ILLINOIS POLLUTION CONTROL BOARD
June 18, 2009
PEOPLE OF THE STATE OF ILLINOIS,
Complainant,
v.
COMMUNITY LANDFILL COMPANY,
INC. and the CITY OF MORRIS,
Respondents.
)
)
)
)
)
)
)
)
)
)
PCB 03-191
(Enforcement - Land)
CHRISTOPHER GRANT AND JENNIFER A. TOMAS, ASSISTANT ATTORNEYS
GENERAL, APPEARED ON BEHALF OF THE PEOPLE OF THE STATE OF ILLINOIS;
MICHAEL S. ROUBITCHEK APPEARED ON BEHALF OF THE ILLINOIS
ENVIRONMENTAL PROTECTION AGENCY;
CLARISSA C. GRAYSON, LAROSE & BOSCO, LTD. APPEARED ON BEHALF OF
COMMUNITY LANDFILL COMPANY, INC.; AND
RICHARD S. PORTER, HINSHAW & CULBERTSON LLP AND SCOTT M. BELT, SCOTT
M. BELT & ASSOCIATES, P.C. APPEARED ON BEHALF OF THE CITY OF MORRIS.
OPINION AND ORDER OF THE BOARD (by S.D. Lin):
SUMMARY OF TODAY’S DECISION
In this final opinion and order, the Board assesses penalties against two respondents for
violations of the Environmental Protection Act (Act), 415 ILCS 5/1
et seq
. (2006) and the
Board’s rules requiring the posting of financial assurance for the proper closure and post-closure
care of a landfill.
On April 17, 2003, the Office of the Attorney General, on behalf of the People of the
State of Illinois (People), filed a one-count complaint against Community Landfill Company,
Inc. and the City of Morris (respondents) alleging failure to provide adequate financial assurance
for closure and post-closure operations. Site permits for the Morris Community Landfill
(Landfill), issued by the Illinois Environmental Protection Agency (IEPA or Agency), list
Community Landfill Company, Inc. (CLC) as the operator, and the City of Morris (City or
Morris) as the owner. The Landfill is a special waste and municipal solid waste landfill located
at 1501 Ashley Road, in Morris, Grundy County.
This case involves one continuing violation, which began in 2000, of the Act’s financial
assurance requirement and two violations of corresponding Board regulations. Section 21(d)(2)
2
of the Act prohibits any person from conducting a waste disposal operation in violation of any
Board regulations.
See
415 ILCS 5/21(d)(2) (2006). The Board regulations at issue are: (1) the
requirement for any person conducting any disposal operations to comply with the financial
assurance requirements (35 Ill. Adm. Code 811.700(f)); and (2) that any surety bonds provided
must be issued by a surety company approved by the U.S. Department of Treasury as an
acceptable surety in its list of acceptable sureties, known as the “Circular 570” (35 Ill. Adm.
Code 712(b)).
On February 16, 2006, the Board issued an interim opinion and order in this case granting
summary judgment in favor of the complainant. People of the State of Illinois v. Community
Landfill Company, Inc. and City of Morris, PCB 03-191 (Feb. 16, 2006) (interim order). The
Board remarked that
The purpose of financial assurance is to provide a guarantee to the State that funds
will be available in the event a landfill owner or operator fails to perform needed
closure and post closure or to address any other environmental problems that may
occur during and after the operating life of the landfill. People v. ESG Watts,
Inc., PCB 96-233, slip op. at 11 (Apr. 16, 1998); citing 35 Ill. Adm. Code
807.603. Inadequate financial assurance could cause the State, at taxpayer
expense, to clean up or even close a facility.
See
People v. ESG Watts, Inc., PCB
96-237 (Feb. 19, 1998). The Board finds the alleged violations of Section
21(d)(2) of the Act and Sections 811.700(f) and 811.712(b) of the Board’s
regulations, and grants the [People]’s motion for summary judgment.
Accordingly, Morris’ counter-motion for summary judgment is denied.
The Board affirmed its order on reconsideration June 1, 2006. People of the State of
Illinois v. Community Landfill Company, Inc. and City of Morris, PCB 03-191 (June 1,
2006) (reconsideration granted, order affirmed).
The Board held a hearing on the issues of appropriate remedy on September 11-13, 2006,
and in this final ruling the Board considers the parties’ evidence and argument as presented at
hearing and discussed in their briefs.
The People request the Board to assess a civil penalty of over $1.06 million against CLC,
and nearly $400,000 against the City. The People also requested that the respondents be ordered,
jointly and severally, within 60 days to: update closure estimates, post financial assurance, and
to initiate closure of Parcel B of the landfill. While the People had initially requested recovery of
its attorney fees and costs, the People now waive them, requesting the Board to take notice of the
waiver in its evaluation of costs of any remedy.
Both respondents continue to contest the finding of liability. Each argues that, even if
found in violation of the Act, no penalty should be imposed. CLC argues that it has no funds to
pay a penalty as it no longer has a permit to operate the landfill and to generate revenue. The
City argues that no penalty is appropriate since it never operated the landfill for which CLC was
contractually obligated to provide financial assurance, enjoyed no economic benefit from any
non-compliance, could have at any time given a “local government guarantee” of financial
3
assurance at no cost if asked, has already expended municipal funds to correct landfill problems,
and anticipates expenditure of more.
Under all of these circumstances and in light of the factors of Section 33(c) of the Act,
415 ILCS 5/33(c) (2006), the Board finds that the appropriate remedy includes the following
directions to respondents:
On or before August 17, 2009, respondents CLC and the City must, jointly and severally
•
post financial assurance in the amount of $17,427,366.00 using any combination of
financial assurance mechanisms acceptable to the IEPA under the Board’s rules;
•
submit revised cost estimates, and update financial assurance in accordance with
approved revised estimates; and
•
cease and desist from accepting any additional waste at the site, and from committing any
other violations of the Landfill’s permits, the Act, and Board regulations.
After considering the factors of Section 42(h) of the Act, the Board imposes a civil
penalty against each respondent “at least as great as the economic benefits . . . accrued by the
respondent as a result of the violation . . . unless the Board finds that imposition of such penalty
would result in an arbitrary or unreasonable financial hardship”. 415 ILCS 5/42(h) (2006).
•
Respondent CLC must pay a civil penalty of $1,059,534.70 (calculated by the People as
$1,486,106.70 with reference to the costs avoided for financial assurance premiums, less
$426,572.00) in premiums paid).
•
The Board declines to make both respondents jointly and severally liable for payment of
the $1.06 million dollar penalty, finding that to do so would impose an arbitrary or
unreasonable hardship on the City’s taxpayers.
•
The City itself must pay a civil penalty amounting to the dumping royalties or tipping
fees it received from 2001-2005, amounting to $399,308.98.
Finally, the Board does not order immediate closure of the portion of the Landfill known
as Parcel B. The record in this case does not support such relief.
FACTUAL BACKGROUND AS FOUND IN FEBRUARY 16, 2006
BOARD INTERIM ORDER
The Board set forth the pertinent facts establishing both respondents’ liability in this case
in its February 16, 2006 opinion and order, which the Board incorporates by reference herein as
if fully set forth. People of the State of Illinois v. Community Landfill Company, Inc. and City
of Morris, PCB 03-191 (Feb. 16, 2006). The Board will repeat here only enough of those facts to
aid the reader’s comprehension of the relief discussion at hearing:
The Morris Community Landfill is approximately 119 acres in area, and is divided into
two parcels, designated parcel “A,” consisting of approximately 55 acres, and parcel “B,”
consisting of approximately 64 acres. CLC operates the Morris Community Landfill and
manages the day-to-day operations of both parcels at that site. [The City owns the
4
property on which the Landfill is located.] The respondents have arranged for and
supervised the deposit of waste, including municipal solid waste, garbage, and special
waste, into waste cells at the Morris Community Landfill since at least June 1, 2000 on
parcels “A” and “B” of the landfill.
The Agency issued Significant Modification (SigMod) Permit Numbers 2000-
155-LFM, covering Parcel A, and 2000-156-LFM, covering Parcel B, on August
4, 2000. Comp. at 3. On June 29, 2001, the Agency issued Permit Modification
Number 2 for parcels A and B. On January 8, 2002, the Agency issued Permit
Modification Number 3 for Parcel A.
Id
. The SigMod permits were issued to
Morris, as owner, and CLC as operator. Pursuant to these permits, the
respondents were to provide a total of $17,427,366 in financial assurance,
beginning in 2000.
See
Mot. Exh. A, p. 45, par. 6; Mot. Exh. B, p. 33, par. 6;
CLC and Morris v. IEPA, PCB 01-48, 49 (cons.), slip op. at 29 (Apr. 5, 2001).
The respondents provided the Agency financial assurance of closure and post
closure costs by way of three separate performance bonds underwritten by The
Frontier Insurance Company. Comp. at 3; Mot., Exh. C. On June 1, 2000, the
United States Treasury Department removed Frontier Insurance Company from
the list of acceptable surety companies listed in the United States Department of
Treasury publication “Circular 570.” Comp. at 3. People of The State of Illinois
v. Community Landfill Company, Inc. and City of Morris, PCB 03-191, slip op.
at 2-3 (Feb. 16, 2006).
The Board stated that the issue in the case is what activities constitute “conducting a
landfill” within the meaning of 415 ILCS 5/21(d)(2) and 35 Ill. Adm. Code 811.700(f).
Id.
at 13.
The Board explained:
In looking at the facts of the case and considering what is anticipated by the Act
and Board regulations to be the behavior of an operator conducting a waste
disposal operation, the Board finds both parties responsible for operating the site
and, therefore, conducting the waste disposal operation that is Morris Community
Landfill. While there must be at least one site operator, the Act does not prohibit
more than one party from operating a site. In this case, the Board finds that both
parties participated in the operations.
While Morris may not actively conduct the day-to-day operations at the landfill,
Morris also does not “passively own land upon which waste disposal operations
are (or have been) conducted.” Morris Resp. at 7. Morris financed the operation,
litigated in conjunction with CLC, as well as profited from and treated the
leachate from the Morris Community Landfill. While these activities alone may
not constitute “operating” a waste disposal site, Morris also had discretion
regarding the decisions at the site and took responsibility for some of the ancillary
site operations such as the treatment of leachate from the landfill. The Board
finds that the grand sum of Morris’ conduct rises to the level of “operation” as
anticipated by the Board in using that term in Section 811.700(f). People of The
5
State of Illinois v. Community Landfill Company, Inc. and City of Morris, PCB
03-191, slip op at 14 (Feb. 16, 2006).
The Board then found that neither Morris nor CLC have provided adequate financial assurance
as described in the Board’s rules.
Id.
The Board went on to observe that the issue of whether the Frontier bonds complied with
Board regulations was previously adjudicated and resolved in a permit appeal involving the same
parties before the Board. People v. CLC and Morris, PCB 03-191 (Oct. 16, 2003); referring to
Community Landfill Co. v. IEPA, PCB 01-170 (Dec. 6, 2001), affd. Community Landfill Co. v.
PCB, 331 Ill. App. 3d 1056, 772 N.E.2d 231 (3rd Dist. 2002),
pet. for leave to appeal den.,
202
Ill. 2d 600; 787 N.E.2d 155 (2002).
1
Hearing was held in Morris by Board Hearing Officer Bradley C. Halloran. The hearing
was opened on September 10, but testimony was presented only on September 11 and 12, 2007.
In its summary judgment order in the instant case, the
Board reiterated that the legal doctrine of “offensive collateral estoppels” applied to bar
relitigation of the issue here.
Id.
at 14-15.
The Board concluded its order by directing the parties to hearing on the specific
issue or remedy only, directing them to provide specific figures and justifications for any
proposed penalty. As previously stated, the Board affirmed its order on reconsideration
June 1, 2006. People v. Community Landfill Company, Inc. and City of Morris, PCB 03-
191 (June 1, 2006).
OVERVIEW OF ISSUES AND EVIDENCE PRESENTED AT HEARING AND IN POST-
HEARING FILINGS
2
1
PCB 01-170 involved denial of a supplemental permit application addressing construction of the
separation layer for Parcel A, an application made on November 27, 2000 pursuant to the August
4, 2000 SigMod permits. By letter dated May 11, 2001, the Agency denied the supplemental
permit application. The Agency denied petitioners’ permit application on two grounds: (1) the
financial assurance documents submitted by petitioners did not comply with the requirements of
35 Ill. Adm. Code 811.712(b); and (2) Robert J. Pruim’s felony conviction, pursuant to Section
39(i) of the Environmental Protection Act (415 ILCS 5/39(i) (2006)).
In PCB 01-170 CLC and
the City jointly litigated only the first issue. The Board found that the permit denial was proper.
Respondents appealed that ruling to the Third District Appellate Court, which affirmed the Board
and IEPA interpretation of the Board’s financial assurance rule. Community Landfill Co. v.
PCB, 331 Ill. App. 3d 1056, 772 N.E.2d 231 (3rd Dist. 2002),
pet. for leave to appeal den.,
202
Ill. 2d 600; 787 N.E.2d 155 (2002).
2
The transcripts for each day of hearing begin with 'page 1'. Citations to the transcript will therefore
be made date specific,
e.g.
9/11/07 Tr. at __.
Complainant’s Presentation
6
On September 11, 2007, the People presented testimony of four witnesses:
Mark Retzlaff, Inspector, IEPA Bureau of Land, Des Plaines, Illinois (primary inspector
for Morris Landfill regarding observations at various site inspections);
Blake Harris, Accountant, IEPA Bureau of Air (formerly of the Bureau of Land).
Springfield, Illinois (environmental protection specialist regarding some aspects of
financial assurance instruments tendered for Morris Landfill by CLC and City);
Brian White, IEPA Bureau of Land Compliance Unit Manager, Springfield, Illinois
(testimony concerning operation of financial assurance rules, bond claim process
regarding Frontier bonds, “local guarantee” process); and
.
Christine Roque, Permit Engineer, IEPA Bureau of Land, Springfield, Illinois
(environmental protection engineer concerning the most current (August 2000 SigMod)
permits and requirements, subsequent submissions by respondents).
The People had admitted into evidence its Group Exhibit A, consisting of Exhibits 1-14. The
People also made an offer of proof as to the details of a possible settlement of a bond claim made
by IEPA to Frontier (9/11/07 Tr. at 187-188); this possible settlement was the subject of a
motion which will be dealt with in more detail along with other “Preliminary Matters”,
infra,
at
p. 19-22.
The Retzlaff Testimony
IEPA inspector Mark Retzlaff stated that he was the primary inspector for the Morris
Landfill, having inspected it some 18 times between 2000 and 2007. 9/11/07 Tr. at 45, 53.
