ILLINOIS POLLUTION CONTROL BOARD

Nay 4,

1995

PEOPLE OF THE STATE OF ILLINOIS,)

)

Complainant,

)

v.

)

PCB 94—127

(Enforcement-Land)

JAMES LEE WATTS,

individually

)

and d/b/a WATTS TRUCKING

)

SERVICE,

INC., and ESG WATTS,

)

INC.,

)

Respondents.

THOMAS DAVIS, ASSISTANT

ATTORNEY

GENERAL, APPEARED ON BEHALF OF

PETITIONER;

GREG RICHARDSON, OF ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,

APPEARED ON BEHALF OF PETITIONER;

CHARLES NORTHRUP, OF SORLING, NORTHRUP,

HANNA,

CULLEN,

& COCHRAN,

APPEARED ON BEHALF OF RESPONDENTS.

OPINION

AND

ORDER OF THE BOARD

(by G.

T. Girard):

On April

20,

1994, the People of the State of Illinois by

the Attorney General

(People or complainant)

filed a three-count

complaint alleging that James Lee Watts,

individually, Watts

Trucking Service and ESG Watts Inc. violated various provisions

of the Illinois Environmental Protection Act

(Act) and the

Board’s regulations.

The specific allegations,

concerning two

landfills,

included failure to timely pay fees pursuant to

Section 22.15 of the Act and thereby violating Sections 21(k)

and

(d) (2) of the Act and 35

Ill. Adm. Code 858.401.

The complaint

also alleges that the respondents failed to timely file

significant modification permits in a timely manner and thus

violated Section 21(d) (2)

of the Act and 35 Ill.

Adia.

Code

814.104.

The complainant is seeking revocation of the operating

permits for the two landfills or in the alternative $254,100 in

civil penalties.

On September 26,

1994,

the Board received a motion for

partial summary judgement and then on September 29,

1994, the

Board received a motion to dismiss or in the alternative motion

for summary judgement, both filed by the respondents.

On

September 30,

1994, the Board received complainant’s response to

the first motion and on October 6,

1994, the Board received the

complainant’s response to the second motion.

Finally, on October

14,

1994, the complainant filed a motion for leave to file a

superseding four—count complaint which was granted by the Board

on November

3,

1994.

The superseding complaint realleges the

violations from the April

20 complaint and adds an allegation

---

2

concerning failure to timely revise closure cost estimates.

(~

35 Ill.

Adin. Code 807.623.)

Hearing was held on November 21,

1994 before the Board’s hearing officer Deborah Frank,

in

Springfield,

Sangamon County,

Illinois.

Members of the public

attended the hearing; however, no members of the public wished to

testify at the hearing or to make

a statement.

Complainant’s brief was filed on December 20,

1994 and the

reply brief was filed on January 20,

1995.

Respondents’ brief

was filed on January 9,

1995.

On February 22,

1995 complainant filed a motion to

supplement the record and on February 28,

1995, complainant filed

a revised motion to supplement the record.

Respondents have

responded to both filings

(March

1,

1995 and March

7,

1995).

The

Board will grant the revised motion to supplement the record as

the filings address the landfills’

current status regarding

compliance.

For the reasons enunciated within this opinion,

the Board

finds that respondent,

ESG Watts,

Inc.,

violated Sections 21(k),

21(o) (11) and

(d) (2)

of the Act and 35

Ill. Adm. Code 807.623,

858.401 and 814.104.

The Board will not revoke the operating

permits as requested by the complainant; however,

for these

violations the Board will impose a penalty of sixty thousand

dollars

($60,000)

BACKGROUND

Respondent,

ESG Watts,

Inc.

(ESG Watts)

is

a wholly owned

subsidiary of respondent,

Watts Trucking Service,

Inc.

(Watts

Trucking).

(Compi.

Br.

at

1;

Resp.

Br. at 4; Tr.

at

176.)’

James Lee Watts

(James Watts)

is the sole shareholder of Watts

Trucking and is the president of both companies.

(Coinpl.

Br. at

1; Resp.

Br. at 4;

Tr.

at 103.)

ESG Watts owns and operates the

Taylor Ridge Landfill

in Rock Island County which was permitted

in 1972.

(Compi.

Br.

at

1;

Resp.

Br.

at

4;

Tr. at 176.)

ESG

Watts also owns and operates the Sangamon Valley Landfill in

Sangamon County which has been permitted since

1980.

(Compl.

Br.

at

1; Resp.

Br.

at 4.)

These two facilities are the subject of

the violations alleged in the complaint.

The superseding complaint filed October

14,

1994, will be

cited as “Compl.

at

_“;

the hearing transcript will be cited as

“Tr. at

“;

the complainant’s exhibits will be cited as “Compi.

Exh.

—

at

_“;

the complainant’s brief will be cited as “Compl.

Br. at

_“;

the respondent’s brief will be cited as “Resp.

Br. at

“;

and the complainant’s reply brief will be cited as “Compl.

RBr.

at

---

3

The Taylor Ridge Landfill was purchased in

1971 or 1972 by

ESG Watts.

(Tr. at 176; Resp.

Br.

at 4.)

Taylor Ridge serves

primarily the Rock Island area and covers an area of

approximately 60 acres.

(Tr.

at 150;

Resp.

