ILLINOIS POLLUTION CONTROL BOARD
April 17, 2003
REZMAR CORPORATION, )
)
Petitioner,
)
)
v. ) PCB 02-91
) (UST Appeal)
ILLINOIS ENVIRONMENTAL )
PROTECTION AGENCY, )
)
Respondent. )
MICHAEL J. HUGHES, NEAL, GERBER & EISENBERG, APPEARED ON BEHALF of
REZMAR CORPORATION; and
JOHN J. KIM APPEARED ON BEHALF OF THE RESPONDENT.
OPINION AND ORDER OF THE BOARD (by M.E. Tristano):
On April 8, 2002, Rezmar Corporation (Rezmar) filed a petition for review with the
Board pursuant to Section 57.9(c)(2) of the Environmental Protection Act (Act) (415 ILCS
5/57.9(c)(2)) and Sections 105.500-105.510 of the Board’s procedural rules (35 Ill. Adm. Code
105.000-105.510). The petition asks the Board to reverse the Illinois Environmental Protection
Agency’s (Agency) decision to deny payments of certain costs for reimbursement from the
Underground Storage Tank (UST) Fund for about $119,000 in clean up costs Rezmar incurred.
For the reasons stated below, the Board affirms the Agency’s decision.
PROCEDURAL BACKGROUND
On December 18, 2002, a hearing in this matter was held in Chicago. One witness
testified at the hearing. Rezmar presented testimony from Mr. Larry Bertsch, a project manager
and geologist from GaiaTech Inc., hired by Rezmar as an environmental consultant. Based on
the legal judgment, experience and observations of the hearing officer, the credibility of the
witness is not an issue in this matter.
On January 22, 2003, Rezmar filed a post-hearing memorandum in support of its petition
for review of reimbursement determination. On February 21, 2003, the Agency filed a response
to Rezmar’s post-hearing memorandum. On March 3, 2003, Rezmar filed a post-hearing reply to
the Agency’s response.
FACTUAL BACKGROUND
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On December 18, 2002, the parties agreed to a stipulation of facts. Rezmar is an Illinois
corporation with its offices located at 853 North Elston, Chicago. Rezmar is the manager of 850
N. Ogden L.L.C., which owned certain property located at 850 N. Ogden, Chicago (site) from
March 1998 until portions of the site were sold as individual housing units starting in late 2000.
During preparation of the site for development purposes, Rezmar hired GaiaTech, Inc. and R.W.
Collins Company to provide environmental consulting and engineering services and to assist
with the removal of two USTs.
On May 3, 1999, R.W. Collins removed one 550-gallon gasoline UST and one 5,000-
gallon heating oil UST from the ground at the site. GaiaTech provided technical and oversight
services for the UST removal project. During the removal of the USTs, holes were observed in
the base and side walls of both tanks by GaiaTech and by a representative of the Office of the
State Fire Marshal. In addition, a pool of oil was found in the heating oil UST excavation. After
removal of the heating oil UST, oil and perched water flowed into the excavation from
surrounding soils and fill material. R.W. Collins recovered approximately 3,600 gallons of oil
from the heating oil UST and approximately 900 gallons of oil from the heating oil UST
excavation by vacuum truck, and transported the oil for off-site disposal.
After temporary backfilling of the heating oil UST excavation, Rezmar submitted a 20-
Day Report to the IEPA on May 23, 1999. Rezmar’s contractors scheduled a return visit to the
site to continue investigation and removal of petroleum-contaminated soils. On June 11, 1999,
during the planned soil removal activities, a significant amount of oil and oil-impacted soils were
encountered in the area adjacent to the former UST, and approximately 500 gallons of oily
product flowed into the new excavation from the surrounding soils. This oily product was
removed by vacuum truck beginning on June 12, 1999, with the investigation and removal
efforts continuing in order to evaluate and mitigate potential migration and other hazards.
During the excavation of contaminated soils adjacent to the former heating oil UST
location, Rezmar’s subcontractors encountered a network of abandoned clay sewer pipes, at
varying depths, which were partially or completely filled with oil and water. GaiaTech observed
discharges of oil and water from these pipes and from the backfill and native soils adjacent to the
former tank and surrounding the clay pipes. Rezmar’s subcontractors encountered several catch
basins attached to the clay pipes, one of which was filled with approximately 50 gallons of oil.
Some of this material was gelatinous in nature and had to be excavated from the site.
