ILLINOIS POLLUTION CONTROL BOARD
September 3, 1998
IN THE MATTER OF:
PROPORTIONATE SHARE LIABILITY
(35 Ill. ADM. CODE 741)
)
)
)
)
R97-16
(Rulemaking - Land)
Proposed Rule. First Notice.
OPINION AND ORDER OF THE BOARD (by C.A. Manning, K.M. Hennessey, and M.
McFawn):
On December 21, 1995, Governor Jim Edgar signed into law House Bill 901 as Public Act
89-443, effective July 1, 1996. This amendatory legislation added a new liability section to Title XVII
of the Environmental Protection Act (Act). This new liability section, Section 58.9, repealed joint and
several liability in environmental actions and replaced it with proportionate share liability. The
proposal that the Board adopts today for first notice establishes the procedures for determining
proportionate share. In the sections that follow, the Board will provide background for this
rulemaking, a summary of the proposed rules for first notice, and a more detailed summary of each
section of the proposed regulations, as well as a discussion of the issues which have arisen during
the hearings for each section and the Board’s resolution of those issues.
BACKGROUND
In the spring of 1995, the Illinois General Assembly passed House Bill 544 and Senate Bill
46. These bills created the Site Remediation Program (SRP) as a new Title XVII within the
Environmental Protection Act. Both bills were identical and set forth a risk-based system of
remediation for contaminated sites. Additionally, both House Bill 544 and Senate Bill 46 replaced the
former joint and several liability provisions for environmental actions with a new proportionate share
liability scheme. In the summer of 1995, Governor Edgar
amendatorily vetoed both bills to remove
the proportionate share liability provisions, leaving all other provisions of the bills intact. See 89th Ill.
Gen. Assem., House Proceedings, October 20, 1995, at 7605-06 (Governor’s Message). Within the
Governor’s veto messages, the Governor expressed concern regarding the proportionate share
liability provisions of the bills, including the issue of adequate funding for “orphan shares, those
shares of responsibility left uncovered because no responsible parties can be identified or held
liable.” See 89th Ill. Gen.
Assem., House Proceedings, October 20, 1995, at 7605 (Governor’s
Message). During the fall 1995 veto session, the General Assembly voted to accept Governor
Edgar’s amendatory veto of House Bill 544, thereby enacting the SRP without the proportionate
share liability provisions. House Bill 544 became law as Public Act 89-431, effective December 15,
1995. No action was taken on Senate Bill 46, and the bill subsequently died.
Besides establishing the SRP, Public Act 89-431 also mandated that the Illinois
Environmental Protection Agency (Agency) propose rules to the Board prescribing procedures and
standards for the administration of Title XVII within nine months after the effective date of the bill
(September 15, 1996). See 415 ILCS 5/58.11(c) (1996). The Board was then required to adopt
within nine months after receipt of the Agency’s proposed rules, rules that were consistent with Title
XVII, including provisions for classification of land use and the
voidance of No Further Remediation
letters. See 415 ILCS 5/58.11(c) (1996).
2
Public
Act 89-431 (Title XVII) was subsequently amended by Public Act 89-443. During the
fall 1995 veto session, the General Assembly passed House Bill 901, which in addition to containing
the identical contents of Public Act 89-431, also contained the original proportionate share liability
provisions vetoed out of Public Act 89-431. Public Act 89-443 also established additional funding for
the Hazardous Waste Fund to be used by the Agency in its efforts to address orphaned,
contaminated sites, thus addressing the Governor’s concerns regarding the “orphan share” issue.
With the addition of the funding scheme to address orphan sites, the Governor signed House Bill 901
into law as Public Act 89-443, effective July 1, 1996. This new liability scheme established by Public
Act 89-443 is contained in Section 58.9 of the Act.
Title XVII, as enacted by Public Act 89-431 and as modified by Public Act 89-443, is intended
to serve several important purposes. Those purposes are to: (1) establish a risk-based system of
remediation based on the protection of human health and the environment relative to present and
future use of the land; (2) assure that the land use for which remedial action was undertaken will not
be modified without consideration of the adequacy of such remedial action for the new land use; (3)
provide incentives for the private sector to undertake remedial action; (4) establish expeditious
alternatives for the review of site investigation and remedial activities, including a privatized review
process; and (5) assure that the resources of the Hazardous Waste Fund are used in a manner that
is protective of human health and the environment relative to present and future uses of the site and
surrounding area.
1
See 415 ILCS 5/58 (1996). In order to achieve the objectives of the SRP, the
Board was required to conduct three separate
rulemakings to implement the provisions of Title XVII.
See 415 ILCS 5/58.9(d), 58.11(c) (1996).
The first set of rules necessitated by Title XVII achieve the first two object
ives of Title XVII
and address “risk-based remediation objectives,” which is the focus of Section 58.5 of the Act. As
required by Section 58.11(c), the Agency proposed and the Board adopted rules, effective July 1,
1997, establish a tiered approach to remediation based on risks to human health and the
environment and a consideration of the proposed land use at a contaminated site. See
In the Matter
of: Tiered Approach to Corrective Action Objectives (TACO): 35 Ill. Adm. Code Part 742
(June 5,
1997), R97-12(A). Two further
rulemakings to refine the TACO standards were completed by the
Board on December 4, 1997, and June 4, 1998, respectively. See
In the Matter of: Tiered Approach
to Corrective Action Objectives (TACO): Amendments to 35 Ill. Adm. Code 742.105, 742.200,
742.505, 742.805, and 742.915
(December 4, 1997), R97-12(B);
In the Matter of: Tiered Approach
to Corrective Action Objectives: Amendments to 35 Ill. Adm. Code 742
(June 4, 1998), R97-12(C).
The second set of rules necessitated by Ti
tle XVII address the procedural aspects of
administering a State clean-up program when private parties are proceeding with site remediation,
either voluntarily or pursuant to a State enforcement action. These procedures are the focus of
Sections 58.4, 58.6, 58.7, 58.8, and 58.10 of the Act and achieve the third and fourth objectives of
Title XVII. As required by Section 58.11(c), the Agency proposed and the Board adopted rules,
1
The first four objectives were enacted under Public Act 89-431. The fifth objective was added by
Public Act 89-443. Additionally, in the spring of 1997, the General Assembly passed Senate Bill 939
as Public Act 90-123, effective July 21, 1997. This bill amended the Illinois Income Tax Act (35 ILCS
5/101 et seq. (1996)) and the Act by adding Section 58.14 to create the environmental remediation
tax credit. This tax credit allows taxpayers to credit against their Illinois income tax liability a portion
of the costs the taxpayer expended to clean up certain contaminated properties. Public Act 90-123
also added a sixth purpose of Title XVII and mandated that the Board adopt for second-notice rules
providing for the Agency’s review of environmental remediation costs within six months of receipt of
a rulemaking proposal by the Agency. The Board adopted these rules for second notice on July 8,
1998. See
In the Matter of: Review of Remediation Costs for Environmental Remediation Tax
Credit (Amendments to 35 Ill. Adm. Code 740)
(July 8, 1998), R98-27.
3
effective July 1, 1997, addressing those sections of the Act. See
In the Matter of: Site Remediation
Program and Groundwater Quality (35 Ill. Adm. Code 740 and 35 Ill. Adm. Code 620)
(June 5, 1997),
R97-11.
The third set of rules necessitated by Title XVII must address the procedural and substantive
aspects of applying proportionate share liability to environmental actions under Section 58.9 of the
Act. These provisions are the subject of this
rulemaking and address the fifth objective of Title XVII.
Specifically, Section 58.9 provides that no action may be brought “to requi
re any person to
conduct remedial action or to seek recovery of costs for remedial activity. . .beyond the remediation
of releases of regulated substances that may be attributed to being proximately caused by such
person’s act or omission or beyond such person’s proportionate degree of responsibility for costs of
the remedial action. . . . .” See 415 ILCS 5/58.9(a)(1).(1996). Section 58.9 further exempts from
performing remedial action any person who neither caused nor contributed, in any material respect,
to the release of regulated substances. See 415 ILCS 5/58.9(a)(2)(A) (1996). Section 58.9 also
provides that if the State of Illinois seeks to require a person to conduct remedial activities, the
Agency must provide notice to such person. The notice must include “the necessity to conduct
remedial action pursuant to this Title and an opportunity for the person to perform the remedial
action.” 415 ILCS 5/58.9(b) (1996). If the Agency has issued the statutorily-required notice, Section
58.9 provides that the Agency and person to whom such notice was directed may attempt to
determine the costs of conducting the remedial action that are attributable to the releases to which
such person or any other person caused or contributed. See 415 ILCS 5/58.9(c) (1996).
Nothing in Section 58.9, however, limits the authority of the Agency to provide notice under
Section 4(q) of the Act to undertake investigative, preventive, or corrective action under any other
applicable provisions of the Act. Moreover, the Director of the Agency is authorized to enter into
such contracts and agreements as may be necessary to carry out the Agency’s duties and
responsibilities under Section 58.9 as expeditiously as possible. See 415 ILCS 5/58.9(e). Section
58.9 also does not apply to any cost recovery action brought by the State under Section 22.2 of the
Act (415 ILCS 5/22.2 (1996)) to recover costs incurred by the State prior to July 1, 1996. See 415
ILCS 5/58.9(f) (1996).
In addition to establishing proportionate share liabi
lity in environmental actions, Section 58.9
also directed that the Board adopt, within 18 months of the effective date of the amendatory act,
rules and procedures for determining proportionate share. This statutory deadline was later
extended to January 1, 1999. See Pub. Act 90-484,
eff. August 17, 1997 (amended 415 ILCS 5/58.9
(1996)). The regulations adopted by the Board to implement Section 58.9 are to provide, at a
minimum, “criteria for the determination of apportioned responsibility based upon the degree to
which a person directly caused or contributed to a release of regulated substances on, in, or under
the site identified and addressed in the remedial action; procedures to establish how and when such
persons may file a petition for determination of such apportionment; and any other standards or
procedures which the Board may adopt pursuant to this Section.” 415 ILCS 5/58.10(d) (1996).
On December 5, 1996, the Board on its own motion opened a docket to solicit public
comments and/or proposals to assist in the promulgation of rules and procedures implementing the
proportionate share provisions of Section 58.9 of the Act. See
In the Matter of: Proportionate Share
Liability
(December 5, 1996), R97-16. On February 2, 1998, the Agency filed a
rulemaking proposal
with the Board to implement the provisions of Section 58.9. The proposal was accompanied by a
motion for acceptance, a Statement of Reasons, and an Agency Analysis of Economic and
4
Budgetary Effects of Proposed Rulemaking.
2
On February 5, 1998, the Board accepted this matter
for hearing. See
In the Matter of: Proportionate Share Liability (35 Ill. Adm. Code 741)
(February 5,
1998), R97-16.
The Agency’s proposal is the result of a coordinated effort between the Agency, the Illinois
Attorney General’s Office (AGO), and the Site Remediation Advisory Committee (SRAC). The
SRAC was established by Section 58.11, adopted as part of the SRP legislation, to advise the
Agency in developing regulatory proposals to implement Title XVII. See 415 ILCS 5/58.11 (1996).
The SRAC consists of one member from each of the following organizations: the Illinois State
Chamber of Commerce, the Illinois Manufacturers Association, the Chemical Industry Council of
Illinois, the Consulting Engineers Council of Illinois, the Illinois Bankers Association, the Community
Bankers Association of Illinois, and the National Solid Waste Management Association. See 415
ILCS 5/58.11(a) (1996).
In developing the proposal, the Agency met formally with SRAC at least nine
times between
February 14, 1997, and March 24, 1998. Additionally, several subgroups also held meetings during
this time period and informal contacts were made. Representatives from the AGO began attending
the Agency/SRAC meetings in October 1997. Additionally, a representative from the Illinois State
Bar Association attended many of the meetings. See
Stat. at 2-3; see also
Exh. 5 at 5. As a result of
these efforts, consensus was reached on many of the issues raised by this
rulemaking, but areas of
disagreement still exist.
Stat. at 3;
Exh. 5 at 5. The Agency identified the major areas of
disagreement to be the applicability provisions, the provisions on information orders, and the burden
and standard of proof. See
Stat. at 3.
In summary, the Agency’s proposal consists of three subparts. Subpart A contains the
applicability provisions, definitions, and other general information and procedures. Subpart B
contains procedures for determining liability and proportionate share where the State of Illinois has
filed a complaint with the Board seeking to require removal or remedial action (hereinafter referred to
as a “response”) or to obtain cost recovery. Subpart C is available to potentially responsible parties
(PRP) who are not the subject of an enforcement complaint and who have agreed among
themselves to allocate the entire costs of a response action.
The Board has held four public hearings in this matter.
3
Those hearings were held on May 4,
1998, in Springfield, May 12, 1998, in Chicago, and May 27 and June 10, 1998, in Springfield. At the
May 4, 1998 hearing, Gary P. King, manager of the Division of Remediation Management within the
Agency’s Bureau of Land, and John S.
Sherrill, an Agency employee in the Remedial Project
Management Section of the Division of Remediation Management within the Agency’s Bureau of
Land, testified and responded to prefiled questions. At the May 12, 1998 hearing, the Agency’s
witnesses again testified, along with Matthew J. Dunn, Chief of the State-wide Environmental
Enforcement/Asbestos Litigation Division of the AGO. At the May 27, 1998 hearing, the Agency’s
witnesses again testified, along with several other witnesses: Sidney M.
Marder, Executive Director
of the Illinois Environmental Regulatory Group (IERG); David L.
Rieser, a partner at Ross &
Hardies,
representing the Illinois Steel Group (ISG) and the Chemical Industry Council of Illinois (CICI); David
E. Howe, Senior Attorney at Caterpillar, Inc.; and Laurel
O’Sullivan, Staff Attorney for Business and
2
References to the Agency’s proposal will be cited to as “Prop. at __.” References to the
Agency’s Statement of Reasons will be cited to as “Stat. at __.” References to the hearing
transcripts will be cited to by volume as “Tr._ at __.” References to exhibits will be cited to
by number as “Exh. __.” Finally, references to public comments will be cited to by number
as “PC _.”
3
A prehearing conference was also held on October 28, 1997, in Springfield, Illinois.
5
Professional People for the Public Interest (BPI). At the fourth hearing on June 10, 1998,
Carey
Rosemarin, an attorney with
Jenner & Block, testified on behalf of Commonwealth
Edison (
Com
Ed),
4
and the Agency provided additional testimony in response to the other testimony presented at
the hearings.
5
During the course of the hearings, the following exhibits were accepted into the record:
Exhibit 1: Photograph of the
Steagall Landfill taken on November 6, 1985, by the
Agency.
Exhibit 2: Photograph of the
Steagal Landfill taken on November 6, 1985, by the
Agency.
Exhibit 3: Enlarged photograph of open refuse at the Logan Landfill taken in August
1996 by the Agency before remedial action was conducted at the site.
Exhibit 4: Enlarged photograph of the Logan Landfill taken in September 1997 by the
Agency after remedial action was conducted at the site.
Exhibit 5: Prefiled testimony of Gary King of the Agency.
4
On June 26, 1998, Com Ed filed a motion with the Board to correct the transcript from the
June 10, 1998 hearing. According to the motion, various statements of Rosemarin were
incorrectly transcribed. Com Ed therefore requests that the transcript be corrected. As no
response to the motion was received and no prejudice will result from the granting of the
motion, the Board hereby grants Com Ed’s motion to correct the transcript. Accordingly, the
Board makes the following revisions to the June 10, 1998 transcript: (1) line 19 on page 102
is corrected to read “some crucial modifications are effected”; (2) line 7 on page 103 is
corrected to read “Quoting from 58.9 in pertinent part, and I”; (3) line 9 on page 103 is
corrected to read “The operative provisions of 58.9 read as”; (4) line 14 on page 104 is
corrected to read “of the restatement to support 210(d)(3).”; (5) line 13 of page 107 is
corrected to read “58.9 was enacted against the backdrop of years and”; (6) line 25 of page
107 is corrected to read “There is similar authority, in Biomedical”; (7) line 15 of page 108 is
corrected to read “disproportionate liability, again in derogation of the”; (8) line 3 of page 111
is corrected to read “The bases of this position are”; (9) line 10 of page 111 is corrected to
read “any consideration of the potential withdrawal of”; (10) line 13 of page 112 is corrected
to read “Initially, I refer to the”; (11) line 9 of page 113 is corrected to read arbitrary and
capricious if the Agency relies on”; (12) line 13 of page 114 is corrected to read “has existed
at the national level and reflected in the”; (13) line 24 of page 133 is corrected to read
“percent is not foisted upon them”; and (14) line 13 of page 137 is corrected to read “I can’t
imagine any of the non-volume,”.
5
Public Act 90-489, which amended Section 27 of the Act (415 ILCS 5/27 (1996)), requires
the Board to request that the Department of Commerce and Community Affairs (DCCA)
conduct an economic impact study (EcIS) on certain proposed rules prior to adoption of those
rules. By letter, dated February 5, 1998, the Board requested that DCCA conduct such a
study. At the June 10, 1998 hearing, the Board asked for public comment on DCCA’s
decision not to conduct an economic impact study for this rulemaking. Tr.4 at 138-40. The
Board received no comment on this issue.
6
Exhibit 6: Prefiled testimony of John
Sherrill of the Agency.
Exhibit 7: Agency’s document entitled “Allocation Scenarios Illustrating Approaches
to Apportionment for Liable Parties.”
Exhibit 8: Agency’s document entitled “4(q) Notice Summary 1984 through 1997.”
Exhibit 9: Prefiled testimony of Matthew Dunn of the AGO.
Exhibit 10: Prefiled testimony of Sidney
Marder of the IERG.
Exhibit 11: Prefiled testimony of David
Rieser on behalf of the ISG and CICI.
Exhibit 12: Prefiled testimony of David
Howe of Caterpillar, Inc.
Exhibit 13: Testimony of Laurel
O’Sullivan on behalf of BPI.
Exhibit 14: Agency’s document entitled “Agency’s Errata Sheet Number 1.”
6
Exhibit 15: Agency’s document entitled “Hazardous Waste Fund (HWF) Fiscal Years
1998 and 1999 Projections for Remedial Work.”
Exhibit 16: Alternative language for Section 741.210(d) submitted by
Carey
Rosemarin on behalf of
Com Ed.
In addition to the testimony and exhibits presented at hearing, the Board has also received
the following public comments in this matter:
PC 1:
Comments of the IERG, submitted by Whitney
Rosen (3/21/97).
PC 2:
Comments of the National Association of Independent Insurers, submitted by
Richard
Hodyl, Jr., Insurance Services Counsel (3/28/97).
PC 3:
Supplemental comments of the IERG, submitted by Whitney
Rosen (2/2/98).
PC 4:
Comments of Thomas A. Ryan on behalf of Browning-Ferris Industries of
Illinois, Inc. (BFI) (4/20/98).
7
PC 5: Comments of Laurel
O’Sullivan on behalf of BPI (7/8/98).
PC 6: The Agency’s Posthearing Comments (7/14/98).
PC 7: The
AGO’s Posthearing Comments (7/14/98).
6
The errata sheet suggests that certain revisions to the original proposal be made. These revisions
are primarily based on questions and comments raised during the hearings.
7
PC 1 through PC 4 were received before the Board held hearings in this matter.
Additionally, the
comments of Thomas A. Ryan on behalf of BFI were originally submitted as
prefiled testimony. However, because Ryan was unable to attend the hearings in this matter, he
asked that the testimony be considered as a public comment. The hearing officer granted this
request at the first hearing in this matter.
7
PC 8: Comments of
Karaganis & White, Ltd. (
Karaganis & White) (7/14/98).
PC 9: Comments of the City of Chicago, Department of Environment (City)
(7/14/98).
PC 10: Comments of
Carey Rosemarin on behalf of
Com Ed (7/14/98).
PC 11: Comments of the United States Environmental Protection Agency (USEPA)
(7/14/98).
PC 12: Public Comments of
Mohan, Alewelt,
Prillaman &
Adami (Mohan) (7/15/98).
PC 13: Posthearing Comments of David
Rieser on behalf of the SRAC, the ISG, and
the CICI (7/17/98).
PC 14: Posthearing Comments of Randy A.
Muller on behalf of the Illinois Banker’s
Association (7/21/98).
PC 15: Posthearing Comments of Whitney
Rosen on behalf of the IERG (7/23/98).
8
During the course of the
prefirst-notice period, approximately 1,100 pages of testimony,
questions, public comments, responses, and exhibits have been gathered. In adopting the proposed
rules for first notice, the Board has reviewed and considered all matters of record, including the
proposal, testimony, exhibits, and public comments submitted by the Agency and other participants
in this
rulemaking. The Board commends the Agency, the SRAC, the AGO, and all others who
participated in this proceeding. Proportionate share liability in environmental law is a new concept in
Illinois and it raises some difficult and complex issues. The time and thought that the participants
devoted to this
rulemaking gave the Board a well-developed record upon which to resolve those
issues. The Board looks forward to the continued participation of these and other participants in this
rulemaking.
