BEFORE THE ILLINOIS
POLLUTION
CONTROL BOARD
PEOPLE OF THE STATE OF
)
ILLINOIS,
)
)
Complainant,
)
)
PCBOI-167
)
CFR~.~
Crr~—r~
ESG WATTS, INC.,
an Iowa
)
u~!
14
zoo~
corporation,
)
)
STATE
OF
ILLiNOiS
Respondent.
)
Polluti0~Control Board
NOTICE OF FILING
To:
Larry Woodward
Corporate Counsel
Watts Trucking Service,
Inc.
P.O.
Box 5410
Rock Island,
Illinois 61204-5410
PLEASE TAKE
NOTICE that on this date
I
mailed for filing with the Clerk of the Pollution
Control
Board
of the State of
Illinois,
a REPLY BRIEF,
a
copy
of which is attached
hereto
and
herewith served
upon you.
Respectfully submitted,
PEOPLE OF THE
STATE OF ILLINOIS
LISA MADIGAN,
Attorney General of the
State of Illinois
MATTHEW J.
DUNN, Chief
Environmental
Enforcement/Asbestos
Litigation Division
BY:____________________
THOMAS DAVIS,
Chief
Assistant Attorney General
Environmental
Bureau
500
South Second Street
Springfield,
Illinois 62706
217/782-9031
Dated: October 8,
2003
CERTIFICATE OF SERVICE
I
hereby certify that
I
did on October 8,
2003,
send by First Class Mail, with
postage
thereon fully
prepaid, by depositing in
a United
States Post Office
Box a true and correct copy of
the following instruments entitled
NOTICE OF FILING and
REPLY BRIEF
To:
Larry Woodward
Corporate Counsel
Watts Trucking Service,
Inc.
P.O.
Box 5410
Rock
Island,
Illinois 61 204-5410
and the original and ten copies by
First Class
Mail with
postage thereon fully prepaid of the same
foregoing
instrument(s)
To:
Dorothy Gunn, Clerk
Illinois Pollution
Control Board
James
R.
Thompson Center
Suite
11-500
100 West
Randolph
Chicago,
Illinois 60601
A copy was
also sent by
First Class
Mail with postage thereon fully prepaid
To:
Carol Sudman
Hearing
Officer
Illinois
Pollution Control
Board
600 South
Second Street, Suite 402
Springfield,
Illinois 62704
Thomas
Davis
Assistant Attorney General
This filing is submitted on
recycled paper.
BEFORE THE ILLINOIS POLLUTION
CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
)
)
Complainant,
)
)
VS.
)
No.
01 -167
)
(Enforcement)
~,
ESG WATTS, INC., an Iowa corporation,
)
~
)
Respondent.
)
2003
P0//uti
Contr
/
REPLY BRIEF
°
8OQr~f
Complainant, PEOPLE
OF THE STATE
OF ILLINOIS,
by Lisa
Madigan, Attorney
General of the State of Illinois, hereby files its Reply Brief to address some
of the Respondent’s
arguments
in the order such are presented
in
Respondent’s
Post-Hearing
Brief.
Additionally,
Complainant hereby responds to
Respondent’s
Motion for Leave to
Supplement Record
Instanter and does
not object.
Overfill/Count
IV
Complainant contends that there are
no legal or technical impediments
to the relocation
of the overfilled wastes within the previously permitted
contours.
This representation was
made
in a July 30, 2001, letter from Attorney General’s Office to
counsel for Respondent.
People’s
Exhibit 9.
However, Respondent argues that such impediments did
indeed exist as
to the
Taylor Ridge
Landfill
in
contrast to the Viola Landfill situation.
First, as to
legal issues,
there was a court order governing the relocation
of the overfilled
wastes within the previously permitted
contours
at the Viola Landfill.
People’s Exhibit
12.1
1This Consent Order also
required ESG Watts
to address the groundwater contamination which
was
at issue
in
PCB 96-233.
Respondent’s Motion for Leave to Supplement
provided
a recent
communication from the Attorney General’s Office which included the following: “While Viola
is no longer
accepting refuse, a court order was entered in early August over Watts’ failure to comply with groundwater
remediation requirements at the site.
A penalty of more than $284,000 was imposed.”
