9827JU10.PDF

ILLINOIS POLLUTION CONTROL BOARD

July 8, 1998

IN THE MATTER OF:

REVIEW OF REMEDIATION COSTS FOR

ENVIRONMENTAL REMEDIATION TAX

CREDIT (AMENDMENTS TO 35 ILL.

ADM. CODE 740)

)

R98-27

(Rulemaking - Land)

Proposed Rule. Second Notice.

OPINION AND ORDER OF THE BOARD (by K.M. Hennessey, C.A. Manning, and M.

McFawn):

In 1997, the Illinois General Assembly adopted legislation creating the environmental

remediation tax credit (tax credit). The tax credit allows taxpayers to credit against their

Illinois income tax liability a portion of the costs that the taxpayer has spent to clean up certain

contaminated properties (or “brownfields”). The tax credit is intended to give taxpayers an

incentive to clean up and redevelop brownfields.

A taxpayer who wishes to claim the tax credit must first submit to the Illinois

Environmental Protection Agency (Agency) an application for review of its cleanup (or

“remediation”) costs. The proposal that the Board adopts today for second notice establishes

the procedures and standards under which the Agency will consider these applications.

PROCEDURAL MATTERS

Effective July 21, 1997, the Illinois General Assembly adopted Public Act 90-123. See

Pub. Act 90-123, eff. July 21, 1997. This bill amended two statutes: the Illinois Income Tax

Act (Income Tax Act), 35 ILCS 5/101

et seq.

(1996), which the bill amended by adding

Section 201(l), a provision creating the tax credit; and the Illinois Environmental Protection

Act (Environmental Protection Act), 415 ILCS 5/1

et seq

. (1996), which the bill amended by

adding Section 58.14, a provision regarding the Agency’s review of remediation costs eligible

for the tax credit.

Section 58.14 of the Environmental Protection Act required the Agency to propose

rules for its review of environmental remediation costs within six months after the effective

date of Pub. Act 90-123. Section 58.14 requires the Board to adopt those rules for second

notice within six months after the Board receives the Agency’s proposed rules.

On January 21, 1998, the Agency filed a proposal, along with a motion for acceptance,

a Statement of Reasons, and an Agency Analysis of Economic and Budgetary Effects of

Proposed Rulemaking. On January 22, 1998, the Board accepted this matter for hearing.

The Board held three public hearings in this matter: the first, in Chicago, on February

24, 1998; the second, in Springfield, on February 27, 1998; and the third, also in Springfield,

on March 17, 1998. At the February 24 hearing, several witnesses testified: Mr. Gary King,

manager of the Division of Remediation Management in the Agency’s Bureau of Land; Mr.

Lawrence Eastep, manager of the Remedial Project Management Section of the Agency’s

Bureau of Land; Mr. Douglas Oakley, an Agency employee who manages and reviews claims

for Underground Storage Tank remedial costs; and Dr. Shirley Baer, an Agency employee

who works in the Agency’s Voluntary Site Remediation Unit. Dr. Baer also coordinated the

Agency’s efforts on this proposal with the Department of Revenue (DOR) and the Department

of Commerce and Community Affairs (DCCA). Tr.1 at 9-11.

At the February 27, 1998, hearing, all of these Agency witnesses again testified, along

with Ms. Melissa Pantier of DCCA. In addition, Ms. Kelsey Lundy, Director of Community

Affairs of the St. Louis Regional Commerce and Growth Association (RCGA) testified about

the proposal. The RCGA represents business and industries in the St. Louis metropolitan area,

including five counties in southwestern Illinois. Tr.2 at 62. Mr. Eric Voyles, a member of

the RCGA, also testified, as did Mr. Eugene Schmittgens, attorney for the RCGA.

The March 17, 1998, hearing was held to receive testimony on DCCA’s decision,

under Public Act 90-489, effective January 1, 1998, not to perform an economic impact study

on the Agency’s proposed rules. No one testified at that hearing.

At the first and second hearings, the hearing officer accepted into the record the

following exhibits:

Exhibit 1: Prefiled Testimony of Gary King of the Agency (Exh. 1);

Exhibit 2: Illinois Environmental Protection Agency Draft of Revisions to Proposed

Amendments to Part 740 in Response to Questions from Pollution Control Board

Hearing of 2/24/98 (Exh. 2);

Exhibit 3: Draft of DCCA’s Proposed Amendments to 14 Ill. Adm. Code 520

(Enterprise Zone Program) (Exh. 3);

Exhibit 4: Agency’s Bureau of Land Inventory Data Input Form for Generator

Identification Number (Exh. 4); and

Exhibit 5: Testimony of Kelsey Lundy on behalf of the RCGA.

Following the hearings, the hearing officer established a deadline for interested persons

to file public comments. The Board received the following public comments:

The transcript of the February 24, 1998 hearing is cited as “Tr.1 at __;” the transcript of the

February 27, 1998 hearing is cited as “Tr.2 at __.”

Public Comment #1 (PC 1): Public Comment of Kelsey Lundy on behalf of the

RCGA;

Public Comment #2 (PC 2): Agency’s Pre-First Notice Comments; and

Public Comment #3 (PC 3): Public Comment of Kelsey Lundy on behalf of the

RCGA.

The Board proposed the rules for first notice on April 16, 1998, and it was published in

the

Illinois Register

on May 1, 1998. Upon that publication, a 45-day comment period began.

During the public comment period, the Board received two additional public comments:

Public Comment #4 (PC 4): Agency’s First Notice Comments; and

Public Comment #5 (PC 5): Public Comment of Kelsey Lundy on behalf of the

RCGA.

