved costs. Pet. Br. at 9-11. Third, ESG Watts argues
that even if the Agency has the power to withhold release of excess trust funds upon a belief that
the actual costs might be higher than approved costs, the evidence in this matter does not support
such a finding. Pet. Br. at 11-13.
Approval by Operation of Law
ESG Watts asserts that the substitute financial assurance for the three landfills for the
period for January 26, 1999 to January 26, 2001 provided by ESG Watts to the Agency has been
approved by operation of law. Pet. Br. at 5. ESG Watts points out that Section 21.1(e) of the
Act (415 ILCS 5/21.1(e) (2000)) provides that the when the Agency disapproves a “performance
bond or other security” posted pursuant Section 21.1(a) or (a.5), the applicant may “contest the
disapproval as a permit denial pursuant to Section 40 of the Act [415 ILCS 5/40(2000)].” Pet.
Br. at 5. ESG Watts further points out that Section 40(a)(1) of the Act (415 ILCS 5/40(a)(1)
(2000)) provides that if the Agency refuses to grant or grants with conditions a permit under
Section 39 of the Act (415 ILCS 5/39 (2000)) the applicant may appeal to the Board.
Id
. ESG
Watts also points to the language in the Board’s rules which allows the applicant to appeal the
Agency’s refusal to accept financial assurance as a permit denial. Pet. Br. at 6, citing 35 Ill.
Adm. Code 807.605(c).
ESG Watts maintains that Section 39(a) of the Act (415 ILCS 5/39(a)(2000)) requires the
Agency to make permit decisions within 90 days of receipt of an application, and the Agency did
not do so here. Pet. Br. at 5-7. Thus, ESG Watts maintains the financial assurance is approved
by operation of law.
Id
. ESG Watts cites Illinois Power Co. v. IPCB, 112 Ill. App. 3d 457, 445
N.E.2d 820 (5th Dist 1983) and Marquette Cement Manufacturing Co. v. IEPA, 84 Ill. App. 3d
434, 405 N.E.2d 512, 514 to further bolster the argument.
Id
.
ESG Watts maintains that the legislature has “already assessed the risk of administrative
delay and placed the risk squarely on the shoulders of the Agency.” Pet. Br. at 7. Section 39(a)
clearly states that if there is no final decision within 90 days after the filing of the application, the
applicant may deem the permit issued, argues ESG Watts.
Id
. ESG Watts contends that if the
Board were to remand the nondecision to the Agency the Board would be allowing the Agency
to engage in the administrative delay prohibited by Section 39(a) of the Act.
Id
.
The Agency Exceeded its Authority in Determining that the Agency had Reason to Believe
that the Actual Closure/Post-Closure Care Costs Would Exceed the Approved Costs
ESG Watts points out that the Agency’s denial letter frames the issues on appeal. Pet. Br.
at 7-8, citing Pulitzer Community Newspaper, Inc. v. IEPA, PCB 90-142 (Dec. 20, 1990). ESG
Watts maintains that in this case the only issue framed by the denial letter is that the Agency has
reason to believe that the actual cost of closure/post-closure care will be significantly greater
than the approved estimate of closure/post-closure care. Pet. Br. at 8-9.
8
ESG Watts argues that the Board’s rules require the release of excess financial assurance
upon acceptance of substitute financial assurance. Pet. Br. at 9. ESG Watts points out that
Section 807.665 requires the closure/post-closure care policy be issued for a face amount at least
equal to the current cost estimates. Pet. Br. at 10. ESG Watts states that the rule provides that
after closure has been initiated, the operator may seek reimbursement for actual expenditures,
and the Agency will instruct the insurer to make reimbursement unless the Agency has reason to
believe that the actual costs will be significantly greater than the face amount of the policy.
Id
.
ESG Watts argues that the Agency has inappropriately relied upon provisions dealing with
reimbursement for expenditures after closure has been initiated as a denial reason.
Id
.
