December 5, 2001

NO. 4-00-0861

JUSTICE MYERSCOUGH delivered the opinion of the court:

In January 1999, the Illinois Environmental ProtectionAgency (IEPA) issued a notice to ESG Watts, Inc. (Watts), pursuant to section 31 (415 ILCS 5/31 (West 1998)) of the IllinoisEnvironmental Protection Act (Act) alleging that Watts wasoperating a landfill in Sangamon County without adequatepostclosure financial assurance in violation of section 21.1 ofthe Act (415 ILCS 5/21.1 (West 1998)). Watts and IEPA attemptedto resolve the matter over the following year through variouscommunications, but they were unable to come to a resolution. InFebruary 2000, IEPA notified Watts by letter that it might referthe matter to a prosecuting authority for enforcement proceedingsto resolve the matter.

In March 2000, Watts filed a petition for a hearingbefore the Illinois Pollution Control Board (Board) seeking adeclaration that IEPA's February 22 letter was "not authorized bylaw" and that Watts had met its obligations for postclosurefinancial assurance under the Act. In August 2000, the Boarddismissed Watts' petition as prematurely filed because the IEPA'sletter was a preenforcement action under section 31 of the Act(415 ILCS 5/31 (West 1998)) and therefore not a final agencydecision for purposes of appeal. Watts appeals, arguing that (1)the Board acted illegally, arbitrarily, and capriciously when itdenied jurisdiction to hear Watts' appeal and (2) Watts' appealto the Board was not mooted by the expiration of the insurancepolicies and by the pendency of a Watts' appeal from the disapproval of a later request to approve substitute financial assurance. We reverse.

At all relevant times, Watts owned and operated alandfill in Sangamon County known as the Sangamon County landfill. The Act required Watts to post with IEPA "a performancebond or other security for the purpose of insuring closure of thesite and post-closure care in accordance with this Act andregulations adopted thereunder." 415 ILCS 5/21.1(a) (West 1998). Watts obtained a pollution liability policy to cover the facilityfrom January 26, 1998, through January 26, 1999, to meet thisrequirement. The policy provided coverage of $999,000 andincluded a $100,000 deductible.

On February 18, 1998, Watts by letter sent IEPA a copyof the insurance policy and requested a written indication thatthe policy satisfied its obligations under the Act. IEPA did notrespond to this letter. On January 8, 1999, IEPA sent Watts aviolation notice pursuant to the Act. 415 ILCS 5/31(a) (West1998). The notice indicated that, in IEPA's judgment, Watts'landfill did not have adequate financial assurance as required bysection 21.1 of the Act and it went on to explain the allegeddeficiencies in the policy that Watts submitted. The noticedirected Watts to provide a written response of how it would dealwith the deficiencies, including an agreement committing itselfto resolving the problem and a timetable of achieving the results.

On February 10, 1999, Watts responded to IEPA. Wattsdisputed some of IEPA's interpretations and requested time toresolve the problem. It also informed IEPA that it had renewedits policy January 26, 1999, and that the new policy correctedthe alleged deficiencies.

On September 15, 1999, IEPA sent Watts a notice ofintent to pursue legal action pursuant to section 31(b) of theAct (415 ILCS 5/31(b) (West 1998)). IEPA stated Watts failed toadequately respond to the January 8, 1999, violation notice andalleged the same deficiencies as the violation notice. IEPAagain warned that if the problem were not resolved, the mattercould be transferred to a prosecutorial authority. The notice ofintent also informed Watts that Watts could request a meeting toattempt to resolve the problem.

On September 17, 1999, Larry Woodard, Watts' corporatecounsel, responded to the September 1999 notice of intent. Inthe response, Woodard referenced a conversation that he had withMichelle Ryan, an IEPA assistant counsel. In that conversation,Ryan had indicated that she had no record of Watts' February 10,1999, response to the violation notice. Woodard included a copyof the February 10, 1999, response to Ryan.

On December 14, 1999, IEPA informed Watts that it hadreviewed the information and still concluded that the violationsin the January 8, 1999, notice had not been adequately addressed. IEPA suggested that a meeting be held to discuss the issues. OnJanuary 14, 2000, IEPA held a meeting and Watts expressed theview that IEPA failed to respond to its February 10, 1999, letterin a timely fashion and that constituted an acceptance of thefinancial assurance in that letter.

On January 19, 2000, Watts sent IEPA additional information relating to the insurance policy and requested writtenconfirmation of compliance from IEPA. On February 22, 2000, IEPAinformed Watts that the information still did not fulfill therequirements of section 31 of the Act because some of the information was not sent by certified mail and other information wassent outside the statutory time frame. IEPA also stated thematter "may still be referred to the Office of the AttorneyGeneral, the State's Attorneys[,] or the United States Environmental Protection Agency for formal enforcement action for thepurpose of the imposition of penalties."

On March 23, 2000, Watts filed a petition for a hearingwith the Board describing the petition as an appeal of a denialof a permit pursuant to section 21.1(e) of the Act (415 ILCS5/21.1(e) (West 1998)). The petition asked the Board to issue anorder requiring IEPA to approve the insurance policy as financialassurance for the Sangamon Valley landfill.

On April 17, 2000, IEPA moved to dismiss Watts' petition for a hearing, explaining that the only action it had takenwithin the prior 35 days was to send the February 22, 2000,letter. IEPA argued that this letter was merely a preenforcementletter under section 31 of the Act and such measures are notsubject to Board review.

On May 19, 2000, Watts filed a response to IEPA'smotion to dismiss. Watts argued that, although section 31actions are not reviewable, Watts brought its petition undersection 21.1 of the Act, which provides for Board review. IEPAthen moved to strike Watts' response as untimely because Wattsfiled its response 23 days after IEPA filed its motion to dismiss. The regulations provide for a response to a motion todismiss to be filed within seven days. 35 Ill. Adm. Code