2

PRELIMINARY MATTERS

  

Swif-T and the Agency each filed motions for leave to file

instanter

. No response to

either motion was received. If a party files no response to a motion within 14 days the party will

be deemed to have waived objection to the granting of the motion.

See

35 Ill. Adm. Code

101.500(d). Accordingly, both motions for leave to file

instanter

are granted, and the Board

accepts the Agency’s response brief and Swif-T’s reply brief.

 

FACTS

 

Swif-T owns and operates a service station facility located at 110 Belevidere Road,

Waukegan, Lake County. During a boring test in August 1995, a release was discovered and the

Illinois Emergency Management Agency (IEMA) was notified. Tr. at 39; Ex. 1. In

September 1995, Swif-T submitted an application for an eligibility and deductible determination

from the Leaking Underground Storage Tank (LUST) Fund to the Office of the State Fire

Marshal (OSFM). Ex. 2. Swif-T stated in the application that three tanks had experienced

releases.

Id

. On January 8, 1996, the OSFM issued a decision finding that three tanks were

eligible for reimbursement in response to the referenced occurrence identified by incident

number 951716 and imposed a $10,000 deductible.

 

In March 1996, Swif-T received a permit from the OSFM to remove the underground

storage tanks at the site. Ex. 3. On March 28, 2003, eight tanks were removed. Ex. 4. On

May 2, 1996, Swif-T reported a suspected release to IEMA reporting that eight tanks had

experienced a release. Ex. 5; Tr. 39-41. A second incident number of 96-0723 was assigned by

IEMA.

Id

. On February 19, 1999, Swif-T submitted another application for an eligibility and

deductibility determination. Ex. 6. At that time, Swif-T stated that all eight tanks at the site had

releases as reported on May 2, 1996. On November 18, 1999, the OSFM issued a decision for

incident number 96-0723 determining that a $10,000 deductible applied for the eight tanks

referenced in the application. AR at 71.

 

On June 21, 2000, the Agency received a request for reimbursement from Swif-T that

listed both incident numbers on the front page, but incident number 96-0723 for each of the tanks

at the site. Ex. 12. Prior to that request, Swif-T and the Agency had been involved in

discussions concerning the deductible. In December 1999, Swif-T notified the Agency of the

two incident numbers for the site, identifying the second number as a re-reporting of the 95-1716

incident number. Ex. 7. On January 5, 2000, Swif-T sent a letter that purported to confirm a

telephone conversation during which Swif-T’s consultant and the Agency agreed that the

incident numbers would be combined. Ex. 8. On January 20, 2000, Agency employee Jay

Gaydosh (the then project manager assigned to the site) sent a memorandum wherein the Agency

agreed that the 1996 release was a re-reporting of the 1995 incident, and stating that all reporting

requirements should be addressed through the 95-1716 incident number. Ex. 9.

 

On July 25, 2001, the Agency issued a final determination that applied a single $10,000

deductible and reimbursed Swif-T $1,971.08 - the total amount sought less the $10,000

deductible. Ex. 14. The final decision references only incident number 96-0723.

Id

.

 

---

 

3

On March 19, 2002, the Agency issued a final decision approving with modifications the

proposed high priority corrective action plan (HCAP) budget. AR at 77-81. On May 21, 2002,

Swif-T’s consultant submitted correspondence to justify costs denied in the approved budget.

Ex. 17. On June 12, 2002, the Agency issued a final decision modifying a HCAP budget for the

site. AR at 82-84. On August 7, 2002, the Agency issued a third final decision further

modifying the HCAP budget. Ex. 18. Each of the three final decisions on the HCAP budget

references both incident numbers. AR at 77-81; AR at 82-84; Ex. 18.

 

On November 7, 2003, Swif-T submitted a reimbursement application to the Agency.

AR at 14. The application seeks a total of $203,644.16 in payments associated with the HCAP

budget.