ESG Watts asserts that the only provisions which allow the Agency to withhold release of
financial assurance based on a “reason to believe” that actual costs might exceed the current cost
estimates are provisions which deal with reimbursements for expenditures after closure has
begun. Pet. Br. at 9. ESG Watts maintains that this authority is absent when dealing with the
release of a financial institution, release of an operator, releasing excess trust funds, and
accepting financial assurance insurance policies in the first place. Pet. Br. at 10-11. ESG Watts
argues that there is good reason for “this dichotomy” in that current cost estimates may be almost
two years old when closure is initiated and matters may be discovered during actual closure that
increases the costs. Pet. Br. at 11. However, prior to the initiation of closure, the Agency must
rely on current cost estimates to determine if excess financial assurance exits. Pet. Br. at 11.
Even if the Agency has the Power to Withhold Release of Excess Trust Funds Upon a Belief
that the Actual Costs Might be Higher than Approved Costs, the Evidence in this Matter
does not Support such a Finding
ESG Watts argues that the Agency’s “reason to believe” that the actual costs would be
higher than the estimated costs was based on the fact that the Taylor Ridge/Andalusia landfill
had to obtain a significant modification permit “pursuant to 35 Ill. Adm. Code 811.100
et seq
.
standards” and the current closure estimates were for a “Part 807” landfill. Pet. Br. at 11-12.
ESG Watts asserts that the Agency’s witness, however did not have any specific knowledge
about the current cost estimate for Taylor Ridge/Andalusia landfill and did not know if the
current cost estimate included “Part 811” requirements already. Pet. Br. at 12. ESG Watts
maintains that the Agency was “guessing” and that is not a legally sufficient “reason to believe”
that the actual costs would be more than the approved cost estimates.
Id
.
AGENCY ARGUMENTS
The Agency puts forth three arguments in support of the Agency’s refusal to release
financial assurance funds and the failure to “approve” financial assurance for the three landfills.
First, the Agency argues that the provisions of Section 39(a) of the Act do not apply to the
approval of financial assurance mechanisms.
Id
. Second, the Agency maintains that the record
supports the Agency’s reason to believe that regardless of the acceptability of the policies, the
trust fund could not be released. Resp. Br. at 23. Finally the Agency asserts that the appeal by
ESG Watts is moot. Resp. Br. at 34. The Board will summarize each of the arguments below.
9
Approval by Operation of Law
The Agency maintains that the substitute financial assurance offered for the three
landfills was not approved by default. Resp. Br. at 14. The Agency argues that the time
limitations of Section 39(a) of the Act (415 ILCS 5/39(a) (2000)) do not apply to Agency
decisions on financial assurance. Resp. Br. at 14. The Agency argues that the time limitation as
set forth in Section 39(a) of the Act applies only to “instances where ‘there is no final action by
the Agency within 90 days after the filing of the application for permit’. (Emphasis supplied).”
Resp. Br. at 14, citing 415 ILCS 5/39(a) (2000). The Agency opines that while certain financial
assurance decisions are appealed to the Board under Section 40(a)(1) of the Act (415 ILCS 5/40
(2000)) “financial assurance mechanisms do not become permits by virtue thereof.” Resp. Br. at
14-15.
The Agency further argues that Part 807 describes permit applications, and financial
assurance mechanisms are not permit applications. Resp. Br. at 15. The Agency maintains that
financial assurance may be required as a condition of a permit, but the financial assurance
mechanisms and the Agency decisions regarding the mechanisms are not permits.
Id
. The
Agency maintains that accordingly the time limitations of Section 39(a) of the Act do not apply
to Agency decisions on financial assurance mechanisms.
Id
.
