ILLINOIS POLLUTION CONTROL BOARD
February 16,
1995
CLARENDON HILLS BRIDAL
)
CENTER (LEARSI
AND
COMPANY,
)
INC.),
Petitioner,
)
v.
)
PCB 93-55
(UST Reimbursement)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
JAMES p. O’BRIEN
AND
ROBERT M. BARATTA, JR., CHAPMAN
& CUTLER,
APPEARED ON BEHALF OF PETITIONER;
JAMES G. RICHARDSON AND JOHN BURDS APPEARED ON BEHALF OF THE
ILLINOIS ENVIRONMENTAL PROTECTION AGENCY.
OPINION AND ORDER OF THE BOARD
(by M. McFawn):
On March
18,
1993 petitioner Learsi and Company filed a
petition seeking review of an underground storage tank
reimbursement determination issued by the Illinois Environmental
Protection Agency
(Agency).
Petitioner seeks review of the
Agency’s denial of reimbursement from the Leaking Underground
Storage Tank (LUST)
Fund of $331,404.05 in costs.
BACKGROUND
Petitioner
is the former owner of
a strip mall located at
445 Ogden Avenue, Clarendon Hills,
Illinois, known as the
Clarendon Hills Bridal Center
(the site).
In September 1990,
petitioner was seeking to sell the site, and hired Mostardi-Platt
Associates
(Mostardi—Platt)
to conduct a phase II environmental
assessment.
The phase II assessment revealed that a portion of
the site, constituting approximately 850 cubic yards of soil, was
contaminated by petroleum, although no underground storage tanks
(UST5)
were discovered at the site at that time.
(Pet.
Br.
at
1—
2.)
Remediation of the site began in October 1990.
Subsequent
investigation revealed that the extent of contamination was much
greater than originally estimated by Mostardi-Platt,
and revealed
the presence of three USTs.
Upon discovering the UST5,
petitioner notified the Emergency Services and Disaster Agency
(ESDA)
on October
12,
1990 that a release had occurred at the
site.
In November 1990, petitioner submitted a corrective action
plan to the Agency in order to qualify for reimbursement from the
LUST Fund.
The plan was approved by the Agency in January 1991.
2
(Pet.
Br. at 3-4.)
During the remediation process,
a fourth UST was discovered
at the site.
Eventually,
the four USTs were removed, and all of
the contaminated soil was excavated, transported from the site,
and disposed of.
The remaining soil satisfied the Agency’s
established cleanup objectives.
The Agency issued a clean
closure letter for the site,
and petitioner sought reimbursement
of its corrective action costs from the LUST Fund.
(Pet.
Br.
at
5—6.)
On January
24,
1991,
the Agency made a preliminary
determination that petitioner was eligible to access the UST Fund
subject to a $100,000 deductible.
(Rec. vol. A at 25.)
On
September 3,
1992,
the Agency received petitioner’s completed
application requesting reimbursement from the UST Fund.
(See
Pet.
Ex.
17 at 1.)
The Agency issued its final determination of
eligibility on February 18,
1993,
and issued a clarification on
April
29,
1993.
The parties agree that the issues in this appeal
are framed by the February 18,
1993 final determination letter,
as clarified by the Agency’s April
29,
1993 letter.
(See
Pet.
Br. at
7;
Resp.
Br.
at 3.)
A hearing in this matter was held on
November 17, 1993,
which was continued on the record on the
following dates: November 18,
1993, December 15,
1993, and
January
19,
1994.
RULE OF GENERAL APPLICABILITY
To be deemed reimbursable from the UST Fund,
remediation
costs incurred must be corrective action costs.
Section 57.2 of
the Environmental Protection Act
(Act)
(415 ILCS 5/57.2
(1992))
now defines corrective action cost as “activities associated with
compliance with the provisions of Section 57.6 early
action
and
57.7 investigation
and remediation) of this Title.”
In October
1990,
corrective action was defined as:
An
action to stop, minimize, eliminate or clean up a
release of petroleum or its effects as may be necessary or
appropriate to protect human health or the environment.
This includes, but is not limited to, release investigation,
mitigation of fire and safety hazards, tank removal,
soil
remediation, hydrogeological investigations,
free product
removal, groundwater remediation and monitoring, exposure
assessments, the temporary or permanent relocation of
residents and the provision of alternate water supplies.
(Ill.
Rev.
Stat.
1989,
ch.
111 1/2, par.
1022.18(e) (1) (C)
(repealed).)
Determining whether costs are corrective action costs
is a
two-part inquiry:
first,
it must be determined whether the costs
are incurred as a result of action to “stop,
minimize,
eliminate,
3
or clean up a release of petroleum,” and second,
it must be
determined whether those costs are “the result of activities such
as tank removal,
soil remediation, and free product removal.”
Costs must satisfy both requirements to be deemed reimbursable as
corrective action.
(Enteririse Leasing Co.
v. Illinois
Environmental Protection Agency
(April
9,
1992)
PCB 91-174,
132
PCB 79,
83.)
At the time of petitioner’s reimbursement application,
Section 22.l8b(d) (4) (C)
of the Act provided:
4)
Requests for partial or final payment for claims under
this Section shall be sent to the Agency and shall
satisfy all of the following:
C)
The owner or operator provided an accounting of
all costs, demonstrated the costs to be
reasonable,
and provided either proof of payment
of such costs or demonstrated the financial need
of joint payment to the owner or operator and the
owner’s or operator’s contractor in order to pay
such costs.
(Ill.
Rev.
Stat.
1989,
ch.
111 1/2,
par.
1022.18b(d) (4) (C)
(repealed).)
In Platolene 500,
Inc.
v. IEPA
(May 7,
1992) PCB 92—9,
133
PCB 259, the Board held that the burden of meeting these
requirements
is on the party seeking reimbursement.
(i~
at 8.)
The burden is thus on the party seeking reimbursement to
demonstrate that the remediation costs were for corrective action
costs and were reasonable.
