ILLINOIS POLLUTION CONTROL BOARD
December 20, 1990
PULITZER COMMUNITY
)
NEWSPAPERS, INC.,
)
Petitioner,
)
V.
)
PCB 90—142
)
(Underground Storage
ILLINOIS ENVIRONMENTAL
)
Tank Reimbursement)
PROTECTION AGENCY,
)
)
Respondent.
RICHARD W. COSBY AND ANTHONY YOUNG, COSBY
AND
BELL, APPEARED ON
BEHALF OF PETITIONER.
RONALD L. SCHALLAWITZ APPEARED ON BEHALF OF RESPONDENT.
OPINION AND ORDER OF THE BOARD (by M. Nardulli):
This matter comes before the Board on a petition for review
filed on August 1, 1990 by Pulitzer Community Newspapers, Inc.
(Pulitzer) pursuant to Section 22.18b(g) of the Environmental
Protection Act (Act) seeking review of the Illinois Environmental
Protection Agency’s (Agency) denial of Pulitzer’s application for
reimbursement from the Underground Storage Tank Fund (Fund) for
costs of corrective action incurred in the removal of underground
storage tanks. A hearing was held on this matter in Chicago,
Illinois on October 16, 1990 at which no members of the public
attended.
FACTS
Pulitzer, a wholly owned subsidiary of Pulitzer Publishing
Company, is a newspaper publishing company located in Chicago,
Illinois. In the spring of 1989, Pulitzer initiated steps to raze
a building on a parcel of land at 5944 South Harlem Avenue across
the street from Pulitzer’s principal place of business, in order
to construct a parking lot. (Tr. l2~l4.)’ The parcel was known to
contain underground storage tanks. (Tr. 14.) Pulitzer contracted
with speedway Wrecking Company for the demolition of the building
and removal of the tanks. (Tr. 14.) speedway obtained the
1 Tr.
indicates citation to the transcripts of the
October 16, 1990 hearing. R.
indicates citation to the Agency
record.
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2
necessary permits from the Office of the State Fire Marshal (OSFN)
for removal of the tanks. (R. 20-25.)
On approximately May 24, 1989, Speedway contacted Pulitzer to
tell it that one of the tanks was damaged and that there had
probably been a release. (Tr. 21.) On that same day, Thomas
Jackson, senior vice-president at Pulitzer, telephoned the Agency
and spoke to Mr. Janssen about the release. (Tr. 21—24; Pet. Ex.
8.) Janssen was identified at the hearing by the Agency as the
manager of the “Immediate Removal Unit” who maintained a fairly
active role in the day-to-day management of the Leaking Underground
Storage Tank (LUST) program. (Tr. 164, 169.) Jackson testified
that Janssen did not tell him to notify the Emergency Service and
Disaster Agency (ESDA).
(u.)
Janssen provided instructions
concerning the procedures to be followed and indicated to Jackson
that he had made proper notification to the Agency. (Tr. 23-24.)
In June of 1989, soil samples were taken and analyzed and
special waste permits were applied for by Speedway and obtained by
Land and Lakes, the landfill to which the contaminated soil was
taken. (R. 55-66.) An engineering consultant was retained to
supervise the reniediation project. (R.40—42.) Between September
25, 1989 and October 5, 1989, 990 cubic yards of contaminated soil
were removed from the site and disposed of by Land and Lakes. (R.
67.) Both testimony and documentary evidence indicate that
Pulitzer was in frequent contact with the Agency during
remediation. On July 28, 1989, Robert Moyer, vice president of
operations for Pulitzer, spoke with Janssen. (Tr. 36.) Moyer
noted Janssen’s instructions to: (1) fill the hole after
remediation was complete; (2) have a professional engineer file
reports for all site excavations; (3) provide analytical data; and
(4) provide results of a sieve analysis and liquid limit test.
(Tr. 41; Pet. Ex. 16.) Janssen told Moyer of the preparation of
a LUST guidance manual, not then completed. (Tr. 42.) In October,
Moyer again spoke with Janssen about problems with continued
excavation undercutting the highway and possible alternatives.
(Tr. 46-47.) Janssen telefaxed a two page extract detailing soil
clean up objectives for petroleum LUST sites. (Tr. 49—50.)
Remediation was completed on October 5, 1989. (R. 124.)
On November 21, 1989, Pulitzer applied to the Agency for
reimbursement from the Fund for its corrective action costs. (R.