Id

. Swif-T lists both incident numbers on the first and second pages of the application,

but uses incident number 96-0723 thereafter. AR 14-22. On March 3, 2003, the Agency issued

the final decision at issue in this case. AR at 1-3. The March 3, 2003 decision assesses a

$10,000 deductible for incident number 95-1716, and denies $8,275.18 for costs exceeding the

approved budget amounts and $13,808.86 as being unreasonable as submitted.

Id

.

 

Specifically, the Agency’s denial letter states in pertinent part:

 

Deductions for costs which are unreasonable as submitted. (Section 57.7(c)(4)(C)

of the Act and 35 Ill. Adm. Code 732.606(hh))

 

A deduction for costs associated with High Priority site activities. The billings

submitted exceed the approved budget amounts. The Illinois EPA is unable to

approve billings that exceed the approved budget amounts. (Section 57.8(a)(1) of

the Act and 35 Ill. Adm. Code 732.601(f))

 

A deduction is being made from the Field Purchases and Other Costs in the

amount of $13,808.86. The costs are from Peter J. Hartmann Company invoices

for the percentage markup and a handling charge both requested; there has not

been any handling charges approved in a budget. AR at 3.

 

  

STATUTORY AND LEGAL BACKGROUND

 

In 1993, the General Assembly repealed Section 22.18b of the Environmental Protection

Act (Act) and enacted a new Title XVI regarding Underground Storage Tank Fund (UST)

reimbursement applications and determinations. 415 ILCS 5/57 (2002). The new law provided

that releases reported to the State on or after the effective date of the amendments, September 13,

1993, would proceed under the new Title XVI. 415 ILCS 5/57.13(a) (2002).

 

The Board's authority to review an Agency budget determination in UST reimbursement

claims arises from Section 57.7(c)(4)(D) and 57.8(i) of the Act. 415 ILCS 5/57.7(c)(4)(D),

57.8(i) (2002). Section 57.7(c)(4)(D) grants owners and operators the right to appeal an Agency

determination on a proposed plan to the Board in accordance with the procedures of Section 40

of the Act. 415 ILCS 5/40 (2002). Section 57.8(i) of the Act grants the right to petition the

Board to review the Agency denial or partial payment of a UST fund reimbursement request in

the manner provided in Section 40 of the Act.

---

 

4

When seeking reimbursement from the UST Fund at a high priority site, the owner or

operator must supply the Agency with “an accounting of all costs associated with the

implementation and completion of the corrective action plan.” 415 ILCS 5/57.7(c)(1)(B). The

owner or operator must prove that the costs associated with the budget are reasonable, will be

incurred in performing corrective action, and will be used to satisfy only the minimum

requirements of the Act. 415 ILCS 57.7(c)(4)(C).

 

Section 57.9(b) in Title XVI sets forth the statutory provisions governing deductible

determinations and provides, in part, as follows:

 

B. An owner or operator may access the Underground Storage Tank Fund for costs

associated with an Agency approved plan and the Agency shall approve the

payment of costs associated with corrective action after the application of a

$10,000 deductible, except in the following situations:

* * *

A deductible shall apply annually for each site at which costs were incurred under a claim

submitted pursuant to this Title, except that if corrective action in response to an

occurrence takes place over a period of more than one year, in subsequent years, no

deductible shall apply for costs incurred in response to such occurrence. 415 ILCS

5/57.9(b) (2002).

 

A number of definitions are instructive in this case.

 

“Site” means any single location, place, tract of land or parcel of property including

continguous property not separated by a public right of way.

* * *

“Occurrence” means an accident, including continuous or repeated exposure to

conditions, that results in a sudden or nonsudden release from an underground storage

tank. 415 ILCS 5/57.2 (2002).

 

SWIF-T ARGUMENTS

 

Deductible

 

Swif-T asserts that the Agency’s decision to apply a second $10,000 deductible was

contrary to the law and facts of this case. Pet. Br. at 6. Swif-T argues that the Agency had

previously rendered a final decision on the issue of how many deductibles to apply and had

detemined that only a single deductible was appropriate.

