ILLINOIS POLLUTION CONTROL BOARD
April
20,
1995
PEOPLE OF THE STATE OF ILLINOIS,)
Complainant,
v.
)
PCB 92—164
(Enforcement-Water)
BERNIECE KERSHAW and DARWIN
DALE KERSHAW d/b/a KERSHAW
)
MOBILE HOME PARK,
)
Respondents.
OPINION
AND
ORDER OF THE BOARD UPON RECONSIDERATION OF THE
PENALTY
(by G.
T. Girard):
This action
is before the Board on a motion for
reconsideration filed on May 12,
1993,
by respondents, Berniece
Kershaw and Darwin Dale Kershaw d/b/a Kershaw Mobile Home Park
(Kershaws).
Complainant filed
its response in opposition on
August
6,
1993,
and on August
10,
1993, Kershaws filed a reply
clarifying certain agreed language in complainant’s response.
In
a Board order on August 26,
1993,
the Board reaffirmed its order
finding Kershaws
in violation of the Illinois Environmental
Protection Act (Act)
and Board regulations concerning water
treatment and discharges.
(See order of April
8,
1993.)’
As
requested by both parties, the Board order of August
26,
1993,
reserved ruling on reconsideration of the $250,000 civil penalty
levied against Kershaws while the parties continued in
‘The
Kershaws had violated Sections
12 and 18 of the Act,
as
well as Board regulations at 35
Ill.
Adm. Code 304.106,
304.120(c),
304.121(a),
305.102(b),
305.103,
309.102(a),
309.104(a),
601.101 and Illinois Environmental Protection Agency
regulations at
35 Ill. Adm.
Code 652.111,
653.105, and 653.118.
Section
12 of the Act includes a general prohibition against
discharging contaminants into the environment which cause water
pollution.
Section 18 of the Act includes a general prohibition
against distributing water from a public water supply which
violates standards adopted by the Board.
Kershaws were found to
be in violation for water discharges:
containing settleable
solids with obvious odor and turbidity (304.106); exceeding the
effluent limits for BaD5 and suspended solids
(304.120(c)); and
exceeding the fecal coliform limit (304.121(a)).
Kershaws were
found to be discharging without
a National Pollutant Discharge
Elimination System (NPDES)
permit, and when they did have a valid
permit they failed to perform required monitoring
(305.102(b),
305.103,
309.102(a),
and 309.104(a)).
In addition, Kershaws
failed to meet certain public water supply standards (601.101,
652.111,
653.105, and 653.118)
2
negotiations on penalty and compliance terms.
(See order of
August 26,
1993,
p.
2,
6.)
PROCEDURAL HISTORY
The detailed procedural history leading to the Board order
finding Kershaws in violation of the Act and Board regulations
can be found in the Board order of April
8,
1993.
Because of the
unusual nature of this case,
some historical highlights bear
repeating.
The original complaint was filed on October 29,
1992,
by the People of the State of Illinois
(People) alleging that the
Kershaws had violated the Act and Board water regulations on four
counts.
The Kershaws failed to answer the complaint.
On
February 17,
1993, the People filed a motion for summary
judgement on all four counts.
The Kershaws did not file a
response to the motion.
On April
8,
1993 the Board entered an
order granting summary judgement finding the Kershaws in
violation as alleged.
The Board ordered the Kershaws to cease
and desist from further violations and pay a civil penalty of two
hundred fifty thousand dollars
($250,000).
On April
27,
1993, Attorney Richard Kuntz filed an
appearance on behalf of the Kershaws, and on May 12,
1993,
Mr.
Kuntz filed the motion for reconsideration of the summary
judgement order.
On May 6,
1993,
the People filed an affidavit
of costs and fees incurred by the State
in pursuing the case,
as
directed by the Board order of April
8,
1993.
On May 24,
1993,
the People filed a motion for extension of time to file a
response to the motion for reconsideration as well as a motion to
disqualify Mr. Kuntz from representing Kershaws
in this
proceeding.
The motion to disqualify was based on Mr. Kuntz’s
service as a hearing officer in other Board cases.
On May 27,
1993, the Board granted the People’s motion for extension of
time.
On June 8,
1993,
Mr. Kuntz filed a memorandum in
opposition to the motion to disqualify by and through his
attorney, Lee R.
Cunningham.
Pursuant to leave granted by the
Board on June 17,
1993,
the People filed a reply in response to
Mr. Kuntz’s memorandum on June 25,
1993.
