Microsoft Word - R04-22-23 080904 transcript

ILLINOIS POLLUTION CONTROL BOARD

August 9, 2004

5 IN THE MATTER OF:

PROPOSED AMENDMENTS TO:

6 REGULATION OF PETROLEUM

LEAKING UNDERGROUND STORAGE TANKS

7 (35 ILL. ADM. CODE 732)

R04-22

(UST Rulemaking)

8 __________________________________

9 IN THE MATTER OF:

PROPOSED AMENDMENTS TO:

10 REGULATIONS OF PETROLEUM

LEAKING UNDERGROUND STORAGE TANKS

11 (35 ILL. ADM. CODE 734)

R04-23

(UST Rulemaking)

The following proceedings were held before the Illinois

15 Pollution Control Board, August 9, 2004, at the Department

16 of Natural Resources Building, One Natural Resources Way,

17 Springfield, Illinois, before Ann Marie Hollo, CSR, RMR.

Keefe Reporting Company

11 North 44th Street

Belleville, Illinois 62226

(618) 277-0190

(800) 244-0190

Keefe Reporting Company

(618) 244-0190

APPEARANCES:

3 OFFICE OF THE ILLINOIS POLLUTION CONTROL BOARD

James R. Thompson Center, 100 W.

4 Randolph Street, Suite 11-500

Chicago, Illinois 60601

By: Marie Tipsord, Esq.

Hearing Officer

ILLINOIS POLLUTION CONTROL BOARD MEMBERS:

8 G. Tanner Girard, Ph.D, Thomas E. Johnson, Esq.,

9 AND

10 Alisa Liu, P.E., Technical Staff Member

ILLINOIS ENVIRONMENTAL PROTECTION AGENCY

12 1021 North Grand Avenue East

Spingfield, Illinois 62794

By: M. Kyle Rominger, Esq.

15 Posegate & Denes, P.C.

111 North Sixth Street, Suite 200

16 Springfield, Illinois 62701

By: Claire A. Manning, Esq.

On behalf of PIPE

Keefe Reporting Company

(618) 244-0190

E X H I B I T S

4 NUMBER

MARKED FOR IDENTIFICATION

ADMITTED

6 Exhibit 77

7 Exhibit 78 - 80

8 Exhibit 81 - 86

9 Exhibits 87, 88

10 Exhibit 89

11 Exhibit 90

117

12 Exhibit 91

118

13 Exhibit 92

179

196

14 Exhibit 93

196

Keefe Reporting Company

(618) 244-0190

HEARING OFFICER TIPSORD: Good morning.

My name is Marie Tipsord, and I have been

appointed by the Board to serve as hearing

officer in these kind of proceedings, entitled

In the Matter of Proposed Amendments to

Regulations of Petroleum Leaking Underground

Storage Tanks, 35 Illinois Admin Code 732 and

734. The docket numbers are R04-22 and 23.

To my immediate right is Dr. Tanner

Girard, presiding board member in this matter,

and to his right is Board Member Thomas

Johnson. And from our technical staff, we have

Alisa Liu today. If we have to continue until

tomorrow, I believe Anand Rao will be joining

us tomorrow. And we also have Erin Conley here

today.

This is the fifth set of hearings to be

held in this proceeding. The purpose of

today's hearing is to allow for additional

testimony from the Illinois Environmental

Protection Agency and the Professionals of

Illinois for Protection of the Environment,

known as PIPE.

We will begin with the Agency's testimony

Keefe Reporting Company

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and by Mr. Clay, and as usual, will be taken as

it is read; you can summarize it, and we will

mark it as an exhibit and go directly into

questioning. After that, after we finish with

the Agency -- excuse me -- we will ask PIPE to

present its testimony and be available for

questions.

Anyone may ask a question. However, I do

ask if you raise your hand, wait for me to

acknowledge you, and after I've acknowledged

you, please state your name and who you

represent before you begin your questions.

I must emphasize for the court reporter's

sake, you must identify yourself. Please do so

each time so that to be sure that she's getting

the right person.

I will only allow questions to be asked.

If you begin to testify, as usual, I will have

you sworn in. I'll politely ask you to state

your question and move on. We can allow for

testimony at the end of the day if there is

time. Please sign up in the back of the room

if you want to testify.

Speak one at a time. If you're speaking

Keefe Reporting Company

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over each other, the court reporter will not be

able to get your questions on the record. Note

that any question asked by a board member or

staff are intended to help get a complete

record for the Board's decision, and not to

express any preconceived notion or bias.

At the back of the room there are signup

sheets for both the notice and service list. I

do want to caution everyone that we're

still -- we're switching how we are doing

notice and service lists. The hearing officers

are no longer in charge of those lists. Those

lists are being done through the clerk's office

and on COOL. There are some kinks that need to

be worked out. If you have signed up on

R04-22, it doesn't necessarily mean you

automatically show on R04-23. So when you get

ready to serve documents on people, please

compare lists, compare contrasts, and if you

encounter any difficulties in signing up or any

inconsistencies between the two lists, please

notify Sandy Wiley in our Chicago office. She

is the one who is in charge of keeping track of

all that stuff. We're trying to get those

Keefe Reporting Company

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worked out, but please be patient and please

help us out. Thank you.

Before we begin with both PIPE and the

Agency, I want to note that on Thursday, August

5th, Mr. Bill Fleischli contacted me with some

concerns regarding the Agency's prefiled

testimony. So before we begin with either the

Agency or PIPE, we'll allow Mr. Fleischli a

couple minutes to speak briefly. Mr. Fleischli

has another meeting later today. So we're

going to start with him.

Before we do that, Dr. Girard?

BOARD MEMBER GIRARD: Good morning. On

behalf of the Board, I welcome everyone to the

fifth hearing on the proposal to amend the UST

rules. We look forward to the testimony and

questions today. And we hope to be closer to a

first notice draft here pretty soon. Thank

you.

HEARING OFFICER TIPSORD: Thank you.

Mr. Fleischli, we'll go ahead and have you

sworn in.

(Whereupon the witness was sworn.)

MR. FLEISCHLI: Thank you very much for

Keefe Reporting Company

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letting me testify first. I am Bill Fleischli,

the executive vice-president of the Illinois

Petroleum Marketers Association. I represent

the Illinois Petroleum distributors who pay the

$75 million a year, the environmental fees to

fund the UST program.

As our members read the new proposal the

IEPA has submitted to the Board, our members

have some real concerns. The new proposal

would require the use of less stringent cleanup

objectives for my members' property, while

requiring that off-site impact be addressed

using the most stringent regulatory

requirements. The proposed rule change would

only allow for the reimbursement to the lower

standard on site, making the owner pay out of

pocket additional costs if they choose to

restore their property to the more stringent

standard.

Currently, the fund pays for reimbursement

costs to clean up the property to comply with

state statutes. The owner/operator, after

consulting with their engineers, chooses the

standard they want to clean -- they want to use

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to clean their property based on land use and

land value.

Now the IEPA wants to mandate they use the

less stringent standard. And once a No Further

Action letter is issued to the property, this

instance will no longer be eligible for the

fund.

Should IDOT or future law changes require

a phase study of the property and contamination

be found and the property mandated to be

cleaned up, the property will not be eligible

for reimbursement for that instance from the

LUST fund, even though the owner is still

paying into the LUST fund and the owner would

be liable and the incident will not be covered.

This is not fair, nor right, in our estimation.

The Illinois Petroleum Marketers

Association is not against the tiered approach

for cleanups. In fact, we led the industry in

the state with this approach about 10 years

ago.

What is wrong is not allowing the owner of

the property and the owner of the tanks the

opportunity to make the right decision for

Keefe Reporting Company

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their particular piece of property, and in

shutting the owner out of the UST insurance

fund after a No Further Action letter is

issued, even though they still continue to pay

into the fund. The IPMA believes this was not

what the fund was originally set up to

accomplish. That is, cleaning up contaminated

property.

I believe these hearings should be left

open, and lender and real estate people should

be asked to testify to the effect this rule

will have on property values. If this supposed

shortage in the fund is the reasoning for this

proposal, then I ask the Agency to join the

industry to help pass legislation that would

prevent the Governor and General Assembly from

taking any more dollars from the fund, and help

the industry pass legislation that would direct

the Governor and the General Assembly to pay

the fund the $35 million they have taken from

the fund over the last three to five years.

Thank you, and I'll answer any questions

you may have at this time.

HEARING OFFICER TIPSORD: Thank you,

Keefe Reporting Company

(618) 244-0190

Mr. Fleischli.

Is there any questions? Thank you very

much.

BOARD MEMBER GIRARD: Thank you.

HEARING OFFICER TIPSORD: Before we start

with the Agency's testimony, too, I do have a

couple of housekeeping things to take care of.

The Agency has provided us with a copy of the

annual report, the 2003 annual report, for the

leaking underground storage tank program.

MR. ROMINGER: There's several years in

there.

HEARING OFFICER TIPSORD: Oh, I'm sorry.

There are several years in there. 2003. 2003,

2001 and 2000, okay. If there's no objection,

I'm going to take these and mark each as an

exhibit. We'll start with 2000 and mark that

as Exhibit 77.

(Whereby, the Hearing Officer

marked Exhibit Number 77.)

HEARING OFFICER TIPSORD: 2001 will be

Exhibit 78. 2002 will be Exhibit 79. And 2003

will be Exhibit 80. Those are so marked.

Keefe Reporting Company

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(Whereby, the Hearing Officer marked

Exhibits 78 through 80.)

HEARING OFFICER TIPSORD: And also Carolyn

Hesse called me on behalf of CW3M. They're

going to submit some exhibits. Is there one

here representing CW3M with those exhibits?

MR. WEINHOFF: These exhibits are in

responses to questions by the Agency at the

June hearings.

HEARING OFFICER TIPSORD: You need to

identify yourself.

THE DEPONENT: Oh, Jeff Weinhoff, CW3M.

Sorry.

HEARING OFFICER TIPSORD: That's okay.

MR. WEINHOFF: I have copies on the back,

copies of the OSHA regulations that we referred

to, copies of fire marshal regulations, two

letters that we refer to that you asked copies

of, for, and a transcript hearing that we

referenced, and then calculations for our

numbers for the other states.

HEARING OFFICER TIPSORD: Do you have

another copy up here?

MR. FLEISCHLI: I've got extra copies.

Keefe Reporting Company

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MR. ROMINGER: Does that have the

reference to the specific regulation regarding

the --

MR. FLEISCHLI: It's a copy of which ones?

MR. ROMINGER: Well, we were wanting a

specific reference to the specific requirement

of the number of people on site that you were

referring to in OSHA.

MR. FLEISCHLI: I did not put it together.

Harold put it together. And it's got -- I

can --

HEARING OFFICER TIPSORD: You do have a

copy of them to look at, right? Why don't you

go ahead and let them take a look. And I'll

let you take a look at those. And for now,

I'll go ahead and mark it. And ask if you have

any objection.

All right. We'll mark as Exhibit 81 -- I

think I am up to -- it's a document, the OSHA

regulations, will be marked as Exhibit 81.

The office of state fire marshal

record -- I'm sorry -- regulation will be

marked as Exhibit 82.

We have a letter dated February 9, 2004,

Keefe Reporting Company

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from the Illinois Environmental Protection

Agency to Mathias Development Corp, which we

will mark as Exhibit 83.

The second letter from the Illinois

Environmental Profession Agency to LE Anderson

Brothers Company Oil Company, Inc., we'll mark

as Exhibit 84.

MS. MANNING: Excuse me, Ms. Hearing

Officer. This is Claire Manning with PIPE.

Are there public copies of those available?

HEARING OFFICER TIPSORD: He said he had

several.

MS. MANNING: Okay.

HEARING OFFICER TIPSORD: Exhibit 85 is a

transcript from PCB 97-226 River View FS versus

IEPA.

And Exhibit 86 is raw numbers from the

ETD of other states.

(Whereby, the Hearing Officer

marked Exhibits 81 - 86.)

HEARING OFFICER TIPSORD: Have you had a

chance to go over those?

MR. ROMINGER: Yes.

HEARING OFFICER TIPSORD: Is there any

Keefe Reporting Company

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objection?

MR. ROMINGER: Well, the part 1926, they

referenced that before, and we asked them to

provide us a specific citation of that specific

provision they were talking about. And it

appears what they have done is sent a whole

copy of the entire part 1926. So we still

don't know which part of 1926 they're talking

about. And we'd just ask that they identify

that at some point.

HEARING OFFICER TIPSORD: In their

comments?

MR. WEINHOFF: And I guess I misunderstood

the question, but I'll review it, and we'll

submit it as a public comment, I guess.

MR. ROMINGER: Okay.

HEARING OFFICER TIPSORD: Any other

objection? Seeing none, we will admit those

exhibits.

(Whereby the exhibits were admitted into

evidence.)

HEARING OFFICER TIPSORD: I think we're

ready for you, Mr. Rominger.

MR. ROMINGER: Since the last hearing, the

Keefe Reporting Company

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Agency went back, and we reviewed the

transcripts of all the previous hearings and

all of the testimony filed in this proceeding.

And we've gone through, and there were a lot of

good recommendations, suggestions and issues

that came forth as part of that process.

And Mr. King mentioned at the last

hearing, we were sort of missing a step in the

regulatory development that we usually have.

Once we put the numbers in these rules, they

were no longer circulated around for comment

from concern from both our side and people in

the regulative community.

So part of the reason these proceedings

have been so protracted is that that step was

not done. And that has been taking place

during these rule-making proceedings.

As we've done with our first and our

second errata sheet, we've continued to revise

our proposal when we saw the need of revision

or there could be improvements. And that's

what we've done in our third errata here.

There's quite a few issues that we thought we

could include and we've included.

Keefe Reporting Company

(618) 244-0190

So I'll turn it over to Doug. He's going

to go through the testimony and summarize some

of the issues that we've covered, and we'll

have some testimony also.

HEARING OFFICER TIPSORD: Do you want to

mark the errata as a separate exhibit of his

testimony, or do you want to attach it to

Doug's testimony?

MR. ROMINGER: I don't think there's a

preference. It may be easier if we have two

exhibits.

HEARING OFFICER TIPSORD: Should we go

ahead and admit those then? Do you have a

clean copy for me?

MR. ROMINGER: Yes. Of the errata?

HEARING OFFICER TIPSORD: Of both. I must

admit, I just noticed when I was reading it.

If there's no objection, we will mark the

errata sheet as Exhibit 87 and Mr. Clay's

testimony as Exhibit 88. And there are copies

available in the back of the room. Seeing

none, those are so entered.

(Whereupon the Hearing Officer marked Exhibits

87 and 88, and same were admitted into

Keefe Reporting Company

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evidence.)

HEARING OFFICER TIPSORD: And we'll have

you sworn.

(Whereupon the witness was sworn.)

MR. CLAY: Good morning. My name is Doug

Clay. Today I will be providing additional

testimony in support of the proposal.

The Agency would like to thank the Board

for the opportunity to submit these additional

changes. We would also like to thank all the

parties who provided comments and

recommendations during the proceeding.

Since the last hearing, the Agency has

reviewed the transcripts of all of the hearings

held in the rule making and all of the

testimony filed with the Board.

Our third errata contains the changes to

our proposal that we think are appropriate in

response to questions, comments and

recommendations that have risen in this rule

making. Although the Agency's third errata

sheet contains quite a few changes, we believe

these change will improve the LUST rules for

all parties involved in the LUST program.

Keefe Reporting Company

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We also have reviewed PIPE's counter

proposal filed last week. We oppose it to the

extent it is inconsistent with our proposal.

Their counter proposal indicates there are

many -- there may be some confusion in our

proposal. Gary will be discussing the few

changes that could be made to clear up this

confusion.

First, I would like to cover several

issues that were raised in the hearing in June

and July. I will then highlight some of the

changes proposed in our third errata sheet.

Issues raised on June 21, June 22 and

July 6th hearings: There were several claims

made regarding the time it takes the Agency to

respond to submittals and requests to reduce

the time allowed the Agency to review

submittals. First, the Act provides the Agency

with 120 days to respond to submittals. Any

changes to that time frame requires a statutory

change to the Act.

Furthermore, reduction of this time frame

would impact the Agency's administration of the

LUST program. The greatest factor in the

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Agency's review time frames is the volume of

documentation it receives. On the average, the

Agency receives 30 linear feet of LUST plans

and reports each month or less -- or more than

7 feet each week. LUST documents currently

make up 50 percent of all the documents

received per month in the Bureau of Land's file

room. These figures do not include all the

reimbursement documentation received by the

LUST claims unit, such as applications for

payment. There must be an understanding of the

time and resources needed to review all

documents we receive. Shortening the Agency's

review deadline, even if done appropriately

through a statutory change, would hinder,

rather than help, the Agency's ability to

review more quickly.

Secondly, statements such as -- and quote,

"Project manager sends a letter at the end of

the 120 day review period and generally not a

day before," end quote, is inaccurate.

The Agency looked at the review times for

plans and reports from May 2003 to May 2004 and

review times are as follows: 26.3 percent of

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all reviews were done in less than 30 days.

26.1 percent of reviews were done between 30

and 60 days, 19.7 percent were done between 60

and 90 days, and 27.9 percent were done between

90 and 120 days.

Furthermore, there have been many

complaints that sometimes it takes up to two

years to obtain Agency approval. The amount of

time it takes to approve a plan or report is

largely dependent upon the quality of the

submittal. If the initial submittal meets the

applicable regulations and therefore could be

approved, the time frames for approval will be

no more than 120 days. As shown in our numbers

I just mentioned, in most cases is much less.

The claim was made in prefiled testimony

of PIPE: Member firms conduct or provide

services at nearly all the underground storage

tank cleanups conducted in the State of

Illinois.

Later at the hearing, PIPE presented

Exhibit 58, which showed 10 unidentified

consultants working on 893 active LUST sites.

PIPE will not identify its members and could

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not provide a breakdown of how many members

represented each of the different types of

businesses involved in the remediation of LUST

sites, but Cindy Davis did indicate that PIPE

had a total of 20 member firms that are either

consultants, laboratories, landfills or

contractors.

To put these numbers in perspective, the

Agency would like to offer the following:

There are over 23,000 LUST sites in the

LUST program. Over 10,000 of those sites still

have to be remediated. Of the unremediated

sites, over 2,300 have had some sort of

activity in the last two years, submitted a

plan or report to the Agency.

There are 375 different consultants that

have worked in LUST sites in the past five

years. There are 48 landfills in the state

permitted to accept LUST soils. There are 668

haulers permitted to transport LUST

contaminated soils. There are 89 laboratories

certified by the Agency to perform analyses

requiring the LUST program. There are 153 tank

removal contractors permitted by the Office of

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the State Fire Marshal. There are numerous

drillers, excavators, drillers and excavators

that work in the LUST program. In addition,

there are thousands of owners and operators who

are the parties responsible for complying with

these rules and the parties to be reimbursed

under the rules for their corrective action

costs.

The Agency appreciates PIPE's involvement

in the rule making. It provides -- it has

provided many good comments and

recommendations, which are included in the

third errata sheet. And we look forward to

working with PIPE members in the future on

issues related to the LUST program. However,

while PIPE has been a very vocal -- has been

very vocal in these proceedings, the Agency

would like to point out that it represents only

a small fraction of the persons involved in the

LUST program. The Agency has heard, either

directly or indirectly, that many consultants

are happy with rules as proposed, and

specifically have no problems with Subpart H.

There have been comments about the scope

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of work for professional consulting services

not being adequately defined in these rules.

The Agency does not believe that a detailed and

defined scope of work for each aspect of the

leaking underground storage tank cleanup is

necessary, nor does it -- should it be included

in these regulations. We agree that there are

some variabilities from site to site, but this

variability has been taken into account in the

Agency proposal. The scope of work is simply

the work required to perform the task being

reimbursed, such as preparing and submitting

the plan or report.

Several PIPE members commented on the

Agency's proposed soil conversion factor. We

believe that the conversion factors that have

been proposed are appropriate. And I would

like to emphasize that whatever conversion

factor the Board adopts, it should be

consistent throughout the rules.

At least one person representing -- or

presenting testimony raised the idea of

allowing owners and operators access to the

fund for costs incurred after the completion of

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remediation and the issuance of a No Further

Remediation letter. The purpose of allowing

such access would be to make owners and

operators more comfortable with the TACO

regulations. PIPE's counter proposal takes

this idea farther and asked the Board to allow

owners and operators back into the LUST program

and the UST fund for almost any reason.

The Agency opposes allowing owners and

operators back into the LUST program and the

UST fund after the issuance of an NFR letter,

except as already allowed for sites with MTBE.

There are over 10,000 releases from USTs

that still need to be remediated. The Agency

should be allowed to focus its time and

resources on sites that have yet to be

remediated, and not on sites that have already

received NFR letters that were requested and

agreed to by the owner/operator.

According to Exhibit 69 submitted by PIPE,

most owners and operators already utilized

alternatives available under TACO as part of

the remediation. There is apparently already a

good comfort level with TACO.

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Allowing owners and operators to come back

into the LUST program and accesses the LUST

fund would make it even harder to get a handle

on the fund's outstanding liability.

And, finally, the Board has already ruled

in the last LUST rulemaking, Docket R01-26,

proposed rule, second notice, that absent

special circumstances, such as MTBE

contamination, the UST fund should not be used

to pay remediation costs once the Agency has

issued an NFR letter. An NFR letter signifies

that no further corrective action is necessary,

thus making the use of the UST fund

unnecessary.

Issue has been taken with the Agency

reviewing plans, reports and applications for

payment that have been certified by a Licensed

Professional Engineer or Licensed Professional

Geologist. Some persons have asserted the

Agency should rely solely on the LPE and LPG

certification and should not question the LPE

or LPG's opinions or decisions. These

assertions assume the LPG and LPE

certifications have much more of a role in LUST

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programming than they are given by the Act and

the rules. Under the Act and the rules, it is

the party responsible for protecting human

health and the environment and properly

administering the UST fund. The Agency's

review of work conducted at LUST sites is

necessary to ensure these obligations are met.

Furthermore, preventing the Agency from

reviewing documentation certified by an LPE or

LPG would result in unchecked access to the

fund. The Act gives the Agency, not the LPE or

LPG the responsibility to determine whether

costs submitted for reimbursement are

reasonable. The Agency has discovered numerous

examples where an LPE or LPG has certified

either technical or reimbursement submittals

that were obviously not in accordance with the

Act and the regulation.

And I'd like to just go through a brief

sampling, a few examples for multiple

consultants, the plans and reportings that have

been certified as reasonable by professional

engineers or professional geologists within the

last year or so that the Agency believes are

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unreasonable. This is only a sampling and is

not included by any means in all instances.

One, a site investigation plan for minor

contamination at the site. Four soil borings

and monitoring wells were proposed to delineate

the extent of the contamination. A total of

257 hours were requested, a total budget of

over $30,000, and personnel costs of over

$19,000.

