We Mean Business. Illinois Business.
 
 

State environmental permit fees provoke more court action
By KERRY L. SMITH

   As the Illinois Association of Aggregate Producers prepares for its oral argument in Sangamon County Circuit Court Feb. 23 over hefty state environmental permit fees levied against its industry, the association heads a growing queue of plaintiffs - including the Illinois State Chamber of Commerce, the Community Bankers Association of Illinois, the Illinois Credit Union League and the Illinois League of Financial Institutions - who are suing the state of Illinois.

   The IAAP's beef is not with the Illinois Environmental Protection Agency, the state agency charged with assessing the permit fees. John Henriksen, executive director of the IAAP - which represents 113 members with more than 250 Illinois-based mines producing over 90 percent of all the fresh stone, sand and gravel in Illinois - said the excess revenues being generated by these IEPA permits and the legislative mechanism enabling them to be swept into the state's general fund is what's objectionable and unconstitutional.

   "The professional relationships our organization has worked so hard to build with the IEPA is still in intact," said Henriksen. "We've made it clear that our lawsuit does not challenge the IEPA's regulatory program. It does assert that there needs to be a limit on the government's ability to charge businesses fees for services provided. And it needs to be fair and reasonable. Beyond that, you run into problems with the Illinois Constitution," he added.

   Katherine Hodge, executive director of the Illinois Environmental Regulatory Group, said her organization's biggest concern is one of public policy. The IERG is an affiliate of the Illinois Chamber of Commerce; as did the Illinois Municipal League and the Chemical Industry Council of Illinois, the IERG filed an amicus curiae brief with the court, lending its support to the IAAP. An amicus curiea is a brief filed by associations or individuals who are not direct parties to the litigation but believe that the court's decision may affect their interests.

   "From a public policy standpoint, the argument we made in the amicus brief for the Aggregate Producers' case is that if there are no reasonable restraints, next year it could be $117 million instead of $17 million in new fees," Hodge said. "If there's no rational relationship between the tax and the service, there's no limit to what the state can do."

   The permitting fees at issues were those enacted by the Illinois Assembly effective July 1, 2003. Within a couple of weeks, municipalities began receiving invoices from the Illinois Dept. of Revenue, requiring them to pay the entire amount within 30 days. Of all the new IEPA permitting fees - assessed on annual air and water permits that were previously issued at no cost by the state - the fees on National Pollutant Discharge Elimination System or NPDES permits are the heftiest. (See story on page 3.) Permit users are those in the public and private sector who discharge domestic sewage.

   The IAAP encouraged its members to pay the new IEPA permitting fees under protest, Henriksen said. The association was the first to file suit against the state of Illinois in August 2003.

   "Prior to these fees being levied on us July 1, 2003, we were part of the Illinois Environmental Regulatory Group, an affiliate of the Illinois State Chamber, the key group that approached the governor's office," he said. "Collectively we said we'd be happy to pay the appropriate, reasonable amount of permitting fees, but our offers were rebuffed and our litigation ensued."

   Ken Alderson, executive director of the Illinois Municipal League, which represents nearly 1,100 municipalities across the state, said if the state would have assessed annual IEPA permitting fees totaling some $6 million - the annual operational cost of running that agency - municipalities wouldn't have objected.

   "But the fee they (Illinois Dept. of Revenue) assessed totals about $25 million," Alderson said. "That's about four times what it actually costs to run the IEPA. If there needs to be a fee, I have a real problem with the state balancing the budget this way, especially when there's still so much fat at the state level."

   Rick Coffman, chief budget officer for the IEPA Bureau of Water, said the NPDES program itself is mandated by the U.S. EPA.

   "It's a federal permit program," he said. "The fees are not mandated at the program level, but the work is delegated to the states by the federal government. The states administer that program and are given a modest amount of grant money to do it."

   One of the reasons the IEPA imposed the water discharge permitting fees, and the governor and Illinois legislators introduced them, was to alleviate general fund budget woes in 2003, said Coffman. "They started looking around at places where they could replace general revenue money with fees, and decided to 'make polluters pay,'" he said.

   Coffman suggested one reason that the IEPA fees now being assessed total more than four times the agency's operational costs relates to the fact that the cost of the IEPA doing business permeates throughout state government in areas such as central management services such as payroll.

   "Another thing that happened was that there were a huge number of NPDES and other permits that had been issued, but were not being used," he said. "When your permit was free, you weren't anxious to terminate it if you didn't need it. Now there is an incentive. It will help us clean up our database."