Id

. Swif-T argues that the Agency’s

subsequent decision was a reconsideration of a final decision and that the Board has previously

denied relief to a permit applicant who sought approval of a request intended to eliminate an

imposed permit condition on the grounds that the proper means of obtaining relief from

challenged conditions was to have brought an appeal. Pet. Br. at 6-7.

 

Swif-T contends that had the Agency, in its initial determination, decided to apply the

$10,000 deductible for each incident, Swif-T’s relief would have been to appeal that decision and

that if Swif-T would have been bound by such a decision, the Agency should be bound by the

---

 

5

decision it did make – especially in light of the fact that no new or different information

concerning the deductibles was ever presented. Pet. Br. at 7-8.

 

Swif-T argues that the Act is clear that only one deductible shall apply per underground

storage tank site. Pet. Br. at 8 citing 415 ILCS 5/57.8(a)(4) (2002). Swif-T asserts that no

question exists that only a single site is at issue here and the Agency’s decision to apply two

deductibles is perplexing. Pet. Br. at 8. Swif-T asserts that nothing generated by the OSFM or

otherwise included in the record suggest that more than one occurrence is an issue here.

Id

. In

addition, Swif-T contends, even the Agency witness Mr. Kuhlman admitted that contamination

from each of the eight tanks in question is so intermingled as to make it impossible to conduct

any separate remediation or to ultimately issue separate no further remediation letters. Pet. Br. at

8, citing Tr. 41-42.

 

Swif-T contends the Agency’s original decision on this point, made by the Agency

managers and reviewers with the most experience, was correct. Pet. Br. at 9. Swif-T asserts that

in December 1999, it notified the Agency of the two incident numbers for the site, identifying the

second incident number as a re-reporting of the first incident number. Pet. Br. at 3, citing Ex. 7.

Swif-T asserts that the Agency agreed that the incident numbers would be combined, and that a

January 20, 2000 memorandum drafted by Jay Gaydosh (the project manager then assigned to

the site) confirmed that the 1996 release was a rereporting of the 1995 incident and all reporting

requirements should be addressed through the 95-1716 incident number. Pet. Br. at 3, citing Ex.

8 and Ex. 9.

 

Swif-T contends that Kuhlman (the project manager currently assigned to the site and

responsible, in part, for the March 3, 2003 final decision) testified that before he was assigned to

the site, Gaydosh was qualified to determine whether one or two deductibles should apply as the

then project manager. Pet. Br. at 3. Swif-T asserts that when the facility was initially assigned to

Kuhlman, he contacted his supervisor Eric Ports and determined that a single deductible applied

to the facility.

Id

. Swif-T asserts that it was only in November 2002, when the reimbursement

application dated November 7, 2002 was received by the Agency, that LUST technical unit

manager Harry Chappel decided to reverse the prior decisions and instructed Kuhlman to apply

two deductibles to the site. Pet. Br. at 4, citing Tr. 64, 94-95. Swif-T notes that Kuhlman has

substantially less time of service with the Agency than does Gaydosh or Ports, and that Chappel

had been in the unit for only one-and-a-half years at the time he made that decision – even less

time than Kuhlman. Pet. Br. at 3-4.

 

Handling Charges

 

  

Swif-T claims that the handling charges in question were approved in the budget,

specifically that Mr. Kuhlman had the handling charges before him, and approved the budget as

presented. Pet. Br. at 9. Swif-T claims that the costs in question were actually incurred, were

corrective action costs as defined by the Act, and were even approved by Mr. Kuhlman prior to

the request for reimbursement. Pet. Br. at 9-10. Swif-T asserts that any objection that the

Agency had to where the handling charges were listed on the budget form should have been

made by Mr. Kuhlman and that he was satisfied. Pet. Br. at 10.