Br. at 4.)

Taylor

Ridge is permitted to accept both solid and special wastes.

(Id.)

At the current rate of disposal Taylor Ridge has capacity

for approximately five years remaining.

(Id.)

The Sangamon Valley landfill is located on the north edge of

Springfield .and has been accepting waste since approximately

1981.

(Tr. at 138;

Resp.

Br.

at 4.)

Sangamon Valley is the only

landfill in Sangamon County and it serves Springfield and the

surrounding communities as well as Menard and Cass Counties.

(Pr. at 139; Resp.

Br.

at 4—5.)

Sangamon Valley consists of

three “areas” only one of which has accepted waste.

(Resp.

Br.

at

5.)

The area which has accepted waste is approximately 27

acres

in size while the two remaining areas are slightly larger.

(Id.)

A portion of the second area has been designed and

constructed; however, no operating permit has been issued.

(Tr.

at 185; Resp.

Br. at 5.)

Sangamon Valley is currently accepting

waste only from non—commercial haulers and has an estimated

capacity of 40—50 years.

(Tr. at 192-193; Resp.

Br.

at 5.)

COMPLAINT

The October 14,

1994 superseding complaint contained four

counts alleging violation.

In general, the complaint alleged

that respondents failed to timely file

a request for significant

modification of the permits for the two landfills as well as

failed to timely file quarterly reports and the fees due the

state.

Finally, the complaint alleges that the respondents

failed to timely revise the closure cost estimates for the

facilities.

More specifically, Count

I alleged violation of

Sections 21(0) (11),

21(k)

and 21(d) (2)

of the Act and 35 Ill.

Adm. Code 858.401(a)

of the Board’s regulations.

Count II

alleged violation of Section 2l(d)(2)

of the Act and

35 Ill.

Adm.

Code 814.104.

Count III alleges “respondents, individually and

collectively, have violated the requirements and prohibitions of

the Act, the Board’s rules and regulations including 35

Ill.

Adm.

Code Part 807, and the terms and conditions of the permits” as to

Taylor Ridge and Sangamon Valley.

Lastly,

Count IV alleges

violation of

35 Ill.

Adin.

Code 807.623.

STATUTORY AND REGULATORY FRAMEWORK

Section 21 of the Act provides in pertinent part:

No person shall:

***

d.

Conduct any waste storage, waste—treatment,

or waste—

disposal operation:

---

4

1.

Without a permit granted by the Agency or in

violation of any conditions imposed by such permit

or

2.

In violation of any regulations or standards

adopted by the Board under this Act;

***

k.

Fail or refuse to pay any fee imposed under this Act.

***

o.

Conduct a sanitary landfill operation which is required

to have a permit under subsection

(d)

of this Section

in a manner which results in any of the following

conditions:

***

11.

failure to submit reports required by permits or

Board regulations;

***

13.

failure to submit any cost estimate for the site

or any performance bond or other security for the

site as required by this Act or Board rules.

(415

ILCS 5/21.)

Section 22.15 of the Act provides,

in pertinent part:

b.

On and after January

1,

1987,

the Agency shall assess

and collect a fee in the amount set forth herein from

the owner or operator of each sanitary landfill

permitted or required to be permitted by the Agency to

dispose of solid waste

if the sanitary landfill

is

located off the site where such waste was produced and

if such sanitary landfills owned,

controlled,

and

operated by a person other than the generator of such

waste ~einphasisadded.

(415 ILCS 5/22.15)

The Board’s rules at

35 Ill.

Adm. Code 807.623 state:

a)

The operator must revise the current cost estimate at

least once every two years.

The revised current cost

estimate must be filed on or before the second

anniversary of the filing or last revision of the

current cost estimate.

b)

The operator must review the closure and post—closure

care plans prior to filing

a revised cost estimate in

order to determine whether they are consistent with

current operations and regulations.

The operator must

either certify that the plans are consistent,

or must

file an application reflecting new plans.

c)

The operator must prepare new closure and post—closure

cost estimates reflecting current prices for the items

---

5

included in the estimates.

The operator determines

that there are no changes in prices

emphasis

added).

35

Ill. Adm. Code 814.104 provides:

a)

All operators of landfills permitted pursuant to

Section 21(d)

of the Act cite

omitted)

shall file an

application for a significant modification to their

permits for existing units,

unless the unit will be

closed pursuant to Subpart E within two years of the

effective date of the Part.

b)

The operator of an existing unit shall submit

information required by

35 Ill.Adm. Code 812 to

demonstrate compliance with Subpart B,

Subpart C or

Subpart

D, which ever is applicable.

c)

The application shall be filed within 48 months of the

effective date of this Part,

or at such earlier time as

the agency shall specify

in writing pursuant to 35 Ill.

Adm. Code 8—7.209 or 813.201(b).

d)

The application shall be made pursuant to the

procedures of

35 Ill.Adm. code 813 emphasis

added.

35

Ill.

Adm. Code 858.401(a)

states:

Payment for the fee due under Section 22.15 of the Act shall

be made on a quarterly basis with the submission of the

Quarterly Solid Waste Summary.

Such payment shall

be

received by the Agency on or before April

15, July 15,

October 15 and January

15 of each year and shall cover the

three calendar months preceding the receipt date.

