BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
by LISA MADIGAN, Attorney General
of the State of Illinois,
PCB 96-98
(Enforcement - Water)
Respondents.
Complainant,
'
v.
)
)
)
)
, )
)
)
)
SKOKIE
VALLEY ASPHALT CO., INC.,
)
an Illinois Corporation, EDWIN
L.
FREDERICK, )
JR., Individually and as Owner and President
of
)
Skokie Valley Asphalt Co., Inc., and
)
RICHARD J. FREDERICK, Individually
)
and as Owner and Vice President
of Skokie
)
Valley Asphalt Co., Inc.,
)
)
)
NOTICE OF FILING
TO:
Mr. David S. O'Neill, Esq.
Mr. Michael
B.
Jawgiel, Esq. '
5487 North Milwaukee Avenue
Chicago, Illinois 60630-1249
Ms. Carol Webb, Hearing Officer
Pollution Control Board
1021 North Grand Avenue East
P.O. Box 19274
Springfield, Illinois 62794-9274
PLEASE TAKE
NOTICE that today I caused to be filed electronically
Complainant's
Response to Respondents' Motion for Reconsideration and Motion to Stay Date of Final
Order
with the Office of the Clerk of the Illinois Pollution Control Board, a true and correct
copy
of which is attached hereto and herewith served upon you.
PEOPLE
OF THE STATE OF ILLINOIS,
LISA MADIGAN, Attorney General
of the State of Illinois
BY:
PAULA
BECKER WHEELER
Assistant Attorney General
Environmental Bureau
69 West Washington, Suite 1800
Chicago, Illinois 60602
Tel: 312.814.1511
Dated: December 31, 2007
Electronic Filing - Received, Clerk's Office, December 31, 2007
CERTIFICATE OF SERVICE
It
is hereby certified that on December 31, 2007, true and correct copies of the
Notice of
Filing
and
Complainant's Response to Respondents' Motion for Reconsideration and
Motion to Stay Date of Final Order,
were sent by overnight UPS Mail, postage prepaid, to the
persons listed on the Notice
of Filing.
BY:
It
is hereby certified that the foregoing were electronically filed with the Clerk of the
Board on December 31, 2007:
Pollution Control Board, Attn: Clerk
James
R. Thompson Center
100 West Randolph Street, Suite 11-500
Chicago, Illinois 60601
BY:
PAULA
BECKER WHEELER
Assistant Attorney General
Electronic Filing - Received, Clerk's Office, December 31, 2007
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
by LISA MADIGAN, Attorney General
of the State of Illinois,
PCB 96-98
(Enforcement-Water)
Respondents.
Complainant,
v.
)
)
),
)
)
)
)
)
SKOKIE VALLEY ASPHALT, CO., INC.,
)
an Illinois Corporation, EDWIN
L. FREDERICK, )
JR., Individually and as Owner and President
of
)
Skokie Valley Asphalt Co., Inc., and
)
RICHARD
1. FREDERICK, Individually
)
and as Owner and Vice President
of Skokie
)
Valley Asphalt Co., Inc.,
)
)
)
COMPLAINANT'S RESPONSE TO RESPONDENTS' MOTION FOR
RECONSIDERATION AND MOTION TO STAY DATE OF FINAL ORDER
NOW COMES the Complainant, PEOPLE OF THE STATE OF ILLINOIS, ("People")
through its attorney, LISA MADIGAN, Attorney General
of the State of Illinois, pursuant to
Sections 101.520 and 101.902
of the Board'sProcedural Regulations, 35
Ill.
Adm. Code
101.520, 101.902, and requests that the Illinois Pollution Control Board ("Board") deny
Respondents' Motion for Reconsideration and Motion to Stay Date
of Final Order. In support
thereof, Complainant states as follows:
I.
Standard for Motion to Reconsider
1.
In ruling on a motion for reconsideration, the Board will consider new evidence, a
change in law, or errors in the court's previous application
of the law.
Grand Pier Center, LLC,
Electronic Filing - Received, Clerk's Office, December 31, 2007
et aI.,
v.
River East LLC, et al.,
PCB 05-157, 2006, slip op at 1, March 6, 2006, (citing
Korogluyan
v.
Chicago Title
&
Trust Co.,
213
Ill.
App. 3d 622, 627,
(PI
Dist. 1991)).
2.
Respondents, SKOKIE VALLEY ASPHALT, CO., INC., ("SVA"), EDWIN L.
FREDERICK, JR., individually and as owner and President of Skokie Valley Asphalt Co,., Inc.,
and RICHARD
J. FREDERICK, individually and as owner and Vice President of Skokie Valley
Asphalt Co., Inc., (collectively the "Fredericks") have
not offered new evidence, nor have they
alleged a change in the Act or the pertinent Pollution Control Board regulations. Rather, in their
Motion for Reconsideration and Motion to Stay Date
of Final Order ("Mot. for Rec. and Stay"),
Respondents appear to challenge the Board's interpretation
of the extensive record in this matter,
by
s~mply
re-offering arguments that have been made numerous times, and that have been
previously considered by the Board and rejected by the Board.
