BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
)
by LISA MADIGAN, Attorney
)
General
of the State of Illinois,
)
)
Complainant,
)
-vs-
)
)
EDWARD PRUIM, an individual, and
)
ROBERT PRUIM, an individual,
)
)
Respondents.
)
)
)
PEOPLE OF THE STATE OF ILLINOIS,
)
by LISA MADIGAN, Attorney
)
General
of the State of Illinois,
)
)
Complainant,
)
)
-vs-
)
)
Community Landfill Company, Inc.
)
)
Respondent.
)
PCB No. 04-207
PCB No. 97-193
(consolidated-enforcement)
NOTICE OF ELECTRONIC FILING
PLEASE TAKE NOTICE that on September 10, 2008, Complainant filed its Response to Motion
to Bar Witnesses and Expert Testimony by electronic filing, a copy
of which is attached and
herewith served upon you.
H STOP ER GRANT
NNIFER VAN WIE
Assistant Attorneys General
Environmental Bureau
69
W. Washington St., 18
th
FIr.
Chicago, Illinois 60602
Electronic Filing - Received, Clerk's Office, September 10, 2008
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PEOPLE OF THE STATE OF ILLINOIS,
)
by LISA MADIGAN, Attorney
)
General
of the State of Illinois,
)
)
Complainant,
)
)
-vs-
)
)
)
EDWARD PRUIM, an individual, and
)
ROBERT PRUIM, an individual,
)
)
Respondents.
)
)
)
)
PEOPLE OF THE STATE OF ILLINOIS,
)
by LISA MADIGAN, Attorney
)
General
of the State of Illinois,
)
)
Complainant,
)
)
-vs-
)
)
Community Landfill Company, Inc.
)
)
Respondent.
)
)
)
)
PCB No. 04-207
PCB No. 97-193
(Consolidated)
(Enforcement)
COMPLAINANT'S RESPONSE TO MOTION TO BAR
WITNESSES AND EXPERT TESTIMONY
NOW COMES Complainant, PEOPLE OF THE STATE OF ILLINOIS, by LISA
MADIGAN, Attorney General
of the State of Illinois, and hereby responds to Respondents'
EDWARD
PRUIM, ROBERT PRUIM, AND COMMUNITY LANDFILL COMPANY'S
Motion in Limine to Bar Complainant'sExpert Witnesses, as follows:
1
I.
This Matter Must Proceed to Hearing as Scheduled
This matter has been ripe for hearing for some time. As alleged, the violations began in
1993. The original complaint was filed in 1997, and, at Respondents' request, two hearing dates
have already been stricken.
In
their Motion, Respondents suggest that hearing once again be
cancelled to extend discovery. However, they do not suggest a new hearing date, and
Complainant is concerned that Respondent's request will result in continued delay in resolution
of this case.
Regardless
of the decision of the Board on Respondent's Motion to Bar, Complainant
believes that this hearing must proceed as scheduled, and is prepared to go forward with or
without the tendered expert testimony. However, as argued herein, there is no need to limit the
information available to the Board by excluding relevant evidence, and Respondent's Motion to
Bar should be denied.
II. Respondents Were Notified
of the
Subject Matter
of the
Opinion Testimony More
Than 60
Days
Prior to Hearing
As will
be made clear at hearing, all the base information used in developing the State's
proposed expert testimony was provided by the Respondents. This includes information on the
cost
of relocating the overheight waste (from Respondent's April 30,2007 Permit Application),
information on the costs
of avoided testing and treatment costs (provided by Respondents'
consultants), and information regarding benefit from insufficient financial assurance (from the
surety bonds submitted to Illinois EPA).
In
its expert report, the State has merely carried these
avoided expenditures forward using the prime interest rate, and adjusted the numbers downward
to reflect a possible tax benefit. (Opinion attached as Exhibit A).
2
As of August 4,2008, counsel for Complainant had not yet received the final,calculation.
For that reason, the undersigned sent a letter to counsel for Respondent explaining the basis for
the opinion. Complainant received no response to this letter, either in the form
of a request for
more information
or by Notice of Deposition. Complainant provided the written opinion on
August 28, 2008.
As noted by Respondents, Supreme Court Rule 218 calls for opinions to be provided no
more than 60 days before trial. Complainant's final opinion was provided 54 days prior.
However, as is clear from Section 101.616
of the Board Procedural Rules, 35 Ill. Adm. Code
101.616, the Supreme Court rules are directory, and not mandatory. Moreover Section 101.616,
the Board's corollary Rule, provides that in the absence
of an order to the contrary, discovery is
to be completed 10 days prior to hearing, not 60 days.
Complainant
is not engaging in new discovery, but rather is honoring its commitment to
provide its expert opinion, first made in 2003. Although it proposes to substitute Gary Styzens
as testifying witness, his opinion was developed in concert with previously-disclosed expert Dr.