Following a rainstorm during the weekend of June 12-13, 1999, the heating oil UST
excavation became partially filled with oil and water. This oil and water was removed from the
excavation on June 14, 1999. Between June 14 and June 22, 1999, R.W. Collins removed
approximately 24,000 gallons of oil and water from the excavation, clay pipes and catch basin.
R.W. Collins also removed 2,375 cubic yards of saturated soil from the site. At the completion
of the excavation, oily product remained in certain pipes and saturated soils that were
inaccessible due to the presence of a temporary office trailer. In order to minimize further
migration, the pipes were sealed with concrete at both ends.
On June 20, 1999, Rezmar requested that the Agency grant a 30-day extension of time for
submittal of a 45-Day Report. By a letter dated July 12, 1999, the Agency determined that early
3
action activities could be conducted beyond the 45-day period, and informed Rezmar that the
initial 45-day period for which early action costs would be considered reimbursable was
extended to July 17, 1999. On July 15, 1999, Rezmar’s subcontractors completed additional
investigation activities, including trenching and sampling activities and backfilling of pipeline
areas. Rezmar submitted a 45-Day Report and Free Product Removal Report to the Agency on
or about August 3, 1999.
Between May 1-8, 2000, after removal of temporary office buildings on the site,
Rezmar’s subcontractors conducted another investigation and removal of pipelines and soils.
Following the completion of removal activities in May 2000 in areas that were previously
inaccessible, Rezmar submitted to the Agency a Free Product Removal Update Report, prepared
by GaiaTech and dated June 14, 2000. The Agency approved this report by letter dated July 3,
2000. GaiaTech subsequently prepared and submitted to the Agency a Site Classification
Completion Report dated November 21, 2000. On March 16, 2001, the Agency issued a letter
approving the Site Classification Report and stating that no further action was required at the
site.
GaiaTech prepared a LUST Early Action Reimbursement Billing Package, dated
April 13, 2001, which was submitted to the Agency for review. On December 3, 2001, the
Agency issued a final decision with respect to the April, 2001 request for reimbursement,
denying payment of certain costs. In Item 3 of the Agency’s list of deductions, the Agency
deducted $107,114 from the invoices related to work performed by R.W. Collins, on the basis
that the costs were associated with the removal of more than four feet of fill material. The
Agency deducted $11,763.28 from GaiaTech’s invoice number 5308-6052, on the basis of lack
of documentation. Specifically, the Agency stated that the dates of performance of work were
not included and that these dates were necessary to determine whether the costs were incurred on
the date of the planned tank pull. Rezmar seeks review of the Agency’s December 3, 2001
denial letter.
STATUTORY BACKGROUND
Section 732.202 – Early Action
(a) Upon confirmation of a release of petroleum from an UST system
in accordance with regulations promulgated by the OSFM, the
owner or operator or both, shall perform the following initial
response actions within 24 hours after the release:
1) Report the release to IEMA (
e.g
., by telephone or electronic
mail):
2) Take immediate action to prevent any further release of the
regulated substance to the environment; and
3) Identify and mitigate fire, explosion and vapor hazards.
4
(b) Within 20 days after confirmation of a release of petroleum from a
UST system in accordance with regulations promulgated by the
OSFM, the owner or operator shall perform the following initial
abatement measures:
1) Remove as much of the petroleum from the UST system as
is necessary to prevent further release into the environment;
2) Visually inspect any above ground releases or exposed
below ground releases and prevent further migration of the
released substance into surrounding soils and groundwater;
3) Continue to monitor and mitigate any additional fire and
safety hazards posed by vapors or free product that have
migrated from the UST excavation zone and entered into
subsurface structures (such as sewers or basements);
4) Remedy hazards posed by contaminated soils that are
excavated or exposed as a result of release confirmation,
site investigation, abatement or corrective action activities.
* * *
6) Investigate to determine the possible presence of free
product and begin free product removal as soon as
practicable and in accordance with Section 732.203.
* * *
(d) Within 45 days after confirmation of a release, owners or operators
shall assemble information about the site and the nature of the
release, including information gained while confirming the release
or completing the initial abatement measures in subsections (a) and
(b) of this Section. This information shall include, but is not
limited to, the following:
* * *
4) Results of the free product investigations required at
subsection (b)(6) of this Section, to be used by owners or
operators to determine whether free product must be
recovered under Section 732.203.
Section 732.203- Free Product is defined as “a contaminant that is present as a non-
aqueous phase liquid for chemicals whose melting point is less than 30 degrees C (
e.g.,
liquid not
dissolved in water).”