VIOLATION

The respondents state in their brief:

The violations alleged in the Amended complaint are not

contested.

Respondents do not dispute that certain

reports and fees,

the significant modification permit

applications for both Taylor Ridge and Sangamon Valley,

and the biennial cost revisions for Sangamon Valley

were not timely submitted.

However, Respondents have

now complied with all these requirements.

(Resp.

Br.

at 5.)

Respondents further state they “have never sought to avoid their

obligation under the Act or to conceal their noncompliance”.

(Resp.

Br. at 2.)

Thus, respondents have admitted the violations

alleged in the amended complaint.

---

6

Respondents do argue that only respondent ESG Watts should

be held liable for the violations as alleged and that the

imposition of liability on James Watts or Watts Trucking is not

warranted either factually or legally.

(Resp. Br at 15 and 21.)

In support of this position, respondents argue that neither James

Watts nor Watts Trucking is an owner or operator of either

landfill at issue.

(Id.)

Respondents argue that the complainant

must “pierce the corporate veil”

to impose liability on James

Watts or Watts Trucking and none of the necessary elements are

found

in this proceeding.

(Resp.

Br.

at

16 and 22.)

Complainant lists

15 factors that complainant believes the

Board should consider regarding the issue of liability of James

Watts and Watts Trucking.

(Compl. RBr. at 6-7.)

The list

includes the fact that James Watts

is the sole stockholder and

corporate president for both ESG Watts and Watts Trucking

(Compl.

RBr. at 6),

as well as the fact that ESG Watts “does not directly

receive revenue for the disposal of waste at the landfills

(Tr.

at 118)”.

(Coinpl. RBr. at 7.)

The Board finds that there is insufficient information in

the record to hold Watts Trucking and James Watts personally

liable for the violations alleged

in the instant matter.

The

alleged violations all deal with failure to timely file reports,

fees,

permits or closure cost revisions.

All of these are the

responsibility of the owner or operator of the landfill as

explicitly stated in the applicable statute or regulation.

The

record in the instant proceeding before the Board indicates that

ESG Watts and not James Watts

or Watts Trucking

is the owner and

operator of the Sangamon County and Taylor Ridge landfills

(Compl. Br.

at

1; Resp.

Br. at 4; Tr.

at 176) Therefore,

considering the instant record,

ESG Watts

is solely responsible

for filing all reports,

fees,

permits and closure cost revisions

under the Act and the Board’s regulations.

The record also indicates that James Watts,

acting as

president of ESG Watts, did not make decisions regarding the

operations of the landfills in isolation.

(Resp.

Br. at 18; Tr.

at 103,

110, and 115.)

Further, the record does not show that

ESG Watts is insolvent or that any injustice or fundamental

unfairness exists that requires imposition of liability on either

James Watts or Watts Trucking.

The Board finds that respondent,

ESG Watts violated Sections

21(k),

21(o) (11) and

(d) (2)

of the Act and

35

Ill. Adm. Code

807.623,

858.401 and 814.104

as alleged by all four counts of the

supplemental complaint.

Thus, the only issue which remains for

the Board

is to determine the appropriate remedy.

---

7

PENALTY

Having found violation,

the Board must now determine the

penalty to be assessed.

In determining the appropriate civil

penalty, the Board considers the factors set forth in Sections

33(c)

and 42(h)

of the Act.

(People

v. Berniece Kershaw and

Darwin Dale Kershaw d/b/a Kershaw Mobile Home Park, (hereinafter

Kershaw) PCB 92-164

(April 20,

1994); IEPA

V.

Allen Barry,

individually and d/b/a Allen Barry Livestock, (hereinafter Barr~~

PCB 88—71,

111 PCB 11 at 72

(May 10,

1990).)

The Board must take

into account factors outlined

in Section 33(c)

of the Act in

determining the unreasonableness of the alleged pollution.

(Wells Manufacturing Company v. Pollution Control Board,

73

Ill.2d 226,

383 N.E.2d

148

(1978).)

The Board

is expressly

authorized by statute to consider the factors in Section 42(h)

of

the Act in determining an appropriate penalty.

In addition, the

Board must bear in mind that no formula exist,

and all facts and

circumstances must be reviewed.

(Kershaw,

supra,

at

14; Barry

supra,

at

62-63.)

The Board has stated that the statutory maximum penalty “is

a natural or logical benchmark from which to begin considering

factors in aggravation and mitigation of the penalty amounts”.

(Barry,

supra

at 72.)

The formula for calculating the maximum

penalty is contained in Section 42(a)

and

(b)

of the Act

(415

ILCS 5/42(a)

and

(b)

(1992)).

Section 42(a) provides for a civil

penalty not to exceed $50,000 for violating a provision of the

Act and an additional civil penalty not to exceed $10,000 for

each day during which the violation continues.

The total maximum

penalty which could be assessed against ESG Watts

is over twenty-

five million dollars.

The complainant requests that the

operating permits for the two landfills be revoked or in the

alternative requests an imposition of civil penalties in the

amount of $254,100 and an order directing respondents to cease

and desist from further violations.

(Compi.

Br. at 18.)

Section 33(c)

Factors

Section 33(c)

sets forth five factors which the Board must

consider in making its determinations:

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;

---

8

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.