DISCUSSION AND DECISION
Petitioner seeks review of a total of $331,404.05 in costs.
The Agency denied reimbursement of these costs on the following
grounds:
(1)
costs lacking documentation;
(2) costs for
activities which did not constitute corrective action;
(3)
costs
which were incurred prior to notification of ESDA;
(4)
costs
which petitioner failed to demonstrate were reasonable; and
(5)
costs which constituted legal defense costs.
Each of these
grounds will be examined separately.
1)
Costs Lacking Documentation
Of the $331,404.05 in costs denied by the Agency,
$298,786.98 were denied as lacking supporting documentation under
Section 22. 18b(d) (4) (C).
(See Pet. Ex.
17 Attachment A at para.
2.)
$251,173.78 of these costs represent costs incurred by
4
petitioner pursuant to its contract with Accurate Pump and Tank
(Accurate).
$206,245.53 of that amount was based solely upon a
per cubic yard rate.
The remaining $44,928.25 attributed to
Accurate was supplemented by Agency billing forms which included
a time and materials breakdown of included costs.
The remaining
costs represent costs incurred by petitioner for work done by
four subcontractors.
a)
Accurate Pump and Tank
Petitioner contends that the Agency is improperly denying
reimbursement of costs paid to Accurate because petitioner failed
to demonstrate that the costs satisfied a two-part test requiring
that they either be:
1) submitted on Agency forms which require a
time-and-materials breakdown,
or
2)
competitively bid, with at
least three bidders, where the lowest bid is chosen.
(Pet.
Br.
at 7.)
Petitioner asserts that this test is merely an Agency
policy,
and that there is nothing in writing which indicates that
such a breakdown was required.
(Pet.
Br.
at 9.)
Petitioner
asserts that its contract with Accurate was based on a per—cubic—
yard rate,
not a time and materials basis,
as would be required
by the Agency forms.
(Pet.
Br.
at 8.)
Petitioner contends that
contracting on a per—cubic—yard basis was
a
standard industry
practice.
(Pet.
Br.
at
10;
see
testimony of John Hayes Tr.
at
4.1.)
The Agency asserts that the supporting documentation
petitioner provided for these costs did not meet the requirements
of Section 22.l8b(d)(4)(C).
(See
Pet.
Ex.
17 Attachment A at
para.
2;
Resp.
Br. at 6.)
Although Accurate provided invoices
for the costs, the Agency asserts that the invoices did not
contain sufficient information to demonstrate that the costs were
reasonable.
(Resp.
Br.
at 8.)
The Agency asserts that a per—
cubic—yard rate alone does not provide the information necessary
for the Agency to determine whether the costs that went into the
rate were appropriate and reasonable,
and that a time and
materials breakdown is necessary for the Agency to make this
determination.
The Agency points out that it did allow
reimbursement of those costs where petitioner demonstrated the
costs were reasonable response costs
in Agency forms with a time
and materials breakdown.
(Resp. Br. at 9.)
We find that the Agency
is properly requiring applicants to
the Fund to demonstrate that submitted costs are properly
reimbursable.
As stated above,
based on Board precedent, the
burden is on applicants to demonstrate that incurred costs are
related to corrective action, properly accounted for, and
reasonable.
The Agency has not limited petitioner to a
demonstration of reasonableness based on time and materials.
Rather, the Agency would allow petitioner to demonstrate the
reasonableness of corrective action costs through a competitive
bidding process.
Thus, the Agency has expanded,
not restricted,
5
the means by which a party can demonstrate the reasonableness of
costs.
Competitive Bidding.
Petitioner asserts that the Accurate
costs should be reimbursed because petitioner obtained two bids
for the work.
(Pet.
Br.
at 12.)
Petitioner contends that it
received a bid from Mostardi-Platt for $90 per cubic yard,
and a
bid from Accurate for $64 per cubic yard,
which petitioner
accepted,
and which was subsequently reduced to $60 per cubic
yard.
Mr.
David Israel, the principal of Learsi, testified at
hearing that Mostardi-Platt submitted the $90 per cubic yard bid.
(Tr.
at 192.)
As further support for the $90 per cubic yard
bid, petitioner attempted to introduce into evidence at hearing a
hand—written note written on the cover of
a soil boring
investigation.
The hearing officer denied its admission on the
grounds that it constituted hearsay.
(Tr.
at 194—196.)
Mr. Israel also testified that Mr. John Hayes of GSC
Environmental obtained a $64 per cubic yard bid from Accurate
Pump
& Tank on behalf of petitioner.
(Tr.
at 198.)
As evidence
of this bid,
at hearing petitioner introduced into evidence the
contract with Accurate.
(Pet.
Ex.
1.)
This contract had not
been submitted to the Agency prior to the Agency’s final
determination.
(Tr.
at 33.)
Mr. Israel further explained that
the rate was later reduced to $60 per cubic yard when petitioner
realized that the extent of contamination was greater than
initially estimated; no documentation was submitted to the Agency
indicating this change in rate.
In response, the Agency asserts that none of this evidence
that petitioner proceeded under a competitive bid process was
submitted to the Agency prior to the Agency’s final
determination.
(Resp.
Br. at 15, Tr. at 643-644.)
The Agency
asserts that it received neither the $90 per cubic yard rate nor
the $64 per cubic yard rate bid prior to its final determination.
The Agency further contends that the hand-written note does not
contain sufficient information to constitute a bid.
Finally, the
Agency contends that three bids are generally required under a
competitive bid process
in order to demonstrate that the lowest
bid was reasonable.
(Resp.
Br.
at 15; Tr.
at 642.)
While it may be possible for a claimant to demonstrate that
a two-bid competitive bidding process is reasonable, we find that
petitioner did not do so in this case.
Petitioner did not submit
any information to the Agency concerning a competitive bidding
process prior to the Agency’s final determination.
Furthermore,
even if the evidence concerning the $90 per cubic yard rate is
considered despite its inadmissibility as hearsay, that
information is simply insufficient to demonstrate that it
constituted a competitive bid.