Following the adoption of this order, the proposed rules will be published in the
Illinois
Register
, upon which a 45-day public comment period will begin. As proportionate share is a new
concept in Illinois, the Board encourages all participants and others to review the Board’s proposal
and comment on its merits within the 45-day comment period. The Board must adopt final
regulations to implement Section 58.9 before January 1, 1999. The last regularly scheduled Board
meeting before that date is December 17, 1998.
SUMMARY
The purpose of Part 741 is to establish procedures for the determination of liability and
allocation of proportionate share for the performance or cost of a response resulting from the release
or substantial threat of a release of regulated substances. See 415 ILCS 5/58.9(d) (1996). Subpart
A contains the applicability provisions, definitions, and other general information and procedures.
Subpart A also provides for discovery before an action is filed for the limited purpose of ascertaining
the identify of persons potentially liable. Subpart A also contains allocation factors and allows for the
modification of a final allocation determination based on newly discovered evidence.
8
PCs 13, 14, and 15 were received after the deadline for filing posthearing comments. The
three public comments were accompanied by a motion to file the comments
instanter
. As no
prejudice will result from their filing, the motions to file
instanter
are hereby granted.
8
Subpart B contains procedures for determining proportionate share where a complaint has
been filed with the Board by the Agency, the State of Illinois, or any person. The Subpart further sets
forth the requirements for asserting proportionate share liability either in a complaint or as an
affirmative defense, and sets forth provisions concerning necessary parties, pleading requirements,
and provides for the filing of stipulations and settlements.
Subpart C contains procedures for potentially liable persons who are not the subject of a
complaint and who have agreed among themselves to allocate the entire cost of a response action.
These parties may initiate a Subpart C proceeding by filing a joint petition with the Board. At the
outset, the participants may choose to proceed to mediation or to directly proceed with the Board’s
voluntary allocation proceeding. If the parties elect to engage in mediation, the subpart sets forth the
procedures for mediation. If, at any time, the parties agree to a settlement, the parties can either file
a motion to dismiss the allocation proceeding before the Board or file a stipulated settlement
agreement with the Board. If no settlement is reached, the parties may notify the Board and proceed
through the Board allocation procedure.
Because of the Board has changed and reorganized many sections of the Agency’s proposal,
the following is a conversion chart for aid in referring to the Agency’s proposal:
Agency Proposal
Board Draft
741.100
741.100
741.105
741.105
741.110
741.110
741.115
741.115
741.120
741.120
741.125
741.125
741.150
741.200
741.200
741.205
741.210
741.215
741.220
741.230
741.205
741.135
741.220
741.210(b)
741.225
741.210(d)
741.225
741.215
741.140
741.220
741.145
741.300
741.300
741.305
741.305
741.310
741.130
741.315
741.310
741.320
741.135
741.315
741.320
9
741.325
741.330
741.325
741.335
741.330
741.140
741.335
741.145
741.340
DISCUSSION
As noted earlier, the proposed regulations contain three subparts. This section of the opinion
sets forth a more detailed description of each subpart, along with a discussion of the Board’s
resolution of any issues that have arisen with respect to any corresponding section of the Agency’s
proposal.
Subpart A
Subpart A sets for
th the general provisions of Part 741. Specifically, Subpart A (1) identifies
the purpose of Part 741; (2) identifies the circumstances under which a Subpart B or Subpart C
proceeding may be initiated and specifies circumstances under which Part 741 is not applicable; (3)
includes definitions for certain terms used in the proposed regulations; (4) sets forth a procedure
whereby persons are able to conduct discovery before an action is filed; (5) requires that notice be
given to a person whom the State seeks to require to conduct a response action and provides what
that notice must include (commonly referred to as a Section 58.99b) notice); (6) provides that the
Agency may offer the person to whom notice is given an opportunity to meet with the Agency to
resolve outstanding issues; (7) requires that the Agency be given notice of, and may participate in,
any proceeding seeking allocation of proportionate shares of liability; (8) includes provisions
concerning mandatory disclosure and discovery; (9) provides procedures for the conduct of
hearings; (10) provides procedures for the Board’s allocation of proportionate shares of liability; (11)
sets forth factors the Board may consider in determining allocations; (12) allows for a final allocation
determination to be adjusted under certain circumstances; and (13) includes a
severability provision
in the event a section, subsection, sentence, or clause of the regulations is judged invalid.
At the hearings and in the public comments, issues were raised regarding app
licability
(Section 741.100 Applicability),
precomplaint discovery (Section 741.115 Discovery Before an Action
is Filed), notice under Section 58.9(b) of the Act (Section 741.120 Resolution of Issues in Section
58.9(b) Notice), and adjustment of allocation determinations (Section 741.145 Relief from Final
Orders). These issues, along with the Board’s resolution of these issues, are discussed below.
Section 741.100 Purpose
Section 741.100 sets forth the purpose of the Part 741 rules. As originally propo
sed by the
Agency, this section provided that the purpose of Part 741 was to
“define applicability and establish
procedures under Section 58.9 of the Act for the determination of liability and the allocation of
proportionate share for the performance or cost of removal or remedial action resulting from the
release or substantial threat of a release of regulated substances or pesticides.” The Board has
made two changes to the language of this section as originally proposed by the Agency. First, the
Board has changed the language from “removal or remedial action” to “response.” As the
definitions make clear, the term response encompasses both removal and remedial action.
Therefore, the Board has used the term response action throughout the rules, instead of removal
or remedial action. Second, the Board has removed the reference to pesticides. Regulated
10
substances include hazardous substances under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA). CERCLA includes pesticides as a category
of hazardous wastes. Thus, the Board does not believe that a separate definition of pesticides is
needed, as pesticides are included in the definition of regulated substances. Accordingly, the
Board has deleted the definition of pesticides and any references to pesticides.
Additionally, the Board notes that while the Agency’s proposed regulations for Part 741
cover the “performance or cost of removal or remedial action resulting from the release or
substantial threat of a release of regulated substances or pesticides,” Section 58.9 only speaks of
remedial action for releases of regulated substances. The Board acknowledges that the Agency
included removal, and substantial threat of a release to keep the Part 741 provisions consistent
with other regulations under Title XVII and Section 58.9(a)(1). See Stat. at 1, n.1. However,
because Section 58.9 does not include these concepts, the Board seeks comment on whether these
concepts are appropriate to include in the regulations.
Section 741.105 Applicability
Section 58.9(a)(1) of the Act provides that:
Notwithstanding any other provisions of this Act to the contrary, including subsection
(f) of Section 22.2, in no event may the Agency, the State of Illinois, or any person
bring an action pursuant to this Act or the Groundwater Protection Act to require any
person to conduct remedial action or to seek recovery of costs for remedial activity
conducted by the State of Illinois or any person beyond the remediation of releases of
regulated substances that may be attributed to being proximately caused by such
person’s act or omission or beyond such person’s proportionate degree of
responsibility for costs of the remedial action of releases of regulated substances that
were proximately caused or contributed to by 2 or more persons. 415 ILCS
5/58.9(a)(1) (1996).
9
In the Agency’s proposal, Section 741.105 sets forth the applicability provisions. Subsection
(a) provides that Subpart B is applicable whenever a complaint has been filed with the Board
seeking to require any person to conduct a response action or to recover the cost of a response
action performed by the State. Subsection (b) provides that Subpart C is applicable when any or all
PRPs at a site have agreed to allocate the entire costs of the response action among themselves.
Subpart C is not available if a complaint has been filed in any forum, including with the Board under
Subpart B. Participation in Subpart C also requires an Agency-approved Remedial Action Plan
(RAP) under the SRP Program or a written agreement with the Agency regarding the performance of
a response action following the issuance of notice under Section 4(q) or 58.9(b) of the Act. 415 ILCS
5/4(q), 58.9(b) (1996).
Although Section 58.9 begins with the phrase “[n]
otwithstanding any other provisions of this
Act to the contrary,” the Agency proposed that the limitations in Section 58.1 of the Act, which by its
terms applies to all provisions of Title XVII, be limits on the applicability of the regulations under
Section 58.9. Section 58.1(a)(2) provides:
9
The language of Section 58.1(a)(1) has remained unchanged since it was initially proposed in
House Bill 544 and Senate Bill 46.
11
Any person, including persons required to perform investigations and remediations
under this Act, may elect to proceed under this Title unless (
i) the site is on the
National Priorities List (Appendix B of 40 CFR 300), (ii) the site is a treatment,
storage, or disposal site for which a permit has been issued, or that is subject to
closure requirements under federal or State solid or hazardous waste laws, (iii) the
site is subject to federal or State underground storage tank laws, or (iv) investigation
or remedial action at the site has been required by a federal court order or an order
issued by the United States Environmental Protection Agency. To the extent allowed
by federal law and regulations, the sites listed under items (
i), (ii), (iii), and (iv) may
utilize the provisions of this Title, including the procedures for establishing risk-based
remediation objectives under Section 58.5. 415 ILCS 5.58.1(b)(2) (1996).
Thus, the Agency’s proposal limited the applicability of Section 58.9 by the limitations contained in
Section 58.1.
In the Agency’s errata sheet (
Exh. 14), (which reflected changes that the Agency made to its
original proposal after certain concerns were raised at hearing), the Agency proposed that Part 741
was not applicable to:
2)
Sites on the National Priorities List;
3)
Sites where investigative or remedial action at the site has been required by
a federal court order or an order issued by the United States Environmental
Protection Agency;
4)
The owner or operator of a treatment, storage or disposal site;
A)
For which a current permit has been issued or is required under State
or federal solid or hazardous waste laws: or
B)
That is subject to closure or corrective action requirement under State
or federal solid or hazardous waste laws:
5)
The owner or operator of an underground storage tank system subject to
federal or state underground storage tank laws.
Based on the language of the Agency’s proposed applicability language,
three different
positions have arisen concerning the propriety of the applicability language. The first is the Agency’s
and the
AGO’s position that Part 741 is limited by the limitations on Title XVII contained in Section
58.1; the second is that there are no limitations on Part 741, and thus Part 741 applies to all sites;
and the third is that there should be some limitations on the applicability of Part 741, but the
limitations are not as broad as the Agency proposes. Resolution of this issue depends on how the
statutory language of Section 58.9 of the Act is construed.
The Illinois Supreme Court has set forth the fundamental rules of statutory construction:
In construing a statute, the court must give effect to the intent of the legislature. To
ascertain the legislative intent, the court must look first to the language of the statute,
examining the language as a whole, and considering each part or section in
connection with every other part or section. Where the meaning of a statute is not
clear from the statutory language itself, the court also properly considers the purpose
of the enactment and the evils to be remedied. Further, where the statutory language
12
is unclear, the legislative history of the statute may aid the court in determining the
legislative intent.
Antunes v.
Sookhakitch
, 146 Ill. 2d 477, 484, 588 N.E.2d 1111,
1114 (1992); see also
In Re
Petition to Annex Certain Territory to Village of North
Barrington
, 144 Ill. 2d 353, 362, 579 N.E.2d 880, 884 (1991).
Additionally, each part of a statute should be interpreted in light of every other provision, and the
entire statute should be construed to produce a harmonious whole.
Dow Chemical Co. v.
Department of Revenue
, 224 Ill. App. 3d 263, 266, 586 N.E.2d 516, 519 (1st
Dist. 1991).
Based on these principles of statutory construction, the Board finds that Section 58.9 was not
intended to be limited by the provisions of Section 58.1 of Title XVII. Thus, the Board concludes that
Section 58.9 applies to all remediation sites, rather than only those sites not exempted from XVII by
Section 58.1.
To reach this outcome, the Board reviewed the language of both Sections 58.1 and 58.9. In
viewing the language of the two sections, the Board finds that Section 58.1 and 58.9 address
different legal aspect of Title XVII, and thus they can be read together without conflict or ambiguity.
Section 58.1 identifies the sites that may be enrolled in the SRP and the sites that may not be
enrolled in the SRP. Section 58.9, on the other hand, addresses the liability of persons for remedial
action and costs. Additionally, Section 58.1 provides that persons may elect to proceed under Title
XVII, while the proportionate share liability provisions of Section 58.9 apply to actions involving
remedial actions or costs recovery for the same. The type of site involved is not relevant to the
question of a person’s liability or the extent of such liability. Nothing in Title XVII requires that these
two sections coincide; each is independent and stands alone. The Board understands that the
Agency and the
AGO’s seeks to link the two sections together in an attempt to ensure that federally
delegated programs are not jeopardized. Nevertheless, Section 58.1 and 58.9 have distinct
purposes and must be read independently.
Further, Section 58.1 defines the types of sites to which Title XVII may apply, and it
specifically lists several sites to which Title XVII is not applicable. Thus, based on the language of
Section 58.1, all the provisions in Title XVII, including Section 58.9, would appear to be inapplicable
to sites excluded from Title XVII by Section 58.1. Section 58.9, however, begins by noting that
“[n]
othwithstanding any provisions of this Act to the contrary.” Consequently, the question for the
Board to decide is whether the “notwithstanding” phrase of Section 58.9 was intended to exclude
Section 58.9 from the limitations in Section 58.1. We conclude that it was.
The ordinary meaning of the phrase “notwithstanding” is defined as “without prevention or
obstruction from or by; in spite of.”
Webster’s Third New International Dictionary 1545 (1981).
Therefore, a literal interpretation of the phrase “notwithstanding” in the context of Section 58.9(a)
could only mean that any action brought against a person to require a person to conduct remedial
action or to seek recovery of costs for remedial activity beyond a person’s proportionate degree of
responsibility is prohibited. Thus, Section 58.9 applies to all actions brought pursuant to the Act or
the Groundwater Protection Act, which seek remediation or costs, even those actions involving sites
excluded from Title XVII by Section 58.1. Because the language of Section 58.9 is clear, the Board
cannot read into it exceptions and limitations where none are specific or can be inferred by clear
implication. To adopt the Agency’s position would render meaningless the “notwithstanding” phrase
of Section 58.9(a).
Other courts that have interpreted the phrase “notwithstanding” have similarly found this
phrase to be unambiguous. See
American Federation of State, County, and Municipal Employees v.
Chief Judge of the Circuit Court of Cook County
, 209 Ill. App. 3d 283, 568 N.E.2d 139 (1st
Dist.
1991);
Department of Central Management Services v. State Labor Relations Board
, 249 Ill. App. 3d
13
740 (4th
Dist. 1993). Further, two circuit courts which have interpreted Section 58.9 have each found
the language of Section 58.9 to be clear and unambiguous and free of limitations. While the Board
is not bound by these decisions, the Board does find them persuasive.
The first decision addressing the applicability of Section 58.9 was entered on July 9, 1997, in
People of the State of Illinois v. Designer Metal Products, Inc., Case No. 96-CH-111 (13th
Dist.
LaSalle County). In that case, the owner of Designer Metal Products and the contaminated property
died and the estate was handed over to the trustee to liquidate the estate and pay off all its creditors.
The State sought to compel the defendant estate to pay for remediation of the property. The
defendant sought to dismiss the action based on Section 58.9(a)(2)(F) which precludes the State
from seeking remedial action or response costs from a corporate fiduciary that has acquired
ownership or control of a site through acceptance of a fiduciary appointment. The State argued that
it was seeking enforcement under Section 21(f) of the Act, not Section 58, and therefore, the
limitations of Section 58.9 were inapplicable. The circuit court disagreed and held that the language
of Section 58.9(a) was clear in that it limited the State’s authority under the entire Act, not just Title
XVII.
In the second case, the circuit court denied the State’s motion to strike an affirmative defense
claimed by both Midwest
Metallics,
L.P.,
S.D. Metals, Inc., and James
Pielet, based on Section 58.9
of the Act. People v. Cole Taylor Bank, Case No. 97-CH-330 (1st
Dist. Cook County). In that case,
the defendants filed several affirmative defenses, including one alleging that the State could not seek
to compel defendants to remediate a property contaminated with a variety of wastes. The court
denied the State’s motion to strike the affirmative defense, noting that Section 58.9(a)(1) refers to the
“Act” and therefore applies to all remedial action brought under the Act. While the Board is not
bound by these circuit court decisions, the Board finds that they are persuasive.
Based on these considerations, the Board concludes that the express terms of Section 58.9
are clear and provide that the applicability of proportionate share liability is not limited by any other
provisions of the Act to the contrary. Thus, the Board has not included the Agency’s proposed list of
limitations on Part 741 in the rules adopted today for first notice.
The Board recognizes that this interpretation of Section 58.9 may jeopardize Illinois’ federally
authorized, delegated and/or approved environmental programs. For example, the USEPA notes
that in order to receive authorization under Section 3006 of the Resource Conservation and
Recovery Act of 1976 (RCRA), 42 U.S.C. 6926, a State must have a program equivalent to the
federal program and provide for adequate enforcement. Section 3009 of RCRA, 42 USC 6929,
prohibits a State from imposing requirements less stringent than those authorized under RCRA
Subtitle C respecting the same matter as governed by federal RCRA Subtitle C regulations.
Requirements for adequate enforcement authority at 40 CFR 271.16(b)(2) provide that the burden
of proof and degree of knowledge or intent required under state law for establishing violations in
actions for civil penalties and criminal remedies shall be no greater than the burden of proof or
degree of knowledge or intent USEPA must provide when it brings an action under RCRA. PC 11 at
2. If proportionate share liability applies to RCRA facilities, the USEPA maintains that the Section
58.9 could make the State RCRA program less stringent by allowing owners of hazardous waste
treatment, storage and disposal facilities to avoid liability for remedial activity and costs under RCRA
and would make it much more difficult for the State to enforce RCRA corrective action requirements.
PC 11 at 3. The USEPA contends that the same proposition holds true for RCRA Subtitle D, RCRA
Subtitle I, the Clean Water Act, and the Safe Drinking Water Act. Under these programs as well,
USEPA contends Illinois may not meet minimum requirements, and the State program would be less
stringent. PC 11 at 3-5.
14
While the Board recognizes the problems posed by the Age
ncy, the AGO, and the USEPA,
we find that the clear and unambiguous language used by the legislature in Section 58.9 leaves no
room for an alternative Board interpretation. Moreover, even USEPA acknowledges the Board’s
dilemma here. While USEPA supports the efforts to impose limitations on Section 58.9, given the
two circuit court interpretations of the law, USEPA has “some doubts whether the regulations will
overcome the courts’ reading of the statutory language.” PC 11 at 5. Thus, USEPA contends that
“[a] statutory amendment may be necessary to assure compliance with the legal requirements for
federally delegated, authorized, or approved programs in Illinois. USEPA states that it is “currently
discussing with the State the effects of certain Illinois laws upon Illinois’ authorized, delegated and/or
approved federal environmental programs, proposed Attorney General interpretations of those laws,
proposed amendments to those programs and applications for new programs, and may include
Section 58.9 in those discussions.” PC 11 at 5. The Board agrees that if the USEPA position
regarding Illinois’ delegated programs is correct, a legislative amendment is necessary to assure
Illinois’ compliance with the federal regulations, as the Board does not have the authority to read into
Section 58.9 limitations that are not explicitly found there.
Finally, the Board notes that even if the Board were to conclude that the limitations in Section
58.1 applies to Section 58.9, legislative action would still be needed to assure Illinois’ delegated
programs. The sites exempted from Title XVII are sites for which a permit has been issued or that
are subject to federal or State hazardous waste laws and sites subject to federal or State
underground storage tank laws. However, the problems with Illinois’ delegated programs extend
beyond RCRA and UST sites and include sites subject to the Clean Water Act and the Safe Drinking
Water Act as well. Because the statute does not specifically exempt these programs, the Board is
unable to exempt them from this rule. Therefore, Illinois’ delegated programs may still be in
jeopardy even with the Board reading certain limitations into Section 58.9. This is a legislative
problem which the Board is also powerless to remedy.
For the foregoing reasons, the Board has not included in the applicability section the
limitations on Title XVII contained in Section 58.1.
Section 741.110 Definitions
Section 741.110 contains definitions of terms used in the proposed regulations. The
definitions are primarily from the Act with minor modifications in a few instances. For example,
the Agency proposal combining the definition of remedial action contained in Sections 3.34 and
58.2 of the Act (415 ILCS 5/3.34, 58.2 (1996)). The Agency combined these definitions because
sites may or may not be performing remedial action in the SRP. See Stat. at 7-8. Thus, a broader
definition of “remedial action” was needed.
The Board has made three changes to the definition section as proposed by the Agency.