I
These same concerns that a judicially sanctioned
resolution of the vertical overfill
problem was
necessary had been expressed at a meeting following the July 30, 2001,
letter; this is why a
proposed court order was drafted
and sent to
Respondent.
People’s
Exhibit 10.
However,
no
reply was made to the suggested judicially sanctioned mechanism.
People’s Exhibit II.
Respondent ought not to hide behind
its own
inaction for not pursuing an agreed
court order
and
now argue
it merely
sought to avoid
being “prosecuted for proceeding without
a permit.”
Respondent’s Brief at page
3.
The permitted
maximum elevation
and final contours
for the Taylor Ridge Landfill
were
imposed by the development permit and the previously approved
closure plans.
Closure
activities consistent with those plans and
the relocation of waste to conform with final contours
should not in
this context be considered
as a “modification” requiring further permitting.
The
real
reason for Respondent expressing this concern both at the time
and
now in the
enforcement proceeding was that “in
1999 and through July
5,
2001
it was attempting
to
obtain
approval
of plans from the
IEPA to
allow overfilled waste to
remain in
place without relocation.”
Respondent’s
Brief at
page 5.
Watts wanted
to leave the 34,100 cubic yards of overfilled waste
in
place not because of technical
concerns as to
odors, dust,
noise,
and other potential adverse
effects
upon neighboring
residents but rather to
avoid the relocation costs
estimated to exceed
$100,000.
See
People’s Exhibit 4.
In arguing against a
finding of liability for exceeding
its maximum permitted
elevation of
758
feet mean
sea level,
Respondent still
contends that the equitable doctrine of
resjudicata
applies
but does
not respond to
Complainant’s arguments that the
Board
lacks equitable
powers.
Nor does
Respondent respond to
Complainant’s arguments that by pleading
in its
Answer that “said violation was known
to the IEPA on or before January 1,
1995,” the
Respondent assumed an evidentiary burden that it has
failed to satisfy.
Respondent has failed
to prove that the Illinois
EPA had sufficient knowledge of the permitted
elevation violation
prior
2
to the December 29,
1999,
resolution
of 98
CH 20.
People’s Exhibit
1.
Rather Watts merely
contends that the Noble
Earth landfill
cover certification drawing dated
October
16,
1996,
and
submitted
in the sig mod application on
November 11,
1996,
informed the Illinois EPA of the
over height problem.
This was the same document at issue on the final
day of hearing in
PCB
96-107 and,
on the basis of which,
the Board subsequently found that “adequate evidence of
this potential violation
is lacking.”
PCB
96-1 07 (February
5,
1998) at page
4~2
As Complainant
noted
in the Post-Hearing
Brief,
Mr. Jones recently testified that this document was “not an
accurate representation of the landfill
at
the time Mr.
Brao
did his cover thickness
investigation.”
Tr. at 189.
Respondent makes no attempt to
rebut or mitigate
the testimony of
its own engineer as to the
lack
of probative value of the Noble Earth drawing.
Respondent also
makes
no attempt to challenge the Board’s previous finding
as
to the lack of probative
value of
the Noble Earth drawing.
In fact,
if the Board
were
to
hold (regarding
resjudicata)
that it will
exercise the equitable powers
believed to
have been statutorily delegated, then
the Board
(in
order to
be consistent) would
also have to
hold that Watts is estopped from
challenging the
Board’s previous finding as to
the lack of probative value of the Noble
Earth
drawing.
The issue of whether Respondent has marshaled enough relevant facts
upon which to
premise a
resjudicata
defense
is an easy one to determine.
Did
Mr. Jones testify that,
during
any of the several meetings from
1996
until 2000,
he or one of the outside consultants informed
2However, the Board totally missed the point of how this document came to
be at
issue so late
in
the prior enforcement proceeding: “This claim
of
a potential overfill violation
is based upon the testimony
of an ESG Watts’ witness at the very final
stages of the hearing.
Throughout the entire discovery process,
complainant never once raised an issue concerning vertical
elevation
in excess of permit limits.
The
Board agrees with ESG Watts that this
allegation results in unfair surprise
and disallows
ESG Watts from
providing an
informed evidentiary response.”