 

---

 

6

Swif-T contends that the Agency’s actions in striking the handling charges were arbitrary

and capricious and constitutes an attempt to reconsider Mr. Kuhlman’s previous decision. Pet.

Br. at 10. Swif-T contends that the March 3, 2003 final decision that frames the issues for appeal

says nothing about the handling charges being denied because they were set forth in the allegedly

wrong line item category.

Id

.

 

Swif-T argues that the policy that only a subcontractor, not sub-subcontractors, is entitled

to a percentage markup for handling has been rejected by the Board. Pet. Br. at 10, citing

Whittington v. IEPA, PCB 92-152 (June 3, 1993). Swif-T argues that a full review is allowed

only where the amounts sought exceed the budget plan, where the Agency has reason to suspect

fraud, or the request is for unapproved early action costs. Pet. Br. at 11-12. Swif-T contends

that none of these situations exist here, but the Agency conducted a full review nonetheless, that

Ms. Weller’s review should have been much more perfunctory than it was, and that the

reasonableness and other evaluations were to have been made by Mr. Kuhlman when he

conducted his review of the proposed budget. Pet. Br. at 12.

 

Swif-T argues that Ms. Weller took it upon herself to conduct the additional review

prohibited by Section 57.8(a)(1) of the Act and the Board’s regulations when she questioned Mr.

Kuhlman’s approval of the budgeted handling charges. Pet. Br. at 12.

 

AGENCY’S ARGUMENTS

 

The Agency asserts that Swif-T cannot merely argue that the Agency’s decision was

flawed, but must present evidence and arguments to demonstrate that by virtue of the submittals

to the Agency, Swif-T satisfied its requirements pursuant to the Act and underlying regulations.

Ag. Br. at 1. The Board, the Agency notes, must decide whether or not the application as

submitted demonstrates compliance with the Act and Board regulations. Ag. Br. at 2.

 

Deductible

 

The Agency asserts that it did not reconsider or reverse any past decisions regarding how

many deductibles should apply, and that there have been only two approvals of payment for costs

associated with either incident number 95-1716 or 96-0723. Ag. Br. at 7. The first payment,

contends the Agency, was issued on July 25, 2001 for incident number 96-0723 and a $10,000

deductible was assessed.

Id

. The Agency notes that no appeal from that decision was made.

Id

.

 

The second approval for costs is the matter at hand, asserts the Agency, and that decision

clearly identifies incident number 95-1716 as the occurrence in question. Ag. Br. at 8. The

Agency states that no final decision issued by it has been revisited or reconsidered in any way,

since no previous decision approving reimbursement of costs for incident number 95-1716 has

ever been issued prior to the one under review.

Id

. The Agency acknowledges that Swif-T may

claim that pieces of correspondence between the Agency and Swif-T are contradicting, but that

any representations made by the Agency in any such correspondence have not been shown to

play any part in any past final decision.

Id

. The Agency argues that until multiple final

decisions have been reached on the same issue, it cannot be said to have contradicted itself.

Id

.

 

---

 

7

Even if the Agency did change its interpretation, asserts the Agency, the Board has

recognized that prior Agency actions, if in error, are properly remedied by correcting the error

not perpetuating it. Ag. Br. at 8, citing State Bank of Whittington v. IEPA, PCB 92-152 (June 3,

1993). Accordingly, argues the Agency, if it the correspondence in question were to be taken as

a memorialization of some kind, the proper course of action would be to correct the wrong

interpretation and proceed with the right decision. Ag. Br. at 9.

 

The Agency asserts that its employee, Mr. Kuhlman, testified that his decision to apply a

deductible in this final decision was based on the fact that the OSFM has issued two separate

decisions, imposing two separate deductibles. Ag. Br. at 9, citing Tr. at 36-37. The Agency

argues that since it does not have the authority to review decisions made by the OSFM, it is

bound to accept the OSFM’s decision in this regard. Ag. Br. at 9. The Agency contends it is

clear from the OSFM’s eligibility and deductible application forms and final decisions, that

Swif-T sought and received two different deductible determinations for two different

occurrences.

