ILLINOIS POLLUTION CONTROL BOARD
June 2,
1994
MYRTLE
LANDWEHRNEIER,
Petitioner,
v.
)
PCB 94-55
(UST Fund)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
)
Respondent.
MAURICE DAILEY, DAILEY
& WALKER, APPEARED ON BEHALF OF
PETITIONER;
GREG RICHARDSON APPEARED ON BEHALF OF THE ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY.
OPINION
AND
ORDER OF THE BOARD
(by E. Dunham):
This matter comes before the Board on a petition for review
filed by Myrtle Landwehrmeier on February
7,
1994,
pursuant to
Sections 22.18b(g)’ and 40 of the Environmental Protection Act
(Act).
(415 ILCS 5/22.18b(g)
& 40
(1992).)
The petition seeks
review of the denial of reimbursement by the Illinois
Environmental Protection Agency (Agency)
of $5,562.33 related to
handling charges,
$895.00 for lack of supporting dociunentation
and $1,110.00 for costs which allegedly do not constitute
corrective action.
The reimbursement determination concerns the
site at 3305 West Chain of Rocks Road in Granite City,
Illinois.
A hearing in this matter was held on April
8,
1994,
in
Granite City, Illinois before hearing officer John Hudspeth.
No
members of the public attended the hearing.
Karl Kaiser, project
manager for the Agency and David Wrobel of Environmental
Operations,
the contractor hired by Ms. Landwehrmeier, testified
at hearing.
The parties elected to present closing arguments on
the record and filed no briefs
in this matter.
At hearing the
parties stated that they had reached
a stipulation concerning
some of the amounts in dispute.
The parties submitted a written
stipulation to the Board on April 25,
1994.
The stipulation
indicates that the parties have resolved all of the costs that
were denied due to lack of supporting documentation, $11.24
related to handling charges and $75.00 related to the adjustment
in costs that were not corrective action.
Based on the
stipulation, the issues remaining before the Board are related to
handling charges and corrective action.
Section 22.18b(g)
of the Act was repealed in H.B. 300
effective September 13,
1993.
2
The petitioner states that the only notice of the denial for
reimbursement received by the petitioner was the invoice voucher
(Rec.
at 40) which provides no explanation of the amount of the
deductions except the standard deductible.
(Tr. at 7.)
Therefore,
the petitioner argues that until a copy of the record
is received there is no way to determine precisely what is
objectionable to the Agency.
(Tr. at 8.)
In Pulitzer v.
IEPA (December 20, 1990),
PCB 90-142, the
Board held that the Agency’s denial of eligibility for the Fund
must comport with the requirements of Section 39(a)
of the Act.
Consequently,
an Agency statement denying reimbursement from the
Fund on the basis of unreasonable costs must also comply with the
dictates of Section 39(a).
(Paul Rosman
v.
IEPA (December 19,
1991), PCB 91—80.)
Such information is necessary to satisfy
principles of fundamental fairness because the applicant has the
burden of proof before the Board to demonstrate that the
regulatory and statutory bases for denial are inadequate to
support that denial.
(Technical Services Co.
v.
IEPA (November 5,
1981), PCB 81-105.)
Therefore,
an applicant is entitled to a
statement detailing the reasons for denial and the statutory and
regulatory support for such denial.
(Pulitzer v.
IEPA (December
20,
1990), PCB 90—142.)
In this case,
the Board must decide if the invoice voucher
and attachment are sufficient to inform Ms. Landwehrmeier of the
basis of the Agency’s denial.
The invoice voucher indicates the
amounts deducted from the amount requested for reimbursement and
references Attachment A for each deduction.
Attachment A
provides a statement of the reason for the deduction and
references the applicable statutory section in support of the
reason.
The Board finds that the invoice voucher and attachment
minimally satisfies the requirements of Section 39(a)
in that it
provides the reason for denial and the statutory support for the
denial.
The Board agrees with petitioner that a more detailed
explanation of the charges not allowed and the calculations used
to determine the amount deemed to be non—reimbursable would be
beneficial.
Section 39(a) of the Act requires that the statement
of denial from the Agency include
*
*
*
3.
the ~pecific type of information,
if any, which
the Agency deems the applicant did not provide the
Agency and:
4.
a statement of ~pecific reasons why the Act and the
regulation might not be met if the reimbursement
was)
granted.
(Emphasis added.)
(415
ILCS
5/39(a)
(1992.)
3
Greater specificity in the denial letter would improve the
applicant’s ability to determine whether the reimbursement should
be appealed and would aid the applicant, the Board and the Agency
in perfecting the record once appeal is taken.
Handlinci Charges
The $5,562.33 not allowed for reimbursement by the Agency
represents the difference between the amount Environmental
Operations billed for the equipment and the amount calculated by
the Agency for use of the equipment based on the actual invoice
plus a handling charge of 15.