Section 732.203 – Free Product Removal
(a) Under any circumstance in which conditions at a site indicate the
presence of free product, owners or operators shall remove free
5
product to the maximum extent practicable while initiating or
continuing any actions required pursuant to this Part or other
applicable laws or regulations. In meeting the requirements of this
Section, owners or operators shall:
1) Conduct free product removal in a manner that minimizes
the spread of contamination into previously
uncontaminated zones by using recovery and disposal
techniques appropriate to the hydrogeologic conditions at
the site that properly treats, discharges or disposes of
recovery by products in compliance with applicable local,
State and federal regulations;
2) Use abatement of free product migration as a minimum
objective for the design of the free product removal system;
3) Handle any flammable products in a safe and competent
manner to prevent fire or explosions;
4) Within 45 days after the confirmation of presence of free
product from a UST, prepare and submit to the Agency a
free product removal report on forms prescribed and
provided by the Agency…; and
5) If free product removal activities are conducted more than
45 days after the confirmation of the presence of free
product, submit free product removal reports in accordance
with a schedule established by the Agency.
(b) For purposes of reimbursement, owners or operators are not
required to obtain Agency approval pursuant to Section 732.202(g)
for free product removal activities conducted more than 45 days
after initial notification to IEMA of a release.
Section 732.103 defines fill material as “non-native or disturbed materials used to bed
and backfill around an underground storage tank.”
Section 732.606(a): Costs ineligible for the removal from the Fund include but are not
limited to:
Costs for the removal, treatment, transportation, and disposal of more than
four feet of fill material from the outside dimensions of the UST, as set
forth in Appendix C of this Part, during early action activities conducted
pursuant to Section 732.202(f). and costs for the replacement of
contaminated fill materials with clean fill materials in excess of the
6
amounts set forth in Appendix C of this Part during early action activities
conducted pursuant to Section 732.202(f) of this Part.
PETITIONER’S ARGUMENT
Rezmar argues that the Agency erroneously deducted the costs in question, which were
reasonably incurred in responding to and reporting a release of petroleum, investigating and
removing free product and free product saturated soils, and mitigating site hazards, in accordance
with 35 Ill. Adm. Code 732.202 and 732.203. Rezmar also argues that the Agency erroneously
deducted costs that were adequately documented. Pet. Post-Hrg. Br. at 4.
Soil Removal and Disposal Costs
Rezmar first challenges the deduction of $107,114 from R.W. Collins’ Invoice Number
9288. It is Rezmar’s position that the material excavated, investigated and removed by R.W.
Collins was not fill material, as the Agency contends. Pet. Post-Hrg. Br. at 4-5. Rezmar argues
that the Agency’s categorization of 2,375 cubic yards of soil as fill material was not supportable
and unwarranted. The project narrative submitted to the Agency described the material as
“saturated soil,” “native soil,” and “free product impacted soils.” Mr. Bertsch testified that the
majority of the materials removed were native soils, some of which were saturated with liquid or
contained pockets of free product. Pet. Post-Hrg. Br. at 5-6.
Rezmar states that under Section 732.202, it was required to take continuous steps to
investigate and abate the presence of free product and explosive vapors, to remedy petroleum
releases and to minimize the potential for further releases and migration of free product. In
addition, Rezmar argues that Section 732.203 requires it to ensure that the site is not left in a
condition that would contribute to migration of the free product, and to remove as much of the
free product as possible. Pet. Post-Hrg. Br. at 7-8.
In certain circumstances, Rezmar argues, it may not always be possible to pump out free
product in liquid form. The presence of free product in pipelines and sewer conduits may require
significant excavation of native soils. Larry Bertsch testified that Rezmar’s contractors observed
and removed a significant amount of free product from the tank excavation, from pipelines, from
catch basins, and from pockets in the soil. He also testified that most of the material removed by
R.W. Collins was saturated soil or liquid that could not be easily separated out. Pet. Post-Hrg.
Br. at 8.
Rezmar’s position is that its actions were not only reasonable but required by the UST
early action regulations regarding free product. At the time of the initial site assessment
activities the extent of the free product was not known. The work performed by R.W. Collins
was necessary to fully investigate the presence and to control further migration of the free
product. From a practical and a safety standpoint, Rezmar argues, the saturated materials needed
to be removed from the site. Pet. Post-Hrg. Br. at 9.