By order on July 22,
1993, the Board found that there was no conflict of interest in
Mr. Kuntz’s representation of the Kershaws in this case, and
thereby denied complainant’s motion to disqualify Mr. Kuntz
as
counsel to the Kershaws.2
Between August 26,
1993, and March 18,
1994,
the parties
pursued discussions and filed status reports with the Board
describing attempts to reach an agreement on the penalty amount,
but eventually failed as reported in the March 18,
1994,
status
2
Mr.
Kuntz ended his service to the Board as
a hearing
officer at the close of fiscal year 1993
(i.e. June 30,
1994).
3
report to the Board.
On March 31,
1994, the Board issued an
order directing the parties to file
a settlement agreement by
April 29,
1994.
On April 29,
1994,
Kershaws filed some evidence and argument
relating to the penalty issue.
The evidence included an
affidavit by Daniel
C.
Solchenberger,
an engineer providing
consulting services to Kershaws since August 1992.
On May 5,
1994,
the Board ordered the parties to address the penalty issue
at hearing.
Hearing was scheduled for August
7,
1994, by order
of the Board hearing officer.
On July 27,
1994,
the parties
filed a joint motion to waive hearing and to instead set a
briefing schedule on the issue of the penalty.
On August
1,
1994,
the Board issued an order granting the motion and
establishing the briefing schedule on the penalty issue.
On August 29,
1994,
the parties filed a joint stipulation
with the Board which contains financial status information on the
Kershaws and also includes copies of engineering studies
commissioned by the Kershaws to bring their facility into
compliance with the Act.
On September 28,
1994,
complainant’s
“brief in support of penalty request” was filed with the Board.
Kershaw filed “respondent’s response brief” on October 31,
1994.
Complainant’s reply brief was filed on November 15, 1994.~
STATUTORY FACTORS
In determining the appropriate civil penalty the Board
considers factors set forth in Sections 33(c) and 42(h)
of the
Act
(415 ILCS 5/33(c) and 42(h)(l992).
A historical review of
Board penalty decisions can be found in IEPA v. Allen Barry,
individually and d/b/a Allen Barry Livestock, PCB 88-71
(May 10,
1990).)
The Section 33(c)
factors are more general factors for
the Board to consider when issuing final orders and
determinations.
The Section 42(h)
factors govern penalty
amounts.
(Barry,
supra,
p.
42.)
The Board considered the
Section 33(c)
and Section 42(h)
factors based on the information
~
The August 29,
1994,
joint stipulation of the parties
will be cited as “Stip.
at
_____“.
Respondents response brief
will be cited as “Res.
Br.
at
_____“.
Complainant’s brief will
be cited as “Comp.
Br.
at
______t~
Complainant’s reply brief
will be cited as “Comp. RBr.
at
______“.
Complainants affidavit
of costs and fees will be cited as “Comp. Affid. at
____“.
The
Solchenberger Affidavit filed by Respondents on April
29,
1994,
will be cited as “Sol.
Affid.
at.
_____“.
The Board opinion and
order of April
8,
1993,
will be cited as “Board Opinion at
_____
or “Board Order at
“.
The motion for summary judgeinent filed
on February 17,
1993,
will be cited as “Not. Sum. at
“.
4
in the record at the time the Board’s order of April
8,
1993, was
rendered
(see Board Order, April
8,
1993).
Section
33
(c)
provides:
In making its orders and determinations, the Board shall
take into consideration all the facts and circumstances
bearing upon the reasonableness of the emissions,
discharges, or deposits involved including,
but not limited
to:
1)
the character and degree of injury to, or interference
with the protection of the health, general welfare and
physical property of the people;
2)
the social and economic value of the pollution source;
3)
the suitability or unsuitability of the pollution
source to the area in which
it is located, including
the question of priority of location in the area
involved;
4)
the technical practicability and economic
reasonableness of reducing or eliminating the
emissions,
discharges or deposits resulting from such
pollution source; and
5)
any subsequent compliance.
415 ILCS 5/33(c)
The Board is authorized by Section 42(h)
of the Act:
“to
consider any matters of record in mitigation or aggravation of
penalty, including but not limited to the following factors:
1.
the duration and gravity of the violation;
2.
the presence or absence of due diligence on the part of
the violator in attempting to comply with 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
5
5.
the number, proximity in time,
and gravity of
previously adjudicated violations of this Act by the
violator.
(415 ILCS 5/42(h))
ARGUNENTS
Complainant argues that “the
factual information in the
record provides an ample basis for the imposition of a
substantial penalty”.
(Comp.
Br. at
1.)
Complainant asserts
that its position is based on decisions of federal courts
regarding penalties under the Clean Water Act as well as Illinois
courts and Board interpretations of penalty provisions of the
Act.