These Noble Earth
documents were produced
to
Complainant during discovery depositions
conducted just one week before
the commencement of trial
after Complainant’s motion to compel was granted to address discovery abuses;
on Respondent’s motion
the documents were admitted
at hearing
on October 30,
1996.
When
the hearing resumed on December
12,
1996, the Complainant attempted
to
elicit testimony on the possibility of an overfill
violation, utilizing
the survey documents, but the Respondent objected and
an offer of proof was rejected.
In the present
proceeding, of course,
Respondent now makes “an
informed evidentiary response” through Mr. Jones’
testimony that
“everybody knew that we were over height.”
Tr. at
190.
3
the Illinois EPA of the over
height?
Did Respondent attempt to
elicit testimony from Illinois
EPA
permit engineers or inspectors as to what they
knew and when they knew it? Ms.
Munie’s
unchallenged testimony was based upon the May 2001 sig
mod application, logged by the
Illinois
EPA Permits Section
as no.
2001-459.
People’s Exhibit
5;
Respondent’s Exhibit
16.
The
Board
must reject this purported affirmative defense.
Gas Management/Count II
Complainant contends that RTC’s failure to perform the gas management activities
permitted
in
1996 does
not relieve ESG Watts of liability.
This is precisely what the circuit court
found
in its
December
1999 Judgment Order.
People’s
Exhibit
1.
Respondent, however,
argues that RTC’s
pending
bankruptcy is “a major hurdle to
resolving the odor problems.”
Respondent’s
Brief at page 9.
RTC’s contract with Watts provides exclusive rights
to extract
landfill gas from the Taylor Ridge
Landfill.
Tr.
at
168.
The purpose of such
extraction was to
be energy recovery and the objective of the
1996 permit was to
be the control of emissions and
odors.
The consequences
of the failure
to achieve this purpose and that objective were the
subject of Mr. Whitley’s testimony.3
It is obvious that the two aims are
compatible; the proper
extraction
of landfill gas would prevent emissions from occurring and
nuisance odors from
resulting while generating electricity and
profits.
While
RTC’s contractual
rights to extract landfill
gas for energy may be an
asset of
its
Chapter
11
bankruptcy estate, the Respondent’s permit obligations to control such
emissions
3This testimony
is unchallenged
in
Respondent’s Brief:
“many, many times
I
have to
go
in the
house and shut the windows.
I cannot stand the odors.”
Tr. at
89.
When asked how the gas emissions
had affected
his life or interfered with his activities
and enjoyment of
his property, Mr. Whitley said
that as
far as sitting
on
his deck “sometimes
it’s completely impossible.”
Tr. at 91.
During the past two or three
years,
it has been completely impossible for him to
sit
by the pond,
which is closer to the landfill
than the
house.
Tr. at 92.
He is often prevented from
working
in his flower garden.
Tr. at 93.
4
does not necessarily conflict with
such rights
or run afoul of the bankruptcy stay.4
In fact, a
rather convincing argument may be
made that proper gas management by the landfill operator
would
act to
preseive
the landfill
gas as a debtor’s
asset or property.
Obviously,
a bankruptcy
stay does
not affect the
generation
of landfill gases or prevent the
emissions
of such gases.
In
fact, as explained by
Mr.
Child in PCB 96-107, the pressure buildup makes
release inevitable.
This was one
reason the flare was necessary.
Watts retains legal title to
and
possession of the landfill
property,
and
has been
ordered
by the circuit court in
98 CH
20 and
the
Board
in
PCB 96-I07 to
control gas emissions.
The
bankruptcy of a third
party does
not excuse Watts’ failure
to comply with these
previous orders.
Moreover, the four and a half months that the flare was not functioning exacerbated
the odor
problems; there is no
reasonable explanation
in the record for why it took so long to
fix the flare
equipment.
The
Board
must reject this purported
affirmative defense.
Evidence
in Aggravation
Complainant has
presented economic benefit evidence
and argument regarding
Respondent’s failure to
pay previous
penalties.
In
its Brief,
Respondent argues that “the
analysis of supposed economic benefits obtained
by ESG
Watts performed by Mr.
Styzens
is
worthless.”
Respondent’s
Brief at page
10.