Among other things, he testified concerning his inspection of Parcel A of the Landfill on June
26, 2007 and of Parcels A & B on August 29, 2007, and sponsored exhibits consisting of his
inspection reports and photographs taken on the site. 9/11/07 Tr. at 55-111 and Comp. Gr. Exh.
A, Exh. 7-8. Generally, Mr. Retzlaff described the condition of the Landfill as “deteriorating”.
During his June and August 2007 inspections, Mr. Retzlaff’s discovered cover erosion in
several locations (9/11/07 Tr. at 68-69), landfill gas escaping to the atmosphere (9/11/07 Tr. at
63, 68, 71), leachate escaping from the waste disposal area (9/11/07 Tr. at 63-4, 74), and
uncovered refuse. 9/11/07 Tr. at 58, 60,-67, 72, 73;
see also
, photographs included in People's
Group Exhibit 1, Comp. Gr. Exh. A, Exh. 7-8. Mr. Retzlaff testified that the photos showed
evidence of recent and ongoing waste disposal at the site, despite the Landfill’s lack of permits to
accept waste. 9/11/07 Tr. 60-61, 65-67.
The Harris Testimony
IEPA Accountant Blake Harris testified he worked with financial assurance issues in the
IEPA Bureau of Land from February 1999 through December of 2003 and that he testified in the
PCB 01-170 permit appeal proceeding. 9/11/07 Tr. at 116-17. Mr. Harris was involved with
review and evaluation of the Landfill's Frontier Insurance Company Bonds in 2000, and stated
7
that the annual bond premium, as shown on the face of each of the three bonds, amounted to two
percent (2%) of the face value of the Frontier Bonds. 9/11/07 Tr. at 125. Mr. Harris stated that
Frontier was delisted from federal Circular 570 June 1, 2000, and that 30 other landfills in
Illinois were using Frontier Insurance Company surety bonds for financial assurance. All of
these landfills were sent notices of violation. 9/11/07 Tr. at 125. These violation notices, sent in
October-November 2000, advised that the Frontier bonds had become noncompliant, and
requested that substitute financial assurance be provided. 9/11/07 Tr. at 126-129, and Comp. Gr.
Exh. A, Exh. 10-11.
Mr. Harris reported that of the 30 facilities receiving violation notices, 28 subsequently
replaced their Frontier bonds with compliant financial assurance. Of the two landfills that took
no action one, Dowty, went out of business and is now on the State list of abandoned landfills.
The Morris Community Landfill is the only remaining noncompliant landfill. 9/11/07 Tr. at 129.
The White Testimony
IEPA Bureau of Land Compliance Unit Manager Brian White testified regarding the
financial assurance requirements for landfills generally, and for the Morris Landfill in particular.
He testified that, under the Board’s financial assurance rules at 35 Ill. Adm. Code 811.700(f) and
811.701(a) applicable to the City and CLC, the owner or the operator of a landfill must provide
the required amount of closure/post closure financial assurance. He also testified that if the
operator did not post the required amount of financial assurance, the landfill owner was required
to do so.
Mr. White testified that the only financial assurance that had ever been provided at the
Landfill under the Board’s Part 811 regulations was in the form of the noncompliant Frontier
Bonds. 9/11/07 Tr. at 180-83. Since the Frontier bonds were issued in 2000, neither respondent
has provided IEPA with any other compliant financial assurance for the Morris Community
Landfill “in the amounts of the [$17.4 million] most recent approved cost estimate and post
closure cost estimate [using] one of the ten mechanisms . . . listed in [35 Ill. Adm. Code]
811.706.” 9/11/07 Tr. at 190-91.
The Roque Testimony
IEPA Bureau of Land Engineer Christine Roque testified that she had worked with some
30 landfills during the course of the 15 years she has worked for IEPA; she has been responsible
for the permits for the Landfill since 1996. 9/11/07 Tr. at 212. Ms. Roque estimates that, over
the years, the City had been issued 50 to 55 permits for the Morris Community Landfill, and that
Community Landfill Company had been issued approximately 50 permits. 9/11/07 Tr. at 213-
14. Ms. Roque stated that, to obtain the 2000 SigMod permits, respondents provided three surety
bonds in the amount of $17,427,366.0044. The City of Morris provided $10,081,630.00, more
than half. 9/11/07 Tr. at 216-17, and Comp. Gr. Exh. A, Exh. 9.
Ms. Roque testified that Board rules require annual updates of cost estimates for
closure/post-closure care costs, but that respondents had not submitted such updates. 9/11/07 Tr.
at 217. While financial assurance amounts may be reduced by seeking and obtaining a permit
8
modification from IEPA, the respondents did not seek a permit modification until July 2007; that
permit modification was under IEPA review at the time of the hearing. 9/11/07 Tr. at 217-18.
The permit modification would revise the schedule of closure activities from those approved in
the 2000 SigMod permits, and the revised cost estimates were some $7 million less based on
these activities. 9/11/07 Tr. at 233.
The City’s Presentation
On September 12, 2007, the City presented the testimony of two witnesses:
William J. Crawford, Certified Public Accountant (CPA) (concerning City finances,
based on audit work performed from 1986-2007 with the exception of 2003-04 audits),
9/12/07 Tr. 17-65 and City Exh. 11; and
Devin Moose, registered Professional Engineer and Director of St. Charles office for
Shaw Environmental (concerning Shaw Environmental’s work for the City at the Landfill
site since 2003, Tr. at 66-149 and City Exh. 1-2).
The City had 12 exhibits admitted into evidence, consisting of Shaw’s updated closure cost
estimates for Parcels A & B and a closure plan update (City Exh. 1-2, 10), independent auditor’s
reports for 2005 and 2006 (City Exh. 4-5), various permit documents (City Exh. 3 (a),(b),(c), 8,
9), lease agreements for the landfill site between the City and CLC (City Exh.
7(a),(b),(c),(d),(e),(f); a letter between the Agency and Frontier (City Exh. 6), Mr. Crawford’s
resume and a financial assurance worksheet completed by Mr. Crawford calculating City’s
ability to “self-insure” closure costs in excess of $9.1 million based on an April 30, 2007
financial statement (City Exh. 11-12.)
The Crawford Testimony
Mr. Crawford testified that he has owned his own certified public accounting firm since
1995, and has performed the City’s annual audits under contract as an independent auditor for
the years 1986-2007 (with the exception of 2003-04 audits). 9/12/07 Tr. 17 and City Exh. 11.
Mr. Crawford describes the purpose of the annual audit as “to express an opinion of the fairness
of the financial statements and to provide that in an independent external way.” 9/12/07 Tr. at
17.
Mr. Crawford testified that he had reviewed the Board’s financial assurance rules at 35
Ill. Adm. Code 811.716 “Local Government Financial Test” and 811.717 “Local Government
Guarantee”, and completed a worksheet designed to allow determination of whether the City
could meet the rules’ requirements based on the fiscal year ending April 30, 2007. 9/12/07 Tr. at
19-23 and Exh. 12. The Board’s rules allow a municipality to guarantee landfill closure if a third
party operating the landfill fails to close. Mr. Crawford states that there are two ratios of concern
in meeting the test, a local government’s liquidity ratio and annual debt service ratio. 9/12/07 Tr.
at 24, 26. Once the local government has met those ratios, a final computation is performed to
determine how much the government can guarantee: annual revenues according to generally
accepted principles times 43 percent. 9/12/07 Tr. at 28-29.
9
Mr. Crawford testified that, to meet the rules, a local government’s “liquidity ratio” (or
“ratio of marketable securities in comparison to expenditures”) “must be greater than 0.5”.
9/12/07 Tr. at 24-25. Mr. Crawford computed the City’s liquidity ratio to be 2.295 for the fiscal
year ending April 30, 2007. 9/12/07 Tr. at 25. While he did not have prior audits before him, he
believes that the City’s liquidity “has never been a problem,” and that it has met the first
component of the financial test. 9/12/07 Tr. at 26.
Mr. Crawford described the annual debt service ratio as
a comparison of the amount of expenditures for debt service, which include
principal and interest in one year, compared to, again, the total expenditures of the
City. And that ratio must be less than [0].2. 9/12/07 Tr. at 27
Mr. Crawford computed the City’s liquidity ratio to be 0.0133 for the fiscal year ending
April 30, 2007. 9/12/07 Tr. at 27. Mr. Crawford concludes that the City would meet the test for
that fiscal year, and opines that it would have met the ratio since the year 2000. 9/12/07 Tr. at
28-29. Mr. Crawford stated that he did not have final figures for the City’s fiscal year ending in
2007, but that he believed that the total revenues were $21,269,662, and that 43 percent of that
amount is approximately $9.1 million. 9/12/07 Tr. at 30.
Mr. Crawford’s analysis of revised closure cost estimates made by Shaw Environmental
and provided by the City lead him to conclude that closure costs would be $7,347,572, and post
closure costs of $2,714,047, for a total amount of $10,061,619. While the City could only self
guarantee $9.1 million, Mr. Crawford testified that the $900,000 difference could be made up by
funds available in 3 City funds: the Sanitary Landfill Contingency Fund, the Solid Waste Tax
Fund, and the Garbage Fund. 9/12/07 Tr. at 30-31. Mr. Crawford testified that at the end of
fiscal year 2007, the City had approximately $2.7 million in those funds, with some $777,000
earmarked to pay expenses. 9/12/07 Tr. at 32.
Mr. Crawford reported that, additionally, the City had capital projects “on the horizon”:
airport expansion in the amount of $2.2 million, a new municipal building with room for police
and a city hall for $10-12 million, and a major drinking water and sewer expansion project for
$14-15 million. 9/12/07 Tr. at 31-32. The sewer project is being funded by a $7.4 million bond
issue, while the municipal building is being funded by the “TIF” fund and general city moneys.
9/12/07 Tr. at 30-31.
Mr. Crawford testified that, after a municipality provides its initial guarantee fee, it does
not “cost money” in the same way buying a bond or insurance vehicle from a third party would.
9/12/07 Tr. at 30-31. In response to the question by the City’s counsel that “if we assume that
somehow the City had an obligation to post financial assurance since 2000, did they (sic) sustain
any economic benefit by not posting their own guarantee,” Mr. Crawford stated that “I don’t see
that”. 9/12/07 Tr. at 37.
On cross-examination, Mr. Crawford stated that in a previous deposition he had stated
that the City could have guaranteed $7.1 million based on 43% of the revenues for the fiscal year
10
ending April 30, 2005, and that the City’s revenues had increased each year between 2000 and
2007. 9/12/07 Tr. at 40-41. Mr. Crawford stated that the Board’s entry of the February 16, 2006
interim order in this case finding the City in violation of the financial assurance rules does not
change his opinion on the financial statements. 9/12/07 Tr. at 41-45 discussing City Exh. 4 at
39. Mr. Crawford states that a $7.6 million potential liability is disclosed (9/12/07 Tr. at 44), in
addition to “$10.2 million of financial assurance for leachate collection and treatment by a third
party for the landfill.” 9/12/07 Tr. at 45. Mr. Crawford agrees that immediately thereafter the
financial statement says that the $10.2 million “amount is in dispute, because the City is
presently treating, and plans to treat in the future, all leachate collected from the landfill at its
own facilities at no cost to the State.” 9/12/07 Tr. at 41-45 discussing City Exh. 4 at 39.
Mr. Crawford stated that he was not aware that the Board had ruled in 2001 that the
City’s treatment of its own leachate was insufficient, and that it would be required to post the
additional $10-plus million as financial assurance. 9/12/07 Tr. at 41-45 discussing Community
Landfill and City of Morris v. IEPA, PCB 01-48 and 01-49 (cons.) slip op. at 29-30 (Apr. 5,
2001), and affirmed on reconsideration (June 7, 2001). Asked whether the City could have
guaranteed $17 million or more of financial assurance at any time between 2000 and 2007, Mr.
Crawford stated that he was sure of his revenue figures, but that he has no idea what the closure-
post-closure figures are. 9/12/07 Tr. at 51-52. He agreed that $9.1 million was the maximum the
City could guarantee, and it could not guarantee $17.1 million. 9/12/07 Tr. at 53-54. Mr.
Crawford stated that he was not aware how different methods of financial assurance could be
combined to meet the rules, and that he has no idea if the City could afford to pay the premium
for $7.4 million in surety bonds. 9/12/07 Tr. at 55-56.
Mr. Crawford stated that the City had net assets of $35 million in 2006, an increase of
$4,946,000 over the previous year (2005). While the City’s financial position is strong, Mr.
Crawford stated that “a strong financial position may not always be indicative of a strong cash
position. 9/12/07 Tr. at 57. Mr. Crawford stated that he did not know if any surety bonds taken
out by the City would need to be reflected against its legal debt limit, or which capital projects
previously discussed would affect the debt margin. 9/12/07 Tr. at 58-59. Mr. Crawford
answered that the City could not expend $7.347 million to close Parcels A & B over a 6-month
period with available funds. 9/12/07 Tr. at 61.
Mr. Crawford agreed that the Board rule at 35 Ill. Adm. Code 811.716 would require the
City to include in its next financial statement a reference to its use of the financial test to
guarantee closure and post-closure care costs. He was unsure whether this would have any effect
on the City’s ability to borrow funds. 9/12/07 Tr. at 63-64.
The Moose Testimony
Devin Moose is a licensed professional engineer, and is the director of the St. Charles
office of Shaw Environmental, Inc. 9/12/07 Tr. at 67. Mr. Moose stated he has been involved in
solid waste-related work since 1983. Among other things, he has designed “dozens upon
dozens” of landfills, and worked on compliance problems at “dozens” of landfills. He has
worked in over 60 Illinois counties, and for nearly 75 Illinois municipalities. 9/12/07 Tr. at 68.
11
Mr. Moose stated that he and Shaw Environmental had not been involved with the Morris
Community Landfill prior to 2003, when the City engaged Shaw to do some preliminary work.
(Andrews Engineering had previously done work for the Landfill, including preparation of the
applications for IEPA-issued SigMod permits for Parcels A and B. 9/12/07 Tr. at 85, 135-36,
Comp. Exh. 12. Mr. Moose said Shaw’s involvement with the site increased significantly
following an inspection in October 2004. Shaw took several steps to determine whether “there
was some kind of imminent threat”, including making a site visit and obtaining a copy of the
entire IEPA file on the site, amounting to “over 35 linear feet” of documents. 9/12/07 Tr. at 72-
73. Shaw also recommended, and the City authorized Shaw to make, evaluations of the
Landfill’s leachate collection system, the landfill gas system, and the groundwater monitoring
system, as well as to do some monitoring of groundwater, landfill gas, and leachate. 9/12/07 Tr.
at 73.