Second. Site investigation plan included

14 monitoring wells were proposed to delineate

the extent of the contamination, the submittal

of the site investigation completion report.

The total budget was $140,000. 94,000 of that

was personnel costs. This was actually a

resubmittal. The initial submittal was for 25

groundwater monitoring wells to delineate

extent of contamination. The original budget

was for $192,000, and it was over $104,000 in

personnel costs.

Third example site investigation plan

consisted of 13 groundwater monitoring wells

were proposed to delineate the extent of

contamination. Total budget, $101,000. 63,000

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in personnel costs.

Fourth. Site investigation plan included

12 soil borings, five groundwater monitoring

wells, preparation of a dig and haul CAP and

corrective action plan and corrective action

completion report. A total of $316,000 with

$68,000 in personnel costs, which included over

$800 -- 800 hours for project manager,

environmental protection II, a professional II

and environmental professional I.

Preparation of a corrective action plan,

installation of five borings and five

monitoring wells for a total of $126,000, a

hundred thousand dollars in personnel costs.

A proposal for corrective action plan

consisting of injection of an oxygen generating

compound into the subsurface to remediate soil

and groundwater contamination in place. A

consultant certified $32 a foot was reasonable

to inject the chemical. The Agency denied and

requested justification for the rate. Then the

plan amendment was submitted and certified that

included a rate of $16 per foot for the same

work, which the Agency then approved. This

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resulted in a cost savings or cost differential

of $115,000.

Corrective action plan consisting of a dig

and haul, collection of samples, collection of

samples and replacement of five groundwater

monitoring wells and the performance of the

biofeasibility study. Total budget, $552,000,

$142,000 in personnel.

Corrective action plan, amendment,

consisting of the preparation of a plan and

budget for performance of the biofeasibility

study, which included 28 borings and 30

injections. Again, this was a pilot study.

$443,000, and $92,000 in personnel costs.

A corrective action plan, amendment, to

excavate 100 cubic yards of soil, collecting

confirmatory soil samples and install two

groundwater monitoring wells and prepare a

highway authority agreement, and record the NFR

letter. Total of $58,000, $49,000 in personnel

costs with 436 hours to perform these

activities.

In addition, over the years we have seen

numerous instances of double billing. That is,

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duplicate submittals of costs that have already

been paid.

We've also seen numerous instances of

requests for payment for ineligible activities,

such as activities performed prior to the

existence of the LUST program, activities

performed prior to the release being reported,

landscaping activities, removal of animals from

remediation sheds. And we've even received one

where a consultant asked to be reimbursed for

staying at his parents' home.

Numerous instances where environmental

professionals have certified that the

requirements of the rules and Act were

satisfied and requested a No Further

Remediation letter. However, the report

clearly shows these requirements have not been

met.

Again, these are just a few examples and

are not isolated cases, to support the need for

the Agency to review plans and reports and not

rely solely on the professional engineer or

professional geologist's certificates for both

the technical adequacy and the reasonableness

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of costs for corrective action as part of the

leaking underground storage tank program.

Members of PIPE have raised the idea of

creating a new database specifically for the

purposes of determining rates to adopt in the

rules. The Agency strongly opposes this idea.

A mandated burdensome and time-consuming data

collection effort sends the LUST program in the

wrong direction. First, it would greatly

complicate and lengthen the preparation of

budgets by consultants, thus increasing costs.

It would also complicate and lengthen the time

needed to review the budgets by the Agency.

BOARD MEMBER JOHNSON: Hey, Doug, I keep

looking through here. Those examples you just

gave, they're not in your prefiled testimony?

That was in addition to it?

MR. CLAY: That's correct.

BOARD MEMBER JOHNSON: Okay, thanks.

MR. CLAY: That's correct.

The UST fund and the Agency resources are

already taxed, and this proposal would only

worsen the situation.

Second, the data submitted would be skewed

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from the beginning. There is nothing to ensure

the data submitted would reflect reasonable

costs.

And, finally, there is no need for such

data collection effort because the Agency has

added bidding provisions to its proposal as a

means of demonstrating on a site-specific basis

the costs higher than Subpart H are reasonable.

Bidding will more accurately reflect the daily

market prices and will be more responsive to

market changes.

Members of PIPE have raised the idea of

the Agency to provide owners and operates with

draft denial or modification letters prior to

decisions denying or modifying the plan of

report. Members of PIPE have likened this idea

to Agency review of permits.

The Agency is opposed to requiring a draft

denial or modification letter prior to the

Agency issuing a final decision. Such a

process would extend review times and is

counter productive to streamlining the LUST

program. Unlike permit reviews, the clock on

the Agency's 120-day review deadline would not

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stop if the Agency were to issue a draft

letter.

Further, the analogy to permit reviews is

not appropriate. According to the permit

section; of the permits they issue, only the

RCRA part B permits, which are construction

operator permits for hazardous waste treatment,

storage or disposal facilities, require draft

permits prior to the final decision.

It is -- in its counter proposal, PIPE

requested the Agency be given 45 days to review

submittals. They also request that the

submittals be automatically approved if the

Agency does not respond within 45 days. Both

the shortened review time and the automatic

approval are contrary to the Act. As I have

stated, the Act specifically provides the

Agency with 120 days to respond to submittals.

Requiring the response PIPE wants within 45

days would shorten the statutory review period.

The Act also specifically provides that

submittals are denied by operation of law if

the Agency does not respond within 120 days.

Title 16 originally provided for approval by

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operation of law if the Agency did not respond.

However in 1995, USEPA pulled its authorization

from the LUST program because in, part, the

automatic approval was inconsistent with the

federal program. In response, the legislature

amended the Act to provide denial by operation

of law. Allowing approval by operation of law

would once again threaten the USEPA's

authorization of the LUST program.

The idea of a peer review committee has

been raised by members of PIPE. The Agency is

opposed to creation of such a committee. The

Agency gives the Act -- the Act gives the

Agency the authority and responsibility to

oversee the LUST program and determine the

reasonableness of costs reimbursed from the UST

fund. The Act does not authorize persons

outside the Agency to review submittals, and

the decision of such a committee would not be

appealable to the Board. Only the Agency's

decision can be appealed to the Board.

Otherwise -- or outside influences or input on

Agency's final decision is simply

inappropriate. Furthermore, routing submittals

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through such a committee prior to the Agency

issues a final decision will lengthen and

review -- lengthen the review process and is

counter to streamlining the LUST program.

To help foster and enable greater

communication between the Agency and other

parties involved in the LUST program, the

Agency is proposing a new provision that would

establish a LUST advisory committee. The

committee would be made up of representatives

of interested parties and will meet with the

Agency on a quarterly basis to discuss the LUST

program. This committee is modeled after the

Site Remediation Advisory Committee that was

established for the Agency's site remediation

program.

Another idea raised by PIPE members is to

allow another method besides Board appeal to

challenge Agency decisions. The persons

allowed to oversee the alternative proceedings

would be selected by committee -- by a

committee, and the costs of the proceedings

would be paid out of the UST fund. The Agency

opposes this idea and is not authorized by and

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is not consistent with the Act.

A few issues have been raised regarding

the applications for payment. One is that the

requirement that applications for payment

include proof of payment to subcontractors.

There has been requests to strike this

requirement because of hardship of obtaining

canceled checks. Canceled checks are not the

only proof of payment that may be submitted.

Applications for payment may also contain lien

waivers or affidavits from subcontractors. One

of these methods of proof of payment should be

reasonably obtained.

Proof of payment of subcontractors' costs

is necessary to show the consultant is entitled

to handling charges. Handling charges, by

definition, means administrative insurance and

interest costs as -- and the reasonable profit

for procurement, oversight and payment of

subcontractors and field purchases. If the

consultant paid the subcontractor's bill, he or

she is entitled to handling charges. However,

many consultants have the owner/operator pay

the subcontractors directly, and therefore are

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not entitled to handling charges. The Agency

needs the proof of payment to show the

contractor paid the subcontractor and is

therefore entitled to handling charges.

Testimony was provided by CW3M that the

average rate for excavation, transportation and

disposal of contaminated soils awarded by IDOT,

awarded for IDOT projects was $99.75 cubic

yard. This comparison is inappropriate.

Following discussions with IDOT regarding the

bidding process, the Agency received a letter

from IDOT dated August 2, 2004 that explains

the process.

At the conclusion of the IDOT -- of this,

IDOT states, and I quote, "Based on the

information provided during the rule making,

IDOT's costs should not be used to compare or

justify costs proposed by the IEPA in this rule

making," end quote.

Steve Gobleman of IDOT, who has been

attending these hearings, has offered to answer

any questions regarding this letter and IDOT's

process. And he is here today.

MR. ROMINGER: We've got a copy to

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provide for the record.

HEARING OFFICER TIPSORD: Yeah, let's go

ahead and mark that as an exhibit. We'll mark

the Illinois Department of Transportation

August 22, 2004 letter to Mr. Clay as Exhibit

89. If there's no objection, seeing none, it's

marked as Exhibit 89.

(Whereby, the Hearing Officer

marked Exhibit Number 89.)

MR. CLAY: Now I'd like to go through the

actual changes that we are proposing in the

Agency's third errata sheet.

The first change on the July 6, 2004

hearing, PIPE requested clarification on how

proposed Part 734 would be applied to releases

subject to Public Act 92-0554, but reported

prior to the effective date of Part 734. In

response, the Agency proposes to

change -- proposes a change that recognizes the

work already performed at a site, even though

the work may not exactly match the requirements

of 734.

In addition, the Section is changed to

provide the costs approved in a budget prior to

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the effective date of Part 734 will be

reimbursed according to the amounts approved in

the budget.

The second change. In response to

comments, the Agency proposes to amend the

definition of half day, one half day equals

four hours. The Agency further proposes to

remove the two half days per calendar day

limitation so that more -- that two half days

can be reimbursed in a single calendar day.

Third change. Members of PIPE have

pointed out correctly that much of the Agency's

review of work performed at the site is based

solely on the report it receives and not on

direct observation of activities. However, the

Agency does not receive advanced notice of when

field activities are being -- will be taking

place. The Agency agrees that direct oversight

of field activities is very valuable in certain

circumstances. To help the Agency identify

sites for field activities should be directly

observed. And to help and plan for such

oversight, the Agency proposes to add wording

that would allow the Agency to require

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notification of field activities.

Fourth change. To help foster and enable

greater communication between the Agency and

other parties involved in the LUST program.

The Agency proposes new sections that establish

a LUST advisory committee. The committee would

be made up of representatives of interested

parties and will meet with the Agency on a

quarterly basis to discuss the LUST program.

The committee is modeled after the Site

Remediation Advisory Committee that was

established through the Agency's Site

Remediation Program.

Fifth change. Members of PIPE have

expressed concern over the proposed language of

the LPE and LPG certification. In response,

the Agency proposes to amend certification so

that a professional who is certifying only to

the standards and practices of his or her

profession.

Sixth change. Members of PIPE requested

that allowances be made for situations where

early action soil samples cannot be collected

in the location specified in the rules. In

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response, the Agency proposes to allow

alternate locations for samples and

circumstances required.

Seventh change. To address problems where

removal of free product that exceeds one-eighth

of an inch depth is impractical, the Agency

proposes to add language to the extent -- to

the maximum extent practicable back into

732.203(a) and 734.215(a). PIPE asked that

free product removal will be required only when

necessary to address health and safety issues.

Relaxing free product removal to such a

standard would make the Board's rules

inconsistent with federal rules and therefore

jeopardize USEPA authorization of the LUST

program.

PIPE also asks the Board to delete its

board notes from this section and throughout

these rules. The Agency believes that these

notes are helpful to owners and operators to

further clarify the Board's rules, and

disagrees with PIPE's proposal.

The eighth change. There was several

comments from members of PIPE and the American

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Council of Engineering Companies, ACEC,

regarding the prescriptive nature of stage one

site investigations. In response to their

comments and recommendations, the Agency

proposes to amend Section 734.315(a) so that it

contains simplified samples requirements. The

amended stage one investigation is based on

ACEC's stage one site investigation submitted

in Dan Goodwin's testimony, which is Exhibit

74.

Ninth change. Members of PIPE have

expressed concerns over knowing how many

alternative technologies must be compared in a

budget when alternative technology is proposed.

The Agency believes that comparison of two

other alternative technologies is sufficient.

Therefore it proposes to require such a

comparison.

The tenth change. Members of PIPE

objected to requiring the submission of

laboratory certifications in applications for

payment. In response, the Illinois EPA

proposes to delete this requirement.

The eleventh change. In order to help

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ensure UST fund money as used in a most

cost-effective manner, the Agency proposes

changes that will require owners and operators

to seek reimbursement to utilize certain

aspects of TACO.

First, the Agency proposes to limit

payment from the fund to costs that achieve

cleanup to Tier 2 objectives. TACO is designed

so that cleanup to the Tier 2 objective is

equally protected as cleanup to the Tier 1

objective, which is generally more expensive.

The second change is to the use of TACO,

is to require the use of a groundwater

ordinance as an institutional control if the

ordinance has already been approved by the

Agency and is available.

The twelfth change. CW3M raised concerns

about the consequences of a proposed provision

that could make consultant fees ineligible when

re-sampling is due to laboratory error. In

response to these concerns, the Agency proposes

to delete that provision.

Thirteenth change. CW3M raised concerns

about certain routine maintenance costs being

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made ineligible by a proposed provision. In

response, the Agency changed those provisions

to make routine maintenance costs eligible for

reimbursement if they are approved in a budget.

Fourteenth change. Members of PIPE have

raised concerns over the addition of record

retention provisions. These concerns appear to

be centered around the audit language repeated

from the Act. The proposed section is intended

to be used for review of documents related to

the payments from the UST fund, such as time

sheets, subcontractors' invoices, chain of

custody documents, backup documentation for

costs submitted for payment. The Agency merely

needs to ensure that the records related to

reimbursement submittals are retained for

certain periods of time so they can be

reviewed, if necessary. With the new

streamlining process, many of these documents

will no longer be submitted to the Agency. Due

to the concerns raised by members of PIPE, the

Agency proposes to delete the statutory

auditing language and retain only the

provisions that are based on record retention

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provisions in other Board and Agency

regulations. Copies of those provisions were

submitted to the Board in Exhibit 16.

Payment of corrective action costs from

the UST fund is the distribution of public

money, and the Agency must be able to properly

account for such public money. The proposed

record retention provisions will bring the LUST

program in line with other Board and Agency

regulations that deal with the distribution of

public money and will aid in the proper

accounting of public money in the UST fund.

Because hundreds of millions of dollars in

public monies are distributed through the UST

fund, far exceeding amounts governed by many

other Board and Agency regulations, there is an

even greater need for record retention

provisions in the LUST rules.

Sixteenth change. Several concerns were

raised over reimbursement amounts for personnel

costs. In response, the Agency proposes the

following changes to its proposal:

A. Allowing one half day of field work

and -- excuse me. Allowing one half day of

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field work and field oversight for each leaking

underground storage tank that is removed, up to

10 half days.

B. Concerns were raised about the costs

of site investigation at high priority sites

under 732. In response, the Agency proposes to

add the same language and costs as provides for

site investigation under 734.

C. Concerns were raised over the costs

for additional well survey work required under

the new rules. In response, the Agency

proposes to add separate maximum payment amount

for this work.

D. Concerns were raised over

reimbursement of travel time. Members of PIPE

recommended the travel time be broken out and

reimbursed separately from the half day rate

due to its variability from site to site. In

response, the Agency proposes to remove travel

time from the half day rate and reimburse it

according to a sliding scale based upon the

distance from the consultant's office to the

site.

E. Concerns were raised about the costs

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associated with plan revisions that are needed

as a result of unforeseen circumstances that

arise after a plan and budget have been

approved. In response, the Agency proposes to

allow $640 for a plan and budget amendments

required because of unforeseen circumstances.

This amount is based on eight hours' personnel

time.

Seventeenth change. Concerns have been

raised about setting maximum reimbursement

amounts in the rules. In addition, the idea of

bidding, which is used in several other states,

has been raised as a possible method of

determining reasonable amounts for

reimbursement. In response, the Agency

proposes to add provisions that would allow

maximum amounts set forth in these rules to be

exceeded if a minimum of three bids are

obtained. If such -- in such cases, the amount

of the lowest bid would be an amount allowing

for reimbursement purposes, unless it is lower

than the maximum payment amount set forth in

these rules. The bidding provisions do not

specify who is to do the bidding. The Agency

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anticipates that in most cases the bidding will

be done by the primary consultant.

The Agency believes that the bidding

process will generally improve the process of

proposed rules. First, it allows an exceedance

over the maximum rates if the lowest of the

bids exceed those rates. Bidding will allow

the rules to be responsive to site-specific

conditions and cause -- that cause an increase

in costs, such as greater hauling distances to

landfills and higher field cost.

Second, costs based on bids will

accurately reflect market price, making the

rules immediately responsive to price

fluctuation.

Third, there is less of a need for Agency

approval of unusual and extraordinary expenses

or the need to determine at what point the

costs substantially exceed the maximum payment

amounts. Instead, the costs can be bid out,

and the lowest bid will be considered

reasonable.

Fourth, there is no need to gather new

information to establish a new database

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specifically for the purposes of determining

maximum reimbursement amounts, which could be

extremely burdensome to both consultants and

the Agency and result in great delays in

adopting these rules.

Finally, bidding will help the Agency

track market rates and adjust maximum payment

amounts in the rule when necessary. If we see

certain costs are continually bid out and

coming in higher than the maximum payment

amount allowed in the rules, we will know it's

time to review the rules and adjust those

amounts through a rule making. The proposed

bidding provisions do prohibit the bids from

certain parties. This is to ensure that

third -- that true third party bids are

obtained. However, the bidding provisions also

provide lowest bidder does not have to be used,

only the amount of the lowest bid. Another

person may be hired to perform the work, and

the rules specifically provide that parties

prohibited from bidding may perform that work.

The bidding provisions allow -- the bid

provisions also require that all bids received

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must be submitted to the Agency. This is to

avoid situations, for example, where five bids

are obtained, and the three bids are submitted

to the Agency are the three highest. If more

than the minimum three bids are obtained, the

amount allowed for reimbursement is intended to

be the lowest of all bids, not just three.

Finally, the rules anticipate consultants

to obtain bids from persons who are properly

qualified to do the work. They are not

expected to obtain bids from unqualified

persons just because they are cheaper.

Eighteenth change. Even with the addition

of bidding, the Agency believes there will

still be situations where the reasonableness of

costs will need to be determined on a

site-specific basis due to extenuating

circumstances. For example, there may be

situations where three bids cannot be obtained

because there are only -- there are not three

persons who provide this service or perform the

work that is needed. Therefore, the Agency

proposes to change the unusual and

extraordinary expenses section to unusual or

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extraordinary circumstances section. If

expense is the only issue, that can be handled

under the bidding provisions.

In Exhibit 7 of Dan Goodwin's testimony

from ACEC, he provides a list of several

situations that it proposes to list in the

rules as atypical situations. The Agency has

reviewed this list and believes that all of the

situations identified by ACEC are either

already reimbursed on a time and material

basis, can be addressed through the bidding

process, or have been addressed in the proposed

rules, including this errata. The Agency does

not see a need to designate certain situations

as atypical in the rules.

Nineteenth change. In its original

proposal, the Agency proposed a

review -- proposed a rule to review the rules

at least every two years to ensure the maximum

payment amounts remain current with the

prevailing market prices. In its first errata,

the Agency proposed a change to this

requirement to an automatic increase in the

maximum payment amount each year. The Agency

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now proposes to add back in a mandatory review

of rates to ensure that they are keeping pace

with the prevailing market rates. The only

difference between the language as originally

proposed is that review must now be conducted

every three years instead of every two years.

The Agency believes that a three-year minimum

is sufficient because the maximum amount will

automatically be increased each year, and the

Agency will be able to track market

fluctuations through the bidding process.

Change 20. Jarrett Thomas, who submitted

testimony on behalf of PIPE and the Illinois

Association of Environmental Laboratories,

recommended that references to specific methods

for BTEX and PNA analyses be deleted from

Section 732, appendix D, and 734 appendix D.

In response, the Agency proposes to delete

those references.

Twenty-first change. Based on discussions

with interested parties, the Agency proposes

to increase the hourly rates for Engineer I,

Engineer II, Geologist I, Geologist II,

Geologist III and Professional Geologist. The

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Agency believes that the amended rates are

reasonable amounts for purposes of

reimbursement for reimbursing costs from the

UST fund.

And, finally, the twenty-second change.

The Agency has proposed changes to the water

well survey requirements. So that water well

is -- so that water well survey is required

only when contamination exceeds the groundwater

and exposure route for remediation objectives.

Focussing on the remediation objectives -- on

these remediation objectives will protect

potable water supply wells while reducing the

number of sites where well surveys are

required. The reduction in number of well

surveys conducted will further reduce

corrective action costs.

That concludes my testimony.

HEARING OFFICER TIPSORD: Thank you.

Excuse me. I had my head down. You weren't

sworn in, right?

MR. KING: I was.

HEARING OFFICER TIPSORD: I thought you

were.

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MR. KING: I just wanted to take a few

minutes and amplify a couple things that both

Kyle and Doug commented on.

As you can see from the nature of our

third errata sheet, we took very seriously the

commitment that we made at the last hearing,

that we were going to go back and look at

everything and figure out what we thought were

appropriate changes to make, and we have done

that. And we think that the hearing process

has allowed us to make a number of significant

improvements to our proposal. And we think

that the Board will see those improvements as

well. Because we did not get PIPE's proposal

until after we filed the third errata sheet,

our proposal is not reflective of anything in

the proposal.

Nonetheless, during the last week, we went

and reviewed that proposal. At least we

reviewed what we had, because we only had half

the proposal, since some of the numbers

are -- a lot of numbers -- and I suppose we can

see those today. I don't know if those have

been handed out yet or not.

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Okay. Based on what -- on our review of

the proposal, we did not see any additional

modification that needed to be made, except for

one small area. It's apparent to us, based on

PIPE's proposal, that they are still confused

about what the Agency has proposed in Subpart

H. And as a result of that, we plan on

submitting, with our final comments, revisions

to the introductory provision of Subpart H that

will form kind of a road map description of how

Subpart H is intended to function. And I think

that change should help clarify things for

PIPE.

At this point, that's the only change we

think that's merited, based on our reading of

the PIPE proposal.

I was noticing one of the serious concerns

that we have with the PIPE proposal is that

there are many suggestions we think are

inconsistent with the terms of Title 16, and

some are inconsistent with federal law as well.

I don't think the Board has authority to adapt

rules in this proceeding that are inconsistent.

HEARING OFFICER TIPSORD: I'm sorry,

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Mr. King. I apologize, but I lost your voice

completely.

MR. KING: I don't think the Board has

authority to adapt rules that are inconsistent

with Title 16. And I certainly don't think

it's advisable to adapt rules that are

inconsistent with federal law.

