ILLINOIS POLLUTION CONTROL BOARD
January
23,
1992
BEER MOTORS,
INC.,
)
Petitioner,
v.
)
PCB 91—120
(Underground
Storage
Tank
ILLINOIS
ENVIRONMENTAL
)
Fund
Reimbursement)
PROTECTION AGENCY,
)
Respondent.
THOMAS T. SCHLAKE, OF THOMAS T. SCHLAXE
& ASSOCIATES,
APPEARED ON
BEHALF
OF
THE
PETITIONER;
TODD F. RETTIG APPEARED ON BEHALF OF THE RESPONDENT.
OPINION AND ORDER OF THE BOARD
(by M. Nardulli):
This matter is before the Board on a petition for review filed
July 17, 1991,
by petitioner Beer Motors,
Inc.
(Beer) pursuant to
Section
22.18b(g)
of
the
Environmental
Protection
Act
(Act).
(Ill.Rev.Stat.
1989,
ch.
111
1/2,
par.
1022.18b(g).)
Beer
challenges the
Illinois Environmental Protection Agency’s (Agency)
determination
that
Beer’s
application
for
reimbursement
for
corrective
action costs from the Underground Storage Tank
(UST)
Fund
is
subject to a $50,000 deductible.
A hearing was held on
September 26,
1991, in Skokie, Illinois.
No members of the public
attended.
The only issue in this case is whether Beer had constructive
knowledge,
prior
to
July
28,
1989,
that
a
release
had
occurred.
If
Beer
had
constructive
knowledge
prior
to
that
date,
a
$50,000
deductible
applies
to
its
claim,
pursuant
to
Section
22.18b(d) (3) (C) (ii)
of
the
Act.
If
Beer
did
not
have
constructive
knowledge before July 28, 1989, a $10,000 deductible applies to its
claim.
Both Beer and
the Agency
agree that Beer
did not have
actual knowledge of the release before July 28,
1989.
Background
This case involves corrective action at a piece of property,
owned
by
Beer,
located
at
1603
Algonquin
Road,
Mt.
Prospect,
Illinois.
(R. at 37.)’
Beer Motors apparently was in the business
of
renting
heavy
equipment.
The property
is
located
on
the
northern boundary of a Shell Oil complex.
(R.
at 18.)
In April
“R.” denotes citation
to the Agency record and “Tr.” denotes
citation
to
the hearing transcripts.
129—263
2
1989
Beer
entered
into
a
contract
with
Amerivest
Property
Services,
Inc.
(Amerivest)
for
the
sale
of
the
property.
The
contract
provided
that
an
environmental
assessment
would
be
made
at
Beer’s
expense.
If
the
assessment
was
not
satisfactory,
Amerivest
could
vitiate
the
contract..
(Tr.
at
14-15;
pet.
br.
at
2.)
In
May
1989
Amerivest
retained
the
firm
of
O’Brien
and
Associates,
Consulting
Engineers
(O’Brien),
to
conduct
the
soil
sampling.
O’Brien
took
seven
soil
probes
on
the
Beer
property.
Mr.
Dixon
O’Brien
testified
at
hearing
that
several
of
those
probes
showed
contamination,
but that Mr.
Leon Teichner, Ajuerivest’s attorney,
requestea that Mr. O’Brien prepare
a letter describing only the
results of probe B—6.
Mr. O’Brien was not to refer to any of the
other information gathered by O’Brien’s inspection.
(Tr. at 42-45;
R.
at
24.)
On June
9,
1989,
Mr.
O’Brien wrote
the requested
letter,
stating
that
its
tests
indicated
that
the
property
contained elevated levels of benzene and xylene.
(R.
at
5.)
Mr.
Teichner forwarded a copy of O’Brien’s report to Beer on June
9,
1989.
(R.
at 8.)
Beer received that letter on or about June 20,
1989, because the letter was sent to the wrong address.
(Tr. at
11.)
The sale did not proceed as planned, although the property
eventually was sold.
(R. at 38.)
Beer’s tanks were taken out of service
(but not removed)
on
July 8,
1989.
(R.
at 39.)
On July 14,
1989,
at Beer’s request,
O’Brien performed additional testing on the property.
The tests
indicated that levels
of benzene,
toluene,
and xylene were less
than Agency clean—up objectives.
Beer was informed of the results
of these tests
in
a letter dated July
31,
1989.