Shaw’s evaluation found that “all three of these systems were in disrepair, or in some
cases, never constructed.” 9/12/07 Tr. at 74 But, Shaw also concluded that there were
measurable, but no significant, impacts to the groundwater, and that there was no significant
landfill gas present beyond the facility limits. 9/12/07 Tr. at 74-5. The evaluation and monitoring
took place during over a dozen site visits between early 2005 and September 2007. 9/12/07 Tr.
at 75.
Mr. Moose stated that (referring to the August 4, 2000 IEPA-issued SigMod permits for
Parcel A and Parcel B of the Landfill 9/12/07 Tr. at 77, Comp. Exh. 12):
[I]t was clear from my first inspection of the file and first inspection of the field
that the actual file conditions didn’t – were not congruent with what was
originally permitted. So that the closure plan – well, at least partially that was in
the application, which was approved, in some instances, didn’t represent on the
ground real-world conditions of what existed out there at the time. 9/12/07 Tr. at
76-77.
Mr. Moose stated that he thought that the $17.4 million dollar Andrews Engineering
closure estimates filed with the permit applications were not reflective of field conditions either,
made on the basis of “the incapability of the modeler . . . to actually get the model to meet the
regulations, as opposed to what’s actually best for that particular piece of ground.” 9/12/07 Tr.
at 78. Mr. Moose stated that he felt that the inputs in the modeling were incorrect, and that the
result was that the Landfill was required to pump and treat groundwater within 100 feet of the
landfill for 100 years, rather than do modeling, at an estimated cost of some $10 million. 9/12/07
Tr. at 79. Mr. Moose also believed that the model included a mischaracterization of the
groundwater, to the extent the modeler used Class II groundwater rather than Class IV
groundwater, creating a higher standard to pass. 9/12/07 Tr. at 87-88. Mr. Moose also stated
that he felt that Darcy velocity used by the modeler was off by a factor of 40,000 from the Darcy
velocity Mr. Moose measured at the site in 2006. 9/12/07 Tr. at 88-89.
Shaw Environmental prepared revised cost estimates for the City for Parcels A
and B. 9/12/07 Tr. at 80, 84 and City Exh. 1-2. Mr. Moose compared the closure
estimates prepared by Andrews Engineering and included in the 2000 SigMod permits.
12
Shaw’s estimate for closure/post-closure care of both Parcels A and B was $10,061,619.
9/12/07 Tr. at 84. Shaw’s costs did not include groundwater pumping and treating for
100 years, leachate pumping and treating for 100 years, or relocation of the overfill
waste from Parcel B (which Mr. Moose did not feel an “appropriate course of action”
due to environmental risk). 9/12/07 Tr. at 85-87.
Andrew’s estimate for closure of Parcel A was $11,103,346, including
$10,117,800 for groundwater treatment. 9/12/07 Tr. at 84. These excluded costs for
repair and/or installation of leachate, gas collection and or groundwater monitoring. The
Andrews’ estimate for Parcel B was $1,927,680, including $900,000 for removal and
relocation of overfill. Mr. Moose stated that Shaw’s estimates included costs for leachate
treatment for 100 years at a cost of over $1 million, but did not include leachate gas and
groundwater monitoring, repair, and installation. 9/12/07 Tr. at 84-85.
Shaw drafted its own proposed schedule of closure activities for the site. 9/12/07
Tr. at 90 and City Exh.10. Shaw would perform a series of investigations and repairs to
existing facilities, and “over a period of 5 to 6 years, take incremental steps to close out
both Parcels A and B”. 9/12/07 Tr. at 89-90. Mr. Moose stated that the 5-6 year estimate
took into account the process of finding the large amounts of soil needed, as well as the
need to properly sequence projects for cost efficiency, and the limitations of the
construction season. 9/12/07 Tr. at 92-93.
Review of Shaw’s estimated shows that costs include expenditures for various tasks to
take place between Fall 2006 and Spring-Fall 2012 totaling $6,729,000 (Tasks 101 to 404), as
well as estimates for a 30 year post-closure maintenance and monitoring period of $2,662,400, or
$88,700 per year (Tasks 501-504). City Exh. 10. Tasks 101 to 404 include repair and operation
of the various systems (for leachate collection, gas collection, and groundwater monitoring), and
placement of cover over the fill. City Exh. 10 and 9/12/07 Tr. at 90. The largest cost item in
Shaw’s estimate --$1,905,000-- is for construction of landfill cover, a “fuzzy” number depending
on stated variables. 9/12/07 Tr. at 91. Mr. Moose stated that the City had done two things:
passed ordinances to require developers to stockpile fill from other projects at the landfill, and to
authorize Shaw to perform a soil cover study to determine how much fill would actually be
necessary.
Id.
Mr. Moose testified that the revised closure/post-closure care figures had been submitted
to IEPA, but that IEPA had not responded to them as of September 12, 2007. 9/12/07 Tr. at 94-
95. He testified that he believed that there would be no cost savings to a municipality in failing
to provide its own municipal guarantee of costs under 35 Ill. Adm. Code 811.716-717. 9/12/07
Tr. at 96-97. Mr. Moose believes that if a municipality meets the self-guarantee test, that it
should not be required to buy a surety bond, since it “directs public resources from this facility to
some suit sitting down on LaSalle Street . . . money [that] needs to be spent on this piece of
ground. 9/12/07 Tr. at 98. Mr. Moose stated that the timing of a landfill’s closure would affect
the rate of payment for a surety bond. 9/12/07 Tr. at 99.
Mr. Moose testified that he believed it was reasonable for CLC to believe that it was not
required to post-financial assurance “up until the motion to reconsider was denied by the
13
Pollution Control Board”, based on the 1982 transfer of the Landfill’s development and
operating permit from the City to CLC and the 1982 lease agreement between the City and CLC.
100-103, and City Exh.3 (a),(b),(c). 9/12/07 Tr. at 102.
Mr. Moose does not see:
any substantiation for the $17.4 million closure costs in the current permits, other
than the closure cost estimate that was put in the application. If the work is
executed the way it’s (sic) permitted to . . . I don’t think it’s protective of the
public health, safety and welfare. I don’t think that’s where we ought to be
spending the money.
It doesn’t include repair to the leachate collection system for one. It doesn’t
include repair and installation of the gas collection system, which is flooded.
Over 50 percent of it is not functioning.
It also takes money and spends it where it ought not to be spent. There’s no
reason to pump Class IV ground water from an abandoned strip mine and send it
to a sewage treatment plant. I don’t think that’s what we ought to be doing with
anybody’s money.
And it also doesn’t . . . really address the problems that are really out there as they
exist today. . . . if you look at the amount of money compared to what the State
Spends to close landfills within its program, it’s very high on a per acre basis.
So the amount of money, just compared empirically to other facilities, is twice
what it ought to be. And the way it’s dictated in the closure plan is not the best
for this piece of ground. 9/12/07 Tr. at 104-106.
Mr. Moose testified that he believes that if a bonding company were to issue a bond that
would “get called immediately”, that it would require full collateralization of the bond,
i.e.
$17.5
million in collateral for a bond covering $17.5 million in closure/post-closure costs. 9/12/07 Tr.
at 108-109.
On cross-examination, Mr. Moose admitted that the revised cost figures were not
submitted to IEPA for over a year after they were developed. 9/12/07 Tr. at 110. Mr. Moose
stated that Shaw had been involved in preparing the November 2005 permit applications’ cost
estimates, which utilized the work plan in the 2000 permits, and basically updated the costs.
These applications showed a closure cost for Parcel A of about $5.7 million, and for Parcel B of
$9.4 million, for a total of $15.1 million or $15.2 million. 9/12/07 Tr. at 119.
Complainant posed a question about the acceptability of violating landfill regulations
“even if it doesn’t cause an imminent threat [to] the environment,” 9/12/07 Tr. at 124. In
response, Mr. Moose testified that he thinks there are occasions where “the regulations don’t
squarely fit with the situation at hand”, and “where consent decrees have been negotiated to put
the public health, safety and welfare in practicality of the solution, above a particular code within
14
a regulation.” 9/12/07 Tr. at 125. Mr. Moose agreed that Shaw was watching gas probe
information at the site regarding possible methane exceedances. 9/12/07 Tr. at 128-130.
Still on cross-examination, Mr. Moose testified that, while not the licensed landfill
operator, the City had spent a significant amount of money with Shaw to monitor the landfill,
and in 2007 had funded repair activities conducted by CLC. 9/12/07 Tr. at 132-133
CLC’s Presentation
On September 12, 2007, CLC presented the testimony of a single witness:
Edward Pruim, Secretary/Treasurer of CLC (sequence of events, motives, perceptions).
9/12/07 Tr. at 9/12/07 Tr. at 150-183.
CLC entered 18 exhibits, consisting mainly of correspondence between Frontier and CLC (CLC
Exh. 3-10), from the IEPA to Frontier (CLC Exh. 11-14), and from Emerald Insurance to CLC
(Exh. 18). CLC also entered three bonds issued by Frontier (CLC Exh.15-17).
3
Frontier issued the bonds to CLC on May 31 and June 14, 2000. Frontier was removed
from the federal Circular 570 list on June 1, 2000. 9/12/07 Tr. at 170 and Comp. Ex. 9. Mr.
Pruim stated that if the IEPA had not initially pre-approved the Frontier bonds in 2000 as
complying with the rules, CLC would have closed the landfill within 4-5 years for $1.4 million.
9/12/07 Tr.159, 168. But, having received the SigMod permit in 2000, CLC proceeded with
engineering work to build and develop a new cell for waste acceptance. CLC approached IEPA
for an operating permit for that new cell, and was told that it needed to replace the Frontier bonds
CLC Exhibit 1
was also marked as Hearing Officer Exhibit 1 (HO Exh. 1).
Edward Pruim is the Secretary/Treasurer of Community Landfill Company, Inc.
It is Mr. Pruim’s opinion that the Board should not impose a penalty against CLC, because it
“at this time has no funds available, we have no business going on there. So we don’t have the
cash flow that we did at one time, years ago”. 9/12/07 Tr. at 151-52. Mr. Pruim also stated that
no penalty should be imposed because CLC complied with all rules when it got the Frontier
surely bonds in 2000. 9/12/07 Tr. at 152.
Prior to CLC’s first SigMod application in 1999, it had carried a bond for $1.4 million in
closure/post-closure care costs. In the 1999 SigMod application, closure costs were estimated at
$7 million. CLC was to post a bond in that amount, while the City would commit to leachate
treatment costing roughly $10 million. IEPA rejected that application, and required the posting
of a bond for the entire $17 million. 9/12/07 Tr. at 155. CLC and the City agreed that, for five
years, CLC would pay for a $7 million bond in its name, as well as for a $10 million bond in the
City’s name. 9/12/07 Tr. at 156-57. The cost for all bond premiums was over $200,000 per
year; Frontier, the bonding company, also required $200,000 in collateral.
Id.
3
The remaining exhibits were the previously mentioned material incorporated from
PCB 01-170 (CLC Exh.1, also marked as HO Exh. 1), and CLC’s 9/28/04 first supplemental
response to discovery requests (CLC Exh. 2).
15
with another financial instrument. 9/12/07 Tr. at 160. IEPA denied the permit, and the Board
and the Appellate Court affirmed the denial on appeal. 9/12/07 Tr. at 160-61.
Mr. Pruim stated that CLC paid Frontier a total of two years in premiums on the bonds; in
addition to the $200,000 in collateral, then, CLC tendered roughly $600,000 in funds to Frontier.
9/12/07 Tr. at 161-62. CLC had its broker look for another bonding company, and found out that
“the collateral was going to be in the range of 70, 80 percent of the bond value.” 9/12/07 Tr. at
162. Mr. Pruim said that CLC did not have those funds at that time.
Id.
Mr. Pruim stated that, once the operating permit for the new cell was denied, CLC’s
income was minimal and it had to let go all employees except for a general manager to oversee
and maintain the landfill and a part-time secretary. 9/12/07 Tr. at 163. CLC had difficulty
paying its fixed expenses and outstanding bills including insurance, equipment maintenance,
fuel, and labor. 9/12/07 Tr. at 164. Mr. Pruim said that CLC did continue to take in
contaminated soil at the landfill, but that was to allow CLC to “dress up the top of the fill where
there was voids from settlement” which it continues to do periodically.
Id.
Mr. Pruim stated that the last premium payment CLC made on the Frontier bonds was in
2001. 9/12/07 Tr. at 165. He said that Frontier refused to release the $200,000 collateral paid to
him, on IEPA direction. (Mr. Pruim testified that he believed that the collateral was now worth
$300,000-$400,000, as a result of Frontier’s investment of the funds.) For the same reason,
Frontier has not refunded to CLC any of the previously-paid premiums. 9/12/07 Tr. at 165-67.
Mr. Pruim stated that, even if ordered to do so by the Board, lack of funds would prevent
CLC from finding a way to get financial assurance in the amount of $17 million or even $7
million, and that CLC would be unable to pay any civil penalty the Board might assess. 9/12/07
Tr. at 167-68.
On cross-examination, Mr. Pruim acknowledged that CLC had received a November 14,
2000 violation notice from IEPA regarding the non-compliant Frontier bonds, including the
suggested resolution of the violation by replacement of the bonds with another method of
financial assurance. 9/12/07 Tr. at 171-2 and Comp. Exh. 11. He also agreed that, given the 5-
year term of the bonds, that he knew that he would need to expend closure costs at the end of the
period. 9/12/07 Tr. at 172-175. Mr. Pruim stated that he would allow the City to take over the
Landfill, and to begin closure at once. 9/12/07 Tr. at 176.
On re-direct, Mr. Pruim reiterated his understanding of the agreement between CLC and
the City was that CLC alone was to be responsible for all closure and post-closure care, with the
exception of City treatment of Landfill leachate at a cost of roughly $10 million. 9/12/07 Tr. at
176-177. Mr. Pruim stated that he was unaware that Frontier would be delisted from the Circular
570 a day after the bonds were issued, and that IEPA approved the bonds and issued the SigMod
permits even after the delisting. 9/12/07 Tr. at 179. Mr. Pruim repeated that he believed that he
did not need bonds for a full $17 million, given the City’s $10 million leachate treatment
commitment, but got bonds in that amount only to insure that IEPA would issue the SigMod
permits. 9/12/07 Tr. at 180. Mr. Pruim challenged the $17 million amount, only to lose the
argument at the Board and appellate court levels.
Id.
He stated that, as landfill lessee, he had
16
never asked the City as owner to take over closure/post-closure activities at the Landfill. 9/12/07
Tr. at 183.