Id

.

 

The Agency asserts that since Swif-T did not appeal either of the OSFM final decisions,

there is no conclusion that can be reached other than Swif-T agreed with the OSFM that a

$10,000 deductible should be applied to two separate occurrences – one referenced by incident

number 95-1716 and the other by incident number 96-0723. Ag. Br. at 10. The Agency had no

choice, it asserts, but to follow the decision issued by the OSFM since those determinations are

delegated solely to the OSFM.

Id

. The Agency contends that in fact and law there were two

occurrences at the site and that Swif-T cannot dispute that finding.

Id

.

 

The Agency contends its application of a deductible is consistent with the Act and

regulations. Ag. Br. at 10. The Agency argues that if the Board were to accept Swif-T’s position

that only one deductible can ever be applied to a UST site, regardless of how many occurrences

have taken place, much of the language in Sections 57.8 and 57.9 of the Act would be

unnecessary. Ag. Br. at 11-12. The correct interpretation, asserts the Agency, is that a separate

deductible is applied to each separate occurrence. Ag. Br. at 12. This interpretation, concludes

the Agency, allows the language of Section 57.9 of the Act to make sense.

Id

.

 

The Agency interprets the Act and Board regulations at 35 Ill. Adm. Code 732.603(b) to

mean that one deductible shall apply to one separate occurrence, and that multiple occurrence

result in multiple deductibles as is undoubtedly the position of the OSFM given the language in

their final decisions. Ag. Br. at 12.

 

Handling Charges

 

The Agency asserts that in the request that led to the final decision under appeal, Swif-T

noted that $229,800 had been approved as ‘Field Purchases and Other Costs’ and sought an

amendment to the amount of handling charges that had been approved to date as evidenced by

the notation of amendment requested. Ag. Br. at 13-14. The Agency contends the notation is

important because it evidences Swif-T’s acknowledgment that an amendment in the amount of

handling charges approved as of the date of submission was needed especially since no costs had

ever been approved for handling. Ag. Br. at 14. The notation also demonstrates, argues the

---

 

8

Agency, the separate and distinct line item for handling charges on the Agency’s forms that

directly corresponded to the amount of costs for handling charges that could be approved.

Id

.

 

The Agency asserts that 35 Ill. Adm. Code 732.405(b) clearly states that any owner or

operator of an UST that intends to seek reimbursement shall submit a budget that will include,

inter alia

, a line item estimate of all costs associated with relevant activities, and that all budgets

shall be submitted on forms prescribed and provided by the Agency. Ag. Br. at 14. The Agency

argues that Swif-T was required to have approved budget line items for any costs sought for

reimbursement, and did not. Ag. Br. at 15. The Agency contends that based on nothing more

than the content of the reimbursement application and the fact that no handling charges had been

approved in any budget as of the date of the final decision, the deduction of handling charges

was appropriate.

Id

.

 

The Agency asserts that Swif-T’s contention that the costs were included in the field

purchases section and therefore should be approved is flawed in that a simple reading of the costs

clearly show that the markups (though improper for reimbursement) amounted to a handling

charge at best. Ag. Br. at 15. The Agency notes that amounts approved in a budget represent the

maximum amount that may be approved for reimbursement, and to instead interpret an approval

of a budget line item to mean that such approval also constitutes an unconditional approval of a

reimbursement request for that amount defeats the purpose of conducting reviews for

reimbursement. Ag. Br. at 15-16.

 

The Agency asserts that the amount sought for handling charges in this instance clearly

exceeded the $0.00 approved for handling charges in prior budget approvals, so a full review was

warranted. Ag. Br. at 16. A full review, contends the Agency, can include review of the

invoices and receipts that support the claim.

