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MARTELL v. MAUZY

April 17, 1981

STEVE MARTELL, PAXTON LANDFILL CORPORATION, AND STRYKER INTERNATIONAL, INC., PLAINTIFFS,
v.
MICHAEL MAUZY, DIRECTOR, ILLINOIS ENVIRONMENTAL PROTECTION AGENCY AND THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY, DEFENDANTS.



The opinion of the court was delivered by: Kocoras, District Judge.

MEMORANDUM OPINION

The Agency specified nine instances of alleged misconduct by plaintiff Steve Martell as the basis for the denial.*fn1 The operating permit was denied without prior notice or opportunity for plaintiffs to be heard or answer or contest the basis for the denial. Absent an operating permit, waste disposal is prohibited. Thus, the denial effectively forced Paxton to cease all operations.

Plaintiffs filed a complaint seeking declaratory relief pursuant to 28 U.S.C. § 2201, § 2202, and Fed.R.Civ.Pro. 57, and injunctive relief pursuant to 42 U.S.C. § 1983 and the fourteenth amendment to the United States Constitution, claiming that, in the circumstances of this case, the lack of a pre-denial hearing deprived them of protected property and liberty interests without due process of law. They subsequently moved for a preliminary injunction enjoining defendants from applying Section 39(e)(i) of the Act to deny the operating permit, and ordering defendants to issue the permit, pending a plenary hearing before the Agency on the charges which formed the basis for the denial.

The parties submitted extensive memoranda, affidavits, and exhibits. Following two days of evidentiary hearings on the merits of plaintiffs' motion, proposed findings of fact and conclusions of law were proffered. Upon careful consideration of the evidence adduced at the hearing, and the materials submitted by the parties, plaintiffs' motion for a preliminary injunction is granted.

Findings of Fact and Conclusions of Law

I

Under the Act, the Agency and the Illinois Pollution Control Board (Board) are granted broad authority over Illinois environmental matters, including the regulation of sanitary landfills.*fn2 In addition, the Board is empowered to adopt rules and regulations to implement environmental control standards which are consistent with the goals of the Act.*fn3

In accordance with its authority under the Act, the Board adopted the Solid Waste Rules and Regulations*fn4 (Solid Waste Rules) to govern solid waste management sites. Rule 201 requires a development permit to be issued before a new solid waste management site may be developed or an existing one modified. Rule 202(b)(i) requires an operating permit from the Agency before the use or operation of an existing solid waste management site. Under Rule 206(a), the Agency may impose conditions on issued permits.*fn5 The standards for issuance of permits are contained in Rule 207, which provides, in relevant part, that permits shall not be granted unless the Agency receives adequate proof that the waste site will be developed, modified, or operated properly under the Act and the Rules, and that operating permits conform to all conditions required by the corresponding development permits. Although the term "adequate proof" is not defined in the Act or the Rules, Rule 316(a) provides that an application for a development permit must contain evidence adequate to prove to the Agency that the development of the landfill will not cause or tend to cause water or air pollution, will not violate applicable air and water quality standards, and will not violate any Board rule or regulation. In addition, the development application must include, among other things, plans, maps, geographical data, soil and water analyses, and a description of the proposed methods of operation.

Rule 316(b)(i) also requires that operating permit applicants prove to the Agency that the operation of the landfill will not violate the Act or Board regulations. Moreover, the operating application must include a certification*fn6 that all data and information previously required by Rule 316(a) has been provided to the Agency and that all conditions have been complied with, except that information already submitted may be incorporated by reference into the application and need not be resubmitted. Before an operating permit may be issued, the Agency is required by Rule 316(b)(2) to inspect the developed site and determine that it accords with the provisions of the development permit application, the Act, and all applicable regulations.