Before the hearing was adjourned, a written “public statement” of Mr. John Swezey
was read into the record. 9/12/07 Tr. at 188 and HO Exh. B (erroneously listed as “E” in
transcript). Mr. Swezy’s statement was that he was unable to appear at hearing due to a medical
condition. Mr. Swezy was an alderman of the City of Morris from 1979 until 2007. Mr. Swezy
commented that, while the City owns the land under the Landfill, that the City has not itself
conducted disposal operations since 1982. 9/12/07 Tr. at 189. Mr. Swezy stated that, under the
terms of the lease and operating agreement between CLC and the City, CLC is solely responsible
for all closure/post-closure care costs. He further claimed that the City Council had no reason to
believe that the City would have to pay any such costs, and that the City Council had never
authorized then-Mayor Feeney in 1976 to execute any documents for the City in any capacity
other than as owner of the land underneath the waste. 9/12/07 Tr. at 190. Mr. Swezy criticized
IEPA for failure, prior to 2002-2003, to require the City to initiate closure of Parcel B or to post
any financial responsibility, stating
If the Parcel B really had reached its capacity in the mid-to-late 1990s, why
wasn’t the [I]EPA compelling CLC as the permanent operator to close it at that
point in time? If the [I]EPA had done its job, the City wouldn’t be in the
predicament it finds itself in today.
* * *
[I]EPA [should be] put on notice it has an obligation to protect the environment
and has failed to adequately protect the citizens of the City of Morris. As stated
above, it is an injustice to now burden our taxpayers with a [$10 million] or $17
million obligation because of the [I] EPA’s failure to enforce its own regulations.
9/12/07 Tr. at 192-193, Comp. Ex. 11.
Post-Hearing Filings
On October 9, 2007, Richard Kopczick, the Mayor of the City of Morris, filed an
affidavit (Kopczick Affid.). In his affidavit, the Mayor stated that he had been Mayor since May
1, 2001, following aldermanic service for the City since May 1, 1995. Kopczick Affid. at 1. He
stated that since transfer of the Landfill in 1982, no prior Mayor or other agent of the City was
authorized to designate the City was anything other than “the owner of the land underneath the
waste facility, and was not authorized to designate the City as owner of the waste operation.”
Id.
The affidavit recites that the City has not:
compacted waste at the Morris Community Landfill, operated equipment at the
landfill, placed cover on the landfill, constructed or developed the landfill, set
consumer rates for the landfill, paid bills of the landfill, or in any way participated in
the day–to-day operations at the landfill.
Id.
at 2.
The Mayor states that in passing its Resolution No. R-99-6, regarding leachate treatment
by its wastewater treatment plant for 100 years, the City reflected the $10 million valuation of
17
this service by the Applicant (presumably CLC). Finally, the Mayor concluded that the City
Council’s passing of the resolution was not intended “to obligate the City in any way to posting
of closure/post-closure financial assistance.”
Id.
On October 12, 2007, the City filed a motion to strike or dismiss the Kopczick affidavit
(Mot. Strike). The City filed a response in opposition (Resp. Mot. Strike) on October 26, 2007.
On October 18, 2007, the People filed a closing argument and post hearing brief (Comp.
Br.) At the same time, the People filed an appeal of the Hearing Officer’s ruling disallowing
admission of, except as an offer of proof, testimony concerning a settlement offer made by
Frontier to IEPA concerning the Frontier bonds. The City filed a response in opposition on
November 2, 2008.
The City filed its closing brief and argument on November 30, 2008 (City Br.), and the
People filed a reply on December 7, 2006 (Comp. Reply to City). On November 30, 2007, CLC
filed its closing brief and argument (CLC Br.), and the People filed a reply on December 10,
2007 (Comp. Reply to CLC).
On December 6, 2007, the City filed a Motion to Bar Punitive Damages (City Mot. Bar),
to which the People filed a response in opposition on December 13, 2007 (Comp. Reply Mot.
Bar).
On June 3, 2009, the People filed a “request for final order”. On June 11, 2009, the City
filed a motion to strike that request. On June 15, 2009, CLC filed a motion for leave to join in
the City’s June 11 motion. Also on June 15, 2009, complainant filed its motion in opposition to
the City’s June 11 motion. On June 16, 2009, the City filed a supplemental motion to strike.
PRELIMINARY MATTERS REGARDING EVIDENCE AND PLEADINGS
The post-hearing filings raise several matters the Board must dispose of concerning
which evidence is properly before the Board in its consideration of penalty matters.
Request for Final Order
The People’s June 3, 2009 request for final order and all subsequent responsive and
related filings are denied as moot. The Board has not reviewed, or taken into account, any of the
parties’ factual statements, characterizations, or arguments contained in these filings. Today’s
decision is being rendered consistent with the Board’s own work plan to decide this action prior
to the end of the current fiscal year.
Kopczick Affidavit
As previously stated, on October 8, 2007, within the deadline for filing public comment
set by the Hearing Officer, Mayor Kopczick of the City of Morris filed an affidavit. In the
affidavit, the Mayor states beliefs as to the City’s intent in taking certain actions concerning CLC
and the Landfill.
18
People’s Arguments
The People move to strike or dismiss the affidavit on the grounds that, as an agent for the
City, a party to this action, the Mayor cannot file public comment, citing American Bottom
Conservancy, et al. v. Village of Fairmont City, PCB 01-159 (slip op. at 7) (Oct. 18, 2001)
(ABC, PCB 01-159) (citing the Board’s rules at 35 Ill. Adm. Code 101.202, 101.628(c)) (ABC,
PCB 01-159). Mot. Strike at 3-4. Alternatively, the People allege that the affidavit should be
stricken as outside the scope of comment allowable under and as 35 Ill. Adm. Code 101.628(c),
in that it is based on evidence outside the record, and does not present legal argument citing to
authorities.
Id.
at 4.
City’s Arguments
In response, the City argues that the Board’s rules do not, by their terms, prevent parties
from filing public comments. Resp. Mot. Strike at 2-5. The City states that the Board has
allowed parties to file public comment in other cases, and distinguishes ABC
, PCB 01-159 on
the grounds that the statement that “parties may not submit public comment” is
dicta
, and that in
any case an administrative determination in one proceeding is not
res judicata
in another. Resp.
Mot. Strike at 5-7. The City argues that the Mayor’s affidavit in this enforcement action is
clearly a “written statement[] to the Board in connection with the subject thereof”. Resp. Mot.
Strike at 7, quoting 415 ILCS 5/32 (emphasis added in response).
Board Ruling
After considering the parties’ arguments, the Board declines to strike the Kopczick
affidavit, but in so doing does not retreat from its comment on the issue in ABC
, PCB 01-159.
ABC
was a landfill siting case, in which petitioners attempted to enter as public comment a
document that had not been part of the local government’s record on appeal. The City correctly
states that the Board first struck the document on the grounds that the document, in its entirety,
had not been part of the record before the local siting authority, citing as grounds the Act’s
dictate that the Board’s decision was to be based “exclusively on the record before the county
board or governing body of the municipality.” 415 ILCS 5/40.1(b) (2006). Only after that did
the Board comment that
Petitioners cannot file public comments because they are a party to the
proceeding. Public comments are reserved for members of the public that are not
a party, who wish to submit information concerning the proceeding.
See
35 Ill.
Adm. Code 101.202, 101.628(c).
The cases cited by the City in support of the contention that the Kopczick
affidavit is proper comment are inapposite; they do not involve cases in which the Board
itself accepted post-hearing public comments from parties.
4
4
In Land and Lakes Co, v. IPCB, 319 Ill.App.3d 41, 743 N.E.2d 199 (3rd Dist. 2000), the
Appellate Court was referring to public comment submitted to the local siting authority during
Members of the public are
19
extended some latitude under the Act and the Board’s rules so that they can express their
opinions and beliefs concerning environmental issues without being unduly hampered by
procedural barriers. These opinions and beliefs are afforded lesser weight than evidence
and statements that are subject to cross examination.
See
35 Ill. Adm. Code 101.628(b);
see also
9/12/07 Tr. at 191 re Sweezy statement, HO Exh. B.
Parties in adjudicatory proceedings, particularly in enforcement cases, cannot be
afforded the same latitude as members of the public who participate at hearings. Parties
and their agents are subject to the rules of discovery, evidence, and administrative
procedure as set out in the Board’s rules.
See
35 Ill. Adm. Code 101. Subpart F. As the
People contend, post-hearing “comment”—even though accompanied by affidavit—is
not subject to cross-examination, and is not an acceptable substitute for hearing
testimony. The Board cannot give the full weight of sworn testimony to public comment
concerning facts and opinion statements as to the intent of the City and its agents in
taking particular actions. By the same token, the Board could not allow the People to
present Agency affidavits attesting to post-hearing site inspections or their interpretation
of Board rules or City actions.
In summary, the Board strikes the Kopczick affidavit as improper public
comment. In so doing, the Board notes that the Swezey statement concerning the same
matters remains as part of the record.
People’s Offer of Proof re Frontier Bond Settlement Offer
During the testimony of IEPA’s Brian White, the People attempted to elicit testimony
concerning possible settlement of the Frontier bonds (Comp. Exh. 9). Without objection, Mr.
White testified that IEPA, as beneficiary of the Frontier bonds, had made a claim on those bonds.
9/11/07 Tr. at 183. He explained that on a performance bond, IEPA must give the surety an
opportunity to perform closure/post-closure. 9/11/07 Tr. at 184. If the surety does not perform,
it must “pay the penal sum” on the bonds.
Id.
Mr. White stated, without objection by
respondents, that Frontier would not be performing closure/post-closure at the Landfill.
Id.
Mr.
landfill siting proceedings. In Village of Sauget v. IPCB, 207 Ill.App.3d 974, 566 N.E.2d 724
(5th Dist. 1990), the Appellate Court was not discussing Board failure to accept public comments
of the petitioner, who was a permit applicant appealing IEPA denial of a permit. The case dealt
with a finding of lack of due process prior to permit issuance where the applicant was unable to
file effective comments with the IEPA before the close of the comment period in response to
USEPA comments, since USEPA filed its comments late and failed to provide the applicant with
a copy. Finally, in Waste Management of Illinois, Inc. v. County Board of Kane County, PCB
03-104, slip op. at 7 (June 19, 2003), the Board found that the local government proceedings
were not made fundamentally unfair because Waste Management did not have an opportunity to
respond to a document submitted in public comment to the local authority because “[p]arties to a
siting approval proceeding do not have a right to submit public comment or respond to filings
more than thirty days after the end of the public hearing. 415 ILCS 5/39.2(c)”.
20
White testified that Frontier would not be paying on those claims, and went on to state that he
had received information that Frontier had offered to settle the case at $400,000.
Id.
At that point, counsel for the City interposed a hearsay objection, which was sustained by
the hearing officer. 9/11/07 Tr. at 184. The People rephrased the question to ask whether
Frontier had offered to pay on the claim, to the witness’ knowledge, and how much the offer was
for. 9/11/07 Tr. at 184-85. Counsel for the City then interposed a relevance objection. The
People explained that their view was that Frontier was “in rehabilitation” and that the settlement
being negotiated was substantially less than the amount needed for post-closure care. 9/11/07 Tr.
at 185-86. Complainant argued that the material was relevant to the issues of gravity of the
offense, since if the State:
can claim on these bonds for the full amount of closure and post-closure care,
then that limits our penalties substantially.
However, if nothing more than a
de minimis
settlement offer has been made on
the bonds, it shows, you know, the amount of damage to the State, the gravity of
the violation. The only financial assurance that’s ever been provided for $17.4
million is now worth $400,000.” 9/11/07 Tr. at 186.
The hearing officer stated that he did find the information “somewhat relevant”,
but that the settlement was “still up in the air and it’s heavy in conjecture,” (9/11/07 Tr. at
187), but allowed the People to make the following offer of proof:
Ms. Tomas: Do you know if Frontier will be paying on those claims?
The Witness: I don’t know if Frontier will be paying on those claims, no.
Ms. Tomas: To your knowledge, have they made an offer to pay on those claims?
The Witness: Yes.
Ms. Tomas: And what was that amount?
The Witness: $400,000. 9/11/07 Tr. at 187-88.
People’s Arguments
On October 19, 2007, the People filed an appeal of the hearing officer ruling
(Comp. HO App.)
5
5
The pages of this appeal motion are unnumbered. The first page following the notice of filing
with the heading “I. Evidentiary Ruling” will be referred to as page 1, the page with footnotes 1-
2 as page 2, the page with footnotes 3-5 as page 3, and the pages with footnotes 6-9 as page 4.
along with its final argument and closing brief. After relaying the
exchanges between counsel, the witness, and the hearing officer (Comp. HO App. at 1-3),
21
the People present their argument for admission into the record of the evidence contained
in the offer of proof. The People state that the excluded facts were not introduced either
as proof of liability against respondents. They argue that the settlement proposal was not
introduced as proof of liability against Frontier,
6
The Board declines to strike the People’s motion on the procedural objection raised by
the City. The issue of the admissibility of information concerning any Frontier offer of
settlement of IEPA’s bond claim was the subject of an offer of proof, in addition to hearing
officer rulings. Under the terms of 35 Ill. Adm. Code 101.502(b), the People’s appeal was due
October 8, 2000 and was so was filed some 11 days late. But, given the fact that the People were
in the process of preparing a final brief for timely filing October 19, 2009, the Board finds that
there is no undue filing delay on the People’s part, or resulting prejudice to the respondents as a
or of the amount of the IEPA’s claim on
the bonds, which some cases state may be reasons for exclusion of the material, but
instead to show the inadequacy of the funds available for closure. Comp. HO App. at 3
and n. 4.
The People reiterate their comment at hearing concerning the relevancy of the
information, stating again that the “fact that only $400,000 is available to satisfy closure
and post-closure obligations of $17.4 MM indicates a serious and grave injury to the
general welfare”. Comp. HO App at 4, citing People v. ESG Watts Inc. (Sangamon
Valley), PCB 96-237 (Feb. 19, 1998).
City’s Arguments
The City filed a response in opposition to the appeal of the hearing officer ruling on
November 2, 2007 (Resp. HO App.). The City first argues that the appeal is untimely filed under
35 Ill. Adm. Code 101.502(b), since it was not filed within 14 days of the Board’s receipt of the
hearing transcript. The Board received the transcript September 24, 2007, but the appeal was not
filed until 25 days later on October 19, 2007. The City argues that the People’s objection to the
hearing is accordingly waived, and that its appeal should be stricken or denied. Resp. HO App.
at 2-3.
The City next argues, citing authority, that the hearing officer properly denied admission
of the White testimony because it concerns settlement negotiations, particularly where they are
introduced to prove liability. Resp. HO App. at 3. The City also argues that the hearing officer
properly excluded the White testimony as hearsay and as irrelevant to penalty considerations.
Id.
at 3-5.