Doug has identified a number of those in

his testimony, and I wanted to go through one

additional one that Doug and I talked about.

It wasn't really something that Doug felt he

could go through because it concerned the

relationship between the site remediation

program and the LUST program.

In PIPE's proposal, they proposed that a

definition which would be added to an UST

remediation applicant, such that the UST RA

would have the same status as an owner or

operator of the UST system. They drew that

definition from Title 17 and site of

remediation program, but I don't think in

proposing that, they understand how that term

is used in that program or the implication of

its use relative to the federal rules and

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regulations that govern the tank program.

As required by federal law and

regulations, Title 16 in the Board's LUST

regulations have always specified that the

legal responsibilities for operating

underground storage tank systems and responding

to releases from those systems belong to the

owners and operators of those systems.

Throughout numerous regulatory proceedings, the

Board has been very careful to keep its rules

in line with that principle to avoid conflict

with federal provisions. PIPE's proposal

represents the first time that I've seen anyone

suggest that a consultant should step into the

shoes of owners and operators with respect to

these legal responsibilities.

In the mid 1990s when we set about writing

Title 17 in terms of the statutory provisions,

we knew we were not bound by the same legal

constraints as was existing in the LUST

program. We knew that we needed to come up

with a broader term, because of the broader

scope of liability, that it tends to cites

under the liability provisions of state and

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federal Super Fund liability provisions.

Unlike the LUST program where only the UST

owner/operator is liable, under Super Fund

provision, liability can also attach to prior

owners and operators and generators and

transporters.

Thus, when we were revising Title 17, we

came up with the terms of remediation applicant

as an approach that would allow anyone with

potential liability concerning the site to

enter the RSP and clean up that site with IEPA

oversight. That term went into the statute,

and then it was adopted in part 734 into the

Board rules, which became effective in 1997.

Although it is possible under the SRP

rules for a consultant to become an RA, a

remediation applicant, on an SRP site, the only

time I perceived that happening is when a

consulting firm intends to buy a site, clean it

up and then sell it for a profit. In those

instances, the consultant is acting more as an

owner of the site or maybe in a situation where

they're looking to become an owner and thus

develop the property. And that's kind of a

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rare occurrence.

In the vast number of instances,

consultants are hired by RAs within the SRP

program, and they're hired to perform

consulting services and are paid by RAs for

those services. If consultants working under

the LUST program want to take on the rights and

responsibilities of owners and operators, they

can do that, and they can do that by purchasing

the UST system and registering with the OSFM as

the owners of the UST system. I don't see any

reason to add that concept of the UST RA to the

LUST rules.

The other thing; I heard Mr. Fleischli's

testimony this morning, and I'm kind of

surprised at the issue relative to our proposal

specifying that a cleanup going beyond Tier 2

would not be paid for by the UST fund.

We have talked to numerous consultants

over the last four to six weeks about the idea

of specifying that cleanup should not go past

Tier 2, and they've all seen -- they've all

told us that they don't see any real problem

relative to that. And the reason why they

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don't see any problem -- I'll explain.

When Tier 1 was developed, it was based on

conditions at a site which would be the most

extreme in terms of potential risk.

Tier 2 provides that a person can go in

and look at what the conditions are at the site

and then develop remediation objectives based

on those conditions.

Virtually every -- for instance, the SP

program, virtually everybody who goes into that

program does an evaluation of the site that

allows the calculation of Tier 2 objectives.

And I'll give you one example that I think

is -- I think is fairly easy to understand.

Under Tier 1, there was a property assumption

of soil. It's called the FOC, the fraction of

organic carbon. When the Tier 1 table was

created, the assumption was that the fraction

of organic carbon would be .1 percent, which

would be the most extreme conditions we could

find under Illinois soil. What is typically

you would find in Illinois soil is that it is a

fraction of organic carbon more around the

percentage of 1 percent or 2 percent. Well,

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what that does is you immediately have a

multiplication factor, common of the cleanup

objective, which allows it to be raised when

you do that site-specific investigation.

And all -- what we're saying is that if

that's what the soil -- if the soil at a site

is not going to allow contamination to move,

based on the Tier 2 calculations, then why

should we be funding cleanups through Tier 1

level, which are not needed to assure that same

level of public health protection?

So I'll finish my comments with that.

HEARING OFFICER TIPSORD: Are there any

questions for the Agency? I assume we're ready

for questions? Any questions?

MR. WALTON: Harry Walton, Illinois

Environmental Regulatory Group, and Chairman of

the Regulation and Site Remediation Advisory

Committee. And I have some questions with

regard to remedial objectives.

QUESTIONS BY MR. WALTON:

Q I'd like to take it pathway by pathway.

On the ingestion, are you proposing

24 any real changes to the risk posed in the ingestion

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1 pathway when you go to Tier 2?

A (By Mr. Clay) No.

Q Thank you. For inhalation, when you

4 calculate a site-specific cleanup objective for

5 inhalation, would there be a change for the

6 inhalation pathway?

A No.

Q Please evaluate that. I think there would

9 be a bit of a change on that, on the FOC.

A Okay.

Q Now, under those scenarios when you do a

12 Tier 2, would there be any institutional controls

13 placed on the property that would go with the

14 property in the future?

A What we're proposing, there would be no

16 additional institutional controls put on the

17 property. You would be required to record the NFR

18 letter, but there would be no additional conditions

19 on that NFR letter.

Q With regard to the ingestion pathway and

21 statewide background number for PNAs, would those be

22 used as remedial objectives at LUST sites?

A Could you repeat that please?

Q With regards to the PNA statewide

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1 background numbers, in the Metropolitan City of

2 Chicago, would those be used as objectives in the

3 Tier 1 numbers?

A Yes, they would be.

Q And, again, would those require any

6 institutional controls placed on the property?

A No, just the recording of the NFR letter.

Q In regards to the groundwater pathway,

9 where would the receptor exposure be in the

10 groundwater pathway? Is it at all points on the

11 property, property boundary?

A What we're -- I guess I don't understand

13 your question. You mean the Tier 2?

Q The Tier 2, where would the compliance

15 point be moved to under this scenario?

A The Tier 2 would apply on site. If it is

17 off site, it would still have to meet Tier 1.

Q So there would be no institutional control

19 with the exclusion of groundwater pathway under your

20 Tier 1 scenario?

A Correct.

Q Are you stating that you would use the SSL

23 equations, the vertical migration equations, in your

24 FOC to calculate the Tier 2?

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A Yes.

Q You also stated that the remedial

3 objectives would be based upon use of the

4 groundwater ordinance. In this case, where would

5 the exposure point be measured?

A Yeah. It would be at the outside of the

7 ordinance, the model of extent of that

8 contamination.

Q Would that exclusion require an

10 institutional control placed on the property?

A There would be -- other than the ordinance

12 being mentioned, use of the ordinance being

13 mentioned in the NFR letter, there would be no other

14 institutional control.

Q So all receptors, on-site receptors, they

16 would be exposed in a direct context sense, to

17 Tier 1 ROs at point of exposure?

A Yes, you could say it that way.

Q How many LUST sites are there in Illinois

20 that are in communities that there's a current

21 groundwater use ordinance?

A As I stated, there had been 23,000

23 releases. Of those, over 10,000 are located in

24 ordinance communities. We've approved 111

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1 ordinances in Illinois. And that's the total

2 issues. There's 10,000, approximately 10,000 open

3 releases that still need to be remediated, and about

4 4,000 of those are located in ordinance communities.

Q So I guess Gary said Tier 1 solution is as

6 protective to a Tier 2 solution, and that holds for

7 all pathways?

A Correct.

MR. WALTON: That's it.

MR. CLAY: I might add one more thing.

Treatment of groundwater is oftentimes the most

expensive part of a cleanup. And when you look

at the numbers, if there's 4,000 sites that are

in ordinanced areas and could use an ordinance,

if those 4,000 sites, you know, chose to

remediate groundwater, even though it wasn't

necessary, and I think it's a conservative

number of a hundred thousand dollars to cleanup

that groundwater -- usually it's higher.

You're talking about $400 million, to put this

in perspective in dollars, that we feel is

cleanup that's not necessary, because the

ordinance prohibits the use of that groundwater

as potable, for installing potable wells, so.

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HEARING OFFICER TIPSORD: You have a

follow-up on that?

BOARD MEMBER JOHNSON: No.

HEARING OFFICER TIPSORD: Go ahead.

BOARD MEMBER JOHNSON: I was looking over

this, Doug, the new Section 855, which bothers

me. I was used to calling it ordinary,

extraordinary, an unusual expenses 855.

But I assume that that was going to be the

addition that was going to engender the most

interest or most questions.

QUESTIONS BY BOARD MEMBER JOHNSON:

Q The biggest question I had was in Section

14 C, in part, in 855, your proposed language is the

15 maximum payment amount for the work bid shall be the

16 amount of the lowest bid, unless the lowest bid is

17 less than the maximum payment amount set forth in

18 Subpart H, in which case the maximum payment amount

19 set forth in Subpart H shall be allowed.

And this goes back, I guess, to

21 essentially our first hearing when we talked about

22 your Subpart H maximum payments is -- to me this

23 implies that no longer is going to be -- I mean,

24 it's implying that regardless of what the bids are,

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1 you get three of them, they're all under the amount

2 that you've defined as the maximum number, payment

3 allowed. We're going to get the maximum payment

4 allowed. Am I reading that right?

A (By Mr. Clay) Yes.

Q Do you recall the question somebody asked

7 in the first hearing that these are maximum amounts,

8 and if in fact the amount comes in underneath that,

9 that's what's going to be reimbursed, rather than

10 the amount delineated in Subpart H?

A Because someone could, without bidding, go

12 in and do the work for the amounts in Subpart H, we

13 put it in C that way to allow them to go ahead and

14 use Subpart H.

And I would have to agree with you;

16 that would be reasonable to take the lowest bid,

17 since we've also stated in testimony that someone

18 who's conducting this bidding has already

19 predetermined or prequalified these bidders as

20 someone that would be acceptable to them.

Q And you're going to require not only if I

22 get five bids, I'm going to want all five of them so

23 I can't pick and choose which ones I submit to you,

24 then this seems to imply as well that if I go out

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1 and get any bids, three or more, I'm going to have

2 to submit them to you, whether or not I intend

3 to -- I guess what I'm saying is, if I'm an

4 owner/operator, and I go out and get three bids and

5 they all are underneath the maximum allowable

6 amount, unless I'm required by the rules to do so,

7 I'm not going to submit them to you guys. Does this

8 require the submission of any bid for any work?

A We didn't want to penalize the consultant

10 from bidding if they did all come in below the

11 maximum payment amount. So in those cases, they

12 wouldn't have to submit those bids. They could just

13 use the maximum amount.

Q Okay. I think it would probably be easier

15 to reconcile with the statutory language that rather

16 than have you guys looking at a bid, that

17 identifies, you know, an amount less than what the

18 maximum allowable amount is, I think it seems to me

19 like it's better for your reviewers to say this is a

20 reasonable expense when they don't have to -- when

21 or for any amount less.

A Okay.

Q I guess I had a question with respect to

24 the now 860, which is the old 855.

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Is that intended to kick in only in

2 instances where bids have been sought previously?

3 Or only instances -- your example was if there

4 aren't three people, which is the question I was

5 going to ask.

What if you can't find three

7 subcontractors that are going to be able to bid on

8 this, because there aren't three of them in the

9 State of Illinois? When does that kick in? When

10 does that 60 kick in? Whenever it fits this

11 definition that it looks like a three part task, to

12 determine maximum payment amount, amounts -- let's

13 see. They demonstrate to the Agency the costs are

14 eligible for payment, they exceed the maximum

15 payment and the result of unusual or extraordinary

16 circumstances. You're not going to have the

17 requirement that owner/operator first exhaust the

18 bidding process?

A I think the intent was that they don't

20 necessarily have to bid, but this is an

21 extraordinary circumstance that they've identified

22 up front, you know. We would expect they would

23 probably bid that to show that it's going to be over

24 the maximum payment amounts.

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There could be situations that

2 they've got an approved plan and budget. They go

3 in, they're doing the work, and then they come

4 across some extraordinary, unusual or extraordinary

5 circumstance. Well, at that point, you obviously

6 can't bid it. You're implementing the corrective

7 action plan at that point. Then they can come to

8 the Agency and justify those higher costs.

BOARD MEMBER JOHNSON: Thank you.

HEARING OFFICER TIPSORD: Go ahead.

MR. WEINHOFF: Jeff Weinhoff, CW3M. I

just had a couple questions on the mechanics of

the bidding process.

QUESTIONS BY MR. WEINHOFF:

Q For example, during stage one, you bid

16 drilling, and it came out two dollars a foot higher.

17 And that was, you know, for three bids. The low was

18 two dollars a foot higher. Would you need to rebid

19 stage two and stage three? Or would that bid be

20 good for that site forever, or each time you're

21 going to propose it, would you need to rebid it?

A (By Mr. Clay) I think you need to rebid

23 each time, because I think your bid that you're

24 requesting or your proposal you're requesting bids

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1 for would be different.

Q So with each submittal you need to rebid

3 that work?

A Correct.

Q Okay. And the second question I had was

6 like for excavation, transportation, backfill, are

7 you requiring like three bids for excavation and

8 three bids for transportation and three bids for

9 disposal, or three bids for the whole job together?

A We would anticipate it would be for each

11 stage of that. Three bids for transportation, three

12 bids for excavation and three bids for disposal,

13 since you're dealing with different companies for

14 disposal, different companies for trucking,

15 different companies for excavation.

Q I see. So you wouldn't get one contractor

17 do it all for you? You'd get a separate amount?

A Correct.

Q Okay. And then with disposal, how would

20 distance with the landfill be affected? Because

21 you've got three bids for transportation, those bids

22 are going to be affected by which landfill you're

23 going to use, for example. So would you need nine

24 then to go with your three landfill bids, or the

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1 three different landfills that you do bid?

A Well, I guess the bid from three trucking

3 companies, for example, or three different

4 landfills.

Q So you'd get different costs for each

6 trucking company and landfill and excavator?

A Yes. Well, I don't know why the excavator

8 makes any difference. Trucking would be the only

9 difference because of the distance of the landfill.

MR. WEINHOFF: That's all I have.

HEARING OFFICER TIPSORD: Mr. --

MR. TRUESDALE: A couple of questions.

HEARING OFFICER TIPSORD: You need to

note -- you need to identify yourself for the

court reporter.

MR. TRUESDALE: Joe Truesdale with CST

Environmental Services.

QUESTIONS BY MR. TRUESDALE:

Q One question, just to clarify Jeff's

20 statement about the drilling costs.

You mentioned that the drilling costs

22 for each activity in the stage, one stage, two

23 stage, three site investigation would be bid

24 separately. So essentially what you're saying then

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1 is the costs associated with those bids would be

2 entirely dependent on the scope of work being

3 performed, correct?

A (By Mr. Clay) Yes.

Q The second question. In the proposal to

6 limit remediation on sites and use the groundwater

7 ordinance to address the ingestion of groundwater

8 objective, and the original ASTM corrective based

9 action document that TACO is based on, there are

10 other pathways essentially that are addressed,

11 inhalation of dissolved hydrocarbon in the

12 groundwater that's virtually ignored in TACO. So

13 under the existing frame work of TACO, since the

14 owner/operator always has the ability to clean up to

15 groundwater ingestion objectives, it's never been a

16 technical issue. However, if you run through those

17 numbers in ASTM and put in some general values, you

18 usually come up with something that says benzene

19 concentration somewhere less than one part per

20 million would pose an excessive risk for inhalation.

21 This is all hydrocarbons in groundwater.

Now, in the context of using the

23 groundwater ordinance, the soilability limits, you

24 can have up to 20 parts per million benzene in the

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1 groundwater.

Has there been any consideration

3 given to evaluating those potential inhalation risks

4 associated with leaving those contaminants in place?

A Well, I mean the three pathway, the three

6 exposure pathways --

HEARING OFFICER TIPSORD: Speak up.

MR. CLAY: There are three exposure

pathways to TACO. Ingestion, soil inhalation

and then ingestion of groundwater. And those I

don't know we're anticipating any new exposure

methods.

MR. KING: If I just could make a comment

on that.

Where I think Mr. Truesdale has suggested

that there may be some additional changes that

may be warranted to TACO, I don't think it's

appropriate to try to change TACO in the

context of the LUST rules. The Agency's

planning on opening a -- proposing additional

changes to TACO hopefully within the next

several months. And I think if there's an

issue about whether there needs to be an

additional pathway included within TACO, I

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think that would be an appropriate time to

discuss that issue.

Q (By Mr. Truesdale) I think what I'm

4 stating actually is that in your testimony and

5 errata sheet, you suggest that this proposal is

6 adequately protective of human health and the

7 environment. However, if you read through the ASTM

8 corrective based action --

HEARING OFFICER TIPSORD: Mr. Truesdale,

do you have another question?

MR. TRUESDALE: Sorry. I apologize.

HEARING OFFICER TIPSORD: Ms. Manning?

MS. MANNING: I just have one question for

Mr. King.

QUESTIONS BY MS. MANNING:

Q Gary, you testified very generally and

17 very broadly that PIPE's proposed language is

18 inconsistent with federal law and state law. Yet

19 the only example you gave was the suggestion that

20 the Board define a UST RA. Certainly the suggestion

21 was not that Title 17 become Title 16? Title 16 is

22 Title 16.

Nonetheless, could you indicate what

24 other provisions of PIPE's proposed language you're

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1 speaking of that you consider inconsistent with

2 either federal or state law?

A (By Mr. King) I thought Doug went into

4 several of those within his testimony. At least

5 that's what I heard him saying.

MR. CLAY: The approval by operation of

law, rather than denial, was a big issue with

the USEPA. It's also contrary to the statute.

The 45 days for review time proposed by PIPE is

inconsistent with the state statute, which

allowed 120 days. Those are two.

Free product. The wording in the federal

rules is the maximum practicable -- I believe

something to that effect, as opposed to whether

or not it's a threat to human health, which is

what PIPE is proposing. Those are the ones I

can name off the top of my head.

MS. MANNING: We're going to address all

those. Thank you.

HEARING OFFICER TIPSORD: Any other

questions? Start with Mr. --

MR. COOK: Jay Cook, United Science

Industries.

QUESTIONS BY MR. COOK:

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Q With regard to the competitive bidding

2 process, is it anticipated that the consultant, the

3 primary consultant, would solicit bids on behalf of

4 the owner/operator?

A (By Mr. Clay) Yes.

Q And the time required to prepare the bid

7 specifications to solicit those bids, is that

8 considered to be a reimbursable corrective action

9 cost?

A It's reimbursable as a handling charge.

11 Under the definition it's partially for procurement.

Q Can you clarify that? The time it's

13 actually necessary for the engineer to prepare the

14 bid specifications and the bidding documents, is

15 that professional services time reimbursable?

A It is reimbursable as a handling charge.

17 As a current handling charge, we believe that's what

18 that was intended for.

Q I'm not sure I understand that. As an

20 example, just to have -- if I had an engineer, let's

21 say who was working, and he had 10 hours of service

22 time in preparing the bid specification documents,

23 and his billing rate was a hundred dollars an hour,

24 so you've got a thousand dollars charge, is that

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1 what would be reimbursed, or is it a percentage of

2 the contract that's awarded? Like, the drilling

3 contract that's awarded, or a percentage of

4 the -- or the excavation, transportation, disposal

5 contract that's awarded?

A It's a percentage -- if you had a $10,000

7 subcontractor doing drilling, it's a percentage of

8 that as your handling charge. And the time to

9 prepare and put together those bids and to collect

10 those bids, evaluate those bids would be in that

11 handling charge.

Q And so that's different than the rest of

13 the way that the professional services are handled

14 within the regulations or reimbursement for

15 professional service on an hourly basis? This would

16 be on a percentage base?

A It is different. It's just the putting

18 together the bid proposal and evaluating those bids

19 would be under the handling charge.

Q And so the consultant would receive more

21 compensation the higher the bids were; is that

22 correct?

A That's the way the handling charges work,

24 that's correct.

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I might add, though, if there's a

2 situation where the owner and operator is going to

3 reimburse or pay for the subcontractor directly, in

4 that case, the consultant would not be entitled to

5 handling charge. There is a provision in -- well,

6 in Subpart H and then in 734.855, that sets forth an

7 amount for the consultant for their time for putting

8 up those bids together.

Q Separately if the contractor is paid?

A Yes. Because we recognize there there's

11 no handling charge for the consultant, but they

12 would be compensated from them.

Q They would be paid for their hourly rate

14 as long as it was reasonable for the services

15 performed?

A No. It's not time and material. It's a

17 specific amount.

MR. ROMINGER: Clarification. That's an

845 G. I believe Doug said 855.

HEARING OFFICER TIPSORD: Thank you.

Q (By Mr. Cook) And Dwayne just said that's

22 $160 per event?

A Yes.

Q So that's roughly a couple of hours, hour

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1 and a half?

A Right. We figured two hours.

Q To compare each set of specifications?

A Yes.

Q Okay. And had the Agency evaluated the

6 costs of soliciting bids, and in the process of Jeff

7 just described, it seemed like a fairly elaborate

8 process to me. There are potentially multiple

9 rounds of bid solicitation that took place. What

10 added costs would there be to the program and

11 estimated added cost to the program to solicit these

12 bids across the remaining LUST sites? Do you have

13 an estimate, the increase in cost?

A I don't have a specific estimate, but

15 we've always paid handling charges. And, you know,

16 I assume that they're part of the handling charge is

17 to, you know, seek a competitive price. And so I

18 mean, I guess we anticipate that that was being done

19 to some degree already because that's what handling

20 charge is for in part.

Second, I don't think we -- I mean,

22 in a lot of cases, there's not going to be bids

23 sought. They're going to use the maximum payment

24 amounts as -- Member Johnson said, I mean, you don't

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1 have to bid it. I mean, from what we've heard from

2 the number of consultants, the amounts in the rules,

3 they don't have a problem with it. So I don't see

4 everything going to bidding. But if they do, it's

5 covered by the handling charges.

MR. COOK: I don't have any other

questions.

MR. GOODWIN: Mr. Dan Goodwin with Secor

International.

QUESTIONS BY MR. GOODWIN:

Q Doug and Gary and Kyle, any of the three

12 of you that you feel like you can respond to this

13 question, I'd like to hear from you.

You have introduced three, I think,

15 pretty significant concepts into this latest set of

16 changes to the proposal. One being the concept of

17 competitive bidding and particularly as an

18 alternative to the dollar limits on reimbursement

19 that would apply.

Secondly, the requirement for

21 obtaining cost estimates, provided cost estimates,

22 on at least two alternative technologies in addition

23 to standard technology cost estimate in order to

24 establish a reimbursement limit for that.

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And the third item -- my mind has

2 gone blank.

A (By Mr. Clay) TACO.

Q TACO. The introduction of the TACO Tier 2

5 concept was discussed earlier.