Watts also criticizes the Attorney General’s Office
for “failing to
introduce the agreement between the
parties
to pay the fine out of a special
source of funds.”
Respondent’s Brief at page
11.
Finally,
Watts argues that no economic
benefit was accrued and
that it has acted with due diligence to
pursue compliance.
Respondent’s
Brief at
page 12.
The Respondent has failed to
initiate and complete closure of the landfill
in a timely
4The automatic stay under
11
U.S.C.~362
prohibits the commencement or continuation of any
action
to recover a pre-petition debt from the debtor or any attempt to
gain
possession of or exercise
control over property of the bankruptcy estate.
5
fashion and has
deferred the expenditure of $1,183,545
in
closure costs that are
proposed
in
the pending sig
mod application.
According to Mr.
Styzens’ calculations, the economic benefits
of noncompliance with the closure requirements (including the overfill relocation) are at least
$284,383.
See
People’s Exhibit 20 and Tr. at 25-70.
In
response, Watts
basically asserts that
since it has
no income with which to make expenditures,
it has accrued
no economic benefit
by
failing to
make such expenditures.
Watts also quibbles as to the length of the continuing
noncompliance.
Respondent suggest that its unapproved
closure schedule of fifty weeks
should
be substituted for Mr. Styzens’ “flawed assumptions” as to the pertinent time period.
Respondent’s
Brief at page
10.
Some of
Mr. Styzens’ assumptions were that the regulations generally require the
initiation of closure within thirty days of the final
receipt of waste and that landfill closure is a
process or series of actions governed
by specifically applicable permits.
In particular,
he
assumed that,
if the closure of the
Taylor Ridge Landfill had commenced within thirty days of
the final receipt of waste,
such work could be finished
by October 16,
1998.
He
could have
assumed that
ESG Watts had ceased
operations
immediately upon the revocation of its permit
by the
Board
on
February 5,
1998;
now,
that would
have been a
flawed assumption.
Of course,
assumptions are
made of potentialities
and not of actualities.
In
actuality,
closure did
not and still
has not timely commenced.
Therefore, Watts is
getting
an
undeserved pass for approximately six months in
1998
and is not
being
charged for
the months and
years after May 2003.
Of course,
as it ludicrously asserts in
its Brief, “ESG
Watts did not know what closure activities were
required or the manner in which they should
be
performed
to
meet IEPA requirements,” presumably because it continues to disregard
fundamental aspects
(e.g.
stormwater control) of the previously approved
closure plans while
seeking
the elusive sig mod
approval.
As to the alleged “agreement”
to pay the penalties and
accrued interest from the
6
proceeds of the sale
by ESG Watts of the Sangamon Valley Landfill,
Complainant simply
responds that the “agreement”
between the
parties
at the September 12,
2002,
court hearing
was that a proposed
hypothecation agreement would
be drafted by Respondent for review by
the State and that copies of the Allied Waste purchase agreement would also
be provided;
in
return,
the State agreed
to postpone the contempt hearing
and to
provide current information
regarding the unpaid
balances of penalties and
interest.
See
Respondent’s
Exhibits 27 and 28.
Copies
of the Allied Waste
purchase agreement were never provided and
no hypothecation
agreement was executed between the parties.
While this is a collateral issue,
it is indicative of
Respondent’s
penchant to “cavalierly ignore” the history of dealings between the parties.
Complainant’s legitimate intent was
to simply provide evidence that Watts
has failed to
pay the
previously imposed
penalties
in PCB 96-1 07, PCB 96-233 and
PCB 96-237; those penalties
have
recently been paid
and only a
relatively small amount of accrued interest remains
outstanding.
The Board
is expected to
give this evidence in aggravation
its
proper weight.
Lastly, as to whether
any
economic benefit was accrued,
it is often difficult to obtain
direct evidence of assets and liabilities, revenues and expenditures,
and so forth, especially
from
privately held
businesses;
as noted,
Respondent has refused
to divulge the terms of the
Allied Waste
purchase agreement while contending that it has
zero income.
Even with public
corporations such
as
Panhandle
Eastern,5
any documented cost savings and
inferred
profitability information
are buried within reams of financial accounting
reports and
filings;
economic benefit data
must
be extrapolated from analyses of the weighted average cost of
capital and
other esoteric concepts.