John Nosari (See: Exhibit A,
p. 3). Use of a State employee witness for testimony will only
reduce the overall costs
of litigation. Mr. Styzens is readily available for deposition if the
Respondents so choose.
III.
All of Complainants Witnesses Were Timely Disclosed
In addition to Gary Styzens and Dr. Nosari, Respondents seek to bar the testimony of
Brian White and Blake Harris, and thus keep additional relevant information from the Board.
However, all proposed witnesses have been properly disclosed in conformance with Board
procedure.
3
~
----------------------------,
The Hearing Officer required that all witnesses be disclosed by August 20, 2008. Mr.
Harris and Mr. White were named at that time (both had also testified at hearing in PCB 03-191).
The Board has determined that this method
of disclosure fully complies with Board procedure.
The Respondent will recall that in People
v. Community Landfill Co. and City of Morris,
PCB 03-191, Complainant also objected to
CLC's and the City of Morris' first disclosure of
witness Edward Pruim by listing him on their October 2, 2006 witness list (hearing was
scheduled for October 24, 2006). Complainant also complained that neither Respondent had
named Edward Pruim as witness in interrogatory responses, and that he therefore should be
excluded from testifying. The Board rejected our contention, stating:
eLe
identified Mr. Pruim as a witness on October
2,
2006,
consistent with the deadline
set by the hearing officer
for the filing of
eLe
's
witness list.
PCB 03-191 (October 19, 2006, slip op. at 3).
Clearly, Board procedure provides for naming
of witnesses in the Hearing Officer's final
pre-hearing order. Having used this provision to name a new witness 22 days before hearing,
CLC cannot claim unfairness by Complainant'snaming
ofMr. White and Mr. Harris
Q.l
days
prior to hearing in this case.
Moreover, the Respondents are familiar with the subject matter
of the proffered
testimony, i.e. financial assurance provided by the Respondents. Both testified at hearing in
PCB 03-191, which dealt solely with financial assurance, and were cross-examined by opposing
counsel. Board rules allow for deposition up to
10 days prior to hearing. Complainant will not
object to deposition
of these witnesses. However, Complainant will vigorously object to a
cancellation
of hearing in this matter for this purpose.
Finally, the Board has granted summary judgement against CLC to Complainant on all
4
Counts where the challenged testimony will be used. Having found CLC in violation, the Board
should be entitled to hear all relevant evidence relating to the proper remedy.
WHEREFORE, Complaint respectfully requests that the Hearing Officer:
1) Require that hearing of this matter continue as scheduled on October 20-23, 2006;
2) Deny Respondent's request to exclude the expert testimony promulgated by
Complainant;
3) Deny Respondents' request to exclude Brian White and Blake Harris as witnesses;
and
4) Grant such other relief as the Hearing Officer deems appropriate.
BY:
---+1.-----------
HRISTOPHER GRANT
ENNIFER VAN WIE
Assistant Attorneys General
Environmental Bureau
69
W. Washington St., 18
th
FIr.
Chicago, Illinois 60602
(312) 814-5388
(312) 814-0609
5
DATE:
TO:
August 26, 2008
Alec Messina, ChiefLegal Counsel
Illinois Environmental Protection Agency
FROM:
Gary Styzens, CIAlMBA, Financial Analyst,
Illinois Environmental Protection Agency
SUBJECT: Community Landfill/Pruim - Economic Benefit Analysis
As you requested, I have finalized an estimate
of economic benefit; associated with avoided expenditures
for the Community Landfill/Pruim case. This particular case involves three (3) types/categories
of
avoided costs and the total economic benefit estimated for all three cost categories combined is
$1,486,079 with the following breakout:
Avoidance in removal
of Excess/Overheight Waste:
Avoidance
of Post-Closure Costs - Significant Mod Application:
Avoidance
of Financial Assurance Upgrade Costs
$1,339,793
$
73,950
$
72,336
$1.486,079
I understand that you requested an estimate
of economic benefit on behalf of the Illinois Attorney
General's Office and you will provide them with a copy
of my memo/report. My analysis and supporting
facts are presented in Section III
of this memo. If you have any questions or need additional information
please let me know.
I, INTRODUCTION
I am employed by the Illinois Environmental Protection Agency ("Illinois EPA") as a financial analyst.
As . part
of my duties, I develop reasonable estimates of economic benefit of noncompliance in
enforcement cases referred to
me by the Illinois EPA's Chief Legal Counsel on behalf of the Illinois
Office
of the Attorney General.
Issues to be Addressed by this Report
This report presents the analysis that I have completed based upon financial documentation of avoided
expenditures associated with costs for the permitting, inspection, maintenance, repair, and operation
of
Community Landfill and/or measures necessary to ensure compliance with federal and state law.
EXHIBIT
~
j.