Id

. The Agency argues that Ms. Weller did not

reconsider in any way Mr. Kuhlman’s budget approvals, but that his budget approvals were what

triggered her full review of the documents presented for reimbursement because he did not

approve any costs for handling charges, yet that was what was sought by Swif-T in the

reimbursement request.

Id

.

 

The Agency asserts that the Board has recently set forth the general rule that only the

primary contractor may assess a handling charge. Ag. Br. at 17, citing Ted Harrison Oil Co. v.

IEPA, PCB 99-127 (July 24, 2003).

 

SWIF-T REPLY

 

Swif-T asserts that the Agency has attempted to capitalize on the confusion it has created

in order to bolster the slim reeds supporting the final decision at issue. Reply at 1. The Agency

is truly tilting at windmills, Swif-T contends, when it addresses the $8,275.18 deduction in its

response because Swif-T is not challenging that deduction, but is challenging the second

numbered paragraph in the March 3, 2003 decision that deducted $13,808.86. Reply at 2. Swif-

T asserts that the decision in that paragraph was wrong because there is no authority for limiting

the applicant to either a percentage markup or a handling charge and the amount in question had

been approved in the budget.

Id.

 

---

 

9

Swif-T argues that the Agency’s imposition of a second deductible was arbitrary

and contrary to a previous decision in which the Agency had imposed only a single deductible.

Reply at 3. Swif-T asserts that the sole issue in this case is whether the March 3, 2003 decision

was correct, not any earlier decisions raised by the Agency.

Id

.

 

Deductible

 

  

Swif-T asserts that it submitted an application for reimbursement in May 2001, that

specifically stated it was submitted with respect to both incident numbers 95-1716 and 96-0723.

Reply at 3. Swif-T contends that at that time, the Agency and Swif-T exchanged

communications summarized by the memorandum of Jay Gaydosh dated January 20, 2000 in

which the Agency agreed that the 1996 release was a re-reporting of the 1995 incident and that

all reporting requirements should be addressed through the 95-1716 incident number. Reply at

3-4.

 

Swif-T disputes the Agency’s assertion that Swif-T should have appealed the July 2001

decision applying a $10,000 deductible to the claim and approving payment of the remaining

$1,971.08. Reply at 4. Swif-T asserts that the decision granted everything it requested and that

Swif-T never disputed that one $10,000 deductible must be applied.

Id

. Swif-T points out that

Mr. Kuhlman was the one who applied the single $10,000 deductible in 2001 upon the advice

and direction of Mr. Gaydosh and Mr. Ports, but that in 2003 Kuhlman procured a new opinion

from his new supervisor was Mr. Chappel who said to apply a second deductible. Reply at 4-5.

 

Swif-T contends that this is a blatant reconsideration driven by Kuhlman’s dissatisfaction

with the first instructions he was given and had the Agency attempted to impose two deductibles

in 2001 when it was presented with an application that on its face proceeded under both incident

numbers, it could have appealed at that time. Reply at 5.

 

Swif-T argues that the actual final OSFM decisions in this matter support its position in

that neither OSFM decision says anything about two deductibles applying to the site, and that

both decisions actually say you are eligible to seek payment of costs in excess of $10,000 and the

costs must be in response to the occurrence referenced above and associated with the tanks.

Reply at 6, citing Ex. 12. Swif-T argues that the OSFM expressly distinguishes between its

eligibility and deductible decisions, and that the final decisions in this case clearly reveal that a

single deductible, with new eligibility decisions forthcoming based upon subsequent

occurrences. Reply at 6.

 

Swif-T asserts that the facts introduced in this case reveal that the Agency’s LUST

technical unit, not the OSFM, decides the deductible issue, and that the Agency’s claim that it

was bound by the OSFM decisions is no more than a smoke screen attempt to shift focus. Reply

at 7.

 

Section 57.8(a)(4) of the Act, contends Swif-T, does not say, or mean, that the deductible

applies per site per occurrence, but simply says per site. Reply at 8. Swif-T argues that Mr.