My question is, for any or all three

7 of those concepts, have you done a analysis of the

8 statutory authority and satisfied yourselves that

9 the statutory authority is already there, and if so,

10 would you be willing to provide that analysis?

A (By Mr. King) Are you asking whether we've

12 done a legal analysis?

Q Yes.

A I don't -- we haven't seen a formal legal

15 analysis on those things, no.

Q Okay. Do you intend to do one if it

17 appears there's an issue?

A I'm sure we would if there was an issue.

19 But as we've always seen the Board's authority in a

20 rule making, you know, there are specific things

21 that the Board -- you know, the Board can't be

22 inconsistent with its statutory authority. And

23 we've identified some areas where there are certain

24 things, you know, in the PIPE proposal that we

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1 thought are inconsistent with that authority. We

2 did not identify any inconsistency issues as we were

3 evaluating what we were suggesting here.

Q Wouldn't you agree that to incorporate any

5 of those three proposals into the regulations, the

6 Board has to make a finding that there is an

7 underlying statutory authority for the Board to do

8 such a thing?

A Oh, I would agree, yes, absolutely.

Q But you, the Agency, has not really done

11 any kind of a formal evaluation to make a finding to

12 present to the Board that that already does in fact

13 exist?

A We have not done any kind of formal

15 internal document. I assume that we certainly could

16 look at that issue in terms of our comments and

17 provide input to the Board on that legal question.

MR. GOODWIN: Thank you.

HEARING OFFICER TIPSORD: Ms. Davis?

MS. DAVIS: I am Cindy Davis, CDS.

QUESTIONS BY MS. DAVIS:

Q I have a question on the proof of payment

23 and the handling charge.

Doug, you just described a situation

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1 where, let's say, you need to go out, and you need

2 to haul to a landfill, but couldn't, due to the

3 price the Agency has established. We would go out

4 and get three bids. What happens in the case,

5 though, where the owner/operator wants the

6 contractor to wait for payment, and let's say the

7 subcontractors have waited for payment? So I won't

8 have proof of payment to put in the reimbursement

9 request. So in that case, what I'm understanding

10 the rules say, that there is no handling charge if

11 you can't provide proof of payment. So how does the

12 consultant get paid to go for the three bids?

A (By Mr. Clay) Well, it's just not the

14 canceled check. There could be a lien waiver, and

15 there was another affidavit -- yeah, an affidavit or

16 lien waiver or a canceled check. So I mean, you

17 could provide a lien waiver.

Q Okay.

MR. SCHUMACHER: You're not --

HEARING OFFICER TIPSORD: Excuse me. You

need to identify yourself.

MR. SCHUMACHER: Brad Schumacher.

QUESTIONS BY MR. SCHUMACHER:

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Q You do a cleanup for 200,000. You get

2 done Monday. You went to submit the reimbursement

3 on a Friday for your reimbursement. Obviously you

4 haven't paid the trucker, you haven't paid the

5 landfill, you haven't paid anybody yet. So you're

6 not going to have the waiver or anything.

MS. DAVIS: That is a problem.

HEARING OFFICER TIPSORD: Excuse me,

excuse me. We're drifting into testimony.

MS. DAVIS: Okay.

HEARING OFFICER TIPSORD: Please stick to

questions. If you want to comment on this at

the end of the day, I'll be more than happy to

let you testify.

MS. DAVIS: That was my -- that was the

end of the question.

QUESTIONS BY MS. DAVIS:

Q And the next question I have is, in the

19 case of a drilling aspect where I own my own

20 drilling company, and let's say a particular site I

21 can't do a drilling for the set price. So I go out

22 and I get three bids as the Agency has allowed me.

23 And it also allows me that if I wanted to, I could

24 do the work for the lowest bid. How do I get paid

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1 for my handling for my time to go get those bids for

2 the scope of work? Because I'm a person who is

3 using a subcontractor with the indirect financial

4 interest. I mean, how do I get paid?

A (By Mr. Clay) In that case, I think you

6 would be entitled to that lump sum as if the owner

7 and operator were paying for the subcontractor. And

8 then, you know, that's sort of a business decision.

9 That's a decision you're making, that you want, in

10 your case, your company to do the work as opposed to

11 the low bidder.

MS. DAVIS: Okay.

HEARING OFFICER TIPSORD: Go ahead.

MR. SCHUMACHER: Brad Schumacher.

QUESTIONS BY MR. SCHUMACHER:

Q I didn't get an answer. If I sent in my

17 reimbursement claim, I am not going to have any

18 waivers, cancelled checks, affidavit, because I

19 haven't paid my contractor yet. So are you going to

20 deny my claim? Or how does that work? Obviously,

21 we're going to pay our subcontractor, but what if my

22 terms are 90 days, I submit a claim, and you're

23 going to not process the claim because I don't have

24 the waivers? Or backups that I'm paying the

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1 subcontractor?

MR. CLAY: Can I respond to that this

afternoon?

HEARING OFFICER TIPSORD: Sure.

MR. CLAY: Let us discuss it.

MR. SCHUMACHER: Thanks.

HEARING OFFICER TIPSORD: Mr. Truesdale?

QUESTIONS BY MR. TRUESDALE:

Q One more question. It's related to what

10 Mr. Goodwin talked about earlier and about the TACO.

You mentioned before, Doug, that you

12 don't expect that there will be deed restrictions or

13 other environmental land use controls required for

14 sites that use the Tier 2 objectives. And

15 Mr. Walton referred to the PNA background analysis

16 for metropolitan areas, for instance.

What if an owner/operator did soil

18 removal at a site after issuance of an SRN based on

19 background PNA data, and that soil was subsequently

20 moved to a site outside of the metropolitan area, or

21 in a case where a Tier 2 inhalation objective was

22 calculated based on site-specific moisture content

23 and that soil was subsequently excavated and spreads

24 to the soil where the physical characteristics

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1 forced the moisture content to change and

2 volitization occur. How would the Agency address

3 those situations?

A (By Mr. Clay) Well, on every one of our

5 NFR letters, there should be a condition that says

6 to the effect any soil removed from the site needs

7 to be handled in a proper manner. Whether it's

8 Tier 1 or Tier 2, the Agency -- or the LUST section

9 is not making a determination whether that soil is

10 moved to a different location as a waste. They're

11 saying that that soil in place is safe, is

12 protective to human health and environment.

So what I said was there would

14 be -- you would see no difference in the NFR letter

15 if it was a Tier 1, based on the Tier 1 numbers. Or

16 if you collected site-specific soil property

17 information calculated Tier 2, you wouldn't be able

18 to tell that in your NFR letter. There would be no

19 additional conditions. We'd still have the

20 condition on both, that, you know, if soil is

21 removed, it needs to be handled in accordance with

22 the appropriate regulation.

Q But under the current frame work, the

24 owner/operator always had the ability to clean up to

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1 the most stringent Tier 1 objectives. So there are

2 no expressed costs associated with managing that

3 waste. If it was excavated and disposed of, the

4 cost would still fall on the owner/operators under

5 the new scenario; is that correct?

A I don't understand the question.

Q If the owner/operator made the decision to

8 clean up to the most stringent Tier 1 subsequently

9 excavated soil and moved it to another property, it

10 already met the most stringent Tier 1 objectives

11 applicable to any property in Illinois. So there

12 would be no expressed risk with managing that

13 material in accordance with state regulations.

14 However, under the new frame work, there could be

15 costs associated with that, for the owner/operators,

16 correct?

A You're assuming that with that statement,

18 you're assuming that Tier 1 residential can be put

19 in any location anywhere and has no waste

20 designation. We don't make that decision in the

21 LUST program.

Q Right.

A And so, you know, there may be soil that

24 meets the Tier 1 residential that wouldn't be

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1 appropriate for certain areas or conditions to put

2 into. So we're not making that designation that

3 it's clean soil, if you will. We don't have that

4 authority in the LUST program.

MR. COOK: Jay Cook with USI.

QUESTIONS BY MR. COOK:

Q Under the federal financial responsibility

8 requirements, the definition of financial

9 responsibility, is there a specific definition of

10 what an owner/operator must demonstrate in the

11 financial, in terms of financial responsibility? We

12 know there are monetary amounts. But that financial

13 responsibility originally was intended to do several

14 things. One of them, I believe, was to show that

15 the owner/operator is capable of undertaking a

16 corrective action; is that correct?

A That's correct.

Q Financially capable of undertaking a

19 corrective action?

A Right.

Q And corrective action then in Illinois

22 could include remediation to either Tier 1 or Tier 2

23 requirements; is that correct?

A Tier 1, Tier 2, Tier 3.

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Q Are there instances where the Agency could

2 require an owner/operator to utilize a more

3 stringent cleanup criteria than what's being

4 proposed in this Tier 2 type of situation?

A It would be based on what's outlined in

6 the regulations. That Tier 1, Tier 2 or Tier 3, if

7 they met that, then we would issue the remediation

8 letter.

Q In instances where the Agency is proposing

10 that reimbursement only be allowed to the use of

11 these Tier 2 objectives, is it possible that the

12 Agency could require what I'll call a more

13 conservative cleanup approach? In other words,

14 meeting more stringent cleanup objectives?

A (By Mr. King) I don't see how that's

16 legally possible, because, I mean, TACO provides

17 different methodologies for a person to establish

18 remediation objectives relative to a site. And the

19 way the Board rule is set up under 742, that's an

20 owner/operator's decision to make.

Q So if they elect, they could utilize

22 Tier 2 and still meet the requirements legally that

23 are imposed by the Agency, and the Agency could not

24 require them to perform the work?

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A Yes, that's correct.

Q Okay. With that being the case, as a

3 practical matter, do you have an estimate of the

4 number of owners and operators in the State of

5 Illinois that are financially able to undertake a

6 cleanup that would exceed these Tier 2, those -- how

7 much, as a practical matter, how much of the

8 owner/operators will utilize Tier 1 or something

9 more stringent than what you're proposing is the

10 maximum amount that would be reimbursed under this

11 Tier 2 approach?

A I think it would be very few.

Q Very few? So as a practical matter, sort

14 of the default cleanup objective becomes this Tier 2

15 approach conditioning?

A I'm trying to think. I guess I'm, in

17 responding to that, I'm just trying to figure out

18 what -- I guess I wouldn't quite use the term

19 "default cleanup objective."

Q It would be the method of choice by the

21 vast majority owners and operators in your

22 estimation?

A I think that's probably true. I mean, I

24 think you're correct in your statement that far

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1 fewer number of owners and operators will go to

2 Tier 1. They would stay with Tier 2 because that's

3 what we would be paying for. And it would be in our

4 view, it would certainly be equally protective with

5 Tier 1. There may be some owners -- I mean, there

6 are owners and operators now that utilize Tier 3

7 provisions, and that certainly would be the case

8 still.

Q Is it a fair characterization to say then

10 that because of the owners and operators, the

11 majorities of them probably don't have the money to

12 take the more stringent approach to clean up, that

13 they take this approach, is it a fair

14 characterization by saying by shifting that, the

15 eligibility of those sites, so that the maximum

16 amount of reimbursement that's available at these

17 sites is based on Tier 2 objectives? That it really

18 is a practical matter, for all intents and purposes,

19 you've practically cleaned -- or changed the

20 remediation objectives, as a practical matter? Not

21 as a technical matter, not as a legal matter, but

22 just as a practical matter, you've changed the

23 remediation objectives statewide?

A No, I wouldn't say it that way at all. I

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1 mean, the remediation objectives are still

2 within -- established under 742. And there's Tier

3 1, Tier 2, Tier 3. We haven't changed those

4 remediation objectives. We've changed that, what

5 would be reimbursed.

MR. CLAY: And to add to that, I mean, as

Gary testified earlier, in the site remediation

program when those people that are in the

program are footing the bill, they almost in

all cases go to Tier 2.

Q For what reason in your estimation?

A Because of footing the bill and being

13 cheaper cleanup, and it's equally protective of

14 human health and the environment.

Q Because, in your opinion, does -- Gary,

16 you're an attorney, I believe; is that correct?

A (By Mr. King) Yes.

Q In your opinion, would an owner/operator

19 incur more liability to a third party if they only

20 clean up the Tier 2? Let's say that I'm a tank

21 owner, but I don't own the site; I don't own the

22 real estate; I own the tanks. And as a result of

23 that, I'm responsible for cleaning this site up.

24 Now, if I only remediate to Tier 2, that's all I

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1 have to do as it pertains to my relationship with

2 the Agency. But as my relationship is established

3 with this property owner, they may not be very happy

4 about that.

So in your opinion, do I have greater

6 liability to this third party property owner because

7 I haven't cleaned up to Tier 1?

A I would say the answer is no.

When we established TACO in 1997, we

10 were very careful, and we went through a large

11 number of debates, a large number of testimony

12 around the whole concept that in terms of public

13 health protection and protection of the environment,

14 a Tier 1 was equal to a Tier 2, was equal to a Tier

15 3.

Now, there may be -- and we see this

17 particularly in the site remediation program. If

18 you've got an out-of-state developer who wants to

19 buy a piece of property, he will demand that that

20 property be cleaned up to -- sometimes will demand

21 that that property be cleaned up to at least Tier 1

22 because he may not be familiar with the Illinois

23 system.

And when those questions come up, we

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1 have to -- you know, we go through and discuss with

2 people what Tier 2 and Tier 3 are and that kind of

3 thing. And usually people, once they understand

4 what we're doing in Illinois, are willing to accept

5 something other than Tier 1 as a methodology.

Q I see. The answer to that then is, no,

7 that wouldn't, in your opinion, change the liability

8 between the property owners. I would assume that it

9 would not decrease the potential for lawsuits

10 between the parties.

Is the fund, can the indemnification

12 within the fund for third party indemnifications be

13 tapped in this instance where the owner of the tanks

14 has elected not to clean up to Tier 1, elected to

15 cleanup to Tier 2, and the property owner is a

16 separate party and is unhappy about that decision on

17 the part of the tank owner/operator, can the

18 property owner make a claim against the fund for

19 indemnification, third party indemnification?

A Well, anybody can make a claim relative to

21 for indemnification, and that has to go through the

22 process, through the Attorney General's office and

23 that.

But we could take the position that

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1 indemnification would not be proper, because if

2 they've done a Tier 2 cleanup, it was the same issue

3 of potential risk to human health or environment as

4 a Tier 1 claim.

MR. COOK: Okay. I just had a question

that I wanted clarification.

BOARD MEMBER GIRARD: Can I just follow up

on that?

QUESTIONS BY BOARD MEMBER GIRARD:

Q In terms of, you know, protection of human

11 health and the environment, you feel that an NFR

12 letter provides that; is that correct?

A (By Mr. King) Yes.

Q So it means you met all the obligations

15 under the Act?

But the questions about liability

17 still, I'm not sure, has been clearly answered. If

18 a property owner has an NFR letter, does that

19 property owner then have any future liability for

20 the contamination that may still be in the ground

21 from the LUST site?

A There's certainly a large body of cases

23 that involve tort law where individual citizens sue

24 companies with claims that their health has been

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1 impacted through the contamination of the site. You

2 could have an NFR letter on a site, the site has

3 been cleaned up, to protect human health and the

4 environment, and somebody could still file a claim

5 saying that there had been a human health impact

6 that was tortuous in nature, in that there was

7 liability related to that.

Now, that claim would exist -- it

9 could exist if I've cleaned up -- it wouldn't matter

10 what you cleaned it up to. You could still have

11 somebody making that kind of claim, whether it was

12 Tier 1, Tier 2. Somebody could still claim that the

13 owner and operator was liable for impact to their

14 human health based on a tort law offense.

MR. CLAY: And keep in mind, the Tier 1

versus Tier 2 that we're talking about is

simply applying site-specific soil

characteristics to the cleanup objectives as

opposed to very conservative.

MR. KING: As opposed to the default

number which Tier 1 is based on.

MR. CLAY: Right. So it's not increasing

the -- you know, in most cases, one in a

million risk that, you know, TACO was based on.

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100

Q (By Board Member Girard) But you feel that

2 legally cleaning up the Tier 2 standards provides as

3 much protection from liability as cleaning up to

4 Tier 1?

A (By Mr. King) Well, you're talking about

6 potential risk to human health or the environment,

7 yes.

BOARD MEMBER GIRARD: Thank you.

HEARING OFFICER TIPSORD: Okay?

MR. GOODEIL: Russ Goodeil, Applied

Environmental.

QUESTIONS BY MR. GOODEIL:

Q Doug, I've got a question, I guess, on the

14 simplest terms.

You had indicated that there are a

16 hundred and eleven communities that have groundwater

17 use ordinance.

A (By Mr. Clay) Yes.

Q And the Agency is basically encouraging,

20 and even through this proposed legislation, forcing

21 owners/operators or consultants to go out and get

22 more groundwater. Then I guess my question --

A That's not true. That's not true.

Q Then, like I say, I'm not a hydrogeologist

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1 or engineer or anything. But I guess, you know, as

2 more of a citizen, my concern comes in if we're

3 implementing these groundwater use ordinances and

4 not cleaning up the groundwater, granted it is

5 expensive, where do we as citizens and Environmental

6 Protection Agency draw the line as to how many

7 communities or how much groundwater contamination is

8 acceptable? And that's, I guess, you know, in the

9 simplest terms.

A Well, the community makes that

11 determination whether or not they want to adapt that

12 ordinance. And what we're posing is the utilization

13 of that ordinance, only if one has been approved and

14 adopted and is acceptable to that site.

I mean, you may have a site that's on

16 the edge of the ordinance. Even though the

17 community has an ordinance, you wouldn't be required

18 to use that, because the model and the extent of the

19 contamination goes beyond that.

So the idea is not that anyone has to

21 go in and adopt an ordinance or go to a municipality

22 and request the adoption of the ordinance. If one

23 is already there and is approved and can be used,

24 that's the one that has to be utilized.

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Q As a follow-up to that, what level of

2 groundwater contamination as citizens of Illinois is

3 acceptable? I mean, where do we draw the line? I

4 mean, I know expenses are a major concern. But how

5 much contamination in Illinois groundwater is

6 acceptable?

A (By Mr. King) Well, I mean, that to me, it

8 seems like that's an appropriate debate to consider

9 when we're talking about what is within the TACO

10 regulations. And I think that is an issue that we

11 certainly debated at the time those regulations were

12 adopted.

You know, to give you an example of

14 kind of the thought process that we've been going

15 through with this. There is an ordinance within the

16 City of Chicago that's in effect that prohibits the

17 installation of potable water wells within the City

18 of Chicago. There have been hundreds of sites that

19 have relied on that groundwater ordinance and have

20 not remediated groundwater, you know, to meet

21 potable supplied uses.

What sense does it make to clean up

23 the hole in the donut? I mean, one of the reasons

24 why TACO was created was to provide a mechanism so

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1 that you don't have to clean up the hole in the

2 donut. Why do it if it's -- why spend the resources

3 to clean up that hole in the donut if it doesn't

4 make sense to do that?

Q I understand that, but the Agency is now

6 encouraging the rest of the donut basically, using

7 your terms -- I mean implementing more groundwater

8 use ordinances within communities throughout

9 Illinois.

And it's my understanding -- I may be

11 misunderstanding. But through passage of the

12 additional groundwater use ordinances, we're making

13 that hole in the donut much bigger, is my

14 understanding.

HEARING OFFICER TIPSORD: Mr. Goodeil, I

was going to say, you need to keep it in the

form of questions.

MR. KING: Yeah. I just want to make it

clear. We do not -- and we have made -- we

have made it very clear in numerous instances

that the decision to adopt a groundwater use

ordinance belongs to that municipality.

They're making the decision relative to the

groundwater use within their community and how

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much they're going to force sites within that

community to clean up relative to groundwater.

If a community does not want to have that

ordinance, and that is certainly our -- that is

certainly their option. Many communities have

seen that there was a benefit to having

projects move forward, be cleaned up, you know,

when they have that groundwater ordinance in

place.

HEARING OFFICER TIPSORD: I don't think

we're going to get done with the Agency. I

would hope we'd get done before lunch, but it's

now 12:15. We have been at it for about 2

hours and 15 minutes. So I think we need to go

ahead and take a lunch break. We'll break one

hour. We'll come back promptly in one hour and

continue with the Agency at that time. Thanks.

(Lunch break.)

HEARING OFFICER TIPSORD: Let's go ahead

and go back on the record.

Mr. Clay has indicated that they have a

response to, I think, Mr. Schumacher's

question. Go ahead, Mr. Clay.

MR. CLAY: Yeah. As we stated, there's

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105

canceled checks, a waiver or affidavit would be

acceptable to payment, but I mean, it's part of

the handling charge. In reading the definition

of handling charge, it's for interest. And so

it's presumed or expected that the prime would

pay their subcontractors, and reimbursement and

then get reimbursed from the Agency.

So I mean, that's, you know, like I said,

part of the -- in the definition of handling

charges interest.

MR. SCHUMACHER: Can I?

HEARING OFFICER TIPSORD: Sure. Do you

have a follow-up? Sure.

QUESTIONS BY MR. SCHUMACHER:

Q Even, say, we paid our subcontractors

16 within 30 days. When I do the cleanup, I want to

17 immediately submit the remediation and all the

18 reimbursement. I don't want to wait 30 days to get

19 a waiver of lien, you know, if I'm paying on that.

20 Is there any way that I can go ahead and submit the

21 claim, and is there any way that I -- say the

22 comptroller is going to give us a check within, you

23 know, we get the letter in a month and a half or two

24 months, and then I have that time frame that before

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106

1 I get paid, before the comptroller actually issues a

2 check. Could I submit the waiver of liens?

3 Because, say, you know, if it takes a hundred days

4 to get paid, and I pay my subcontractor in 30 days

5 or 60 days, and I can get the waiver of liens, I

6 have that time frame to get that waiver of liens to

7 the EPA or to somebody before the check is actually

8 cut. That will at least show that, hey, I did pay

9 all my subcontractor. Here's a waiver of lien.

10 Because what I don't want to -- 30 days, I don't

11 want to wait 30 more days to get in the line for

12 reimbursement just for a waiver of lien.

Is there any way that we can submit

14 them prior to getting a check? Like, would you

15 normally do for a normal contract -- you submit your

16 waiver of lien before the company pays you?

A Right. And I mean, basically you need to

18 wait until you get a waiver of lien before you

19 submit the bills. And I understand what you're

20 saying.

But you've got to remember from the

22 Agency's standpoint, we're dealing with thousands of

23 these things. So you're talking another review now

24 or at least a portion of a review to now you

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1 submitted your waiver of liens, which you already

2 reviewed the package and said, you know, you haven't

3 paid your subcontractors, at least you haven't shown

4 us that you paid your subcontractors.

And I mean, to be honest, one of the

6 reasons this provision is in there is because we

7 received complaints from subcontractors that said

8 I'm not getting paid. And we said, well, let me

9 look that up. And we looked it up and said, well,

10 we paid the owner/operators three months ago. They

11 are not paying the subcontractor.