A
Delayed Costs: By delaying compliance costs, the violator can earn a return on these funds that
should have been committed to the capital investment or one-time expenditure required for
pollution control and compliance with applicable environmental regulations. The violator's
economic benefit is the difference between investing in pollution control and investing in other
projects (investing in improved marketing, product improvements, hiring additional sales staff
etc.) or placing the funds in other investment accounts. For the Community Landfill case, costs
have been classified as avoided since there has been no documentation identifying and supporting
expenditures necessary to eliminate violations and achieve compliance with applicable
regulations.
Avoided Costs: Costs can be avoided altogether instead
of being delayed. Avoided costs can
include continuing annual, recurring costs or one time period costs that the violator would have
incurred had it complied with environmental regulations on time (maintenance, utilities,
inspections, monitoring, permitting fees, financial assurance etc.). The violator's economic
benefit for avoided compliance costs is the sum
of the total avoided annual costs plus the return
that could be expected on these funds that were used. for other projects/investments rather than for
pollution control compliance.
Statement ofQualifications
A copy of my current resume is attached as Attachment A.
II. BACKGROUND INFORMATION
One of Illinois EPA'smost important responsibilities is to ensure that regulated entities comply with
applicable environmental laws. A cornerstone
of the civil penalty program is recapturing the economic
benefit that a violator may have gained from activities that are not in compliance with applicable rules and
regulations. Recapture helps level the economic playing field by preventing violators from obtaining an
unfair financial advantage over their competitors who made the necessary expenditures for environmental
comp
1
lance.
.
1
There are usually two components
to the civil penalties: gravity and economic benefit. The gravity
component reflects the seriousness
of the violation. The economic benefit component focuses on the
violator's economic gain from noncompliance that may occur in three basic ways.
1. Delay necessary pollution control expenditures,
2. Avoid necessary pollution control expenditures,
3. Gain a competitive advantage during the period ofnoncompliance.
2
I
The Federal RegisterVo1.64,No.117/Friday, June 18, 1999 provides an overview of economic benefit analysis.
2 Due to the high level of avoided operating and maintenance costs and the acceptance of waste above
grade in violation
ofthe permit allowances; there is a high risk that a competitive advantage occurred
during the noncompliance period.
-2-
In presenting economic benefit analysis in a hearing with the Illinois' Pollution Control Board or before
the Civil Courts, the USEPA guidance provides that an expert should provide an independent financial
analysis
of the economic benefit the violator obtained as a result of its violations. The independent
financial assessment reflects the expert's
ow!). analytical approach as applied to the particular facts of a
case.
The expert approach used
by the State of Illinois was developed for use in a 200112002 case against
Panhandle Pipeline. The financial analysis using Excel spreadsheets was developed
by Gary Styzens,
CIA,
MBA with technical assistance form Dr. John Nosari, CPA, CIA a professor at University of
Illinois-Springfield.
In this case, I conducted an independent financial analysis
ofthe economic benefit Community Landfill
obtained as a result
oftheir noncompliance with environmental regulations. My analysis, that includes
the use
of Excel spreadsheets, incorporates many of the basic financial concepts incorporated into a
general financial education and associated financial textbooks used in college curriculums' including:
e Time value of money concepts including future value.
•
Cost
of Capital concepts using a company specific Weighted Average Cost of Capital (WACC)3
or Prime Lending Rate as a benchmark for WACC.
•
Tax concepts.
•
Opportunity costs.
The above approach has been well tested in the Panhandle case with Panhandle's expert witness accepting
the general approach; except for some general challenges with the weighted average cost
of capital
approach used
by Dr. Nosari.
Professional Standards
The professional accounting and auditing standards used to develop reasonable estimates of economic
benefit and for performing the financial analysis
of economic benefit include the following items:
Ii1
The Institute of Internal Auditors auditing standards
II
The General Accountability Office (GAO) Government Auditing Stanclards (Yellow Book)
l!l
American Institute of Certified Public Accountants (AICPA) Statements on Auditing
Standards (SAS)
IiiI
Office of Management and Budget (OMB) Circulars
IU. ANALYS][S
As requested, I have estimated an economic benefit associated with avoided expenditures for Community
Landfill is $1,486,079; with the following breakout:
3 I did not have sufficient company specific fmancial data to calculate a company specific WACC. Consequently, used the
Federal Reserve Prime Lending Rate as a conservative benchmark cost of capital/time value of money rate.
-3-
~
Avoidance In Removal of Excess/Overheight Waste: Economic Benefit
=
$1,339,793 - Non-
compliance period is operation from submittal
of an addendum to application by owners/operators for
modification to permit received
by IEPA on April 30, 1997 through the time period of this analysis July
31,2008.
~
Avoidance of Post-Closure Costs - Significant Mod Application: Economic Benefit
=
$73,950 - Non-
compliance period is from submittal
of the Owner/Operator filed variance on April 26, 1995 through the
time period
of this analysis July 31,2008.