The Record Supports the Agency’s Reason to Believe that Regardless of the Acceptability
of the Policies, the Trust Fund Could not be Released
The Agency argues that ESG Watts must close the Taylor Ridge/Andalusia landfill
pursuant to Part 811 and at this time approval for a permit to close under Part 811 has not been
issued. Resp. Br. at 24-25. The Agency maintains that just because there is not specific
knowledge of what closure may cost under Part 811 does not mean that there is not a legitimate
reason to believe that the costs will exceed current estimates. Resp. Br. at 25. The Agency
points to the testimony of Chris Liebman who testified to the significantly increased obligation
for closure under Part 811 versus Part 807, as well as increased financial commitment. Resp. Br.
at 25, 26. Furthermore, the Agency asserts that even though Mr. Liebman lacked “intimate
knowledge” of ESG Watts’ closure plan, he was certain that the current plan did not meet the
Part 811 requirements. Resp. Br. at 26.
The Appeal by ESG Watts is Moot
The Agency asserts that the policies tendered by ESG Watts in this case have expired and
were not renewed. Resp. Br. at 35. Therefore, the Agency argues this appeal is moot.
Id
. The
Agency points to Duncan Publishing, Inc. v. City of Chicago, 304 Ill. App. 3d 778, 709 N.E.3d
1281 (1st Dist. 1999) for the definition of when a claim is moot. Duncan states that “a claim is
moot when no actual controversy exits or events occur which make it impossible for a court to
grant effectual relief.” Duncan at 709 N.E.2d 1281, 1285. The Agency argues that ESG Watts
wanted to present the Agency with something of value to fully fund financial assurance
obligations intervening circumstances have rendered the policies worthless. Resp. Br. at 37. The
Agency asserts the Board can therefore no longer offer effectual relief and the appeal is moot.
Id
.
10
The Agency maintains that the principle of financial assurance is to provide security for
potential future costs of closure and post-closure care. Resp. Br. at 38. With insurance coverage
that has expired, this cannot be accomplished and the appeal is moot.
Id
.
DISCUSSION
There are three issues that need to be addressed in this proceeding. The first issue is
whether the Agency’s failure to decide on the substitute financial assurance offered by ESG
Watts results in the financial assurance being acceptable by operation of law. The second issue
is whether the Agency may refuse to release financial assurance based on a reason to believe that
the actual cost of closure/post-closure care will be significantly higher than the cost estimates.
Third, is whether the appeal is moot since the policies have expired. The Board has today
already made a decision on each of these issues in other proceedings involving ESG Watts and
the Agency. See ESG Watts, Inc. (Sangamon Valley)v. IEPA, PCB 01-62
(Apr. 4, 2002) and ESG Watts Inc. v. IEPA, PCB 01-63, 64 (consol.) (Apr. 4, 2002). The Board
will summarize the Board findings in those cases below and then address the remaining issues in
this case.
PCB 01-63, 64 Taylor Ridge/Andalusia Landfill and Viola Landfill
In a separate opinion and order, the Board today affirmed the Agency’s refusal to accept
substitute financial assurance for Taylor Ridge/Andalusia landfill and Viola landfill. In that
opinion and order the Board found that the appeals were not moot even though the terms of the
policies had elapsed. The Board also found no support in the Board’s rules or the Act for the
Agency to withhold funds in excess of current cost estimates because the Agency has a “reason
to believe” the actual costs will exceed the estimates prior to the initiation of closure. As the
Agency’s arguments are the same in this case, the Board will not address these issues further in
this proceeding.
PCB 01-62 Sangamon Valley Landfill
In another separate opinion and order today, the Board considered arguments regarding
whether or not Agency decisions on financial assurance mechanisms are permit appeals. In that
case, the Board did not reach the issue, as the Board found that a decision on the financial
assurance was not necessary. A decision was not necessary because ESG Watts is no longer
owner or operator of Sangamon Valley and therefore ESG Watts need not provide financial
assurance for closure/post-closure care. Thus, the Board must address the issue in this
proceeding.
Does the Agency’s Failure to Decide on the Substitute Financial Assurance Offered by ESG
Watts Result in the Financial Assurance Being Acceptable by Operation of Law?
ESG Watts maintains that the request to approve financial assurance is a permit appeal
and as such is subject to the provisions of Section 39(a) of the Act (415 ILCS 5/39(a) (2000)).