Q That's not really the Agency's

13 responsibility? It should be the contractors, it

14 should be the consultant, it should be a contractor

15 thing. You know, the subcontractor is not getting

16 paid, the general, and you know, take legal action

17 against that person. It's not --

A No, I disagree. I mean, we are to

19 reimburse corrective action costs. If you haven't

20 paid your sub, then you haven't incurred that cost.

21 I mean, that's the way I look at it.

HEARING OFFICER TIPSORD: Okay.

24 QUESTIONS BY MR. COOK:

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108

Q You said you haven't incurred that cost.

2 If I was audited, our books were audited, on an

3 accrual basis, my auditors would say based on

4 generally accepted accounting principles, that I

5 hadn't incurred that cost. So when you make that

6 statement or you just -- I just want a

7 clarification. What's that based on? Is it based

8 on GAP?

A Based on what?

Q GAP.

A I'm not familiar with that term.

Q Generally accepted accounting principles.

A Okay. It is based on the fact that you

14 don't have anything that showed proof of payment

15 that you're proposing, which is a canceled check, a

16 waiver or an affidavit from your sub.

MR. COOK: All right.

HEARING OFFICER TIPSORD: Any other

questions? Ms. Manning?

MS. MANNING: I have a question for

Mr. King.

QUESTIONS BY MS. MANNING:

Q Gary, you indicated in your testimony that

24 evidence of a continued confusion over Subpart H,

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109

1 which you promised to set straight after these

2 hearings. Could you just enlighten us now in terms

3 of what area of confusion you think there still

4 remains with your proposed Subpart H, and how it's

5 going to work employed by the Agency?

A (By Mr. Clay) Yeah. I mean, one of the

7 real confusions was that we identified -- and I

8 think this was in talking with PIPE members and in

9 talking with Dan Goodwin -- was there was some

10 confusion on how long summons would work and how we

11 would determine a maximum amount for that task

12 actually works.

And if it's a lump sum of $2,000, for

14 example, for consulting services, and the consultant

15 submits an invoice that says $2,000 for a

16 corrective -- well, let's use the real world

17 example. Okay. 51 20 for a corrective action plan,

18 which allows in Subpart H, the consultant submits an

19 invoice that says 5120 preparation for corrective

20 action plan. That's all we're looking for as far as

21 the consultant services and showing that that cost

22 was incurred. We would pay 5120. There would be no

23 other documentation required. I mean, we want to

24 know the dates when the work was done, and that's

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110

1 probably it on that invoice. So there wouldn't be

2 time sheets or anything like that required.

If the consultant would submit an

4 invoice for $4,000, for preparation of corrective

5 action plan, we would not reimburse them 5120. So

6 the 5120 is a maximum. But if they ask for 5120 for

7 that task, then we would reimburse that. We're not

8 going to reimburse you for more than you ask for.

And I think that's what we want to

10 clarify is how those lump sums and unit rates

11 would -- what we would expect and how that would be

12 paid.

Q So that's true of all the lump sum and

14 unit rates from your perspective, that you don't go

15 behind those once an invoice is submitted, saying

16 that I've done that work?

A For subcontractors, you know, we have to

18 have backup invoices for the subs.

For example, if we've got a drilling

20 subcontractor, you know, we'd want to have $19 a

21 foot, which is how many feet that were drilled, the

22 dates. But that's what we would expect from the

23 subcontractor. It would be from the consultant. We

24 have to have that invoice from the sub. But, yeah,

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1 for the lump sums and the unit rate, that's what we

2 would expect.

MS. MANNING: Okay, thank you.

HEARING OFFICER TIPSORD: Anything else?

Okay. I have a few questions.

6 BY HEARING OFFICER TIPSORD:

Q First of all, Mr. Clay, in your testimony

8 on page 4 from this hearing, one of the comments

9 that's made here is that the Agency believes there

10 will be a significant savings in cleanup costs with

11 the establishment of, quote, "reasonable costs,"

12 unquote and regulations. And we've heard a lot of

13 testimony about what's reasonable and all of that.

I guess my to-the-point question is,

15 do you believe that's because you're reducing what's

16 currently considered reasonable?

A (By Mr. Clay) I don't think it's reducing

18 what's considered reasonable. I think it's a matter

19 of what everybody considers reasonable as part of

20 the rules.

I mean, for example, some of the

22 examples I gave as far as what's being billed as

23 reasonable and certified as reasonable, we felt were

24 far from reasonable. And so I don't know that we're

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1 reducing what's reasonable. I think it's just a

2 matter of making sure that everybody knows up front

3 what is reasonable.

And then as a result of that, I think

5 there will be savings in report preparation, you

6 know, re work. We said in past hearings that most

7 of the denials are the result of budget issues as

8 opposed to technical issues. So hopefully we'll

9 avoid those having to be resubmitted.

Q That's actually my next question then. A

11 list of unreasonable costs of the Agency deemed to

12 be unreasonable, I am assuming that none of those

13 costs were appealed to the Board? Or were those

14 costs appealed to the Board?

A The examples?

Q Yes.

A I don't know. I think those were all

18 within the last year, and some of them may have

19 been -- we didn't look at whether or not they were

20 appealed or not.

Q Could you check on that? I'd be

22 interested to see if they were appealed and whether

23 or not were affirmed. Or, you know, I think that's

24 a significant issue. If you were not affirmed,

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1 obviously the Board didn't agree with your summation

2 that those were reasonable?

BOARD MEMBER JOHNSON: Those were all

denied, your list of unreasonable --

MR. CLAY: I think they were all denied,

yes.

The example that I gave where it was $32 a

foot for injection of the oxygenated compound,

they just resubmitted that at $16 a foot, and

we approved that. So that was one that was

resubmitted as opposed to, you know, gone to

something going to appeal, but we'll get back

on that.

Q (By Hearing Officer Tipsord) Okay. Then

15 on -- I think it was page 7 -- no, 14. In

16 discussion about PIPE's comments regarding sort of a

17 draft denial or a draft decision by the Agency, you

18 noted that -- and they analogized with the pertinent

19 section, you say that the analogy to the permit

20 review is not an appropriate unit. You talked to

21 the permit section, and that a permit issue RCRA

22 part B permits require draft to a final decision.

Again, I'm making -- I'm sure you'll

24 correct me if I'm wrong. You talked to the land --

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A That's correct.

Q Are you aware of whether or not water and

3 air permits --

A I believe they do. For example, their

5 NPDS permits, they do draft permits.

HEARING OFFICER TIPSORD: Thank you. And

then in the rules, first of all, in this errata

sheet, given the size of the errata sheet, I'm

going to ask the same request of PIPE later on.

Could you provide that to us on disk?

MR. ROMINGER: Sure.

HEARING OFFICER TIPSORD: And particularly

on page 5 -- and this is also an issue that I

noticed that PIPE raised in their discussion.

But in the new language on page 5, the Agency

states, the Agency "may" allow. As you

probably are aware, JCAR is not fond of the use

of the word "may." So could we have some

further clarification? And I'm not even sure

that "may" is correct based on the testimony.

I think you're using it, as we may do this if

nothing else works, but you will do it in the

first sentence, doesn't happen.

BOARD MEMBER JOHNSON: 202?

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HEARING OFFICER TIPSORD: Yeah, page 5.

Could you just check on that? And we may need

some further clarification.

MR. CLAY: I think that's fine. We'll

allow alternative clarification.

MR. ROMINGER: Yeah. It intends them to

allow to use those provisions.

HEARING OFFICER TIPSORD: Yeah. Then on

page 38, and you talk about this again in your

testimony, about reviewing payment amounts and

that you'll periodically review and maybe

commit to changes. Would the Agency be willing

to commit to when they'll bring those -- you

know, if you decide changes are necessary for

Subpart H, how much time it will be before you

bring those to the Board?

I mean, like, if you do it every three

years, are you going to wait another three

years before you bring it to the Board? Would

you be willing to make a commitment to bring

those to the Board within a certain time frame

after that?

MR. CLAY: Can we look at that? And part

of it will be dependent upon how extensive they

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are. I mean, if it's one number. We wouldn't

want it to input from the community. So we'd

have to have time for that. But I mean, if

it's a couple numbers, it would obviously be

much easier to do very quickly as opposed to if

all the numbers are changing. But we'll

respond to that.

MR. ROMINGER: Yeah.

Q (By Hearing Officer Tipsord) Then sort of

10 a general question -- and this is again going to the

11 economics of the rule, we heard -- you gave us a lot

12 of numbers today about the number of consultants,

13 laboratories, etcetera, that are out there that are

14 probably not members of PIPE.

My question sort of is, do you

16 anticipate that these rules, as adopted, as you have

17 proposed them in this errata sheet, will result in

18 any potential businesses going out of business? Or

19 I mean, do you have a feel for that?

MR. CLAY: We don't anticipate that.

HEARING OFFICER TIPSORD: Thank you. Are

there any other questions for Mr. Clay or the

Agency? Thank you very much.

We'll move on to PIPE then. Let's go off

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the record for just a second.

(Whereupon there was a short

discussion off the record.)

MS. MANNING: This is PIPE's response to

the testimony of Doug Clay that was prefiled,

and I'll be reading that today.

HEARING OFFICER TIPSORD: We're back on

the record.

MS. MANNING: Madam Hearing Officer,

should we mark both of these exhibits? Have

you done that already as exhibit --

HEARING OFFICER TIPSORD: Yeah. We'll

mark the filing from August 3rd, PIPE's

proposed alternative language as Exhibit 90 if

there's no objection.

MS. MANNING: And I would state that I

regret that I don't have copies of this

document today that we filed. So Exhibit 90?

HEARING OFFICER TIPSORD: Yes.

(Whereby, the Hearing Officer

marked Exhibit 90.)

MS. MANNING: And then I would offer then

as Exhibit 91 a document entitled PIPE

Testimony in Response to IEPA Testimony of

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August 9, 2004, and Third Errata Sheet PIPE

Testimony in Support of Alternate Language.

HEARING OFFICER TIPSORD: Any objection?

Seeing none, we'll mark that as Exhibit 91.

(Whereby, the Hearing Officer

marked Exhibit 91.)

(Witness was sworn.)

MS. MANNING: Madam Hearing Officer,

before I begin, too, I would like to suggest

that the legislative community of PIPE as well,

they may testify from time to time after I

respond to the Agency's comments. So perhaps

they ought to be sworn in as well.

HEARING OFFICER TIPSORD: Okay. Let's

swear you in.

MR. TRUESDALE: Joe Truesdale, CSD

Environmental.

MR. WEINHOFF: Jeff Weinhoff, CW3M.

MR. DOTY: Dwayne Doty, United Science

Industries.

(All were sworn.)

MS. MANNING: Thank you.

HEARING OFFICER TIPSORD: Go ahead.

MS. MANNING: First as a general matter,

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PIPE again very much appreciates and respects

this opportunity to address the Pollution

Control Board on this rule making with great

importance regarding the underground storage

tank rules.

Second, PIPE appreciates the changes to

the rule proposal that the Agency has submitted

in its third errata, and further thanks the

Agency for the many meetings we have had over

the course of this proceeding.

In large part, PIPE supports the offered

changes that are in the third errata sheet and

agrees that they are responsive to some of the

concerns raised by PIPE and other interested

groups that have met with the Agency over the

course of the last several months. Further,

the changes make the Agency's proposal more

palatable. Specifically, PIPE, although we had

questions about the proposed draft provisions

regarding bidding, generally the concept as

drafted by the Agency is something that PIPE

can rally around, and to a certain degree,

support. Also we support definitely the

concept of the UST advisory committee, and I'll

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talk about that in a little later fashion.

However, there are still some very

important issues that need yet to be addressed

by this Board. Those issues involve process

and procedure as well as cost designated for

reimbursement.

Regarding process, we do not share the

Agency's position that their proposal will

result in any efficiencies. That's "in any

efficiencies," not "inefficiencies."

Regarding costs, PIPE continues to believe

that the Agency's costs as set forth in Subpart

H are neither well defined nor well justified.

They are not well defined because they do not

define the work necessary for certain lump

sums. They are not justified because they are

not -- they are based on historical data as

determined appropriate by the Agency, and not

on any real or market based data criteria or

statistics.

Today 's PIPE testimony is broken into two

phases. First a response to the Agency's

prefiled testimony and third errata sheet.

And, second, our testimony in support of PIPE's

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alternate approach on the areas of substitute

disagreement that remain.

The following clarifications are required

and result directly from the prefiled testimony

filed by Doug Clay on behalf of the Agency.

First -- and this is a small matter,

meeting agendas. On page 3, Mr. Clay states

that PIPE prepared the agenda for the meetings,

and although the agenda reflected what we

intend to discuss, they do not necessarily

reflect what was actually discussed in our

meetings. A quick review of those agendas will

suggest that all of the issues set forth in

them are issues that PIPE has been concerned

about from the outset of these proceedings, as

the Board will recognize from the testimony of

past hearings. It is true the PIPE prepared

these agendas. It's also true that they

reflect PIPE's concerns. Some of those

concerns, admittedly, were discussed in more

detail than others.

For example, where the Agency made clear

its position at the outset in opposition to

certain items, such as procedural alternatives,

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database for collection of market data and cost

issues, there was very little discussion.

It was not PIPE's intention submitting

these agendas to show areas of disagreement, to

show areas of agreement -- excuse me. Just

areas of concern and discussion. Those areas

of concern and discussion are consistent with

our testimony throughout this Board proceeding.

Impetus for the rule making. In response

to Mr. Clay's assertion, which is found on page

3 of his prefiled testimony, item 2, he states

that, quote, "This rule making was initiated in

2002 in response to statutory changes passed

that year."

And, presumably, I guess, not because the

Agency saw the fund began to fail, PIPE asserts

the following: First, this rule making was not

filed with the Board for public hearing until

January 13, 2004, a full year and a half after

PA 92-0554 became law on June 24, 2002. While

the Agency did in fact at some point during

this period of time have meetings with the Ad

Hoc committee, which consists largely of those

individuals who appeared and offer testimony in

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this proceeding, namely Dan Goodwin and Cindy

Davis, the heart of the concerns raised by the

Ad Hoc committee at that time were not

addressed by the Agency before it filed this

rule and in large part remain unaddressed. And

for that, you can see the testimony in both Dan

Goodwin and Cindy Davis in this proceeding.

The entire testimony at hearing, as well

as Mr. Clay's very next point, item 3 on page

4, contradicts the idea that this rule is not

about controlling costs.

Mr. Clay is correct in asserting that the

transcript incorrectly captured Cindy Davis's

testimony when it reflected that she stated

that the Agency, during our meetings, told us

for the first time that they needed to save

$125 million from the fund. Cindy didn't say

125 million. She did say 25 million. And we

were told 25 million by the Agency during one

of our meetings. 25 million is the figure that

correctly references Ms. Davis's testimony.

Mr. Clay states that the $25 million

reduction figure is justified because, quote,

"Approximately 25 million more is being paid

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out of the fund each year than is coming in."

PIPE would like to point out that, first and

foremost, it supports the idea of ensuring that

the UST fund is used wisely -- excuse me -- for

its intended purpose. That intended purpose is

reimbursement for the remediation of

underground storage tank sites. However, with

the exception of FY 03, at least in the data

presented to us by the Agency, the cost of

reimbursement has not historically exceeded the

revenues the fund generates.

If the state's goal is cost control, which

the Agency at this stage is hard pressed to

deny, the Board and the Agency should look at

the costs of the state's implementation of the

program, rather than direct all of the focus of

this rule making to the unspoken and unproven

assertion that current costs of reimbursement

are unreasonable. Over the last three fiscal

years, the Agency's share of operational costs

from the fund has risen $200,000 to $400,000

per year, such that the 04 cost of

administering the Agency's LUST fund was almost

$4 million, which doesn't include the money

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that the Agency utilized from the USEPA for the

administration of the program. As the Board

well knows, $4 million exceeds the entire

annual appropriation for the Board's own

operations.

Various other states, like Wisconsin,

administer their entire UST program with

federal USEPA dollars alone and do not even tap

into the state's own UST fund for the

administration of the program.

And on that note, I would suggest that the

Agency put a lot of the states other laws in

and talk directly just about the costs of those

other laws. But I would direct the Board's

attention to look carefully at those laws,

because a lot of things that PIPE is talking

about in this proceeding are in fact covered in

those laws.

Things like escape clauses, the 800 -- the

855 rule now, 860, 732.855, 732.860, those are

included in most of the state's provisions,

escape clauses like that, as well as most of

those other states have some sort of scope of

work provisions, so that when there is a lump

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sum attached to a specific job, the job is more

clearly delineated than in this proposal, and

I'll get to that later.

The Agency has not suggested what its

proposal will actually say or how much it will

cost. Mr. Clay's testimony admits that the

Agency has not performed the formal economic

analysis to determine, in specific dollars, the

savings that will be generated by its proposal.

The Agency's expectation of savings is

bolstered only by its presumption that it is

establishing, quote, "reasonable costs." Yet

those costs have not been derived from any

scientifically sound method or from any

reliable market place data. The Agency's

presumptions need to be closely examined by the

Board.

Further, the Agency's focus in this rule

making was not in the least focused on the

great number of sites that have yet to be

remediated in Illinois. Indeed, it was PIPE

who put forth data concerning the great number

of sites that remain inactive. There was no

great concern expressed as to why 5,000 sites

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still await remediation. Indeed, if the UST

remediation business were as lucrative as the

Agency would like to have the Board believe,

one might wonder why this great number of sites

remains inactive. Based upon these statistics,

one might wonder why the EPA is not actively

encouraging businesses like those in PIPE who

are engaged in remediation to double their

efforts, instead of discouraging them from

doing so by squeezing them out of their

remediation business by setting the costs based

on the Agency's selective and dated historical

data.

Time to review claims. On page 5, item 5,

the Agency declares the testimony of interim

PIPE president, Cindy Davis, inaccurate. This

Agency testimony has caused PIPE to reevaluate

our testimony on time frames. And,

accordingly, we have researched all of the data

available on the Agency's Web site regarding

this, and indeed, Mr. Clay is correct. That

the Agency's time frame for issuing each of its

various decisions averages much less than a

hundred and twenty days.

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Further, the Agency has averaged much less

time for decision making FY 04 than it did in

FY 03. The Agency is indeed making substantial

improvements in these time frames. And clearly

the data suggests, however, that a hundred and

twenty day wait for a decision is now out of

the norm.

However, and importantly, Cindy Davis was

also correct, at least in terms of her

experience with her company. The data

regarding her company, CSD Environmental, bears

out her testimony. The average time it takes

for the Agency to issue a decision on a project

involving her company is 119.86 days, which

Ms. Davis now recognizes is well outside the

norm. Indeed, the next closest average,

considering only those companies whose

remediation decisions constitute more than

1 percent of the overall Agency decisions, is

94.26 days. Indeed, out of 3,353 decisions

reviewed, the average Agency time to respond

has been 67.84 days. Also, the data easily

demonstrates that the time frame began to

shorten considerably after the Board's decision

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in Ayers.

Ms. Davis is correct on another point as

well. And from the start of the UST project to

final reimbursement, regardless of the time

frame it takes to issue individual decisions of

the Agency, it takes a very long time to get

that. The statistics above -- excuse me,

include each and every decision the Agency

makes in the UST program. The Board must bear

in mind that there are so many of these

decisional steps that the actual time frame

from start to finish; that is, from budget to

final reimbursement, must consider a number of

them added together. For that time frame,

there are no statistics.

The Agency further states that since the

Act provides it with 120 days to respond to

submittals, any change to that time frame would

need to be a statutory change, and reduction in

this time frame would impact the Agency's

administration of the LUST program.

And indeed, this morning Gary King

indicated that our proposal is inconsistent

with state law, and we'll get into that later,

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because I disagree with him in terms of any

PIPE's proposals being challenged under state

law. That the statute allows for a 120-day

response period does not require the Agency to

take a 120-day response period for each and

every decision.

Further, since the Agency does indeed

issue most of its decisions in a time frame

that's actually closer to 60 days, the Agency's

continued reluctance to at least consider some

of its decisional -- to at least consider the

reduction of some of these time frames is

perplexing, particularly when it asserts that

this rule is going to allow for more efficient

administration and processing.

On page 6, item 5, regarding extension of

the 120-day time frame if more information is

sought, Mr. Clay asserts, quote, "In some

cases, additional information that is needed

can be submitted within the 120-day time frame,

and the submittal can be approved."

First, the Board needs to ask the

questions Hearing Officer Tipsord was asking

earlier in terms of tying the language down in

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this rule making. The Board needs to ask what

cases and under what circumstances, ie who gets

to ask -- who gets asked to provide additional

information and who doesn't.

It has not generally been the experience

of the members of PIPE that the Agency calls

and asks for more information. The opposite in

fact has been the practice. The Agency does

not generally solicit information, and

generally it provides no information regarding

the reasons for rejection or modification

beyond the standard and vague phraseology

"exceeds the minimum requirements of the Act."

Given the Agency's assertion, one must

question why would they continue to have such a

problem with tying these principles down, in

the manner provided in PIPE's alternative

language. Similarly, the Board should ask the

Agency questions like the amount of time it

takes the Agency to approve a plan or report is

largely dependent upon the quality of the

submittal, and that has not been in all of

PIPE's members' perspective as well.

The next item that Doug talked about is

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PIPE itself being a vocal minority. And it

challenges -- he challenged in his testimony

again that PIPE would not identify its members

and could not provide a breakdown of how many

members represented each of the different types

of businesses involved in the remediation of

LUST sites.

He then gave various statistics -- the

Agency did -- in terms of putting everything

into perspective, and offered without

suggesting names, that there were numerous

silent consultants out there who were perfectly

happy with Subpart H. Hopefully, PIPE expects

that the Board is not going to be swayed by any

assertions by the silent people out there who

are not speaking to the Board in this

proceeding. If other companies or associations

have something to say in this rule making, they

can and should do it.

Rather, given the context of Ayers and

other litigation concerning the rate sheet, the

Agency's continued focus on who the members of

PIPE are breeds suspicion, if you would, within

the members of PIPE. And as everyone knows

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here, PIPE was born out of this rule making.

While PIPE very respectfully recognizes the

Board's admonition at hearing -- Member

Girard's -- that failure to disclose its

membership may weaken its credibility, and

we've discussed your concern.

It's evident from this proceeding that

this whole side of the room are members of PIPE

for the most part. We can identify everybody.

And there's a board staffer. And Dan is not.

But PIPE is well represented. It's a new

association that has worked quite positively

with the Agency.

I don't mean my comments here today to be

disingenuous. I do want the Board to know how

serious the members of PIPE are, however.

The following rather prominent and engaged

Illinois associations have happily worked side

by side with PIPE. In addition to the Agency,

the ACEC, the ISPE and the IPMA. Indeed,

PIPE's birth was envisioned and inspired by

IPMA.