Finally, petitioner had not even
6
submitted evidence of the bid it ultimately accepted prior to the
Agency’s final determination.
We find that petitioner did not
provide sufficient evidence of a competitive bid process to the
Agency to demonstrate that the costs paid to Accurate were
reasonable.
Per—Cubic Yard Rate.
Petitioner also argues that it
demonstrated that the $64 per cubic yard rate was a reasonable
per-cubic-yard rate.
(Pet.
Br.
at 12-13.)
In support of this
proposition, petitioner presented the testimony Mr. John Hayes,
an environmental consultant who was employed by GSC
Environmental,
a consulting firm petitioner retained to provide
technical assistance with the remediation project.
Mr. Hayes
testified that $64 per cubic yard constituted a reasonable rate
(Tr.
at 50),
and testified that the work was actually performed.
Accurate provided invoices for the work performed which were
submitted to the Agency.
Petitioner also offered the testimony
of Steven E.
Nelson, an independent environmental contractor,
who
testified as to the reasonableness of the $64 rate.
(Tr.
at
373.)
The Agency asserts that the supporting documentation for the
denied costs did not meet the requirements of Section
22.18b(d) (4) (C)
and failed to establish that the costs billed to
petitioner were reasonable.
The Agency does not dispute that a
common industry practice is to contract for excavation, removal
and disposal of contaminated soil on a per—cubic—yard basis.
However, the Agency asserts that a per—cubic—yard rate alone
in
not sufficient to demonstrate that the rate is reasonable;
it
must be supported by a time and materials breakdown of the costs
included in the per-cubic-yard rate.
Mr. Doug Oakley testified
on the Agency’s behalf that a time and materials breakdown is
necessary for the Agency to determine the reasonableness of
remediation costs,
such as personnel costs, equipment costs, and
profit.
(Resp.
Br.
at
14;
Tr.
at 644—647.)
Furthermore, the Agency asserts that it is commonly known in
the industry that a per-cubic-yard rate is insufficient to
demonstrate reasonableness of costs.
In fact,
the Agency points
out that petitioner’s own expert witness, Mr. John Hayes,
testified that a per—cubic—yard rate alone does not demonstrate
that the rate is reasonable,
and that
it is commonly known in the
industry that the Agency requires a time and materials breakdown
of the costs included in the per cubic yard rate.
(Resp.
Br. at
13—14; Tr.
at 386—389,
426.)
We affirm the Agency’s denial of reimbursement of the
$206,245.53 sought by petitioner which was not supported by a
time—and—materials breakdown.
These costs were not identifiable
or supported by anything more than the total amount represented
as paid in the inventory of checks and the total amount of the
Accurate invoices.
7
Additional Accurate Costs.
The Agency denied an additional
$44,928.25
in costs charged by Accurate for failure to submit
proper documentation.
Although these additional costs were
identified in billing forms which provided a time-and-materials
breakdown, the Agency denied reimbursement for the following
reasons:
1)
$1,625.00 for a duplicate billing form for February 6,
1991, where two billing forms were submitted for the
same personnel on the same date;
(2)
$318.75 reported on a February
6,
1991 billing form
where the weekly worksheet did not support the
information contained on the summary sheet;
(3)
$40.00 reported on a billing form for the period of
January 28,
1991 through February 5,
1991, which
contained a mathematical error;
(4)
$195.00 reported on a billing form for the period of
June 3,
1991 through June 30,1991, where the drill rig
hours
on the weekly work sheet did not support the
drill rig hours on the summary sheet;
(5)
$42,749.50 reported on a billing form from Accurate for
work performed by Terry Robb Cartage, where Accurate
billed petitioner and added a 15 percent service
charge, despite the fact that petitioner had been
billed directly.
(Resp.
Br.
at 17.)
Petitioner provided no additional argument that these costs
should be reimbursed, relying instead on its argument that the
entire amount should be reimbursed based on the reasonableness of
the per-cubic—yard rate.
Therefore, we uphold the Agency’s
determination denying reimbursement of these costs.
In sum, we find that petitioner did not demonstrate the
reasonableness of the $206,245.53 in submitted costs which were
not supported by a time and materials breakdown.
We further hold
that these costs were not shown to be reasonable through a
competitive bidding process.
Furthermore, the additional costs
attributed to Accurate in the amount of $44,928.25 are denied for
lack of evidence and argument by petitioner.
We therefore uphold
the Agency’s determination denying reimbursement of these
combined costs.
b)
Investigation Costs of Nostardi-Platt
Petitioner seeks review of the Agency’s denial of $3,277.00
in costs incurred for work performed by Mostardi-Platt.
8
Petitioner provided the Agency with an invoice for $6,554.00,
and
a check for $3,277.00,
half the amount.
Petitioner claims that
the other half was deducted from the sales escrow in connection
with the sale of the site,
since the total cost was split equally
between petitioner and the purchaser.
(Tr. at 237
—
238.)
Petitioner asserts that it is therefore entitled to reimbursement
of $3,277.00.
(Pet.
Br.
at 26—27.)
The Agency denied the costs associated with soil
contamination investigation performed by Mostardi-Platt on the
grounds that these costs lacked supporting documentation.
The
Agency asserts that the invoice submitted is a lump sum bill,
and
that it cannot determine what services comprised the
investigation, the personnel involved and their qualifications,
or the rate at which the services or personnel were billed.
(Resp.
Br.
at
19.)
We find that petitioner has not provided sufficient
documentation to demonstrate that these costs constituted
reasonable corrective action costs.
Petitioner’s arguments
concerning payment of the invoice do not address the
reasonableness of the costs contained in the invoice.
Accordingly, we affirm the Agency’s denial of $3,277 in costs
paid to Mostardi-Platt.
c)
Consultant/Oversight Costs of Sun Eco Systems,
Inc.
Petitioner seeks reimbursement of $300 for costs paid to Sun
Eco Systems,
Inc.