3.
Accordingly, the People rely on the total record, including the two previous
hearings and the exhibits at hearing (such as the Asset Purchase Agreement) and asks the Board
to do the same. Complainant also specifically adopts and incorporates the following pleadings,
motions, and responses previously filed with the Board: People's Closing Argument and Post-
Trial Brief filed January 15,2004, People's Closing Rebuttal Argument and Reply Brief filed
April 15,2004, and Complainant'sResponse to Respondents' Motion to Recuse Complainant's
Attorney, Joel
J. Sternstein with Mr. Sternstein's affidavit, filed on September 11,2003.
II.
Discussion
4.
Rather than address each and every misstatement by the Respondents in their Mot.
for Rec. and Stay, the People rely on the on the facts contained in the Hearing Records
of
October 30
lh
and 31 sl ,2003, and December 12
lh
, 2006, and on prior pleadings before the Board,
2
Electronic Filing - Received, Clerk's Office, December 31, 2007
and categorically deny any statement not supported in the record, and more specifically, the
egregious misstatements discussed below.
5.
For instance, although settlement negotiations surely occurred, there was no
agreement to settle this case as stated in Respondents' Mot. for Rec. and Stay at pp. 8 and 9, and
elsewhere. Respondents make no citation to the record because these statements are not true and
are not supported in the record. Furthermore, whatever settlement negotiations may have
I
occurred are irrelevant. Settlement did not occur and this matter proceeded to a vigorously
contested hearing.
6.
Respondents erroneously state that Mr. Joel Sternstein, a former Board employee,
did a substantial amount
of work on this case for the Board while a Board employee and that the
Respondents' attorneys was unaware
of the potential conflict. (Mot. for Rec. and Stay at p. 9.).
Again, Respondents do not cite to the record because this statement is not supported
any where,
and, in fact, is
directly
contradicted in the record by Mr. Sternstein'saffidavit. Mr. Sternstein's
affidavit, attached to the Response to the Respondents' Motion to Recuse Complainant's
Attorney, Joel
J. Sternstein, filed September
11,2003,
states that he had no involvement with this
case while working at the Board, and that Mr. David O'Neill, one
of Respondents' attorneys,
knew him at the time and knew that he worked at the Board. Finding that Board Member Melas
had voted on two orders in this case, the Board granted Respondents' motion to recuse and Mr.
Sternstein withdrew as one
ofthe People'sattorneys. However, the Board found no prejudice or
specific bias because
ofMr. Sternstein's short involvement as an attorney of record during the
long history
of this case.
7.
Respondents raise this same issue later in their brief and attach a document as
3
Electronic Filing - Received, Clerk's Office, December 31, 2007
Exhibit A (or Appendix A as it is variously called), which purports to include a hand-written
statement from Mr. Sternstein to Mr. Cohen. (Mot. for Rec. and Stay at pp.23, 24.) The Exhibit
is a Board Order that is supposed to have "strikeouts" in it. However, these "strikeouts" are not
apparent to this reader on the one page document attached. More importantly, according to the
Respondents, this document was tendered to them during discovery and prior to the December
12,2006 hearing. Most likely, it is a copy of the Order made available on the date of the
Board'smeeting to discuss and vote on it. Regardless, this document was tendered to the
Respondents before the last hearing date and the issue could have been raised prior to that
hearing.
It
is not new evidence. The Court in
John Alden Life Ins. Co.
v.
Propp~
627 N.E. 2d
703, 707, stated "civil proceedings already suffer from far too many delays, and the interests
of
finality and efficiency
require
that the trial courts not consider such late-tendered evidentiary
material, no matter what the contents thereof may be." (emphasis in original). Ironically, the
hand-writing is on a Board Order, dated March 3, 2003, denying the People'smotion for
summary judgment. This order can hardly demonstrate undue bias towards the People's
attorneys.
8.
In their first stated issue, Respondents argue that their defense of laches should be
reconsidered. This issue has been argued and ruled on properly by the Board in prior motions
and rulings. Again, as throughout the Respondents Mot. for Rec. and Stay, numerous statements
are made without reference to the record because they statements are not supported in the record.
The Respondents argue that the Fredericks individually were added too late to the complaint,
claiming that discovery was closed in the year 2000, and that they did not have access to the
records after selling the company for over eight million dollars. Mot. for Rec. and Stay at
4
Electronic Filing - Received, Clerk's Office, December 31, 2007
pp. 16-19. However, discovery was not closed until 2003, and the Asset Purchase Agreement
plainly shows that the Fredericks were entitled to any records they wanted, and explicitly notes
that they were obligated to perform remediation. In it's Opinion and Order
of September 2,
2004, the Board found there was no indication that any evidence beyond what was needed to
defend SVA was needed to defend the Fredericks. The Fredericks are now trying to distance
themselves from the company and have the penalties accrue to a dissolved corporation with no
assets.