112.) On December 21, 1989, the Agency sent Pulitzer an
application for reimbursement form. (Pet. Ex. 11.) Between
November 21, 1989 and December 21, 1989, Pulitzer telephoned the
Agency twice regarding the status of its application. (Tr. 93, 57;
R. 114.) The Agency indicated that Pulitzer would be eligible for
reimbursement.
(a.)
A telephone conversation on December 4, 1989
confirmed that Pulitzer would need an ESDA incident number to
complete its application. Pulitzer was confused as to whether
Speedway had obtained the ESDA number because the ESDA number was
similar in form to the special waste permit number. (Tr. 53, 75-
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3
76, 89, 93.) On December 15, 1989, Pulitzer telephoned ESDA and
was told it had not been issued an ESDA incident number. (Tr. 52-
54.) ESDA then issued Pulitzer “incident number 892655.” (R.
120.)
On January 4, 1990, Pulitzer submitted its second application
on the form provided by the Agency. (Pet. Ex. 11.) On January
17, 1990, the Agency notified Pulitzer that it was eligible for
reimbursement, subject to a deductible of $10,000. (R. 143.)
Between January 17, 1990 and July 3, 1990, the Agency made five
requests to Pulitzer for additional information. (R. 144, 147,
148, 152—57, 166, 167, 175, 176.) On June 20, 1990, Douglas
Oakley, an account technician for the Agency who reviews
applications for reimbursement, noted that Pulitzer did not obtain
an ESDA incident number until December 15, 1989, approximately two
months after corrective action was completed. (Tr. 223.) The
Agency testified that applications for reimbursement from the Fund
are dealt with in a two-step process. (Tr. 124—25.) In the first
step, the Agency determines whether the applicant meets general
eligibility requirements and the applicable deductible.
(~.)
In
the second step, the Agency determines pursuant to Section
22. 18b(d) (4) (C) whether the costs incurred are reasonable.
(n.)
On July 3, 1990, the Agency notified Pulitzer that it was not
eligible for reimbursement from the Fund because:
1. All of the costs for which reimbursement
is being requested were accrued prior to the
ESDA receiving notification of the release
of a regulated substance. The Application for
Reimbursement indicates that ESDA was notified
on December 15, 1989, with the corrective
action costs all accrued prior to the
notification date.
2. The owners and operators of an underground
storage tank system shall report to ESDA
within 24 hours
...
the discovery
...
released
regulated substances
... .
(35 Ill. Adm. Code
731.150(a).)
3. Requests for partial or final payment for
claims under this Section shall be sent to the
Agency and shall satisfy all of the following:
The owner or operator notified the State of
the release of petroleum in accordance with
applicable requirements. (Ill. Rev. Stat.
1989, ch. ill 1/2, par. l022.18b(d)(4)(D).)
(R. 185.)
Because the Agency determined that Pulitzer was not eligible
for reimbursement, it never reached the issue of reasonableness of
the costs of corrective action incurred by Pulitzer. On August 1,
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4
1990, Pulitzer filed its petition for review from the Agency’s
denial of its application for reimbursement from the Fund. On
November 19, 1990, the Board received from the hearing officer a
written statement submitted on behalf of the Illinois Petroleum
Marketers Association (IPMA). On November 20, 1990, Pulitzer filed
an objection and response to the IPHA’s statement and the Agency
filed a response to the IPMA’s statement. We agree with Pulitzer
that the IPMA’s written statement is more properly characterized
as an amicus curiae brief rather than a statement offered pursuant
to 35 Ill. Adm. Code 103.203. Based upon IPMA’s position as a
representative of “jobbers, marketers and suppliers of petroleum
products in every county in the State of Illinois” (IPHA’s Brief
at 1), that this case is one of first impression for the Board and
that the parties were allowed to respond to the IPMA, the Board
accepts filing of the IPMA’s amicus curiae brief.
DISCUSSION
The main issue presented is whether costs of corrective action
incurred by Pulitzer prior to notification to ESDA are reimbursable
from the Underground Storage Tank Fund. Section 22.l8b(a) of the
Act provides that an owner or operator is eligible to receive money
from the Fund for costs of corrective action incurred as a result
of a release of petroleum from any underground storage tank where
certain conditions are met. (1989 Ill. Legis. Serv. 1299—1300
(West) P.A. 86-125.) In its denial letter, the Agency cites 35
Ill. Adm. Code 731.150(a) which provides that “o)wners and
operators of UST systems shall report to the ESDA within 24 hours
...“
as support for its denial of the application. (R. 185.) The
Agency also cites Section 22.18b(d) (4) (D) of the Act which provides
that requests for reimbursement shall establish that “t)he owner
or operator notified the State of the release of petroleum in
accordance with applicable requirements” as statutory support for
denial of Pulitzer’s application for reimbursement. (1989 Ill.