(Sun Eco)
for consulting and oversight
services.
Petitioner asserts that it submitted an invoice from
Sun Eco which stated that it was for an on—site project overview
on November
1,
1990.
(Pet.
Br. at 28; Pet.
Ex.
15; Ag.
Rec. Vol.
B at 172.)
Furthermore, Mr.
Israel,
the principal of Learsi,
testified at hearing that a consultant named Philip Mode was
“brought
in to assess the whole situation”
when the project was
beginning.
(Tr. at 243-244.)
The Agency denied the $300 in costs paid to Sun Eco on the
grounds that petitioner failed to provide sufficient
documentation.
The Agency asserts that the Sun Eco invoice did
not indicate who performed the service,
their area of practice or
expertise, their billing rate,
or the specific services provided.
(Resp.
Br.
at 18.)
We find that petitioner did not provide the Agency with
sufficient documentation of the services performed and associated
costs for the Agency to determine whether they constituted
reasonable corrective action costs.
Accordingly, we affirm the
Agency’s denial of $300 for costs paid to Sun Eco Systems,
Inc.
9
d)
Ashly Trucking Company
Petitioner seeks reimbursement of $7,670.00 in costs paid to
Ashly Trucking Co.
(Ashly).
Petitioner asserts that it submitted
invoices indicating that the charges were for trucking services,
and specified the cost per load.
(Pet.
Br. at 23; Ag. Rec Vol. B
at 151
-
160.)
Petitioner also provided cancelled checks
totalling $7,670.00, the full amount of the invoice.
(Pet.
Br.
at 24; Ag. Rec Vol.
B at 165
-
167.)
Petitioner further asserts
that the testimony of Mr.
Israel and Mr. Hayes at hearing
demonstrated that the costs were reasonable.
Mr. Hayes had
testified that he was present at the Site when Ashly was
delivering the backfill, and expressed his opinion that the rates
charged by Ashly were reasonable.
(Tr.
at 105.)
Mr. Israel had
testified about payment of the invoices and debiting of the
appropriate account.
(Pet.
Br.
at 23,
Tr. at 235
-
236.)
The Agency denied $7,670.00
in costs paid to Ashly based on
lack of supporting documentation.
(Resp.
Br.
at 17-18.)
The
Agency asserts that,
although the submitted invoices provided
information such as dates,
ticket numbers, truck numbers, and
units,
the Agency’s accountant,
Ms.
Levine,
could not determine
what service had been provided.
(Tr. at 439-440.)
She therefore
could not determine whether the costs were reasonable,
or were in
fact corrective action costs.
Furthermore, the Agency asserts
that the petitioner never informed the Agency of the purpose of
the costs prior to its final decision.
(Resp. Br.
at 18.)
We find that petitioner failed to provide documentation that
the costs paid to Ashly were reasonable corrective action costs.
While petitioner demonstrated at hearing that the costs were for
transportation of backfill,
this demonstration was not made to
the Agency prior to its final determination, and the Agency was
therefore justified in finding that the costs were not adequately
documented.
In several prior UST Fund reimbursement cases, beginning
with Sparkling Spring Mineral Water Co.
v. Illinois Environmental
Protection Agency (August
26,
1993)
PCB 92-203, and continuing
through Chuck
& Dan’s Auto Service v. Illinois Environmental
Protection Agency (August
26,
1993)
PCB 92-203, the Board has
admitted evidence which was not contained in the Agency record.
This evidence was admitted because the Agency had not promulgated
regulations identifying for petitioners the type of information
necessary to complete a reimbursement application.
The Board
reasoned that without such regulations, petitioners could not
anticipate what information the Agency would require, and
therefore petitioners should be allowed to supplement the record
in order to clarify why a disputed cost should be reimbursed.
This was a departure from the evidentiary rule applied in permit
appeal cases, wherein the Board reviews only the record below.
(Sparkling Spring Mineral Water at 4,
citing
Joliet Sand
& Gravel
10
v.
PCB,
163 Ill.App.
3d 830,
516 N.E.2d 955,
958
(3d Dist.
1987)
.)
However, the facts in the present case warrant the
application of the evidentiary rule followed in permit appeals.
Notwithstanding the absence of Agency regulations, petitioner
knew or was obligated to know that, at a minimum,
it was required
to demonstrate that the disputed cost was for corrective action.
Section 22.18(b)
of the Act clearly states that an owner or
operator can only recover from the Fund the costs of corrective
action.
The initial burden on the party seeking reimbursement is
to demonstrate that the remediation costs satisfy the definition
of corrective action.
(Platolene 500,
Inc.
v. IEPA
(May 7,
1992)
PCB 92-9,
133 PCB 259 at 7.)
The information submitted
concerning trucking costs was insufficient to demonstrate that
the cost was for corrective action.
The invoices submitted
contained no information as to what task the truck performed.
Such information is critical to the Agency’s determination
whether a cost is for corrective action.
Absent that
information, the Agency would have been remiss
if
it would have
released monies from the UST Fund.
We therefore affirm the
Agency’s denial of $7,670.00 in costs paid to Ashly Trucking.
e)
August Sievers and Sons Company
Petitioner seeks reimbursement of $3,227.20 in costs paid to
August Sievers and Sons Company (Sievers).
Petitioner asserts
that it submitted an invoice for these costs which specifically
states the invoice
is for services rendered to “backfill and
compact clean fill in tank hole.”
(Pet.
Br. at
24, See Pet.
Ex.
4, Ag. Rec.
vol.
B at 168.)
Petitioner also points out that
petitioner provided a cancelled check to August Sievers for
$3,227.00,
the total amount of the invoice.
Furthermore, Mr.
Israel testified about payment of the invoices and debiting of
the appropriate account.
(Pet.
Br.
at 23,
Tr.
at 232
—
234.)
The Agency denied reimbursement of these costs on the
grounds that the bill was
a lump sum bill.
(Resp.
Br. at 19.)
