t
OFFICE OF
THE
ATI’ORNEY
GENERAL
OCT
012
STATE
OF
ILLINOIS
STATEO
ILLINOIS
P/(tt
Control
Board
Lisa
Madigan
AY1’ORNEY
GENERAL
September
29,
2009
John
T.
Therriault,
Assistant
Clerk
Assistant
Clerk
of
the
Board
Illinois
Pollution
Control
Board
James
R.
Thompson
Center,
Ste.
11-500
100
West
Randolph
Chicago,
Illinois
60601
Re:
Prime
Location
Properties,
LLC,
v.
IEPA
PCB
No.
09-67
Dear
Clerk:
Enclosed
for
filing
please
find
the
original
and
ten
copies
of
a
Notice
of
Filing
and
Respondent’s
Objection
to
Attorney’s
Fees
in
regard
to
the
above-captioned
matter.
Please
file
the
original
and
return
a
file-stamped
copy
to
me
in
the
enclosed
envelope.
Thank
you
for
your
cooperation
and
consideration.
Very
truly
yours,
Thomas
Davis,
Chief
Assistant
Attorney
General
Environmental
Bureau
500
South
Second
Street
Springfield,
Illinois
62706
(217)
782-9031
TD/pj
k
Enclosures
500
South
Second
Street,
Springfield,
Illinois
62706
• (217)
782-1090
• TTY:
(877)
844-5461
•
Fax:
(217)
782-7046
100
Vest
Randolph Street,
Chicago,
Illinois
60601
• (312)
814-3000
•
‘ITY:
(800)
964-3013
• Fax:
(312)
814-3806
1001
E,cr
M,i1n
CarhnndIe
Illinnic
62Q01
• (61R1
s2q-6400
•
rrv
(S77
67-Q’,Q
•
(c1
ocsi
BEFORE
THE ILLINOIS POLLUTION
CONTROL BOARD
PRIME LOCATION PROPERTIES,
LLC,
)
Complainant,
)
OCT
012009
vs.
)
PCB No. 09-67
(USTAppeal)
rOIBoard
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
NOTICE OF FILING
To
Fred
C
Prillaman
Mohan,
Allewelt, Prillaman
& Adami
One North
Old
State
Capital Plaza,
Ste.
325
Springfield,
IL 62701
PLEASE
TAKE NOTICE that on this date I mailed for filing with the Clerk
of the Pollution
Control Board
of
the
State of Illinois, RESPONDENT’S OBJECTION TO ATTORNEY’S FEES,
a
copy
of which is attached hereto and herewith served upon you.
Respectfully submitted,
PEOPLE OF THE STATE OF ILLINOIS
LISA
MADIGAN,
Attorney General of the
State of Illinois
MATTHEW
J.
DUNN,
Chief
Environmental
Enforcement/Asbestos
Litigation Division
BY:________________________
THOMAS DAVIS, Chief
Assistant Attorney General
Environmental Bureau
500 South
Second Street
Springfield, Illinois 62706
217/782-9031
Dated:
September 29, 2009
CERTIFICATE
OF SERVICE
I hereby
certify
that I did on
September
29,
2009, send
by
First
Class Mail, with
postage
thereon
fully prepaid, by depositing
in a
United
States Post Office Box
a true and correct
copy
of
the foregoing NOTICE OF FILING and RESPONDENT’S
OBJECTION TO
ATTORNEY’S
FEES
Fred
C.
Prillaman
OCT
oi
2009
Mohan, Allewelt Prillaman
&
Adami
STAT
One North Old State Capital Plaza,
Ste.
325
PoIfr,j
0
°c,!JJNOiS
Springfield, IL 62701
rol
8
oard
and the
original and ten copies
by
First Class
Mail with postage thereon fully prepaid
of the
same
foregoing instrument(s):
To:
John
T. Therriault, Assistant Clerk
Illinois Pollution Control Board
James R.