Legis. Serv. 1299—1300 (West) P.A. 86—125.)
Pulitzer argues that 35 Ill. Adm. Code 731.150(a) did not
become effective until June 12, 1989, approximately 1 month after
the release was discovered on May 24, 1989, and, therefore, the
regulation may not be used as a basis for denying Pulitzer’s
application for reimbursement. The Board agrees with Pulitzer’s
argument. Pulitzer cannot be required to comply with a regulation
requiring notification of a release which was not in effect at the
time of the discovery of the release. Therefore, the Board’s
regulation requiring notice to ESDA cannot be used as a basis for
denying reimbursement.
Although Pulitzer does not raise this argument, the Board
finds a similar problem with the Agency’s reliance upon Section
22.18b(d) (4) (D) of the Act. This section of the Act became
effective July 28, 1989. (1989 Ill. Legis. Serv. 1299—1300 (West)
P. A. 86-125.) The Board notes that the UST provisions of the Act
117—102
5
have undergone frequent legislative change (see ~.g., P.A. 85—
1324; P.A. 86-125; P.A. 86-958) and have in fact been amended
subsequent to P.A. 86-125 in P.A. 86—958, effective December 5,
1989. (1989 Ill. Legis. Serv. 5220—22 (West) P.A. 86—958.) The
Board determines, with the exception explained below, that P.A. 86-
125, effective July 28, 1989, is applicable to Pulitzer because
Pulitzer’s application for reimbursement was filed November 21,
1989. (R. 112.) 2 However, the Board fails to see how, at the
time of the instant release on May 24, 1989, Pulitzer can be held
to comply with a statutory provision requiring notification to the
State which was not in effect at the time of the release. A review
of the UST provisions in effect at the time of the release in May
of 1989 has failed to yield any comparable notice requirement. The
Board concludes that the Agency cannot rely on Section
22.18b(d)(4)(D) of the Act in denying Pulitzer’s application
because that section did not become effective until approximately
2 months after the release.
Although the above-cited Board regulation and section of the
Act are the only provisions cited by the Agency in its denial
letter, the Agency argued at hearing, and in its post-hearing
brief, that various state and federal regulations also support its
interpretation that notification to ESDA is a prerequisite to
reimbursement. (Resp. Ex. 12, 13 and 15.) The Agency cites 41
Ill. Adm. Code 170.560 of the OFSM’s regulations, effective April
21, 1989, which provides that owners and operators of UST5 must
notify ESDA within 24 hours of a release. The Agency also cites
29 Ill. Adm. Code 430.30 of ESDA’s regulations, effective February
6, 1989, and characterizes this regulation as pertaining “to
release of reportable quantities of flammable substances.” (Agency
Brief at 3.) The Agency also relies on 40 CFR
280.50.
The Board must address the Agency’s reliance upon regulatory
provisions in support of its denial at the Board level which were
not cited as bases for denial in the July 3, 1990 denial letter.
(R. 185.) Section 22.18b(g) provides that, “if the Agency
2 The record establishes that
on November 21, 1989,
Pulitzer sent the Agency a letter requesting reimbursement. (R.
112.) On November 22, 1989, Pulitzer sent the Agency a letter
correcting the amount of costs incurred as set forth in the
November 21, 1989 letter. (R. 113.) In approximately December of
1989, the Agency apparently completed preparation of its
reimbursement forms. (R. 118.) On January 4, 1990, Pulitzer sent
the completed form requesting reimbursement to the Agency. (R.
118-140.) In light of the fact that no standard forms were
available to Pulitzer in November, the Board accepts November 21,
1989 as the date the application for reimbursement was filed and,
therefore, P.A. 86-125, effective July 28, 1989, applies to
Pulitzer’s application rather than P.A. 86-958, effective December
5, 1989.
117—103
6
refuses to reimburse
...,
the affected owner or operator may
petition the Board for a hearing in the manner provided for review
of permit decisions in Section 40 of the Act.” (Ill. Rev. Stat.