The Agency asserts that the invoice does not indicate what type
of backfill was used,
or what personnel or equipment were needed
to perform the work,
or the rate at which the work was billed.
There was therefore insufficient information to determine the
reasonableness of the costs.
(See Tr.
at 441.)
We find that petitioner did not provide the Agency with the
information necessary to determine whether the charges for the
services which made up the total were reasonable.
We therefore
affirm the Agency’s denial of $3,227.20 for costs paid to August
Sievers and Sons Company.
11
2) Costs Not Considered Corrective Action
a)
Pumping and Disposal of Water
After petitioner discovered the USTs at the site,
in order
to become eligible to seek reimbursement from the UST Fund,
petitioner prepared and submitted to the Agency a corrective
action plan in the second week of November 1990.
The corrective
action plan was approved in January 1991.
During this time
period,
8—10 feet of run—off water collected in the excavation,
with a total volume of approximately 80,000 gallons.
(Pet.
Br.
at 15; see testimony of John Hayes,
Tr. at 63.)
Petitioner seeks
reimbursement of $28,655.70 in costs incurred in pumping and
disposing of this water as a special waste.
(Pet.
Br. at 15.)
Petitioner requested approval to discharge the water through
the sewer system.
(Agency Rec.
vol.
D at 119.)
The Agency
informed petitioner that a discharge permit would be needed, and
that the permitting process would take approximately 60-120 days.
(See Agency Rec.
vol. D at 134.)
An April
1, 1991 report from
GSC Environmental
(GSC)
directed to Angela Tin at the Agency,
indicates that the Village Engineer from the Village of Clarendon
Hills would allow the discharge if a permit was obtained from the
Agency.
(~~)
Despite the fact that the Agency and Village approved the
discharge of the collected run-off to the sewer pending
petitioner’s receipt of a discharge permit, petitioner elected to
have the water pumped out and treated as a special waste.
(See
Ag.
Rec. Vol C pt.
2 at 639.)
The April
1,
1991 report from GSC
indicates that petitioner elected to pump and treat the water as
a special waste in order to avoid the delay associated with
obtaining a permit.
(Agency Rec.
vol.
D at 134.)
Petitioner argues that applying for a permit to discharge
into a sewer is a very long and costly process,
and is not a
practical or reasonable alternative for managing rainfall
accumulated in an excavation.
(Pet.
Br. at 17; Tr.
at 376.)
Petitioner presented the expert testimony of Mr. Nelson that such
permit applications are often denied, since there is always the
possibility of residual contamination.
(Tr.
at 376.)
Petitioner
also argues that the water presented a safety concern since
someone could be harmed if they fell into the excavation, and
since the sides of the excavation could collapse.
(Pet.
Br. at
16; Tr. at 67,
375.)
Petitioner further states that the costs
were corrective action costs since,
as admitted by the Agency,
the excavation could not proceed with the water in the
excavation.
(Pet.
Br.
at 16; see testimony of John Hayes,
Tr. at
64, testimony of Jay Hamilton;
Tr. at 581.)
The Agency denied reimbursement of these costs,
saying that
they didnot constitute corrective action costs.
(Pet.
Ex.
17
12
Attachment A para.
7.)
Petitioner’s own testing shows that the
water was clean,
and did not need to be disposed of as a special
waste.
(See April
1,
1991 Report by GSC to Angela Tin, Ag.
Rec.
Vol D at 137.)
Furthermore, the Agency had agreed to
petitioner’s request to dispose of the water through the sewer,
which would have been less expensive than pumping and treating as
a special waste.
(See testimony of Steven
E. Nelson, Tr.
at 403
-
404; testimony of Jay Hamilton at 566.)
This would have required
that petitioner obtain a discharge permit.
The record shows that
the, Village of Clarendon Hills engineer would allow the discharge
of water if such a permit was obtained.
The record shows that
processing a permit application was expected to take 60-120 days.
(R.
Vol.
D at 134.)
We find unpersuasive petitioner’s argument that the water
presented a safety concern which required immediate action.
The
excavation had been fenced, and had already been sitting dormant
for approximately two months.
Furthermore, the record
demonstrates that there was a reasonable and less expensive
alternative to pumping and treating the water as a special waste,
and that it would have been less expensive to dispose of it
through the sewer.
The record indicates that the Village
Engineer would allow the discharge if approved by the Agency, and
that petitioner had obtained Agency approval.
Petitioner only
needed a discharge permit, which could have obtained in
approximately 60-120 days.
We find that the Agency properly
denied the cost, of disposing of this water as a special waste,
since disposing of the water as a special waste did not
constitute corrective action.
b)
Sewer Repair
Petitioner seeks reimbursement of $842.83 incurred in
repairing and capping a storm sewer.
(Pet.
Br. at 19.)
Petitioner asserts that these costs constituted corrective action
costs,
since the repair minimized,
eliminated,
or stopped the
potential flow or migration of contaminants.
(~~)
Petitioner
points out that Mr. Hamilton admitted under cross—examination
that if the storm sewer had been left unrepaired,
it was possible
that contamination could have entered the storm sewer and
migrated to other places on the site,
or even off—site.
(Pet.
Br. at 19, see Testimony of Jay Hamilton,
Tr. at 598.)
The Agency denied the sewer repair costs on the grounds that
they did not constitute corrective action costs.
(Pet. Ex.
17
Attachment A para.
8; Testimony of Jay Hamilton at 569.)
The
Agency asserts that there
is no evidence that any contamination
ever entered the sewer, and that
it is mere speculation on
petitioner’s part that such migration of contamination could,
occur.
(Resp.
Br. at 25.)
The Agency also argues that
petitioner failed to demonstrate that the sewer was not damaged
during petitioner’s removal activities.
(~~)
13
We find that petitioner has demonstrated that the repair and
capping of the sewer constituted corrective action.
Petitioner
was not required to demonstrate that migration had occurred in
order for the repair to be considered corrective action.