There is also a discrepancy
between the number of days billed by Environmental Operations for
some pieces of equipment and the number of days shown on the
invoices from the rental company.
Environmental Operations charged the time and material rate
for the use of the various pieces of equipment.
(Tr. at 31.)
This is the rate that the company has determined to be a standard
rate and lists that rate on a time and material schedule.
(Tr. at
31.)
The company considers this to be a competitive rate.
(Tr.
at 32.)
These charges include costs of overhead,
insurance,
technical experience for use of equipment and profit.
(Tr. at
45.)
Concerning the discrepancy in the days that some of the
equipment was used, Environmental Operations contends that it
received a bonus of one free day from the renter of the equipment
as an incentive for future business.
(Tr. at 37.)
Environmental
Operations contends that the reimbursement should be for its
usual and customary rate, which is reflected in the billings
submitted to the Agency.
(Tr. at 82.)
Based on the rental invoices, the Agency determined the cost
of renting the equipment and then added a 15
markup.
(Tr. at
60.)
The Agency only allowed for the actual cost of renting the
equipment on a daily basis.
The Agency maintains that the 15
is
a standard percent that the Agency allows for markup on equipment
charges or materials that are purchased.
(Tr. at 14.)
The Agency
views the difference between the rental invoice and the amount
billed by Environmental Operations to be profit and argues that
this represents an excessive charge.
(Tr. at 82.)
The Board has,
on at least three occasions, addressed the
issue of the Agency’s reduction of handling charges in excess of
15.
In all three cases the Board affirmed the Agency’s
reduction of handling charges to 15
of the total subcontractor
cost or field purchase.
In each case,
the Board weighed the
evidence offered by the petitioner during the UST appeal hearing
to determine whether the handling charges were “reasonable as
submitted,” and concluded the petitioner failed to demonstrate
that the requested handling charge was reasonable.
The Board
affirmed the Agency’s downward adjustment of three separate
handling charges of 46.4,
46
and 16,
to a flat 15
in State
4
Bank of Whittington
v. IEPA (June 3,
1993) PCB 92-152, the
Agency’s handling charge reduction from 58
to 15
in Beverly
Malkey
V.
IEPA (March 11,
1993), PCB 92—104, and the Agency’s
adjustment to 15,
disallowing $2821.76 in handling charges,
in
Platolene 500,
Inc.
V.
IEPA (May 7,
1992), PCB 92—9.
In addition, the Act has been amended to limit the amount of
handling charges.
Effective September 18,
1992, P.A. 87-1171,
amended Section 22.18b(i)(2) and created a sliding scale of the
percent allowable for a handling charge.
Subcontract or field
purchases of $5,000 and under will have handling charges
reimbursed at a rate of 12,
and costs in excess of $5,000 will
have handling charges reimbursed at a percent which decreases as
the costs increase.2
While new Section 22.18b(i)(2)
is not
directly applicable to this case because the effective date is
several months subsequent to the petitioner filing the
reimbursement application, the Board is persuaded that new
Section 22.18b(i) (2) reflects a prevailing belief, at least in
the legislature, that handling charges within the 12
and under
range are acceptable.
The Third District Appellate Court of Illinois recently
held,
in an unpublished opinion, that the Board’s reliance on the
Agency’s 15
limitation on handling charges constituted reliance
on a standard which the Agency improperly promulgated.
(Chuck and
Dan’s Auto Service v. IEPA
(No. 3—93-0751 May 19,
1993), PCB 92-
203.)
In that case,
however,
“...the Agency stipulated that the
contractor’s
invoices contained reasonable charges,
including
handling charges.”
(p.
7).
In Landwehrmeier, there is no
stipulation as to the reasonableness of the charges billed by
Environmental Operations.
Where there is a dispute whether
2New Section 22.18b(i) provides:
i.1. For purposes of this Section, “handling charge” means
administrative,
insurance,
and interest costs and a
reasonable profit or procurement, oversight,
and
payment of subcontracts and field purchases.
2.
Handling charges are eligible for payment only if they
are equal to or less than the following amounts:
Subcontract or
Eligible Handling
Field Purchase
Charges as a
Cost
Percentage of Cost
$1
—
$5000
12
$5,001
—
$15,000
$600+lO
of amt.over $5,000
$15,001
—
$50,000
$1600+8
of amt.over $15,000
$50,001
—
$100,000
$4400+5
of amt.over $50,000
$100,001
—
$1,000,000
$6900+2
of aiut.over $100,000.
5
charges are reasonable, the Board must make a de
novo
review of
the record before the Agency.
Given the legislature’s intent to limit future cases to 12
or less for handling charges, the Board holds that the use of 15
is perhaps slightly generous, but not unreasonable in this case.
Section 22.18b(d)(4)
of the Act requires the applicant to
show that the costs incurred were reasonable.