Board Ruling
6
The People explain that the State’s bond claim is not the subject of a lawsuit, but is being
processed according to New York State insurance company rehabilitation procedures. The
People assert that “[c]ounsel for Frontier Insurance Company in Rehabilitation was consulted
prior to hearing in this case, and had no objection to the State’s use of its $400,000.00 offer as
evidence.” Comp. HO App. at 3, n. 5.
22
result of the late filing. The People filed the appeal along with its closing brief on October 19,
2007, and the City had ample opportunity to file a reply to the motion as well as to respond to the
People’s arguments based on this material in its own closing brief, timely filed on November 30,
2007 under the briefing schedule set by the hearing officer before the close of hearing.
Considering the parties’ arguments on their merits, the Board grants the People’s motion
and admits the proffered White testimony concerning Frontier’s offer to settle its liability under
the bonds to IEPA for $400,000. The Board is persuaded by the People’s arguments that it is
within the Board’s discretion to accept this material, which is not offered for the purpose of a
liability determination against respondents (already established in the Board’s orders of February
and June 2006). The material contained in the offer of proof was not, in the end, the subject of a
hearsay ruling (9/11/07 Tr. at 187), and so is not excludable on that ground. The material is
relevant to at least some of the penalty factors of Sections 33(c) and 42(h) of the Act. 415 ILCS
5/33(c) and 42(h) (2006). These include, as the People suggest, the degree of injury and
interference with the general welfare (415 ILCS 5/33(c)(i)) and the gravity of the violation (415
ILCS 5/42(h)(1)). As the People argued, if Frontier is a ready source of funds for the full closure
amount, the gravity of the violation is arguably less than if Frontier is not.
Even if the Frontier settlement figure could properly be excluded from evidence, the
Board notes that this information is, to some extent, cumulative to other undisputed evidence in
the record. The hearing officer was correct that the potential $400,000 bond settlement figure is
speculative, in that an offer by Frontier to settle IEPA claims is not proof that the company will
in fact settle the bond claim in any amount. But, the City did not object to testimony by Mr.
White that Frontier will not perform closure/post-closure care. The record is clear that the full
bond premium funds were never paid, so that the amount of any recovery on the bonds is
unlikely to be the full face value of the bonds. Respondents have offered testimony that CLC
paid two years worth of premiums for a total of $400,000 on the Frontier bonds, which had 5-
year terms and could be extended for another 5 years (Comp. Exh. 9). The evidence is
undisputed that CLC presented Frontier with some $200,000 in collateral, so that in all Frontier
had received a total of some $600,000 from respondents as surety for closure costs of some $17.4
million. 9/12/07 Tr. at 161-62, 165-67.
Applicability and Effect of
Local Governmental and Government Employees Tort Immunity Act
The City has raised the Local Governmental and Governmental Employees Tort
Immunity Act (Tort Immunity Act), 745 ILCS10/1-101
et seq
. (2006), in two separate motions in
this action: a September 5, 2007 pre-hearing motion for leave to file amended affirmative
defenses, and a post-hearing December 6, 2007 motion to bar punitive damages (Mot. Bar). The
People have opposed both motions on substantive and procedural grounds and on December 13,
2009 moved to strike the City’s motion to bar (Mot. Strike).
The pleadings on the affirmative defense issue include the City’s September 5, 2007
motion for leave to file amended affirmative defenses, the People’s September 6, 2007 objection
thereto, and the City’s September 10, 2007 motion for leave to file a reply to the People’s
response. In addition to the statutory claim, the City’s September 5, 2007 motion raises issues of
23
laches, estoppel, and other matters the Board will consider in this opinion in its considerations of
the factors of Section 33(c) and 42(h) of the Act. 415 ILCS 5/33(c) and 42(h) (2006). None of
these motions were addressed by the hearing officer, so that they all remain pending. 9/11/07 Tr.
at 17-18. The motions for leave to file are granted; the Board has considered the content of all of
these filings.
The pleadings on the motion to bar punitive damages are the City’s December 6, 2007
motion, and the People’s December 13, 2007 motion to strike it. The People’s motion to strike is
denied.
The Tort Immunity Act states that its purpose is “to protect local public entities and
public employees from liability arising from the operation of government.” 745 ILCS 10/2-
101(a). The Tort Immunity Act also states:
Notwithstanding any other provision of law, a local public entity is not liable to pay
punitive or exemplary damages in any action brought directly or indirectly against
it by the injured party or a third party. 745 ILCS 10/2-102.
Among other things, “a local public entity is not liable for an injury resulting from an act or
omission of its employee where the employee is not liable.” 745 ILCS 10/2-109.
The City contends that:
The Illinois Supreme Court has explained that punitive damages are those
damages which are awarded in order to punish the offender and to deter that party
and others from committing similar acts of wrongdoing. Loitz v. Remington
Arms Co.
,
138 Il1.2d 404, 414, 563 N.E.2d 397 (1990). Thus, it is clear that the
damages sought by the State for the purpose of punishment or as a deterrent to
others constitute punitive damages, which are barred by the Tort Immunity Act.
See Paulson v. County of DeKalb
,
268 Ill.App.3d 78, 83, 644 N.E.2d 37, 40 (2nd
Dist. 1994) (holding that the Tort Immunity Act barred the imposition of
statutorily available treble damages against county-run nursing home). Mot. Bar
at 1-2.
In response, the People argue that they are
not seeking punitive damages from the Respondents . . . [as][c]ivil penalties
assessed under the Act are not ‘damages’, but rather administrative sanctions.
Environmental Protection Agency v. City of Champaign
.
PCB 1971-051
(September 16, 1971), 1971 WL 4357 (slip op. at 1). The purpose of civil
penalties is remedial and not punitive. People v. Bentronics Corporation
,
PCB
1997-020 (October 17, 1996), 1996 WL 633410 (slip op. at 4) (citing Modine
Manufacturing Co. v. IPCB
,
193 Ill. App. 3d 643 (2d Dist. 1990)). Mot. Strike at
2 (emphasis in original).
24
The Board denies the City’s motion to bar. The Board finds that the Tort Immunity Act
does not by its terms apply. Section 2-101 of the Tort Immunity Act provides that “[n]othing in
this Act affects the right to obtain relief other than damages against a local public entity or public
employee.” 745 ILCS 10/2-101 (2006). The City cites no authority for the proposition that an
enforcement action seeking civil penalties for violation of the Act is properly charactacterized as
a tort action for damages, punitive or otherwise. Early in its history, the Board held:
[T]he City’s reference to Section 2-102 of Chapter 85[the Tort Immunity Act]
is totally inapplicable since that section deals with “punitive or exemplary
damages,” a technical term having to do with additional payments in private civil
damage actions. The penalties which the Board may invoke pursuant to the
Environmental Protection Act are, on the other hand, not in the nature of
“damages,” but are, rather, administrative sanctions . . . . IEPA v. City of
Champaign, PCB 71-51C, slip op. at 1 (Sept. 16, 1971).
The Act provides separately for civil penalties and punitive damages. The People seek
civil penalties under Section 42(a) of the Act (415 ILCS 5/42(a) (2006)). Punitive damages are
addressed elsewhere in the Act, for example, in Sections 22.2(k) and 57.12(f) (415 ILCS
5/22.2(k), 57.12(f) (2006)). Moreover, it is well-settled that the primary purpose of civil
penalties is to aid in enforcement of the Act; any punitive considerations are secondary.
See
,
e.g.
, People v. Fiorini, 143 Ill. 2d 318, 349, 574 N.E.2d 612, 625 (1991).
The purpose of the Tort Immunity Act is “to protect local public entities and public
employees from liability arising from the operation of government.” 745 ILCS 10/1-101.1
(2006). The Board believes that the City’s arguments that the welfare of its taxpayers should
receive special consideration here may properly be considered by the Board under Section 42(h)
of the Act (415 ILCS 5/42(h)
(2006)) in the context of the “arbitrary or unreasonable financial
hardship” exception to imposing a civil penalty at least as great as any economic benefit accrued
from non-compliance. Accordingly, the Board will address this further in its later discussion of
Section 42(h).
See infra
pp. 42-44.
STATUTORY AND REGULATORY FRAMEWORK
A short summary of the relevant statutes and rules follows.
Section 21(d)(2) of the Act provides that “[n]o person shall . . .
Conduct any waste-storage, waste-treatment, or waste disposal operation . . . in
violation of any regulations or standards adopted by the Board under this Act.”
415 ILCS 5/21(d)(2) (2006).
Section 811.700(f) of the Board’s financial assurance regulations provides:
On or after April 9, 1997, no person other than the State of Illinois, its agencies
and institutions, shall conduct any disposal operation at an MSLF unit that
requires a permit under subsection (d) of Section 21.1 of the Act, unless that
25
person complies with the financial assurance requirements of this part.” 35 Ill.
Adm. Code 811.700(f).
Under Section 811.712(b), the surety company issuing the bond must be licensed by the
Department of Insurance, pursuant to the Illinois Insurance Code, or at least licensed by the
insurance department of one or more states and approved by the U.S. Department of the Treasury
as an acceptable surety. 35 Ill. Adm. Code 811.712(b). Section 811.712 also provides that the
U.S. Department of the Treasury lists acceptable sureties in its “Circular 570.”
Id
.
Section 33(c) of the Act provides in its entirety that:
(c)
In making its orders and determinations, the Board shall take into
consideration all the facts and circumstances bearing upon the
reasonableness of the emissions, discharges or deposits involved
including, but not limited to:
(i)
the character and degree of injury to, or interference with the
protection of the health, general welfare and physical property of
the people;
(ii)
the social and economic value of the pollution source;
(iii)
the suitability or unsuitability of the pollution source to the area in
which it is located, including the question of priority of location in
the area involved;
(iv)
the technical practicability and economic reasonableness of
reducing or eliminating the emissions, discharges or deposits
resulting from such pollution source; and
(v)
any subsequent compliance. 415 ILCS 5/33(c) (2006).
Section 42(h) of the Act provides that
In determining the appropriate penalty to be imposed . . . the Board is
authorized to consider any matters of record in mitigation or aggravation of
penalty, including but not limited to the following factors:
(1)
the duration and gravity of the violation;
(2)
the presence or absence of due diligence on the part of the
respondent in attempting to comply with requirements of this Act
and regulations thereunder or to secure relief therefrom as
provided by this Act;
(3)
any economic benefits accrued by the respondent because of delay
26
in compliance with requirements, in which case the economic
benefits shall be determined by the lowest cost alternative for
achieving compliance;
(4)
the amount of monetary penalty which will serve to deter further
violations by the respondent and to otherwise aid in enhancing
voluntary compliance with this Act by the respondent and other
persons similarly subject to the Act;
(5)
the number, proximity in time, and gravity of previously
adjudicated violations of the Act by the respondent;
(6)
whether the respondent voluntarily self-disclosed, in accordance
with subsection (i) of this Section, the non-compliance to the
Agency; and
(7)
whether the respondent has agreed to undertake a “supplemental
environmental project,” which means an environmentally
beneficial project that a respondent agrees to undertake in
settlement of an enforcement action brought under this Act, but
which the respondent is not otherwise legally required to perform.
In determining the appropriate civil penalty to be imposed under
subsection (a) or paragraph (1), (2), (3), or (5) of subsection (b) of this Section,
the Board shall ensure, in all cases, that the penalty is at least as great as the
economic benefits, if any accrued by the respondent as a result of the violation,
unless the Board finds that imposition of such penalty would result in an arbitrary
or unreasonable financial hardship. However, such penalty may be offset in
whole or in part pursuant to a supplemental environmental project agreed to by
the complainant and respondent. 415 ILCS 5/42(h) (2006).
ADDITIONAL FINDINGS OF FACT
Prior to analysis of the 33(c) and 42(h) factors, the Board will make additional findings of
fact based on the hearing record. But, the Board must reiterates some earlier findings, which the
Board will not revisit even to the extent of repeating the parties’ arguments about them as it
relates to analysis of the Section 33(c) and 42(h) factors:
Limits of Current Record
27
The complaint in this case concerns only the financial assurance violations alleged in the
complaint. The record in this case closed in December of 2007. Again, this record does not
incorporate the record in the fully-briefed, but still-pending cases alleging operating violations.
7
The time for challenge to the landfill permitting and financial assurance rules is long past.
Board does not and will not adjust closure/post-closure care cost figures in the context of an
enforcement action. These cost figures, based on the permitees’ own estimates of actions needed
to comply with the Act and Board rules, are established in the permit process and can be
modified only by the Agency under 35 Ill. Adm. Code 811.Subpart G or by the Board in a
proceeding to establish a facility-specific rule or adjusted standard.
See
415 ILCS 5/27-28 and
28.1.
Respondents’ Unavailing Collateral Attack on Landfill Rules and Permit System
The Board modernized its landfill permitting and operating rules, and upgraded financial
assurance requirements as dictated in Section 21.1 of the Act (415 ILCS 5/21/1 (2006) in a
rulemaking proceeding. Development, Operating and Reporting Requirements for Non-
Hazardous Waste Landfills, R88-7 (Aug. 17, 1990). Section 29(a) of the Act provides for appeal
of such rules within 35 days of their adoption. 415 ILCS 5/29(a), referencing 415 ILCS 5/41
(2006). Section 29(b) specifically provides that
Action by the Board in adopting any regulation for which judicial review could
have been obtained under Section 41 of this Act shall not be subject to review
regarding the regulation’s validity or application in any subsequent proceeding
under Title VIII, Title IX or Section 40 of this Act. 415 ILCS 5/29(a) (2006).
8
7
These cases are People of the State of Illinois v. Community Landfill Company, Inc. and
People of the State of Illinois v. Edward Pruim and Robert Pruim,
PCB 97-193 and PCB 04-207
(cons.).
PCB 97-193 was initiated by a May 1, 1997 six count complaint re operation of the site,
alleging,
inter alia
, water pollution, lack of appropriate financial assurance, failure to file
application for permit sig mod, and various other operating deficiencies.
PCB 04-207 was begun by a May 21, 2004 19-count complaint alleging,
inter alia
, failure to
adequately manage refuse and litter; failure to prevent/control leachate; failure to timely file a
SigMod application; water pollution of the Illinois River; waste deposition in unpermitted
portions of the landfill; conducting disposal operation without permit (2 counts); open dumping;
violation of standard permit conditions (deviations without approval); improper used tire
disposal; violation of permit conditions (re movable fencing, prior notification of operation of
gas control facility, taking corrective action re erosion control, proper leachate disposal, prior
approvals before waste placement); and failure to provide adequate financial assurance and
upd
8
As
ate
Mrc.
oMst
ooesstie
masuggetes.
sted, courts may make such adjustments using their general equity powers,
but the Board as a creature of statute has only the specific authority given to it.
See, e.g,.
Ford. v.