And to the extent of the question of whose

interests PIPE represents continues to be

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relevant to the Board, I'm going to offer you

the following:

There are 10,000 UST sites in Illinois

that have yet to be remediated. And PIPE is an

association of various established and viable

companies. Oftentimes we're direct competitors

in this business. They're in a position to and

are very competent to, as you can tell from

their testimony and their questions, to

remediate those 5,000 sites that remain to be

remediated in the State of Illinois. PIPE has

members, companies who are more tangentially

involved in the UST remediation, such as

laboratories, landfills and drillers.

I think in Doug's testimony, he said there

were 48 landfills. We don't have 48 landfills

as our members, but as you all know, one

landfill company, you know, might have several

landfills. So numbers aren't necessarily

driving the concerns of this rule making.

While the Agency alerts that there are a

number of companies who perform LUST

remediation in Illinois -- and they are

correct -- the Agency very much realizes that

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the companies who have been active in PIPE at

these hearings have the greatest market share

of that business, especially when you're

considering how it relates to the gas station

owner and operator with the retail gas station

owner and operators, and those that are not

owned by the large oil companies. Given that

these smaller owners and operators are the

ones, especially in downstate Illinois, who

risk the most harm from this rule making, it

should be no surprise that the consults and

businesses who are in a position to

successfully remediate these properties are the

ones that are the most active in this hearing.

PIPE suggests, again, that the Agency

ought to be encouraging businesses like those

in PIPE who can remediate these remaining

properties. The rule making ought to consider

the importance to Illinois of the viability of

these companies.

Thankfully, Doug's testimony finally

speaks of market factors, as PIPE has

encouraged all along. However, he does not do

so as support for the numbers that have been

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presented in rule making, the rates proposed,

because they're not based on real market data,

but instead in support of the competitive

bidding proposal, which as stated earlier, PIPE

supports as it's written.

Scope of work. The Agency's description

of scope of work speaks volumes about the

differences of opinion that remain between the

Agency and the participants in this making.

Quote, "The scope of work is the work required

to perform the task being reimbursed; preparing

and submitting a plan, preparing or submitting

a report." State job descriptions are

generally more comprehensive than the Agency's

description of what they consider to be the

scope of work on a UST project.

Payment for environmental services

requires a flexible reimbursement procedure

that varies according to the degree of

difficulty in the project. The Agency has

proposed to divide the payment of services for

the consultants into two types of

payments -- time and material, and lump sum or

fixed fee. PIPE agrees that dividing payments

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into these two types is appropriate, depending

on the specifics of the tasks and the magnitude

of the unknowns. Time and material pricing

works best when the technical and financial

risks and unknowns are large.

As many authorities recognize -- and I'm

not going to read all of that, but the bottom

line is, is it's a quote from the Environmental

Business Committee White Paper Performance

Based Contracting. And it basically -- the key

phrase here is that unfortunately many key

government decision makers seem to share belief

that a fixed price guarantees delivery of a

product -- or a project for a fixed price.

This is not a valid notion, because change

orders and large contingency fees are then

needed to protect against unanticipated site

conditions or technology performance. By

utilizing time, material contract when the

risks or unknowns are great, and then applying

lump sum or fixed fee price contracts to

discrete, well defined tasks with small

unknowns, efficiency gains and cost savings can

be realized.

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The Agency does not believe that a

detailed, defined scope of work for every

aspect of the leaking underground storage tank

is necessary. PIPE is not requesting a defined

scope of work be prepared for every aspect of

the leaking underground storage tank site.

However, PIPE requests a defined scope of work

be prepared for those services that will be

paid for on a lump sum or a fixed fee basis.

In the next part, we explain the concept behind

a proposed sub appendix G, which we'll pass

around in a while.

We've drafted Appendix G. And it says,

"which provides a scope of work for the

services for which PIPE has identified as a

commodity type where the tasks are well defined

with relatively small risks and unknowns." The

intent of the scope of work is to identify all

of those tasks that are needed to prepare these

reports or services and to establish a standard

of review. It is our hope that the scope of

work will eliminate arguments of what items and

services are to be provided for the lump sum or

fixed fee. Without a clear defined scope of

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work, the Agency and the consulting engineer

may have differing opinions of what work is

required to be performed, ultimately increasing

the need for appeals. In the event the Agency

reviewer decides the site warrants additional

information beyond the scope, the consulting

engineer should be paid on a time and material

basis to provide the site-specific information.

Mr. Clay has voiced concerns to PIPE that

if the rules were to list the services to be

provided, and it was not an inclusive list, the

consulting engineer would be requesting

additional pay. However, it is unfair to the

consulting engineer when the profitability of

their firm is to provide these services is at

risk.

The best option would be to work together

and develop an all-inclusive list to be

included in the Board's regulations, which

allows all the players to know the rules of the

game. PIPE also agrees that a method needs to

be established to allow additional services to

be included on the scope of work if it's

determined the service was left off in error.

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Swell Factor and Conversion Factors. I'm

going to allow for testimony in terms of the

technical to you guys. I'm going to let you

handle that.

TACO tools and entry back into the fund

after an NFR letter. Regarding this issue,

PIPE responds that forcing a TACO based cleanup

affects the freedom of choices available to the

owners and operators who hire PIPE members, and

accordingly, we defer to IPMA and the position

of owners and operators of this issue.

However, PIPE does have some serious

concerns with the Agency's objection to allow

owners and operators back into the fund when an

unforeseen problem has been discovered after an

NFR letter is issued following a TACO based

cleanup.

The Agency used PIPE's own data, which

demonstrates that some owners and operators

already used TACO, to suggest that since there

was already a comfort level, there should

therefore be a mandate. Yet the Agency has

known from our discussions that owners and

operators will not accept a TACO mandate until

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they are guaranteed to get back into the fund,

if need be, after an NFR letter is issued.

Thus, the idea of allowing these items to

be reimbursed following an NFR is not to make

owners and operators more comfortable with TACO

regulations, but to increase their willingness

to utilize the tools that TACO provides. The

Agency's position on this issue, that being not

being able to get into the NFR again if there's

a problem of award, is shortsighted. If the

Agency wants to realize the cost savings that

TACO will provide, it ought to seriously

consider a vehicle for allowing an NFR to be

reopened under certain special circumstances,

as already is the case with MTBE contamination.

The UST fund is, after all, a fund that is

designed to fully insure against contamination

from leaking underground storage tanks.

On a final note regarding this issue, the

Agency suggests that allowing for a reopening

of an NFR letter, even under special

circumstances, would make it even harder to get

a handle on the fund's outstanding liability.

And on this note, we would suggest that we

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appreciate whatever desire the Agency has to

get a handle on the fund's outstanding

liability. The TACO issue shouldn't hold

anybody up, on the TACO issue as well.

And the next issue that I'm going to talk

about is the professional technical

certification and Title 16.

In Item 12, the Agency's proposal, the

Agency presents testimony for the first time

that suggests putting the LPE or LPG

certification in the Act. The legislature only

intended for oversight of site investigation

and corrective action by that professional.

The testimony misses the mark and shouldn't

really sway the Board. PIPE has never

suggested that the Agency should rely solely on

an LPE or LPG certification. We've never

suggested that. As the Board knows, when the

legislature required an LPE, later an LPG,

certification, the theory was that the licensed

professional would certify to the propriety,

from a technical perspective, of the decisions

that were made at the site concerning cleanup.

In large part, this is to justify that the work

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that was done was necessary for the site

remediation. That is, in fact, the issue here,

by the way.

The question is, how many soil borings

were necessary. The provision also was

necessary because the Agency itself does not

oversee UST remediation from a technical

perspective, as it does in other programs, but,

rather, its oversight is limited to an on-paper

fiscal review.

The point PIPE makes is an absolutely

valid one, which should be folded into these

rules by the Board. That point is that where

there is room, and need, for technical judgment

regarding how a UST site is cleaned up, the

Agency ought to defer to the judgment of the

professional who has signed the certification,

as opposed to Agency reviewer who oftentimes

lacks technical training and is only trained

really in the Agency's standards of fiscal

review. The UST program needs to quit mixing

apples and oranges, apples being technical

questions, and oranges being fiscal questions.

Further, the Agency's citation to 57.7(f),

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as being the alleged sole provision regarding

LPE and LPG certification, brings up a very

interesting statutory question, which I

understand the Board already knows anyway in

terms of the various conflicting statutes which

make up Section 57.7 and are contained in Title

16.

As you know, in 2002, Title 16 was the

subject of conflicting amendments in four

different bills, each of which became public

law. I am not going to read them all, but the

Board should know that they're very

conflicting. And the problem is that the

latter two Acts, which were the LPE and LPG

certification and their revision act actually

were passed before the site classification

bill, but did not become law until after such

bill. Thus, the amendments that were

contemplated and made law in the newer law in

reality amended the old new law.

Even in reviewing the Illinois Compiled

Statutes of 2002, they present four different

versions of Section 57.7. They also point the

reader to Section to 5 ILCS 70/6, which

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indicates how conflicting statutes are to be

interpreted.

Basically, the provision requires that,

where possible, the laws, quote, "shall be

construed together in such a manner as to give

full effect to each act, except in the case of

irreconcilable conflict." The provision

further states that an irreconcilable conflict

between two or more acts which amend the same

section of an act exists only if the amendatory

acts make inconsistent changes in the section

as it therefore existed.

Certainly, regarding the professional

certification clauses, there is no obvious

intention by virtue of the passage of what is

now 57.7(f) to limit the provisions that the

legislature passed regarding LPEs and LPGs in

the context of 92-735. The Agency's original

filing in this matter merely cites 92-554 and

92-735 as the rule's impetus, but does not

necessary either shed further light on the

statutory quagmire.

The Board simply -- the only reason I'm

saying this is, the Board really needs to be

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careful in dealing with these provisions in

terms of how it interprets the Act when they're

conflicting.

On a final note on this particular issue,

the Agency continues to obfuscate the point

PIPE attempts to make regarding professional

certification. Instead, it talks about its

greater authority to ensure reimbursement costs

are reasonable and promises to provide the

Board with examples of how it has received

professional certifications that have

constituted inaccurate or improper

certifications.

Doug went through a list of them this

morning. As PIPE has told the Agency a number

of different times, we hope that they denied

all of those claims. That's their job. We

would hope they do it. In fact, PIPE pointed

out to the Agency that it has the authority

under the statute already to go after any

fraudulent contractors. This rule making is

not about fraudulent contractors.

Database and electronic improvements for

the LUST program. The Agency's response to the

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participants' suggestion of a database for the

collection of market data is, while not

unexpected, is perplexing. Certainly, with all

the resources of the fund that are available to

the Agency, it is in a position to consider the

benefits that electronic efficiencies will

offer them -- electronic filing, electronic

data collection. Instead, the Agency continues

to deem the very suggestion of electronic

efficiencies as a, quote -- and this is the

quote from the testimony -- "a mandated

burdensome and time-consuming data collection

effort which sends the LUST program in the

wrong direction."

We couldn't disagree more. Time and

again, government and businesses have

benefitted from electronic efficiencies and

data collection. It is fairly well-established

business fact that, generally, electronic

efficiencies reduce work; they do not create

more of it.

Indeed, the Agency's position on this

issue is in direct conflict with its position

that its rule proposal is intended to create

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efficiencies. If this rule proposal is going

to work as well as the Agency expects,

basically if the costs are within Subpart H are

good to go, there is absolutely no reason why

not to design an electronic filing form and

database which processes claims in record time.

UST Advisory Committee and proposed

process changes. The Agency's comments

regarding PIPE's proposal, items 14, 15 and

17 -- actually, I'm here to answer any

questions about them when we get into the

testimony about our proposal.

We appreciate and support the Agency's

proposal of the UST Advisory Committee, which

is in item 14. And certainly that committee

will identify problems. But unfortunately,

simply a UST advisory committee is not going to

solve any problems, and they're certainly not

going to solve problems immediately. The time

for some of these solutions and some of these

issues to be addressed and raised and finally

disposed of is now, while the Agency is before

the Pollution Control Board.

Average costs of remediation per site. In

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response to item 17, which delineates the

average cost of remediating sites from 1997 to

2001, PIPE fails to understand the Agency's

following point: And this is the point they

make. The Agency did not include incidents

closed in later years because it assumes that

many claims related to those sites have yet to

be submitted. Actually, as PIPE has indicated

in testimony exhibits, many of those sites,

even the 1997 to 2001 data, are actually sites

that were opened in the years delineated in the

Agency's chart, but haven't been closed yet

either.

PIPE asserts that the more logical reason

for the omission of the 2002, 2003 and 2004

data is that it is not supportive of the

Agency's position. Certainly, over the course

of the years, one would expect that average

costs would rise. If they have not, it's

likely due to the fact that in some years,

there may have been more complicated cleanups

than in other years.

As various members of PIPE have testified

in this proceeding, there are currently some

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very complicated cleanups underway. The Board

should not be swayed by the Agency's continued

use of old data to support real time figures.

The rate sheet. In item 18, the Agency

asserts that, quote, "There appears to be some

confusion regarding the Agency's use of the

rate sheet." We're no longer confused. The

Agency utilized rate sheets, for various

purposes, at various times, based upon rates

deemed appropriate by select Agency employees

looking at select files of select costs. In

large part, the numbers brought to the Board in

this rule making are based upon those select

costs.

Proof of payment for subcontractors. In

item 19, the Agency is requesting the proof of

payment to subcontractors be included in the

application for payment. Mr. Clay states the

proof of payment to the subcontractor is

necessary to show that the subcontractor was

paid, and therefore the owner or operator is

entitled to reimbursement of handling charges.

The definition of handling charges is defined

in the proposed amendments to 35 Illinois

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Administrative Code, Part 734, Section 735.115.

And that definition is administrative,

insurance and interest costs and a reasonable

profit for procurement, oversight and payment

of subcontractors -- subcontracts and field

purchases.

According to the definition, handling

charges are due to the owner and operator

regardless of whether he paid the subcontractor

at the time of services or if the subcontractor

agreed to wait until the owner and operator

received payment from the LUST fund.

Obviously, from question and answers

earlier today, it's not the Agency's intention

to indicate whether the contractor paid the

subcontractor. And to wait for that payment,

they expect that there has to be proof of

payment before they will pay the contractor for

any of the subcontractor costs. Even if the

subcontractor agreed to wait for payment, the

prime contractor bore the cost of insurance,

administration, and is entitled to a reasonable

profit for the procurement and oversight of

subcontracts. It is unfair to the prime

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contractor to deny a handling charge if the

subcontractor agreed to wait for payment.

For essentially the same reasons, PIPE

proposes that Section 734.630, double zero, be

removed. Even if the prime contractor has a

financial interest in the subcontractor, the

prime still bears a cost of insurance,

administration, etcetera. There's nothing

untoward in this relationship. It's a typical

business relationship.

Drilling beyond stage three. In item 20,

the Agency squarely presents the dilemma a

consultant faces when he has to perform work

not necessarily contemplated in the four

corners of the rules.

Mr. Clay explains that, if someone has to

drill beyond stage three, he could do so

without approval, because he now will know,

with certainty, what he will be paid for the

drilling.

What we've all come to realize that

there's this disconnect in this proceeding.

However, is that the concern is not with what

the cost of drilling will be, but whether the

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Agency is going to approve the drilling at all.

The Agency has shown no propensity to defer to

the judgment of a licensed professional as to

whether any work will be necessary or whether

that particular work was necessary, and the

Agency has shown every propensity to deny costs

if the work performed, that contractor

performed, was what the Agency deems, without a

technical review, excessive. The mantra being,

"exceeds the minimum requirements of the Act."

If the Agency intends to streamline, they

should allow an expedited method of getting

approval in this situation, or other "out of

the box" atypical situations. They should also

exhibit a willingness to define a particular

scope of work.

IDOT excavation, transportation, disposal

costs. In item 22, the Agency claims it has

been in contact with IDOT. And, in fact,

putting the letter into evidence today -- and I

have had an opportunity to read it. And it

doesn't deny that PIPE's testimony that the

average cost that IDOT pays contractors

for -- the particular cost is 99.75. The

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Agency proposes 57. But they claim a

distinction because of the way IDOT reviews

bids and awards contracts. And I continue and

I think PIPE continues to fail to understand

the distinction.

The fact of the matter is, when reviewing

the IDOT contracts, that is the average cost of

that particular piece of work.

At this time, Madam Hearing Officer, I'm

concluding my remarks, at least that are

directly in response to the Agency's remarks

and the errata sheet.

In large part, as I indicated, we're

supportive of all of the Agency's comments in

the errata sheet and the movement they've made

in the errata sheet, but we believe that

there's a lot of substantive issues that

remain. And I'm willing to go on and talk

about what it is that PIPE is proposing, unless

anybody wants to ask any questions at this

point.

HEARING OFFICER TIPSORD: Let's go ahead

and proceed with your testimony, and we'll take

questions.

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MS. MANNING: Okay. If I might just add,

that our proposals really are, from our

perspective, while some of the issues are in

direct conflict with the Agency's issues in

terms of scope of work, in terms of potential

cost and in terms of procedures, by and large,

we've been able to work out a lot of the other

issues.

One of the issues we would suggest the

Board look at -- and we didn't -- and I know

other people have testified. I think David

Reeser (sp) maybe at the first hearing that the

Board had in this matter, is to look at the

idea of merging Part 732 and Part 734. Having

both parts is going to be very complicated for

the regulating community, in that every time

somebody is operating under one or the other,

every time, you know, it's changed, you'll have

to change both parts. We just raised this as

an idea because we believe that it's

complicated to have both 732 and 734, but we

offer no suggestions to the Board in terms of

whether to do it.

Subpart A. In terms of the general

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provisions, the Agency's applicability

clause -- and we've talked to them about the

applicability clause. And I think we're pretty

much on the same page with that, except that I

think that the language we proposed -- and I

would welcome any words that the Board finds

appropriate in terms of the applicability on

this.

The key, I think, is that there can't be

retroactive application of the rules. Whatever

amendments the Board makes and whatever -- once

they're promulgated and they go through the

joint committee, that's when they're effective.

So any work performed, any budgets approved

prior to the effective date of these rules,

these rules wouldn't apply to. I don't think

that the Agency's provisions are written that

tightly, and I think they should be.

We put in both for 732 and 734 -- and,

again, we would welcome any wordsmithing on the

part of the Board in terms of tightening the

applicability.

Definitions. Gary King spoke about this,

this morning. And I find it interesting that

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PIPE's only perspective in putting the

definition of UST-RA is to simplify things.

There was no intention to develop any sort of

liability that's under Title 17 into Title 16.

It's especially interesting, in that the

Agency's proposing TACO. TACO comes out of

Title 17. And if there's legal issue in terms

of the applicability of the site remediation

program to an underground storage tank cleanup,

one would think that would be a legal issue,

not simply a suggestion that a definition be

considered that makes this process work better.

We didn't even think of the UST-RA issue

until, quite honestly, there was an Agency

surreplying the Ayers case, where there was an

argument raised that there was something

untoward, if you will, because one of the

members of PIPE was the decision maker in terms

of appealing something on behalf of an owner.

And the point I think we're trying to make

is there's nothing untoward in that at all.

Owners and operators have contracts with

consultants continually in this program, and

that ought to be recognized by the Board, and

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that there's no problem with that.

And the definition that's contained in

Title 17, speaks perfectly to various issues.

It basically just says, "a Underground Storage

Tank remediation applicant means any person

seeking to perform or performing investigation

or remedial activities under Title 16 of the

Act, including the owner/operator of the site

or persons authorized by law or consent to act

on behalf or in lieu of the owner/operator of

the site."

This simply recognizes the contract, if

you will. That is a matter of general business

course between consultants and owners and

operators of the underground storage tank fund.

That's it.

And there are other states, if you look at

them. I think Indiana is one of them where

they actually have a form that an owner or an

operator can file, indicating that a consultant

can deal on his behalf with the Agency. The

idea is just to make this easier.

And, again, even the language here doesn't

suggest that we're assuming liability on the

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part of the consultant. It says responsibility

for interfacing with the Agency on questions

concerning the propriety of the remediation

almost always rests with the consultant the

owner has hired to remediate the property.

The next item I think that I just wanted

to talk about is the data collection, plans and

budgets and reports. We had suggested language

in the Section 734.135. And, again, the Agency

has been opposed to the whole concept of a

database. The benefits of the database, I

think, we talked about earlier.

The language just says the Agency shall

create an electronic database that will allow

for electronic plans, budgets and reports;

collect and maintain data relevant to costs and

remediation of sites, including costs that are

usual and customary in the cleanup of such

sites, as well as data related to the number

and severity of sites yet to be remediated; and

provide for expeditious review and payment of

claims that meet the requirements of the Act.

Early action. We proposed changes in the

early action, free product removal section.

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Again, this was for purposes of making these

rules easier to deal with. It wasn't intended,

and I don't believe that it causes any major

legal issues. In fact, I don't consider that

it has any legal issues in terms of 734.215.

On Page 15 of our proposal, we talk about

the Board notes as well. And the suggestion is

to look at the Board notes because they may be

obsolete. Our idea is to tie this all up so

that we all know whatever language the Board is

using, whether it's maximum rates or lump sums

or reimbursable costs. As we've suggested, it

needs to be tied up.

And there's -- really the Board notes are

simply confusing to the regulating community.

So the Board might want to consider whether it

just wants to do away with those Board notes

and make the rules, say what they need to say.

Subpart E, review of plans, budgets or

reports. Gary testified to this -- well, he

didn't testify to it, but he did say that this

would be, I guess, Doug, if that there was a

problem with the procedure and if it conflicted

with state law, but it's my impression that

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they do not.

First of all, the time frames in here are

not doing anything that's inconsistent with the

Act. It's just setting forward a specific

process. 734.505(a) is exactly the language of

the Agency. 734.505(b) talks about the

authority to approve, reject or require

modification.

What it really does -- actually, in the

middle of that is the Agency fails to make such

decision within 120 days, the applicant can

consider the Agency to have denied the

submittal and can proceed to invoke the

processes set forth in this.

That is the law. That is the law. PIPE

would like it differently. It would be great

that if it was actually a grant as opposed to a

denial in most cases, but it's a denial. So

that is the law.

The part the Agency may find objectionable

also isn't -- there's nothing wrong with the

law, and that is to turn the burden of proof.

The Agency will have the burden as to why the

applicant's submittal violated the Act or these

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regulations or was not otherwise approvable.

If the applicant prevails before the Board, the

Board may authorize the payment of the

applicant's costs from the UST fund. That's

the law as well.

C is the Agency shall process claims as

expeditiously as possible. Where the submittal

and attendant costs are consistent with this

part, the Agency shall approve such a submittal

within 45 days of its receipt. Just because

the law says they get 120 days doesn't mean you

can't, in your regulations, allow for a shorter

time frame, especially if the Agency is used to

processing it in that amount of time frame, a

shorter time frame anyway, number one.

And, number two, if the theory of these

rules is that everything is going to be easy,

and it's an easy review, and the costs are

contained, when everyone follows Subpart H, the

Agency shouldn't have any trouble just

approving the plan then within that period of

time.

