ILLINOIS POLLUTION CONTROL BOARD
April 16, 1998
PEOPLE OF THE STATE OF ILLINOIS,
Complainant,
v.
ESG WATTS, INC., an Iowa corporation,
Respondent.
)
)
)
)
)
)
)
)
)
PCB 96-233
(Enforcement - Land)
FINAL ORDER OF THE BOARD (by M. McFawn):
On February 5, 1998, the Board issued its opinion and order resolving the majority of
matters in this enforcement proceeding. Two matters were left unresolved by the Board’s
February 5 order: (a) the Attorney General’s request for attorney fees under 415 ILCS
5/42(f), and (b) what action the Board should take in response to failure of respondent ESG
Watts, Inc. (ESG Watts) to comply with the Board’s order of March 6, 1997, in which ESG
Watts was ordered to deposit $249,067 into the financial assurance trust fund for its landfill at
Viola, Illinois, within 45 days (
i.e.
, by April 21, 1997).
1
Since ESG Watts had not addressed
either issue as of February 5, the Board gave ESG Watts the opportunity to do so prior to the
close of this case. The Board granted ESG Watts until February 20, 1998, to file a response to
the Attorney General’s request for attorney fees. The Board also directed ESG Watts to show
cause, on or before February 20, 1998, why it should not be sanctioned for failure to comply
with the Board’s order of March 6, 1997. Complainant was granted until March 6, 1998, to
respond to any filing by ESG Watts.
REQUEST FOR ATTORNEY FEES
The Attorney General requests an award of $14,760 in fees. This request is supported
by affidavits of attorneys Jane E. McBride and Thomas Davis, which were appended to
“Complainant’s Reply Brief,” filed on June 2, 1997. Watts did not file a response to the
Attorney General’s fee request. The Board finds that the fee request is reasonable, and hereby
awards the requested fees.
ESG Watts must pay $14,760 on or before June 1, 1998. Such payment must be made
by certified check or money order payable to the Treasurer of the State of Illinois, designated
to the Hazardous Waste Fund, and must be delivered to:
1
The forty-fifth day, April 20, 1997, was a Sunday.
2
Illinois Environmental Protection Agency
Fiscal Services Division
1021 North Grand Avenue East
P.O. Box 19276
Springfield, IL 62794-9276
ESG Watts must write its Federal Employer Identification Number on the certified
check or money order. Any portion of the fees awarded which is not paid by June 1, 1998,
will incur interest at the rate set forth in Section 1003(a) of the Illinois Income Tax Act (35
ILCS 5/1003(a)), as now or hereafter amended, from the date payment is due until the date
payment is received. Interest will not accrue during the pendency of an appeal during which
payment of the fee award has been stayed.
FAILURE TO COMPLY WITH ORDER OF MARCH 6, 1997
On February 23, 1998, ESG Watts filed “Respondent’s Cause as to Why it Should Not
Receive Sanction for Failure to Comply with March 6, 1997, Order” (Cause). ESG Watts
does not deny that it violated the Board’s order. Cause at
¶
5. It argues, however, that its
failure to comply with the Board’s order was due to financial inability, and that it diligently
sought alternatives. It also points out that there is currently insurance in place bringing ESG
Watts into full compliance with the financial assurance requirements for the Viola landfill. In
support of its position, ESG Watts has filed an affidavit of Gerald R. Eilers, Vice President
and Secretary of ESG Watts.
Complainant filed a response on March 6, 1998. Complainant responds with the
argument that, notwithstanding ESG Watts’ negotiations regarding insurance, no action was
taken to bring the financial assurance trust fund up to the required amount during 1997, even
though ESG Watts’ tax returns indicate millions of dollars in business expenditures.
Complainant recommends a $50,000 penalty for the initial violation of the Board order and an
additional penalty of $1,000 per day for which the violation continued after April 24, 1997,
through February 21, 1998, for a total recommended sanction of $350,000. Response at 2.
The Board’s authority (and, indeed, duty) to order sanctions for failure to comply with
an order is found at 35 Ill. Adm. Code 101.280, which provides in relevant part:
a)
If a party . . . fails to comply with any order entered by
the Board . . . the Board will order sanctions.***
b)
In deciding what sanction to impose the Board will
consider factors including, but not limited to, the relative
severity of the refusal or failure to comply, the past
history of the proceeding, and the degree to which the
proceeding has been delayed or prejudiced.
3
Subsection (a) of Section 101.280 lists a number of sanctions available to the Board, but the
list is not exclusive. In addition to the listed sanctions, a party violating a Board order may be
liable for civil penalties under Section 42(a) of the Environmental Protection Act (Act) (415
ILCS 5.42(a) (1998)).
Under Section 42(a) of the Act, violation of a Board order renders the violator liable
for monetary penalties of up to $50,000 per violation and $10,000 per day that the violation
continues. When imposing a penalty under Section 42(a) of the Act, Section 42(h) (415 ILCS
5/42(h) (1998)) authorizes the Board to consider any matters of record in mitigation or
aggravation. The relative severity of failure to comply and the past history of the proceeding,
which the Board must consider under Section 101.280, are adequately addressed in the Board’s
discussion of financial assurance violations in its opinion of February 5, 1998. See People v.