IEPA, 9 Ill. App.3d 711, 292 N.E.2d 540 (3rd Dist.1973).
The SigMod permits issued in 2000 set the closure/post-closure care costs at $17.4
million based on respondents’ own figures. As even respondents acknowledge, the Board
28
decided in 2001, and the appellate court agreed, that the figure must include the roughly $10
million in costs for the treatment of leachate which the City agreed to undertake.
Chronology
The Board has been dealing with cases involving the Landfill, its SigMod permit
applications, and financial assurance issues since 1993. The chronology of all of these events is
not immediately clear from the parties’ briefs, and the Board believes that some recapitulation
may assist the reader’s understanding of this case.
In 1982, the City of Morris executed the first of a series of agreements with CLC
concerning CLC’s status as sole operator of the Morris Community Landfill. While remaining
the owner of the property on which the Landfill is located, since that time the City has not
engaged in day-to-day operations of the Landfill. This change has been reflected in permits
issued since then. Tr. 9/12/07 at 101-102.
As part of the agreement, CLC agreed to pay dumping-related royalties or “tipping fees”
for CLC’s use of the Landfill. CLC paid the City $399,208.98 in such fees for the years 2001
through 2005. Comp. Ex. 13, Response. No. 23. Additionally, CLC accepted responsibility for
maintenance of appropriate financial assurance. 9/12/07 Tr. at 156.
Under 35 Ill. Adm. Code 814.104, owners of existing landfills permitted under Section
21(d) were required to submit a SigMod application on or before September 18, 1994, unless
required to do so earlier by the IEPA. The Board takes administrative notice of the fact that, in
Community Landfill Corp. v. IEPA
, PCB 95-137 (Sept. 21, 1995) the respondents requested a
retroactive variance on April 26, 1995. Respondents sought a retroactive variance from the
Board to begin June 15, 1993 (the earlier SigMod application due date set by IEPA) and to end
45 days from the grant of variance to make the filing. The Board denied the variance.
Respondents appealed the decision. The Third District Appellate Court was persuaded to order
the Board to grant variance. Community Landfill Corp. v. PCB
, No. 3-96-01-82 (3rd Dist. June
17, 1996) (unpublished order under Supreme Court Rule 23). Accordingly, the Board issued the
variance as directed, giving the City until August 5, 1996 to file the variance. Community
Landfill Corp. v. IEPA, PCB 95-137 (June 30, 1996.)
The Board takes administrative notice of the facts stated in its decision in Community
Landfill Company and City of Morris v. IEPA, PCB 01-48 and PCB 01-49 (cons.) (Apr. 5,
2001)(review of conditions included in August 4, 2000 SigMod permits for Parcels A and B
applied for in May, 2000).
On August 5, 1996, respondents filed the [variance-authorized SigMod]
applications. On September 1, 1999, the Agency denied the SigMod permit
applications. Parcel B, Vol. I at 36. Among other things, whether CLC timely
filed the applications is raised in an enforcement case currently pending before the
Board.
See
People of the State of Illinois v. Community Landfill Company Inc.
(April 5, 2001), PCB 97-193 (ruling on motions for partial summary judgment).
PCB 01-48 and PCB 01-49 (cons.) (slip op at 5) (Apr. 5, 2001).
29
Beginning in 1996, CLC secured financial assurance from Frontier bonds. On
May 1, 1997, the People initiated the still-pending enforcement action referenced above:
People of the State of Illinois v. Community Landfill Company, Inc., PCB 97-193. Prior
to CLC’s SigMod application in 1999, it had carried a bond for $1.4 million in
closure/post-closure care costs. In the 1999 SigMod application, closure costs were
estimated at $7 million. CLC was to post a bond in that amount, while the City would
commit to leachate treatment costing roughly $10 million. Again, IEPA rejected that
application, and required the posting of a bond for the entire $17 million. 9/12/07 Tr. at
155. CLC and the City agreed that, for five years, CLC would pay for a $7 million bond
in its name, as well as for a $10 million bond in the City’s name. 9/12/07 Tr. at 156-57.
The cost for all bond premiums was over $200,000 per year; Frontier, the bonding
company, also required $200,000 in collateral.
9
9
As the People note, there is conflicting evidence as to the actual cost of the Frontier bonds, as
evidenced in the testimony of IEPA’s Mr. Edwards and CLC’s Mr. Pruim.
See
People’s Br. at
16.
Id.
CLC and the City filed their next SigMod applications in May 2000. Frontier
issued $17.1 million in bonds to respondents on May 31, 2000. On June 1, 2000, Frontier
was dropped from Circular 570. In August 2000, the IEPA issued the SigMod permits,
and respondents appealed some 200 conditions contained in those permits.
On November 14, 2000, the IEPA sent notice to respondents that their Frontier
bonds were non-compliant. On November 27, 2000, respondents filed an application for
supplemental permit for Parcel A.
In April, 2001, the Board affirmed many, but not all of the various conditions
contained in the 2000 SigMod permits, including the $17.4 million financial assurance
amount.
See
PCB 01-48 and PCB 01-49 (cons.) (Apr. 5, 2001) (slip op at 25-30). The
Board’s decision was affirmed in part (including on the financial assurance amount) and
reversed in part. Community Landfill Corp. v. PCB, No. 3-01-552 (3rd Dist. July 12,
2001) (unpublished order under Supreme Court Rule 23).
The IEPA denied the November 2000 supplemental permit application in May 2001,
citing as grounds the non-compliant Frontier bonds. Respondents filed an appeal of this denial
in August, 2001, and the Board affirmed the supplemental permit denial in Community Landfill
Company and City of Morris v. IEPA, PCB 01-170 (Dec. 6, 2001). On respondents appeal, the
Third District Appellate Court in turn affirmed the Board. Community Landfill Corp. v. IEPA,
331 Ill. App. 3d 1056, 772 N.E.2d 231 (3rd Dist. 2002), pet. for leave to appeal denied in No.
94600, 202 Ill. 2d. 600, 787 N.E.2d 155 (2002).
CLC made its last premium payment on the Frontier bonds at some point in 2001.
It is undisputed that the only financial assurance posted for this landfill since issuance of
the SigMod permits in 2000 was the non-compliant Frontier bonds. Pursuant to the agreement
30
between CLC and the City, CLC was to pay premiums for both the $10 million bond for leachate
treatment issued in the City’s name, as well as the $7 million bond issued in CLC’s name. The
bonds were issued for a 5-year term, renewable for another 5 years, for a total of 10 years. IEPA
approved the bonds as complying with the Board’s financial assurance rules. But, as of June 1,
2000 Frontier was removed from the federal Circular 570 list. As a result, the Frontier bonds
issued May 31, 2007 were no longer compliant with the rules.
Thirty Illinois landfills had purchased Frontier bonds. Of these, one closed, and 28 others
obtained acceptable substitute financial assurance. The Morris Community Landfill was the only
one which did not obtain substitute financial assurance, even following receipt of an IEPA notice
of violation suggesting this course of action in November, 2000.
The Frontier bonds are not a present source of adequate financial assurance for closure of
the Landfill. Frontier has not offered to close the Landfill using the proceeds of the bonds. CLC
paid Frontier only 2 years premium on the bonds, in addition to making an initial $200,000
collateral payment. CLC’s premium payment was $217,842, which the People calculate to be a
cost of $596.83 per day.
The People filed this action in April 2003. In May, 2004, the People filed another
enforcement action concerning operations at the Landfill. People of the State of Illinois v.
Edward Pruim and Robert Pruim, PCB 04-207. At some point in 2004, the City engaged Shaw
Engineering to inspect the site and evaluate the situation.
In February 2005, the Board “reluctantly” granted the Pruims motion to consolidate PCB
07-193 and PCB 04-204, noting that “both parties agree that consolidating these two proceedings
will avoid duplication and that neither party will be prejudiced”. People v. Community Landfill
Co., Inc. and People v. Edward and Robert Pruim
, PCB 07-193 and PCB 04-204 (Feb. 17, 2005).
According to the interrogatories in this case, the Landfill accepted its last waste load in
2005. Mr. Pruim stated that the Landfill currently continued to accept contaminated soil “to
dress up the top of the fill where there was (sic) voids from settlement”. 9/12/07 Tr. at 164.
The Board granted summary judgment in this action in February 2006. The City
contends that it was not aware of any obligation to provide financial assurance for the site until
the Board issued its decision in June 2006 affirming on reconsideration the February 2006 order.
In the City’s words:
since the PCB found that the City would be required to assure the performance of
closure, post-closure care, the City voluntarily incurred substantial costs,
including hiring environmental experts to evaluate the situation at the Landfill
facility and determine all necessary closure, post-closure activities, and to revise
the defective closure, post-closure plan previously submitted by CLC, as well as
to create current, accurate cost estimates which were submitted to IEPA
approximately 6 months ago [in July 2007]. City Br. at 5, citing Tr. 9/12/07 at 94,
111-113, 229, 231.
31
The Board held hearing in this matter in September 2007, at which time IEPA
Inspector Retzlaff reported signs of waste acceptance and other problems at the Landfill
during inspections as late as August 2007. Briefing in this action concluded in December
2007.
Since 2000, Frontier has made no payments to anyone in relation to these bonds. As
beneficiary of the bonds, IEPA blocked CLC’s attempt to have its collateral returned. As of the
close of the record in this case, IEPA had made a claim on the bonds, but had not received
payment. The hearing record indicates that Frontier made an offer of $400,000 in settlement of
the claim, but does not specify a date.
REMEDIES
Remedies Requested
The People here have requested Board entry of an order containing multiple remedies.
The first the People characterize as “affirmative remedies”: 1) requiring the respondents to post
financial assurance in the amount of $17,427,366.00, submit revised cost estimates, and update
financial assurance in accordance with approved revised estimates, and 2) requiring respondents
to close Parcel B of the Landfill in accordance with 35 Ill. Adm. Code 811.110, and the
provisions of Permit No. 2000-156-LFM6.
The People next urge the Board to assess a civil penalty against the respondents, jointly
and severally, in the amount of $1,059,534.00, and an additional civil penalty against the City of
Morris in the amount of $399,308.98. Comp. Br. at 25..
10
10
The amount of the penalty the People request against the City for recovery of dumping
royalties or tipping fees is listed as various amounts at various places throughout the brief.
Compare pp. 4, 25, 27, and 35. The People state that the source of the amounts of the royalties
or fees received by the City is Complainant's Exhibit 13, Response to Second Set of Interrogatories,
Response No. 23. Comp. Br. at. 25. The figures listed are: 2001--$242,527.55; 2002--$63,226.01;
2003--$0; 2004--$73,925.07; 2005--$19,630.35. The Board calculates the total of these amounts to be
$399,308.98, as listed at Comp. Br. at 25. The Board will consistently use the $399,308.98.
The People have waived attorney
fees, asking the Board to consider this waiver when considering the costs of the various remedies
the People have requested. Comp. Br. at 32-33.
CLC contends, in sum that: any CLC non-compliance was unintentional, and a direct
result of the Agency’s initial approval of the Frontier bonds; CLC has at all times acted in good
faith and with due diligence; CLC has received no economic benefit from non-compliance; and
in any event has no funds to pay a penalty.
See, e.g.,
CLC Br. at 19.
In summary, the City argues that no remedy at all should be imposed against it.
See, e.g.,
City Br. at 5-7. The essence of the City’s argument is that its conduct was at all times
reasonable, that no remedy should be imposed against it because that remedy will add to the
burden of the expenses already incurred by its taxpayers.
Id.
32
In fashioning all of its orders, the Board must consider the factors of Section 33(c) of the
Act. If the Board determines a penalty is appropriate, the Board must also consider the factors of
Section 42 (h) of the Act.
Section 33(c)(i): The character and degree of injury to, or interference with the protection
of the health, general welfare and physical property of the people.
People’s arguments
. The People argue that the evidence in the record demonstrates a
substantial interference with the protection of the general welfare. Based on the uncontroverted
evidence in the record, there has been no compliant financial assurance in place for this site since
June 1, 2000; CLC’s premium payments on the non-compliant bonds ceased in 2001.
Based on record evidence in which CLC admitted it had last received waste in parcel B in
1996. Comp. Ex, 13, the People calculate that Parcel B should have been closed in 1996. But,
parcel B has not been closed, and the situation at the landfill is deteriorating. Comp. Br. at 6.
City’s arguments
. The City maintains that, since it did not own or operate the Landfill.,
that it has not caused any injury, and that it has no control over facility operations since 1982.
City Br. at 8-9. The City asserts that its environmental engineer, Mr. Moose, found there were
“no significant” impacts to groundwater, presence of landfill gas, or gas migration, and discounts
the evidence of IEPA’s Mr. Retzlaff. City Br. at 10-13. However, it has taken action to address
site concerns, states the City, and has approved Mr. Moose’ set of recommendations for actions
to be taken at the site. City Br. at 13.
CLC’s arguments
. CLC too argues that there is no evidence of harm, given testimony
that landfills have economic value, the Morris Landfill is properly located, and that closure and
post-closure activities are occurring at the Landfill. CLC Br. at 2.
Board ruling.
The Board agrees with the People that the record shows a high degree of
injury to the general welfare of the public. The record amply demonstrates, even through the
testimony of the City’s environmental consultant, that Parcels A and B remain open, although
ostensible not receiving waste, and that conditions at the Landfill evidence signs of neglect
including erosion. Since 2001, there has been no assurance by CLC, the City or any third party
that the $17.1 closure costs can be met. Even assuming
arguendo
that a $7.1 million figure was
to be found appropriate in some future-issued permit, no one has ever stepped forward to
guarantee even this amount. This factor weighs against respondents.
33(c)(ii): The social and economic value of the pollution source.
People’s arguments
. Regarding “the social and economic value of the pollution source,”
see
415 ILCS 5/33(c)(2) (2006), the People argue that the Morris Community Landfill as it exists
has become an environmental liability due to respondents’ neglect. Parcel B is not permitted to
accept waste at all. To the extent Parcel A may have remaining capacity, it has no operating
permit allowing waste disposal. Com. Br. at 8-9.
33
City’s arguments.
The City cites to the testimony of IEPA’s Mr. Retzlaff as proof that
landfills present a benefit to the public, without specifically addressing the Landfill’s current
condition. City Br. at 13.
CLC’s arguments.
CLC too argues that there is testimony here that landfills have
economic value. CLC Br. at 2.
Board ruling.
While properly-run, closed, monitored, and cared for landfills have
economic and social value, the Board agrees that the Landfill in its current state is an
environmental liability. The Board weighs this factor against respondents.
33(c)(iii): The suitability or unsuitability of the pollution source to the area in which it is
located, including the question of priority of location in the area involved.
People’s arguments.