~
Avoidance of Financial Assurance Upgrade Costs: Economic Benefit
=
$72,336 - Non-compliance
period is from when the Agency received the performance bond on June 20, 1996 through the time period
of this analysis July 31,2008.
As mentioned earlier, the Total Economic Benefit from combining the avoided costs occurring with the
above three classification
of avoided costs is $1,486,079. Attachment B provides an
overview/explanation on the details
of my Economic Benefit calculations along with four (4) pages of
Excel based spreadsheets (attached).
-4-
ATTACHMENT A
Resume
of Gary Styzens
GARY STYZENS, MBA
11871 Pinehollow Lane
Petersburg, Illinois 62675.
(217) 632-3607
CERTIFIED
INTERNAL AUDITOR
CAREER.8UMMARY:
. . '
'J, ":,:.
1<:';"
"•.
2006 to present
2003 to 2005
State of Illinois, Environmental Protection Agency (IEPA), Springfield, IL
Economic Benefit Analyst and Manager (1/06. present) functions as a financial
analyst to:
tl Plan, research, and develop estimates of economic benefit for penalty cases
including support in settlement negotiations and provide assistance and
consultation for
any economic benefit estimates to the Chief Legal Counsel and the
Attorney General's Office
for potential litigation activities.
•
Serve as an expert financial analyst, performs management studies
of the
adequacy
of internal administrative and fiscal controls; provides assessment of the
adequacy
of major systems including revenues and receivable and expenditures;
performs fiscal monitoring and reporting of agency revenues, obligations and
expenditures; evaluates, develops, and implements management reports on cash
flow analysis and expenditure controls,
•
Perform ability to pay analysis as it relates to penalties developed by the IEPA and
Attorney General.
State
of Illinois, Illinois Office of Internal Audits (lOlA), Springfield, IL
Internal Audit Division Manager (10/03 -12/05) functions as manager of lOlA's
internal audit program for the Division of Economic Development, Environmental
Regulation, and Law Enforcement that includes 10 staff auditors and includes the
foliowing agencies/departments: Agriculture,.Environmental Protection, Natural
Resources, Commerce and Economic Opportunity, State Police, Law Enforcement
Training & Standards Board, Corrections, Prisoner Review Board, and Violence
Prevention Agency. Duties included:
e
Implement a risk based audit plan that identifies individual audits to be conducted in
the Division during the year.
o
Manage the Division's internal auditing program to assure compliance with the
"Fiscal Control and Internal Auditing Act", the Institute
of Internal Auditor's auditing
standards, and
lOlA's policies and procedures.
&
State of Illinois' Economic Benefit expert providing analysis to the IEPA, Trust Fund
Commission, and Attorney General.
.
-5-
2001 to 2003
1991 to 2000
State
of Illinois, Environmental Protection Agency (IEPA), Springfield, IL
Senior Public Service Administrator (1/01 - 9/03)
Chief Internal Auditor function as manager of IEPA's internal audit function that
includes four staff auditors. Duties include:
•
Prepare a risk based audit plan identifying the individual audits to be conducted
during the year, and an annual report detailing the results
of the prior year's plan.
•
Manage the agency internal auditing program to assure compliance with the "Fiscal
Control and Internal Auditing Act" and the Institute
of Internal Auditors' auditing
standards.
•
Direct audits
of the Agency's systems of accounting and administrative controls;
obligation,expenditure, receipt and use
of public funds by the Agency and, grants
received
or made by the Agency.
•
Review the design
of new electronic data processing systems. Directs special
audits
of the operations, procedures, programs and activities of the Agency as
requested by the Director
or Deputy Director of the Agency.
c
Perform audits of Economic Benefit and Ability to Pay associated with penalty
cases being managed by the Division
of Legal Counsel and the Illinois Attorney
General including expert testimony.
Significant Job Related Accomplishments:
~
Provided financial related expert testimony for the Division of Legal Counsel before the
Pollution Control Board
on a key enforcement case that defended IEPA'sapproach to
determine a reasonable penalty for violations
of the EPA Act. The Pollution Control Board
issued a record civil penalty approaching
$1 million.
~
Worked with Agency management to improve the effectiveness of management'ssystem of
administrative and accounting controls to ensure that IEPA is in compliance with
state/federal rules and regulations, Agency programs are operating efficiently and, program
goals and objectives are being achieved.
The result
of improved internal controls is evidenced by a reduction of external audit
findings made by the Auditor General over the last ten years from
::l!Jproximatp.ly 40 down
to three in the FY2001/02 audit.
.
~
At the request ofthe Deputy Director, worked as a project leader to develop and implement
an Agency-wide property control process including elimination
of duplicate inventory
systems, and development
of a property control process including procedures, forms,
staffing, and a bar code scanning system. For the first time in
10 years the Auditor General
audit had no material property control findings.