Section 33(c)(1)

(Degree of Injury)

The complainant argues that two circuit court cases

(91—CH—

242; Compl.

Exh.

7

(Zappa)

and 92-CH—23; Compl.

Exh.

9

(Cadagin))2 in which respondents have been a party are pertinent

to this inquiry.

(Compl.

Br. at

14.)

Complainant maintains that

because the findings in those previous cases included potential

environmental harm,

the “Board ought to find that some of the

past violations have unreasonably interfered with the enjoyment

of life by the adjacent property owners.

.

.“.

(Id.)

The respondents argue that the violations,

in the instant

matter, did not result in any injury or interference with the

protection of the health, general welfare and physical property.

(Resp.

Br. at 23-24;

Tr.

at 200.)

Respondents further maintain

that the findings of the circuit court in the Zappa and Cadagin

cases are not relevant to a determination of the effect these

violations may have on the environment.

(Resp.

Br. at 24.)

The Board finds that the consideration of this factor

mitigates the violations.

The two circuit court cases cited by

the complainant are more properly considered in the context of

the penalty factor found at Section 42(h)(5)

of the Act

(previously adjudicated violations).

The violations as alleged

in this matter do not assert any discharges or emissions of

pollutants to the environment has occurred.

Rather,

the

violations for failure to timely file quarterly reports and fee

payments are mechanisms by which the Agency and the Board monitor

landfills and operators in the State.

The Board notes that the

failure to timely file the biennial closure revision and the

failure to file significant permit modification permit

applications could have resulted in environmental harm

~

2

The record indicates that in the Cadagin matter a

preliminary injunction was entered against ESG Watts and Watts

Trucking in September of 1992.

The injunction was for activities

at the Taylor Ridge Landfill.

In February 1994, Judge Zappa

declined to permanently enjoin operations at the Sangamon Valley

landfill and found that respondents had “made reasonable efforts

to abate violations”.

(Exh.

7 at

2.)

However, Judge Zappa did

issue a total penalty of $350,000 against respondents

(the Zappa

matter is on appeal).

---

9

Eeople v. Freedom Oil,

PCB 93-59,

(May

5,

1994) (appeal pending));

however in this case no environmental harm has been established.

Section 33(c)(2),

(c)(3)

and

(c)(4)

(Value, Suitability and

Reasonableness)

The complainant states that the landfills have value as long

as the operations comply with all applicable requirements.

(Compi. Br.

at 14.)

Complainant maintains that the request to

revoke the operating permits of respondents

is made to “prohibit

respondents from operating the landfills rather than to

completely prohibit the operation by other more responsible

parties”.

(Id.)

The complainant also states that the

suitability of the source to the location is

“a moot point for

the purposes of the relief requested”.

(Id.)

Complainant argues

that the Board “ought to find that compliance with the applicable

requirements would reduce or eliminate the emissions,

discharges

or deposits resulting from the landfills and that such compliance

is both technically practicable and economically reasonable”.

(Compl.

Br.

at 14-15.)

Respondents point out that the complainant concedes the

social and economic value of the source as well as the

suitability of location.

(Resp.

Br.

at 25.)

The respondents

also argue that the issue of technical practicability and

economical reasonableness are not relevant to this query.

(Id.)

The Board finds that the consideration of the social and

economic value of the facilities favors ESG Watts as does the

suitability of location.

The Board also finds that consideration

of technical practicability and economic reasonableness must

weigh against ESG Watts as compliance with these requirements is

technically practicable and economically reasonable.

Section 33(c) (5)

(Subsequent Compliance)

Complainant concedes that the respondents have subsequently

complied with the provisions of the Act and Board regulations

which were violated.

However, Complainant asserts that the

“subsequent compliance must be put into perspective”.

(Conipl.

Br.

at 15.)

For example, respondents were specifically under

court orders which required the timely payment of solid waste

fees by certified check.

(Id.)

Also,

the original complaint in

this action was filed on April 20,

1994 and respondents failed to

timely file reports and pay fees due April

15 and July 15,

1994.

(Id.)

For these reasons, complainant recommends that the Board

find that “any subsequent compliance is outweighed by the

intentional nature of the violations”.

(Id.)

Respondents also point out that they are now in compliance

with the requirements.

(Resp.

Br.

at 26.)

Further, respondents

argue that they have made “good faith efforts to come into

---

10

compliance with the significant modification and cost revision

requirements long before the original complaint was filed”.

(Id.)

The Board has noted in previous cases that “the

courts

have found evidence of the presence or absence of good faith to

be a very significant determinant of a penalty.

.

.

Good

faith has

been inferred from behavior which reflects diligence and which is

reasonably directed towards the goal of achieving compliance.

The acceptable efforts have included hiring engineers to find a

cure for pollution, attempting to secure permits,

installing

pollution control equipment at considerable expense, and

abandoning offensive practices altogether.”

(~,

People v.

Kershaw, PCB 92—164

(April 20,

1995)

citing Illinois EPA v. Allen

Barry,

PCB No. 88-71,

p.

35

(May

10,

1990)

citing City of Chicago

v. Illinois Pollution Control Board,

57 Ill.App.3d 517,

373

N.E.2d 512

(1st Dist.

1978); Harris-Hub Company.