Kuhlman admitted that the contamination from the two purported occurrences has commingled

and that it would be virtually impossible to separate the two occurrences for remediation

---

 

10

purposes, and that remeditation will not be completed for either incident number until

remediation is completed for both. Reply at 8-9. Swif-T asserts that the general assembly has

created a scheme to limit the deductible per site, but to still allow for a new deductible if

incidents were discreet and apportionable – i.e., if the first occurrence is remediated at least a

year before the second occurrence – and that here only one deductible should apply. Reply at 9.

 

Handling Charges

  

Swif-T asserts that the $229,800 under the category of field purchases and other costs had

been previously accepted by Mr.Kuhlman as part of the approved budget and that the

information submitted specifically explained the basis for all the costs including the mark-ups of

subcontractors. Reply at 9. Swif-T asserts that Mr. Kuhlman did not reject the budget amounts

as excessive or unreasonable, or as being in the wrong line-item category.

Id

. Thus, Swif-T

argues, there was no reason for it to expect any response from the reimbursement unit other than

approval of a payment since the payment request was exactly the same amount as the approved

budget in exactly the same categories. Reply at 10. Swif-T reiterates that the decision of Ms.

Weller was a blatant reconsideration of the final, appealable decision made by Mr. Kuhlman, and

that she had no basis or authority for doing so.

Id

.

 

Swif-T contends that the only defense mounted by the Agency is to cast doubt on Mr.

Kuhlman’s final approval by claiming it was only for the maximum amount recoverable and

could, therefore, be lowered by Ms. Weller. Reply at 10. The maximum figure of $229,800

expressly included and approved the $13,808.86 subsequently cut by Ms. Weller, Swif-T

maintains. Reply at 11. In addition, Swif-T contends, the Agency’s argument that a full review

was permitted because the $13,808.86 should have been in the handling charges category and $0

was approved for handling charges, is pure sophistry.

Id

. Swif-T argues that no evidence

supports the Agency’s contention that the $13,808.86 was in the wrong category.

Id

.

 

Swif-T concludes that the Harrison case is not on point, but that Whittington is and

provides that the “Board concludes it is inconsistent for the Agency, as a matter of policy, to

allow a 15% handling charge on the basis that this fairly reflects overhead costs in the market

place, and then turn around and deny the 15% handling charge to some persons simply because

they are not the prime contractor.” Reply at 12, citing Whittington, PCB 92-152 (June 3, 1993).

 

BURDEN OF PROOF

 

Section 105.112(a) provides the burden of proof is on the petitioner. 35 Ill. Adm. Code

105.112(a). The burden is on the petitioner for reimbursement to demonstrate that the costs

incurred 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 02-

104, slip op. at 9 (Apr. 17, 2003). When requesting reimbursement from the fund, the owner or

operator must provide an accounting of all costs associated with the implementation and

completion of the corrective action plan.

Id

. 415 ILCS 5/57.7(b)(3).

 

 

 

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11

STANDARD OF REVIEW

 

The standard of review under Section 40 of the Act is whether the application, as

submitted to the Agency, would not violate the Act and Board regulations. Ted Harrison Oil Co.

v. IEPA, PCB 99-127, slip op. at 5 (July 24, 2003); citing Browning Ferris Industries of Illinois

v. PCB, 179 Ill. App. 3d 598, 534 N.E.2d 616 (2nd Dist. 1989). The Board will not consider

new information not before the Agency prior to its final determination regarding the issues on

appeal. Kathe’s Auto Service Center v. IEPA, PCB 95-43, slip op. at 14 (May 18, 1995). The

Agency’s denial letter frames the issues on appeal. Pulitzer Community Newspapers, Inc. v.

IEPA, PCB 90-142 (Dec. 20, 1990).

 

DISCUSSION

 

Two separate issues are involved in this appeal – the imposition of a $10,000 deductible

and the decision to deduct $13,808.86 from the reimbursement. The Board will address each

issue in turn.

