ILLINOIS POLLUTION CONTROL BOARD

September 20,

1979

ENVIRONMENTAL PROTECTION AGENCY,

Complainant,

PCB 78-88 and

V.

)

PCB 78—225

Consolidated

SUNDALE SEWER CORPORATION, an

Illinois corporation,

Respondent.

ORDER OF THE BOARD

(by Mr. Goodman):

Upon careful consideration of the arguments presented

herein by the Illinois Environmental Protection Agency

(Agency),

the Board affirms

its

Interim

Order of July 12,

1979.

In a motion filed August

23,

1979 the Agency requested

that the Board reconsider its interim decision which rejected

a proposed Stipulation and Proposal

for Settlement and reman-

ded the matter to the parties

for further proceedings.

The

Agency asks the Board either to adopt the Stipulation and Pro-

posal

for Settlement

as presented or,

in the alternative,

to

clarify its Interim Order to allow the Agency to knowledgeably

proceed in this and other matters.

The July 12, 1979 Interim

Order rejected the Stipulation and Proposal

for Settlement

because it provided for contingent and suspended penalties

which the Board has found to interfere with its duty to

determine penalty amounts and conditions under which penalties

may be warranted.

The Board agrees with the Agency’s argument that nothing

in the Environmental Protection Act

(Act) prevents the Board

from imposing the penalty as proposed in the Stipulation.

The

Board does not, however,

agree with the contention that the

contingent or suspended penalty serves any useful purpose.

In

its motion

the

Agency,

in justifying

the usefulness of the

contingent

or

suspended penalty, compares the Board’s reason-

ing

in determining standard penalties and simultaneously

requiring the execution of performance bonds.

There is no

more usefulness in the imposition of contingent or suspended

penalties than there is in the imposition of standard penal-

ties and the simultaneous requirement of executing performance

bonds.

35—363

---

—2—

Secondly,

the Board finds that there

is

a potential for

abuse of the Act when contingent or suspended penalties are

imposed.

Where a suspended or contingent penalty conditions

payment

upon noncompliance with the Board’s Order,

the Board

is

faced with

the tasks ol enforcing the penalty and of ensur—

i eq

future

COflj)

i

i a

flC(~

.

I.

ii

these

ci. rcuns

tances

,

noncoml)i

i ance

becomes

an

appealable

issue.

In

many

cases

a

minimal

penalty

for

an initial violation may have been

imposed and collected

while a larger, contingent,

part of the penalty remained to be

delayed,

reduced or removed on appeal.

Contingent or suspended penalties

also generate the use

of the “excessive”

penalty.

Often the contingent part of

a

penalty,

which

is

designed

to

ensure

enforcement,

is

stipulated

to even

though

it can be deemed excessive.

The party may be-

lieve that it can meet the compliance schedule and therefore

agrees to a higher contingent or suspended penalty than it

otherwise would have agreed to.

However,

if the party unexpec-

tedly became unable

to comply with the settlement,

it would

become liable for a penalty which may be beyond its means.

In

a

subsequent

court proceeding to force such payment,

a

judge

may

well

reduce

or

even eliminate the penalty.

Enforce-

ment of the Act is not aided if penalties become uncollectible,

and there is

likelihood

of uncollectibility where the penalty

can lie proven to be an excessive one.

The primary objection that the Board has with respect

to contingent or suspended penalties is that these penalties

interfere

with

its

duty

to determine the amounts and condi-

tions

of penalties

to be imposed for violations

of the Act.

Although

any

stipulation

or

settlement

usurps the Board’s

authority

to

determine

the

proper

means

by

which

it

shall

insure

compliance

with

and

shall

enforce

the

Act,

stipulations

containing

contingent

or

suspended penalties interfere with

this

authority

to

a

greater

degree.

The

Board

is

not

only

asked

to

accept

stipulated

facts,

a

compliance

program,

and

a

penalty

for

specific

violation,

it

is

asked

to

endorse

an

agreed

penalty

amount

for

future

noncompliance;

the Board

is

usurpted

from

further

acting

against

parties

who

fail

to

achieve compliance and the public is estopped from pursuing

a complaint regarding that noncompliance.

Stipulations containing contingent penalties preclude

the Board from considering aggravating or mitigating

factors

should noncompliance occur.

Neither

the parties nor the Board

can present

legal arguments beyond those included in the Stip-

ulation.

Unless the Stipulation contains defenses for noncom-

pliance,

the reason for noncompliance is largely immaterial.

If the parties

fail

to foresee and

to state

all reasonable

excuses

for noncompliance at the time the Stipulation was

drafted, then

a party may be required to pay a penalty for

noncompliance even when delays of other matters were beyond

his control.

Even

if a provision is included to cover unfore—

35-364

---

—3—

seen circumstances,

an issue for appeal

is created; parties

could litigate the question of what

is an enforceable circum-

stance and could further complicate the enforcement process.

The Board in the past has utilized suspended penalties

in certain exceptional instances

(EPA

v.

E.

Lysle Epperson,

et al.,

23 PCB 581; EPA v.

Timberlane Acres Water Association,

19 PCB 725; EPA v

City

of Athens,

24 PCB 687).

These cases

involved

unique

circumstances

or

concerned

a

penalty

mandated

by statute which the Board felt would work an arbitrary or

unreasonable

hardship

on

the respondent.

The significant fac-

tor in these cases was that the contingent or suspended penal-

ty was instigated by, and under complete and total control of,

the Board itself.

The Board fully retained its authority to

determine

penalty

amounts

and

conditions.

In EPA v.

City

of

Georgetown,

PCB

78—127

(April

26,

1979),

the Board accepted

a

settlement

agreement

with

a

con-

tingent or suspended penalty.

Insofar as the Opinion and

Order

in Georgetown is in conflict with the Board’s Opinion

expressed in this Order, it is hereby overruled.

IT

IS

SO

ORDERED.

Mr. Young and Dr. Satchell dissent.

I,

Christan

L.

Moffett,

Clerk

of

the

Illinois

Pollution

Control

Board,

hereby

cc

tif

the

above

Order

was

adopted

on

the

______

day of

,

1979 by a vote ~

IV) ~

Christan

L. Moffett, 7Wtk

Illinois Pollution CoM~l Board

35—36 5