Petitioner could demonstrate that the costs were corrective
action costs by showing that the sewer created the potential for
migration of contaminants.
We hold that petitioner
is entitled
to reimbursement of $842.43 incurred
in the repair and capping of
the sewer.
c)
Site Sweeping
Petitioner asserts that the $349.20 incurred for sweeping
the site should have been reimbursed,
since they constitute
mitigation of a safety hazard.
(Pet.
Br.
at 19
—
20.)
Petitioner further argues that some of the soil removed in
sweeping the site may have been affected by contamination, even
if the levels were below cleanup objectives.
(Pet.
Br. at 19.)
The Agency denied reimbursement of the site sweeping costs
on the, grounds that they did not constitute corrective action
costs.
(Pet.
Ex.
17 Attachment A para.
8.)
The Agency asserts
that there
is no evidence that sweeping and cleaning the site
stopped, minimized, eliminated or cleaned up the release of
petroleum
at
the site.
(Resp.
Br. at 25.)
The Agency asserts
that the Enterprise Leasing test focuses on whether the activity
itself is corrective action,
not whether
it is the result of
corrective action, and that petitioner has failed to demonstrate
that the activity is corrective action.
(~~)
We find that petitioner failed to demonstrate that the costs
incurred to sweep and clean the site were corrective action
costs.
There is no evidence that sweeping and cleaning the site
stopped, minimized,
eliminated, or cleaned up the release of
petroleum.
The safety hazards presented by a “dirty,
disorgarüzed site” are not the kinds of risks the LUST Fund was
intended to address.
Sweeping the site constitutes a restorative
action, beneficial to the property owner and society, and not a
corrective action, stopping or minimizing a release of petroleum.
d)
Demurrage
Petitioner asserts that it should have been reimbursed for
$280 in demurrage costs, paid to Beaver Oil Company,
Inc., which
were billed at $70 per hour for four hours.
(Pet.
Br.
at 20
-
21; Ag. Rec. Vol.
C pt.
2 at 688,
691.)
Petitioner asserts that
the demurrage fees were charges for the time a truck was required
to stay at the site while it was removing water from the
excavation.
(Pet.
Br. at 20; Testimony of John Hayes,
Tr. at 88-
89.)
14
The Agency denied reimbursement of the demurrage costs on
the grounds that they did not constitute corrective action costs.
(Pet.
Ex.
17 Attachment A para.
9..)
The Agency defines demurrage
costs as “a charge assessed for detaining a freight car,
truck,
or other vehicle beyond the free time stipulated for loading or
unloading.”
(Resp.
Br. at 25.)
In her testimony,
Grace Levine
referred to demurrage fees as “standby charges.”
(Tr. at 467.)
The Agency asserts that Beaver Oil Company, Inc., which assessed
the fees,
interpreted demurrage fees
in the same manner.
The
Agency points out that an October 30,
1990 Beaver Oil invoice for
a load of oil, water and sludge, and a load of heavy mud, charged
no demurrage fee for loading these substances,
so that the term
demurrage cannot refer to the time spent actually pumping out the
materials.
(Resp.
Br. at 26; Agency Rec Vol.
C pt.
2 at 684.)
Furthermore the Agency asserts that,
if demurrage charges
were in fact costs incurred for the time the material was
actually being removed, the demurrage fees do not correlate with
the amount of materials removed.
For example, the pumping of
2000 gallons of used oil and water incurred two hour of demurrage
fees, while the pumping of 3000 gallons and 5500 gallons incurred
only one hour each of demurrage fees.
(Resp.
Br.
at 26;
see Ag.
Rec. Vol. C pt.
2 at 688,
691.)
The Agency acknowledges that,
pursuant to Platolene 500,
Inc.
v.
IEPA
(May 7,
1992) PCB 92-9,
certain standby charges can be related to corrective action.
However, the Agency asserts that petitioner did not provide
sufficient details concerning the delays to justify
reimbursement.
We find that petitioner has failed to demonstrate that the
demurrage fees were corrective action costs.
Petitioner has
failed to explain the inconsistencies which would result if its
definition were adopted.
Furthermore, petitioner has failed to
adequately explain the delays in order to justify reimbursement.
We therefore affirm the Agency’s denial of $280 for demurrage
costs.
e)
Lost Barricades
Petitioner asserts that it should be reimbursed $180
incurred for lost barricades.
(Pet.
Br. at 21.)
Petitioner
asserts that these costs were incurred as part of the corrective
action at the site.
(i~) The Agency denied these costs on the
grounds that they do not constitute corrective action costs.
(Pet.
Ex.
17 Attachment A para.
10.)
At hearing, Ms. Grace
Levine testified that equipment rental
is reimbursable, but
equipment purchase is not, since equipment purchase is not
necessary for corrective action.
(Tr. at 467
—
468.)
We affirm the Agency’s denial of $180 for lost barricades,
on the grounds that these costs do not constitute corrective
action costs.
15
f)
Parking Lot Lighting
Petitioner seeks reimbursement of $10,127.46
in costs
incurred
in replacing parking 1~tlighting fixtures.
(Pet.
Br.
at 25
—
26.)
The Agency denied these costs on the grounds that
they do not constitute corrective action costs.
(Pet.
Ex.
17
Attachment A para.
11.)
Paragraph 11 of the Agency April 29,
1993 clarification only
states that $127.46 is denied in reimbursement.
(Pet.
Ex.
17
Attachment A para.
11.)
Petitioner asserts that the Agency
should be bound by the $127.46 figure, pursuant to Clinton Co.
Oil Co.
v. Illinois Environmental Protection Agency
(March 26,
1992, and June 4,
1992)
PCB 91-163.
Furthermore, petitioner
contends that the dismantling and reassembling of the lights was
necessary to perform the remedial action at the site.
(Pet.
Br.
at 26; see testimony of John Hayes,
Tr.
at
79.)
The Agency asserts that the $127.46 figure was an obvious
typographical error,
and that it intended to deny the full
amount.