Rezmar states that the site conditions and the nature of the investigation and excavation
work should have been apparent to the Agency from the documents available in the project file.
7
GaiaTech supplied a detailed project narrative with the reimbursement package and it stated that
the removal of the saturated soils were performed on an emergency basis. In addition, at the
time of review the Agency was in possession of two Free Product Removal Reports and a Site
Classification Report that described the free product investigation and removal work. Pet. Post-
Hrg. Br. at 9.
Lack of Documentation
Rezmar argues that the Agency erroneously deducted the amount of $11,763.28, which
costs were adequately supported on the invoices and documents submitted. To support this
Rezmar states that the date of removal, May 3, 1999, was included in the reimbursement
documentation related to GaiaTech’s Invoice No 5308-6052. The reimbursement package also
included a project narrative describing in detail the activities occurring on each day. Pet. Post-
Hrg. Br. at 11.
RESPONDENT’S ARGUMENTS
The Board’s Regulations Limit What Can Be Reimbursed as Early Action
The Agency position is that Rezmar’s argument is inconsistent with the plain language of
the Board’s regulations and the concept of early action and later corrective action. The Agency
points out that Section 732.606(a) defines the scope of what type of removal activities may be
reimbursed as an early action activity. The Agency may approve removal of only up to four feet
of fill material from the outside dimensions for the UST. Any other request for reimbursement
of costs associated with removal of soil, the Agency argues, is more properly characterized as a
request for reimbursement of corrective action costs. The Agency states that if this were not the
case, then an owner or operator of a leaking UST would have no limitations on how much
material could be removed during early action. Resp. Post-Hrg. Br. at 3.
The Agency argues that there was an avenue for Rezmar to pursue to seek reimbursement
of those removal costs. Rezmar could have chose to classify the site as a high priority site and
then proceed to seek reimbursement under the heading of corrective action costs. The Agency
states that Rezmar did not choose this option and it is now unfair to ask the Agency to bend or
overlook the Board’s regulations to find a means by which Rezmar can receive reimbursement.
Resp. Post-Hrg. Br. at 4.
The Agency also argues that Section 732.202 does not contain any language that supports
Rezmar’s position that removal of contaminated material is considered to be an early action
activity. Section 732.202(a) requires the performance of certain initial response actions, none of
which include soil removal. Sections 732.202(b) and 732.202(c) call for initial abatement
actions to be taken within 20 days of contamination of the release, but none of those provisions
call for the removal of contaminated soil. Section 732.202(d)(4) does require that hazards posed
by contaminated soils be remedied, but does not require or call for those soils to be removed.
Section 732.202(e) requires a 45-Day Report be submitted to the Agency detailing the action
taken per Section 732.202(d). Section 732.202(f) states that early action may also include
disposal in accordance with applicable regulations, but the statutory citation included in that
8
provision references the limitation of removal of four feet of fill material. Thus, argues Rezmar,
the reliance placed on Section 732.202 for the argument that soils beyond those allowed by
Section 732.606(a) can be removed is without merit. Resp. Post-Hrg. Br. at 4.
Soil Contaminated With Free Product is Not Free Product Itself
The Agency also argues that the contaminated soil removed at the site was not free
product but rather soil contaminated with free product. The definition of free product
contemplates a contaminant floating on water. The removal of such material is consistent with
the removal of free product requirements found in Section 732.203. Resp. Post-Hrg. Br. at 5.
The Agency states that Rezmar is arguing that Section 732.203 allows for the removal of
contaminated soil under the guise that the soil is contaminated with free product, and is
essentially the same as free product. The Agency argues that this position is inconsistent with
the clear provisions of the regulation and with the definition of free product. The definition of
free product does not include soil contaminated with a contaminant that is present as a non-
aqueous phase liquid for chemicals whose melting point is less than 30 degrees Celsius. When
contaminated soil is the subject of the removal, the activity is more properly characterized as a
corrective action activity and should be presented so. Resp. Post-Hrg. Br. at 5-6.
Lack of Adequate Documentation Prevented Approval of Certain Costs
The Agency argues that it denied some of the costs found in the invoice submitted by
GaiaTech because the costs in question did not have dates when the work was actually done,
including personnel, equipment, and subcontractor costs. The decision letter stated “[t]his was a
planned tank pull and the dates are necessary because the costs on the day of the tank pull are not
reimbursable. It is possible if dates are submitted some costs are eligible.” Resp. Post-Hrg. Br.
at 7.