State
of Illinois, Environmental Protection Agency, Springfield, IL
Public Seli'Vice Administrator (5/91 - 1/01)
internal Audit Section Supervisor functioned as lead auditor by performing non-
routine audits
of complex programs. Assisted in the management of the agency
internal auditing program to assure compliance with the Fiscal Control and Internal
Auditing Act"; participated in the development
of the annual audit plan and the annual
-6-
evaluation of audit accomplishments; assisted in the coordination of the annual
evaluation and certification
of internal controls; verified and documented corrective
action taken to resolve audit findings; and supervised three audit staff.
Performed and coordinated all facets
of internal audits for management, internal
control, and information system audits. Worked closely with the Chief Auditor to report
critical audit issues to senior management and responded to management's inquiries
and special audit requests. Worked closely with the Attorney General's Office and
IEPA Chief Legal Counsel to assist
in penalty negotiations involving violators of the
EPA Act. Performed detailed financial statement analysis to determine the violator's
reasonable penalty amount and to determine the violator's financial ability to pay a
penalty without causing excessive financial hardship. 1985 to
1991 State of Illinois,
Department
of Public Aid, Springfield, IL
Internal Auditor III (7/89.6/91)
,
Management Audit Unit Supervisor controlled, performed, and directed management
and program audits as requested by management. Program audits included:
Homeless Shelter, Day Care, Refugee, and Welfare
To Work. Reviewed high dollar
contracts to ensure that costs/budgets were reasonable for the services being
provided.
Supervised and directed 4 junior auditors to ensure audits were accurately reported,
conducted within bUdgeted hours, and emphasize significant issues. Drafted and
reviewed audit programs, audit reports
or report segments drafted by junior auditors
relative to completeness and accuracy.
Internal Auditor" (9/87 • 7/89)
Advanced level Senior Auditor regularly conducted internal audits of non-routine
and complex natures including financial, internal control, operational, and compliance
audits. Functioned independently, as a team leader, and as auditor
in charge of junior
auditors.
Internal Auditor I (4/85 • 9/87)
Junior Auditor conducted internal audits of simple and complex programs
independently and as team member under general supervision. Prepared
audit reports for review and completed specific phases
of complex audits.
EDUCATIONAL SUMMARY:
Certified
IIi1I~emal
Auditor, 1988
State
of Illinois, Department of Professional Registration
M.B.A., BLlIsiness
Administration, 1983
Southern Illinois University, Carbondale, IL (GPA 3.30/4.00)
B.S., Forestll)l/Eo1lVironmell1ltal Sciell1lces, 1980
Southern Illinois University, Carbondale, IL (GPA 3.50/4.00)
- '7 -
AttachmentB
AVOIDED
Economic Benefit Associated with Avoided Expenditures
(Schedule Initial Compliance Investment Page 1- Overheight Removal)
This section provides a sample/overview of the Excel spreadsheet calculations on Economic Benefit
Column B: This represents the non-compliance period and is provided to us by the IEP
AI
AG attorneys.
During this period the company was not in compliance with environmental regulatioris.
Column C First Row of schedule Initial Compliance Investment for Overheight Removal (Page l) is the
starting point for calculating the economic benefit for avoided expenditures and shows the before tax costs for
removing excess/overheight waste associated with the permitted landfill named Community. This figure was
obtained from the non-compliant entity.
Columns D First Row shows the tax implications/reduction associated with the avoided environmental
compliance expenditures using the estimated corporate tax rate in Illinois
of approximately 33%.
Environmental compliance expenses are tax exempt.
Column E is calculating the after tax interest earnings throughout the noncompliance period on avoided
expenses using the Bank Prime Loan Rate as an estimate of the cost of capital/time value of money rates. As
you move down the non-compliance period the different annual Bank Prime Loan Rates in
Column Fare
applied in each year's calculations. The interest calculations are brought down the noncompliance period with
interest charging on both the avoided principal and the interest compounded throughout the period.
Column
E
Last Row is the total Economic Benefit (interest and principal) associated with the avoided
expenditures.
Column
F
is the Federal Reserve Bank Prime Loan Rate and this median interest rate for each year of
noncompliance is used to estimate the level of investment income the Corporation received by investing
monies in the Corporation rather than in pollution control measures to comply with environmental/permit
requirements. Schedule PRIME page four (4) provides the prime rate information.
Coh.m:m G snows tne interest earnings resulting from investment of monies in the Corporation and the interest
is added back to column E to obtain the final, total; Economic Benefit (principal and interest) in
Cohnmnn E,
Last Row.