On the issue of “the suitability or unsuitability of the pollution
source to the area in which it is located,”
see
415 ILCS 5/33(c)(3) (2006), the People note that
the City had obtained approximatedly 50-55 permits for the Landfill, while CLC had obtained
approximately 50. Otherwise, the People contend, there is no evidence in the record regarding
suitability, and so this factor is not significant in this case. City Br. at 9.
City’s arguments.
The City cites to the testimony of IEPA’s Mr. Retzlaff as proof that
the Landfill is suitably located, and notes that there is no contrary evidence. City Br. at 14..
CLC’s arguments.
CLC too argues that landfills have economic value, the Morris
Landfill is properly located.
Board ruling.
There is no evidence in this record that would lead the Board to conclude
that the Landfill, when properly operated and managed, is unsuitable to the area in which it is
located. This factor weighs neither for nor against respondents.
33(c)(iv): The technical practicability and economic reasonableness of reducing or
eliminating the emissions, discharges or deposits resulting from such pollution source
.
People’s arguments
. The People also argue that providing financial assurance was both
technically practicable and economically reasonable.”
See
415 ILCS 5/33(c)(4) (2006). The
People contend that the financial assurance requirements of the Act and Board rules are designed
to place the burden of landfill closure on those with a direct financial stake in a landfill. As to
CLC, the People argued that 28 of the 30 other landfills holding non-compliant Frontier bonds in
2000 managed to find alternative insurance. Acknowledging CLC’s argument that it currently
has no funds available to secure financial assurance, the People contend that CLC’s inability to
properly conserve resources from its 20 years of waste disposal obligations should not be
considered a defense to compliance. Moreover, argue the People, if Parcel B had been closed
when closure was due, the problem of posting high amounts of collateral could have been
avoided. Comp. Br. at 9-13.
34
As to the City, the People also cite to the testimony of the City’s auditor Mr. Crawford
that the City was “in a strong financial position,” and could have provided a local government
guaranteed under 35 Ill. Adm. Code 811.716-717 for $9.1 million as of fiscal year 2007, up from
$7.1 million for fiscal year 2005. Comp. Br. at 10-11. While the City could therefore not have
provided the full $17.4 million required under the permits, the People contend that there is every
indication that the City, alone or in combination with CLC, could have provided surety bonds
from 2000 to the present. Assuming a premium of two percent of face value, the annual
premium would have been $348,000, a sum the People believe the City could afford. City Br. at
11.
City’s arguments.
The City contends this factor does not apply in this case. The City
states that since the alleged violations here do not involve “emissions, discharges or deposits” of
pollutants, the “technical practicability and economic reasonableness of reducing or
eliminating discharges” is not relevant.
CLC’s arguments.
CLC argues that compliance is not economically reasonable or
technically feasible for CLC due to lack of funds. CLC argues that its current situation is a direct
result of the Agency’s August 2000 approval of the Frontier bonds, failure to grant a permit to
accept waste at the site, and failure to allow CLC to recoup its collateral from Frontier.
Board ruling
. As the Board previously stated, the economic reasonableness and
technical feasibility of the Illinois landfill permitting and financial assurance system was
established during the rulemaking process. The Board will not further address the City’s
contention that this factor is irrelevant here. The record demonstrates that 28 of 30 other landfill
sources were able to find alternative financial assurance following the disapproval of Frontier
bonds. The Board weighs this factor against respondents.
33(c)(iv): Any subsequent compliance.
People’s arguments.
Addressing the final factor of any subsequent compliance,
see
415
ILCS 5/33(c)(5) (2006), the People state that the record reflects only continued noncompliance.
The People argue that respondents have done nothing to provide the required financial assurance.
Although respondents challenge the financial assurance amount here, neither sought a permit
modification between 2000 and July 2007. Comp. Br. 14-15.
City’s arguments.
The City argues that it has continued to treat leachate from the
Landfill, in addition to retaining environmental consultants. As to any liability of the City for
posting financial assurance, the City repeats that it continues to challenge that it has any
responsibility for so doing, and that it has been properly pursuing legal challenges and
exhausting administrative remedies. The City contends that it has been complying subsequent to
the Board’s orders of February and June 2006, by voluntarily hiring Shaw Environmental and
proceeding with closure and post-closure care activities despite the fact that the City does not
conduct the waste disposal operation. City Br. at 14-15.
CLC’s arguments
. CLC argues that it attempted to find compliant financial assurance
once the permit denial for a new operating cell was upheld in the appellate court. Because the
35
permit was denied, CLC could not accept waste, and was unable to make money. IEPA refused
to allow Frontier to release collateral to CLC. When CLC attempted to find alternative financial
assurance, it found that it would have to post collateral of $14-15 million in cash, which it could
not afford to do. CLC contends that it at all times acted in good faith, and that the problem here
was a result of the State’s conduct.
Board ruling.
At present time, it is undisputed that there is no financial assurance
currently in place to guarantee funds for closure of the Morris Community Landfill. The Board
finds that this factor weighs against each respondent. CLC as an operator of the Landfill, and the
City as owner of the property on which the Landfill sits, and as an operator as found by the
Board in February 2006, were and are jointly and severally responsible for posting the initial
financial assurance, as well as for upgrading it as needed following the required annual cost
updates.
Affirmative Remedies Granted
The Board finds on the basis of the record before it that the Section 33(c) factors weigh in
favor of granting much of the “affirmative” relief requested by the People. In this context, the
Board again notes that the People have foregone their original claim for attorney fees, requesting
the Board to take notice of the fee waiver in its evaluation of costs of any remedy.
The record amply supports, and the Board orders, respondents to post financial assurance
in the amount of $17,427,366.00 within 60 days; this sum may be reduced by any amount IEPA
has or will receive from its claim against the Frontier bonds. Respondents may use any
combination of financial assurance mechanisms acceptable to the IEPA under the Board’s rules.
Respondent’s submission of any permit application for reduction of closure/post-closure costs to
IEPA does not constitute compliance with this order.
Also within 60 days, respondents must submit revised cost estimates, and update
financial assurance in accordance with approved revised estimates. The Board orders
respondents to cease and desist from accepting any additional waste at the site, and from
committing any other violations of the Landfill’s permits, the Act, and Board regulations.
As the People point out, the Board’s remedy order here is consistent with that imposed in
other cases involving financial assurance violations.
See
People v. John Prior and Industrial
Salvage, Inc., PCB 93-248 (July 7, 1995) (ordering closure of three landfills, development permit
revocation, posting of financial assurance, and that Prior “cease and desist” from further
violations); People v. Wayne Berger and Wayne Berger Management, PCB 94-373 (May 6,
1999)(ordering landfill closure and imposing $30,000 penalty).
The Board does not today require respondents to immediately close Parcel B of the
Landfill in accordance with 35 Ill. Adm. Code 811.110, and the provisions of Permit No. 2000-
156-LFM6. This record makes clear that a wholesale reassessment of the best approach to the
closure of Parcels A and B is necessary to avoid compounding the environmental issues they
currently present. But, this record does not provide the information to enable the Board to do so.
36
The Board finds that this record demonstrates the need for penalties. To determine the
appropriate penalty amount, the Board below considers factors listed in Section 42(h) of the Act.
See
415 ILCS 5/42(h) (2006).
Penalty Considerations under Section 42
Section 42(a) Maximum Civil Penalties.
The maximum civil penalties the Board can assess are established in Section 42(a) of the
Act:
[A]ny person that violates any provision of this Act or any regulation adopted by
the Board . . . shall be liable for a civil penalty of not to exceed $50,000 for the
violation and an additional civil penalty of not to exceed $10,000 for each day
during which the violation continues . . . . 415 ILCS 5/42(a) (2002).
The People assert that each of the respondents committed two violations, one each of 35 Ill.
Adm. Code 811.700(f) and 811.712. At the time it filed its brief, the People calculated that the
maximum penalty for the violation of Section 811.700(f) should be $24,950,000 ($50,000 plus
$24,900,000 (the 2,490 days from November 16, 2000 through September 11, 2007 at $10,000
fine per day).
11
11
The Board calculates the additional fines that would have accrued during the 646 days from
September 12, 2007 through June 18, 2009 to be $646,000. The total maximum civil penalty
assessable today, then, would be $48,040,000.
At the time it filed its brief, the People calculated that the maximum penalty for
the violation of Section 811.712 should be $16,580,000 ($50,000 plus $16,580,000 (the 1,658
days from November 16, 2000 through June 1, 2005 at $10,000 fine per day). Pursuant to
Section 42(a) of the Act, the People assert that the Board could require Board could require
respondents to pay a civil penalty of $41,580,000. Comp. Br. at 15-17.
The People do not seek the maximum penalty of $41.5 million. Instead, the People ask
that the respondents at least be held liable for the economic costs avoided due to failure to have
financial assurance. The People ask that respondents be held jointly and severally liable for the
cost of bond premiums avoided. At roughly $600 per day for each day, the People calculate this
sum as in excess of $1.49 million. Comp. Br. at 26-27. The People also request an additional
penalty of $399.308.98 against the City alone, the amount of the landfill operating royalties or
“tipping fees” paid to the City by CLC.Comp. Br. at 25. The People state that, “for simplicity”,
they waive recover of interest between the date the benefit was received to the date of hearing.
Comp. Br. at 23.
Section 42(h) Penalty Factors
Section 42(h) articulates the aggravating and mitigating factors that the Board weighs in
determining an appropriate civil penalty (
see
415 ILCS 5/42(h) (2006)). Below, the Board will
lay out the more significant points the parties have made in support of these factors. The Board
will give its analysis of the factors following this presentation.
37
Section 42(h)(1): Duration and Gravity of the Violation.
The People argue that a
conservative first date for the beginning of violation was November 14, 2000, the date CLC was
advised of the non-compliant status of the Frontier bonds. Comp. Br. at 26. But, the City argues
that the duration of any violation attributable to it should run only from June 1, 2006, the date of
the Board’s affirmance of the summary judgment order here. City Br. at 20-21.
The People argue that the evidence on the gravity of the violation is substantially the
same as the evidence presented concerning Section 33(c)(1). 415 ILCS 5/33(c)(1)(2006). The
People again maintain that the gravity of the violations is high, arguing prior Board precedent.
Comp. Br. at 19-20, citing ESG Watts Inc. (Viola Landfill) v. Illinois EPA, PCB 01-63 (slip op.
at 14) (April 4, 2002) (“financial assurance for closure/post closure of a landfill is essential to
protect the State of Illinois from potential liability to care for landfills that may be abandoned");
People v. Wayne Berger, PCB 94-373 (slip op. at 20-21) (May 6, 1999) ("the [financial
assurance] provisions are in place to ensure that other more threatening violations do not occur,
and which provide a safety net to protect the environment if the operator cannot or will not meet
his obligations under the law"); People v. ESG Watts, Inc. (Sangamon Valley Landfill)
, PCB 96-
237 (slip op. at 5) (February 19, 1998) ("compliance with financial assurance requirements is
necessary to assure that the State of Illinois will not have to pay for correcting environmental
harm created by insolvent polluters."). The People suggest that a number of problems need
immediate attention at the Landfill, including the closure of Parcel B, cover maintenance,
correction of leachate seeps, and uncovered refuse. For these reasons, the People believe this
should be considered a significant aggravating factor. Comp. Br. at 20-21
As to the gravity of the violation, CLC argues that any violation is minimal. Although it
has not filed appropriate local guarantee documents, the City states that “it is and has been
performing [CLC’s failed obligations], even without an order from the Board.” CLC Br. at 21.
In addition, CLC again reargues the correctness of its interpretation of the financial assurance
rules. CLC Br. 21-25.
Section 42(h)(2): Presence or Absence of Due Diligence.
After applying for and
obtaining in 2000 the SigMod permits with financial assurance requirements totaling
$17,426,366, respondents unsuccessfully challenged the amount of financial assurance before the
Board. The challenge resulted in a Board denial April 5, 2001 followed by an appellate denial in
2002. No cost updates have ever been filed. Respondents never sought regulatory relief, and
respondents did not submit a permit application requesting a reduction of financial assurance
until July 2007. Since the date that the Frontier bonds were deemed non-compliant, the
respondents have posted no compliant financial assurance, of any kind or in any amount, for
closure/post-closure of the Landfi1l. Comp. Br. at 21-22
The City argues that it has been diligent in pursuing resolution of any Landfill violations
since at least 2004. The City asserts that Shaw submitted revised cost estimates to IEPA as early
as 2005, and submitted revised estimates as recently as July 2007. City Br. at 26. The City
asserts that as long as CLC remains its lessee under the lease agreement, that “the City cannot,
on its own initiative, charge in and close Parcel B at CLC’s facility, nor can it dictate how CLC
will conduct its operation at the facility”. City Br. at 27.
38
Section 42(h)(3): Economic Benefit from Delayed Compliance.
At hearing, the only
testimony concerning possibly applicable financial assurance mechanisms for compliance with
35 Ill. Adm. Code 811.706 were performance bonds under Section 811.712, local government
guarantee under Section 811.717, and the local government financial test under Section 811.716.
The maximum amount that the City could have guaranteed ranged from $7 million to a high of
$9 million. The City posted no guarantee in any amount. Comp. Br. at 25
The People argue that respondents jointly benefitted from the avoided costs on financial
assurance bonds, and suggest using the premium payments avoided for the non-compliant
Frontier bonds as providing “a very conservative estimate of the avoided economic benefit.”
Comp. Br. at 26.
Based on the 2001 annual premium of $217,842, the People calculate that the avoided
cost per day was $596.83. Based on the initial non-compliance date of November 16, 2000, until
the first day of the remedy hearing September 11, 2007, the People calculate the economic
benefit from non-compliance to be $1,486,107.70. Comp. Br. at 26. Even assuming a credit to
CLC for the premium payments for 2000-2001, the avoided costs would be $1,059,534.70.
The People assert that these costs should be assessed CLC jointly and severally.
Id.
The City asserts it could have posted a self-guarantee without any cost to itself. City Br.
at 27-28. The City argues it received no economic benefit from any compliance delay, because
under Section 42(h)(3) any benefit must be “
determined by the lowest cost alternative for
achieving compliance
.” City Br. at 28 (emphasis in original), citing 415 ILCS5/42(h)(3). The
City also suggests that based on the testimony of IEPA’s Mr. Harris that the Frontier bonds were
valid on their face through 2005 and by rule through 2006, the non-compliance period should run
only from January 1, 2007 through September 11, 2007, resulting in a cost of $151, 594.82 at a
daily cost of $596.83. The City states that, crediting premiums paid of $426, 572, no economic
benefit resulted. City Br. at 28-29.
CLC again argues that the State has refused to allow Frontier to release funds to it, and
that CLC lacks the means to pay any penalty. CLC Br. at 17-18.