The Agency argues that the Agency’s actions on financial assurance mechanisms are not permit
11
appeals. The Board disagrees. The clear language of the Act and the Board’s rules defines
Agency decisions on financial assurance mechanisms as permit appeals. Therefore, the decisions
on financial assurance mechanisms are subject to Section 39(a) of the Act (415 ILCS 5/39(a)
(2000)).
Section 21.1(e) of the Act provides:
The Agency shall have the authority to approve or disapprove any performance
bond or other security posted pursuant to (a) or (a.5) of the Section. Any person
whose performance bond or other security is disapproved by the Agency may
contest the disapproval as a permit denial appeal pursuant to Section 40 of this
Act. 415 ILCS 5/21.1(e) (2000).
Section 21.1(a.5) of the Act specifically includes insurance policies of the type offered by ESG
Watts in this case as “performance bond or other security” requirement. 415 ILCS 5/21.1(a.5)
(2000). Therefore, the Act clearly anticipates that the refusal to approve a financial assurance
mechanism may be contested as a permit appeal.
Furthermore, Section 807.605(c) (35 Ill. Adm. Code 807.605) of the Board’s rules define
which Agency actions may be appealed as permit denials pursuant to Section 21.1(e) of the Act
(415 ILCS 5/21.1(e) (2000)). Section 807.605(c) includes the refusal to accept financial
assurance tendered by the operator and the refusal to release excess funds as permit appeals.
Thus, the Board’s rules also clearly anticipate that the Agency’s decision on financial assurance
mechanisms is a permit appeal.
As both the Act and the Board’s rules anticipate a permit appeal based on the Agency’s
action regarding financial assurance mechanisms, the Board finds that the request for approval is
a permit application and as such is subject to the provisions of Section 39(a) of the Act (415
ILCS 5/39(a) (2000)). Therefore, the Agency’s failure to act on a permit application within 90
days allows the operator to deem the permit approved by operation of law. It is undisputed that
the Agency’s decision on these applications was not made within 90 days of receipt of the
application. Therefore, ESG Watts may deem the financial assurance approved by operation of
law.
Even though the Board has found that ESG Watts may deem the permit approved, the
Board cannot lawfully direct the release of funds in the ESG Watts trust fund at this time. ESG
Watts is required to maintain financial assurance for the Taylor Ridge/Andalusia landfill and
Viola landfill pursuant to Section 21.1 of the Act (415 ILCS 5/21.1 (2000)). The policies offered
by ESG Watts in this proceeding have expired, so if the Board were to direct the release of the
trust fund ESG Watts would not have financial assurance in place
3
and that would be a violation
of the Act. Therefore, the Board cannot and will not direct the release of the trust fund at this
time.
3
ESG Watts does state in the motion to strike that there are policies in place. Mot.S. at 2.
However, ESG Watts did not include an affidavit to that fact and did that fact is outside the
record in this proceeding.
12
CONCLUSION
The Board agrees that the financial assurance Pollution Liability Policies tendered by
ESG Watts were approved by operation of law. However, the Board cannot and will not direct
the Agency to release the corpus of the trust fund tendered by ESG Watts in February 1985. The
trust fund represents the only financial assurance for the Taylor Ridge/Andalusia landfill and the
Viola landfill and pursuant to Section 21.1 of the Act, the owner or operator of a landfill must
maintain financial assurance. Thus, if the Board were to direct the release of the funds, the
Board would be ordering a step which could place ESG Watts in violation of the law.
ORDER
The Board affirms the Agency’s refusal to release any existing financial assurance
tendered by ESG Watts for the facilities owned by ESG Watts.
IT IS SO ORDERED.
Section 41(a) of the Environmental Protection Act provides that final Board orders may
be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the
order. 415 ILCS 5/41(a) (2000);
see also
35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.
Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois
Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The
Board’s procedural rules provide that motions for the Board to reconsider or modify its final
orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code
101.520;
see also
35 Ill. Adm. Code 101.902, 102.700, 102.702.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above opinion and order on April 4, 2002, by a vote of 6-0.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