Inc.

v. Illinois

Pollution Control Board,

50 Ill.App.3d 608,

365 N.E.2d 1071

(1st

Dist.

1977); Midland v.

Illinois Pollution Control Board,

119

Ill.App.3d 428,

456 N.E.2d 914

(4th Dist.

1983); and Modine

Manufacturing Company v. Pollution Control Board,

193 Ill.App.3d

643,

549 N.E.2d 1379

(2nd Dist.

1990).)

The Board finds that consideration of subsequent compliance

factors against ESG Watts.

ESG Watts

is currently in compliance;

however, compliance with some of the violations only occurred

after the filing of this complaint.

In fact,

ESG Watts failed to

comply with fee payment schedules after the filing of this

complaint.

The Board does not believe that such actions exhibit

“good faith”.

Section 42(h)

Factors

Section 42(h)

of the Act sets forth factors to be considered

in determining the appropriate amount of the civil penalty.

Those factors are:

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 the

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 requirements;

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

---

11

5.

the number, proximity in time, and gravity of

previously adjudicated violations of this Act by the

violator.

Section 42(h)(1)

and

(h) (2) (Duration, Gravity and Due Diligence)

The complainant argues that an “imposition by the Board of a

further civil penalty is not being sought for prior violations”.

(Conipl. Br.

at 16.)

However, the complainant states:

“In light

of the duration and gravity of the new violations,

and of the

past violations,

the Board would be justified in enhancing the

penalty.”

(Id.)

The complainant asserts that the duration of

the “new” violations range from 20 days to sixteen and a half

months and the gravity of the violations is “heightened by the

obvious disregard of the respondents for the regulatory system in

general and the Agency’s fee collection and permitting programs

in particular”.

(Id.)

The complainant argues that respondents have not exercised

due diligence and asks that the Board find that the absence of

due diligence is a factor in aggravation of the penalty.

(Compl.

Br.

at 17.)

Complainant maintains that the eventual submissions

of fee payments, waste summaries,

and permit applications are not

relevant to the inquiry of due diligence; rather, the attempts,

if any, to meet the specific deadlines would be the relevant

inquiry.

(Id.)

The respondents state that the duration of the fee and

report violations

is not disputed.

The respondents do not

dispute the duration of the violations for failure to timely

submit the significant modification permit or the submission of

the closure revision.

(Resp.

Br. at 28.)

Further the

respondents argue that the fee and report requirements are in the

“general mechanism by which the State collects revenue” and the

“State has now collected all the revenue that is due” from the

respondents.

(Resp.

Br.

at 27.)

With regard to the failure to

timely submit the significant modification permit applications,

the respondents maintain that the purpose for those submittals

has been served and the gravity of “missing the Agency’s

unilaterally imposed call-in date is also low”.

(Resp.

Br.

at

28.)

Respondents state:

Although Respondents admit that certain payments were not

timely made, given the vast array of economic and business

pressures noted above, they request the Board to determine

that they have been diligent in meeting fee obligations.

(Resp.

Br. at 29.)

---

12

Respondents go on to state that some of the problems in paying

the fees were “occasioned by Respondents own

‘cash—flow’

problems”.

(Resp.

Br.

at 30.)

The Board finds that these factors should aggravate the

penalty in this matter.

ESG Watts violations were on-going for

several months and some violations occurred after the initial

filing of this complaint.

Further, respondents admit that they

knew they were in violation and made business choices to not

timely file.

An “intention” to comply and not “hiding” failure

to comply do not constitute diligence or good faith on the part

of ESG Watts.

Quite the contrary, such factors illustrate the

blatant noncompliance of ESG Watts.

Section 42(h) (3) (Economic Benefits)

The complainant does not delineate specific economic

benefits which respondents have accrued by failing to comply with

the Act and Board regulations.

However, complainant does suggest

that the Board consider that respondents have put the cost of

compliance at the bottom of the list and have avoided the cost of

compliance until after the filing of this enforcement action.

(Compl.

Br.

at 17.)

Respondents assert that they did not obtain economic benefit

from the failure to timely submit reports and fees.

Further

according to the respondents, “compliance has not been avoided

but rather has been achieved by the submittal of the required

payments.”

(Resp.

Br.

at 31.)

Mr. Watts testified that:

Q.

Mr.

Davis)

..

.My question to you,

though,

is economic

use of money, whatever other term you want to apply, having

the money for use deferring the payment

is not an economic

benefit in your regard?

A.

Mr.

Watts

The payments were deferred because of cash

flow problems, not because of personal desire to just not

pay it.

Q.

But payment

sic

were deferred?

A.

Payment

sic)

were deferred because of cash flow

problems,

yes.

Q.

And you decided to defer the payment?

A.

I would say that on some occasions,

yes.

---

13

Q.

On this occasion, fourth quarter ‘93

it was due January

15.

You deferred

it until October,

and you decided to do

that, did you not?

A.

If

I didn’t someone directly under me did yes.

We put

things in some order of relevance.

If it was a matter

whether to make payroll or pay a fee on time or if there was

barely enough money to make payroll

or,

say, but fuel or

equipment or to do what we deemed to be first order of

business,

like burying the waste and operating the site,

then yes, possibly we paid those things first.

(Tr. at 115—116.)

Further Mr. Watts stated:

Q.

(Mr.