1989, ch. 111 1/2, par. 1022.18b(g).) Section 40 of the Act
provides for Board review of the Agency’s denial of a permit
application or imposition of permit conditions. (Ill. Rev. Stat.
1989, ch. 111 1/2, par. 1040.) When the Agency denies a permit,
it must issue a statement in accordance with Section 39(a) of the
Act which sets forth the section of the Act and regulations that
may be violated, the type of information which the Agency deems
the applicant failed to provide and a statement of the specific
reasons why the Act and regulations might not be met if the permit
were granted. (Ill. Rev. Stat. 1989, ch. 111 1/2, par. 1039(a).)
It is well established that the information in the denial
statement frames the issues on review. (Ill. Rev. Stat. 1989, ch.
111 1/2, par. 1039(a); Centralia Environmental Services. Inc. V.
IEPA, PCB 89-170 at 6 (May 10, 1990); City of Metrotolis v. IEPA,
PCB 90—8 (February 22, 1990).) Such information is necessary to
satisfy principles of fundamental fairness because it is the
applicant who has the burden of proof before the Board to
demonstrate that the reasons and regulatory and statutory bases for
denial are inadequate to support permit denial. (Technical
Services Co. v. IEPA, PCB 81—105 at 2 (November 5, 1981).) The
same rationale applies to the Agency’s denial of applications for
reimbursement because Section 22.l8b(d)(4) imposes a burden on the
applicant to “satisfy” six criteria in order to receive
reimbursement.
(Ill. Rev. Stat. 1989, ch. 111 1/2, par.
1022.l8b(d) (4).) It is the applicant seeking reimbursement who has
the burden of proof before the Board to demonstrate that it is in
compliance with the Act and regulations and is eligible for
reimbursement from the Fund. Consequently, an applicant seeking
reimbursement from the Fund is entitled to a statement detailing
the reasons for denial and the statutory and regulatory support for
such denial.
Additionally, the Agency has taken the position that it must
adhere to the requirements of Section 39(a). Bur Filson, manager
of the LUST clean-ups in the Marion region, testified at hearing
that applications for reimbursement under the Fund “would be
considered for appeal purposes, a permit. And when denying a
permit, you give the reasons, the sections that would be violated
had the permit been issued and so forth.” (Tr. 135.) Filson also
stated that “the permit denial lists or states that the (Agency
has to give the portion of the Act or regulations adopted under the
Act or something to that effect.” (Tr. 139.)
Here, there is no question that the Agency’s denial statement
complied with Section 39(a) of the Act and properly framed the
117— 104
7
issues on review.3 Pursuant to Section 39(a) of the Act, where the
Agency has determined that permit denial is warranted, the denial
statement constitutes the Agency’s “final action”. Principles of
~fundamental fairness require that an applicant be given notice of
the statutory and regulatory bases for denial of an application for
reimbursement and that the Agency be bound on review by those cited
bases for denial given in its denial statement. Fundamental
fairness would be violated if the Agency were free to cite
additional statutory and regulatory reasons for denial for the
first time at the Board hearing. The Board concludes that the
Agency cannot rely upon those regulations not previously cited in
the denial letter as support for its denial of Pulitzer’s
application for reimbursement.
The Board is not required to consider the Agency’s reliance
upon the OSFM and ESDA regulations in reviewing this matter in
light of its determination that the Agency cannot raise new reasons
for denial at the Board level. However, because this case is one
of first impression, the Agency’s attempted reliance upon these
regulations warrants some discussion. It is well established that
administrative agencies are creatures of statute having no greater
powers than those conferred on them by legislative enactment.
(Village of Lombard v. PCB, 363 N.E.2d 814 (1977); Rossler v.
Morton Grove police Pension Board, 533 N.E.2d 927 (1st. Dist.
1989).) P.A. 85-861 gave the Agency and the Fire Marshal authority
to implement the UST program. The Board has determined that, while
no explicit division of authority is given, the provision that the
OSFM “shall not adopt regulations relating to corrective action at”
USTs implies such a division. (Ill. Rev. Stat. 1989, ch. 127 1/2,
par. 154(3) (b) (ii); In The Matter of: UST Update. USEPA Recmlations
(September 23, 1988), R88—27 at 3 (April 27, 1989).) Additional
requirements relating to corrective action must be adopted by the
Board pursuant to Section 27 of the Act, which would be implemented
by the Agency.