Environmental
Operations has not persuaded the Board that the facts in this
case are such that handling charges in excess of 15
are
reasonable.
While Environmental Operations claims that the
billings represent usual and customary charges that are
competitive with the charges in the area, they have not provided
any evidence to substantiate this claim.
Specifically,
Environmental Operations failed to explain how its equipment fees
are reasonable and competitive in the marketplace.
Environmental
Operations stated that the rates that they charge are flat rates,
regardless of the rate paid to the rental outlet that provided
the equipment.
Mr. Wrobel of Environmental Operations stated
that:
“As a matter of fact,
in the wintertime we sometimes get a
50 percent discount because the equipment is not being used.”
(Tr. at 47)
In this case, that discount was realized by
Environmental Operations, but the State UST Fund is asked to pay
at the flat,
fixed rate charged by Environmental Operations.
Accordingly, the record does not support a finding that the
charges by Environmental Operations are reasonable.
The Board finds that the Agency’s use of a 15
handling
charge on the actual charge for the rental of the equipment is
reasonable based on the record in this case.
Therefore, the
Board affirms the Agency’s adjustment to these charges and the
Agency’s denial of reimbursement of $5,551.09~related to this
adjustment.
Corrective Action
The Agency deducted $1,035.00 for items that were not
considered to be corrective action.
This amount was the charge
for the hauling and disposal of concrete.
The charge for hauling
away the concrete was $900.00 plus a 15
handling charge for a
total of $1,035.00.
(Tr. at 68.)
The Agency contends that the concrete constitutes clean
debris and would not have to be transported to a landfill.
(Tr.
at 25.)
The Agency contends that such material could be used as
backfill.
(Tr. at 25.)
Therefore, the Agency argues that the
~
The amount of $5,551.09 represents the $5,562.33 denied
by the Agency less $11.24 which the parties reached an agreement
on in the stipulation.
6
hauling of the concrete is not corrective action because it was
not part of the efforts to minimize the effects of the release at
the site.
(Pr. at 25.)
While the Agency states that it is up to
the owner/operator and its consultant to do what they feel is
necessary with the clean debris,
(Tr. at 72) the Agency contends
that landfilling the concrete was overkill because the debris
could have been used for fill.
(Tr. at 81.)
Environmental
Operations contends that the removal of the concrete was
necessary to access the tanks and once the concrete is broken up
it must either be removed from the site or piled up to be handled
at a later date.
(Tr. at 82.)
When reviewing reimbursement determinations the proper
standard of review is to apply the statutory definition of
corrective action.
(Platolene 500. Inc.
v. IEPA (May 7,
1992),
PCB 92-9.)
Corrective action is defined in Section
22.18(e) (1) (C) of the Act 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 and
the environment.
This includes but is not limited to,
release response investigation, mitigation of fire and
safety hazards, tank removal,
soil remediation,
hydrogeological investigations,
free product removal
and groundwater remediation and monitoring, exposure
assessments, the temporary or permanent relocation of
residents and the provision of alternate water
supplies.
Removal of concrete has been reimbursed by the Agency.
(Warren’s Service v. IEPA
(June 4,
1992), PCB 92—22.)
The
removal of concrete satisfies the definition of corrective action
because in most cases,
it is necessary to access the leaking tank
and the contaminated soil to perform remediation.
Therefore,
the
removal of concrete is an integral part of the remediation
operation.
Since the removed concrete must be properly disposed,
the Board views the disposal of the concrete as part of the
remediation process.
The Agency argues that it was “overkill” to landfill the
concrete and that the concrete could have been used as fill.
The Board recognizes that the contractor had several options for
the disposal or reuse of the concrete.
However, the Agency has
failed to show how the landfilling of the concrete in this case
was unreasonable or contrary to any statutory provision.
Therefore,
the Board finds that the cost of the disposal of
concrete were costs incurred as a part of corrective action and
should be reimbursed.
This opinion constitutes the Board’s finding of fact and
conclusions of law in this matter.
7
ORDER
For the reasons stated herein, the Board affirms the
Agency’s denial of excessive handling charges in the amount of
$5,551.09 and reverses the Agency’s denial of reimbursement of
costs for the disposal of concrete in the amount of $1,035.00.
The Agency is hereby ordered to reimburse Ms. Landwehrmeier for
the disposal of concrete.
IT IS SO ORDERED.
C. Manning concurred.
Section 41 of the Environmental Protection Act,
(415 ILCS
5/41
(1992)), provides for appeal of final orders of the Board
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, Motion for Reconsideration.)
I, Dorothy M. Gunn,
Clerk of the Illinois Pollution Control
Board, hereby certify that the above opin
and order was
adopted on the _____________day of________________________
1994,
by a vote of
_______.
Dorothy N.
n,
Clerk
Illinois P
ution Control Board
\-,