Davis) Now, these three fee payments totalled over

$210,000, and you’re suggesting that cash flow problems have

prevented you from making payment until October

24,

1994?

A.

Mr.

Watts

Yes, that’s exactly true,

that’s correct,

yes.

It fluctuates from time to time.

We are not a public

company as some of the large companies nor are we a

municipality.

In many cases other landfills are run by municipalities or

public companies, and our cash flow situation is

a little

bit different.

We are a small company and sometimes a

struggling small company as cash flows.

Q.

But during this time period you were presumably and

correct me if I’m wrong, collecting your salary.

A.

Pardon me, sir?

Q.

You mentioned you had to make payroll, and you were on

that payroll, were you not?

A.

Yes,

sir.

Q.

So, basically a business decision, was it not, whether

to pay the State of Illinois or to make other expenditures?

A.

It was

a business decision because of cash flow,

yes.

(Tr. at 119—120.)

The Board finds that the economic benefits accrued by ESG

Watts was substantial.

ESG Watts made decisions whereby other

business payments were made while the fees due to the State of

Illinois were not paid.

Those payments included paying Mr. Watts

a salary of over $300,000 while deferring payment of fees due to

---

14

the State of Illinois.

(Tr.

at 119-120;

Coinpl.

Br.

at 2.)

In

effect, ESG Watts was using money which rightfully belonged to

the State of Illinois to pay their expenses.

Further,

by putting

off the filing of the significant modification permit

applications, ESG Watts was able to avoid the expenditures

involved in hiring experts to prepare the applications and

benefited economically from such decisions.

Therefore, this

factor substantially aggravates the penalty to be assessed and

the Board will factor economic benefits of noncompliance3 into

the penalty calculation where appropriate.

Section 42(h) (4)

(Deterrence)

The complainant is seeking revocation of the operating

permits.

Therefore,

complainant maintains that “in a sense this

request for relief indicates that no amount of monetary penalty

is expected to actually deter further violations”.

(Compl.

Br. at 18.)

Complainant argues that respondents “have

demonstrated not only their inability to comply with the

applicable requirements but also their unwillingness to do so”.

(Id.)

The complainant does suggest a penalty of $254,100,

if the

Board determines that permit revocation

is not appropriate.

(Id.)

The penalty is based upon a $500 fine per violation per

day.

(Id.)

The complainant also asks that the penalty be

apportioned among the three respondents.

(Compl.

Br.

at 21.)

Respondents maintain that no monetary penalty

is needed to

deter future violations by respondents.

(Resp.

Br.

at 31.)

Respondents assert that compliance has been achieved for all the

violations alleged in the amended complaint.

(Resp.

Br. at 31.)

Respondents maintain that some violations have been beyond

respondents’ control

(Resp.

Br.

at 32) and argue that permit

revocation is not necessary if the respondents can achieve

significant modification permits from the Agency for their

operations.

(Resp.

Br.

at 32.)

Respondents argue that since

they are now in compliance,

there

is no need to impose a penalty

to deter future violation.

(Resp.

Br.

at 31.)

Respondents have made business decisions not to comply in

the past with the Act and Board regulations; therefore, the Board

believes a penalty is necessary to deter future violations.

The

Board will assess a penalty which will dissuade ESG Watts from

~

The economic benefit of noncompliance can be calculated

based on the formula in the Barry opinion

(supra).

The formula

is based on the precept that the cost savings of delayed

compliance must take into account the time—value of money.

An

interest rate factor can be used to calculate an economic savings

or benefit from not spending capital or from not borrowing funds.

(Barry,

supra.,

at 77.)

---

15

such future business decisions which result in violations.

Finally,

as previously stated,

only ESG Watts will be held liable

for the penalty assessed in this proceeding.

Section 42(h)(5)

(Previously Adjudicated Violations)

Complainant asserts that:

there are four distinct categories in sources of previously

adjudicated violations:

1) the nineteen administrative

citations,

one of which the respondents failed to pay for

two and a half years

~

Compl.

Br.

at 13);

2) the fourteen

prior fee payment violations proven at hearing

in this

action;

3) the several violations found by Judge Cadagin as

grounds for the entry of a preliminary injunction regarding

Taylor Ridge;

and 4)

the numerous occasions of noncompliance

considered by Judge Zappa in granting the judgement order in

favor of the People in the Sangamon Valley Case.

(Compl.

Br. at 21—22.)

Complainant argues that this past record indicates a propensity

of respondent to ignore the applicable requirements,

as well as

inability and unwillingness of respondents, to comply with

requirements.

(Compl Br.

at 22.)

Respondents maintain that the complainant

is attempting to

relitigate the two circuit court matters in this proceeding.

(Resp.

Br. at 33.)

Respondents argue that the one case is on

appeal and therefore the findings should not be considered as

those findings are not final.

(Id.)

Further, the second matter

is also not final

in that the order entered by the circuit court

is a preliminary injunction and thus controverted facts have not

been decided.

(Resp.

Br.

at 34-35.)

The Board agrees with complainant that the history of

adjudicated violations against ESG Watts indicates that a high

penalty is warranted in this case to deter future violations.

Nineteen administrative citations have been issued by the Board

for violations at the Taylor Ridge and Sangamon Valley landfills.

(Compi.

Br. at 13.)