First, the Board has not included in Section 741.110 the definition of “unallocated share” as
proposed by the Agency in its errata sheet. See Exh. 14 at 3. As amended by the Board, the
regulations never use the term, and thus the Board has not included the definition of “unallocated
share” in Section 741.110. Secondly, the Board has added to the end of the definition of
“Remedial Action” the following underscored language: “Remedial action means activities
associated with compliance with the provisions of Sections 58.6 and 58.7 of the Act, including,
but not limited to, the conduct of site investigations, preparation of work plans and reports,
removal or treatment of contaminants, construction and maintenance of engineered barriers,
and/or implementation of institutional controls.” This language was added to keep the definition
15
of “remedial action” in these rules consistent with the definition of “remedial action” contained in
35 Ill. Adm. Code 740.120. Finally, as noted above, the Board has deleted the definition of
pesticides as it is already a “regulated substance.”
Karaganis & White urges the Board to adopt a definition of the term “action.” PC 8 at 8.
Karaganis & White asserts that Section 58.9 provides that the State or any person may not pursue
an “action” to require any person to conduct remedial action or to seek recovery of costs for
remedial activity beyond that person’s proportionate share of responsibility for the release.
Karaganis & White contends, however, that the Agency’s proposed regulations do not define the
term “action,” but instead limit the procedures for attempting to determine a person’s portion of
responsibility to after the State has filed a complaint. Thus, Karaganis & White believes that the
Agency’s proposal creates a distinction between a complaint filed before the Board, which is
considered an action, and a notice letter, issued pursuant to Section 4(q) or Section 58.9(b) of the
Act (415 ILCS 5/4(q), 58.9(b) (1996)), which is not considered an action. PC 8 at 8. Karaganis
& White asserts that the distinction created is not supported by the language of the Act. Rather,
it contends that Section 58.9(c) provides that once notice has been issued, the Agency and the
person receiving the notice may attempt to determine the costs of conducting the remedial action
in accordance with rules promulgated by the Board. Accordingly, Karaganis and White urges the
Board to adopt a definition of “action” which includes the issuance of notice under either Section
4(q) or Section 58.9(b). PC 8 at 9.
The Board declines at this time to make the change Karaganis & White requests. Section
58.9(b) provides that the Agency must provide notice to a person in which the State seeks to
require that person to conduct remedial activities for a release or threatened release of a regulated
substance. See 415 ILCS 5/58.9(b) (1996). If the Agency has issued such notice, the statute
provides that the Agency and the person to whom the notice was sent may attempt to determine
the costs of conducting the remedial action that are attributable to that person. See 415 ILCS
5/58.9(c) (1996). Section 58.9(c) then goes on to state that “[d]eterminations pursuant to this
Section may be made in accordance with rules promulgated by the Board.” See 415 ILCS
5/58.9(c) (1996).
Because the statute states that determinations under Section 58.9(c) “may” comply with
the Board’s proportionate share rules, the Board cannot adopt a definition of “action” which
would require the Agency to use the procedures in this Subpart. The Board therefore declines to
adopt a definition of “action” as suggested by Karaganis & White. However, as Karaganis &
White was the only participants to comment on this issue, the Board would appreciate comment
during the first-notice period from others on whether a definition of “action” is needed and how
that term should be defined.
Section 741.115
Discovery Before an Action is Filed
Section 741.115 of the Agency’s proposal contains a procedure allowing the Agency to
obtain an information order from the Board in cases where the proportionate share liability rules
apply and before an action is filed with the Board. The provisions on information orders
16
contained in the Agency’s proposal are similar to those provided under Section 104(e)(2) of
CERCLA, 42 USCS § 9604(e)(2).
Specifically, Section 741.115 of the Agency’s proposal provided that the Board could issue
information orders upon request by the Agency and a demonstration of a reasonable basis for belief
that a release or substantial threat of a release may exist. The information order would then require
the person named to furnish to the Agency, upon reasonable notice, the necessary information or
documents. Section 741.115 identified types of information subject to the order, two methods of
providing such information, and provided for penalties in case of noncompliance.
In response to comments, the Agency submitted an amended Section 741.115 in its errata
sheet. See
Exh. 14. The new Section 741.115 generally conforms to that originally proposed,
except for the following major differences: (1) the section maintains that the Agency will file a
petition to commence the information order process, and provides notice to the person to whom the
order is to be directed; (2) the petition must contain certain items including a statement supported by
affidavit of the Agency’s basis for belief that there is a release or substantial threat of a release and
that the respondent has or may have the information sought; and (3) the section provides for the
filing of a response and a reply.
Two major issues have been identified regarding information orders. Those issues are: (1)
whether the Board has the authority to adopt a provision regarding information orders; and (2)
whether information orders are necessary. These issues will be addressed in turn.
Whether the Board has the Authority to Adopt Section 741.115.
The Agency maintains that
such authority does exist. The Agency admits that Section 58.9 of the Act does not expressly
authorize information orders. See PC 6 at 13; Tr.1 at 56. However, the Agency argues that the
Board has broad discretion under Section 58.9(d) to adopt procedures to implement proportionate
share liability. PC 6 at 3;
Exh. 5 at 8, 17; Tr.1 at 56. The Agency asserts that this broad grant of
authority is sufficient for the Board to adopt provisions pertaining to information collection. PC 6 at 3.
The Agency also argues that the legislature does not have to spell out every detail in order for an
administrative agency to exercise its
rulemaking authority. PC 6 at 3.
The AGO and BPI share the Agency’s view that the Board has authority to adopt Section
741.115. In support, the AGO also cites the Board’s broad grant of authority in Section 58.9 to adopt
rules and procedures to implement Section 58.9. PC 7 at 4;
Exh. 9 at 6. BPI agrees that the Board’s
authority for granting the Agency’s request for an information order is found within the broad
language of Section 58.9. PC 5 at 3.
Conversely, a number of intereste
d parties believe that the Board does not have the authority
to adopt Section 741.115.
Com Ed, Mohan, and SRAC all assert that the Board does not have the
authority necessary to adopt Section 741.115.
Com Ed supports its view by making the following
arguments: (1) that the General Assembly has not granted analogous authority to the Board in any
Illinois environmental statute; (2) that Section 58.9(d), on which the State relies, merely authorizes
the Board to adopt rules and procedures for determining proportionate share; (3) that even the State
admits Section 58.9 does not expressly provide any statutory authority for the issuance of such
information orders, and that the State’s position impermissibly expands the statutory grant of
authority in 58.9(d); (4) that by not expressly granting information gathering authority to the Agency,
the General Assembly has implicitly recognized that the Agency does not require information orders;
and (5) that, because the legislature has not granted the Board the authority to issue information
orders, issuance of an order by the Board may constitute an unreasonable search and seizure in
violation of the Fourth Amendment. See PC 10 at 17-20; Tr.4 at 114-116.
17
Com Ed also cites
Bio-Medical Laboratories, Inc. v.
Trainor
, 68 Ill. 2d 540, 370 N.E.2d 223
(1977) (hereinafter
Bio-Medical
), for the proposition that any power or authority claimed by an
administrative agency must find its source within the provision of the statute by which it is created.
Com Ed also relies on
Landfill Inc. v. Pollution Control Board
, 74 Ill. App. 2d 541, 545, 387 N.E.2d
258, 262 (Ill. 1978) (hereinafter
Landfill
) and
Citizens For a Better Environment v. United States
Environmental Protection Agency
, 649 F. 2d 522, 525 (7th
Cir. 1981), for the proposition that where
an administrative agency promulgates rules without the statutory authority to do so, the rules are
void.
Mohan asserts that the General Assembly did not authorize the Board to create broad
powers such as information orders.
Mohan further contends that the information order proposal is
not rulemaking, but legislating, and that if the Agency feels so strongly that this power is necessary, it
should present that need to the General Assembly. PC 12;
Exh. A at 4.
Reiser, testifying for SRAC and representing CICI and ISG, also asserts that there is no
language which specifies information orders in the statute, and therefore no statutory authority exists
for the proposal. Tr.3 at 35;
Exh. 11 at 7; PC 13 at 3.
Reiser also adds that the Board is a creature
of its enabling legislation and has only those powers enumerated to it in that legislation. Thus,
Reiser concludes that since Title XVII did not provide for an information order, or for any of the
procedures therein, Section 741.115 cannot be adopted by the Board. PC 13 at 3.
As noted, Section 58.9(d) of the Act requires the Board to adopt rules and procedures for
determining proportionate share. This section further mandates that the rules provide “criteria for the
determination of apportioned responsibility based upon the degree to which a person directly caused
or contributed to a release of regulated substances on, in, or under the site identified and addressed
in the remedial action; procedures to establish how and when such persons may file a petition for
determination of such apportionment; and any other standards or procedures which the Board may
adopt pursuant to this Section.” See 415 ILCS 5/ 58.9(d) (1996).
Given the Board’s broad authority to adopt procedures to implement the proportionate share
provisions, the Board finds that it does have the authority to adopt provisions regarding information
orders. Moreover, the Board notes that, even absent the broad grant of authority in Section 58.9, the
Board would still have the authority to adopt such provisions. Generally, courts have recognized that
an administrative agency has authority to regulate and execute the provisions of the statute and to
carry out the powers conferred upon it. See
Eastman Kodak Co. v. Fair Employment Practices
Comm’n., 86 Ill. 2d 60, 70, 426 N.E.2d 877, 881-82 (1981); see generally
Freedom Oil Co. v.
Pollution Control Board
, 275 Ill. App. 3d 508, 655 N.E.2d 1184 (4th
Dist. 1995). Moreover, courts
have found that “an express legislative grant of authority to an administrative agency includes the
power to do all that is reasonably necessary to perform the duty conferred by statute,” and that “an
agency is to be given wide latitude in determining what actions are reasonably necessary.” See
Oak
Liquors, Inc. v.
Zagel, 90 Ill. App. 3d 379, 380-81, 413 N.E.2d 56, 58 (1st
Dist. 1980). As explained
below, the Board finds that a modified version of the Agency’s proposal concerning information
orders is necessary for the proper and efficient functioning of the rules. Thus, the Board finds that
under the general authority of administrative agencies to adopt rules necessary to perform the duty
conferred upon it by statutes, the Board has the authority to adopt provisions allowing for the
discovery of certain information before and action is filed with the Board.
Further, the Board finds that the cases cited by
Com Ed are inapposite. Nothing in the
proposed rules in the instant case infringes on authority granted to other entities as was the situation
in the
Landfill
case. Moreover, the
Bio-Medical
case, the other case cited by
Com Ed, concerned a
regulation allowing termination from the Medicaid program for fraud and abuse which was found
invalid even though adopted under a general grant of
rulemaking authority. The court’s decision was
18
based, in part, on the existence of other remedies within the Public Aid Code for addressing billing
discrepancies. Since there are no other remedies available under the Act for addressing
precomplaint discovery and the rules are reasonably related to the purpose of the proportionate
share rules, the Board finds that this case also does not support a finding that the adoption of a rule
governing
precomplaint discovery would be beyond the Board’s authority. Accordingly, the Board
finds that Section 58.9, as well as the inherent authority granted to administrative agencies, clearly
empowers the Board to promulgate rules to facilitate the allocation of proportionate share.
Having determined that the Board has the authority to adopt rules governing
precomplaint
discovery, the next question is whether such rules are necessary.
Necessity of Information Orders.
The Agency believes that information orders are important
to assure a workable implementation of Section 58.9 that fully protects human health and the
environment.
Stat. at 8;
Exh. 5 at 17. The Agency asserts that information orders are a modest tool
that will allow it to obtain information from
PRPs short of filing formal enforcement actions and
relying on discovery procedures.
Exh. 5 at 18. The Agency believes that under joint liability,
successful completion of the entire cleanup did not require that all
PRPs be named because any or
all are potentially jointly liable for the entire release.
Stat. at 8. However, under proportionate share
liability, in order to assure complete remediation, the State must identify as many
PRPs as possible
before filing a complaint. Otherwise, asserts the Agency, the shares of unidentified
PRPs will
remain unallocated regardless of the effectiveness of the procedures that follow the filing of the
complaint.
Stat. at 8. The Agency argues that while the task has become more difficult, the tools
available to the Agency for PRP identification remain limited to public records and voluntary
interviews. PC 6 at 12.
The Agency stresses that information orders are a particularly important means of identifying
PRPs, and identifying
PRPs is crucial if proportionate share liability is to work. Tr.4 at 11. In
addition, continues the Agency, under proportionate share liability the incentive for the identified
PRPs to come forward with information regarding the contribution of other
PRPs is substantially
reduced because their own allocation will not be affected by what other parties have or have not
done at the site.
Stat. at 8-9. To effectively manage a cooperative cleanup, the Agency will need to
be more effective than ever in identifying all
PRPs and justifying the level of participation required.
PC 6 at 12.
The Agency is especially concerned about the effect that the inability to identify
PRPs may
have when site conditions pose a significant threat, because if no PRP may be required to conduct
remedial activities beyond its proportionate share, then a complete remediation cannot be performed
until all
PRPs are identified.
Stat. at 9. The Agency maintains that without tools such as information
orders to identify
PRPs and bring them into the case, neither the Agency nor the Board will be able to
construct a model of site operations that will lead to a timely, complete and equitable allocation of
responsibility.
Stat. at 9. The Agency admits that the information order is not a panacea for this
problem, but a modest tool that will allow the Agency to obtain information short of filing formal
enforcement actions and relying on discovery procedures.
Exh. 5 at 18.
The Agency further asserts that information orders will enable the Agency to obtain access to
the PRPs, develop a much clearer picture of site operations at an early stage, and thus allow the
Agency to nudge
PRPs toward cooperative cleanups without litigation. PC 6 at 12. This would allow
the Agency to accomplish more with a given quantity of resources which the Agency states is critical
considering the limited resources available. PC 6 at 12, 13. Information orders would allow
responsible parties to become involved in the remedial process at an early stage, ultimately giving
them more influence in planning and site characterization. PC 6 at 12, 13. The Agency notes that
19
civil discovery really does not help in a
prelitigation context, and is, in fact, at the end of the process
of investigation described by the Agency. Tr.4 at 10; PC 6 at 12.
The AGO agrees with the Agency that information orders are necessary, and asserts that
such orders are necessary to advance the process of determining and allocating liability to
accomplish expeditious remediation of contaminated property either before or after the initiation of
formal administrative proceedings.
Exh. 9 at 7. The AGO further contends that information orders
are necessary to assist in filling the gap left by the change in liability from joint and several to
proportionate share liability.
Exh. 9 at 7. Additionally, the AGO asserts that information orders will
provide an opportunity to the State early in the process to obtain as much information about a
release as possible and to include as many liable parties in an allocation proceeding as possible.
PC 7 at 3. Finally, the AGO maintains that information orders will also facilitate faster, more
complete, and less expensive resolution of cases subject to these regulations. PC 7 at 3.
BPI also asserts that information orders are necessary. BPI argues that information orders
are essential for the Agency to do its job as expeditiously as possible.
Exh. 13 at 7; Tr.3 at 156. BPI
also asserts that identification of
PRPs is the only mechanism which the Agency has for
safeguarding the State and taxpayers against having to cover orphan share costs. Exh.13 at 7; Tr.3
at 156. Finally, BPI states that information orders seem like a reasonable tool for the Agency to have
at their disposal to aid in trying to identify
PRPs, a task that is in the best interest of the State and its
citizens. Tr.3 at 177.
On the other hand, the same parties that believe the Board is without authority to adopt
provisions concerning information orders also believe that information orders are not necessary. For
instance,
Reiser testified that the Agency already has numerous means to gain information both
under the Act and otherwise. PC 11 at 8.
Reiser states that the Act gives the Agency broad
authority to enter sites to inspect for potential releases, and that Illinois Supreme Court Rule 224
allows for
precomplaint interrogatories to be filed before the court and the Board. PC 11 at 8; Tr.3 at
36.
Reiser also notes that there are many different ways to get information including investigation
and just asking for it. Tr.3 at 36.
Similarly,
Com Ed asserts that the Agency’s premise is entirely wrong, and that there is
ample incentive for a PRP to come forward and produce information under the PSL rules. Tr.4 at
114.
Com Ed dismisses the Agency’s discussions about its need for information orders, and asserts
that the issue is not need, but statutory authority, and the Board,
Com Ed argues, does not have the
necessary statutory authority. Tr.4 at 115.
Com Ed does note, however, that there exists ample
authority for the Agency to get the information it requires through existing means. Tr.4 at 115
Likewise,
Mohan comments that there is simply no reason for the Agency to demand
information orders. PC 12,
Exh. A at 4.
Mohan contends that if the Agency has identified a facility at
which a release or substantial threat of release has occurred, the Agency need only be able to name
a single potential party in order to bring a circuit court or Board enforcement action. A title search
will usually reveal at least one party to be sued. PC 12,
Exh. A at 4. Once the suit is filed,
Mohan
asserts that the State may use all litigation discovery normally available. In addition, criminal and
administrative search warrants are available for
prelitigation use. PC 12,
Exh. A at 4.
Aside from the issue of necessity, participants are also concerned that information orders will
be abused. PC 8 at 8; Tr.2 at 74.
Karaganis & White proposes that safeguards be adopted to
ensure that the provisions on information orders are properly used. For instance,
Karaganis & White
assert that Section 741.115 should contain a requirement that the Agency issue an initial request for
relevant information. PC 8 at 7.
Karaganis & White argues that the Agency should have to make a
showing in the petition that this request was made and that the Agency received either no response
20
or a demonstrably inadequate response. PC 8 at 7-8.
Karaganis & White concludes that these
provisions will encourage the Agency to seek relevant information from channels that neither require
the Agency or the potential respondent to incur transaction costs unnecessarily, nor raise the
potential for penalties at the initial information gathering stage. PC 8 at 8.
The Board concludes that discovery prior to an action being filed is necessary to ensure
Section 58.9 is workable. To assure complete site remediation, the Agency should identify
as many
potentially liable parties as possible before filing a complaint. Without effective tools such as the
discovery prior to an action to identify potentially liable parties and bring them into the case, the
Board does not believe the rules will lead to a timely, complete, and equitable allocation of
responsibility.
Thus, the Board adopts provisions providing for discovery prior to an action being
filed.
However, the Board believes that such discovery should be limited. The main purpose of
information orders is to aid the Agency in identifying as many potentially responsible parties as
possible before the Agency files a complaint. The Board believes that it is in the best interest of all
citizens of Illinois that as many potentially responsible parties are identified as possible before an
action is filed. However, the Board understands the concern that there is a potential for abuse with
such discovery. Therefore, the Board has revised the rules to allow for discovery before an action is
filed.
The new provisions on discovery prior to an action are modeled on Illinois Supreme Court
Rule 224. Illinois Supreme Court Rule 224 creates an independent action for discovery for the “sole
purpose of ascertaining the identify of one who may be responsible for damages.” See 172 Ill. 2d R.
224; see also
Yuretich v. Sole
, 259 Ill. App. 3d 311, 631 N.E.2d 767 (4th
Dist. 1994);
Roth v. St.
Elizabeth’s Hospital
, 241 Ill. App. 3d 407, 607 N.E.2d 1356 (5th
Dist. 1993);
Malmberg v. Smith
, 241
Ill. App. 3d 428, 607 N.E.2d 1370 (5th
Dist. 1993);
Shutes v.
Fowler, 223 Ill. App. 3d 342, 584 N.E.2d
920 (4th
Dist. 1991);
Guertin v.
Guertin
, 204 Ill. App. 3d 527, 561 N.E.2d 1339 (3rd
Dist. 1990). The
relief sought in that action is limited to an “order authorizing the petitioner to obtain . . . discovery [of]
the identification of responsible persons and entities.” 172 Ill. 2d R. 224. Courts have also
interpreted Illinois Supreme Court Rule 224 as allowing the discovery of certain additional facts
pertaining to the potential liability of a person, but not actual liability, or the discovery of specific facts
of wrondgdoing. See
Beale v.
Edgemark Financial Corp.
, 279 Ill. App. 3d 242, 664 N.E.2d 302 (1st
Dist. 1996).
Like Illinois Supreme Court Rule 224, the focus of the Board’s proposed rule is the identity of
potentially liable parties, not their responsibility. Further discovery of specific facts of wrongdoing
could be obtained after the filing of the substantive complaint. Moreover, the Board finds that the
involvement of the Board in this process also protects against the potential abuses that are
associated with
precomplaint discovery.
Moreover, the Board notes that even if the Board did not include provisions on
precomplaint
discovery, the parties could still argue that Illinois Supreme Court Rule 224 applied to allow such
discovery. Section 101.100(b) of the Board’s procedural rules allows that in the absence of a
specific rule to govern a particular situation the parties may argue a particular provision of the Illinois
Supreme Court Rules apply. See 35 Ill. Adm. Code 101.100(b);
People v.