Complainant presents a discussion of the general framework
for calculating penalties.
(Comp.
Br.
at 7-12.)
Complainant
further argues that the duration and gravity of the violations
(Comp.
Br. at 12-25),
as well as Kershaws’ bad faith and lack of
due diligence (Comp.
Br. at 25-32)
support imposition of a
substantial penalty.
Complainant also argues that past Board
case law establishes adequate formulas for calculating Kershaws’
economic benefit from noncompliance and that the calculation
shows that a substantial penalty is warranted.
(Comp. Br.
at 32-
37.)
Finally, complainant asserts that a substantial penalty is
warranted to deter Kershaws from further violation of the Act.
(Comp.
Br. at 38-41.)
In summary, complainants argue that the
$250,000 penalty is justified for the reasons stated above.
(Comp.
Br. at 41.)
Kershaws assert that the $250,000 penalty is not warranted
by the facts of the case,
the penalty guidelines established by
the Act, the case law applying penalty provisions of the Act, or
prior Board penalty decisions.
(Res.
Br.
at 1-2.)
Kershaws
argue that they should be allowed to marshall their meager
resources to meet the financial obligations necessary to bring
their mobile home park into full compliance with the Act.
(Res.
Br. at 2.)
Kershaws bolster their arguments by:
reviewing Board
penalty decisions from 1971 to present
(Res.
Br. at 3—5);
discussing two Third District Appellate Court cases concerning
Board penalty cases
(Res.
Br.
at 5-6); examining federal Clean
Water Act case law
(Res.
Br. at 6-8); exploring Kershaws’ ability
to pay the penalty
(Res.
Br.
at 8-11); disputing the
environmental impact of the illegal discharges
(Res.
Br.
at 11—
13); asserting that Kershaws have realized very little economic
benefit from delayed compliance
(Res.
Br.
at 13-14); and
declaring that the Kershaws’ mobile home park has considerable
social and economic value by providing low—income housing.
(Res.
Br. at 14—15.)
Kershaws also argue that legal costs incurred by
Kershaws in litigating the complainant’s motion to disqualify
counsel should be taken into account when determining the civil
penalty.
(Res.
Br.
at 19.)
In summary, Kershaws argue that the
penalty should not exceed $10,000.
(Res.
Br. at 20.)
6
DISCUSSION
Penalty Range
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,
p.
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 prpvision of the
Act and an additional civil penalty not to exceed $10,000 for
each day during which the violation continues.
Section 42(b)
provides a maximum civil penalty of $10,000 per day of violation
of Section 12(f)
of the Act on any NPDES permit or permit
condition.
The People assert that the statutory maximum penalty for all
violations alleged in the complaint is $53,866,000.
(Comp. Br.
at 12.)
Kershaws note that the People appear to be calculating
the maximum penalty by including alleged violations after the
complaint was filed on October 29,
1992.
(Res.
Br. at 18.)
The
Board agrees that some of the violation dates used in the penalty
calculations occur after the complaint was brought on October 29,
1992.
(See Comp.
Br.
at 8—12.)
Since complainant did not amend
the complaint pursuant to 35 Ill. Adm. Code 103.210(b), the Board
therefore will recalculate the maximum penalty by subtracting
penalties for those dates after October 29,
1992.
Using the same
principles as complainant (Comp.
Br.
at 8-12),
and subtracting
those penalty amounts applied to dates after October 29,
1992,
the Board recalculates the maximum penalty as $48,006,000.
Kershaws did not directly contest the maximum penalty
calculation presented by the People.
Kershaws did argue that no,
penalties should be imposed for violations alleged to have
occurred prior to two years before the commencement of the
People’s action in October 1992.
‘(Res.
Br. at 16.)
Respondents
recognized that Illinois courts have generally held that statutes
of limitations do not apply to the State when the State
is
asserting public rights
(City of Shelbyville v. Shelbyville
Restorium,
96 Ill.2d 457,
451 N.E.
2d 874
(1983)).
However,
Kershaws “respectfully maintain” that this case presents a
“perfect opportunity” for the Board to re—examine the statute of
limitations in regards to civil penalties in environmental cases.
(Res.
Br. at 16.)
The Board is not persuaded that this case is a “perfect
opportunity” to re-examine the statute of limitations for civil
7
penalties in environmental cases and declines to do so.4
The
Board agrees with the parties in the instant case that the
appropriate penalty lies somewhere between a minimum of $10,000
as advocated by Kershaws
(Res.
Br.
at 20) and a maximum of
$250,000 as advocated by complainants.
(Comp.
Br.
at 41,
45—49.)