(R.
at
l0_ll.)2
The tanks were removed on June
1,
1990.
(R. at 16-17;
39.)
On
December
17,
1990,
Beer
applied
to
the
Agency
for
reimbursement from the UST fund for corrective action costs.
On
January 24,
1991,
the Agency determined that Beer is eligible for
reimbursement,
subject to a
$50,000 deductible.
(R.
at
32-33.)
The Agency stated that the $50,000 deductible applied pursuant to
Section 22.18b(cl) (3) (C) (ii) of the Act, which provides:
If the costs incurred were
in response to a release of
petroleum which first occurred prior to July 28, 1989 and
the
owner
or
operator
had
actual
or
constructive
knowledge that such a release had occurred prior to July
28,
1989,
the deductible
amount
...
shall
be
$50,000
rather than $10,000...
Ill.Rev.Stat.1989,
ch.
111 1/2, par.1022.18b(d) (3) (C) (ii).
On February
8
and May 20,
1991,
Beer requested a review of the
2
Mr. Beer testified at hearing that he picked up that July 31,
1989 letter at O’Brien’s offices on August
2 or
3,
1989.
(Tr. at
16—17. 28.~
129—264
3
Agency’s determination,
contending that it had no knowledge of
a
release until June
1,
1990,
and that thus a
$10,000 deductible
should
apply.
(R.
at
24-26.)
On
June
12,
1991,
the
Agency
reaffirmed its decision that a $50,000 deductible applies to Beer.
(R.
at 27.)
Beer filed this appeal with the Board on July 17,
1991.
On August 27,
1991,
the Agency filed a motion for summary
judgment, contending that it was entitled to judgment as a matter
of law.
The Board denied that motion on September
12,
1991.
Arquments of the Parties
Beer argues that it did not have constructive knowledge of a
release from the tJSTs prior to July 28,
1989.
Beer notes that on
or about June 20,
1989,
it received the letter from Mr. Teichner
indicating that there was contaminated soil on the property,
but
points out that the June 9, 1989 p’Brien report concludes that the
most likely cause of the contamination was a spill at the surface.
The June O’Brien report concluded:
Because the lot has a gravel surface and the majority of
the
native
soils
are
relatively
impermeable
clays,
contamination from surface spillage
is a likely cause.
Less likely causes
include
leakage
from the tanks and
off-site contamination.
(P. at 5.)
Beer contends that the Agency’s position, that the June
9,
1989
letter gave Beer constructive knowledge of a release,
ignores the
conclusions as to the cause of the contamination.
Beer also points
out that further information from the May O’Brien assessment was
withheld from Beer at the direction of the prospective purchaser’s
attorney,
Mr. Teichner.
Beer also challenges the Agency’s position that the additional
analysis,
which
it
asked
O’Brien to undertake
in July
1989,
is
further evidence of Beer’s constructive knowledge of the release.
Beer contends that this position ignores the fact that the July
1989 O’Brien analysis, performed on July 14 and reported in a July
31,
1989 letter, concluded that:
“...it appears that the contaminated soil encountered in
the soil boring performed for the previous environmental
assessment probably represents an isolated condition.
It
is possible this situation
is the result of surficial
infiltration
of
diesel
fuel from
a. leaking tank
on
a
piece of construction equipment parked in this area.”
(R.
at 10—11.)
Beer also points out that Mr. Bur Filson,
an Agency employee who
prepared the January
24,
1991 Agency
letter
imposing
a
$50,000
129—265
4
deductible,
testified
at
hearing
that
he
was
not
aware
that
Amerivest,
not
Beer,
had ordered the May 1989 site assessment.
(Tr.
at
76.)
Therefore,
Beer
maintains
that
Mr.
Filson’s
conclusions were based on a mistaken idea that Beer had been the
initial employer of O’Brien, and that it was simply not credible
that
O’Brien
would
have
withheld
information
from
the
May
assessment.
The Agency
argues
that
the
facts
in this
case
gave
Beer
constructive knowledge, prior to July 28,
1989, that a release had
occurred’.
The Agency points out that the real estate sale contract
did not proceed as planned after the results of the May assessment.
The Agency
contends
that
this
fact
placed
a
duty
on
Beer
to
diligently investigate the possibility that a release had occurred.
Furthermore, the Agency maintains that because Beer was provided
with some of the results of the May assessment,
a reasonable person
would suspect a release and therefore have a duty to investigate
any potential release more fully.