Cech (October 2, 1997),
PCB 97-138. Thus, the Board concludes that it is better to provide for a specific rule regarding
precomplaint discovery, rather than dealing with the application of Illinois Supreme Court Rule 224
on a case-by-case basis.
A final issue that needs to be addressed is whether the discovery mechanism should be used
only by the Agency. As originally proposed by the Agency, information orders were a tool that could
21
only be used by the Agency. When asked why the use of information orders was strictly limited to
the Agency, the Agency responded that: (1) it was concerned about extending the use of the
information order too far; and (2) the provision was modeled on the federal
Superfund Law which
does not extend the use of the orders beyond the agency. Tr.2 at 55. The Agency acknowledges,
however, that use of information orders in a Subpart C action would be a very useful tool which
would change the dynamics of that type of proceeding. Tr.2 at 56. The Board finds that there is no
reason to limit the use of the discovery to the Agency. Thus, the rules incorporate this change.
Section 741.120 Resolution of Issues in Section 58.9(b) Notice
Section 741.120 is based on Sections 58.9(b) and (c) of the Act. Subsection (a) provides
for the issuance of notice to persons the State seeks to require to conduct remedial activities.
Subsection (b) sets forth the content of the notice. The notice must include a basis for liability,
the response to be performed, and an opportunity for the performance of the response.
Subsections (c) through (e) offer opportunity and guidelines for settlement. Specifically,
Subsection (c) provides that the Agency may offer the person to whom notice is sent an
opportunity to meet with the Agency to resolve outstanding issues and to determine the costs of
conducting the response action. Subsection (d) mandates that the meeting described in
Subsection (c) be conducted within 30 days of receipt of the written notification. Finally,
Subsection (e) provides that in determining an allocation, the parties may consider the allocation
factors set forth in Section 741.140 of the proposed regulations.
In a publication attached to PC 12, Mohan contends that the opportunity to hold a
meeting with the Agency should not be optional, but mandatory. Mohan asserts that “the
Legislature considered the meeting to be a critical event in the proportionate share liability
scheme, and relegating it to an optional, informal, typical [Agency] meeting will result in a
complete loss of the opportunity intended by the General Assembly.” PC 12, Exh. A at 4.
Moreover, Mohan maintains that the significance of a meeting is especially crucial in an
enforcement context. Mohan states that without an opportunity to meet with the Agency to
determine the costs of conducting the remedial activity, a person may be subject to significant
penalties if he refuses to do any cleanup, or the State may receive a windfall if the person does all
the cleanup. Thus, Mohan concludes that the appropriate process should be that the Agency is
required to conduct a meeting at which a person’s extent of involvement may be discussed.
Mohan further concludes that “[n]ot allowing [a polluter] this opportunity, after all, may well
subject him to higher penalties
even though
he has a good faith, articulable basis to limit his own
liability.” (Emphasis in original.) PC 12, Exh. A at 5.
While the Board agrees with Mohan that an opportunity to meet with the Agency to
discuss the extent of a person’s responsibility for a release is important, the Board cannot require
that the Agency conduct the meeting. Section 58.9(c) clearly provides that this meeting is
discretionary. It states that “the Agency and person to whom such notice was issued may attempt
to determine the costs of conducting the remedial action that are attributable to the releases to
which such person or any other person caused or contributed.” 415 ILCS 5/58.9(c) (1996)
(emphasis added). Based on the statutory language of Section 58.9, the Board finds that it has no
authority to require the Agency to offer such a meeting.
22
Moreover, the Board notes that this issue was raised by the Board at the first hearing. In
response to a question of whether the meeting described in Section 58.9(c) was discretionary or
mandatory, the Agency responded that the meeting was considered “not mandatory” and used as
a basis for this response the language of Section 58.9(c). Tr.1 at 178. Additionally, the Agency
stated that it normally provides a timeframe in these notices for a person to request to meet with
the Agency. If a person is willing to meet in a timely fashion, the Agency asserted that “99 times
out of 100” the Agency would meet with him. Tr.1 at 179.
Section 741.125 Notice to Agency
The Board has included a new provision in the regulations that requires a person who is
initiating a proceeding seeking allocation to give notice to the Agency of the proceeding. This
provision also allows the Agency to participate in any proceeding seeking an allocation of
proportionate shares of liability. The Board notes, however, that the Agency will not be allocated
responsibility for shares of unknown or insolvent parties. Since the State may, as a practical
matter, end up paying for such parties’ shares of remediation in order to ensure that remediation
takes place, the State (through the Agency) is given the opportunity to participate in allocation
proceedings to protect this indirect, but nevertheless significant interest. Actual allocations of
liability, however, would be made to the unknown or insolvent party; State assumption of such
shares would be purely voluntary.
Absent joinder of all necessary parties, the Board could make a determination of liability
of a participating party, and where applicable impose penalties for violations of the Act, but could
not apportion liability, or consequently, order remediation or allow cost recovery.
Section 741.130 Mandatory Disclosures and Discovery
Section 741.310 of the Agency’s proposal provides for a discovery period that is intended
to facilitate the production of information for the purpose of creating a model of historical and
current site operations. The discovery period would begin with a conference scheduled by the
assigned hearing officer. The conference would bring the potentially liable parties together to
discuss the organization and schedule of the proceeding through submittal of a joint proposal to
the Board. The conference would be followed with a hearing officer order containing the
agreement of the parties on organization and scheduling issues. If the parties could not agree on
these issues, the hearing officer order would then resolve the issues.
Subsection (c) of the Agency proposal sets forth the time period for discovery. Within 30
days after issuance of the Board’s order accepting the petition, all parties are required to produce
and make available for review and copying all documents in their possession or control pertaining
to the release. Beyond this initial production requirement, information may be obtained in
accordance with the Board’s discovery procedures in 35 Ill. Adm. Code 101 and 103. Time limits
are provided for some of the discovery period activities with the intention of keeping the
proceedings moving toward resolution. The remainder of the schedule is to be determined by the
hearing officer order following the initial conference but may be amended as circumstances
require.
23
The Board has adopted at Section 741.130 a modified version of the discovery procedure
outlined in the Agency’s proposal. The new provisions rely on the Board’s existing procedural
rules for discovery. This provision would apply to proceedings under both Subpart B and C.
Specifically, Section 741.130(a) of the rules adopted today for first notice provide that within
time limits set by the hearing officer, all persons involved in an allocation proceeding must
compile all relevant documents within their possession and make the records available for review
by all others to the allocation proceeding. Subsection (b) provides that discovery must be
conducted pursuant to the Board’s procedural rules and that sanctions for failure to comply with a
Board or hearing officer order, among other things, are available. Subsection (c) makes clear that
discovery pursuant to this section is not applicable to mediation proceedings under this Part.
Section 741.135 Conduct of Hearings
The Board has included a section regarding the conduct of hearing. These provisions
apply to hearings under both Subparts B and C. Generally, Section 741.135 provides that the
hearings will be conducted pursuant to the procedures in the Board’s procedural rules, and that
failure to comply with a hearing officer or Board order is sanctionable behavior. The rules also
establish that all parties or participants to the proceedings may present evidence relevant to the
allocation of proportionate share liability. Finally, Section 741.135 provides that if proportionate
share liability is raised in an enforcement complaint, the hearing on proportionate share liability
may be combined with the hearing on the case in chief.
Section 741.140 Allocation Factors
Section 741.240 of the Agency’s proposal provides a list of allocation factors that the
Board may consider in making its allocation determination. The list is not intended to be
exclusive, and the Board may consider any other factors related to a liable party’s cause of, or
contribution to, a release or substantial threat of a release. Subsection (b) recognizes that risk-
based corrective action, as embodied in TACO, may affect the allocation by affecting the nature
of the remediation.
The Board has made several changes to the Agency’s proposal. First, the Board has
moved the provision to Subpart A and noted that the allocations factors listed therein may be
considered by the Board in determining allocations in either a Subpart B or C proceeding.
Secondly, this section specifically provides that the Board may consider any other factors relevant
to a party’s proportionate share of liability. Finally, the Board has deleted what was Section
741.215(b) of the Agency’s proposal. That subsection provided that “[t]he Board shall not be
required to determine precisely all relevant factors provided substantial justice is achieved.” The
phrase “provided substantial justice is achieved” is not defined and is an extremely vague.
Therefore, the Board has concluded that such a provision does not aid either the Board or the
parties in an allocation proceeding. Accordingly, the Board has not included this language in the
proposal for first notice.
Section 741.145 Relief from Final Orders
24
Both Subparts B and C of the Agency’s proposal include provisions that allow a Board
allocation determination to be adjusted where, in the course of subsequent remedial activity, new
information is discovered indicating the allocation determination should have been different. In
Subpart B of the Agency’s proposal, the adjustment provisions are found in Section 741.220; in
Subpart C, the adjustment provisions are found in Section 741.335 of the Agency’s proposal.
The Agency asserts that allowing for adjustments following a final determination in a
contested case is necessary. The Agency explains that “[n]ormally, the only change allowed to
a final determination is through reconsideration or appeal, and the time for doing so is strictly
limited. To do otherwise may result in relitigating the same issues again and again, and this is
inconsistent with the principles of
res judicata
and conservation of resources. On the other
hand, the Agency recognizes that the original assumptions guiding planning for remediation at
the site may be altered once work has begun and that the new information may have a
significant impact on the costs attributable to specific PRPs.” Stat. at 12-13; Exh. 5 at 26.
For this reason, the Agency included provisions in its proposal allowing for the reopening of a
final Board allocation determination.
The adjustment provisions in Sections 741.220 and 741.335 of the Agency’s proposal
are different, however, and demonstrate two different approaches to the reopening of a Board
decision. Tr.2 at 152. Section 741.220 gives the Board general authority to use its discretion
on adjustments, while Section 741.335 attempts to establish thresholds and procedures for
adjustments. The latter approach was first suggested by SRAC. Stat. at 13, n.9; Exh. 5 at 26-
27.
Specifically, Section 741.220(a) of the Agency’s proposal provides that an apportionment
determination may be reopened by any party when “subsequent performance of removal or
remedial action at the site has revealed facts and circumstances that would have led to a
substantially different allocation of proportionate shares had those facts and circumstances been
presented to the Board at the time of the hearing.” Section 741.220 also makes clear that the
adjustment procedures are not available where the allocation arose out of a cost recovery
complaint or count.
In Section 741.335 of the Agency’s proposal, rather than the “substantially different
allocation” test, the proposed regulations contain circumstances under which an allocation
determination could be reopened. Those circumstances are: (1) if the response in the RAP or
written agreement was not performed; (2) if the cost remediation varied from expected costs by
25% or $100,000, whichever is greater; (3) if a party can demonstrate that its allocation would be
reduced by at least 20% or $25,000, whichever is greater; or (4) all parties to the allocation agree.
Section 741.335 also provides that the adjustment procedure must be initiated by filing a petition
with the Board, documenting with affidavits the information supporting the basis for the
reopening, and that the petition must be served on all participants to the allocation. Participants
will have 30 days, which can be extended, to respond to the petition. Subsection (d) provides that
the Board shall issue a written decision, determining whether the allocation should be modified. If
the Board determines that the allocation should be modified, Subsection (d) requires that the
25
Board allocate 100% of the costs of the response action performed or to be implemented. Finally,
proposed Section 741.335(e) provides that if a petition for adjustment is not filed jointly by all
parties, and the Board determines that the allocation should not be modified, the party petitioning
for the modification must pay the costs of the other parties.
As noted, the main difference between the two proposed sections is that Section
741.220(a) would give “the Board general authority to use its discretion on reopeners while
Section 741.335 attempts to establish thresholds and procedures for reopeners.” Stat. at 13, n.9.
The Agency succinctly states the difficulties with these two approaches: “[t]he advantage of
threshold amounts is that the Board has some clear standards against which to judge the
advisability of a reopener. The difficulty is . . . that the threshold amounts are purely arbitrary and
may not be appropriate for every site or PRP.” Stat. at 13, n.9; Exh. 5 at 26-27.
The Board believes that it is necessary to allow parties to reopen an allocation
determination in some circumstances. Parties may seek an apportionment of liability before
remediating a site. In the course of remediation, however, new information may come to light
which indicates that the initial allocation of liability was incorrect. In such a situation, the Board
agrees that participants should have a mechanism available to adjust the allocations. Stat. at 12-
13; Tr.1 at 172-73; Tr.2 at 146-147; Tr.4 at 79-84. On the other hand, participants in allocation
proceedings have a significant interest in finality of apportionment determinations. As one witness
stated, “One of the worst things in the world to a PRP is to get some finality on something and
then have their liability reopened because of newly discovered evidence.” Tr.3 at 78. Thus, the
adjustment procedure must strike a balance between finality and fundamental fairness.
While the Board agrees that the parties need to be able to seek relief from an allocation
order, including reallocation of liability based on new evidence, the Board concludes that there
need be only one procedure to apply to all allocation orders, and that procedure can be patterned
after the Board’s existing procedural rule on obtaining relief from a final order. Currently, parties
to contested cases under Board jurisdiction can obtain relief from final orders under 35 Ill. Adm.
Code 101.301(b), which provides in relevant part:
b)
On written motion, the Board may relieve a party from a final order entered
in a contested case, for the following:
1)
Newly discovered evidence which existed at the time of hearing and
which by due diligence could not have been timely discovered[.]
(Other paragraphs of Section 101.301(b) provide for relief in the case of fraud or a void order.)
The Board has applied this test in proceedings for a number of years. In fact, absent
specific provisions governing allocation proceedings, this general rule, Section 101.301(b), would
apply. This rule therefore provides a useful starting point to consider the proper conditions for
reopening an allocation determination. Next, the Board considers whether circumstances unique
to allocation proceedings suggest that additional provisions need to be added to the general rule
of Section 101.301(b).
26
Based on the following analysis, the Board concludes that a separate rule governing relief
from allocation orders, including reallocation of liability, is necessary. Because this provision will
apply to all allocation orders, it should be located with the general provisions in Subpart A of the
proposed rules. Accordingly, the Board has added a new section 741.145
10
in lieu of proposed
sections 741.220
11
and 741.335. This new language is modeled after Section 101.301(b) of the
Board’s procedural rules, but contains additional provisions based on the unique circumstances of
allocation proceedings.
The Board begins its analysis by examining the various provisions of Section 741.220 and
741.335 of the Agency’s proposal. The test in Section 101.301(b) is essentially a less specific
version of the provisions proposed by the Agency in Section 741.220(a). Proposed Section
741.220(a) differs from Section 101.301(b) in several significant ways. First, Section 741.220(a)
restricts the type of newly discovered evidence upon which reopening may be based. Under that
section, reopening may only be based on evidence discovered where “subsequent performance of
removal or remedial action at the site has revealed facts and circumstances[.]” From the
testimony of various witnesses, the Board understands that parties anticipate that removal or
remediation activities may result in information being discovered that would be the basis for
reopening the allocation determination. Stat. at 12-13; Tr.1 at 172-73; Tr.2 at 146-147; Tr.4 at
79-84. The Board agrees, but cannot see any reason for limiting reopening with such a
restriction. See PC 10 at 11, n.17. New information which would justify reopening an allocation
proceeding may come to light from some other source, and in that event the parties should be able
to seek relief from the allocation order. See PC 10 at 11, n.17. As an example, a previously
unknown party may be identified after the initial allocation, and that party may have information in
its possession that could impact the allocation determinations. The Board accordingly concludes
that the restriction contained in Section 741.220(a) is too limiting.
Next, Section 741.220 also contains the “threshold of significance” requirement, that the
newly-discovered evidence “would have led to a substantially different allocation of proportionate
shares had those facts and circumstances been presented to the Board at the time of the hearing.”
Section 101.301(b) contains no similar language. Relief from a final order under Section
101.301(b) is at the discretion of the Board, and therefore the Board could deny relief when
reopening a case could result in only a
de minimis
change in the end result. Because this issue is
of significant concern to parties (see Tr.2 at 149-50; Tr.4 at 81-84), however, the Board
concludes that it is appropriate to provide by rule that reopening will be denied absent a
potentially significant change in allocation. The provision is found in Section 741.145(c).
10
The severability provisions, which were originally contained in Section 741.125 of the
Agency’s proposal, were moved and are now contained in Section 741.150.
11
Section 741.220 contains a second subsection, which deals with appeals. Subsection
741.220(b) states, “Appeals of final orders of the Board shall be in accordance with Section 41
of the Act. Interlocutory appeals shall be allowed only with leave of the Board.” This
subsection adds nothing to the rules governing either regular appeals (Section 41(a) of the Act,
415 ILCS 5/41(a) (1996)) or interlocutory appeals (35 Ill. Adm. Code 101.304), and is thus
superfluous. The Board therefore does not include a provision in the rules regarding appeals.
27
Finally, Section 741.220(a) provides that “[t]o the extent the underlying complaint was for
cost recovery, the adjustment procedure is not applicable.” The Agency explained the reason for
this limitation as follows:
[The Agency] thought it was important where you had a case, for instance,
where we were seeking for PRPs to perform a cleanup and during the
course of that case there would be an allocation assigned. Well, by the
time you got through with the case you might find out that you had more
information come in, and you could conclude at that point that maybe the
allocation that was initially arrived at was not . . . as fair as it should be so,
therefore, you should readjust that. [W]ith the cost recovery case the
money has already been spent before the litigation is started . . . so there is
no point in adjusting the cost recovery as to that because you already know
what has been spent and what the allocation should be at the time the case
is decided. Tr.1 at 172-73.
While the Board understands the Agency’s rationale, the Board sees no reason to
foreclose relief from the allocation determination where new information may come to light from
some other source. The Board therefore concludes that such a provision is also unwarranted.
As proposed in Section 741.335, an allocation order cannot be reopened until after
remediation is complete. The Board recognizes the distinct possibility that additional information
may come to light as a result of remedial activities (at least until remediation is substantially
complete). Thus, the most efficient approach would be to defer any ruling on reopening until
after remediation. Given the broad definition of “remedial action” in the Act, however, the Board
concludes that a blanket prohibition on reopening until remedial action is complete is too broad.
“Remedial action” encompasses activities, such as monitoring, that could continue indefinitely. A
better approach is for the Board to use its discretion when ruling on motions for reopening to
avoid the needless expenditure of time and resources where remediation is not substantially
complete.
As noted earlier, Section 741.335 also lists specific threshold amounts under which an
allocation determination could be modified. As the Agency recognized, “the threshold amounts
are purely arbitrary and may not be appropriate for every site or PRP.” Stat. at 13, n.9. Whether
a projected change in allocation is significant, and thus will support reopening an allocation order,
will be determined based on the facts of each case. The Board accordingly does not adopt the
dollar amount thresholds proposed for reopening allocation determinations. Rather, the Board
concludes that a general “threshold of significance” provision such as that proposed in Section
741.220, rather than the specific conditions listed in Section 741.335, is appropriate. Again, this
provision is found in Section 741.140(c) in the rules adopted for first notice.
Section 741.335(c) also allows 30 days for a response to a petition to reopen a case to be
filed. This 30-day time period may be extended by the Board for an additional 30 days. Under
Section 101.301(e), a response to a motion for relief from a final judgment must be filed within 14
28
days. In light of the potentially complex considerations which may be involved in an allocation
proceeding, the Board recognizes that additional time to evaluate a motion to reopen an allocation
order may be necessary. The Board finds 30 days an appropriate period. Where an extension is
justified, this time period would be extended as in any other case; a specific provision regarding
extension of the time to respond is thus unnecessary. Therefore, the Board has not included the
additional 30-day provision.
Section 741.335(e) deals with petitions for adjustments that are not joined by all parties to
an allocation determination. In a situation where all parties do not join the motion for adjustment
and the Board determines that a reallocation is not warranted, Section 741.335(e) provides that
the petitioning party is responsible for the cost and fees of the nonpetitioning parties. The Board
concludes that this provision is inappropriate. Given that the threshold of significance will vary
from case to case depending on specific facts and circumstances, the Board will not penalize a
party for evaluating the significance of new information inaccurately.
Additionally, Mohan raised a concern regarding the time within which a reallocation may
be sought:
No time limit is given for this ‘adjustment’; theoretically a party
might be able to reopen a case 20 years after a cleanup has been
completed. That problem can be solved easily enough by including
a time limit for bringing such an action. PC 12, Exh. A at 6.
Under Section 101.301(d), a motion for relief from a final order must be filed within one year of
entry of the order. The Board recognizes that where remediation is underway, this deadline may
not provide sufficient time; new evidence could be discovered in the course of remediation more
than one year after the entry of the allocation order. The Board concludes that where remediation
has begun within a year of entry of the allocation order, a more appropriate time limit is three
years. Either time period could be extended for cause, where a motion for extension was filed
within the applicable time period. These provisions are found in the Board’s rules adopted today
in Section 741.145(e)
Section 741.150 Severability
Section 741.150 is standard severability language. No changes have been made to the
Agency’s proposed language.