Section 5(d) of the Act*fn7 also empowers the Board to conduct hearings on alleged violations of the Act or regulations. Section 30*fn8 provides that the Agency shall investigate alleged violations of the Act, its rules, regulations, and permits, upon request of the Board. Under Section 31(a),*fn9 if the investigation reveals a possible violation, a written notice and formal complaint specifying the particular provision allegedly violated must be served; the alleged violator must answer the charges at a hearing before the Board within 21 days of the notice. Section 31(c) provides that the Agency has the burden of proof in the hearing to demonstrate that the respondent has caused or threatened to cause air or water pollution, or has violated or threatens to violate the Act, its rules or regulations, or a permit provision. Section 32*fn10 prescribes a full trial-type evidentiary hearing on the purported violation before a qualified hearing officer,*fn11 and section 33(a)*fn12 requires the Board to publish written factual findings following the hearing.

Section 39(a)*fn13 of the Act provides that application must be made to the Agency when the Board's regulations require a permit for the development, construction, modification, or operation of a waste facility. The Agency must issue such a permit upon proof by the applicant that the facility will not violate the Act or regulations. If a permit is denied, the applicant must receive detailed statements as to the reasons for the denial, including the specific type of information, if any, which the Agency deems the applicant did not provide, and which sections of the Act and regulations would be potentially unmet or violated if the permit were granted. There are no provisions in either the Act or the Rules for any type of temporary or restricted operating permits pending an appeal from a permit denial.

Pursuant to Sections 40(a)*fn14 and 5(d),*fn15 appeal of a permit denial may be made to the Board. The hearing procedure is the same as that employed regarding an alleged violation, with one important exception: the applicant-petitioner has the burden of proof before the Board concerning the propriety of the denial. Although Section 40(a) does not specify a time during which the hearing must be held or a decision rendered, the petitioner may deem the permit issued if there is no final action by the Board within 90 days. This time period, however, may be extended an additional 30 days, to a maximum of 120 days, if the Board membership falls below a quorum.*fn16

On September 18, 1980, an amendment to Section 39 of the Act took effect. The amendment, Section 39(e),*fn17 provides:

  (e) Before issuing any permit for the conduct of any
  refuse-collection or refuse-disposal operation, the
  Agency shall conduct an evaluation of the prospective
  operator's prior experience in waste management
  operations. The Agency may deny such a permit if the
  prospective operator or any employee or officer of the
  prospective operator has a history of:
  (i) repeated violations of federal, State, or local
  laws, regulations, standards, or ordinances in the
  operation of refuse disposal facilities or sites; or
  (ii) conviction in this or another State of any crime
  which is a felony under the laws of this State or
  conviction of a felony in a federal court; or
  (iii) proof of gross carelessness or incompetence in
  handling, storing, processing, transporting or
  disposal of any hazardous waste.

The Agency relied on Section 39(e)(i) in denying the operating permit requested by Paxton. Prior to this amendment, under both the Rules and Agency practice an operating permit would automatically issue for the same site given a development permit upon receipt by the Agency of a proper certification pursuant to Rule 205(d)*fn18 and confirmation of the proper nature of the certification by the Agency inspection required by Rule 316(b)(2). The Agency concedes that until Section 39(e)(i) became effective, it could not refuse to issue an operating permit based on alleged prior violations of federal, State, or local laws, regulations, standards, or ordinances in the operation of waste disposal sites. As prescribed by Rule 316(b)(1), an operating permit application need not contain information already submitted to the Agency in the development permit application regarding evidence adequate to prove that the operation of the landfill site would not violate the Act or regulations. Instead, the Rule allows this information to be incorporated by reference. Since all information required for the operating permit (other than the engineers certification and the Agency inspection) is submitted with the development permit application, the issuance of a development permit by the Agency was tantamount to the issuance of an operating permit prior to the enactment of Section 39(e).

II

Paxton has been operating its sanitary landfill site since approximately 1971. On August 30, 1979, plaintiff Stryker International Inc. (Stryker), through its sole shareholder and chief operating officer, Steve Martell, purchased Paxton; Stryker's sole business is the operation of Paxton.*fn19 From the time of the purchase until November 18, 1980, Paxton disposed of such refuse as garbage, demolition wastes, and liquid, semi-liquid, and solid hazardous and nonhazardous wastes in trenches constructed and sealed so as to contain the wastes and prevent contamination of ground and subsurface waters. The disposal of hazardous waste materials was discontinued after November 18, 1980. Paxton ceased virtually all operations after the denial of the operating permit on December 29, 1980.