Further, the Board agrees with complainants that the wastewater
treatment and permit violations are the most significant of the
violations
for which the Kershaws are liable.
(Comp.
Br. at 13.)
Statutory Penalty Factors
Section 33(c~(2)(3)(4)(5) and 42(h)(5) Factors
The Board has reviewed the statutory penalty factors at
Sections 33(c)
and
42(h)
for the purposes of reconsidering the
penalty in light of the new evidence entered in this case.
Several statutory factors can be dealt with swiftly at the outset
of this discussion.
No new evidence has been entered into the
record in regards to social and economic value
(Section
33(c) (2)),
suitability of location (Section 33(c) (3)), technical
practicability and economic reasonableness of compliance
alternatives
(Section 33(c)(4)),
any subsequent compliance
(Section 33(c)(5)),
and previously adjudicated violation of the
Act
(Section 42(h)(5)).
The Board opinion of April
8,
1993 found
that the Kershaws’ mobile home park does have “moderate social
and economic value” and
is suitable to its rural location.
(Board Opinion at 5.)
The Board has also found that complying
with the Act and applicable regulations
is technically feasible
and economically reasonable.
(Board Opinion at 5.)
There
is no
new evidence in the record that the Kershaws are presently in
compliance with the Act and applicable regulations.
There is no
evidence in the record of previous violations of the Act or
applicable regulations by the Kershaws.
In this case, the Board considers the social and economic
value of a trailer park containing 75 mobile homes
(Stip. at
328),
serving low and moderate income residents,
to be of
sufficient value to mitigate against a maximum penalty.
Suitability of location is a neutral factor in this case.
The
availability of technically practicable and economically
reasonable compliance alternatives is a factor pointing to a
4The Board notes that applying a two year statute of
limitations in the present case does not help the Kershaws avoid
a substantial penalty.
By using the People’s method of
calculation per count of the violations
(Comp.
Br. at 8-12),
the
Board calculates the maximum penalty for violations between
October 29,
1990, and October
29,
1992,
to be as follows:
Count
I,
$500,000; Count
II,
$8,590,000;
Count
IV,
$5,557,000; for a
total maximum civil penalty of $14,197,000.
8
higher penalty amount.
Present lack of compliance may indicate
that a higher penalty amount is appropriate.
No evidence of
prior violations weighs in the balance toward a lower penalty
figure.
Section 33(c) (1)
and 42(h) (1)
Factors
(Harm, Duration and
Gravity)
The Board is directed by Sections 33(c) (1)
and 42(h) (1)
of
the Act to examine the environmental impact of the violations
in
fashioning a penalty.
In the instant case,
complainants maintain
that the facts
in the record demonstrate that the ongoing
wastewater treatment violations at the Kershaws’ mobile home park
have existed for at least nine years,
and the violation for
failing to obtain an NPDES permit lasted for eight years.
(Comp.
Br.
at 12.)
Complainants point to the IEPA inspection reports of
November
13,
1985,
and March 23,
1992
(Motion for Summary
Judgement, Appendix B)
for
a description of the offensive
character of the effluent.5
Complainants used data from the
Agency grab samples and Kershaws’
effluent discharge reports
(Sol. AffId.
at App. A), to calculate that 60
of the documented
violations of the
10 mg/i limit for BOD5 were two times or more
in excess of the limit.
Complainants also calculated that 79
of
the documented violations of the 12 mg/i limit for suspended
solids were two times or more in excess of the limit.
(Comp.
Br.
at 13.)
The People contend that the violations did cause the
potential for environmental harm and did cause environmental
harm.
(Comp.
Br. at 15-16.)
Complainants opine that
“wjastewater
containing settleable solids and obvious color,
odor, and turbidity and concentrations of BOD5 and suspended
solids in excess of the regulatory limits may not be as
immediately dangerous or toxic as some materials, but
nevertheless these contaminants deplete the available oxygen in
the river and destroy the chemical, physical, and biological
integrity of the river” and thus are harmful to the environment.
(Camp. Br.
at 17-18.)
Kershaws argue that there
is no evidence in the record that
Kershaws’ effluent had any measurable impact on the Rock River
and present calculations by their engineer
(Sol. Affid.
at
3)
asserting that there was a “miniscule hypothetical maximum
loading into the river”.
(Res.
Br.
at
12.)
Kershaws state “that
the engineer’s affidavit openly acknowledged that violations
occurred, but demonstrated that the violations resulted in
5The inspection report for the November 13,
1985,
inspection
described the effluent as “green cloudy”.
(Mot.
Sum.,
App.
B at
16.)
The inspection report for the March 23,
1992,
inspection
described the effluent as “green and turbid”.