Judicial orders in the Zappa case

(Exh.

7)

and Cadagin case

(Compl.

Exh.

9)

have been entered into the

record in this case.

The Zappa decision did find violations of

the Act over three years on twelve counts at Sangamon Valley

landfill

(Compl.

Exh.

7 at

1), which would point to a higher

penalty.

However, Judge Zappa’s order also found that the

respondent had “made reasonable efforts to abate violations cited

by the People”.

(Compi.

Exh.

7 at p.2 para.

5.)

This finding by

Judge Zappa would mitigate against the Board ordering the most

severe penalty in this case (which would be revocation of the

operating permits).

Judge Cadagin’s preliminary injunction order

found numerous violations of the Act at the Taylor Ridge landfill

(Compl.

Exh.

9), which aggravates the penalty

in the instant

---

16

case.

However, Judge Cadagin also ordered that “the

facility

is to remain open until further order of the court”

(Compl. Exh.

9 at 2), which also mitigates against the Board imposing the most

severe penalty (revocation of operating permits).

Penalty Calculation

First, the Board will not revoke the operating permits of

ESG Watts.

The Board finds that the record in this proceeding

simply does not warrant such an extreme penalty.

The violations

alleged and admitted in this case have caused no environmental

damage nor has the failure to comply threatened the general

public welfare.

(Tr. at 200.)

In fact,

no damage can be

attributed to the failure to comply.

(~,

Freedom Oil

supra.)

Therefore,

revocation of an operating permit

is not warranted.

The Board will assess a penalty sufficient to deter future

violations and to cancel any economic benefit ESG Watts may have

enjoyed.

The Board will first assess a penalty for the late

filing of fees.

Respondents admit that the failure to timely

file the

fee payments was a “cash—flow” problem and business

decision.

(Tr.

at 115—116,

119-120 and 178.)

Further, James

Watts testified that other bills including his own salary were

being paid during the time that the fee payments were late.

(Tr.

at 119—120.)

Therefore, to deter future violations,

the Board

will assess a penalty which removes the financial incentives to

delay paying fees owed to the State of Illinois and thereby avoid

the time—costs of money.

For the purpose of assessing a penalty, the Board will first

assume that ESG Watts could have borrowed funds at an annual

interest rate of 10

per annum to timely pay the fees to

Illinois.

To deter the respondent from future violations, the

Board will add an additional

10

interest per annum as a

disincentive to the late payment of fees in violation of the Act

and Board regulations.

In summary, a total penalty of 20

interest per annum is necessary to remove the economic incentive

for late payments and to deter future violations.

The penalty for the six late payments can then be calculated

by multiplying the amount of the fee, by the length of time the

fee was late at an annual interest rate of twenty percent

(20).

The penalty calculation for each of the six late fee payments is

given

in the tables below

(rounded to approximate figures):

Sangamon Valley

1993 fourth qtr fees

($55,829)

96 days late

$

2,800

1994 first qtr fees

($51,671)

152 days late

4,300

1994 second qtr fees

($36,631)

61 days late

1,200

---

17

Taylor Ridge

1993 fourth qtr fees

($86,861)

282 days late

13,000

1994 first qtr fees

($57,609)

192 day late

5,800

1994 second qtr fees

($65,631)

101 days late

3,300

Rounded

Penalty Total

$30,000

(See Coinpi. Br.

at 4-8.)

In addi.tion to late filing of the fees for the above

timeframes,

ESG Watts failed to timely file six quarterly

reports.

These reports are

a necessary regulatory requirement

which allow the state to monitor landfills not only for

compliance with the Act and Board regulations but also for

capacity.

In addition, ESG Watts did receive economic benefit by

not expending the funds to timely prepare and file these reports.

The Board will take into account the fact that ESG Watts

is

currently in compliance.

Therefore, the Board finds that a flat

penalty of two thousand five hundred dollars

($2,500)

for each

failure to file a report on time would be appropriate.

The Board

notes that this assessment is only five percent of the statutory

maximum penalty of fifty thousand dollars

($50,000) per

occurrence with no additional penalty for each day ESG Watts was

not

in compliance.

Therefore, the penalty the Board will assess

for these six violations will be a total of fifteen thousand

dollars

($15,000).

The failure to timely file the two significant modification

permit applications

is a substantial violation.

The Board

regulations require all existing landfills to either file the

significant modification permit application or begin closure.

(35 Ill.

Adm. Code 814.104(a).)

Thus,

ESG Watts’

landfills have

continued to operate while other landfills in the state have

either timely submitted permit applications or begun to close.

This factor results

in an economic benefit to the respondent.

The Board notes as mitigating factor that ESG Watts has filed the

two permit applications and is continuing to pursue those

applications before the Board and Agency.

(~g,Motions and

responses filed 2/22/95,

2/28/95 and 3/1/95,

2/7/95

infra

p.

2..)

The Board finds that a five thousand dollar

($5,000)

penalty for

each violation with no additional penalty for each day of

noncompliance

is warranted.

The total penalty the Board will

assess for these two violations is therefore ten thousand dollars

($10,000).

Finally,

ESG Watts failure to timely file the biennial

closure revision benefited the respondent

in at least two ways.

First,

ESG Watts was able to delay paying an expert to perform

the review and secondly ESG Watts was not required to revise the

funds.