(Pet.
Br. at 27.)
The Agency states that it would have
been impossible for
it to have separated $127.46 out of the
total,
since petitioner provided only
a lump sum bill.
The
Agency further points out that total amount to be reimbursed
listed in both the April
29,
1993 and the reimbursement voucher
prepared for the site confirm that $10,
127.46 was the
appropriate figure.
The Agency argues that it should not be
bound by such an obvious typographical error.
The Agency further
argues that Clinton County Oil does not address typographical
errors, and that it is therefore inapplicable and does not
require that the Agency be bound by such an error.
The Agency asserts that, pursuant to Platolene 500,
Inc.
v.
IEPA
(May 7,
1992)
PCB 92-9,
it
is clear that installation of the
parking lights constituted a restorative action, and did not
constitute corrective action to stop or minimize
a release of
contamination.
(Resp. Br.
at
27
-
28.)
The Agency states that t
would have paid for dismantling of the light poles and their
reassembly if the dismantled components had been used.
(Resp.
Br. at 27
-
28; Testimony of Jay Hamilton,
Tr. at 574
-
575.)
We find that the Agency is not bound by an obvious
typographical error in its clarification letter.
There is no
danger that petitioner would have been misled to believe that
only a portion of the costs were denied, since petitioner
provided only a lump sum bill,
and did not provide the Agency
with.a breakdown of costs.
Furthermore, we find that the Agency
is correct in characterizing these costs as restorative actions,
which pursuant to Platolene 500, are not reimbursable.
Installation of the lights did nothing to stop minimize or
prevent a release of petroleum.
Accordingly, these costs were
properly denied.
16
3)
Pre-Notification Expenses
The Agency denied a total of $14,213.96 in costs which were
incurred prior to notification of ESDA (pre-notification
expenses):
$5,330.58 in costs associated with consulting
services provided by GSC, and $8,883.38 for work performed by
Accurate.
(Pet.
Ex.
17 Attachment A para.
3.)
The Agency
asserts that,
pursuant to Section 22.28b(d) (4) (D)
of the Act,
costs incurred prior to notification of ESDA are not eligible for
payment.
Petitioner asserts that the Agency is improperly relying on
language which does not appear in the Act until the remediation
at the site had been completed
-
language which became effective
September 6,
1991
(Pub.
Act 87-323).
(Pet.
Br.
at 22-23.)
The statutory language in effect at the time petitioner
submitted its application read:
(4)
Request for partial or final payment for claims under
this Section shall be sent to the Agency and shall
satisfy all of the following:
(D)
The owner or operator notified the State of the
release of petroleum in accordance with applicable
requirements;
Petitioner asserts that this requirement was eventually
satisfied, and that the costs should therefore be reimbursed.
(Pet.
Br., at 22
-
23.)
As the Board explained in North Suburban Development
Corporation
(December 19,
1991),
PCB 91—109,
128 PCB 263,
272:
Contrary to North Suburban’s assertions
the
revised
language of Pub. Act 87-323
does not reflect a new
statutory initiative
to exclude pre—notification expenses.
The old language would have excluded all remediation costs
when ESDA was not notified within
24 hours, even if ESDA was
notified more than 24 hours later but before remediation
costs were incurred.
The new language makes it clear that
costs incurred after notification can be compensated even if
the 24—hour notification requirement is not met.
Since pre—
notification costs are excluded under both the old and the
new statutory language, this argument is misplaced.
(See also Kronon Motor Sales,
Inc.
v. IEPA (January 9,
1992),
PCB
91—138,
affirmed
609 N.E.
2d 678.)
17
We find that this explanation
is applicable and
petitioner’s argument
is without merit.
We therefore affirm the
Agency’s denial of the pre—notification expenses.
4)
Manifest Charges $37.50.
Petitioner seeks reimbursement of $42.50 for the preparation
of five special waste manifests by Beaver Oil.
(Pet.
Br. at
18.) Petitioner asserts that the $37.50 charge reflects the
charge, for the execution,
filling out and processing of the waste
manifest that is required to accompany the special waste.
(Pet.
Br.
at 18; see Testimony of John Hayes,
Tr.
at 89.)
Beaver Oil
charged petitioner $8.50 per manifest for this service.
(Pet.
Br.
at 18; Ag.
Rec. Vol C pt.
2 at 684,
688,
691.)
The Agency allowed reimbursement of
$5 and denied
reimbursement of $37.50 of these charges
(Pet.
Ex.
17 Attachment
A para.
6), allowing only $1 per manifest, which
is the price the
Agency charges for the actual manifest document.
(Resp. Br. at
23.)
The Agency asserts that the information contained in each
manifest appears to be the same on each form, and should have
only taken 2-3 minutes to complete.
(Resp.
Br.
at 24.)
The
quantity of substance on each form is hand—written, and the only
other information that changed between forms were signature and
date.
(~~)
Furthermore, the information could have been
completely handwritten, requiring even less effort.
(~)
The
Agency also points out that other companies that completed the
manifests did not charge
a completion fee.
(~~)
The Agency
asserts that charging a fee to complete the manifest is not
reasonable in light of the minimal efforts required to perform
the task.
(~~)
We find that petitioner failed to demonstrate that this cost
was reasonable as submitted.
We agree with the Agency that the
minimal efforts required to complete the form do not justify the
$8.50 per manifest fee.
The Agency’s denial of $37.50 is
affirmed.
5) Handling Charges
The Agency denied $253.42 associated with the handling
charges for certain subcontracted services related to site
sweeping and sewer repair,
($1,192.03),
lost barricades
($180)
deinurrage costs
($280) and manifest costs ($37.50).
(Pet.
Ex.
17
Attachment A para’.
1.)
Because we have affirmed the Agency’s
denial of the site sweeping costs,
lost barricade costs and
demurrage costs, we affirm the Agency’s denial of the related
handling costs.
Because we have reversed the Agency’s denial of
$842.83 in sewer repair costs, we reverse the Agency’s denial of
the related handling costs.
