A major taxpayer files 28 separate applications seeking certification of various systems, methods, devices and facilities as "pollution control facilities" within the meaning of the Property Tax Code. If the applications are granted, around $1.2 billion will allegedly disappear from the School Board’s tax base. When the Pollution Control Board denies the School Board’s motions for leave to intervene in the certification proceeding, does the School Board have standing to appeal? That’s the question in The Board of Education of Roxana Community Unit School District No. 1 v. The Pollution Control Board, et al. Board of Education, which was argued a few weeks ago at the Illinois Supreme Court. Our detailed summary of the underlying facts and lower court decisions is here. Our report on the oral argument is here.

In October 2010, the taxpayer submitted 28 separate applications to the Illinois Environmental Protection Agency for certification of certain improvements as pollution control facilities. In August 2011, the EPA recommended approval of two of the requests. The following month, the Pollution Control Board accepted the recommendations and certified the two systems. The petitioner School Board moved for reconsideration, and a few weeks later, the Agency recommended approval of the remaining requests for certification. The Pollution Control Board denied reconsideration and denied the petitioner’s motions to intervene in the remaining 26 requests for certification.

The School Board appealed to the Appellate Court pursuant to the Environmental Protection Act, 415 ILCS 5/41(a). The Board pointed to the Property Tax Code 35, ILCS 200/11-60, claiming that only applicants had standing to appeal — not challengers. The Appellate Court dismissed the appeal for lack of jurisdiction, citing Citizens Against the Randolph Landfill (CARL) v. The Pollution Control Board for the proposition that only limited review at the Circuit Court was possible. Justice Thomas R. Appleton dissented, arguing that the School Board had standing to appeal under Section 41(a) of the Environmental Protection Act.

Counsel for the School Board began by explaining that an owner received preferential property tax treatment if it installs equipment whose primary purpose is controlling pollution from its own operations. Counsel argued that by denying intervention, the Pollution Control Board had ensured that its interpretation of the primary purpose test would go unreviewed. The Pollution Control Board had wiped $1.2 billion off the local assessment rolls within two weeks’ time with no notice to the local taxing body, counsel argued; nothing in the Property Tax Code precluded intervention. Justice Thomas asked counsel if the Court agreed with him whether it should remand to the Appellate Court for resolution of all substantive issues. Counsel responded that all substantive issues were effectively before the Court. Justice Thomas pointed out that the Court took the case for the jurisdictional issue, and wondered whether the Court had a sufficient record to decide more. Counsel responded that the Court had all issues properly before it: (1) whether the Board was precluded from granting intervention; (2) the Appellate Court’s jurisdiction to review the Board’s decision on intervention; and (3) the Board’s application of the primary purpose test. Justice Thomas asked what statutory provision applied on jurisdiction; when counsel answered Section 41(a) of the Environmental Protection Act, he pointed out that opposing counsel would argue that Section 11-60 of the Property Tax Code was more specific. Chief Justice Kilbride asked counsel why the EPA was now challenging jurisdiction on appeal. Counsel responded that the real parties in interest in cases of this type are the local taxing bodies, but the EPA doesn’t want local entities weighing in such questions. Justice Thomas asked counsel why the EPA would want to keep taxing authorities out of such cases, and counsel answered that perhaps the EPA was placating the companies on such issues in order to build capital for larger enforcement actions.

Counsel for the state entities was asked by Justice Karmeier whether potential intervenors had any right of appeal. Counsel responded that intervenors had no statutory right of appeal. Justice Thomas asked what the Court should do with cases in which the Pollution Control Board had pointed disappointed litigants to the Appellate Court for appeal, rather than the Circuit Court. Counsel conceded that the Pollution Control Board had included pro forma language in a number of orders saying that if the litigants didn’t like the answer, they should go to the Appellate Court, but argued that this didn’t trump the specific holding that attempted intervenors didn’t have any right of appeal under the Property Tax Code. Counsel argued that if taxing bodies were unhappy with that rule, their remedy was with the Legislature. Responding to a comment by counsel for the School Board, counsel argued that if the Court disagreed with respect to the Pollution Control Board’s jurisdiction, the appropriate remedy was remand; it wasn’t appropriate to address all the merits issues for the first time at the Supreme Court.

Counsel for the taxpayer pointed out that the Pollution Control Board certification was supposed to be a summary proceeding. When the Legislature intended taxing bodies to be a party to certification proceedings, it said so, counsel said. Counsel argued that the taxpayer’s tax levy had increased from $9 million to $36 million between 2010 and 2011. Counsel concluded by arguing that the treatment of pollution control facilities by the Pollution Control Board was not unique within Illinois law, or in comparison to neighboring states.

Counsel for the School Board argued in rebuttal that the certification procedure involved a two page application, not a detailed analysis of the suitability of certification. Counsel argued that when the Pollution Control Board denied intervention under Citizens Against the Randolph Landfill, it had said it had never seen so many applications for pollution control certification filed by a single applicant in only six months. According to counsel, the Pollution Control Board said that the School Board had presented a compelling case that it was singularly affected by the certification process, and that it was unlikely that any other Board had faced a similarly grave depletion of its tax base. Counsel claimed that the Pollution Control Board had stated that if it were a legislative body creating a certification process de novo, the School Board’s policy arguments might prevail, and if the Pollution Control Board had the power of an equity court, the School Board’s policy arguments might prevail. Counsel argued that there was no basis for sending the case back to the Appellate Court: the Pollution Control Board had made it clear that it would grant intervention if it believed that it had the power to do so.

We expect Board of Education to be decided within two to four months.