The Agency states that its concern was not that the date of the tank removal was not
noted, but rather that some of the costs included in the invoice may have been part of planned
tank pull activities. If such costs were included, then they would not be eligible for
reimbursement. The lack of adequate documentation as to the dates of the work performed led to
the denial. Resp. Post-Hrg. Br. at 7.
Rezmar states that the date on the invoice should be sufficient; however, the Agency
disputes that it is clear from the invoice for there was no date associated with each of the
activities. Rezmar also argues that other portions of the reimbursement request included
information that could have filled in those gaps. The Agency disputes this claim, since a review
of those pages cited by Rezmar does not provide a breakdown of the activities and dates of
activities needed to sufficiently cross-reference the GaiaTech invoice. Resp. Post-Hrg. Br. at 7-
8.
DISCUSSION
Soil Removal and Disposal Costs
9
After review of the record and the arguments of the parties, the Board affirms the
Agency’s $107,114 deduction for costs for the removal of more than four feet of fill material
from the outside dimensions of the UST during early action activities. Rezmar’s argument is
inconsistent with the language of the Board’s regulations and the concept of early action and
later corrective action. The statute states “ … for the purpose of payment for early action costs,
fill material shall not be removed in an amount in excess of four feet from the outside
dimensions of the tank.” 415 ILCS 5/57.6(a)(1)(B).
As a result of this statute, the Agency is limited to approving only up to four feet of fill
material from the outside dimensions of the UST. Any other requests for reimbursement of costs
associated with removal of soil, even during the period for early action activities, are more
properly characterized as a request for reimbursement of corrective action costs. As the Agency
points out, if this were not the case, then an owner or operator of a leaking UST would have no
limitations on how much material could be removed during early action. This would be contrary
to the controls and limitations imposed by the regulation. There was an opportunity for Rezmar
to pursue to seek reimbursement of those removal costs. Rezmar could have chosen to classify
the site as a high priority site and seek reimbursement under corrective action costs.
The Board also does not find persuasive Rezmar’s argument that since there was free
product encountered the removal of the soil was part and parcel of the free product removal and
should be reimbursed. Under Section 732.103, free product is defined as a contaminant that is
present as a non-aqueous phase liquid for chemicals whose melting point is less than 30 degrees
Celsius. The contaminated soil at the site was not free product. Removal of such material is
consistent with the removal of free product requirements found in Section 732.203.
The arguments presented by Rezmar are not consistent with Sections 732.202 and
732.203. As a result the Board affirms the Agency’s determination to deny reimbursement in the
form sought by Rezmar.
Lack of Documentation
Based on Board precedent, the burden is on applicants to demonstrate that incurred costs
are related to corrective action, properly accounted for, and reasonable. Beverly Malkey, as
Executor of the Estate of Roger Malkey d/b/a Malkey’s Mufflers. v. IEPA PCB 92-104 (Mar. 11,
1993) at 4. When requesting reimbursement from the fund, the owner or operator must provide
an accounting of all costs.
Id.
Rezmar argues that the date on the invoice should be sufficient.
However, the Board finds persuasive the Agency’s claim that there was not a date associated
with each of the activities in the invoice.
Rezmar failed to provide a breakdown of the activities needed to sufficiently cross-
reference the GaiaTech invoice. This does not support Rezmar’s position that other portions of
the reimbursement request included information that could have filled in those gaps in the
invoice. The costs in question had no dates when the work was done, such as personnel,
equipment and subcontractor. The Board affirms the Agency’s position that this was a planned
10
tank pull and the dates were necessary because the costs on the date of the tank pull are not
reimbursable.
CONCLUSION
The Board finds that Rezmar did not meet its burden of proving that the Agency
erroneously deducted the costs in question.
This opinion constitutes the Board’s finding of fact and conclusions of law.
ORDER
The Board affirms the Agency’s December 3, 2001 reimbursement determination
disallowing reimbursement of certain costs claimed by Rezmar.
IT IS SO ORDERED.
Board Member N.J. Melas abstained.
Section 41(a) of the Environmental Protection Act provides that final Board orders may
be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the
order. 415 ILCS 5/41(a)(2002);
see also
35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.
Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois
Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The
Board’s procedural rules provide that motions for the Board to reconsider or modify its final
orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code
101.520;
see also
35 Ill. Adm. Code 101.902, 102.700, 102.702.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, Certify that the Board
adopted the above opinion and order on April 17, 2003, by a vote of 5-0.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board