Subpart D then says if the Agency intends

to reject the submitted plan, budget or report,

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or requires modification thereto, or requests

more information, it shall within 45 days of

the receipt of such submittal, provide written

notification of such intention. Such written

notification -- and those four provisions are

taken right out of the statute. Granted those

provisions are taken out of the statute after

the 120-day time frame in terms of rejection,

and in the middle part of it in terms of a

modification, but there's nothing wrong with

doing it this way from an administrative law

perspective. It does not violate the

Environmental Protection Act. It does not

violate the Administrative Procedures Act. It

certainly is a streamline procedural approach

to getting decisions made easier, quicker and

more efficiently.

It says it if chooses to modify the

submittal in response to the Agency's written

notification, the applicant shall provide such

notification of modification to the Agency

within 35 days of receipt of the Agency's

letter of intention. The applicant's notice of

modification shall not extend the applicable

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120-day review period.

In fact, I think Doug, in his testimony,

talked about how, you know, when they get

information, it doesn't extend the 120-day

period. So they shouldn't have any problem

with that either, because you shouldn't ever

extend the 120-day period in underground

storage tank.

F is then if, at the end of the period,

the Agency deems that the submittal should be

rejected, it shall provide written notification

for the reason of such rejection, which shall

include one more of those reasons delineated in

734.505(d).

And I'd like to point those out, if for no

other reason, are statutory. You know, that's

why they're italicized, except they're not

currently the Agency's proposal. And generally

when they get a rejection letter, there's not

this specification. When UST remediation

applicants, or whatever you want to call them,

the consultants apply and get a denial letter

from the Agency, oftentimes that denial letter

simply says exceeds the minimum requirements of

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the Act, and doesn't allow for any more

specificity on that.

And it talks about if the applicant has

modified its plan, based on the Agency's

request; that's not good enough, and there's

still a problem. The Agency ought to explain

to them why that's a problem as well.

G says an owner and operator may waive the

right to a final decision within 120 days.

That's basically already in the Agency

proposal. That language isn't any different

than the Agency's letter.

H, I think is the same as the current

Agency language as well. The Agency shall mail

notice of its intended action, pursuant to

Section 734.505(d).

I. Any final action by the Agency to

reject or require modifications or rejection by

failure to act, of a plan, budget, or report,

in accordance with Section 735.505(f), again,

which cite the statutory language, shall be

subject to appeal to the Board within 35 days

after the Agency's final action in the manner

provided for in review of permit decisions in

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section.

Nothing new either.

Where an applicant has filed an appeal

with the Board, the Agency shall at the

applicant's request, agree to a 90-day

extension provided in Section 40 of the Act.

Generally, they do that anyway. I mean,

there is a distinction there in terms of saying

that the Agency shall agree to a 90-day

extension. Perhaps there is an issue there,

but if so, it's not a big one, and it's not

something that is a deal breaker in terms of

PIPE anyway. It's not really the focus of this

procedure.

My testimony here is that the focus of

this procedure is absolutely within the

confines of both the Environmental Protection

Act and the Administrative Procedure Law.

During this period at the applicant's

request, the Agency will meet with the

applicant in an effort to resolve any dispute

about costs or narrow any issue that may be

appealed to the Board.

2. Where the applicant prevails before

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the Board, the Board will authorize payment of

the applicant's reasonable attorney's fees from

the fund, in accordance with Section 57.7 of

the Act, unless the Board finds that the appeal

was not taken in good faith.

Admittedly, that particular provision

further details the discretion already allowed

the Board in the Act. So if the Board

obviously prefers the discretion as it is

written in the Act, that's not a deal breaker

in terms of PIPE either.

3. As an alternative to a Board appeal,

the parties may mutually agree, in writing, to

the services of a mediator or arbitrator who

shall be paid a reasonable fee from the UST

fund. And then it talks about specific

requirements that the UST Advisory Committee

will establish, a list of acceptable neutrals

who need not be lawyers and who shall not be

state employees, but demonstrate an

understanding of issues related to the

contracts. The UST advisory committee will set

a limitation as on the rate to be paid any such

neutral.

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PIPE's intention here is not to avoid a

Board appeal. And PIPE drafted this, in large

part, not knowing what the balance of powers

are and still not knowing what the balance of

powers are in terms of pursuing appeals to the

Board. It's very costly, as you know now, as I

certainly know, to proceed through the Board

through an appeal process. Statutes require

that you have to have a lawyer to argue before

the Board. This particular process would give

the parties an "out" if they chose. Obviously,

if would be a contract between the EPA and a

particular consultant, instead of going the

route of the Board, which would have an appeal

to the courts. They decide just to resolve it

more informally. It's an alternative dispute

resolution procedure that allows for that to

happen.

The Board might, I think, already has a

rule that allows the Agency and members of the

regulating committee to have an alternative

dispute resolution procedure, which takes a

decision outside of the confines of the Board.

I think it's in the MSHA program, but I am not

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sure. I will provide the Board with that

particular provision, but I'm sure that there's

at least one area on board regulation where the

Agency's proposed itself an alternative dispute

resolution mechanism.

The reason PIPE is proposing this is that

the balance and the equation of power in the

underground storage tank program is no

different than it is in other programs that the

Agency administers. In large part, that's

because of the numbers of cases that the Agency

deals with. It's also because that the money

in dispute is not as large as it is elsewhere

when you're talking about permits and those

kinds of things.

The other issue I think the Board needs to

look at is, this really isn't a permit appeal.

While the law has drawn the underground storage

tank process into Section 40 of the Act, it

really isn't a permit appeal. So there are

various kinds of things which I've suggested in

my filing to the Board in terms of differences

and similarities between this and the permit

process.

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Certainly I would suggest, though, the

Wells case that we talked about in here that

found that the failure of a company to receive

information before a denial may very well

violate due process. It's something the Board

at least should look at in terms of evaluating

the propriety of a process like this. PIPE is

very serious about the idea of process and in

making sure that things work more

expeditiously.

More so than any other program or many

programs, PIPE members feel they're in a black

box when we're dealing with the Agency, and

it's a black box that's really hard to get out

of. And it's really costing them a lot of

money in terms of doing their business, and

many of them are even considering getting out

of the business as a result of that particular

black box. That is not good for the State of

Illinois. It's not good for the remediation of

these 5,000 sites that are inactive and sitting

out there. So this is a real serious proposal

on the part of PIPE that we would like the

Board to listen to in terms of making this

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process more workable and in terms of balancing

the equations of the parties out a little

easier, and a little more as the Act intends,

that the regulated community and the EPA have

equal authority when they get before the Board.

Obviously, this was written as well before

the Board's case in Ayers recently that you

issued on Thursday. We just found out about

that case, tHat the attorneys' fees issue. And

I'm sure the --

MR. KING: Excuse me.

MS. MANNING: Okay.

MR. KING: I don't think we should be

talking about cases that are pending before the

Board.

MS. MANNING: I thought that case was

closed. I'm sorry.

BOARD MEMBER JOHNSON: It's well within

the appeal period.

MS. MANNING: Okay, thank you.

That's all I had on procedure, procedure.

The payment from the fund. We indicated

in our Subpart H filing, as the Board has known

for some time, that we have two real issues.

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The first issue is the lack of a definitive

scope of work for any of the things for which

lump sum is due and owing.

We have worked very hard, and we've given

various drafts to the Agency a long time ago,

and we're still working on all of us agreeing

what it is that's the scope of work for a

particular process where a particular lump sum

that's applicable in this particular

proceeding.

And I believe we do have a draft of

Appendix G, of proposed Appendix G that we're

going to circulate, and then I'll put into

evidence.

In terms of rates and dollars and PIPE

offering any numbers to replace our Xs that

have been presented to the Board in the filing,

at this point, we have decided -- let me just

explain what we've done thus far and where

we're working on the numbers.

PIPE has agreed, through me basically, to

exchange numbers and has attempted to come up

with specific numbers that fit the categories.

However, we have discovered, just like we

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thought perhaps we would, until we get a

delineated scope of work so that everybody

understands what's called for in every lump sum

payment or maximum amount, or whatever the

Board intends to call it in its rule, until

that happens, until everybody agrees what it is

that's required for that particular piece, it's

very difficult, if not impossible, for us to

come up with an alternative set of numbers for

that particular piece. We're still working on

it, as we do intend, at some point to present

those numbers to the Board.

And the way we're going to do that is

basically through me. Everybody will, once

their work, scope of work is delineated, based

on the Agency's sections, we're going to take

each of those sections, say this is what the

work is for this particular dollar amount, we

all agree that's what we'll do for it. That's

what's included in it. Let's get that language

in the rule, let's put a specific dollar amount

on it, and we'll present that to -- each member

of PIPE will send me their own indications of

what that number will be, should be, and then

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I'll send those to the Board. But that is a

process that will have to take place after

we've all come to an agreement on what the

scope of work is. And I think that is a

process that everyone in this rule making ought

to consider that needs to be done before we

actually come up with numbers that work.

The other alternative that PIPE considered

and would like the Board perhaps to consider,

and we've asked the Agency to consider, and

they've not, is the idea of using a

professional market based consultant, like RS

Means to come in and look at this particular

situation, this particular market, this

particular state and indicate what those

numbers ought to be.

My understanding is the State of Wisconsin

is going through rule making at this point in

time, and they're going effective with their

new rule in September. And my understanding is

they're basing some of theirs on drawing from

RS Means. We've actually talked to the people

from RS Means. PIPE's not in a position

obviously to hire them and to say come and look

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at market data. PIPE is convinced and

committed to develop accurate market based fees

and structures. We're not just looking here to

up the costs and have a high cost of

remediation. As I said, there's

5,000 -- there's a lot of work yet to do in

Illinois. What we're very concerned about,

however, to make those costs relevant to

reliable and market based, and there needs to

be a appreciation for the businesses that are

already established that are capable of doing

this work and in prices that reflect their

costs of doing business. So at this point in

time, that's where we are. Go ahead.

BOARD MEMBER JOHNSON: Have you come to a

consensus? Have your group members come to a

consensus on how you intend to do that?

MS. MANNING: Yes. And we had the scope

of work that we'll pass out today. I think Joe

has it. Do you just have one copy, Joe?

MR. TRUESDALE: I have three versions.

HEARING OFFICER TIPSORD: You know what?

I'm going to need to have more than one copy.

MS. MANNING: How about we put it in

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public comment after the Board hearing?

MR. TRUESDALE: I have two different

versions that I'm aware of yet.

MS. MANNING: That's what we're doing. I

mean, we've have a scope of work that all of

the consultants that at least are members of

PIPE have agreed to. And what they're going to

do is give me numbers.

HEARING OFFICER TIPSORD: From a practical

standpoint, we've already had five sets of

hearings here. It would seem to me that this

would be a fairly substantial piece of

information you're wanting to put in. When

does PIPE anticipate having this scope of work

done so that you can move on to the next point?

MS. MANNING: Probably two weeks, a week.

MR. TRUESDALE: If I might just add

something. A lot of it -- a lot of problems

have come from just trying to figure out what

will be required in the regulations and the

changes that have come about through this

hearing process, what was required for site

investigation in the initial proposal versus

what site investigation requirements are.

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Fourth, first, second and third errata sheets.

The scope continues to change for us. So it's

hard to put our finger on what we have to do as

a result of that.

MS. MANNING: Well, you saw some of that

in the testimony this morning about the

questions about the bids. I mean, there's a

moving target here, which makes it more

difficult, because every time any part of the

questions our people had this morning, well, if

you have more than one bid, you know, do you

have more than one bid for each thing? And if

the bid -- you know, if you do a second

drilling, do you have to go and get the bids

again the second time? And so all of those

things need to be considered in terms of what

the scope of work is.

BOARD MEMBER JOHNSON: Well, we

appreciate -- it's like trying to put a thumb

tack on jello. You know, we have a time line,

and I think that that's what Marie was getting

to is that we can't wait forever.

MS. MANNING: I understand that. And we,

honestly, the last time we met with the Agency

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and Dan Goodwin, there was -- and I think he's

going to testify today, we asked for more time

because we thought we had another couple of

weeks to work with the Agency. So I would

think it might behoove the Board to have

another set of hearings or just one in the next

week or two. But Dan is going to testify today

as well.

HEARING OFFICER TIPSORD: Before we move

on to that, did you have additional testimony,

or are you ready for questions?

MS. MANNING: Did you guys want to say

anything? Can we have just a few minutes?

HEARING OFFICER TIPSORD: Yeah. Let's

take a few-minute break, yeah.

(Brief break.)

HEARING OFFICER TIPSORD: Let's go back on

the record.

MS. MANNING: In response to the Board's

question, Madam Hearing Officer, I am prepared

to put two pieces into evidence, which might

indicate that at least on some costs were

closer to the Agency than it appears. And

those are the construction costs, those costs

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that are very well defined, and they're not the

professional services costs. They don't

necessarily require the same scope of work.

I have a document. Which exhibit are we

at now? And I'll go ahead and mark it.

HEARING OFFICER TIPSORD: Exhibit 92 for

construction costs. And I'll explain it.

(Whereby, the Hearing Officer

marked Exhibit Number 92.)

MS. MANNING: These are costs that

directly are taken out of the Agency's

proposal, Subpart H. One we did is put the

word out to various members of PIPE. Six

companies responded. Some companies didn't put

numbers as to anything and others put numbers

down. And this fills in at least the Xs from

PIPE's perspective on those unit costs. As you

can see, we're really not far from the Agency

on some of these costs, like ET & D.

BOARD MEMBER JOHNSON: What, Claire?

MS. MANNING: E T & D, excavation,

transportation, disposal. The famous $58, in

other words. We're not seeking the $97 that

IDOT pays their contractors for ET & D. You

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know, that big issue about IDOT.

MR. ROMINGER: Is that a third column

down?

BOARD MEMBER JOHNSON: I was just trying

to find that.

MS. MANNING: Yes, it's the third, Member

Johnson. It's the third group, ET & D yards

per three.

BOARD MEMBER JOHNSON: 67.46.

MS. MANNING: That's the 90th percentile,

you're right. The minimum was 57. The maximum

was 69.509, average was 6140. These were based

on, as I indicated, each of the company's

submitting to me, somebody designing this form

based on the Agency's Subpart H, as we've

suggested it be amended in terms of adjusting

certain categories.

An example of that is the type of tanks.

I think the Agency only had two or three

different types of categories of tanks, and we

thought there needed to be more categories of

tanks. As can you tell when you get a tank

that's very large, the issues get more

complicated. And several of the companies

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didn't want to put a price on that at all.

So there are some, you know, of these

various different things where what you can see

from this is where we were uncomfortable

putting prices on and where the companies were

comfortable putting prices on. And in some

areas that's not all that far apart from the

Agency in terms of these discrete construction

costs.

Many of these costs as well, the Board can

look at RS Means and find similar kinds of

costs. And that's my next --

BOARD MEMBER GIRARD: Before you leave

this exhibit, could I just ask a question now?

MS. MANNING: Sure.

BOARD MEMBER GIRARD: How again did you

solicit this information from the company? Did

you just call them up and say how much money

you would like to get for this service?

MS. MANNING: They're not services.

Basically we said look at Subpart H, and

emailed a blank Excel spread sheet, said price

this as you would if you're bidding for an IDOT

job, and send it to me. And that's exactly

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what happened. And then I took those figures

and created this document.

We were not able to do any of the other

costs that need a more clearly defined scope of

work, professional services cost, the cost of

doing EACP, those kinds of things.

BOARD MEMBER GIRARD: Now, company four,

you didn't get any information from company

four; is that correct?

MS. MANNING: That's correct.

BOARD MEMBER GIRARD: So this is simply an

email survey. And were these companies

familiar with the Subpart H proposal?

MS. MANNING: Yes.

HEARING OFFICER TIPSORD: Were they all

members of PIPE, did you say?

MS. MANNING: Yes. Some of them not

active members of PIPE. Some of the members of

PIPE, I should point out as well, were not

willing to yet attach any costs to it. So you

can't assume that they're simply the members

that testified. They're -- go ahead.

MR. TRUESDALE: I might mention that some

of the PIPE members are -- our firm, for

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instance, used RS Means data entirely to derive

costs that we presented as reasonable prices in

our statement for costs.

MS. MANNING: Which is an example I'm

going to label Exhibit Number 93.

HEARING OFFICER TIPSORD: I think we have

another question on this chart.

MR. GOBELMAN: Steve Gobelman, Illinois

Department of Transportation.

I haven't seen this form, but you say it's

like any other IDOT construction costs.

MS. MANNING: No, I didn't mean to suggest

that.

MR. GOBELMAN: Is that volume based on

what's going to the landfill per cubic yard

cost? Is that based on the volume that's going

to the landfill?

MS. MANNING: Yards per three.

MR. GOBELMAN: Is that based upon the

volume?

MS. MANNING: Yes, I think it is, isn't

it?

MR. GOBELMAN: Are you aware of how IDOT

does their work?

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MS. MANNING: I'm not making a comparison

to IDOT.

MR. GOBELMAN: Yes, you did.

MS. MANNING: Maybe. Let me just

clarify --

HEARING OFFICER TIPSORD: Wait a minute.

One at a time, one at a time.

MS. MANNING: I can.

MR. GOBELMAN: Specifically everything

related to the cost of what you perceive to be

the average cost that IDOT pays for

transportation, disposal of contaminant soil?

MS. MANNING: From our perspective, and in

what we're suggesting here, it's irrelevant to

us at this point in time what the average cost

of ET & D is that IDOT does in its contracting

service.

MR. GOBELMAN: Are you aware of how IDOT's

transportation disposal of volume is calculated

on?

MS. MANNING: Not at this point in time,

no.

MR. GOBELMAN: So, therefore, you're

making a comparison on something you don't

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understand or know about?

HEARING OFFICER TIPSORD: Wait a minute.

MR. COOK: All of these members of PIPE

that responded to that are all doing work and

are well aware of how the Agency does those

calculations, and they would use their current

levels of experience and understanding in how

the Agency works. So it is completely

irrelevant.

HEARING OFFICER TIPSORD: Mr. Cook, you

have not been sworn in. And you are clearly

offering testimony. So please be sworn in.

(Whereupon the witness was sworn.)

HEARING OFFICER TIPSORD: You can

continue.

MR. COOK: Well, my point is, that the

firms that prepare those numbers would have

prepared those numbers consistent with the

means that they would use to prepare a budget

that they would submit to the Agency today.

MS. MANNING: Correct.

MR. COOK: So they're well aware of the

Agency's methods of determination of soil

volumes and that sort of thing. So this

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comparison to IDOT, which was used casually, I

believe, was completely irrelevant.

MS. MANNING: Thank you.

MR. TRUESDALE: I might just mention maybe

to clarify.

The way it was presented is, it was sent

out as this would be a request for proposal for

any environmental work, be it an SRP project,

whatever, an arbitrator request, a proposal for

a request for this particular work item, that's

how it was bid irrespective whether it was in

the LUST program, SRP. It was marketable rates

for doing this service.

MS. MANNING: And, again, it's presented

to show that on some of these costs, there's

not that great a distinction.

And based on your question about moving

this forward, I wanted the Agency to know, and

I wanted the Board to know that it's not like

we're out here hanging, not working. We're

working at very hard getting to where we think

this rule needs to go, and I presented that to

show you that.

HEARING OFFICER TIPSORD: We had no doubt

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that you were working hard.

BOARD MEMBER GIRARD: I have one more

question.

How can you come up with a bid for -- I

mean, like I understand excavation. You know,

per yard square and disposing a per yard

square. But transportation costs depend on the

distance that's being transported. So how are

you able to come up with a figure without

knowing that, you know, it's X number of miles

to your disposal site, from your cleanup site?

HEARING OFFICER TIPSORD: I am sorry?

MR. RANGUSSO: Bob Rangusso with Marlin

Environmental.

I think you're getting to the point

exactly. How do you set one price when there's

such high variability in the cost of transport

and disposal variables throughout the state,

regional, local, traffic, seasonal conditions,

all of those things. What we were responding

to is the Agency has set one number that

categorically covers the maximum for any

scenario that might happen throughout the

state. So, therefore, we're trying to match

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apples with apples on their behalf. I mean, I

would certainly agree that it is not something

that should be -- it should be on a

site-by-site basis.

MS. MANNING: That's why I would add to

that, that's why some PIPE members refused to

actually even fill the numbers out because they

were not able to do that.

Our point was the Board is going to want

to see something as an alternative to the

Agency. The Agency has been asking us for

alternative numbers for several months now.

You have hit the nail on the head. It is very

difficult to put numbers out there when you

don't exactly know what the numbers apply to.

We were trying as best as possible to be

responsive to the Agency Subpart H.

BOARD MEMBER GIRARD: But would this make

it appear that Subpart H now has become the

floor for these costs, because the lowest cost

of these five companies that came back with an

estimate is the maximum cost that the Subpart H

proposals is to pay for that? $57?

MS. MANNING: Again, we looked at Subpart

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H, where we could define a particular cost

based on what we believe to be the Agency's

expectation.

MR. TRUESDALE: I might explain.

Some of the responses may have been that

appears that Agency proposed Subpart H costs

are adequate or something to that effect. So

as a result, the numbers that went in would

have been reflective of what Subpart H

suggested.

HEARING OFFICER TIPSORD: Go ahead.

MR. WALTON: Harry Walton.

At the previous hearing, there was a lot

of dialogue focussed at the IEPA statistics for

their population from which they drew their

costs. In comparison, what is the population

from which PIPE drew its sampling, in context

to the total population out there, do you feel

that your numbers are statistically valid? Are

the same issues that you raised to the Illinois

EPA's numbers, are they still issued here also?

MS. MANNING: I'll answer to that, Harry.

I don't disagree with you. The fact of the

matter is, it took us a long time to try to

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decide whether we were going to throw these out

or not. We're not suggesting these are the

numbers. In fact, that is exactly the issue in

this proceeding. The Agency comes out with

select numbers based upon not a statistical

database. Our numbers are based on -- I can

tell you our numbers are based on contractors

that do a lot of UST work today. Now, today,

probably out of -- there's an exhibit already

in the record out of most of those UST

remediation consultants that have in the double

digits, if you will, sites out there, and are

members who may have been asked to fill this

out.

MR. WALTON: But population size is very

small?

MS. MANNING: What do you mean population

size?

MR. WALTON: Responses that characterize

your entire statistics.

MS. MANNING: I would point out, Harry, as

well, when I reviewed the documentation of all

the underground remediation businesses, the

businesses in Illinois that do underground

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storage tank remediation, the great bulk of

them, the great bulk of them had less than

1 percent market share, if you will, out of

the -- for lack of a better word, less than

1 percent of the Agency's decision making

applied to those.

HEARING OFFICER TIPSORD: Excuse me,

Ms. Manning, but you're making it very

difficult for us to hear. Go ahead,

Ms. Manning.