The People also contend that the State should recover the dumping royalties or tipping
fees it received from 2001-2005, amounting to $399,308.98. This is because after the 2001
operating permit denial, the City knew that there should have been no waste dumping at the
Landfill. Comp. Br. at 26-30. On this point, the City suggests that it was still permissible to
continue dumping waste in Parcel A. City Br. at 28. Moreover, the City argued that it received
no benefit from CLC’s failure to acquire bonds only CLC was required to pay for. Overall, the
City urges, “it makes no sense that the City would pay more penalty than CLC because the City
accepted royalties, when the operator clearly benefited more from the direct revenues it received
from the acceptance of waste.”
Id.
The City argues that the City and its taxpayers have incurred
substantial costs as a result of CLC’s situation, and that there are no “ill-gotten gains” or
“windfall profits” to be disgorged from the City. City Br, at 29-30.
39
Section 42(h)(4): Penalty Amount That Will Deter Further Violations and Enhance
Voluntary Compliance.
The People argue that deterrence is closely linked to the economic
benefit factor. The People argue that
Municipalities which own landfills may contract with other entities for operation,
however, they remain jointly liable under the pertinent land disposal regulations,
and therefore have the responsibility to ensure that their contract partner operates
the landfill in compliance with the law. . . . These municipalities must not be
allowed to stand by while their landfills deteriorate, nor must they be allowed,
once dumping revenues have ceased, to shift long term maintenance
responsibilities to the State. In our case, City of Morris has ignored its
environmental responsibilities, while spending a significant amount of funds on
other projects. Therefore the penalty assessed in this matter must make it clear to
others that municipalities will not be treated differently from private owners when
violations of the Act and Board regulations occur at their landfills. At a minimum,
fees and royalty payments made to municipalities during periods of knowing
violation must be recovered in penalty, so that there is no incentive for continued
violations. Comp. Br. at 29-30.
The City argues that any penalty would only serve to further burden local taxpayers, who
have already suffered mightily, and would not facilitate closure. The City argues that it is “not in
the public interest to impose a harsh punishment on a small municipality (and therefore its
taxpayers) for a private operator’s failings”. City Br. at 30-31.
Section 42(h)(5): Previously Adjudicated Violations of the Act.
The People state that
aside from the summary judgment order issued in this action, the only previously adjudicated
violation is that in IEPA v. Community Landfill Co.
, AC 89-6 (Feb. 23, 1989) (uncontested,
$500 fine). Comp. Br. at 32.
Section
42(h)(6): Voluntary Self-Disclosure Under Section 42(i).
There was
no self-disclosure here; CLC was notified of the Frontier bonds non-compliance. Comp. Br. at
32. But that, argues the City, should have no relevance to penalty considerations relative to it.
Section 42(h)(7): Supplemental Environmental Project Undertaken.
There is no
supplemental environmental project (SEP) proposed here. Comp. Br. at 32. Here, too, the City
argues that this factor does not weigh against it, since a municipality cannot “voluntarily take on
environmental projects at taxpayer expense in order to ‘settle’ with the State, where the City
believes the IEPA’s action result from a misinterpretation of the law.” City Brief at 32.
Board Analysis and Penalty Calculation
The Board finds that the Section 42(h) factors justify the imposition of a penalty on both
respondents. The single adjudicated administrative citation violation weighs minimally against
CLC. The factors related to voluntary self-disclosure and SEP performance weigh neither for
nor against respondents. Aggravating factors are many and severe.
40
These aggravating factors are that the on-going, grave financial assurance violations in
this case have persisted since 2000, leaving unresolved problems at the Landfill. Neither
respondent has exhibited due diligence in actually replacing the non-compliant Frontier bonds
(for which no premiums have been paid since 2001). Compliance with financial assurance
requirements has yet to be achieved, as respondents continue to argue against the cost
requirements and figures based on their own SigMod permit applications.
These respondents have exhibited a course and pattern of conduct in which they appear to
believe that they can unilaterally re-write the Board’s landfill and permitting rules and
requirements. Both respondents have clung steadfastly to their interpretation of the financial
assurance requirements for surety bonds despite consistent, contrary interpretations rendered by
IEPA, the Board, and even the Third District Appellate Court. Similarly, both respondents
appear to believe that their closure/post-closure care costs and obligations are not those actually
contained in permits, but instead those advocated by the City’s new environmental engineer.
The Board finds that both respondents benefited economically by putting off spending
money to achieve compliance with the financial assurance rules, and for this, Section 42(h)(3)
requires recovery of benefits received. After listing the factors, the Section 42(h) goes on to
provide that
the Board shall ensure, in all cases, that the penalty is at least as great as the
economic benefits, if any, accrued by the respondent as a result of the violation,
unless the Board finds that imposition of such penalty would result in any
arbitrary or unreasonable hardship. However, such civil penalty may be off-set in
whole or in part pursuant to a supplement environmental project agreed to by the
complainant and the respondent. 415 ILCS 5/42(h) (2006).
Based on the limitations of this record, the Board agrees that an appropriate measure of
the civil penalty against CLC is the amount of money CLC saved by not paying premiums for
the non-compliant Frontier bonds, less the amount of premiums paid. The Board will award the
State the penalty amount it requested against CLC: $1,059,534.70.
The Board is not swayed by CLC’s cries of current poverty; costs of closure have always
been part of the landfill business equation. The cost/post-closure care requirements were
tightened at the state and federal level in the early 1990s after lengthy and public regulatory
processes. Incomplete knowledge, or even misunderstanding, of these requirements, does not
excuse non-compliance with the provisions of the Act and rules designed to protect the State’s
taxpayers from bailing out from their closure/post-closure defaults the landfill operators who in
earlier years reaped the profits of landfill operation. The $1,059,534.70 penalty assessed here
is not the Board’s first substantial penalty for landfill financial assurance and closure violations.
See
People v. ESG Watts, Inc. (Taylor Ridge Landfill), PCB 01-167 (Apr. 1, 2004) ($1 million
penalty plus attorney fees for closure violations); People v. ESG Watts, Inc. (Viola Landfill),
PCB 96-233 (February 5, 1998) ($683,200 penalty plus attorney fees for financial assurance and
closure violations).
41
The Board finds some force in the People’s arguments in favor of joint and several
liability for the “premiums avoided” penalty, finding that the City has not been diligent in
resolving this situation. But, the Board will not impose this $1.06 million penalty jointly and
severally on CLC and the City. The Board finds that to do so would impose an arbitrary or
unreasonable hardship on the City’s taxpayers, within the meaning of Section 42(h).
12
Unless
the City is able to recover funds from CLC in any separate civil action for breach of the lease
agreement between them, the City may well be left to shoulder all necessary compliance costs.
13
The City was lessor, owner of the underlying property, and an operator of the Landfill
under all circumstances here as previously found by the Board. It is beyond question that CLC,
under the Act, Board rules, and permits as well as the lease agreement with the City, was the
person the State properly looked to
first
for the posting of financial assurance. But, the City was
on notice that the State would look to the City
next
in terms of remediation of any problems. The
Board cannot find that the City has reaped no financial benefit from its inaction. While the City
argues that it
could have
“self-guaranteed” closure costs of from $7.1 up to $9.1 million in 2001
through 2007, the City has never
actually made
such a guarantee.
14
12
In this case, this finding is not in consistent with the taxpayer-protection aims of the Tort
Immunity Act, 745 ILCS10/1-101
et seq
. (2006), as discussed
supra
pp.22-24.
13
Assuming
arguendo
that Frontier Insurance was ready, willing, and able to refund all monies
received by it from CLC in both collateral and bond premiums, this record establishes that this
would amount to some $600,000. This sum falls far short of financial assurance costs needed
h
14
erTe
hbe
y
Canityy ’s
parartguy’mes reckont
alsno
inignorg.
es the fact that at all times pertinent the permit-established
closure costs have been at least $17.4 million, figures which should have been but were not
routinely and annually updated.
While this record does not
quantify amounts, the Board finds that the City received some economic benefits from the fact
that it did not formally execute the local guarantee. The Board may reasonably assume that
eliminating any such pledge of the City’s credit from appearing in its annual audits could only
serve to have the City’s credit picture appear in a more favorable light to any interested person or
entity.
See, e.g.,
ESG Watts, Inc. v. PCB, 218 Ill. App. 3d 43, 668 N.E. 2d 1015 (4th Dist. 1996)
(reasonable to assume timely value of money by delaying necessary expenditures on slight
evidence).
The only undisputable economic benefit figure quantified in this record is that the City
has received dumping royalties or tipping fees from Landfill operations in the years 2001-2005,
amounting to $399,308.98. The Board gives little credence to the City’s arguments to the effect
that it has been an innocent bystander held captive by the feckless actions of its royalty-paying
lessee. The Board notes that the City has been ably assisted by counsel through many appeals of
determinations by the IEPA and the Board.
See supra
at pp. 27-30. The Board is unable to credit
that the City could in good faith believe that it could contract away any responsibility to post
financial assurance, or to assume that without posting acceptable financial assurance that CLC
would always be able to remediate pollution on land the City owns.
42
As a prudent landlord and steward of its own property, the City had an obligation to its
taxpayers to ensure that CLC lived up to its obligations under the lease agreement. The Board
has long held, and the courts have long affirmed, that even
passive
ownership of property
15
1)
The Board finds that respondents Community Landfill Corporation, Inc. (CLC)
and the City of Morris (City) have violated Section 21(d)(2) of the Act (415 ILCS
5/21(d)(2) (2006)), and Sections 811.700(f) and 811.712(b) of the Board’s
regulations. 35 Ill. Adm. Code 811.700(f), 811.712(b). The Board incorporates
by reference herein as if fully set forth its orders of February 1, 2006 and June 1,
2006 granting summary judgment in favor of complainant, the People of the State
of Illinois.
is
sufficient to allow a finding of liability for pollution under the Act.
See, e.g.,
Perkinson v. IPCB,
187 Ill. App.3d 698, 543 N.E. 2d 901 (1989); Ryan v. McFalls, 313 Ill.App.3d 223, 728 N.E.2d
1152 (2000). When a person owns the land from which discharges originate, that person has
long been held liable for the resulting violations of the Act.
See, e.g.,
Meadowlark Farms, Inc. v.
PCB, 17 Ill. App. 3d 891, 308 N. E. 2d 829, 835-36 (1974).
The Board finds that it is appropriate under all of the above circumstances to recover
from the City the monies it received from 2001-2005, amounting to $399,308.98. The People
have made their case that the City knew or should have known that further disposal activities on
the site were being conducted without proper financial assurance during these years. As the
courts have repeatedly held, the primary purpose for authorization of civil penalties in the Act is
to aid in the enforcement of the Act; any punitive considerations are secondary.
See, e.g.,
Fiorini, 143 Ill. 2d at 349, 574 N.E.2d at 625. The Board does not consider the recoupment of
these dumping royalties or tipping fees to be punitive in nature. The City has a long record of
disregard of the State’s landfill requirements, and requiring it to forego some of the financial
benefits of its lease arrangement is appropriate here to aid in the enforcement of the Act within
the meaning of Section 42(h).
Mindful of the City’s taxpayers and the potential costs of the remedies ordered today, the
Board is not imposing any additional penalty amount on the City or CLC in this case.
In so stating, the Board again notes that these respondents could be assessed statutory penalties
under Section 42(a) in this case alone amounting to over $48 million.
This opinion constitutes the Board’s findings of fact and conclusions of law in this
matter.
ORDER
2)
Within 60 days of the date of this order, on or before August 17, 2009, CLC and
the City must, jointly and severally, post financial assurance in the amount of
15
The Board reminds that it has not found the City’s role here to be mere passive land
ownership.
See infra
at p. 4-5, quoting the Board’s February 2006 summary judgment
order. People of The State of Illinois v. Community Landfill Company, Inc. and City of
Morris, PCB 03-191, slip op at 14 (Feb. 16, 2006).
43
$17,427,366.00 in such form(s) as meet the requirements of the 35 Ill. Adm. Code
811.700, and the current permits for the Morris Community Landfill (Landfill).
Respondents may use any financial assurance mechanism, or combination of
mechanisms acceptable to the IEPA under the Board’s rules. Respondents’
submission of any permit application for reduction of closure/post-closure costs to
IEPA does not constitute compliance with this order.
3)
Within 60 days of the date of this order, on or before August 17, 2009, CLC and
the City must, jointly and severally, provide updated cost estimates for
closure/post-closure care as meet the requirements of 35 Ill. Adm. Code
811.705(d).
4)
Within 60 days of providing the update cost estimate required in paragraph 3),
above, CLC and the City must, jointly and severally, upgrade the financial
assurance for closure and post closure, as required by 35 Ill. Adm. Code 811.701.
5)
Respondent CLC must pay a civil penalty of $1,059,534.70 no later than
Monday, August 17, 2009, which is the first business day after 60 days
from the date of this order. Such payment must be made by certified
check, money order, or electronic transfer of funds, payable to the
Environmental Protection Trust Fund. The case number, case name, and
CLC’s federal employer identification number must be included on the
certified check or money order.
6)
Respondent City must pay a civil penalty of $399,308.98 no later than
Monday, August 17, 2009, which is the first business day after 60 days
from the date of this order. Such payment must be made by certified
check, money order, or electronic transfer of funds, payable to the
Environmental Protection Trust Fund. The case number, case name, and
City’s federal employer identification number must be included on the
certified check or money order.
7)
Respondents must each send the certified check, money order, or
confirmation of electronic funds transfer to:
Illinois Environmental Protection Agency
Fiscal Services Division
1021 North Grand Avenue East
P.O. Box 19276
Springfield, Illinois 62794-9276
8)
Penalties unpaid within the time prescribed will accrue interest under
Section 42(g) of the Environmental Protection Act (415 ILCS 5/42(g)
(2006)) at the rate set forth in Section 1003(a) of the Illinois Income Tax
Act (35 ILCS 5/1003(a) (2006)).
44
9)
Respondents must cease and desist from accepting any additional waste at the
site, further violations of the Act
and the Board’s regulations
IT IS SO ORDERED.
Member G.L. Blankenship concurred.
Section 41(a) of the Environmental Protection Act provides that final Board orders may
be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the
order. 415 ILCS 5/41(a) (2006);
see also
35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.
Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois
Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The
Board’s procedural rules provide that motions for the Board to reconsider or modify its final
orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code
101.520;
see also
35 Ill. Adm. Code 101.902, 102.700, 102.702.
I, John T. Therriault, Assistant Clerk of the Illinois Pollution Control Board, certify that
the Board adopted the above opinion and order on June 18, 2009, by a vote of 5-0
___________________________________
John T. Therriault, Assistant Clerk
Illinois Pollution Control Board