-8-
ATTACHMENT C
Documents Consulted
LIST OF DOCUMENTS CONSULTED
1. BEN Manual
2. Federal RegisterVo1.64,No.117/Friday, June 18, 1999
3. Economic Benefit related professional literature/article:
II
USEPA Office of Enforcement and Compliance Assistance article titled: "Leveling the Playing
Field: Eliminating the Economic Benefit
of Violating Environmental Laws"
II
USEPA, office of Enforcement and Compliance Monitoring "IDENTIFYING AND
CALCULATING ECONOMIC BENEFIT THAT GOES BEYOND AVOIDED AND/OR
DELAYED COSTS"
4. Chemical Engineering.Magazine-Plant Cost Index for inflation factors
5. Federal Reserve Website-Prime Lending Rates
6. Four (4) pages of attachments in Excel for computing Economic Benefit
7. Information on avoided expenditures associated with three categories of avoided costs pertaining to
non-compliance for Community Landfill.
-9-
PAGE THREE
(3)
Total interest earned on avoided
1_
_
,~~
..
~~
,expenditures/investment
E26: The economic benefit of $72,336 includes the avoided principal expenditures in
E-10 ($32,074) and accumulated interest earnings of $40,262 in G24 that accrued
throughout the noncompliance period from June 20, 1996 through the current period;
July 31, 2008.
COLUMN E: Shows the principal and interest accumulating in
a Corporate investment account due to avoided expenditures on
additional fiancial assurance costs. E12: $36,326=$33,480 plus
$2,846.
G
10: Partial year figured at 194 days and daily rate for 1996
rate .0825 or .0002260 and is taken from Prime Rate
Schedule Worksheet.
TOTAL
Total Economic Benefit Due to Financial Assurance
Upgrade Delays - Principal and Interest:
COLUMN C: $47,871 Avoided figure
obtained
from Bureau of Land and
Attorney General staff.
COLUMN
D: Corporate tax break given up fron at 33%
due
to environmental related costs being designated as tax
exempt The 33% rate is an estmimated rate provided by
[EPA consultant Dr, John Nosari, PhD,CIA,CPA and
represents a reasonable estimate
ofcorporate tax rates in
Illinois.
COMMUNITY LANDFILLIPRUIM
Economic Benefit for AVOIDED
Financial Assunmce Upgrade Costs
AB
C
DEFG
AVOIDED FINANCIAL
MARGINAL
CAPITAU
BANK
YEAR
I
ASSURANCE UPGRADE COSTS
TAX
INVESTMENT
PRIME
NET
NON-COMPLIANCE PERIOD
1996 ESTIMATEDIDOLLARS
RATE
LESS
LOAN.
BENEFIT
33%
TAXES
RATE
INTEREST ONLY
10
20-Jun-96
$47,871
$15,798
>
.~~i~&74"-{'
0.0825
$1,406
11 1997
$33,480
00850
$2,846
12 1998
$36,326
00850
$3,088
13
1999
$39,413
00788
$3,106
14
1000
$42,519
0.0950
$4,039
15 1001
$46,558
00687
$3,199
16 1002
$49,757
00475
$2,363
17
1003
$52,120
0.0411
$2,142
18
1004
$54,262
00413
$2,241
19
.~005
$56,504
00613
$3,464
20
:1006
$59,967
00814
$4,881
21
-'007
$64,849
0.0825
$5,350
$70,199
24b========JI:==~=========_
COLUMN B: Non-<:ompliance period
provided by Bureau
of Land technical staff
and Attorney General and relates to
insufficient financial assurance during the
period July 1993 through the date the
Agency received a performance bond on
June 20, 1996.
COLUMN.£.
Source: Federal Reserve Bank
Prime
Loan Rat':- Annual Median Rate
http://www federalreserve.gov/releaseslh15/data/MonthlyfH 15 PRIME NA.txt
See
PRIME RATE SCHEDULE WORKSHEET
G22: Partial year figured at 212 days and
daily rate for 2008 rate .0524 or .0001436
and is taken from Prime Rate Schedule
Worksheet
81261200811:48 AM
PAGE TWO (2)
COMMUNITY LANDFILLfPRUlM
Economic Benefit for AVOIDED
Late File of Significant Modification Application - Post-Closure Care Costs
Total interest """cd on
avoided
expenditures/investment
-
B
C
-
-
D
E
F
G
--
AVOIDED POST CLOSURE COSTS
MARGINAL
CAPITAL!
BANK
YEAR
SIGNIFICANT MODIFICATION
TAX
INVESTMENT
PRIME
NET
NON-COMPLIANCE PERIOD
APPLICA
nON
RATE
LESS
LOAN
BENEFIT
1995 ESTIMATED/DOLLARS
JJ%
TAXES
RATE
INTEREST
26-Apr-95
$44,526
$14,694
$29,832
0.0878
S\,786
\996
$3\,618
00825
$2,609
\997
$34,227
00850
S2,909
\998
$37,\36
00850
S3,157
\999
$40,293
00788
S3,175
2000
$43,468
00950
S4,129
200\
$47,597
00687
S3,270
2002
$50,867
00475
S2,416
2003
$53,283
004\\
$2,190
2004
$55,473
00413
$2,291
2005
$57,764
00613
$3,54\
2006
$61,305
00814
$4,990
2007
$66,296
00825
$5,469
31-Jul-08
TOTAL
::::::
~:
TotalMod.EconomicApplicationBenefitDelaysDue to-PostPrincipalClosur
and
Costs/SignificantInterest:
~·i~~~¥~;:Jf~~~~~;~t\j~~~;
.