In and about May, 1980, and prior to receipt of a development permit, Paxton began to develop additional trenches in an area of the landfill site known as Parcel III. These trenches were labeled trenches R, S, T, and X, Y, Z, and were developed based on the advice of James Douglas Andrews, an independent engineer retained to perform engineering, landfill planning, and waste management consulting duties for Paxton. It was Andrews' opinion that the Parcel III development was proper under previously issued permits.

Paxton began operations in trenches X and Y in May 1980. In August 1980, Paxton was visited by Mr. Kenneth P. Becheley, the regional manager of land pollution control field units for the Agency. Becheley informed Daniel Smith, the Paxton site operations manager, that the development and operation of these trenches was improper. Paxton accordingly applied for a supplemental permit to develop additional trenches, including trenches R, S, T, X, Y, Z, and U, V, W. This permit was granted by the Agency on August 27, 1980. Paxton subsequently applied for an operating permit for trenches R, S, T and Z, and this permit was granted by the Agency on October 3, 1980, two weeks after the effective date of Section 39(e) of the Act. Paxton spent approximately $100,000 developing trenches R, S, T and Z. Even though the Agency had the same information later used to deny an operating permit for trenches U, V and W, the operating permit was issued unaccompanied by allegations of prior improper conduct.

On September 16, 1980, Paxton began development of trenches U, V, and W, pursuant to the permit issued on August 27. Development of these trenches was completed on November 15, 1980, at a cost of approximately $97,000. On November 17, independent engineer Andrews certified trenches U, V, and W as being in compliance with the plans and specifications approved by the Agency in the August 27 development permit. Andrews had been employed previously by the Agency as both the manager of the Permit Section, Division of Land Pollution Control, and as the manager of the Division of Land Pollution Control. Following Andrews' certification, Paxton requested the Agency to issue an operating permit for trenches U, V, and W; the Agency received the certification and request on November 18. On December 12, Ms. Bonnie Eleder, a field inspector for the Agency, inspected the trenches pursuant to Agency procedure under Rule 316(b)(2). She reported her findings to the Agency, concluded that the trenches conformed to the plans, specifications, and conditions of the development permit, and recommended that an operating permit issue. Sometime after Ms. Eleder's inspection but before December 29, Andrews was advised by Mr. Terry Ayers, an engineer employed by the Agency, that the Agency had found the construction of trenches U, V, and W to be proper, thereby meeting all statutory and regulatory criteria for the issuance of an operating permit. Anticipating the grant of the permit based on the August 27 development permit and the October 3 operating permit for trenches R, S, T, and Z, Paxton spent a substantial amount of money in November and December to purchase capital equipment for the landfill.

On December 29, 1980, the Agency denied Paxton an operating permit for trenches U, V, and W based on Section 39(e)(i) of the Act. At no time between the effective date of Section 39(e)(i) on September 18 and December 29 did the Agency advise Paxton that the permit might be denied on this basis. The denial letter, received by Paxton on January 2, 1981, stated that the operating permit was denied specifically because Steve Martell had a past history of repeated violations of federal, state, or local laws, regulations, standards, or ordinances in the operation of refuse disposal facilities or sites.

The denial letter complied with the specific notice requirements of Section 39(a) by listing nine instances of alleged violations. However, none of the asserted violations concerned an adjudication reached after an evidentiary hearing, several did not name or involve Martell, and two involved lawsuits that were settled between the parties without any admissions of wrongdoing. The nine instances of alleged violations were:

  1. Item 1 referred to a lawsuit entitled People of the
  State of Illinois v. Steve Martell and U.S. Drum
  Corporation, 79-CH-1915, and to an agreed Final Order
  entered on May 9, 1979. Although neither the complaint
  nor Final Order were attached to the dismissal
  letter, the evidence at the hearing demonstrated that
  this lawsuit charged Martell with operating the U.S.
  Drum waste management site without a permit, and that
  Martell and U.S. Drum were ordered to clean up the
  site. The parties stipulated that the site was
  intended to ...

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