(Mot.
Sum., App.
B
at 21.)
9
minimal
impact on the ultimate receiving stream”.
(Res.
Br. at
12.)
Kershaws further argue that the People failed to
demonstrate any material harm.
(Res.
Br. at 12.)
The Board is not persuaded by the Kershaws’ arguments that
their engineer has demonstrated in the Solchenberger Affidavit
that the violations resulted in minimal impact on the ultimate
receiving stream.
Further, the engineer’s attempt to suggest
that the unnamed tributary which receives the initial effluent
discharge provides “treatment benefits”
(Sal. Affid.
at
1,
paragraph
3)
is misplaced.
The current NPDES permit for the
Kershaw’s facility notes that the effluent discharges into an
unnamed tributary that flows approximately 100 feet into the Rock
Rivers.
(Stip.
at 360.)
Even though the Illinois Environmental
Protection Agency (Agency) has categorized this waterway as
“unsuited to support primary contact activities
(swimming)”
(Stip. at 360),
this does not relieve the Kershaws from discharge
limits for BOD5 and suspended solids, or provide their engineer
with justification to indirectly suggest that this short waterway
is part of the treatment process.6
The Board reaffirms its
finding that by operating without an NPDES permit for eight
years,
and violating discharge standards for BOD5 and suspended
solids for at least nine years, the Kershaws harmed the
environment in a way that warrants a high penalty.
Section 42(h)(2) Factor
(Due Diligence)
Complainant asserts that the record reveals a pattern of bad
faith and absence of diligence by the Kershaws,
including years
of procrastination and broken promises in bringing their
wastewater treatment facility into compliance.
(Comp.
Br.
at 25-
27.)
The People argue that Kershaws’ behavior demonstrates bad
faith and absence of due diligence which precludes any mitigation
of the maximum penalty.
(Comp.
Br.
at 31.)
Complainant cites
the following chain of events to support its contention:
(1) the
Agency first notified the Kershaws of the water pollution
violation at their mobile home park in December,
1985;
(2) five
meetings were held over the next nine years with state officials
discussing compliance alternatives;
(3)
at least four separate
commitments were made by the Kershaws to bring their wastewater
6Paragraph
3 of the Solchenberger Affidavit stated that:
“t)he
wastewater treatment facility discharges to an open ditch
that then discharges to a backwater slough of the Rock River.
The open ditch
is located in a low lying area that is subject to
frequent flooding.
The effluent should reap some treatment
benefits from being discharged to this ditch and backwater slough
area.
There are wastewater treatment systems that use
“constructed wetlands” as their primary treatment process or
incorporate the process into an existing system”.
10
system into compliance;
(4) Kershaws failed to hire an
engineering consultant until July7 or August,
1992;
and
(5)
there
is no evidence in the record that Kershaws are presently in
compliance with the wastewater regulations.
(Camp.
Br.
at 30-
31.)
Kershaws do not directly dispute the People’s arguments that
the Kershaws’ behavior does not demonstrate good faith and due
diligence.
Kershaws do state that the record reflects that
Kershaws have “responded promptly and voluntarily to every
information request from the Attorney General...”.
(Res.
Br.
at
8.)
Kershaw’s engineer stated that Kershaws have been reluctant
to tackle some of the problems facing their wastewater treatment
system because of the possibility that the Illinois Department of
Transportation
(IDOT) may construct Colona Road from John Deere
Road
(IL 5)
through the mobile home park to FAI Route 80.
(Sol.
Affid. at
4 and Appendices B
& C.)
Kershaw’s engineer opines
that if IDOT purchases right-of-way from the Kershaws, the
prospect of recouping capital improvements on the Kershaws’
property is uncertain.
(Sal. Affid.
at 4.)
The Board has noted that “(t)he 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.”
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 can find nothing
in the enhanced record of this
case to change our finding in the April
8,
1993, opinion that
Kershaws have not been diligent
in their efforts to correct their
wastewater treatment problems.
Kershaw’s efforts have been
characterized by delay and procrastination,
rather than good
faith and diligence.
Kershaws did not hire an engineer until
7The Board notes that the People give the hiring date as
July 1992
(Comp.
Br. at 31), while the affidavit of Kershaws’
engineer states that he has been providing consulting engineering
service to Kershaws since August
7,
1992.
(Sol. Affid. at
1.)
11
almost seven years after their first notification by the Agency
of water pollution violations at their mobile home park and only
three months before the instant enforcement proceeding was filed
by the People.
There were numerous conferences with state
employees over the years attempting to bring their facility into
compliance.