The Board will consider the fact that ESG Watts is

presently in compliance,

but will assess a penalty to deter

future violations.

The Board finds that a penalty of five

---

18

thousand dollars

($5,000)

is appropriate for failure to timely

submit the biennial review.

In summary,

the Board finds that a monetary penalty is

necessary to deter future violations by ESG Watts.

Therefore,

the Board will assess a total penalty of sixty thousand ($60,000)

dollars against ESG Watts for violations of the Act and Board

regulations.

This penalty has been determined using the factors

enunciated in Sections 33(c)

and 42(h)

of the Act, and

considering all pertinent facts and circumstances in the record.

ATTORNEY FEES

Section 42(f)

allows the Board to assess attorney’s fees in

cases where a person “has committed a wilful, knowing or repeated

violation of the Act”.

(Section 42(f)

of the Act.)

By the

respondents own admissions these violations were wilful, knowing

and repeated.

Therefore the Board finds that assessment of

attorney’s fees is proper.

Complainant maintains that the total

time expended on this preceding was forty-one and a half hours,

which

is supported by the affidavit of Mr. Thomas Davis.

Complainant asks that an hourly rate of $120 be charged.

The Board notes that attorney’s fees

in the People’s

affidavit are charged at rates above the reasonable rate of $100

per hour as determined in a prior Board opinion.

(See,

People

v.

Freedom Oil (May

6,

1994)

PCB 93-59,

Stip.

Op. at 11 and

supplemental opinion, People

v.

Freedom Oil

(June

6,

1994) PCB

93—59.)

However, the $120 rate includes all reasonable costs

such as certified mailings and word processing.

Therefore, the

Board finds these costs to be reasonable and will award the

Office of the Attorney General four thousand nine hundred eighty

dollars

($4,980).

ESG Watts will be ordered to pay this sum to

the Hazardous Waste Fund,

created

in Section 22.2 of the Act,

as

required by Section 42(f)

of the Act.

CONCLUSION

The Board finds that respondent ESG Watts violated Sections

21(k), 21(o) (11) and (d)(2)

of the Act and 35

Ill.

Adm.

Code

807.623, 858.401 and 814.104 as alleged by all four counts of the

supplemental complaint.

The record indicates that ESG Watts did

so knowingly and wilfully.

Further,

the record establishes that

ESG Watts accrued substantial economic benefit as a result of

violating the Act.

Therefore,

the Board assesses a penalty of

sixty thousand dollars

($60,000)

and assesses four thousand nine

hundred eighty dollars

($4,980)

for attorneys fees.

This opinion on the penalty amount constitutes the Board’s

findings of fact and conclusions of law in this matter.

ORDER

---

19

1)

The Board finds respondent, ESG Watts violated Sections

21(k),

21(o) (11)

and

(d)(2) of the Act and 35 Ill. Adm.

Code 807.623,

858.401 and 814.104 as alleged by all

four counts of the supplemental complaint.

2)

The Board hereby assesses a penalty of sixty thousand

dollars

($60,000) against ESG Watts.

3)

ESG Watts shall pay sixty thousand dollars

($60,000)

within 60 days of the date of this Order.

Such payment

shall be made by certified check or money order payable

to the Treasurer of the State of Illinois, designated

to the Environmental Protection Trust Fund,

and shall

be sent by First Class mail to:

Illinois Environmental Protection Agency

Fiscal Services Division

2200 Churchill Road

P.O. Box 19276

Springfield,

IL

62794—9276

Respondent shall also write their Federal Employer

Identification Number or Social Security Number on the

certified check or money order.

Any such penalty not

paid within the time prescribed shall

incur interest at

the rate set forth in subsection

(a)

of Section 1003 of

the Illinois Income Tax Act,

(35 ILCS 5/1003), as now

or hereafter amended, from the date payment

is due

until the date payment

is received.

Interest shall not

accrue during the pendency of an appeal during which

payment of the penalty has been stayed.

4)

Respondent ESG Watts shall pay four thousand nine

hundred eighty dollars

($4,980)

as fees and costs

awarded to the Attorney General’s Office.

Such payment

shall be made within

60 days of the date of this order

by certified check or money order payable to the

Treasurer of the State of Illinois, designated for

deposit to the Hazardous Waste Fund,

and shall be sent

by First Class mail to:

Illinois Environmental Protection Agency

Fiscal Service Division

2200 Churchill Road

Springfield,

IL

62706

The certified check or money order shall clearly

indicate on its face,

the case name and number,

respondent’s federal employer identification number and

that payment is directed to the Hazardous Waste Fund.

---

20

5)

Respondent,

ESG Watts shall cease and desist from

Board Member J. Theodore Meyer concurred.

Section 41 of the Environmental Protection Act

(Ill. Rev.

Stat.

1991,

ch.

111 1/2, par.

1041) provides for the appeal of

final Board orders within 35 days.

The Rules of the Supreme

Court of Illinois establish filing requirements.

I, Dorothy M.

Gunn, Clerk of the Illinois Pollution Control

Board, hereby certify that the above opinion and order was

adopted on the

‘~Z~

day of

____________________,

1995, by a

vote of

~7~)

.

Dorol

I

/

/

j

:2

7

~

~

Control Board