ESG Watts, Inc. (February 5, 1998), PCB 96-233, slip op. at 4-14. Given the procedural
posture of this case, the degree to which the proceeding has been delayed or prejudiced is not a
significant factor in our analysis. ESG Watts has raised two matters which could mitigate the
penalty to be imposed: (a) that it acted with “all dispatch” to comply with the Board’s order,
and (b) that it is currently (since February 19, 1998) in compliance with its financial assurance
requirements. The presence of due diligence by a violator in attempting to comply is among
matters the Board is specifically authorized under Section 42(h) to consider. See 415 ILCS
5/42(h)(2) (1998).
In determining an appropriate penalty, the Board will not sanction ESG Watts for the
time when it was exercising diligence in its attempt to obtain insurance to come into
compliance with its financial responsibility requirements. Based upon Mr. Eilers’ affidavit,
however, we do not find that ESG Watts exercised diligence prior to September 1, 1997.
Mr. Eilers describes two courses of action by ESG Watts prior to September 1, 1997:
(a) consultation with insurance agents regarding obtaining a bond or insurance for closure and
post-closure costs, and (b) negotiations with Resource Technology Corporation (RTC) for
RTC’s assistance in obtaining a bond. The Board does not find ESG Watts’ consultations with
insurance agents relevant to the issue of ESG Watts’ diligence in complying with the Board’s
order because it appears from Mr. Eilers’ affidavit that such consultations took place well
before the Board entered its order of March 6, 1997. Indeed, ESG Watts’ insurance agent,
Jack Lawley, informed ESG Watts as early as 1995 that the company could not obtain a bond
on its own due to its financial problems. Eilers Aff. at
¶¶ 8-9.
The Board further does not
find ESG Watts’ discussions with RTC (which also began well before March 6, 1997) a
credible means of achieving compliance. Based upon the testimony at hearing, RTC’s
involvement with the Viola landfill was contingent upon ESG Watts’ obtaining local siting for
the over-height portion of the landfill. (See Tr. of 3/25/97 at 59-60.) ESG Watts has never
filed a siting application. As to Mr. Eilers’ references to “contractual assurances,” RTC’s
only obligation under the single contract before us, Respondent’s Exhibit B, involves only an
increase in bond requirements due to RTC’s involvement. This is specifically identified as
“supplemental to the usual bond required by the landfill operations.” Res. Ex. B,
¶
7(e).
Given these circumstances, the Board finds that ESG Watts could not have reasonably expected
its discussions with RTC to result in compliance, at least not at any time in the foreseeable
4
future. The Board thus finds that negotiations with RTC did not constitute diligence on the
part of ESG Watts.
On September 1, 1997, Mr. Lawley presented a proposal which RTC rejected. It is
only after this event that ESG Watts began earnestly investigating other options. On
December 8, 1997, ESG Watts terminated its relationship with Mr. Lawley. Less than three
weeks later, on December 23, 1997, ESG Watts’ new agent, AON Risk Services, Inc.,
presented a proposal to ESG Watts which was accepted, and on February 19, 1998, insurance
policies were filed with the Agency bringing ESG Watts into compliance with its financial
assurance requirements for the Viola landfill.
The Board therefore concludes that it is appropriate to assess a penalty against ESG
Watts for the period from April 21, 1997, when payment was due, to September 1, 1997,
when it appears ESG Watts began to exercise diligence in its attempts to come into
compliance, and concludes that the method of calculating a penalty applied in the Board’s
February 5, 1998, opinion—the profit or savings realized by ESG Watts due to its failure to
comply—provides a reasonable basis for calculating an appropriate penalty now. Using the
same conservative estimates as were employed in the Board’s February 5 analysis, we set ESG
Watts’ profit or savings at 8% per annum. At this rate, given a base amount of $249,067 and
a time element of 133 days (or approximately 0.36 year), the Board finds that ESG Watts
realized a profit or savings of $7,173 by not complying with the Board’s order. In recognition
of the mitigating factors present in the matter currently before us, the Board reduces this
amount by 50% and imposes a penalty of $3,587 against ESG Watts.
ESG Watts must pay $3,587 on or before June 1, 1998. Such payment must 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 must be delivered to:
Illinois Environmental Protection Agency
Fiscal Services Division
1021 North Grand Avenue East
P.O. Box 19276
Springfield, IL 62794-9276
ESG Watts must write its Federal Employer Identification Number on the certified
check or money order. Any portion of the sanction assessed not paid by June 1, 1998, will
incur interest at the rate set forth in Section 1003(a) of the Illinois Income Tax Act (35 ILCS
5/1003(a)), as now or hereafter amended, from the date payment is due until the date payment
is received. Interest will not accrue during the pendency of an appeal during which payment
of the sanction has been stayed.
IT IS SO ORDERED.
5
Board Members R.C. Flemal and G. Tanner Girard, and Chairman Claire A. Manning
dissented.
Section 41 of the Environmental Protection Act (415 ILCS 5.41 (1998)) provides for
the appeal of final Board orders to the Illinois Appellate Court within 35 days of service of this
order. Illinois Supreme Court Rule 335 establishes such filing requirements. See 172 Ill. 2d
R. 335; see also 35 Ill. Adm. Code 101.246, Motions for Reconsideration.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, hereby certify that
the above order was adopted on the 16th day of April 1998 by a vote of 4-3.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