Thompson Center
Suite
11-500
100 West Randolph
Chicago, Illinois 60601
A copy
was also sent by First Class Mail with postage thereon fully prepaid to:
Carol Webb
Hearing
Officer
Illinois
Pollution Control Board
1021 North Grand Avenue East
Springfield, IL
62794
THOMAS DAVIS, Chief
Assistant
Attorney General
To:
This filing is submitted on recycled paper.
BEFORE THE ILLINOIS
POLLUTION CONTROL BOARD
PRIME LOCATION PROPERTIES, LLC,
)
)
Petitioner,
)
v.
)
PCB
No. 09-67
)
(UST Appeal)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
)
Respondent.
)
RESPONDENT’S OBJECTION TO ATTORNEY’S FEES
Respondent, ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
by
its
attorney.
LISA MADIGAN,
Attorney General of the
State
of Illinois, hereby responds
to the Motion for
Authorization
of Payment of Attorney’s Fees
as
Costs of Corrective Action, and states
as
follows:
I.
Petitioner
has prevailed in its
action before the Board
and seeks
reimbursement
of
legal
costs.
The
Board
granted
leave to
Petitioner
to
file
“a statement of
its legal fees that
may
be
eligible for reimbursement
and
its
arguments why
the
Board should
exercise
its discretion
to
direct
the Agency to
reimburse those fees from the UST Fund.” August 20,
2009
Opinion
at
page
34.
2.
Section 57.8(1) of the Act provides: “Corrective action does not include legal
defense
costs.
Legal defense
costs
include legal
costs for
seeking
payment under this Title unless
the
owner or
operator prevails before the Board in which
case
the Board may authorize
payment
of
legal
fees.”
3.
Petitioner relies upon
four
previous Board decisions in which the Board has
)
RECEflVED
CLERK’S
OFFICE
OCT
0 1
2009
STATE
OF
ILLINOIS
Pollution
Control
Board
—1—
required
the reimbursement
of
legal
fees from the UST Fund: Ted Harrison
Oil Co. v.
IEFA,
PCB 99-127 (October 16, 2003); Illinois Ayers
Oil Co. v. IEFA, PCB 03-214 (August
5, 2004);
SwT Food Mart v. IEFA, PCB 03-185 (August 19,
2004); and Webb & Sons, Inc. v. IEPA,
PCB
07-24 (May 3, 2007). In each of these orders, the Board
based
its discretionary
decision to award
fees
on
the “facts”
of the particular
case but did not (except for Ayers) identify what it
considered
to be the
salient facts justifying the award. The
Board’s decision in Ted Harrison
Oil
Co.
seems
to have served as
“precedent” for its ruling in
Ayers although it did not explain why an award
was “warranted” in
the earlier
case.
4.
In Ayers there were independent grounds for
the award of attorney’s fees under
Section 10-55 of the Administrative Procedure Act, 5 ILCS 100/10-55. The Agency’s rate
sheet
was
found
to
be an invalid rule of general applicability. Even though the petitioner in Ayers
(represented by the same counsel as
the
present case)
conceded that Section 10-55 of the
Administrative
Procedure
Act
did not apply
to
the Board, the Board found the invalidity of the
rate
sheet under the
APA
to
be a “compelling reason for allowing reimbursement of legal fees.”
PCB
03-2 14; August
5,2004 order
at
page 9. The petitioner in Ayers also
argued
that
the
Board’s
decision in Ted Harrison Oil Co. was inapplicable to the
situation in
Ayers.
PCB
03-
214; June 1,
2004 reply at page 8, footnote 2. Noting that the Agency did not challenge the
reasonableness
of the requested fees, the
Board
concluded:
“Therefore, the Board
does
not
find
the
legal
fees are
unreasonable.” PCB 03-2 14; August
5,
2004 order at page
9.
In other
words,
an
award
of fees must be reasonable. Unfortunately, no rationale is
provided
for the substantial
amount
of the
legal fees
awarded in Ayers. The “standard” of reasonableness thus established
without
the necessary
factual context to lend any insight to future award considerations.