(a.)
According to a “Memorandum of Understanding”
entered into by the Agency, OSFM and ESDA, ESDA “is the responsible
Agency for primary coordination of the State’s response to this
type of emergency.” (Resp. Ex 14.)
In the absence of a statutory provision making notification
This case is distinguishable from Centralia Environmental
Services Inc.v. IEPA, PCB 89-170 where the Board directed the
Agency to issue an amended denial statement. In Centralia, the
Agency’s 39(a) letter did not contain citations to the Act or
regulations and, therefore, the Agency failed to frame the
regulatory and statutory issues on review. In light of that
deficiency, the Board found that the proper remedy was to remand
the matter to the Agency to cure the defect and allow the applicant
the opportunity to respond to the amended denial statement. Here,
however, the Agency issued a 39(a) letter which framed the issues
on review, but attempted to subsequently modify those issues.
117— 105
8
a prerequisite to reimbursement, the OSFM and ESDA regulations are
not sufficiently linked to the right to reimbursement from the Fund
to be a basis for Agency denial of an application for
reimbursement. Moreover, the Agency admitted at hearing that it
has no authority to “enforce” OSFM regulations. (Tr. 147—150.)
Nor do we believe the Agency may rely on ESDA “notice regulations”,
absent a statutory provision requiring notice, to deny
reimbursement. In In the Matter of: UST State Fund, R89-l9 (April
26, 1990), the Board stated that the OFSM and the Agency cannot
create authority, beyond the scope of that conferred by statute,
by mutual agreement (j~~~IMemorandum of Understanding Resp. Ex.
#
14). The Board concludes that, in the absence of a statutory
provision requiring that proper notification is a prerequisite to
the right to reimbursement, the Agency may not deny reimbursement
on the basis of OSFN and ESDA regulations requiring notice.
The Board notes that the circumstances presented here are
unusual in that, because of the time frames involved, many of the
regulations pertaining to USTs, as well as the Agency’s guidance
manual (Resp. Ex. 19), were not yet enacted. Additionally, the UST
provisions of the Act appear to be in a constant state of flux due
in part, perhaps, to the dual implementation of the system.
Therefore, much of the above discussion is pertinent only to those
reimbursement cases which fall into this “gap” period where
procedures were not soundly in place. The Board also notes that,
while it has concluded that there was no statutory or regulatory
notification requirement applicable to Pulitzer, the record
establishes that Pulitzer notified the Agency of the release
immediately. (Tr. 21-24; Pet. Ex. 8.) The record also establishes
that Pulitzer and the Agency were in frequent contact both before
and during the remediation of the site and that the Agency had
ample opportunity to instruct Pulitzer to notify ESDA.
In summary, the Board finds that no statutory provision
requiring notice of a release was in effect at the time the instant
release was discovered, nor was any such Board regulation effective
at the time of Pulitzer’s release. Additionally, the Agency may
not deny reimbursement for failure to timely notify ESDA based upon
OSFM and ESDA notice requirements where no statute existed at the
time the release was discovered conditioning reimbursement on such
notification. Therefore, the Board concludes that, under the facts
presented here, Pulitzer was not required to notify ESDA of the
release. Therefore, the Agency improperly denied reimbursement on
the basis that Pulitzer is ineligible for reimbursement for failure
to notify ESDA. However, because the Agency made no determination
as to the reasonableness of the corrective action costs incurred
by Pulitzer, the Board remands this matter to the Agency for such
a determination in accordance with Section 22.l8b(d)(4)(C). This
docket is closed. Petitioner is free to seek Board review of the
Agency’s final determination of the reasonableness of costs under
a separate docket.
117—106
9
This constitutes the Board’s finding of fact and conclusions
of law in this matter.
ORDER
The Agency’s determination that Pulitzer is not eligible for
reimbursement from the Fund is reversed. This matter is remanded
to the Agency for a determination of the reasonableness of the
corrective action costs incurred by Pulitzer. This docket is
closed; however, petitioner is free to seek Board review upon the
Agency’s final determination of the reasonableness of costs.
IT IS SO ORDERED.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control
Board, he,çe~ycertify th t the above Opinion and Order was adopted
on the ~C”-day of
_______________
,
1990 by a vote of
7—O.
Dorothy M/ftunn, Clerk
Illinois r~’llutionControl Board
117—107