Subpart B
Subpart B sets forth the provisions that apply when the A
gency, the State of Illinois, or any
person files a complaint with the Board that raises issues of proportionate share liability.
Specifically, this Subpart (1) identifies the general provisions of the subpart; (2) establishes how an
allocation proceeding may be initiated and explains how proportionate share liability may be raised
as an affirmative defense; (3) provides that all known parties which could be located through a
diligent search must be joined as parties; (4) sets forth the necessary elements of a complaint
seeking an allocation of proportionate shares of liability; (5)
describes how a petitioner may prove
29
that the respondent caused or contributed to the release or substantial threat of a release of
regulated substances; (6) allows for the filing of stipulations and settlements; and (7) provides the
standards for the Board in issuing a final order allocating shares of liability.
As originally proposed by the Agency, Subpart B contained five sections: General (Section
741.200), Procedures (741.205), Burden and Standard of Proof (Section 741.210), Allocation Factors
(Section 741.215), and Adjustments and Appeals (Section 741.220). Based mainly on comments
regarding the burden and standard of proof section of the Agency’s proposal, the Board has
substantially rewritten Subpart B to include eight sections addressing the issues described above.
Because the genesis of the new provisions relate to issues regarding the burden of proof in
allocation proceedings, the Board will discuss some of the provisions in Section 741.205 through
741.230 together, rather than separately.
Section 741.200 General
Section 741.200 describes the procedures and standards contained in Subpart B. This
section was rewritten to correspond to the other changes made to this subpart.
Sections 741.205 through 741.230
Section 741.210 of the Agency’s proposal sets forth the burden and standard of proof for
complaints filed under Section 741.105(a) of the proposed regulations. Subsection (a) places the
burden of proof for the threshold issue of liability on the State. Subsection (b) provides that the
State must prove liability by a preponderance of the evidence. Ways in which a party may have
caused or contributed to a release are listed at subsections (b)(1) through (b)(5). Subsection (c)
sets forth defenses to liability. Subsection (d) provides for the determination of proportionate
shares once liability has been demonstrated. Subsection (d)(2) places the burden of proving a
party’s share on that party. Under subsection (d)(3), the Board could allocate responsibility for
any unallocated response actions or costs to any respondent unable to demonstrate its
proportionate share.
Regarding the Agency’s burden of proof provisions of its proposal, three main issues have
been identified: (1) whether the liability categories contained in Section 741.210(b)(1) through
(5) of the Agency’s proposal were appropriate; (2) whether the burden of proof should shift to
respondent to prove his proportionate share of responsibility; and (3) the proper allocation for a
respondent whose proportionate share is not proven. Each of these issues will be discussed in
turn.
Liability Categories. S
ection 58.9 of the Act requires that liability for remediation or
response costs be apportioned according to the degree to which a person caused or contributed to a
release. The Agency’s proposal includes five ways in which a person may have caused or
contributed to a release:
b)
To establish liability, the State shall prove by a preponderance of t
he
evidence that the respondent cause or contributed to the release or
substantial threat of a release in one or more of the following ways:
30
1)
By act or omission that is a proximate cause of a release or a
substantial threat of a release of regulated substances or
pesticides;
2)
By act or omission that has aggravated or failed to mitigate a
release
or substantial threat of a release such that additional
removal or remedial
action is necessary or additional response
costs have been incurred;
3)
By ownership or operation of a site or facility used for disposal,
transport, storage or treatment of regulated substances or
pesticides and from which there has been a release or substantial
threat of a release of any such regulated substances or pesticides
if the respondent owned or operated the site or facility at the time
of any such disposal, transport, storage or treatment;
4)
By arranging with another party or entity by contract, agreement, or
otherwise for disposal, transport, storage, or treatment of regulated
substances for pesticides owned, controlled or possessed by the
respondent at a site or facility owned or operated by another party or
entity from which there is a release of any such regulated substances
or pesticides; or
5)
By accepting any regulated substances or pesticides for transport
to a disposal, storage or treatment facility or site from which
there is
a release or a substantial threat of a release of any such
regulated
substances or pesticides.
The Agency maintains tha
t Subsections 741.210(b)(1) and (b)(2) are based on traditional
principles of causation where a person’s act or omission has lead directly to a release or
exacerbated an existing release. PC 6 at 14. The Agency also acknowledges that Subsections
(b)(3) and (b)(5) are patterned after Subsections 22.2(f)(2) through (f)(4) of the Act, but contends that
Subsections (b)(3) and (b)(5) are ways in which persons may have contributed to a release under
Section 58.9 without having directly caused the release. PC 6 at 14. Without liability for those that
have contributed to the release, the Agency contends that there would rarely, if ever, be liability at
commercial facilities for generators, arrangers, or
transporters. PC 6 at 14. As to Subsection (b)(3),
the Agency contends that the underlying idea that such actions are contributions to the release is
based on the assumption that the substances would not have been on site to be released had they
not been accepted by the former owners and operators. PC 6 at 15.
While BFI supports the majority of the Agency’s proposal, BFI opposes Section
741.210(b)(5). BFI argues that under the Agency’s proposal, a
transporter could be liable even if it
did not select the site for disposal. BFI believes that this is unfair to
transporters, and it also fails to
recognize the economic realities of the waste disposal business. PC 4 at 1. BFI argues that even
under CERCLA a transporter must select the site for disposal before it is a liable party. See 42
U.S.C. 9607(a)(4). Section 9607(a)(4) provides for
transporter liability for any person who:
[a]ccepts or accepted any hazardous substances for transport to disposal or
treatment facilities, incineration vessels or sites selected by such person, from which
there is a release, or a threatened release which causes the
incurrence of response
costs, of a hazardous substance . . . .”
31
BFI also argues that federal courts which have addressed CERCLA have also acknowledged
Congress’ intent to make
transporters liable only when they select the site for disposal.
See U.S. v.
Western Processing Co.
, 756 F.
Supp. 1416, 1420 (
W.D. Wash. 1991). Thus, BFI urges the Board
to make it clear in the rules that a
transporter who does not select the disposal site is too far
removed from causing the release to be a liable party. PC 4 at 2.
Karaganis & White objects to the list of liability categories. Under the Agency’s proposal,
Karaganis & White asserts, an owner, arranger, or a transporter who did not directly or
proximately cause a release can be held liable. Additionally, Karaganis & White argues that there
is no nexus between the proposed bases of liability and the incurring of response or remedial
expenses. PC 8 at 11-12. Karaganis & White also contends that the list of liability categories is a
resurrection of joint and several liability by incorporating the list of responsible parties from the
federal and State superfund statutes without regard to the language in Section 58.9 of the Act.
PC 8 at 11.
Mohan also objects to the proposed methods of establishing liability. Mohan asserts that
the only statutorily authorized method is the first one—showing that the respondent caused or
contributed to the release by act or omission that is a proximate cause of a release of regulated
substance. PC 12, Exh. A at 4. Mohan contends that the other categories are not supported by
the statutory language of Section 58.9 of the Act.
As noted earlier, Section 58.9 of the Act provides that no person may be required to
conduct remedial action or pay for costs of remedial activity “beyond the remediation of releases
of regulated substances that may be attributed to being proximately caused by such person’s act
or omission or beyond such person’s proportionate degree of responsibility for costs of the
remedial action of releases of regulated substances that were proximately caused or contributed to
by 2 or more persons.” 415 ILCS 5/58.9(a)(1) (1996). For the Board to include categories of
liability in these rules, such as those set forth in Section 741.210(b) of the Agency’s proposal, the
Board would have to conclude that the parties listed would, as a matter of law, always directly
cause or contribute to any release with which they may be connected. The Board is unwilling to
do so. Thus, the Board will not adopt the categories listed in paragraphs (b)(3) through (b)(5).
Paragraph (b)(1) of the Agency’s proposal merely restates the key provision of Section
58.9(a) of the Act, and the Board therefore has retained this provision in the current regulations.
Additionally, the Board concludes that Subsection (b)(2) of the Agency’s proposal reflects
traditional principles of causation and thus the Board has , for now, retained this provision as
well. The Board invites comments from interested parties on whether Subsection (b)(2) is
appropriate in these rules. Accordingly, the Board has included these two provisions as defining
liability in Section 741.225 of the regulations adopted today for first notice.
Assignment of Burden of Proof. In the Agency’s proposal,
Section 741.210(d)(2) provides
that following a determination of liability “[
i]t is the burden of each respondent to prove by a
preponderance of the evidence the degree to which the respondent caused or contributed to the
release or substantial threat of a release based on the allocation factors . . . .” Two major issues
arose with regard to this subsection. Those issues were: (1) whether the burden of proof should
shift to a respondent to demonstrate the proportionate share of that liability, and (2) whether the
shifting of burden was authorized by Section 58.9.
32
The Agency contends that the Board has the authority to shift the burden of proof to the
respondent. In support, the Agency cites Section 58.9(d) which empowers the Board to adopt “any
other standards and procedures which the board may adopt pursuant to this Section.” PC 6 at 3.
The Agency also notes that the legislature need not spell out each and every detail for administrative
agencies to exercise their
rulemaking authority and that an express grant of authority to an
administrative agency includes the power to do all that is reasonably necessary to perform the duty
conferred by statute. See PC 6 at 5-6. The Agency further asserts that the burden shifting is
supported by Section 433(B)(2) of
Restatement (Second) of Torts
(Restatement)
.
See PC 6 at 15-
16; see also Tr.1 at 63, 116-117. Finally, the Agency asserts that shifting the burden is appropriate
because its provides an incentive to
PRPs to provide information. Tr.2 at 51, 53; Tr.4 at 20-21.
The AGO, the City of Chicago, and BPI agree with the Agency that the shifting of burden is
authorized and is necessary. These entities provide basically the same reasons in support of the
shift in the burden as the Agency. See PC 7 at 5;
Exh. 9 at 9-10; PC 9 at 2;
Exh. 13 at 8-9; Tr.3 at
157.
SRAC,
Karaganis & White
, and
Mohan oppose shifting the burden. They argue that a shift
in the burden is “contrary to the language of Section 58.9 and contrary to the legislature’s intent that
joint and several liability be eliminated in favor of proportionate share liability.” PC 13 at 5. SRAC
contends that there is no language in Section 58.9 to support shifting of the burden of proof and no
basis for speculation that burden shifting was intended by the legislature.
Exh. 11 at 4; Tr.1 at 118.
Moreover, SRAC asserts that when the legislature intends to shift the burden of proof it does so
explicitly. For example, under Section 22.2(j) of the Act, a defendant has the specific burden of
proving defenses to Section 22.2(f) actions and the specific burden to demonstrate that it is an
innocent landowner. SRAC points out that such a direction is absent in Section 58.9. Tr.3 at 25.
SRAC also contends that lack of information is not a reason to shift the burden from the State
to other parties. “In no other enforcement context would the State be able to foist its burden of
proving a necessary element of an offense on a defendant, just because the defendant had better
access to information than the State.” PC 13 at 6. Moreover, SRAC contends that a “liable” person
may not have better access to information about his role at a given site than the Agency. The “liable”
person may well have been in complete compliance with all laws and standards in existence at the
time of the action which gave rise to the release, and may, for entirely legitimate reasons, not have
additional information regarding the site. The fact that a person is “liable” under the Agency’s
proposal should not result in the imposition of additional burdens simply because it cannot prove its
proportional share at a given site. PC 13 at 6-7.
Additionally, SRAC maintains that a PRP will bring forward information to the Agency and will do so
because the PRP wants to be involved as little as possible. Tr.3 at 62.
Com Ed also opposes the shifting of the burden of proof. Under Section 741.210(d),
Com
Ed asserts that the Board could impose liability on a person by default, not on the basis of the
amount of harm it caused. PC 10 at 4.
Com Ed argues that the Agency’s sole legal support is the
Restatement
which
Com Ed does not believe supports the Agency’s theory. PC 10 at 5.
Com Ed
explains that the
Restatement
states that the burden of proving causation is upon the plaintiff and
further provides that, in cases where joint
tortfeasors exist, the burden of proving that the harm is
capable of apportionment is on the defendant. However,
Com Ed notes that by enacting the
proportionate share liability standards in Section 58.9, it has already been determined that, as a
matter of law, the harm at Illinois contaminated sites always is divisible and a reasonable basis for
apportionment exists. PC 10 at 6. Thus,
Com Ed asserts that Section 433B of the
Restatement
has
already been fulfilled.
33
When discussing the various parties’ burdens in proceedings involving allocation of
proportionate shares of liability, it is important to keep in mind the distinction
between the
determination of a given party’s liability and the allocation of shares of liability among multiple
liable parties. This distinction has often been blurred in the course of this rulemaking.
The determination of liability is a well established process, and the burdens of the parties
with respect to that determination are well known. Section 741.210(a) of the Agency’s proposal
merely restates the long-standing rule. The complainant alleges facts establishing liability, and
must prove the allegations in its complaint. An equally well established rule is that the respondent
may raise affirmative defenses, and has the burden of proof with respect to those defenses. See
generally, 735 ILCS 5/2-613.
This “assignment of burdens” is unaffected by the advent of proportionate share liability.
Section 58.9 merely provides new affirmative defenses which were not previously available to
respondents. In keeping with long-established rules, the burden of proof with respect to these
defenses is on the respondent. The Board therefore concludes that the issue is not whether the
burden of proof to demonostrate proportionate share liability shifts to the respondent. Rather, the
issue is how the respondent is obligated to support its affirmative defense. Thus, the second issue
debated by the participants,
i.e.,
whether shifting the burden is authorized by Section 58.9, is not
relevant.
It is important to note the nature of that burden with respect to the most significant of
these new defenses—that contained in Section 58.9(a). Section 58.9(a) provides, as has been
discussed, that no person may bring an action to require a respondent to conduct remedial action,
or seek costs for remedial activity with respect to a release, beyond the respondent’s
proportionate share of responsibility for the release. To successfully assert this provision as a
defense to an action, the respondent is required only to plead and prove that some other person or
entity at least partly caused or contributed to the release. That other person or entity’s specific
proportionate share of liability is not an element of the defense. Apportionment of liability is a
separate issue, to be addressed only after issues of liability have been resolved.
Neither is a specific proportionate share of liability an element of a claim for remediation
or cost recovery. To hold otherwise would require a complainant in a case involving only one
responsible party to prove a negative,
i.e.
, that there are no other responsible parties, a potentially
insurmountable burden.
There is thus no specific set of facts which must be proven in order to establish that a
party is, for instance, 40% liable for a release, as opposed to 20% or 60%. The significance of
any particular piece of information or circumstance will vary from case to case, depending on all
facts and circumstances of a particular matter. When determining proportionate shares, the Board
will have a body of evidence before it, which it will evaluate, and based on all the evidence,
allocate shares of liability. Thus, in the context of allocation determinations, “burden of proof” is
a misnomer for the duty of participants.
34
Based upon the comments of the participants, it appears that the main purpose of
assigning the burden of proof to respondents in the Agency’s proposal is to ensure that
respondents have an incentive to come forth with information in their possession regarding
responsibility of various parties for a release. For instance, the Agency asserts that shifting the
burden is appropriate because its provides an incentive to parties to provide information. Tr.2 at
51. The Agency argues that the incentive to produce information is not as strong under a
proportionate share liability system as under joint and several liability because the risk of being
held liable for 100% of the remedial costs is absent. However, the Agency observes that the
incentive to produce information is still greater than it would be under a system where none of the
costs of remediation are allocated to a liable party unless its share can be proven. Tr.2 at 53, Tr.4
at 20-21.
Similarly, the AGO notes that the Act is silent on the issue of burden of proof and
provides only that a person cannot be required to pay more than its proportionate share. There is
no guidance in the statutory language regarding how a person’s proportionate share should be
determined or upon whom the burden of proof lies. Since it is the liable party who presumably
has the information about its contribution to the release, the AGO believes that it is necessary that
the burden of proof be placed on the liable party. PC 7 at 5; see also Exh. 9 at 9-10. The AGO
also contends that the shift is necessary to ensure that respondents provide all information in their
possession relating to a release.
The Board believes that the goal of obtaining the most complete information possible
about a release can be better realized by directly imposing a duty on participants in an allocation
proceeding to come forth with such information, than through the indirect method contained in
the Agency’s proposal,
i.e.
, assignment of the “burden of proof.” As previously explained, the
Board has included a rule at Section 741.130 of the first-notice proposal requiring all participants
in an allocation proceeding to compile any and all documents within their possession or control
pertaining to the release at the subject site and make the records available for review and copying
by the parties to the allocation proceeding.
After discovery, each party may introduce any evidence that party desires for
consideration by the Board. No party, however, is required to introduce evidence, or to prove
any particular fact or set of facts in an allocation proceeding. Rather, since each party has access
to all available relevant information, the self-interest of each party will result in a complete record
before the Board: all parties will introduce whatever evidence is available that suggests greater
shares for other participants and lesser shares for themselves.
Unproven Proportionate Share. The third major “burden of proof” issue debated by the
participants in this rulemaking proceeding is the proper allocation to a party whose proportionate
share is not proven. Under the Agency’s proposal, if there is no evidence establishing a specific
proportionate share for a party, that party may be assessed all unapportioned costs or response
actions.
The Agency included such a provision in its proposal because it believed that such a
provision was necessary to motivate the production of complete and accurate information and to
prevent clearly liable parties from entirely escaping responsibility in cases where there was
insufficient information to apportion harm or where the harm was not divisible.
Exh. 5 at 23; see also
Tr.1 at 63; PC 6 at 16. Moreover, the Agency asserts that this provision is not a return to joint and
35
several liability because it does not require a potentially responsible party to pay more than its share
of the harm.
Exh. 5 at 24; Tr. 1 at 64. The important point, according to the Agency, is that any
“such allocation would not violate the Section 58.9 restriction on assigning a share beyond the
person’s proportionate degree of responsibility. The restriction assumes that the person’s share is
known or can be determined. Where the liable party’s share cannot be proven, neither can it be
proven that the party had paid more than its share, and there is no violation of Section 58.9.” PC 6 at
17-18.
The AGO and BPI support the Agency’s proposal based on the same reasons espoused by
the Agency. See PC 7 at 6;
Exh. 13 at 10-11; Tr.3 at 160-161. The City also supports the Agency’s
provisions. However, in order to minimize concern that a PRP who is unable to prove its
proportionate share could be allocated the entire unallocated share, the City suggests that language
be added to Section 741.210(d)(3) which would affirmatively require the Board to consider any
evidence a PRP could provide which would indicate that it was not responsible for a portion of the
unallocated share. Thus, for instance, a PRP that could show it began operating in 1997 would not
be allocated the entire unallocated share of a site that had been receiving waste since 1995. Or, as
another example, a PRP that can show that it has never used a particular substance would not be
allocated costs associated with cleaning up that substance. Further, the Board should be required to
consider information concerning other
PRPs who are unable to determine their proportionate share.
Thus, if two or more
PRPs disposed of essentially the same waste at a facility, and both are unable
to determine their proportionate share, the entire unallocated share could not be allocated to only one
PRP. PC 9 at 2-3.
Conversely, several participants in this rulemaking contend that where there is no evidence
of a particular proportionate share, an element of the case against a respondent has not been
proven, and consequently no liability can be assessed. Tr.3 at 27.
The various positions of the participants are based on the view that a specific percentage
allocation is an element of a cause of action or defense, which must be proven before that claim or
defense can be sustained. The Board, as noted, has not adopted that approach. Rather, under
proposed Section 741.225, the Board makes a determination based on all evidence presented by
all parties as to proportionate shares of liability. In any case where there is sufficient evidence to
prove liability, there will be at least some evidence from which the Board can make an allocation
of proportionate shares. Consequently, a party will not be allocated an unfair share merely
because that party does not possess extensive evidence regarding its involvement in a release.
Furthermore, the burden will not be on the State to prove any party’s share.
Other Procedural Matters.
Necessary Parties.
In a proceeding to apportion liability, all liable parties who can be
identified through a diligent inquiry must be made parties. The Board may allocate shares of
liability to entities which are not made parties, or to unknown actors, but such allocations would
not be binding on any such entities. Allocations of liability to participating parties, however,
would be conclusive of those parties’ liability in a subsequent action involving a previously
unknown or nonparticipating party. Accordingly, the Board has included a new provision at
Section 741.215 in the regulations concerning necessary parties.
36
Stipulations and Settlements.