-2-
5.
The Board’s decision
in Ayers is noteworthy for
at least two other reasons. First,
the
Board seized upon that petitioner’s
suggestion that Section 57.8(1) of the Act is
a
“fee
shifting” statute.
The
company cited Chicago
v. illinois Commerce Commission, 187 Ill.
App.
3d
468,
470
(1st
Dist. 1989),
in support of its argument.
The Board did not discuss this particular
case but (in
the “discussion”
of the issue) nonetheless
adopted
the theory and found that the
statutory
provision:
provides
for an award
to
compensate
counsel
for
prevailing before the Board and
as such
is
a
“fee-shifting” statute.
See
Brundidge
et al. v.
Glendale
Federal
Bank, F.S.B. 168 Iii.
2d 235, 245; 659 N.E.2d 909, 914 (1995). The plain language
of Section 57.8(1) of the
Act (415 ILCS 5/57.8(1) (2002)) guides the Board in our analysis
of when to allow the
prevailing party to receive legal defense costs. The first question the Board must
address
is whether or not the proceeding falls within the parameters of the statutory provision.
Second, the Board must also determine whether or not to exercise our discretion.
PCB
03-214; August 5, 2004 order at page 7. A careful reading shows that what legitimately
began in
Ted Harrison Oil Co. as the reimbursement of the owner or operator for legal costs
has
evolved,
according
to the “plain language” of the statute, as a scheme to “compensate counsel”
premised
upon the argument that Section 5 7.8(1) is intended to shift fees. The Board accepted
the
“fee-shifting” argument at face value even
though
the court in Chicago v. illinois Commerce
Commission was
concerned with
the
APA provision, the purposes of which “are
to
discourage
enforcement
of invalid rules and to provide
incentive
to those subject to regulations to oppose
doubtful
rules where
compliance would otherwise
be
less costly
than
litigation.”
187
Ill.
App. 3d
at
470. The court was
also concerned with assessing reasonable attorney’s fees and discussed
the
issue in the
context of the specific statutory
language.
The
First District
also considered whether
legal costs were
paid by the client or the legal clinic representing that party. The actual holding
of this
case is that
(under the APA provision) attorney’s fees must be “calculated
at
market
rates
-3-
commensurate
with
experience
and
expertise”
in order
to
be reasonable. Ibid. In
any
event,
Chicago v. Illinois Commerce Commission provides
no basis for the Board to find that this
provision of the Environmental Protection Act is
a “fee-shifting” statute and the Board relied
instead upon Brundidge et
al.
v. Glendale Federal Bank, F.S.B.
The Supreme Court held in this
common fund class action litigation that in determining
the amount of attorney fees to be granted
to
the plaintiffs’ counsel, the circuit court is vested with discretionary authority
to choose either
the
percentage-of-the-award method or the “lodestar” method,
based
on facts and circumstances
of each case.
168 Ill. 2d at 246. The Board did not discuss this case either, but according
to the
Court’s own
rationale, Brundidge makes a “critical distinction” between fee-shifting cases
defined as
“where a statute
clearly provides for
an
award
to
compensate counsel for the
prevailing class” and
common funds cases: “We believe that
fee-shifting
cases
are materially
different
from common fund cases, such as the
case
at bar, most
notably
because fee-shifting
cases do not
involve
a
common fund from
which attorney fees may be awarded.” Id. at 245. In
summary, the
Board has based (and expanded)
its non-critical finding that our statute is a fee-
shifting
statute
upon case law
that is clearly inapplicable.
6.
The
second reason the Ayers decision is
noteworthy pertains
to
the Board’s refusal
to
allow the late
filing of the Agency’s July 8,
2004 amended response, which that petitioner
had
argued
was not
relevant:
The Agency
is seeking
to
amend a response to a request
for the authorization
of
payment of
legal fees. The Act allows the
Board
to
authorize the payment of legal fees
if
the
owner or operator prevails before the Board. See
415
ILCS 5/57.8(1) (2002). There is
no
language in the Act
which specifies who must initially pay the
attorney
fees.