Even with
all of the extensive documentary evidence and
expert witness testimony in the
Panhandle
case, the
Board
was only able to
find a “good
approximation of Panhandle’s
economic benefit from delayed compliance.”
PCB 99-191
5People ofthe State of Illinois v. Panhandle Eastern Pipe Line Company,
PCB 99-191
(November
15, 2001).
7
(November 15, 2001) at page 33.
Rather than
setting any
kind of
benchmark for such
considerations, the Board’s decision
in
Panhandle
is important for its holding:
“That a violator
will still incur costs to
come
into compliance does not eliminate the economic benefit
of delayed
compliance,
i.e.,
funds that should
be spent on
compliance were available for other pursuits.”
Id.
at
page 34.
Respondent has conceded
that there were
indeed funds available for other
pursuits;
hundreds of thousands of dollars were wasted on
deficient sig
mod applications and
defective appellate petitions.
Furthermore,
there has obviously been
no subsequent
compliance, and
economic benefit will continue to accrue
until the landfill is properly closed, the
overfill relocated,
and the gas emissions and
stormwater runoff controlled.
As to due
diligence, any efforts must be judged according
to their effectiveness.
It is not
convincing
to introduce
at
hearing a
box of sig
mod applications.
These documents achieved
nothing except permit denials from the Illinois
EPA.
It is not convincing to take four and a
half
months to fix the flare.
It is not convincing
to occasionally dredge silt from Mr. Whitley’s
pond.
Finally,
it is not convincing
to
blame the Illinois
EPA and the Attorney General’s Office for
anything except “years of diligence
in
holding Watts’ feet to the fire and forcing it
to pay the
citizens of Illinois what it owes for breaking the
law.”
See
press
release submitted pursuant to
Respondent’s Motion
for Leave to
Supplement.
Certainly, the
Illinois EPA must be accountable
for the permit denials
In closing, Complainant
respectfully requests that the Board find
liability on all counts,
reject
Respondent’s affirmative defenses,
order
Respondent to immediately
undertake effective
action to
cease and
desist from further violations, and
impose a civil penalty of one million
dollars.
Respectfully submitted,
PEOPLE OF THE STATE OF ILLINOIS,
LISA MADIGAN
Attorney General
8
500 South
Second Street
Springfield,
Illinois 62706
217/782-9031
Dated:
October 8,
2003
9
State of Illinois
MATTHEW J.
DUNN, Chief
Environmental Enforcement/Asbestos
Litigation Division
BY:_______________
THOMAS
DAVIS,
Chief
Environmental Bureau
Assistant Attorney General
OFFICE OF THE ATTORNEY GENERAL
STATE OF ILLINOIS
October 8, 2003
RECE~iVED
CLERK’S
OFFiCE
OCT
1
4
2003
Dorothy Gunn, Clerk
Illinois
Pollution Control Board
100 West Randolph Street
Suite
11-500
Chicago,
Illinois 60601-3286
Re:
People v.
ESG
Watts,
Inc.,
an Iowa corporation
PCB
No.
01 -167
Dear Clerk Gunn:
STATE OF
ILUNOIS
Pollution Control Board
Enclosed for filing please find the original and ten copies of a NOTICE OF FILING and
REPLY BRIEF in
regard to the above captioned
matter.
Please file the originals and
return
a
file-stamped copy to our office in the enclosed self-addressed stamped
envelope.
Thank you for your cooperation and
consideration.
TD/pp
Enclosures
Sincerely,
Thomas Davis
Assistant Attorney General
500
South Second Street
Springfield,
Illinois 62706
500 South Second
Street, Springfield, Illinois
62706
•
(217)
782-1090
•
TTY: (217)
785-2771
•
Fax: (217)
782-7046
100 West Randolph Street, Chicago, Illinois
60601
•
(312) 814-3000
•
TTY: (312) 814-3374
•
Fax: (312) 814-3806
1001
East Main, Carbondale,
Illinois
62901
•
(618)
529-6400
e
TTY:
(618) 529-6403
•
Fax: (618) 529-6416
Lisa Madigan
ATTORNEY GENERAL