At the hearings, Howe, testifying on behalf of Caterpillar,
noted that there is no provision in the Agency’s proposal for a party to settle out of an allocation
proceeding unless the parties agree to assume responsibility for 100% of remediation. “[I]f a
party gets involved in a proceeding and basically wants to settle out and buy their peace, I’m not
sure that I see any means by which they could do that without there being a 100% allocation
already being made; in other words, there doesn’t appear to be a way for anybody to settle early
through these proceedings[.]” Tr.2 at 143. “[B]usinesses and others who are deemed liable for a
portion of the cost of cleanups should be able to quickly resolve, via compromise and settlement,
issues relating to their individual liability if they so desire. This will enable them to obtain closure
with respect to those issues.” Exh.12 at 2.
For a complete or partial settlement in an allocation proceeding to be binding, it would
have to be accepted by all participants. Where such agreement can be reached, the Board agrees
that a party should be able to “settle out” of a proceeding. Given the nature of allocation
proceedings, however, it is possible that the Board may, after all evidence is considered, find that
a party which has settled out is responsible for a greater proportionate share of liability than its
settlement amount. If other parties agree to let a settling party out of an allocation proceeding
before the proceeding is completed, therefore, those parties must also agree to assume liability for
any share allocated to that party beyond the settlement amount. The Board has added Section
741.230 to permit settlements under these terms.
Section 741.230 also contains a provision allowing parties to an allocation proceeding to
conclude an allocation proceeding through stipulation where the parties allocate and assume
100% of remediation or response costs.
Section 741.235 Final Orders
Section 741.235 provides standards for the Board in entering a final order determining
liability and allocating shares of liability. Specifically, this section provides that final orders must
be based on the evidence presented at hearing or in a stipulation. Moreover, this section
establishes that the failure to comply with a Board order may result in the assessment of penalties
under Section 42 of the Act. 415 ILCS 5/42 (1996).
Private Enforcement Actions
Section 31(d) of the Act allows private parties to enforce the Act:
Any person may file with the Board a complaint, meeting the requirements of
subsection (c) of this Section, against any person allegedly violating this Act or any
rule or regulation thereunder or any permit term or condition thereof. 415 ILCS
5/31(d) (1996).
As a remedy for such violations, a private party may ask the Board to issue such orders as the Board
deems appropriate, including orders requiring the respondent to conduct remedial action, imposing
penalties, or revoking permits. See 415 ILCS 5/31(a) and 31(b) (1996); see also
Discovery South
Group, Ltd. v. PCB
, 275 Ill. App. 3d 547, 559, 656 N.E.2d 51, 59 (1st
Dist. 1995) (“Illinois decisions
reflect the generally acknowledged authority of the Board to take whatever steps are necessary to
37
rectify the problem of pollution and to correct instances of pollution on a case-by-case basis”). In
addition, the Board has held that it may order a respondent to reimburse the complainant for the
costs of remedying a respondent’s violations. See
Lake County Forest Preserve District v.
Ostro
(July 30, 1992), PCB 92-80;
Herrin Security Bank v. Shell Oil Co.
(September 1, 1994), PCB 94-178;
Streit v.
Oberweis Dairy, Inc.
(September 8, 1995), PCB 95-122;
Richey v. Texaco Refining and
Marketing, Inc.
(August 7, 1997), PCB 97-148;
Dayton Hudson Corporation v. Cardinal Industries,
Inc.
(August 21, 1997), PCB 97-134;
Malina v. Day
(January 22, 1998), PCB 98-54.
12
Section 58.9 of the Act appears to place limits on this ability of private parties to sue for
remedial action or recovery of costs for remedial activity. Section 58.9 provides, in relevant part:
Notwithstanding any other provisions of this Act to the contrary, including subsection
(f) of Section 22.2, in no event may the Agency, the State of Illinois,
or any other
person
bring an action pursuant to this Act or the Groundwater Protection Act to
require any person to conduct remedial action or to seek recovery of costs for
remedial activity conducted by the State of Illinois
or any person
. . . . 415 ILCS
5/58.9 (1996) (emphasis added).
The Agency’s proposal, however, did not address how, if at all, Section 58.9 would apply to
private enforcement actions. In response to questions regarding this issue, the Agency confirmed
that it viewed the Subpart B proceeding as applying “strictly to cases brought by the State . . . .” Tr.1
at 97. The Agency also stated that its attempt to deal with the private enforcement action issue
resulted in the development of Subpart C. But the Agency conceded that Subpart C would not
address a citizen’s enforcement suit brought under Section 31, such as a suit alleging a violation of
Section 21 of the Act for open dumping of regulated substances. Tr.1 at 98.
The Agency took its position regarding private enforcement actions because of the following
concerns:
First, [the Agency] [was] concerned that with these third party cases that there could
be an orphan share arising out of those. Now, it is not an issue that [the Agency]
would be legally obligated to fund those orphan shares, but it would be a situation
where potentially cleanup would not go forward unless the State funding was made
available. We are going to be very reluctant to spend State dollars at sites where we
have not been closely involved in developing the remediation and
oversighting
activities and so forth. If there is a third party action and the case goes to a final
judgment before the Board and there is a split on the proportionate share, you know,
what happens then at that site after the completion of the case.
Another question is whether the judgment in those third party cases would
impose limitations on the Agency filing its own cases at such sites . . . .
The second big concern is that a third party case could disrupt ongoing
Agency activities. If [the Agency] [has] issued a 4(q) notice and [the Agency] [is]
trying to proceed to get an entire cleanup at a site and a third party case is filed, that
could put our Agency activities at the site in some kind of limbo pending the outcome
of that case. Tr.4 at 24- 25.
12
Several federal courts have also concluded that the Board has the authority to hear private
costs recovery actions. See Midland Life Insurance Co. v. Regent Partners I General
Partnership, 1996 U.S. Dist. LEXIS 15545 (N.D. Ill. Oct. 17, 1996); Krempel v. Martin Oil
Marketing, Ltd., 1995 U.S. Dist. LEXIS 18236 (N.D. Ill. Dec. 8, 1995).
38
As a result of these concerns, the Agency urges the Board to refrain from addressing private
enforcement actions in this
rulemaking:
If the Board is going to conclude that third party actions need to be
addressed, then in our view it should not do so in this docket. The appropriate thing
to do would be to set up a separate Docket B to look at that issue. [The Agency]
think[s] there [are] at least three reasons for that.
First, I think that the concerns that we have identified relative to how our
program operates are substantial . . . .
Second, it would have a chance . . . to get the issues raised in our proposal at
least somewhat settled before opening them up to new issues that might be raised
by third party complaints.
Third, the inclusion of a third party action in 741 is an issue that may be of
interest to a much broader section of the public than the parties interested in the
procedures that we have outlined in 741. Tr.4 at 26-27.
In its posthearing public comment, the Agency reiterated its request that the Board address private
enforcement actions in a separate docket. PC 6 at 19.
Mohan criticized the Agency’s proposal for failing to address private actions. “Assume an
innocent landowner did nothing to cause the problem but discovered that past owners had caused
it—this person is bound by the prohibitions of Section 58.9 just as much as the state is, yet nowhere
in
IEPA’s proposed rules is there any mechanism for this class of persons to obtain any source of
declaration of contributors’ proportionate share of liability.” PC 12,
Exh. A at 7.
Other commentors were less sure that Section 58.9 applied to private actions, and
emphasized that Section 58.9 was not intended to create any new cause of action. Tr.3 at 82.
However, Reiser, who testified on behalf of SRAC, CICI, and ISG, suggested that to the extent that
Section 58.9 applies to actions brought under other parts of the Act, “there is no reason that in an
individual enforcement action between two parties or even between three parties the Board cannot
apply the same principles that are drawn here.” Tr.3 at 83.
Howe, testifying on behalf of Caterpillar,
agreed: “With respect to the 58.9, the way that I had interpreted that is to the extent that a private
right of recovery might exist elsewhere in the Act, that then in that situation, you could not—a person
could not force somebody else to pay more than their proportionate share.” Tr.3 at 84.
The Board finds that the record raises the following issues regarding private enforcement
actions: (1) whether Section 58.9 applies to actions brought by private parties; and (2) if so,
whether the proposed regulations should be changed to address private party suits, or whether the
Board should reserve these issues for a separate docket. The Board addresses each of these
issues in turn.
The plain language of Section 58.9 applies to actions brought by “any person” against
“any person.” Given the plain language of Section 58.9, the Board must find that Section 58.9
applies to an action brought by a private party “to require any person to conduct remedial action
39
or to seek recovery of costs for remedial activity . . . .”
13
Having determined that Section 58.9
applies to private actions, the Board now must resolve how the proposed rules should address
private suits.
Participants in this rulemaking have outlined three different routes for the Board to take
on this issue. First, the Agency has urged that the Board address the issue in a separate docket.
Second, Mohan has argued that the proposal address private party claims. Third, representatives
for SRAC and Caterpillar have observed that the same principles set forth in the proposed rule
could be applied to private party claims.
The Board is not persuaded that this issue should be addressed in a separate docket. The
Board believes that claims by private parties and the State raise many of the same issues.
Consequently, the Board believes that a better rule will result if these issues are addressed with
the input of those who may be affected by private party claims. Moreover, to the extent a broader
section of the public is interested in this issue, they still have the opportunity to comment on this
issue during the first-notice period.
The Board also does not agree that private party claims will interfere with the Agency’s
ability to issue 4(q) notices and proceed with cleanups. Under Section 4(q), the Agency has the
authority “to provide notice to any person who may be liable pursuant to Section 22.2(f) of this
Act for a release or a substantial threat of a release of a hazardous substance or pesticide. Such
notice shall include the identified response action and an opportunity for such person to perform
the response action.” Section 58.9(e) expressly states that it does not affect the Agency’s 4(q)
powers: “Nothing in this Section shall limit the authority of the Agency [to] provide notice under
subsection (q) of Section 4 or to undertake investigative, preventive, or corrective action under
any other applicable provisions of this Act.” 415 ILCS 5/58.9(e). The fact that a private party
action is pending regarding a site therefore will not affect the Agency’s ability to issue 4(q)
notices.
The Agency also suggests that judgments in third party cases may give rise to orphan
shares, or limit the ability of the Agency to file its own cases at such sites. Tr.4 at 24-25; see also
People v. Progressive Land Developers, Inc., 216 Ill. App. 3d 73, 79-80, 576 N.E.2d 214, 218-19
(1st Dist. 1991) (holding that
res
judicata
barred the Attorney General from litigating whether
certain monies were charitable assets when the same claim had earlier been brought by another
party: “a nonparty may be bound by a judgment if its interests were so closely aligned to a party’s
interests that the party was the nonparty’s virtual representative”). But to the extent that these
13
The Board acknowledges that despite the Board’s rulings in Ostro and following cases, some
of the participants believe that the Act does not allow for private actions to recover the costs of
remedial action. Tr.3 at 70. All agreed, however, that a private party may bring an
enforcement action seeking to require someone to perform remediation. Tr.3 at 82.
Therefore, even if private parties could not bring cost recovery actions, the Board would still
need to decide whether and how Section 58.9 applied to private actions that seek to require
someone to undertake remedial action or to recover costs for remedial activity.
40
effects arise,
14
they originate from the language of Section 58.9 itself. These effects will not be
avoided even if the Board addresses private party actions in a separate docket. Therefore, these
potential effects are not a reason to defer the Board’s consideration of this issue.
Based on the record, the Board believes that private party claims are best addressed by
expanding the procedures and standards set forth in Subpart B to complaints filed by any person.
It is true, as Reiser and Howe suggest, that the language in Section 58.9 is self-executing; Section
58.9 applies whether or not the Board adopts rules to implement it. But Section 58.9(d) requires
the Board to adopt rules and procedures for determining proportionate share, and the Board sees
no reason not to make it clear that the same standards will apply to all claims.
Finally, the Board emphasizes that it agrees that Section 58.9 does not create any new
cause of action. However, once a complaint has been filed by the State or any person “to require
any person to conduct remedial action or to seek recovery of costs for remedial activity,” the
standards and procedures set forth in Subpart B shall apply to determine that person’s
proportionate share. Subpart C remains available for those situations in which private parties can
meet its requirements and seek an allocation of proportionate share.
The rules at first notice reflect these proposed changes, and the Board welcomes comment
on its proposed resolution of these issues.
Subpart C
As originally proposed by the Agency, Subpart C
set forth the provisions that applied when
no complaint had been filed with the Board, and any or all PRPs petitioned the Board to allocate
among those participating PRPs the entire cost of remediation at the contaminated site.
Section
741.300 set forth the general procedures for allocation when no complaint had been filed with the
Board. Section 741.305 of the Agency’s proposal provided that the potentially liable persons could
initiate a Subpart C proceeding by filing with the Board, and established what information a petition
must contain. Section 741.310 provided for a discovery period that was intended to facilitate the
production of information for the purpose of creating a model of historical and current site operations.
Section 741.315 set forth the requirements for submitting the participants’ joint proposal, either
setting forth the agreed allocation of shares of responsibility or a proposal for hearing to resolve the
allocation disputes, to the Board. If the participants agreed on allocations for any or all participating
potentially responsible parties, the Board would directly review the allocation agreement. If the
participants requested a hearing, Section 741.315 required the hearing officer to issue an order for
the scheduling and conduct of the hearing. Section 741.320 outlined the procedures when the
participants requested a hearing and gave the hearing officer 30 days to review the evidence and
make a recommendation to the Board on the allocations for each PRP. Following the hearing officer
recommendation, the parties had 30 days to file briefs in support or opposition to the
recommendation. Section 741.325 contained provisions regarding the Board’s review of the agreed
allocation arising out of the joint agreements or the hearing officer’s recommendation. Finally,
14
The Board does not address here whether the State would be bound by a determination of a
party’s proportionate share in a private party enforcement action; the Board merely notes that
potential effect flows from Section 58.9, not the Board’s decision to promulgate rules on how
proportionate shares will be determined in private party actions.
41
Section 741.330 provided that the Board shall use the allocation factors available under Section
741.240 in apportioning liability.
The proposed Subpart C procedure is unique in environmental law. It is a procedure which
is part voluntary and part
adjudicatory. It is voluntary in the sense that all parties to the proceeding
have agreed that they are each in some part responsible for the contamination at issue. It is
adjudicatory in that they seek a determination of their proportionate share of liability concerning the
contamination that is binding and
appealable. The Agency’s proposed rules were developed after a
series of discussions with SRAC. Testifying on behalf of SRAC,
Reiser, explained the procedure as
follows: “it is essentially a binding allocation, a State-funded binding allocation process, a binding
arbitration process, let me put it that way, where at the end of the day you get a Pollution Control
Board determination that as between these parties these are the appropriate shares.” Tr.3 at 77.
Under proposed Subpart C, the Board’s hearing officers would assume a much greater role
in the
decisionmaking process than they have in the past. Specifically, the proposed rules provided
for the hearing officer to initially guide the parties to a settlement and, failing that, issue a
recommended decision and order to the Board on the substantive issues of proportionate share. The
Board would then review that recommendation and accept it or reject it, presumably in whole or in
part. The Board’s decision,
appealable pursuant to Section 41 of the Act, would be the binding
allocation to which
Reiser referred.
Concerns were raised at hearing by individual Board Members regarding the propriety of
changing the Board’s
decisionmaking scheme. The Board is somewhat unique among
administrative
adjudicatory agencies, because it decides cases without a hearing officer
recommendation. Participants in this proceeding identified other issues regarding this subpart,
including the need for and type of procedures required for voluntary allocation petitions.
Necessity of Subpart C
According to
Karaganis & White, Subpart C, as proposed by the Agency, “contains the most
complex procedural requirements possible where they are least needed–where purportedly
responsible parties have decided to cooperate with each other to achieve the final cleanup.” PC 8 at
13.
Karaganis & White asserts that it remains unclear what purposes Subpart C serves, since under
the Site Remediation Program participants are currently free to voluntarily remediate a property and
obtain a No Further Remediation letter from the Agency.
Karaganis & White speculate that one
possible benefit may be that the Board is available to resolve disputes over the allocation, a concept
that
Karaganis & White generally supports. PC 8 at 13.
Mohan also believes that the proposal has limited utility in a very narrow class of cases.
According to
Mohan, the only time this type of proceeding would be used is if a few major players
are involved in a site and agree to simply ignore the minor players who refuse to come to the table.
PC 12, Exh. A. Moreover,
Mohan contends that at any site at which a major participant is not
available, there is no incentive for the other major participants to use this proceeding because they
would first have to agree to clean up 100% of the problem. In contrast, forcing the Agency to sue
first would result in the State picking up the “orphan share.” PC 12,
Exh. A at 7.
As noted before, Section 58.9 of the Act requires the Board to adopt rules and procedures
for determining proportionate share. Section 58.9 further requires that these rules provide,
among other things, “procedures to establish how and when such persons may file a petition for
determination of such apportionment.” See 415 ILCS 5/ 58.9 (1996). Based upon this statutory
mandate, the Board finds that the rules promulgated to implement Section 58.9 must include
procedures for allocating responsibility for a release that are independent of an enforcement
42
action. The Board further believes that such a process will benefit PRPs by providing a procedure
to resolve disputes over allocation and thus will encourage the cleanup of contaminated sites.
Moreover, the Board finds that the procedures under Subpart C (as modified by the Board in this
order) are not overly burdensome or complex and are necessary for a properly functioning rule.
While this type of procedure may be used in a limited number of circumstances, the Board
believes this process serves a useful function, while at the same time encouraging responsible
parties to completely remediate contaminated sites.
The parties admitted at hearing that the process as proposed was not “set in stone.”
Rather, it appeared that the parties desire the Board’s assistance in developing a process that
would meet the goal of the parties—expediency, finality, and workability. Utilizing the
framework provided by the Agency through its discussions with SRAC, the Board has modified
Subpart C to provide a procedure that, hopefully, meets those goals. The Board welcomes both
general and specific comment on the value and workability of the changes advanced in this first-
notice proposal.
Generally, the Board’s changes from the Agency’s proposal reflect a sense on the part of
the Board that the parties are looking for both a procedure that would guide participants to
settlement and, failing that, a procedure that would formally and finally adjudicate specific shares
of responsibility. While we do not believe the Agency’s specific proposal would accomplish both
of these goals, we offer at first notice a procedure that might do so. The procedure, further
explained below, involves a period of confidential mediation before a qualified individual, as well
as a traditional Board adjudicatory procedure where mediation is unsuccessful or not desire.
Section 741.300 General
Section 741.300 lists the procedures for allocation when no complaint has been filed with
the Board. The State will not be a party in Subpart C proceedings (but may participate) although
the proceedings may arise because the State issued a notice under Sections 4(q) or 58.9(b) of the
Act. As originally proposed by the Agency, a Subpart C proceeding could not be initiated until
site activities had progressed at least to the point where there was an approved RAP under the
SRP or a written agreement with the Agency as to the activities to be performed in response to
the Section 4(q) or 58.9(b) notice. While the Board has retained a modified version of this
provision in the regulations adopted today for first notice, the Board notes that participants in this
rulemaking have questioned whether the statutory language supports such a provision and
whether it affords any benefit. See PC 12, Exh. A at 7. The Board believes that a benefit does
exist in situations where persons agree to accept 100% liability for a release, but have not
stipulate to specific shares of liability. In such a case, the allocation process is likely to be much
more effective if the necessary remedial action is known. However, when the parties stipulate to
specific shares of liability, the Board questions whether this prerequisite is necessary. The Board
would therefore appreciate comment on this requirement.
Additionally, the Board has made a few minor changes to the Agency’s language to keep
it consistent with other changes made to this Subpart.
43
Section 741.305 Initiation of Voluntary Allocation Proceeding
As adopted, Section 741.305 provides for the initiation of the Subpart C proceeding by
petition to the Board. As noted above, if participants do not stipulate to specific shares of
liability, a Subpart C proceeding can only be initiated if there is an Agency-approved RAP or a
written agreement with the Agency. The petition must identify the site in question and the
participants, the stipulated share of specific parties, if any, and a certification by all participants
that they have agreed to allocate among themselves the entire cost of the response action to be
performed. The 100% allocation is required even if all known potentially liable parties do not
participate. The petition must also include a statement of whether the participants choose to
engage in mediation or proceed directly to Board’s adjudicatory allocation process.
Subsection (e) provides that participation in a Subpart C proceeding is a waiver of the
right to contest the nature of a response action agreed to as provided at Section 741.105(b). The
provision does not preclude amendment of SRP Remedial Action Plans in accordance with SRP
rules or negotiation of response actions arising from Section 4(q)/58.9(b) notices. Subsection (e)
provides that if a Subpart B proceeding is initiated after a Subpart C proceedings has been
initiated, the Board may, upon motion or
sua
sponte
, stay the Subpart C proceeding pending the
outcome of the Subpart B proceeding.
The Board made several changes to the Agency’s proposed language, other than those
already noted. First, the Board has deleted the requirement that the petition contain each
participants proposed allocation for itself. The Board believes that this information is not
necessary at the initiation of the voluntary proceeding, and at that time, there may be little
information to provide an accurate assessment of a participant’s proposed allocated share.