~
•• ;;...
~,~
...:....
;,~:"
..
~~:-::-;;;
". I
i
·~~~S.$73',950~~:','
.'
$44,118,
"
A
25
10
II
12
13
14
IS
16
17
18
19
20
21
22
23
24
COLUMN D: Corporate tax break given up fran at 33%
due to environmental related costs being designated as tax
COLUMN
B: Non-compliance period
COLUMN C: $44,526 Avoided figure obtained from
provided
by Bureau of Land technical staff Bureau of Land and Attorney General staff.
and Attorney General and relates to
neW
monitoring requirments stemining from
regulation changes in
1992.
Owner/Operator filed variance on April
exempt. The 33% rate is an estmimated rate provided by
26,1995 instead of back in June, 1993 per IEPA consultanl Dr, John Nosan, PhD,CIA,CPA and
Land staff.
represents a reasonable estimate
of corporate tax rates in
Illinois.
COLUMN F
Source:
Federal Reserve Bank Prime
Loan Rate - Annual Median Rale
hltp:llwww.federalreserve.gov/releasesIh15/data!Monthly/H 15 PRIME NA.lxt
See PRIME RATE SCHEDULE WORKSHEET
G23: Partial year figured at 212 days and daily rate for 2008 rate ,0524
or .0001436 and
is taken from Prime Rate Schedule Worksheet.
COLLIMN E: Shows the principal and interest
accumulating m a Corporate investment account
dUe
to aVOided expenditures on additional post closure
momtormg costs E
12: $34,227=$31,618 plus
$2,609
E25: The economic benefil
of$73,950 includes the avoided principal
expenditures m
E.IO ($29,832) and accumulated interest earnings of $44,118
m G25 that accrued throughout the noncompliance period from April 26,
1995 through the current period; July
31,2008.
GIO: Partial year figured at 249 days and daily rate
for 1995 rate .0878
or .0002405 and is taken from
Prime Rate Schedule Worksheet.
919/2008
2:46
PM
YEAR
NON-COMPLIANCE PERIOD
AVOIDED INITIAL
COMPLIANCE OVERIlEIGHT
INVESTMENT/EXPENDITURES .
1991 ESTIMATEDIDOLLARS
MARGINAL
TAX
RATE
JJ%
CAPITAU
INVESTMENT
LESS
TAXES
BANK
PRIME
LOAN
RATE
NET
BENEFIT
INTEREST
PAGE ONE (1)
12 30-Apr-97
5950,000
5313,500
13 1998
14 1999
15 2000
162001
17 2002
18 2003
19 2004
20 2005
21 2006
22 2007
TOTAL
Total Economic Benefit Due to Noncompliance for
Excess/Overheight waste: Principal and interest
$636,500
5072.819
5730.009
5787.533
5862,349
5911592
5965.368
51.005.045
51.046.553
51.110.707
S1.201.118
S1.300.210
0.0850
I
536,319
0.0850
I
57.190
0.0788
57,525
0.0950
74,816
0.0687
59,243
0.0475
43,176
0.0411
39,617
0.0413
41,508
0.0613
64,154
0.0814
90,412
0.0825
99,092
0.052477:='777777.m;;7
Total interest earned on avoided
r(t
-~
S703,293!expendltures/invesnnent
COLUMN C: $950,000 figure in CI2 provided by Community
Landfill/operators as the 'cost to move/truck the excessloverheight waste to
another pennined landfill facility within the general area of the
current/noncomplianl landfill landfill. This figure was on document titled
"Addendum
to the applicatiojn for significant modification to pennit"
dated April 30,
1997. The
4/30/1997
date is also used in Column B.to
start the non-compliance period.
COLUMN D: Corporale tax break given up fron al 33% due 10 environmental related
costs being designated
as lax exempt. The 33% rate is an esnnimaled rate provided by
IEPA consultant Dr, John Nosari, PhD,CIA,CPA and represents a reasonable estimale of
corporate
tax
rates in Illinois.
COLUMN F
Source: Federal Reserve Bank Prime
Loan Rare - Annual Median Rate
http://Www.federalreserve.gov/releasesih151dataiMonlhlyIH15 PRIME NA_txt
E25: n,e economic benefit of$I,339,793 includes principal because il is assumed that no
pnnc.pal Will be applied by the owners/operators to achieve compliance. Consequently, both
interesl and pnncipal
is assumed to be avoided. Money that is eventually spent to achieve
compliance, at a later date, could be used to reduce the principle portion
of the economic
benefil (the $636,500 portion). The $703,293 interesl portion should not
be reduced.