Therefore,
the Board agrees with Ayers
that
the
information presented in testimony
at the
rulemaking
hearing
is not relevant to
the Board’s decision on the request for legal costs.
The Board
denies the motion to amend the response.
-4-
PCB 03-214; August
5,
2004 order
at page 2.
The Board apparently rejected the merits of
the
Agency’s argument as not relevant
but
then
determined the
statute
“provides
for an award
to
compensate
counsel.”
This
information
is worth
due
consideration
before it may
be
relegated
to
the dustbin, especially since the Agency intends
to appeal the present matter. Therefore,
this
pleading will incorporate and reprise those
prior arguments as follows: On June 21 and 22,
2004,
the
Board conducted hearings in PCB R04-22
and R04-23 on the proposed amendments to Parts
732 and 734. Cindy Davis testified in the rulemakings regarding
her participation in the Ayers
proceeding; her company, CSD Environmental,
was
the consultant for the
Illinois Ayers Oil
Company and she provided testimony in PCB 03-2 14. Ms. Davis opined that the Agency’s
rate
sheet
was unfair: “Hence the reason we decided to appeal Ayers. I paid for the appeal on Ayers,
and not the
owner/operator. The reason I did is, I
guess
it
was just something that stuck in me
that I
didn’t feel
was
right, and it was affecting my business, driving the cost of cleanups up
because
all
we
were doing was spending time trying to justify why we
were needing more
money
than the
Agency was willing to give to us.” PCB
R04-22
and
R04-23;
June 21, 2004 transcript
at
page 96.
It was the consulting company and
not
the oil company that incurred the
costs
of
bringing the appeal in
PCB
03-214. If
the Board were
to approve
the payment of
costs
sought
in
PCB 03-2 14, the Board
would require
a
payment from the Fund to
a party
that had not incurred
any of the costs.
In effect, it would
be
subsidizing the legal activity of CSD Environmental,
an
entity
that has
no legal obligation, responsibility, or
rights
under the Act. Only an owner or
operator
may receive
payment of
costs
from the Fund. The Board’s approval would require
a
finding
that the attorney’s fees
are
a
corrective action that would
be payable
from
the
Fund
pursuant to
Section 57.8(1). It is a
fundamental concept that
costs deemed
eligible
for
-5-
reimbursement
from the Fund are payable only
to the owner or
operator. Here (PCB 03-2 14),
it
was the
owner/operator’s
consultant
that
had a business concern,
paid
for
the appeal, and now
seeks
to reap the
benefits
by way of payment
of legal fees. To allow such
a payment would
open
the door
to
other situations in
which an owner or operator,
in name only, seeks costs for
reimbursement or payment from the
Fund that were never actually incurred
by the owner
or
operator. This is a bad precedent,
and
one
that should be stopped now
to
prevent
future erosion
of
the purposes of the Act. See PCB 03-2
14;
July
8,
2004
amended response at pages 1-3.
7.
Ayers was the precedent for the Board’s August 19, 2004 decision in
SwifTFood
Marty. JEPA, PCB 03-185:
In
Illinois Ayers,
the Board stated that under a fee-shifting statute, the amount
of
fees
to
be awarded lies within the “broad discretionary powers” of the Board. Globalcom,
Inc.
v.
Illinois Commerce Commission, 347 Iii. App. 3d 592; 806 N.E.2d 1194, 1214
(1st
Dist. 2004).
This includes
a
determination of reasonableness of the requested fees.
United
States
Fidelity and Guaranty Company
v.
Old Orchard Plaza Limited
Partnership,
333
Ill.
App. 3d 727, 740; 776
N.E.2d 812, 824 (1st Dist. 2002); In re Pine
Top
Insurance
Company,
292 Ill. App. 3d 596 [sic]; 686 N.E.2d 657 (1997).
PCB 03-185;
August 19, 2004
order
at page 3.