Second, the Board has deleted the requirements that participants waive the right to contest
the nature of the agreed response contained in the RAP or other Agency’ approved plan. In its
place, the Board has provided that the remedy may be contested in the voluntary allocation
procedure. The Board seeks comment on this alternative or whether the waiver is necessary. If
necessary, the Board questions whether such a waiver should be limited until after the allocation
determination was made, or was intended to forever preclude a challenge to an Agency decision
on a remedial action plan.
Section 741.310 Allocation Proposals and Hearing Requests
Section 741.310 applies where the participants are engaged in the adjudicatory allocation
process, rather than mediation, and sets forth the requirements for submitting the parties’ joint
proposal to the Board. Within 60 days following the close of discovery, the parties are required
to file with the Board either or both of the following: (1) an agreed allocation for any or all
participants, and/or (2) a proposal for hearing for the resolution of all allocations for which the
participants have been unable to reach agreement. If the participants have agreed on allocations
for any or all participants, the allocation agreement goes directly to the Board, which reviews the
proposal and issues an order under Section 741.325. If a hearing is requested as part of the joint
proposal, Section 741.310(c) requires the hearing officer to issue an order for scheduling and
44
conduct of the hearing. The parties then may submit briefing memoranda to the hearing officer
identifying the issues to be resolved at hearing and supporting their proposed allocation.
Karaganis & White is
concerned because it believes that missing from the proposal is any
mechanism by which a party who may have proximately caused a small share of a release or
substantial threat of a release, and who had demonstrated their proportionate share, may either
conduct (or pay for) their proportionate degree of remedial action and then be released from any
further liability.
Karaganis & White thus
encourages the Board to consider any such proposal
submitted during the
rulemaking process and adopt a workable mechanism for such parties. PC 8
at 14.
The Board bel
ieves that the current proposal does allow a party to settle out early. The
proposal allows for participants to file a joint agreement with the Board for any or all participants.
Thus, if all participants have agreed to a particular participant’s allocation, that agreed allocation
goes directly to the Board for review. Accordingly, the proposal does contain a mechanism for a
PRP to settle out early and not participate further. The Board agrees with the Agency that “[t]o allow
any party to submit a proposal for resolution at any time would invite free-lancing and force the
hearing officer and the parties to spend time evaluating and responding to individual proposals
rather than focusing on the task at hand, reaching a fair division of the responsibility among the
participating parties.”
Stat. at 15, n.10. Moreover, if no agreement can be reached by the
participants, the participant who wants an allocation may initiate a proceeding under Subpart B.
Thus, the Board has retained these provisions unchanged in the regulation adopted today. However,
the Board questions whether this section is necessary since the Board has included provisions,
discussed below, providing for mediation. The Board would appreciate comment on this subject.
Section 741.315 Settlements
Section 741.315 allows participants to reach an agreed allocation among themselves at
any time, as long as the agreement results in allocation of 100% of the costs of the response in the
Remedial Action Plan or other Agency-approved plan.
Sections 741.320 through 741.330 Mediation
Today, for first notice, the Board has proposed an alternative to the Board’s traditional
adjudicatory process that would involve voluntary and confidential mediation before a qualified
individual whose purpose is to facilitate agreement between the parties, not to adjudicate any legal
or factual issues. This process is proposed as a result of the Board’s recognition that the parties
appear to be looking for a procedure that has elements of both mediation (the facilitation of voluntary
agreement) and adjudication (formal
decisionmaking where no agreement has or can be reached).
The Agency proposed increasing the role of Board hearing officers in part so that they might better
direct negotiations. Yet, the Agency’s proposal would also have the hearing officer issue a
recommended decision to the Board. The Board at this time declines to adopt the Agency’s proposal
as it relates to the role of the hearing officer and instead proposes the concept of voluntary
mediation, to be followed by a traditional Board hearing on the allocation issues if voluntary
agreement is not reached through mediation or mediation is not desired.
Pursuant to Sections 741.320 through 741.330, the mediation process would work as follows.
Where the participants agree, in lieu of a traditional Board hearing regarding allocation issues, a
qualified mediator would be chosen by the parties or appointed by the Board. The mediator would
control the process, with all
timeframes being determined by the mediator and the participants. All
45
information gathered in the mediation process would be kept confidential by the mediator and would
not be discoverable in this proceeding. Further, unless the participants agreed otherwise, any
information gathered in the mediation could not be used in a subsequent allocation proceeding.
Where the process culminated in agreement of all participants, the participants could move that the
Board approve the stipulated settlement agreement, or alternatively, that the Board dismiss the
underlying petition for allocation. Where the participants cannot reach agreement, the
adjudicatory
allocation process would always be available. The Board hopes that the proposed process (where
the facilitator of the agreement has absolutely no role in the adjudication of the matter) might serve
what we perceive to be the interests of the parties: expediency, finality, and workability. The
Board’s proposed rules for first notice regarding mediation are set forth in the order. We welcome all
comments regarding their workability.
Section 741.335 Board Review and Final Orders
Section 741.335 provides for Board review of agreed allocations arising out of joint
proposals and for the issuance of a Board decision allocating liability to the participants. As
initially proposed by the Agency, the Board was required to make a final determination on
allocation within 90 days of the close of the hearing. The Board has not included the 90-day
provision as the Board finds that this time period may be too limited in complicated cases.
Additionally, Section 741.335 provides that the Board may accept or revise agreed
allocations, but the final order must allocate 100% of the costs of the response to the participants
in the proceeding. The Board has also made changes to the Agency’s language as noted above to
correspond to the changes made regarding the hearing officer’s role in the proceedings.
As originally proposed, Subsection (c) required that the parties to the Subpart C
proceeding bear the risk of default by any of the participating parties. Several participants to this
rulemaking commented on the propriety of this provision.
The City asserts that Section 741.325(c)
is the greatest disincentive to participation in Subpart C proceeding. Under that section, if a PRP
defaults after its share has been allocated, its share will be allocated among the other
PRPs. Thus,
the City contends that a PRP responsible for the majority share could default before paying its
allocated costs and the other smaller
PRPs would end up either defaulting themselves or paying a
much higher cost. Accordingly, the City contends that the proceedings at best will have been a
waste of time, if all
PRPs end up defaulting. At worst, all
PRPs who are actually responsible for only
a small percentage of the problem may end up paying the majority
PRP’s costs, thus defeating the
purposes of the proportionate share scheme. The City offers two approaches to remedy this
problem: (1) provide for sanctions to be assessed by the Board against a defaulting PRP; and (2)
include language which would allow the remaining
PRPs to pursue a cost-recovery action or breach
of contract action against the defaulting PRP. Such measures would create a disincentive for the
majority PRP to default. PC 9 at 3-4.
Mohan opposes to this provision for basically the same reasons as does the City.
Mohan
also contends that this provision is not supported by any statutory language.
Mohan maintains that
legislative history and the language of the legislation itself very specifically provide that the State
may not force orphan shares on other parties, even under a voluntary scheme. PC 12,
Exh. A at 7.
The Board agrees that making a participant responsible for a defaulting participants share
is a disincentive to proceeding under Subpart C. Therefore, the Board has struck this provision
and in its place provided that sanctions may be assessed against a defaulting participant.
46
Other Matters
The City believes that a specific provision should be included for t
he inclusion of a potentially
liable party who may be discovered during the course of the discovery phase and who agrees to
participate. The City contends that the lack of such specific language may discourage potentially
liable parties from entering into a Subpart C proceeding if they are not certain that all viable
potentially liable parties have been identified. Thus, the City encourages the Board to amend
Section 741.305(a) to clarify that later-identified
PRPs may join in a Subpart C proceeding that is
already underway. PC 9 at 3. The Board does not believe that such a provision is necessary
because the Board’s general rules on amending a complaint and
joinder of parties would apply.
Karaganis & White is
also concerned that the proposal currently lacks any provision to
compel a necessary party to participate in the allocation procedure if the party fails to voluntarily do
so, or for taking into account the allocable shares of such a party relative to the participating parties’
shares. PC 8 at 13. The Subpart C proceeding is a purely voluntary proceeding, and thus, the
Board cannot compel a party to participate. As noted earlier, Subpart B is available when potentially
liable parties cannot agree to proceed under Subpart C.
Mohan also notes that the Subpart C is only available if the participants have already
secured the Agency’s approval of a remediation action plan or if the
PRPs sign a written agreement
with the Agency to perform removal actions and remediation irrespective of the outcome of the
proceedings.
Mohan asserts that there is no statutory language that supports this restriction. To the
contrary,
Mohan contends that the statute is explicit in that it prohibits the State from forcing any
person to do more than its proportionate share of remediation or pay more than its proportionate
share of costs. PC 12,
Exh. A at 9. As noted earlier, the Board has retained the provision requiring
an Agency-approved Remedial Action Plan or written agreement before potentially liable parties may
initiate a Subpart C proceeding. However, the Board would appreciate more comment on this
subject from the participants.
TECHNICAL FEASIBILITY
Section 27 of the Act provides that before adopting a rule, the Board must consider the
“technical feasibility” of the rule. See 415 ILCS 5/27(a) (1996). The Board does not believe
that there are any issues regarding technical feasibility that would arise as a result of the
proposed regulations. The proposed regulations would not impose any new burdens on the
regulated community to install equipment or to develop new technology. Rather, the proposed
regulations establish procedures to resolve the factual and legal issues related to the
apportionment of responsibility for response costs or to conduct remedial action.
Consequently, no technical requirements are necessary for compliance with the proposed
regulations. The Board therefore finds that the proposed rules are technically feasible.
ECONOMIC REASONABLENESS
Section 27 of the Act also provides that before adopting a rule, the Board must take
into account the “economic reasonableness” of the rule. See 415 ILCS 5/27(a) (1996). As
noted previously, the proposed regulations do not impose new regulatory burdens on persons,
nor do the regulations create any new causes of action. Rather, the regulations establish
procedures to deal with the factual and legal issues created by changing the liability scheme in
47
Illinois from joint and several liability to proportionate share liability. While no new
technological burdens are imposed, the proposed rules may increase the litigation costs to the
State and PRPs in an action to recover response costs or to require remedial action.
As Section 741.105 of the proposed regulations sets forth, a Subpart B proceeding may
only be initiated whenever the State, the Agency, or any person files a complaint with the
Board seeking to require any person to conduct a response or to recover the costs of a response
performed by the State. The Agency asserts in its Statement of Reasons that “elimination of
joint liability and the requirement to prove cause or contribution will impose additional cost
burdens on the State when developing enforcement cases.” Stat. at 19. The Agency also
contends that it “anticipates a significant increase in the resources required to identify PRPs
prior to filing enforcement action at sites with multiple PRPs and a corresponding increase in
the resources required to develop the cases once the PRPs are identified.” Stat. at 19.
Additionally, the Agency contends that the absence of joint liability will shift the costs of the
“orphan share” to the State. For these reasons, the Agency believes that adoption of the
proposed rules will increase the costs of bringing actions against PRPs.
The Board agrees with the Agency that the State’s costs of enforcement actions will be
increased and that there may be an increase in costs because the State may be, as a practicall
matter, forced to assume the share of costs or remedial action that is not attributable to any
person, or is attributed to an insolvent or absent person. However, the Board believes that
these increased costs are the result of statutory amendments mandating a system of
proportionate share liability and not because of the implementing regulations adopted for first
notice today.
Moreover, a Subpart C proceeding can only be initiated whenever any or all potentially
liable parties at a site have agreed to allocate the entire costs or response among themselves.
While compliance with the formal requirements of Subpart C may increase the cost of
resolving issues of liability among potentially liable parties, participation in a Subpart C
proceeding is entirely voluntary. For these reasons, the Board finds that the proposed
regulations are economically reasonable.
CONCLUSION
The Board finds that the Agency’s proposal, with the Board’s revisions, is
economically reasonable and technically feasible. The Board therefore adopts the following
proposal for first notice.
ORDER
The Board directs the Clerk to cause the filing of the following proposed rules with the
Secretary of State for first-notice publication in the
Illinois Register
.
TITLE 35: ENVIRONMENTAL PROTECTION
SUBTITLE G: WASTE DISPOSAL
CHAPTER I: POLLUTION CONTROL BOARD
48
PART 741
PROPORTIONATE SHARE LIABILITY
SUBPART A: GENERAL
Section
741.100
Purpose
741.105
Applicability
741.110
Definitions
741.115
Discovery Before an Action is Filed
741.120
Resolution of Issues in Section 58.9(b) Notice
741.125
Notice to Agency
741.130
Mandatory Disclosures and Di
scovery
741.135
Conduct of Hearings
741.140
Allocation Factors
741.145
Relief from Final Orders
741.150
Severability
SUBPART B: ALLOCATION DETERMINATION WHEN A COMPLAINT
HAS BEEN FILED
741.200
General
741.205
Initiation of Allocation Determination
741.210
Proportionate Share Liability as a Defense
741.215
Necessary Parties
741.220
Pleading
741.225
Proof of Liability
741.230
Settlements
741.235
Final Orders
SUBPART C: VOLUNTARY ALLOCATION PROCEEDINGS
741.300
General
741.305
Initiation of Voluntary Allo
cation Proceeding
741.310
Allocation Proposals and Hearing Requests
741.315
Settlements
741.320
Appointment of Mediator
741.325
Scheduling of Mediation and Mediation Conference
741.330
Settlement Through Mediation
741.335
Board Review and Final Orders
AUTHORITY: Implementing Section 58.9 and authorized by Section 58.9(d) of the Environmental
Protection Act [415 ILCS 5/58.9]
ADOPTED: Adopted in R97-16 at ___ Ill. Reg. _____, effective ________, 19___.
NOTE: Capitalization denotes statutory language.
SUBPART A: GENERAL
Section 741.100
Purpose
49
The purpose of this Part is to define applicability and establish procedures under Section 58.9 of the
Act for the allocation of proportionate shares of liability for the performance or cost of a response
resulting from the release or substantial threat of a release of regulated substances.
Section 741.105
Applicability
a)
Subpart B applies whenever a complaint has been filed before the Board:
1)
Requesting that the Board allocate proportionate shares of liability
for a
release or threatened release of a regulated substance; or
2)
To which proportionate share liability has been raised as an affirmative
defense.
b)
Subpart C applies whenever a petition has been filed under Section 741.305 of this
Part requesting the Board to require any person to conduct a response or to seek
recovery of costs and where the participants agree to allocate among themselves the
entire costs of remediation at a site.
c)
This part is not applicable to ANY COST RECOVERY ACTION BROUGHT B
Y THE
STATE UNDER SECTION 22.2 of the Act TO RECOVER COSTS INCURRED BY
THE STATE PRIOR TO JULY 1, 1996. (Section 58.9(f) of the Act)
Section 741.110
Definitions
Except as stated in this Section, or unless a different meaning of a word or term is clear from the
context, the definition of words or terms in this Part is the same as that applied to the same words or
terms in the Environmental Protection Act (415 ILCS 5).
"Act" means the Environmental Protection Act (415 ILCS 5).
"Agency" means the Illinois Environmental Protection Agency.
"Board" means the Pollution Control Board.
"PERSON" MEANS INDIVIDUAL, TRUST, FIRM, JOINT STOCK COMPANY, JOINT
VENTURE, CONSORTIUM, COMMERCIAL ENTITY, CORPORATION (INCLUDING
A GOVERNMENT CORPORATION), PARTNERSHIP, ASSOCIATION, STATE,
MUNICIPALITY, COMMISSION, POLITICAL SUBDIVISION OF A STATE, OR ANY
INTERSTATE BODY INCLUDING THE UNITED STATES GOVERNMENT AND
EACH DEPARTMENT, AGENCY, AND INSTRUMENTALITY OF THE UNITED
STATES. (Section 58.2 of the Act)
"REGULATED SUBSTANCE" MEANS ANY HAZARDOUS SUBSTANCE AS
DEFINED UNDER SECTION 101(14) OF THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980
(P.L. 96-510) AND PETROLEUM PRODUCTS INCLUDING CRUDE OIL OR ANY
FRACTION THEREOF, NATURAL GAS, NATURAL GAS LIQUIDS, LIQUEFIED
NATURAL GAS, OR SYNTHETIC GAS USABLE FOR FUEL (OR MIXTURES OF
NATURAL GAS AND SUCH SYNTHETIC GAS). (Section 58.2 of the Act)
50
"RELEASE" MEANS ANY SPILLING, LEAKING, PUMPING, POURING, EMITTING,
EMPTYING, DISCHARGING, INJECTING, ESCAPING, LEACHING, DUMPING, OR
DISPOSING INTO THE ENVIRONMENT, BUT EXCLUDES (a) ANY RELEASE
WHICH RESULTS IN EXPOSURE TO PERSONS SOLELY WITHIN A
WORKPLACE, WITH RESPECT TO A CLAIM WHICH SUCH PERSONS MAY
ASSERT AGAINST THE EMPLOYER OR SUCH PERSONS; (b) EMISSIONS FROM
THE ENGINE EXHAUST OF A MOTOR VEHICLE, ROLLING STOCK, AIRCRAFT,
VESSEL, OR PIPELINE PUMPING STATION ENGINE; (c) RELEASE OF SOURCE,
BYPRODUCT, OR SPECIAL NUCLEAR MATERIAL FROM A NUCLEAR INCIDENT,
AS THOSE TERMS ARE DEFINED IN THE ATOMIC ENERGY ACT OF 1954, IF
SUCH RELEASE IS SUBJECT TO REQUIREMENTS WITH RESPECT TO
FINANCIAL PROTECTION ESTABLISHED BY THE NUCLEAR REGULATORY
COMMISSION UNDER SECTION 170 OF SUCH ACT; AND (d) THE NORMAL
APPLICATION OF FERTILIZER. (Section 3.33 of the Act)
"REMEDIAL ACTION" MEANS THOSE ACTIONS CONSISTENT WITH
PERMANENT REMEDY TAKEN INSTEAD OF OR IN ADDITION TO REMOVAL
ACTIONS IN THE EVENT OF A RELEASE OR THREATENED RELEASE OF A
regulated substance INTO THE ENVIRONMENT, TO PREVENT OR MINIMIZE THE
RELEASE OF regulated substances SO THAT THEY DO NOT MIGRATE TO
CAUSE SUBSTANTIAL DANGER TO PRESENT OR FUTURE PUBLIC HEALTH OR
WELFARE OR THE ENVIRONMENT. THE TERM INCLUDES, BUT IS NOT
LIMITED TO, SUCH ACTIONS AT THE LOCATION OF THE RELEASE AS
STORAGE, CONFINEMENT, PERIMETER PROTECTION USING DIKES,
TRENCHES OR DITCHES, CLAY COVER, NEUTRALIZATION, CLEANUP OF
RELEASED regulated substances OR CONTAMINATED MATERIALS, RECYCLING
OR REUSE, DIVERSION DESTRUCTION, SEGREGATION OF REACTIVE
substances, DREDGING OR EXCAVATIONS, REPAIR OR REPLACEMENT OF
LEAKING CONTAINERS, COLLECTION OF LEACHATE AND RUNOFF, ONSITE
TREATMENT OR INCINERATION, PROVISION OF ALTERNATIVE WATER
SUPPLIES, AND ANY MONITORING REASONABLY REQUIRED TO ASSURE
THAT SUCH ACTIONS PROTECT THE PUBLIC HEALTH AND WELFARE AND
THE ENVIRONMENT. THE TERM INCLUDES THE COSTS OF PERMANENT
RELOCATION OF RESIDENTS AND BUSINESSES AND COMMUNITY FACILITIES
WHERE THE GOVERNOR AND DIRECTOR DETERMINE THAT, ALONE OR IN
COMBINATION WITH OTHER MEASURES, SUCH RELOCATION IS MORE COST-
EFFECTIVE THAN AND ENVIRONMENTALLY PREFERABLE TO THE
TRANSPORTATION, STORAGE, TREATMENT, DESTRUCTION, OR SECURE
DISPOSITION OFFSITE OF regulated substances, OR MAY OTHERWISE BE
NECESSARY TO PROTECT THE PUBLIC HEALTH OR WELFARE. THE TERM
INCLUDES OFFSITE TRANSPORT OF regulated substances, OR THE STORAGE,
TREATMENT, DESTRUCTION, OR SECURE DISPOSITION OFFSITE OF SUCH
regulated substances OR CONTAMINATED MATERIALS. REMEDIAL ACTION also
includes ACTIVITIES ASSOCIATED WITH COMPLIANCE WITH THE PROVISIONS
OF SECTIONS 58.6 AND 58.7 of the Act, including, but not limited to, the conduct of
site investigations, preparations of work plans and reports, removal or treatment of
contaminants, construction and maintenance of engineered barriers, and/or
implementation of institutional controls. (Sections 3.34 and 58.2 of the Act)
“REMOVE” OR “REMOVAL” MEANS THE CLEANUP OR REMOVAL OF
RELEASED regulated substances FROM THE ENVIRONMENT, ACTIONS AS MAY
BE NECESSARY TAKEN IN THE EVENT OF THE THREAT OF RELEASE OF
51
regulated substances INTO THE ENVIRONMENT, ACTIONS AS MAY BE
NECESSARY TO MONITOR, ASSESS, AND EVALUATE THE RELEASE OR
THREAT OF RELEASE OF regulated substances, THE DISPOSAL OF REMOVED
MATERIAL, OR THE TAKING OF OTHER ACTIONS AS MAY BE NECESSARY TO
PREVENT, MINIMIZE, OR MITIGATE DAMAGE TO THE PUBLIC HEALTH OR
WELFARE OF THE ENVIRONMENT, THAT MAY OTHERWISE RESULT FROM A
RELEASE OR THREAT OF RELEASE. THE TERM INCLUDES, IN ADDITION,
WITHOUT BEING LIMITED TO, SECURITY FENCING OR OTHER MEASURES TO
LIMIT ACCESS, PROVISION OF ALTERNATIVE WATER SUPPLIES, TEMPORARY
EVACUATION AND HOUSING OF THREATENED INDIVIDUALS, AND ANY
EMERGENCY ASSISTANCE THAT MAY BE PROVIDED UNDER THE ILLINOIS
EMERGENCY MANAGEMENT ACT OR ANY OTHER LAW. (Section 3.35 of the
Act)
“RESPOND” OR “RESPONSE” MEANS REMOVE, REMOVAL, REMEDY, AND
REMEDIAL ACTION. (Section 3.40 of the Act)
"SITE" MEANS ANY SINGLE LOCATION, PLACE, TRACT OF LAND OR PARCEL
OF PROPERTY OR PORTION THEREOF, INCLUDING CONTIGUOUS PROPERTY
SEPARATED BY A PUBLIC RIGHT-OF-WAY. (Section 58.2 of the Act) This term
also includes, but is not limited to, all buildings and improvements present at that
location, place or tract of land.