COLUMN
E: Shows the principal and inlerest
accumulatmg
In
a Corporate investment account due
to aVOided expenditures on compliance. E14:
$730.009=5672,819 plus $57,190.
E26: The economic benefit
of$I,339,793 includes the avoided principal expenditures in E.12
$636,500) and accumulated interest earnings
of $709,293 in E25 that accrued throughout the
noncompliance period from April 30, 1997 through the curren
I
period; July 31, 200::.
G 12:
P3I1,al year figured at 245 days and daily rate for 1997 rate .0850
or 0002329 and is taken from Prime Rale Schedule Worksheet.
G25: Partial year figu,ed
at 212 days and daily rale for 2008
rate .0524 or .0001436 and
IS laken from Prime Rale Schedule
Worksheet.
919/2008 2.47 PM
FederaH Rese:r"le Board olf Governors
Ball1lk Prime Loan Rate
Annual Median Rates
§d]edlQJiHe~
JrRIlVIE
PAGE FOUR (4)
AB
C
D
E
F
G
H
I
1
SOURCE:
7" http://www. federalreserve.gov/releases/h 15/data/Monthly/H 15 PRIME NA. txt
3
7
f-
+
7
1995
1996
1997
1998
1999
2000
8
Jan
8.50
8.50
8.25
8.50
7.75
8.50
9 Feb
9.00
8.25
8.25
8.50
7.75
8.73
10
Mar
9.00
8.25
8.30
8.50
7.75
8.83
11
Apr
9.00
8.25
8.50
8.50
7.75
9.00
12
May
9.00
8.25
8.50
8.50
7.75
9.24
13
J~m
9.00.
8.25
8.50
8.50
7.75
9.50
14 Jul
8.80
8.25
8.50
8.50
8.00
9.50
15
Aug
8.75
8.25
8.50
8.50
8.06
9.50
16 Sep
8.75
8.25
8.50
8.49
8.25
9.50
17
Oct
8.75
8.25
8.50
8.12
8.25
9.50
18 Nov
8.75
8.25
8.50
7.89
8.37
9.50
19
Dec
8.65
8.25
8.50
7.75
8.50
9.50
20
21
Median
8.78
8.25
8.50
8.50
7.88
9.50
22 Daily Rate
0.02405
0.0226
0.02329
0.02329
0.02159
0.02603
I
~~
25
2001
2002
2003
2004
2005
2006
2007
2008
26 Jan
9.05
4.75
4.25
4.00
5.25
7.26
8.25
6.98
27 Feb
8.50
4.75
4.25
4.00
5.49
7.50
8.25
6.00
28 Mar
8.32
4.75
4.25
4.00
5.58
7.53
8.25
5.66
29
Apr
7.80
4.75
4.25
4.00
5.75.
7.75
8.25
5.24
30
May
7.24
4.75
4.25
4.00
5.98
7.93
8.25
5.00
31 Jun
6.98
4.75
4.22
4.01
6.01
8.02
825
5.00
32 .Jul
6.75
4.75
4.00
4.25
6.25
8.25
8.25
5.00
33
Aug
6.67
4.75
4.00
4.43
6.44
8.25
8.25
34
Sep
6.28
4.75
4.00
4.58
6.59
8.25
8.03
35 Oct
5.53
4.75
4.00
4.75
6.75
8.25
7.74
36
Nov
5.10
4.35
4.00
4.93
7.00
8.25
7.50
37 Dec
4.84
4.25
4.00
5.15
7.15
825
7.33
38
39
Median
6.87
4.75
4.11
4.13
6.13
8.14
8.25
5.24
40 Daily Rate
0.01882
0.01301
0.01126
0.01132
0.01679
0.0223
0.0226
0.01436
41
9/9/2008 2:48 PM
CommunityFINALFINAL (AMR) 4
CERTIFICATE OF SERVICE
I, CHRISTOPHER GRANT, an attorney, do certify that I caused the foregoing Response
to Respondents' Motion to Bar Witnesses and Expert Testimony to be served on those listed
below by email and placing same with the United States Mail
Illinois, on September 10, 2008.
Service List:
Mr. Bradley P. Halloran
Hearing Officer, Illinois Pollution Control Board
100
W. Randolph, 11 th Floor
Chicago, Illinois 60601
Mr. Mark LaRose
LaRose
&
Bosco
200
N. La Salle Street, Suite 2810.
Chicago, Illinois 60601
Ms. Clarissa
Y.
Cutler
Attorney at Law
155 N. Michigan Avenue, Suite 375
Chicago, Illinois 60601
icago,