The Agency asserts that instead
of complying with this duty to investigate, Beer chose to rely on
a mistaken assumption about the cause of the contamination.
Board Conclusions
After examining the arguments and the record, the Board finds
that Beer did not have constructive knowledge of a release prior to
July 28, 1989.
O’Brien’s May 1989 testing does indicate that there
may have been contamination on the property prior toJuly 28, 1989,
although the results of the July 14, 1989 testing show that levels
of
benzene,
toluene,
and xylene were below
clean—up objectives.
However,
as
the Board indicated in its September. 12,
1991 order
denying summary judgment, both parties have focused simply on the
issue
of contamination
on the property,
without focusing on the
fact that contamination does not necessarily equate with a release.
35 Ill.Adm.Code 731.112 defines “release” as:
any spilling, leaking, emitting, discharging, escaping,
leaching
or
disposing
from
a
liST
into
groundwater,
surface water or subsurface soils.
(emphasis added.)
Therefore,
the relevant issue
is whether Beer had
constructive
knowledge
that
the
contamination
was
the
result
of
spilling,
leaking,
or
discharging
from
the
tanks.
The
record
contains
a
number
of
suggestions
as
to
the
source
of
the
contamination
discovered
in
May
1989.
Various
suggestions
include
surface
spills,
leakage from USTs,
leakage of diesel fuel from a piece of
construction equipment, and off—site contamination from the Shell
Oil tank farm adjacent to the Beer property.
(P. at 5,
11,
17,
20,
and
24.)
Based upon the varying information
contained in the
record as to the source of the contamination, the Board finds that
Beer did not have constructive knowledge of
a release before July
28,
1989.
129—266
5
The
Board
is
not
persuaded
by
the
Agency’s
argument
that
the
facts imposed a duty upon Beer to investigate.
The statute states
only that constructive or actual knowledge of a release before July
28, 1989 will trigger a $50,000 deductible.
There is no provision
or mention of investigation as a relevant factor.
In other words,
whether or not Beer investigated the source of the contamination is
not
at
issue
here.
If
the
facts
were
such
that
Beer
had
constructive knowledge, that is sufficient to mandate imposition of
a $50,000 deductible.
The Board finds that the facts here did not
give Beer constructive knowledge of a release.3
Finally,
the Board notes that today
it remanded
a UST fund
appeal
to
the Agency, prior to a Board decision on a challeng.e to
the amount
of
the
deductible.
That
remand
is
based
upon
the
Board’s finding that an Agency decision in a UST reimbursement case
is
not
appealable
to
the
Board
until
all
Agency
decisions
(including
reimbursability
of
costs)
have
been
made.
(Ideal
Heating Com~anv
V.
Illinois Environmental Protection Agency,
PCB
91—253
(January
23,
1992).)
However,
the Board has decided to
apply that holding only to cases where no hearing has been held.
Therefore,
the
Board
has
decided
this
case,
which
was
fully
briefed, on the merits of the arguments.
This Opinion
constitutes the Board’s
findings
of
fact
and
conclusions
of
law
in
this
case.
ORDER
The
Agency’s
June
12,
1991
decision
imposing
a
$50,000
deductible
in
this matter
is hereby
reversed.
This
matter
is
remanded to the Agency, and this docket
is closed.
IT IS SO ORDERED.
Section
41
of
the
Environmental Protection Act (Ill.Rev.Stat.
1989,
ch.
111
1/2,
par.
1041)
provides of appeal of final orders of
the
Board
within
35
days.
The
Rules
of
the
Supreme
Court
of
Illinois establish filing requirements.
~ The Board
points out that Beer did indeed investigate the.
source
of
the
contamination,
when
he
asked
O’Brien
to
make
a
further assessment
of
the
property.
Even
if this
factor were
relevant,
it
would
work
against
the
imposition
of
a
$50,000
deductible,
since
it is uncontroverted that Beer did not receive
the results of the July
14,
1989 tests.until
at
least July
31,
1989--three days after the July 28,
1989 date.
129—267
6
I,
Dorothy M.
Gunn,
Clerk of the Illinois Pollution Control
Board, hereby certify that the above Opinion and Order was adopted
on
the
‘~-~
day
of
_______________,
1992,
by
a
vote
of
6—c
.
~
~.
/L~/
Dorothy
M.
$/inn,
Clerk
Illinois Po(l/lution Control Board
129—268