Correspondence with IDOT shows that “the actual
construction date of the road
project8 is unknown at this
time”.
(Sol. Affid.
at 13.)
In summary, there is no
justification for the Kershaws’ pattern of delay and
procrastination in bringing their wastewater treatment system
into compliance with the Act and applicable regulations, and this
pattern of behaviors points toward a higher penalty.
Section 42(h) (3) (Economic Benefits)
Complainant argues that Kershaws derived economic benefits
from delayed compliance that should be factored into a penalty
determination.
(Comp. Br. at 32-41.)
Complainant calculated the
economic benefits to Kershaws based on the formula in the Barry
opinion9 and the construction cost estimates provided by
8The Board notes that a variance would be the proper
proceeding to determine whether or not a potential project, such
as a road, would impose an arbitrary or unreasonable hardship on
the Kershaws in their compliance efforts (415 ILCS 5/35
(a)(1992fl.
In a variance proceeding,
the burden
is upon the
petitioner to show that its claimed hardship outweighs the public
interest in attaining compliance with regulations designed to
protect the public.
(Willowbrook Motel v
Pollution Control
Board
(1985),
135 Iil.App.3d 343,
481 N.E.2d 1032.)
Only with
such a showing can the claimed hardship rise to the level of
arbitrary or unreasonable hardship.
A further feature of
a
variance is that it is,
by its nature,
a temporary reprieve from
compliance with the Board’s regulations, and compliance is to be
sought regardless of the hardship which the task of eventual
compliance presents an individual polluter.
(Monsanto Co.
v.
IPCB
(1977),
67 Ill.2d
276,
367 N.E.2d 684.)
Accordingly, except
in certain special circumstances, a variance petitioner is
required, as a condition to grant of variance,
to commit to a
plan which
is reasonably calculated to achieve compliance within
the term of the variance.
9”The cost savings of delayed compliance take into account
the time-value of money.
This is to say that by postponing
capital improvements or operating and maintenance costs for
pollution control, those funds are available for other uses or
investments or to reduce the need to borrow, creating a better
position relative to competitors who voluntarily comply.
Some
rate of return
(an interest rate factor) can be used to calculate
an economic savings or benefit from not expending capital and
12
Kershaws’ engineer.
(Camp.
Br. at 32-33; Stip.
at 375.)
The two
most recent compliance cost estimates submitted by the Kershaws
(Stip.
at 375) range from a low of $77,260
(1994 estimate for
connecting to the City of Green Rock sewer line)
to a high of
$466,900
(1994 estimate
£or upgrading the current facility).
Assuming a 6
rate of return, the People calculated that the
annual cost savings to Kershaws was $4,635.60
(6
of $77,260)
to
$28,014
(6
of $466,900).
Complainants calculated the total
savings to Kershaws for a nine-year period from 1985 through 1994
as ranging from $41,720.40
($4,635.600 X
9) to $252,126
($28,014
X 9).
(Camp.
Br.
at
36.)
The People disagreed with the
conclusion of Kershaws’ engineer that “the Kershaw Mobile Home
Park realized very little economic benefit from delayed
compliance”.
(Camp.
Br.
at 37, quoting Sal.
Affid.
at
4,
paragraph 19.)
Complainant contends that Kershaws’ engineer did
not support his statement with “any real analysis or discussion
of specific items of cost savings and expenditures”.
(Camp.
Br.
at 37.)
Complainant further asserts that Illinois courts have held
that penalties should reflect the economic benefit of
noncompliance especially where the violator has exhibited a
“continuous blatant disregard
for requirements and procedures
designed to protect the environment”.
Wasteland,
Inc.
v.
Illinois Pollution Control Board,
118 Ill.App.3d 1041,
456 N.E.2d
964, 976
(3rd Dist.
1983); Midland v.
Illinois Pollution Control
Board,
119 Ill.App.3d 428,
456 N.E.2d 914,
920
(4th Dist.
1983).
The People argue that the Kershaws have shown a continuous
blatant disregard of the requirements
of the Act and Water
Pollution Regulations and of the State’s requests to correct the
wastewater treatment violations.
Therefore, the penalty assessed
by the Board must be greater than the Kershaws’ economic benefit.
(Comp.
Br.
at 37.)
Kershaws contend that the People cannot extend the time
period for calculation of penalties beyond the 1992 filing date
of the complaint.
(Res.
Br. at 14.)
Kershaws also assert that
the complainant has not rebutted the conclusion of Kershaw’s
engineer that the Kershaws’ mobile home park realized very little
economic benefit from delayed compliance.
(Res.
Br.
at 13.)