Petitioner is entitled to
reimbursement of $127.25 in handling costs.
18
6)
Legal Fees of Ross
& Hardies
The Agency denied reimbursement of $68,679.55 in costs paid
to the law firm of Ross
& Hardies on the grounds that they
constituted legal defense costs.
(Pet.
Ex.
17 Attachment A para.
5.)
Paragraph
5 of the denial letter further states that,
pursuant to Section 22.28b(e) (1) (C)
of the Act,
legal defense
costs include legal costs for seeking payment under Section
22.18(b).
Petitioner is appealing the denial of
$10,000 of these
costs which were incurred in connection with petitioner’s appeal
of the O’ffice of the State Fire Marshal’s revocation of the
registration of the tanks at the site.
(Pet.
Br.
at 28
-
29; see
testimony of David Israel, Tr.
at 206
—
207,
251
—
252.)
Petitioner asserts that these costs are not legal defense
costs as defined in 35 Ill. Adm. Code 731.192, which defines
legal defense costs as:
any expense that an owner or operator or provider of
financial assurance incurs
in defending against claims or
action brought,
By USEPA or the State to require corrective action or
to recover the costs of corrective action;
By or on behalf of a third party for bodily injury or
property damage caused by an accidental release; or
By any person to enforce the terms of
a financial
assurance mechanism.
(Note: this regulation was repealed in April,
1992.)
Petitioner relies on City of Roodhouse v. IEPA (September
17, 1992)
PCB 92-31, wherein the Board took notice of the
definition of the term “legal defense costs” contained in 35 Ill.
Adm. Code 731.192 for guidance in interpreting its meaning in the
UST reimbursement context.
(See City of Roodhouse at 19.)
The Agency responds that City of Roodhouse is
distinguishable,
in that the costs in that case were found to be
corrective action costs.
(Resp.
Br.
at 23.)
The Agency asserts
that in the present case,
the costs were not corrective action
costs,
in that they were not incurred to stop, minimize,
eliminate,
or clean up a release of petroleum or its effects as
may be necessary or appropriate to protect human health and the
environment.
The Agency points out that petitioner was required
to clean up the site whether or not petitioner was entitled to
access the Fund.
(Id.)
We affirm the Agency’s denial of these costs on the grounds
that they were legal defense costs which did not constitute
19
corrective action costs.
In City of Roodhouse, the Agency had
denied reimbursement of legal costs connected with obtaining an
alternate water supply, which was specifically listed as
corrective action.
Here,
Petitioner seeks reimbursement for
costs incurred in obtaining registration of tanks,
an activity
which is not corrective action.
We distinguish Roodhouse on the
grounds that,
in Roodhouse, the legal costs were incurred in
connection with corrective action costs.
In the present case,
the legal costs incurred in appealing the registration of tanks
with the OSFM clearly do not constitute corrective action costs,
in that they are not incurred to stop, minimize, eliminate,
or
clean up a release of petroleum or its effects.
Therefore, we
find that it is inappropriate to apply the definition contained
in 35 Ill. Adm. Code 731.192.
Furthermore, The Agency’s April
29,
1993 clarification letter informed petitioner that the costs
were being denied because they did not constitute corrective
action costs,
and that legal costs incurred
in for seeking
payment under Section 22.28(b) were not reimbursable as
corrective action costs.
While the standard language contained
in the April
29,
1993 incorrectly referenced language contained
in Section 22.28(e) (1) (C) which was not
in force at the time
petitioner submitted its application in order to support the
denial, the fact that this was not a reimbursable cost was
entirely correct.
CONCLUSION
For the reasons set forth above,
we find that the Agency
properly denied reimbursement of $330,434.37 of the $331,404.05
in contested costs.
We further hold that petitioner
is entitled
to additional reimbursement of $969.68:
$842.43 for costs
incurred in the repair and capping of the sewer,
and $127.25 for
handling charges on those sewer repair costs.
This opinion constitutes the Board’s findings of fact and
conclusions of law in this matter.
ORDER
1.
The Board hereby affirms the Agency’s February 18,
1993
final determination,
as clarified by its April
29,
1993
letter,
in denying reimbursement to petitioner,
Learsi, for
the following costs:
A.
$298,786.98 for costs lacking supporting documentation;
B.
$28,655.70 for costs associated with clean water
pumping,
since these costs are not corrective action
costs;
C.
$349.20 for costs incurred for site sweeping,
since
these costs are not corrective action costs;
20
D.
$280.00 for costs associated with demurrage,
since
these costs are not corrective action costs;
E.
$180 for costs associated with lost barricades,
since
these costs are not corrective action costs;
F.
$10,127.46 for costs associated with wiring lights;
since these costs are not corrective action costs;
G.
$14,213.96 for costs incurred prior to notification of
ESDA;
H.
$37.50 for manifesting costs,
since petitioner failed
to demonstrate that the costs were reasonable;
I.
$126.17 for handling charges on denied costs; and
J.
$10,000 in legal defense costs for which petitioner
sought review.
2.
The Board hereby reverses the Agency’s February 18,
1993
final determination,
as clarified by its April
29,
1993
letter,
in denying reimbursement to petitioner
for the
following costs:
A.
$842.43 for costs incurred
in the repair and capping of
a sewer; and
B.
$127.25 for handling charges on those sewer repair
costs.
IT IS SO ORDERED.
Section 41 of the Environmental Protection Act (415 ILCS
5/41
(1992))
provides for the appeal of final Board orders within
35 days of the date of service of this order.
The Rules of the
Supreme Court of Illinois establish filing requirements.
(See
also 35
Ill. Adm. Code 101.246.
“Motions for Reconsideration”.)
I,
Dorothy M.
Gunn,
Clerk of the Illinois Pollution Control
Board,
hereby cert~,ifythat the ab~çeopinion and order was
adopted on the
~
day of
~
1995,
by a vote
of
‘7—~
.
Il
Control Board
