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Alternate Fuels, Inc. v. Director of the Illinois Enviornmental Protection Agency

March 11, 2003

ALTERNATE FUELS, INC., PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
THE DIRECTOR OF THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY AND THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY, DEFENDANTS-APPELLEES AND CROSS-APPELLANTS.



Appeal from the Circuit Court of St. Clair County. No. 98-MR-302 Honorable John M. Goodwin, Jr., Judge, presiding.

The opinion of the court was delivered by: Presiding Justice Hopkins

Released for publication April 1, 2003.

ALTERNATE FUELS, INC., PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
THE DIRECTOR OF THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY AND THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY, DEFENDANTS-APPELLEES AND CROSS-APPELLANTS.

Appeal from the Circuit Court of St. Clair County. No. 98-MR-302 Honorable John M. Goodwin, Jr., Judge, presiding.

The opinion of the court was delivered by: Presiding Justice Hopkins

Publish

The plaintiff, Alternate Fuels, Inc. (AFI), appeals from the trial court's denial of a summary judgment on count II of its complaint against the defendants, the Illinois Environmental Protection Agency and its director (collectively, the Agency). The trial court granted AFI's motion for a summary judgment on count I of the complaint, and it granted a "summary determination" on count II in favor of the Agency. AFI contends that the trial court's order denying a summary judgment on count II is inconsistent with its grant of a summary judgment on count I and that the summary determination on count II is in error as a matter of law. In its cross-appeal, the Agency argues just the opposite-that the trial court erred as a matter of law in granting a summary judgment in favor of AFI on count I. The substantive issue presented by both sides is whether the materials AFI receives, stores, and manufactures into an alternate fuel to be used by Illinois Power Company should be classified as waste, such that AFI would require a permit to continue its recycling business. AFI additionally argues that the trial court erred in denying its request for the reasonable costs and expenses of litigation. The Agency contends that the trial court should have dismissed the complaint for a lack of jurisdiction because the case was not ripe.

FACTS

AFI collects, separates, and processes plastic materials into alternate fuel at its plant in East St. Louis, Illinois. The plastic materials (polyethylene, polyolefin, and polyurethane, but not polyvinyl chloride (PVC)) come from approximately 12 suppliers. The plastic materials typically come from "triple rinsed" agricultural chemical containers from farm supply stores. AFI places the plastic containers into a granulating machine that shreds the plastic into small pieces.

AFI has a contract to supply up to 100,000 tons of alternate fuel to Illinois Power Company (now known as Dynegy, Inc., but referred to hereinafter as Illinois Power) for use at its Baldwin power plant, which produces electricity by means of coal-fired boilers. Both AFI and Illinois Power have plans to begin adding scrap wood from construction and demolition debris as an additional element of the alternate fuel.

AFI is required under its contract with Illinois Power to provide alternate fuel that meets certain specifications, the same specifications that Illinois Power is required to meet under the operating permits issued by the Agency for the Baldwin power plant. AFI in turn requires all of its suppliers of the components of the alternate fuel to sign a contract as evidence of their agreement to provide only materials free of nonconforming items, so that the wood delivered to AFI will contain only wood and the plastic will contain only plastic. Suppliers must certify that the materials delivered are not hazardous. Additionally, the suppliers must perform a fuel analysis on the materials to show that they meet the required specifications. These test results are reviewed by AFI before it accepts suppliers' bids. Before allowing materials into its facility, AFI also visually inspects the materials to check for compliance with the agreement.

The Illinois Pollution Control Board (the Board) reviewed the contract between AFI and Illinois Power in Illinois Power Co. v. Illinois Environmental Protection Agency, Ill. Pollution Control Bd. Op. 97-35, 97-36 (January 23, 1997). In that decision, the Board decided that the alternate fuel produced by AFI from the empty plastic containers was not waste within the meaning of the Illinois Environmental Protection Act (the Act) (415 ILCS 5/1 et seq. (West 2000)). This decision was based upon the Agency's denial of Illinois Power's request to revise its air permits to allow for the combustion of AFI's alternate fuel at the Baldwin power plant. The Agency had denied Illinois Power's request. The Agency had claimed that AFI's alternate fuel constituted waste and that Illinois Power was required to obtain local siting approval pursuant to section 39.2 of the Act (415 ILCS 5/39.2 (West 2000)).

The Board rejected the Agency's claim and held that AFI's alternate fuel was not waste within the meaning of the Act. The Board ruled that Illinois Power did not require local siting approval, and the Board ordered the Agency to issue Illinois Power an operating permit to allow for the combustion of the alternate fuel.

Despite the Board's decision, the Agency continued to interpret the Act as requiring the facilities manufacturing the alternate fuel to comply with solid-waste-permitting and local-siting-approval procedures. Essentially, the Board took the position that although the alternate fuel used by Illinois Power does not constitute waste, the materials used to make that alternate fuel are waste subject to permitting rules. On July 8, 1998, the Agency issued a violation notice to AFI pursuant to section 31(a)(1) of the Act (415 ILCS 5/31(a)(1) (West 2000)). The notice alleged that AFI had violated sections 21(d)(1) and 21(e) of the Act (415 ILCS 5/21(d)(1), (e) (West 2000)) because AFI was storing and treating waste at its facility without a permit from the Agency. The notice indicated that AFI might be prosecuted for the violation and that if AFI failed to respond to the notice, it would waive its opportunity to meet with the Agency prior to any prosecution.

The violation notice required AFI to submit a permit application for a waste-storage and waste-treatment operation. The permit-application procedure additionally requires proof of local siting approval under section 39.2 of the Act (415 ILCS 5/39.2 (West 2000)).

The Agency contends in its brief to this court that the "record contains no indication that AFI responded to the Violation Notice" and that instead of responding or preparing to defend against potential prosecution, AFI filed its complaint for a declaratory judgment. The Agency is correct that on November 2, 1998, AFI filed a complaint for a declaratory judgment, but it is incorrect in its assertion that AFI did not respond to the violation notice. The record is clear that AFI responded to and met with Agency officials, and the Agency admitted that in its answer to AFI's complaint for a declaratory judgment.

On September 15, 1998, Agency representatives met with David Wieties, AFI's president, to discuss the allegations of the violation notice. The Agency advised Wieties that it interprets the statutory term "discarded material" as the phrase is used in the definition of waste (415 ILCS 5/3.53 (West 2000)). In that definition, discarded material refers to any material that is not being used for its original purpose. According to the Agency, since the component materials used to manufacture the alternate fuel are not being used for their original purpose, they are discarded, ...


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