The Board’s prior analysis or lack thereof in
Ayers
necessarily leads to close
scrutiny
of the particular cases it has cited. The First District
Appellate
Court ruled
in Globalcom, Inc. v. illinois Commerce Commission that the ICC has
“broad
discretionary
powers.” 347 Ill. App. 3d at 626. This first
opinion cited United
States
Fidelity and
Guaranty Company v. Old
Orchard Plaza Limited Partnership for the “well
established”
proposition
that fee-shifting
statutes must
be
strictly construed. This second earlier
opinion
reiterated
another well-established proposition, to wit: the trial court has “broad
discretionary
powers”
in awarding attorney’s fees.
333
Ill. App.
3d at
740. The last cited
case,
In
re
Pine
Top
Insurance Company,
292 III.
App. 3d 597, held that the
trial
court
failed
to
-6-
conduct a
reasonableness
analysis in ascertaining
whether
to approve or disapprove
the
contingency fee agreement,
and may be considered
(if at all)
as merely filler.
No
court
has held
that the Pollution Control Board
enjoys
“broad
discretionary
powers”
regarding attorney’s
fees or
any other issue; in fact, numerous
appellate
decisions have considered
issues relating to the
scope
of
authority granted
to the Board and its exercise
of such authority, and
none has characterized
the
Board’s powers (i.e., authority) or exercise
thereof (i.e., discretion)
as being “broad.”
8.
The most recent
case cited in support
of this Petitioner’s request for
legal costs is
Webb & Sons,
Inc. v. IEPA, PCB 07-24
(May
3, 2007). This
case
is noteworthy for the
limitations placed
by
the Board on the
award of costs, including the rejection
of engineering
expenditures
as
legal costs. PCB 07-24; May
3, 2007 order at page 5.
9.
The primary purpose of this review of Board
decisions is to respond to this
Petitioner’s motion in which the Board is urged to “continue
to
liberally award legal
costs to
prevailing parties in LUST appeals.” Motion
at
¶
6.
The award of legal
cost reimbursements
from the
Fund has indeed been liberal
as
demonstrated
by
the Board precedents discussed
above.
The
process
to
date seems to be one of “ask and ye shall receive.” Counsel for this
Petitioner has
submitted an affidavit in support of the award request and states that the hourly rates
“charged
are commensurate
with the prevailing rates for environmental
legal services in Springfield,
Illinois
for 2009. .
. .“ The assessment of a “reasonable” monetary amount is
an
issue
separate
and
apart from the legal
justification
of any given award. None of the decisions addressed the
details of such
an assessment. For instance, the hourly rates approved in the
past have not been
identified in the
Board’s decision nor discussed in the context of
whether such rates are
representative or
prevailing. Here, Attorney Shaw
has two different billable rates:
$160
per hour
-7-
and
$220
per hour. Respondent
accepts as true
the
verified
statements as to
the nature and
amounts of work
performed,
but
these
rates are employed
somewhat inconsistently.
The rates
charged for teleconferences
with the client
were
$220
per hour
in April 2009 and
$165
per hour
in May 2009; some pleadings
were drafted at the higher
rate and some
at the lower rate. The
billings
for May 4, 2009 regarding e-mails
received from
the hearing officer
use both rates.
There is
little indication in the previous decisions
that the rates or
the itemized work have
been
reviewed
during
the Board’s determinations of
“reasonable” awards.
10.
Petitioner’s
argument is likewise rather
presumptive:
“With respect
to the
specifics
of
this
appeal,
the Board should award reimbursement
for the same reason
that
legal
fees
were awarded in Swif-T
Food
Mart, which the Board found
to be applicable precedent
herein.”
Motion at
¶
7.
The Board’s decision in
the prior case did serve as precedent
for the
determination of the technical issue, but the factual rationale for the award
of legal costs in
Swif
T Food Mart was much
different
than
the
record here. More importantly, Petitioner
does not
represent that
it has actually paid for the legal work
performed.