 

Deductible

 

The Board finds that only one $10,000 deductible applies for both incident numbers.

Section 57.9(b) of the Act sets forth the statutory provisions governing deductible

determinations. 415 ILCS 5/57.9(b) (2002). The Board has previously held that under the Act,

deductibles are generally assessed per site, not per occurrence.

See

Mac Investments d/b/a

Olympic Oldsmobile v. OSFM, PCB 01-29 (Dec. 19, 2002). The Agency’s arguments in this

case have not persuaded the Board to alter this decision.

 

Moreover, after a review of the record the Board is convinced that the 1996 release was a

re-reporting of the 1995 incident, as initially decided by the Agency in 2001. While it is true the

Board has held that the Agency is not prohibited from correcting an error, the facts in this

particular case do not reveal any error in need of correction. Rather, the Board finds that Swif-T

has met its burden in proving that the Agency erred when it imposed a second $10,000

deductible for this site in the final decision of March 3, 2003.

 

Handling Charges

 

The $13,808.86 in charges was deducted from the category of Field Purchases and Other

Costs. In its final decision, the Agency states that there cannot be a percentage markup and a

handling charge both requested and there have not been any handling charges approved in the

budget.

 

The record is clear that no handling charges were included as a separate line item in the

approved budget as of the date of the final decision. However, in this instance the costs were

included under the field purchases line item of the approved budget. Moreover, the Agency was

specifically notified that the costs in question were included under that line item in

correspondence that led to the ultimate approval of the budget.

See

Exs. 17 and 18.

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12

Accordingly, the Board finds the Agency’s stated denial point that no handling charges were

approved in the budget in error.

 

The Agency also denied the charges because there cannot be a percentage markup and a

handling charge both requested. Reimbursement of handling charges is provided for in the Act

and Board regulations. See 415 ILCS 57.8(f) (2002)) and 35 Ill. Adm. Code 732.607. Neither

section contains the limitation used by the Agency to deny reimbursement in this case. At

hearing, Ms. Weller (the Agency employee who made the decision to deny reimbursement)

testified that the Agency’s position that both the prime contractor and subcontractor cannot

receive handling charges is not a rule, but an Agency policy. Tr. at 122-23.

 

The Board addressed this issue in Whittington, finding it inconsistent for the Agency as a

matter of policy to allow a handling charge that fairly reflects overhead costs in the marketplace

to the primary contractor and not to the others simply because they are not the prime contractor.

Whittington, PCB 92-152, slip op. at 23 (June 3, 1993). As the Agency argues, the Board has

stated that as a general rule only the primary contractor may assess a handling charge.

See

Ted

Harrison Oil, PCB 99-127, slip op. at 24 (July 24, 2003). However, the facts in this case are

more analogous to those in Whittington.

  

 

The Board finds that Swif-T has met its burden to demonstrate that the costs incurred are

related to corrective action, properly accounted for, and reasonable. Accordingly, the Agency’s

decision to deny reimbursement for those costs is reversed.

 

CONCLUSION

 

The Board finds that the record supports the petitioner's request for reimbursement of

$10,000 for the imposition of a second deductible and for $13,808.86 of costs denied by the

Agency. Thus, the Board reverses the Agency’s determination denying reimbursement for

$10,000 and for $13,808.86.

 

This opinion constitutes the Board's findings of fact and conclusions of law.

 

ORDER

 

 

1. The Board reverses the Agency’s March 3, 2003 determination to deny

reimbursement to Swif-T Food Mart and directs the Agency to provide

reimbursement for:

 

A. $10,000 imposed as a deductible.

 

B. $13,808.86 requested under Field Operations and Other Costs.

 

2. The Board remands to the Agency.

 

 

 

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13

IT IS SO ORDERED.

 

 

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

 

I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board

adopted the above opinion and order on May 20, 2004, by a vote of 5-0.

 

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board