Section 741.115
Discovery Before an Action is Filed
a)
Any person who wishes to engage in discovery before seeking an allocation of
proportionate shares of liability and for the sole purpose of ascertaining the identity of
a person who may be liable (at least in part) for a release or substantial threat of a
release of regulated substances may file a petition for such discovery with the Board.
b)
The petition must be brought in the name of the petitioner and must name as
respondents the person or persons from whom discovery is sought. The petition
must include:
1)
The name and address of the respondent(s);
2)
The reason the proposed discovery is necessary;
3)
The nature of the discovery sought;
4)
A statement, supported by affidavit(s), of the petitioner’s basis for belief that
there is a release or substantial threat of a release and that the respondent
has or may have the information sought;
5)
The petitioner’s proposed time for compliance with the order (not
less than 30 days from the date of issuance of the order); and
6)
A request that the Board enter an order authorizing petitioner to obtain such
discovery.
c)
A brief or memorandum and other supporting documents may be filed with the
petition.
52
d)
The petition must be accompanied by an affidavit attesting that the petitioner could
not obtain the information sought by any other reasonable means.
e)
The petitioner shall serv
e a notice of filing and a copy of the petition and any
supporting documents upon the person(s) to whom the order is to be directed who
shall be designated the respondent(s). The notice of filing must inform the
respondent of the filing of the accompanying petition and of the respondent’s
opportunity to respond to the petition within 14 days of the date of service.
f)
Within 14 days from the date of service of the petition, the respondent may file a
response to the petition supported by affidavit(s) as necessary. The respondent may
file a brief or memorandum and other supporting documents with the response. If no
response is filed, the respondent is deemed to have waived objection to the
discovery sought.
g)
The petitioner may reply to the response within 7 days of the date of service of the
response.
h)
Service and filing must be in accordance with 35 Ill. Adm. Code 101.Subpart C,
except that initial service of the petition must be made personally, by registered or
certified mail, or by messenger service.
i)
The Board will review the petition, affidavit(s), and any other supporting documents
on file and grant or deny the petition. The order granting the petition will require the
respondent to respond to authorized discovery, and will limit discovery to the
identification of potentially liable persons. Where a deposition is authorized the order
will specify the time and place of the deposition and the name and address of each
person to be examined, if known, or, if unknown, information sufficient to identify
each person. The order will specify a reasonable time for compliance and the method
of compliance.
j)
If any respondent fails to comply with a discovery request authorized under this
Section, the petitioner may seek penalties under Section 42 of the Act.
k)
Nothing in this Section limits the ability of any person to obtain information in any
other lawful manner.
Section 741.120
Resolution of Issues in Section 58.9(b) Notice
a)
IN THE EVENT THE STATE OF ILLINOIS SEEKS TO REQUIRE A PERSON WHO
MAY BE LIABLE PURSUANT TO THIS ACT TO CONDUCT a response FOR A
RELEASE OR THREATENED RELEASE OF A REGULATED SUBSTANCE, THE
AGENCY SHALL PROVIDE NOTICE TO SUCH PERSON. (Section 58.9(b) of the
Act) This notice may be combined with a notice under Section 4(q) of the Act.
b)
The notice under subsection (a) of this Section must include:
1)
Identification of a basis for liability;
2)
Identification of the response to be performed; and
53
3)
The opportunity for the person to perform the identified response.
c)
At the time of notification pursuant to Section 58.9(b) of the Act or at any time
subsequent thereto, the Agency may offer the person to whom the notice is sent an
opportunity to meet with the Agency to resolve outstanding issues and to determine
the costs of conducting the response that are attributable to the release or substantial
threat of a release to which such person or any other person caused or contributed.
d)
The meeting described in subsection (c) of this Section must be held within 30 days
of receipt of written notification of the opportunity unless the Agency agrees to a
postponement.
e)
In determining the proportionate share liability allocation, the allocation factors set
forth in Section 741.140 of this Part may be considered.
Section 741.125
Notice to Agency
The person initiating a proceeding seeking allocation shall give notice to the Agency, and the Agency
may participate in any proceeding seeking allocation of proportionate shares of liability.
Section 741.130
Mandatory Disclosures and D
iscovery
a)
Within time limits set by the Hearing Officer, all parties to a proceeding in which
allocation is sought shall compile any and all documents within their possession or
control pertaining to the release or threatened release and shall make the records
available for review and copying by the parties.
b)
Discovery is governed by 35 Ill. Adm. Code 101 and 103, and all discovery devices
identified in 35 Ill. Adm. Code 101 and 103 are available to all parties in a proceeding
to allocate proportionate shares of liability. Sanctions for failure to comply with
procedural rules, subpoenas, or order of the Board or Hearing Officer shall be as set
forth therein and as otherwise available under the Act.
c)
Discovery pursuant to this Section is not applicable to mediation proceedings under
this Part.
Section 741.135
Conduct of Hearings
a)
In any proceeding initiated under Subpart B or C of this Part, the Board will hold a
hearing on allocation of proportionate shares of liability, unless the parties have
stipulated to allocation of all shares of liability.
b)
Unless otherwise provided, hearings will be conducted pursuant to the procedures at
35 Ill. Adm. Code 101 and 103. Sanctions for failure to comply with procedural rules,
subpoenas, or orders of the Board or Hearing Officer are as set forth therein and as
otherwise available under the Act.
c)
All parties and the Agency may present evidence relevant to allocation of
proportionate shares of liability at the hearing.
54
d)
If proportionate share liability
is raised in an enforcement complaint or as an
affirmative defense, the hearing on proportionate share liability may be combined
with the hearing on the case in chief.
Section 741.140
Allocation Factors
In determining allocations under this Part, the Board may consider any or all factors related to the
cause of, or contribution to, a release or substantial threat of a release of regulated substances on, in
or under the site, including but not limited to:
1)
The volume of regulated substances for which e
ach liable person is
responsible;
2)
Consistent with the provisions of 35 Ill. Adm. Code 742 and the remediation
of the site in a manner consistent with its current and reasonably foreseeable
future use, the degree of risk or hazard posed by the regulated substances
contributed by each liable person;
3)
The degree of each liable person’s involvement in any activity which caused
or contributed to the release of regulated substances at the site; and
4)
Any other factors relevant to a liable person’s propor
tionate share of liability.
Section 741.145
Relief from Final Orders
a)
On written motion by any person participating in an allocation proceeding, the Board
may provide relief from a final order entered in an allocation proceeding for any of the
following reasons:
1)
Newly discovered evidence which existed at the time of hearing and which by
due diligence could not have been timely discovered;
2)
Fraud (whether intrinsic or extrinsic), misrepresentation, or other
misconduct of a party; or
3)
Void orde
r, such as an order based on jurisdictional defects.
b)
Relief under subsection (a) may include reallocation of liability.
c)
The Board may decline to reopen an allocation determination if the motion and any
supporting materials do not demonstrate that the reopening would result in significant
changes in shares of liability.
d)
A motion under this Section does not affect the finality of a Board order or suspend
the operation of a Board order. The motion must be filed in the same proceeding in
which the order was entered but is not a continuation of that proceeding. The
motion must be supported by affidavit or other appropriate showing as to matters
not of record. The
movant shall notify all parties or participants in the proceeding as
provided by 35 Ill. Adm. Code 101.141(a).
e)
A motion under subsection (a) must be filed with the Board within one year after entry
of the order, except that where remediation of a site has begun before expiration of
55
this one-year period, a motion under subsection (a) must be filed with the Board
within three years after entry of the order. Upon written motion, the Board may
extend either of these periods for cause shown.
f)
Any response to a motion under this Section must be filed within 30 days of the filing
of the motion.
Section 741.150
Severability
If any section, subsection, sentence or clause of this Part is judged invalid, such adjudication does
not affect the validity of this Part as a whole or any section, subsection, sentence or clause thereof
not judged invalid.
SUBPART B: ALLOCATION DETERMINATION WHEN A COMPLAINT
HAS BEEN FILED
Section 741.200
General
This Subpart sets forth the requirements for asserting proportionate share liability either in a
complaint or as an affirmative defense to an enforcement complaint and sets forth provisions
concerning necessary parties, pleading requirements, and procedures for the filing of stipulations
and settlements.
Section 741.205
Initiation of Allocation Determination
A complaint filed by the Agency, the State of Illinois, or any person to initiate an enforcement action
may include a request for allocation of proportionate shares of liability.
Section 741.210
Proportionate Share Liability as a Defense
a)
When a complaint seeks to compel a response or recover costs of a response, it is
an affirmative defense that the complaint seeks remediation or recovery of costs of a
response beyond that which may be attributed to being PROXIMATELY CAUSED BY
THE RESPONDENT’S ACT OR OMISSION OR BEYOND SUCH PERSON’S
PROPORTIONATE DEGREE OF RESPONSBILITY FOR COSTS OF THE response
of RELEASES OF REGULATED SUBSTANCES THAT WERE PROXIMATELY
CAUSED OR CONTRIBUTED TO BY 2 OR MORE PERSONS. Section 58.1(a)(1) of
the Act.
b)
A respondent asserting the affirmative defense of proportionate share liability must
allege facts establishing that two or more persons caused or contributed to a release
of regulated substances.
c)
Assertion of proportionate share liability as an affirmative defense does not initiate an
allocation determination.
Section 741.215
Necessary Parties
All known parties which may have proximately caused or contributed to a release or threatened
release subject to this Part, and which can be located through a diligent search, must be made
parties to any action seeking allocation of proportionate shares of liability.
56
Section 741.220
Pleading
a)
A complaint seeking an allocation of proportionate shares of liability, or a defense
raising proportionate share liability, must allege facts establishing that two or more
persons caused or contributed to a release of regulated substances from a site.
b)
It is not necessary to plead a specific alleged percentage of liability of any party in
order to initiate a determination of proportionate shares of liability.
c)
If a respondent asserts proportionate share liability as a defense, a complainant may,
within 30 days of service of the pleading raising the defense, amend the complaint to
add a request for allocation of proportionate shares of liability. If the complaint is so
amended, the complainant must add any additional parties required under Section
741.215 of this Part as respondents.
Section 741.225
Proof of Liability
The petitioner must prove by a preponderance of the evidence that the respondent cause or
contributed to the release or substantial threat of a release in one or more of the following ways:
a)
By act or omission that is a proximate cause of a release or a substantial threat of a
release of regulated substances.
b)
By act or omission that has aggravated or failed to mi
tigate a release or substantial
threat of a release of regulated substances such that an additional response is
necessary or additional costs of a response have been incurred.
Section 741.230
Settlements
a)
At any time, all parties may agree to assign a certain percentage of liability to a
particular party. Parties agreeing to such a settlement agree to assume any liability
beyond the agreed percentage allocated to that party in a final Board order.
b)
At any time, any number of parties may stipulate to
entry of an order allocating 100
percent of liability for the payment of costs or performance of a response.
Section 741.235
Final Orders
a)
Based on the evidence presented at hearing or a stipulation, the Board will enter a
final order determining liability and allocating shares of liability for the payment of
costs or performance of a response for each party.
b)
If any party fails to comply with the Board’s order, any party may seek penalties
under Section 42 of the Act. Penalties may be imposed under Section 42 of the Act if
the party fails to comply with a Board order.
SUBPART C: VOLUNTARY ALLOCATION PROCEEDINGS
Section 741.300
General
This Subpart sets forth the circumstances under which an allocation proceeding may be initiated by
participants who agree to allocate the entire costs of a response among themselves and when no
57
complaint has been filed with the Board. This subpart also provides procedures for mediation and
settlements and the requirements and standards to be used by the Board in issuing final orders
allocating proportionate shares of liability.
Section 741.305
Initiation of Voluntary Allocation Proceeding
a)
Participants agreeing to accept 100 percent of liability for a release and stipulating to
specific shares of liability may initiate a voluntary allocation proceeding by filing a
petition with the Board.
b)
Participants agreeing to accept 100 percent of liability for a release but not stipulating
to specific shares of liability, or stipulating to less than all shares, may initiate a
voluntary allocation proceeding by filing a petition with the Board if:
1)
There is an Agency-approved Remedial Action Plan for the site under 35 Ill.
Adm. Code 740; or
2)
There is a written agreement with the Agency with regard to the performance
of a remedial action at the site following the issuance of a notice under
Section 4(q) or Section 58.9(b) of the Act.
c)
The petition under subsection (a) and (b) of this Section shall include the following
information, at a minimum:
1)
The location
and identity of the site for which an allocation of proportionate
shares of liability is requested;
2)
The identity of all participants;
3)
The stipulated shares of specific participants, if any;
4)
Certification that the participants have agreed to allocate among themselves
the entire cost of the response as provided in the Remedial Action Plan or
written agreement with the Agency; and
5)
A statement that the participants choose to engage in mediation under
Sections 741.320 through 741.330 of this Subpart or to proceed with the
Board’s allocation procedure under Sections 741.310 through 741.315 of this
Subpart.
d)
Upon determination that the petition contains the required information, the Board
shall issue an order accepting the petition and assigning a Hearing Officer.
e)
The nature of any response agreed to as part of a Remedial Action Plan or written
agreement with the Agency cannot be contested during the allocation proceeding.
d)
If a proceeding is initiated by the Agency, the State, or any p
erson under Subpart B of
this Part against participants to a proceeding under this Subpart C involving the
same release or threat of a release, the Board may, upon motion by any participants
or at its discretion, stay the Subpart C proceeding pending the outcome of the
Subpart B proceeding.
58
Section 741.310
Allocation Proposals and Hearing Requests
a)
Within 60 days following the close of discovery, the participants shall submit a joint
proposal to the Board, which must include either or both of the following, as
applicable:
1)
An agreed allocation of the shares of responsibility for any or all of the
participants;
2)
A proposal for hearing on all allocations for which the participants have not
reached an agreed allocation.
b)
If agreed allocations are reached for all participants, the allocated shares must total
100 percent of the costs of the response to be implemented under the Remedial
Action Plan of written agreement with the Agency.
c)
If a hearing is requested as part of the joint proposal, the Hear
ing Officer will issue
an order for the scheduling and conduct of the hearing and any other matters
deemed necessary. The order must include a requirement that, at least 30 days prior
to the date of hearing, the participants shall submit pre-hearing memoranda setting
forth the share for which they accept responsibility and the issues to be resolved at
the hearing.
Section 741.315
Settlements
Nothing shall prohibit the participants from reaching agreed allocations among themselves at any
time if the agreed allocations result in 100 percent allocation of the costs of the response to be
implemented under the Remedial Action Plan or written agreement with the Agency, including any
agreed allocations arising out of Section 741.310(a)(1) of this Part. Joint proposals shall be
submitted to the Board for review under Section 741.335 of this Part.
Section 741.320
Appointment of Mediator
a)
If the participants have stated in the joint petition that they wish to choose in
mediation, the participants may file a joint notice with the Board:
1)
Designating a mediator selected mutually by the participants; or
2)
Requesting a list of qualified mediators maintained by the Board.
b)
If the parties cannot agree upon a mediator within 14 days of the order accepting the
case or 14 days after receipt of the Board’s list of mediators, the parties shall so
notify the Board within 7 days of the expiration of that period, and the Board will
appoint a mediator from the Board’s list.
c)
The mediator must be compensated by the
parties, and each party shall pay a pro
rata share of the total costs of the mediator.
d)
While mediation is proceeding, the time periods for allocation proposal and hearing
requests set forth in Sections 741.310 of this Subpart are suspended.
Section 741.325
Scheduling of Mediation and Mediation Conference
59
a)
The first mediation conference must be held within 30 days of the order appointing a
mediator or within 30 days of the filing of the joint stipulation.
b)
At least 10 days before the conference,
the participants shall jointly present to the
mediator any stipulations of facts or issues that have been agreed to and shall
individually present to the mediator a confidential written summary of the case and
statement of issues. The summary of the case should include the facts of the
release, opinions on liability, statements on costs incurred or to be incurred,
estimated costs of remediation, and any other relevant information.
c)
Within 10 days after the order appointing the mediator or the filing of
the joint
stipulation, the mediator shall notify the participants in writing of the location, date
and time of the mediation conference.
d)
The mediator shall at all times be in control of the mediation process and the
procedures to be followed in the mediation, and may extend the time periods
contained in subsections (a), (b,) and (c) above with the agreement of the
participants.
e)
The mediator may meet and consult privately with either participants and his
representative during the mediation process.
f)
All oral or written communications in a mediation conference, other than the
executed settlement agreement, are inadmissible as evidence unless all
participants agree otherwise. Evidence with respect to alleged agreements
shall be admissible in proceedings to enforce the settlement. Subject to the
foregoing, the mediator may not disclose any information obtained during the
mediation process, unless authorized by the participants.
g)
Discovery and discovery schedules will be at the discretion of the
mediator.
h)
If a participant fails to appear at a duly noticed mediation conference without good
cause, the Board upon motion will impose sanctions against the participant failing to
appear.
i)
Mediation must be completed within 60 days of the first mediation conference unless
extended by agreement of the participant.
Section 741.330
Settlement Through Mediation
a)
If an agreement is reached, it must be reduced to writing and signed by the
participants and their counsel, if any. Within 14 days of the agreement, the
participants shall file a joint motion to dismiss the Board action or a motion to accept
the stipulated settlement agreement.
b)
If the participants do not reach an agreement, the participants shall report the lack of
an agreement to the Board and file either (1) a joint motion to dismiss the Board
action or (2) a joint motion to initiate the Board allocation proceeding under Sections
741.310 through 741.315 of this Subpart.
60
c)
At any time, the participants may jointly file a motion to
cease the mediation and
begin the Board’s allocation proceedings under Sections 741.310 through 741.315 of
this Subpart.
Section 741.335
Board Review and Final Orders
a)
Based on the evidence presented at hearing or in a stipulation, the Board will enter a
final order allocating proportionate shares of liability for the payment of costs or
performance of a response for each participant.
b)
The Board’s final order will allocate 100 percent of the costs of the response action to
be implemented under the Remedial Action Plan or written agreement with the
Agency. If the total of the agreed allocations under Section 741.310(a)(1) of this Part
and the allocation of shares of responsibility demonstrated during the hearing
process by the remaining participants do not equal 100 percent of the costs of the
response action to be implemented under the Remedial Action Plan or written
agreement with the Agency, the Board’s order must apportion the remaining liability
among the participants in the same ratio as the shares that have been agreed upon
or demonstrated for each participant during the hearing.
c)
Penalties may be imposed under Section 42 of the Act if a party fails to comply with a
Board order.
IT IS SO ORDERED.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, hereby certify that
the above opinion and order was adopted on the 3rd day of September 1998 by a vote of 7-0.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