MS. MANNING: Less than 1 percent of the

Agency's decisions applied to that great bulk

of contractors.

MR. WALTON: I understand.

MS. MANNING: So, basically, this is a

good representative group of those underground

storage tank remediation businesses that do a

lot of underground storage tank remediation.

HEARING OFFICER TIPSORD: Mr. Truesdale?

MR. TRUESDALE: In addition to that, I'd

like to point out, once again, that many of the

costs were derived solely from RS Means, which

is a database that's essentially infinitely

prepared by a third party data resource

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clearing house. UST abandonment costs, for

instance, at least I know at least one of the

inputs of the six companies were derived solely

based on RS Means data and is within the range

of applicability for the rest. So the

individual estimates that were submitted do

have a kind of inherent check and balance

system against RS Means.

I know that Holliston Wallgreen (sp),

two-inch well installation, which I believe

Claire is going to present as another exhibit,

was derived solely from RS Means' data, using

their production rate estimates and their

material, labor and equipment costs.

MS. MANNING: Basically, Member Girard,

I'm not -- this can't be done. It's just that

it needs to be done correctly. And at least

from my perspective, this is more market based

because it's actually done by people out from

the market than it is based on historical data

that was discovered and potentially dated. I

mean, I guess so that's the point I'd like to

make on this particular document.

MR. ROMINGER: I have just a quick

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question on that.

When I was looking through this under the

soil, removal and disposal, the transportation

for clean soil column, and then all of the

columns under truck disposal, I was just

wondering if there was some information that's

missing, because when you look down the

information that's applied to the cost reach

company, when you get down to the

90th percentile, the very last row, those

numbers are all higher than the numbers

actually provided by the companies.

MS. MANNING: I don't know why that is.

That's the only one like that, isn't it?

MR. ROMINGER: Well, everything under drum

disposal, under transportation, clean soil,

those are the only ones I looked at. I didn't

look at the other ones. There was some blank

lines. So I didn't know if there was some

company's information that was missing out of

that.

MS. MANNING: Go ahead.

MR. WEINHOFF: I was just going to say,

it's just due to not having enough response.

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The 90th percentile is simply a formula that

takes a number times the standard deviation

plus the average. And it's just due to lack of

enough response, and I'm still -- I mean, we

are trying to get more responses, and we're

getting as many as we can.

MR. TRUESDALE: It's representative of the

input that has significant variability.

MS. MANNING: It's not intended to be

imperial.

MR. WEINHOFF: It was a formula set in

those, and the numbers were put in, and the

formula wasn't changed and wasn't.

MR. ROMINGER: So you get a

90th percentile that exceeds all the data

inputs?

MR. WEINHOFF: If there's not enough

inputs, that's how it came out. I guess it

looks like there's probably two inputs on

those; is that correct? And so the standard,

that's just not enough to probably calculate

standard deviation.

MR. TRUESDALE: It's standard deviation

assumes the normal distribution. So it's

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probably not normal distribution.

HEARING OFFICER TIPSORD: Yeah. Mr. Cook?

MR. COOK: I think it would serve to help

sort of to resolve this situation. From USI's

perspective, we looked at this exercise as the

Agency has proposed this figure $57 per yard,

and does this figure look palatable based upon

our 15 years' of experience and the several

hundred sites that we're involved in. We put

our number down. We believe we're close. We

believe we're close enough and USI does -- we

believe we're close enough in this instance

that we don't see significant opposition to

what -- on USI's perspective for what the

Agency has proposed.

MS. MANNING: On these costs. We should

also point out that these costs do not consider

any costs of the competitive bidding process

that the Agency has just proposed. In other

words, the cost of bidding isn't built into any

of these costs.

HEARING OFFICER TIPSORD: If there's no

objection, I don't think we've formally

admitted this. We'll admit this as Exhibit 92.

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(Whereby, Exhibit Number 92 was

admitted into evidence.)

MS. MANNING: Exhibit 93 is basically

taken from RS Means 2004. It deals just with

monitor well, material costs for two-inch,

four-inch, six-inch and eight-inch wells. I'm

going to put this into -- I think you already

have it.

HEARING OFFICER TIPSORD: Yes. It's

Exhibit 93.

MS. MANNING: Thank you. This is

basically information that the Board can obtain

or the Agency could have obtained from RS

Means, which is, as we said, early in this

proceeding, a service that writes a book that

has contractor costs, as well as they have a

special one in terms of environmental costs,

and that's where this information is derived

from.

HEARING OFFICER TIPSORD: Seeing no

objection, we'll admit that as Exhibit 93.

(Whereby, Exhibit Number 93 was

marked and admitted into

evidence.)

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MR. TRUESDALE: I might adjust a bit about

that particular exhibit. The costs, once

again, were derived wholly from RS Means. And,

essentially, the same thing can be done for a

number of the other general costs components

proposed in Subpart H, using third party

environmental cost data that's representative

of a large sample set collected over a long

period of time and accepted widely throughout

not only the environmental construction agency,

but a vast majority of construction industries

nationwide.

MS. MANNING: Again, though, he's talking

unit costs, discrete costs, not costs that are

dependent on a delineated scope of work.

MR. TRUESDALE: Exactly. It's

predominantly associated with fixed services or

commodity services, not professional consulting

services.

But a similar exercise to be completed for

UST removal using RS Means' data, the example

provided in that exhibit is strictly for

monitor well construction and monitor well

abandonment.

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MS. MANNING: And PIPE has always

indicated the Agency would be fine with that

approach in terms of using RS Means, in terms

of these various unit costs that are discrete.

So that in that regard, this is not new.

MR. TRUESDALE: And another point I might

bring out, we did the ratios also just to

compare to what Doug presented in his

testimony. And it's fairly similar to what

they proposed a ratio of 1 and 1/2, I think,

for 20-foot or 25-foot well, 2 inch compared to

4 inch, the ratio for 2. However, the unit

costs were different than what is currently

proposed by the Agency, but the scenarios

appeared to check out.

HEARING OFFICER TIPSORD: Given this

testimony that you're very close to what the

Agency has proposed in Subpart H, I'm going to

ask you the same question that I asked earlier

about the businesses, the members of PIPE. If

the Board adopts Subpart H as currently

proposed by the Agency, would you anticipate

that this would put any of your companies

either out of business or at least out of the

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underground storage tank business?

MS. MANNING: As currently proposed with

the rates that are proposed without any

delineation of scope of work?

HEARING OFFICER TIPSORD: Yes.

MS. MANNING: Yes.

HEARING OFFICER TIPSORD: We'll start with

Mr. Cook, since he's already sworn in.

MR. COOK: In answer to your question, I

was -- I would segregate that question into two

parts.

With regard to the professional services,

that's where I have the major area of concern.

And I think absolutely you would see

consultants go out of business, or just simply

choose not to do LUST work any more. That's

based upon many years of experience in dealing

with all the unknowns that consultants have to

deal with, and the fact that these Subpart H

regulations, as proposed, don't provide, define

the scope of work to implement a maximum

payment amount in the absence of a defined

scope of work is -- it just doesn't make good

business sense. It doesn't make good financial

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sense for anyone.

And it would be analogous to hiring an

architect to design a home and tell him that

you're going to have him design this home, but

we're going to have him design it, and you're

going to pay him $2,000. What he doesn't

realize is that it's a 15,000 square foot home.

If he can design the home and it was a 2,000

square foot home for that fee, fine. He's

going to lose a significant amount of money on

a larger home.

So absolutely I think there are companies

that will go out of business.

I think as it pertains to drilling and

excavation, transportation and disposal and

remedial action performed in the field, I think

the Agency has a long history of collecting

well-defined data.

As I recall in Mr. Oakley's testimony -- I

believe it was in Bloomington -- he testified

that the Agency had long collected statistics

based upon excavation, transportation and

disposal of the cubic yard of soil. And I

would concur with his testimony on that. I

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would say the same thing holds true for

drilling. So I think that the Agency's data

based in those areas is much more significant.

I don't see that same thing happening with the

professional services. I don't think they have

a database that can define well a scope from

site A to site B.

HEARING OFFICER TIPSORD: Ms. Davis, did

you have anything else?

MR. TRUESDALE: I would just like to add

to Mr. Cook's testimony also.

The same is true with the construction

costs that we presented. It's all for fixed

scope of work. The items there's dissension

among PIPE members are in the areas where

there's less fixed scope of work, are less

defined tasks lists associated with it.

And the same holds true for the Agency.

We've seen the same thing also. We've seen

similar costs, fixed scope of work. That

hasn't changed substantially over years and

years for drilling and excavation, disposal,

but professional services change as a result of

variations in the regulatory frame work, the

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implementation of TACO, the multiple options

available to the owner/operators to address the

contamination at the site. New technologies

are developed every year that changes costs and

changes the amount of work associated with

cleanup of contaminated sites. Yet excavating

cubic yard of soil and drilling one foot of

boring stays relatively consistent from year to

year, and the scope of work doesn't change

appreciably.

HEARING OFFICER TIPSORD: Mr. Cook?

MR. COOK: One other thing that I would

like to add is a very serious concern that I

have, is that if specific maximum payment

amounts are passed as they relate to

professional services, then what drives

innovation? Because it's innovation within the

marketplace that ultimately drives costs down.

And in the absence of that innovation, the

ability for that professional to innovate and

to think, to go outside the box, we don't have

a permanent mechanism in Illinois to drive

costs down. It's that innovation that drives

the free market system. And I certainly hope

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the Board will keep that in mind as it makes

its decision.

HEARING OFFICER TIPSORD: Are there any

other -- Mr. King?

MR. KING: I want to ask the question of

Mr. Cook; are you saying that if Subpart H is

adapted the way it is proposed here with the

rates and the bidding options involved, that

USI is going to stop doing LUST work in this

state?

MR. COOK: I didn't say that USI would. I

say that I believe that there are firms that

will be put out of business.

MR. KING: But USI will continue to do

work?

MR. COOK: I'm not going to comment on

that one way or another at this point.

MR. KING: Is there a reason why you can't

comment on that?

MR. COOK: Is there a reason why?

MR. KING: Yes.

MR. COOK: Because there are competitors

in this room, I'm not going to comment. I'm

going to refrain from commenting while

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competitors are present.

MR. KING: When you say other competitors

are going out of business, what would that

analogy be based on?

MR. COOK: Comments within the industry.

MR. KING: Comments from other competitors

that have told you they're going to go out of

business?

MR. COOK: Yes.

HEARING OFFICER TIPSORD: Mr. Truesdale?

MR. TRUESDALE: I think the market, in

general, whether or not a particular firm

decides to continue to work, do work in the

LUST market is going to be depending on what

the numbers come out. If they're lucrative and

provide a reasonable profit for completion,

then people are going to perform the work. If

companies continue to lose money from

completing LUST projects as a result of changes

and limitations in payment, then they're going

to naturally drop out of the industry and

choose not to do that work or be forced to

close the doors and not be able to do that work

essentially.

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HEARING OFFICER TIPSORD: Thank you.

MR. TRUESDALE: It's a business decision

and will be made once the final numbers are

determined.

BOARD MEMBER JOHNSON: I looked through

this Appendix E. I guess it is the personnel

titles and rates. And there doesn't appear to

be a significant difference, not a huge

difference between any of the categories and

the maximum hourly rate attributed to that

particular job description and category.

So what you're saying your concern is, is

because of the scope of work is not defined,

you don't know how many hours of whatever

dollar per hour increment it is? Okay.

MS. MANNING: That's correct.

HEARING OFFICER TIPSORD: Mr. King?

MR. KING: Mr. Truesdale, you used the

term you have to -- you look at whether the

payback was lucrative. Was that the word you

used?

MR. TRUESDALE: Possibly. There has to be

a profit associated with completion of work.

If we just cover costs and don't have

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reasonable profit to keep our overhead and

salaries and so forth --

MR. KING: What kind of percentage of

profit would you consider to be necessary for

your firm to continue doing LUST work?

MR. TRUESDALE: I personally don't have

any idea. Industry standards for personnel

tend to range from multiplier of three to four.

So three to four times what our operating costs

would be.

MS. MANNING: If I might add to that,

RS Means includes the industry standards in

terms of profit overlay. The Board could look

at RS Means for that information.

MR. TRUESDALE: I mean, it's not strictly

profit. You have overhead cost, profit,

general conditional projects, so forth and so

on, that go on top of our operating capital.

So in order for a particular job to be

lucrative, we have to cover operating capital,

plus make enough money in addition to that to

cover overhead, general conditions, profit.

Insurance costs continue to go up, our profit

margin changes continuously.

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MR. KING: So in other words, the

reimbursement would have to end up being

lucrative in order for you, the firm, to

continue?

MR. TRUESDALE: Correct.

HEARING OFFICER TIPSORD: Mr. Cook?

MR. COOK: I'd like to clarify, too, that

I think that what's proposed in Subpart H as it

relates to professional services will be more

difficult for the smaller firms to deal with

and address.

I've heard in meetings with the Agency

that it should be an obligation of the larger

firms to cut costs, contain costs, and that it

all comes out in the wash. Smaller firms don't

have an opportunity. They're members of PIPE

that have just a few jobs, and they don't have

an opportunity to allow -- to come out into the

wash. They have the 5, 10, 15 jobs that they

have, and that's their opportunity to make a

living. I don't believe it's appropriate or

fair for those types of firms to go out of

business.

I was once there. And I stand in the

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position today where we're the largest firm in

this type of work in the State of Illinois, and

we could gladly gobble those firms up as they

go out of business, but I've been in that

individual sole proprietor's type role before,

and it's not fun. It's very difficult.

And so I think this particular set of

regulations, as it pertains to professional

services, would be extremely difficult for

those one- and two-man shops.

HEARING OFFICER TIPSORD: Did you have

anything else, Ms. Manning?

MS. MANNING: Just as a follow-up to that.

One of the things that I've been most

impressed with working with PIPE is they are a

group of very viable businesses that do compete

with one another and hardly knew each other

before they formed this association.

MR. KING: I had other questions.

HEARING OFFICER TIPSORD: That's fine. Go

ahead. I just wanted to be sure that we were

done with the presentation before we --

MR. KING: Oh, okay.

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QUESTIONS BY MR. KING:

Q There's a couple references made to the

3 Wisconsin DNR. Excuse me. To the LUST program

4 within Wisconsin.

A (By Ms. Manning) Just a couple, yes.

Q Did you talk to somebody with --

A I did.

Q Who did you talk to?

A Mr. Dangler (sp).

Q Mr. Danger?

A I think that was his name. I can't

12 remember. I can get you that information.

Q Who does he work for?

A Is it called pecfa (phonetic). It's the

15 Wisconsin Underground Storage Tank Program with DNR,

16 with the Wisconsin DNR.

Q Are you aware that in Wisconsin the LUST

18 program is administered by two separate agencies?

A It wouldn't surprise me, as it is in

20 Illinois as well.

Q The LUST program, the LUST program --

MR. MULLEN: The Department of Commerce

handles the issues that defer from the --

HEARING OFFICER TIPSORD: Hold on. Wait a

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minute. State your name, and we'll have you

sworn in.

MR. MULLEN: Scott Mullen (sp).

HEARING OFFICER TIPSORD: And who do you

represent?

MR. MULLEN: Regensis (sp).

HEARING OFFICER TIPSORD: Thank you.

MR. MULLEN: Yeah, we're within the group.

We all have specialists in certain areas, but,

yeah, I don't know if Claire is speaking of the

DNR or the department of commerce, but how the

divisions go, yeah.

MS. MANNING: And I'm not sure which one I

was speaking to either, actually. Just the one

that is doing the rule making that's going to

be effective September 1st. And the

gentleman's name was Mr. Dangler.

Q (By Mr. King) So you're aware that about

19 half of the program is administered by Wisconsin

20 DNR, and then about the other half of the program is

21 administered by the equivalent of the Illinois

22 Department of Commerce and Economic Opportunity?

And when were you suggesting that

24 that is -- maybe I missed the point. Are you saying

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1 that that is a model we'd want to start to follow?

A No, I didn't suggest that at all,

3 Mr. King. I simply suggested that I think in terms

4 of the -- I think the only thing I raised about that

5 is the agency that I was talking to was totally

6 funded by the USEPA fund, and not by the state

7 dollars that came through the UST state fund. I

8 believe that's about all I said about the Wisconsin

9 issue.

I wasn't -- in fact, I think they

11 have a competitive bidding in Wisconsin. All of the

12 models and all of the states are very different.

13 And I'm not necessarily suggesting that Illinois

14 look to any different any one of the states.

I do think that you all put the

16 different states into evidence. And I did suggest

17 as well to the Board that they look not only at the

18 dollar figures in the other state statutes, but also

19 in the escape clauses, whatever you want to call

20 them, the scope of work clauses, whatever you want

21 to call them, because they have those kind of

22 clauses as well.

Q I noticed in your proposal, you didn't

24 refer to this in your testimony, but in your

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1 proposal, there was a provision that said that the

2 Agency personnel reviewing a plan would have to be

3 an LPE or an LPG.

A Where is that? Just point me to the

5 language.

Q It's page 21. This is under 734. It says

7 something -- a technical review shall be conducted

8 by IEPA personnel who is a licensed professional

9 engineer or geologist.

HEARING OFFICER TIPSORD: Top page of 21.

MS. MANNING: I see it.

MR. KING: Yes.

MS. MANNING: What I think, what I was

testifying in terms of apples and oranges. If

there is a technical review performed by the

Agency, it needs to be performed by someone who

has technical licensure. And if it's a

financial review, the Agency ought to be freer

than making technical judgments.

Q (By Mr. King) So it's PIPE's position that

21 every IEPA reviewer needs to be -- reviewing a

22 technical plan needs to be either an LPE or LPG?

A I think that when the Agency makes a

24 determination and denies reimbursement on a

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1 technical ground, they ought to have a technical

2 review and a technical person make that

3 determination.

Q You probably have no reason to know this,

5 but I'm sworn. So accept this for what it's worth.

But approximately 10 to 15 percent of

7 the Agency reviewers are LPEs or LPGs. As I

8 interpret this, that would mean that approximately

9 85 to 90 percent of the current staff project

10 reviewers would be ineligible to review technical

11 plans. And based on that, do you have a view as to

12 what that would do to the speed of the review

13 process relative to the Agency's program?

A It's certainly not PIPE's intention to

15 slow up the review process.

HEARING OFFICER TIPSORD: Go ahead,

Mr. Truesdale.

MR. TRUESDALE: I would add that we

contemplated that. If you look back to

professional engineer/professional geologists

Act, the requirements are a little looser than

that. The review should be conducted under the

direction and oversight of a licensed

professional engineer, licensed professional

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geologist who ultimately has responsibility for

that decision. But the review itself does not

have to be conducted by that person, just under

the direction of. It's the same way your

regulations are written, because they're

modeled after the Professional Engineer and

Professional Geologist Act.

MR. KING: But that's not what this says

here.

MR. TRUESDALE: The intention of that.

MS. MANNING: Mr. King, I honestly think

this is your language.

MR. KING: Well, it's not.

MS. MANNING: 734-5150(a)and (b).

MR. KING: It's not.

MS. MANNING: Okay.

MR. TRUESDALE: It may need to

be -- that's what the intent was. It may need

some changing of wording or whatever, but the

intention was to be consistent with the

Professional Engineer and Professional

Geologist Act.

MR. KING: I want to go back. I'm kind of

going backwards through this provision on 20

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where you discussed this mediator or arbitrator

provision.

MS. MANNING: Pardon?

BOARD MEMBER JOHNSON: You're putting all

of us out of work. The reviewers, the Board.

Q (By Mr. King) By the terms of this, it

7 states the parties may mutually agree. So if one of

8 the parties -- for instance, if the Agency did not

9 agree to having a mediator or arbitrator, then that

10 would not be applicable.

A (By Ms. Manning) That's correct. That's

12 what alternate means, alternative.

Q Now, I can tell you right now that the

14 Agency is not going to agree in any instance to this

15 kind of thing.

A You've told me that before, Mr. King.

Q So, I mean, in that sense, the Board could

18 put this in the rule or not put it in the rule.

19 It's not going to make any difference because it's a

20 dead letter as it would go in.

A So long as the Agency makes that position,

22 takes that position, that's the Agency's position.

Q One of the things we seem to have a

24 difference of opinion on is the ability of the Board

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1 to shorten a statutory review period, which is 120

2 days at this point. As I understand what you're

3 saying is, that the Board has authority to mandate

4 that the Agency complete its reviews in something

5 shorter than 120 days.

A Under certain conditions, yes.

Q Okay. Now, if you're suggesting that the

8 Board has the authority to shorten a statutory time

9 frame, do you think the Board also has the authority

10 to shorten the statutory time frame when it comes

11 to a petitioner filing a petition for review? In

12 other words, could the Board say you have only got

13 15 days to file an appeal as opposed to 35?

A No, because that's jurisdictional.

Q Well, why isn't the 120-day time frame

16 jurisdictional then? I mean, in this case, the

17 legislature has made a decision that the Agency has

18 the right to take up to 120 days to perform a

19 review. On what authority would the Board have to

20 mandate that the Agency has to review things in less

21 than what the legislature has said it can review

22 things?

A Actually, the legislative prescription is

24 that the Agency shall do it within that period of

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1 time. In other words, there used to be a

2 consequence for the Agency not acting on it. Now

3 there's not even a consequence, really, for the

4 Agency not acting within the 120-day period of time.

5 The fact of the matter is, there still probably

6 isn't a consequence with the Agency not acting

7 within the 120-day period of time, but that does not

8 preclude the Board or the Agency from having a

9 shorter time frame than that which is generously

10 allowed by the legislature.

Q You made some comments about -- there was

12 four different legislative versions of 57.7 F. I

13 think it was F. Or was it H?

A No, not of F, of that section.

Q Of that section.

A Of that section.

Q Now, the Agency attempted to meld all

18 those different bills when we drafted our rule

19 that's before the Board here.

Are you suggesting that what the

21 Agency drafted is somehow inconsistent with those

22 statutes or did not meld those statutes properly?

A I was reacting to Mr. Clay's testimony

24 regarding the LPE and LPG certification, where I

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1 believe he just focussed on Section F, which is in

2 only one of those statutes. So basically I was

3 suggesting that, in fact, the LPE/LPG certification,

4 which that particular Act amended, various different

5 sections of the Act needed to be considered as well.

6 I was actually acting in reaction to your testimony

7 regarding LPE and LPG certification where you said

8 that it's simply an oversight, and that's all the

9 legislature intended. And in that same vein then, I

10 just talked basically about the complicated nature

11 of Title 16.

Q But you're not suggesting that what we

13 propose is an inconsistent melding of those?

A I'm suggesting the Board needs to look at

15 whether it is or whether it isn't. I think the

16 Board is going to have to before they send it to the

17 joint committee on administrative rules anyway. I

18 think it's a complicated legal question.

MR. KING: That's all the questions.

HEARING OFFICER TIPSORD: Are there any