Similarly,
Attorney Shaw
does
not state
that
the
fees incurred have been billed and
paid.
Reimbursement
is
a
simple concept.
The
owner or operator must prove more than mere eligibility in
order to receive any payment
from the Fund.
11.
The owner or operator has
a
legal
right to reimbursement from the Fund,
but
that
right
is not unlimited. FedEx Ground Package System, Inc.
v.
Pollution
Control Board, 382
Ill.
App.
3d 1013
(1St
Dist. 2008). The
First
District cites to its earlier decision for the proposition
that
“the Fund does not have a broad remedial purpose, presumably due
to
its limited
resources.”
382
Ill. App.
3d
at
1015-16. This earlier case is Strube
v.
Pollution
Control
Board, 242 Ill. App.
-8-
3d
822, 826
(lst
Dist. 1993),
where the
court summarized
and adopted the Board’s
arguments:
The Board disputes
the Strubes’
contention that the
Fund has
a
broad
remedial
purpose. The Board states
that the Fund’s
purposes are narrow
and that the
statutory
definition of corrective
action
is specific.
Accordingly, the
Board asserts that
restoration
expenses such as repaving
fall outside the
statutory definition
of corrective
action.
We
agree.
The Board
argues that
a two-pronged analysis
should
be used
to determine if
an
activity meets the
definition of corrective
action:
(1) whether the costs are
incurred
as a
result of action
to stop, minimize, eliminate
or clean up
a petroleum release; and (2)
whether the costs are the
result of activities
such as those listed in
the statute.
If
“the Fund does not have a broad remedial
purpose, presumably
due to its limited
resources,”
then
the Board cannot “continue to liberally
award legal costs
to
prevailing
parties in LUST
appeals.” If the owner or operator does not
have an unlimited legal right
to
reimbursement
from
the
Fund, then it is
unlikely
such a limited legal right
may be exercised
by
a third
party, e.g. the
consultant in Ayers
or the
attorney in the present
case.
12.
Petitioner is not legally entitled to reimbursement
but
rather
merely qualifies
for
a
potential award of
legal
costs.
Respondent respectfully argues that
the Board precedents
discussed above
must
be
evaluated in light
of the appellate court’s declarations in the
FedEx
case.
The award in the present case must be determined with more stringency
than the Board
has
done in the past.
The legal
bills must first be paid in order to be eligible for
reimbursement. The
legal work
performed must fall within the statutory
definition of corrective action; after
all,
Section 57.8(1)
explicitly excludes legal defense
costs except in the limited situation set forth
in
that
provision. Any award is discretionary and the Board’s
reasonableness approach is only
as
good
as its attention to
the details
such as the hourly rates being charged for legal
services and
the
relation of that work to the outcome achieved. A finding
that a particular award is based
-9-
upon the
facts
of
a given case
has no meaning
as precedent unless
the assessment
of that
particular
award
is articulated. The
Agency suggests
that
a reasonable
award with
an
appropriate
rationale may
be made
in
this
case
but
not
without
clarification
of the inconsistently
applied
hourly rates
issue. The focus
must be
on
limiting
awards
from
the Fund
in
accordance with
the
statutory
and case law requirements
and not
on how
“broad”
the Board’s
discretionary
powers
might
be.
WHEREFORE,
the ILLINOIS
ENVIRONMENTAL
PROTECTION
AGENCY,
objects
to the award of attorney’s
fees
as
requested.
Respectfully
submitted,
ILLINOIS
ENVIRONMENTAL
PROTECTION
AGENCY,
ex
rel.
LISA MADIGAN,
Attorney
General
of the State of Illinois
MATTHEW
J. DU1Th,
Chief
Environmental
Enforcement/Asbestos
Litigation
Division
BY:__________________
THOMAS
DAVIS, Chief
Environmental
Bureau
Assistant Attorney General
Attorney Reg. No.
3124200
500
South Second
Street
Springfield, Illinois 62706
217/782-9.031
Dated:_______
-10-