The Board finds that the Barry formula for determing
economic benefits of noncompliance is applicable to this case as
presented by complainant.
However,
as discussed earlier in this
opinion, the Board agrees with Kershaws that we will only
consider violations occurring before the complaint was filed in
October,
1992.
Therefore, we will use the same assumptions as
complainants in our calculations,
except that we will multiply
operating funds at an earlier point in time.”
(Barry,
supra,
p.
77.)
13
the annual savings by seven years as advocated by Kershaws,
rather than nine years as asserted by complainants.
The
recalculated total savings to Kershaws
for the seven year period
form 1985 through 1992 range from $32,449.20
($4,635.60 X
7)
to
$196,098
($28,014 X 7).
The Board agrees with complainants that
the circumstances of this case support the argument that the
penalty assessed in this case should be greater than the
Kershaws’ economic benefit.
Therefore,
based on this fact, the
appropriate penalty in this case should range from approximately
$32,000 to $196,000.
Section 42(h)(4)
(Deterrence and Ability to Pay)
Complainant argues that a discussion of penalties that
provide deterrence necessarily centers on the violator’s ability
to pay a penalty.
(Camp.
Br. at 38.)
Complainant further states
that inability to pay is not a bar to a penalty, but is
a
mitigating factor.
(Coinp.
Br.
at 38-39,
citing to Standard Scrap
Metal Company v. Pollution Control Board,
142 Ill.App.3d 655,
491
N.E.2d 1251,
1258
(1st Dist.
1986); Midland v. Illinois Pollution
Control Board,
119 Ill.App.3d 428,
456 N.E.2d 914, 920
(4th Dist.
1983).)
The People calculate that the Kershaws received a total
of $178,817 in personal income from the mobile home park by
examining their federal income tax returns from 1985 to 1992.
(Stip.
at 10,
75,
77,
119,
121,
138,
161,
173,
184,
186,
187,
189,
199.)
In 1992, Berniece Kershaw had an adjusted gross
income of $22,461 and Darwin Dale Kershaw had an adjusted gross
income of $60,054.
(Stip.
at 214,
297.)
The People acknowledged
that the 1992 adjusted gross income for the Kershaws does not by
itself support the imposition of a six figure penalty.
(Camp.
Br. at 40.)
However, complainant further asserts that the
Kershaws own the mobile home park,
and the value of their
property should be considered in a penalty determination.
(Comp.
Br. at 40-41.)
Finally, complainants argue that the penalty
should be as high as possible,
in light of the willful and
repeated nature of the violations and in keeping with the ruling
in Standard Scrap.
(Camp.
Br.
at 41.)
Kershaws maintain that the People did not cite Illinois case
law to show that respondents have the burden of demonstrating
inability to pay.
(Res.
Br. at 9.)
Kershaws argue that the
People have not met their burden of demonstrating that the
Kershaws have the ability both to pay a substantial penalty and
to bring their wastewater treatment system into compliance.
Kershaws assert that “since the record before the Board
demonstrates that the Kershaws do not have these means, the Board
should take this inability to pay into account in mitigating any
penalty it chooses in impose”.
(Res.
Br.
at
9.)
Kershaws
further argue that a variance
for BOD5 and suspended solid
effluent standards granted by the Board to Atlanta Meadows
trailer park in 1994 (Atlanta Meadows v.
IEPA,
PCB93-72
(January
14
20,
1994))
is similar to the instant case and supports mitigation
of the Kershaws’ penalty.
(Res.
Br.
at 9-10.)
Kershaws also
argue that the situation of a trailer park resembles a small
government or utility in that residents bear the costs of
improvements
(Res.
Br. at 10)
and therefore the penalty should be
reduced.
(Barry,
supra,
p.
39, citing to City of Moline v.
Pollution Control Board,
133 Ill.App.3d 431
(3rd Dist.
1985).)
After careful review of the record,
the Board finds that the
Kershaws have the ability both to pay a sizeable monetary penalty
and to pay for improvements to their wastewater treatment system.
Kershaws derive approximately $25,000 to $30,000 per year in
personal income from the mobile home park.
(Stip.
at
10,
75,
77,
119,
121,
138,
161,
173,
184,
186,
187,
189,
199.)
Further, the
record shows that they have had sufficient income to make the
improvements at an earlier date.
Kershaw’s engineer estimated
that it would have cost $56,000 to bring the waste water
treatment system into compliance in 1980.
(Sol.
Affid. at 18
(Appendix D).)
The Board does not agree with Kershaw’s
contention that the variance granted in Atlanta Meadows should
mitigate the penalty in this case.