If the Fredericks honestly believed that they had conflicting defenses, they would have
hired different counsel than SVA's counsel to represent these allegedly different interests.
9.
The Respondents also argue that the Board Opinion and Order of September 2,
2004, attacks the Fredericks personally, and therefore shows bias. Mot. to Rec. and Stay at
p. 19.
This is patently false. In it's Opinion and Order of September 2,2004, the Board dispassionately
and clearly stated the reasons for their findings including a finding that the Respondents
submitted false records.
10.
Respondents' final two issues are that the Board did not apply the Section
33(c) factors and 42(h) factors properly. While the People may not agree with the entire rationale
for the penalty assessed, as the People stand by the previous request for $493,000.00 in penalty
against the Respondents, the Board considered the same arguments as those raised by
Respondents in their Mot. to Rec. and Stay, and provided a well-reasoned and complete analysis
to the 33(c) and 42(h) factors.
11.
Furthermore, the record is clear that there were three underground storage tanks
contributing to the discharge, that the Respondents' knew about them, and did not disclose them
until the U.S. EPA required the Respondents to search for additional sources. Complainant's Ex.
5
Electronic Filing - Received, Clerk's Office, December 31, 2007
25 and Ex. 34, p. 8 at Hearing on October 30'\ 31
5
"
2003. Moreover, although the Respondents
finally came into compliance, it was only after scrutiny by the U.S. EPA and the Illinois
Environmental Protection Agency, and because they were required to by the Asset Purchase
Agreement. All
of these facts should be weighed against the Respondents in assessing a penalty.
12.
The Board also correctly ruled that the penalty assessment applied jointly and
severally. The Fredericks were the sole shareholders and the President and Vice-President
of
this closely-held company. Prior to 1998, when they sold the assets of the company, they were
responsible for all environmental non-compliance because
of their personal involvement and
active participation in management decisions, and because they were the corporate officers.
After 1998, they were responsible for the environmental remediation, not only because that was
and
is the law, but also because they agreed to do it pursuant to the terms of the Asset Purchase
Agreement. The People could argue that the Fredericks were even more personally liable
because they controlled all aspects
of the company which was only a shell to shield their personal
assets.
13.
Additionally, the Respondents argue that the penalties assessed should be offset
by the expenses incurred for remediation in the amount
of at least $150,000.00. They state that
now more than $200,000 has been spent and expenses are still being incurred, and that this new
figure should be used as an offset. There is no evidence in the record that this amount has been
spent or that expenses are ongoing. In fact, it defies logic that expenses are ongoing when
supposedly the remediation
is complete and the site is in compliance as stated previously by
Respondents. Mot. to Rec. and Stay at
p. 31.
14.
Respondents further argue that the $150,000 requested offset of the penalty should
6
Electronic Filing - Received, Clerk's Office, December 31, 2007
only apply to the Fredericks and not to the dissolved corporation from which the assets were sold
for more than $8,000.000.00. Because the Respondents are jointly and severally liable, they are
all responsible for paying the penalty, and although the People believe no offset should be given
for costs incurred because
of the Respondents' violations of the law, any offsets that are
considered should go to the entire penalty, and not to any respondent individually, as the Board
properly found.
15.
In summary, Respondents have failed to present any new evidence, any change in
the law, or any errors in the Board'sprevious application
ofthe law. Respondents' Motion for
Reconsideration and Motion to Stay Date
of Final Order should be denied, and Respondents
should be ordered to pay all assessed penalties, fees and costs immediately.
WHEREFORE, Complaint respectfully requests that the Board deny Respondents,
SKOKIE VALLEY ASPHALT, CO., INC., EDWIN
L. FREDERICK, JR., individually and as
owner and President
of Skokie Valley Asphalt Co,., Inc., and RICHARD J. FREDERICK,
individually and as owner and Vice President
of Skokie Valley Asphalt Co., Inc., Motion for
Reconsideration and Motion to Stay Date
of Final Order, order the Respondents to pay all
previously assessed penalties, fees and costs immediately, and order any further relief that the
Board deems appropriate.
Respectfully Submitted,
LISA MADIGAN
Attorney General
of the State of Illinois
7
Electronic Filing - Received, Clerk's Office, December 31, 2007
BY:
8
PAULA BECKER WHEELER
Assistant Attorney General
Environmental Bureau
69
W. Washington St., Suite 1800
Chicago, Illinois 60602
(312)
814-1511
telephone
(312) 814-2347 fax number
Electronic Filing - Received, Clerk's Office, December 31, 2007