Contrary to the Kershaw’s
case,
the variance granted in Atlanta Meadows shows that the
Kershaws had other compliance alternatives than the strategy of
delay and procrastination that they employed in complying with
the Act.
In summary,
the record shows that a penalty higher than
the $10,000 advocated by Kershaws is necessary to facilitate
compliance and deter future violations.
CONCLUSION
In an extensive review of Board penalties, the Barry opinion
had two conclusions:
(1)
the heart of the penalty decision must
include review of “all the facts and circumstances”,
both in
aggravation and mitigation; and
(2)
no formulae exist,
so the
Board must make case-by—case penalty determinations.
(Barry,
supra,
p.
35,
62-63.)
In determining an appropriate penalty in
this case, the Board has carefully considered all the facts and
circumstances
in the record.
The Board finds that the $250,000
penalty levied against Kershaws in the April
8,
1993,
Board Order
is not appropriate in light of the new evidence in the record.
The Board finds that a penalty of $30,000 will be sufficient to
accomplish the purposes of the Act in regard to this matter.
Several factors stand out to the Board in determining that
the $30,000 penalty is appropriate in this case.
First, the
Kershaws have realized at least $30,000 in benefits because of
delayed compliance,
and noncompliance with environmental
regulations should not benefit violators.
Second, the $30,000
penalty is appropriate because of the history of delay and
procrastination demonstrated by the Kershaws’ actions and the
harmful nature of the discharges.
Third,
the $30,000 penalty
equals the approximate annual income from the Kershaws’ mobile
15
home park.
Finally, the record shows that the Kershaws are
capable of paying this penalty.
The Board will not impose a
higher penalty because the Kershaws will be making substantial
expenditures ranging from approximately $80,000 to $470,000 to
bring their facility into compliance as required by the Board’s
cease and desist order.
(Stip. at 373-375.)
A penalty amount
that approximates their net yearly income from the mobile home
park should be a sufficient deterrent against future violations
without adversely affecting their ability to finance the
necessary improvements.
In addition, the Board will order the
Kershaws to pay the costs and fees incurred by the State as
discussed in the section below.
COST AND FEES
In the original Board decision order issued April
8,
1993,
a
Docket B was opened in this proceeding to assess reasonable costs
and fees to complainant as provided in Section 42(f)
of the Act.
Complainant filed an affidavit with the Board on May 6,
1993,
which outlined the People’s costs in pursuing this matter.
Kershaws did not respond directly to Complainant’s Affidavit of
Costs,
but,
instead, responded that Kershaws’ costs in litigating
the attorney disqualification issue should be a mitigating factor
in the final penalty assessment.
(Res.
Br. at 19.)
The expenses
presented by the People total $5,190.69.
(Comp. Affid.
at 1.)
The major cost categories include:
$1,791.39 for attorney’s
fees;
$3,123.49 for expert witness and consultant fees;
$58.85
for clerical costs;
and $216.96 for other costs.
(Camp. Affid.
at 1.)
The Board notes that attorney’s fees in the People’s
affidavit are charged at rates ranging from 15 to 53 dollars per
hour,
which is below 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.)
The
Board finds these costs to be reasonable and will award the
Office of the Attorney General five thousand one hundred ninety
dollars and sixty nine cents
($5,190.69).
Kershaws 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.
This opinion on the penalty amount constitutes the Board’s
findings of fact and conclusions of law in this matter.
ORDER
1)
The Board reiterates that the respondents, Berniece
Kershaw and Darwin Dale Kershaw d/b/a Kershaw Mobile
Home Park (Kershaws), were found in violation of
Sections
12 and 18 of the Illinois Environmental
Protection Act and the Kershaws shall cease and desist
from violation of the Act.
16
2)
The Board hereby vacates the first paragraph of the
April 8,
1993 order, which assessed a penalty of
$250,000 against Kershaws, and substitutes today’s
order.
3)
Kershaws shall pay Thirty Thousand Dollars
($30,000)
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
Respondents 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)
Kershaws shall pay five thousand one hundred ninety
dollars and sixty—nine cents
($5,190.69)
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, Kershaw
Mobile Home Park’s federal employer identification
number or the social security number
for Berniece
Kershaw and Darwin Dale Kershaw,
and that payment is
directed to the Hazardous Waste Fund.
17
5)
Dockets A and B
in this matter are closed.
Board Member 3. Theodore Meyer dissented.
IT IS SO ORDERED
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
~? ~jzZ
day
of
&‘—1’.A~~-L-
,
1995, by a
vote of
~2/
.
4~
~
Dorothy M.
Guny(,
Clerk
Illinois Pol1~tionControl Board