In addition, after the public comment period had closed, the RCGA filed a motion for

leave to file the public comment of Senator Frank Watson instanter. Senator Watson was a

sponsor of the legislation that created the tax credit. The Board grants the motion and accepts

the public comment of Senator Watson as Public Comment #6 (PC 6).

In order to meet the statutory deadline imposed by Section 58.14 of the Environmental

Protection Act, the Board must proceed to second notice on or before July 21, 1998. With this

opinion and order, the Board meets that requirement. The Board now sends the proposal to

the Joint Committee on Administrative Rules (JCAR). Following JCAR’s review, the Board

will consider the rules for final adoption.

BACKGROUND AND OVERVIEW OF PROPOSAL

Pub. Act 90-123 established two programs to provide financial incentives for

brownfields remediation. The first program, directed at the public sector, is the Brownfields

Redevelopment Program. Under that program, the Agency will issue grants to municipalities

to investigate and assess brownfields sites. The Agency’s proposed rules for that program

appeared in the

Illinois Register

on June 19, 1998.

The second program, directed at the private sector, is the tax credit that is the subject

of this rulemaking. Generally, that program provides taxpayers who remediate brownfields a

tax credit that is equal to 25% of the taxpayer’s remediation costs over $100,000 per site.

Tr.1 at 13-14. The $100,000 limit is waived in certain areas that meet certain criteria,

including that the site is entirely within an enterprise zone. See Pub. Act 90-123, eff. July 21,

1997 (added 35 ILCS 5/201(l)). The total credit allowed will not exceed $40,000 per year,

with a maximum total of $150,000 per site.

. Unused credits may be carried forward for

five taxable years.

The tax credit is not available “if the taxpayer or any related party caused or

contributed to, in any material respect, a release of regulated substances on, in, or under” the

site. Pub. Act 90-123, eff. July 21, 1997 (added 35 ILCS 5/201(l)). Furthermore, the tax

credit is available only to taxpayers who remediate sites under the Site Remediation Program

(SRP). The SRP is a voluntary program under which participants may clean up sites where

contaminants are present. It allows participants to use risk-based cleanup objectives that take

into account current and anticipated uses of sites. The SRP also establishes procedures for the

Agency’s review and approval of site cleanup activities. Readers interested in a more

thorough discussion of the SRP should consult the Board’s opinion in Site Remediation

Program and Groundwater Quality (35 Ill. Adm. Code 740 and 35 Ill. Adm. Code 620) (June

5, 1997), R97-11.

Three agencies have roles to play regarding the tax credit. First, DCCA identifies

those areas that are not subject to the $100,000 remediation cost threshold. See Pub. Act 90-

123, eff. July 21, 1997 (added 35 ILCS 5/201(l)); see also Tr.1 at 13-14. Second, the Agency

must determine what costs are considered “remediation costs” and therefore eligible to be

applied to the tax credit. See Pub. Act 90-123, eff. July 21, 1997 (added 415 ILCS 5/58.14).

Finally, DOR will take the information that it receives from DCCA and the Agency and

implement the tax credit. Tr.1 at 14-15; see also Pub. Act 90-123, eff. July 21, 1997 (added

35 ILCS 5/201(l)).

To implement its role regarding the tax credit, the Agency proposes that the Board add

to Part 740 a new Subpart G entitled “Review of Remediation Costs for Environmental

Remediation Tax Credit.” The proposed Subpart G contains seven sections. Section 740.700

(General) generally describes the contents of Subpart G. Section 740.705 (Preliminary Review

of Estimated Remediation Costs) establishes an optional procedure for obtaining a preliminary

review of estimated remediation costs set forth in a budget plan. If actual remediation costs

are less than those the Agency approved under the preliminary review procedure, the Agency

is not required to further review those costs and may approve the costs as submitted.

To be eligible for the tax credit, a Remediation Applicant must submit an application

for final review of remediation costs to the Agency and have the Agency approve the

application. Section 740.710 (Application for Final Review of Remediation Costs) sets forth

the information required in the application. Section 740.715 (Agency Review of Application

for Final Review of Remediation Costs) establishes standards and procedures for the Agency’s

review of the application. Section 740.720 (Fees and Manner of Payment) addresses the fees

that a Remediation Applicant must submit with its budget plan and application for final review.

Section 740.725 (Remediation Costs) provides a non-exhaustive list of examples of

costs that the Agency may approve as remediation costs. It also provides that additional costs

not listed may be considered remediation costs in certain circumstances. Section 740.730

(Ineligible Costs) provides a non-exhaustive list of examples of costs that are not considered

remediation costs.

In addition to the new Subpart G, the Agency proposes minor changes to several

existing sections of Part 740: Section 740.100 (Purpose), Section 740.120 (Definitions), and

Section 740.505 (Reviews of Plans and Reports). These changes are necessary to

accommodate Subpart G.

At first notice, the Board outlined the proposed rules and discussed various issues,

including (1) timeframes for review of certain plans, (2) the effect of budget plan

determinations, (3) the meaning of “unreimbursed eligible remediation costs,” (4) whether the

costs of obtaining a special waste generator identification number should be eligible for the tax

credit, and (5) the eligibility of attorney fees. The Board will not repeat that discussion here,

and below addresses those issues raised after publication of the first notice.

DISCUSSION

After the first notice publication, participants in the rulemaking addressed the following

issues: (1) timeframes for review of certain plans; (2) the meaning of “unreimbursed eligible

remediation costs;” (3) whether developers of brownfields need greater certainty, before

undertaking clean ups, that their remediation costs will be eligible for the tax credit; (4)

whether Senate Bill (SB) 1705 necessitates a change to the rules; (5) whether remediation costs

eligible for the tax credit should be more broadly defined; and (6) whether the costs of

obtaining a special waste generator identification number should be eligible for the tax credit.

The Board also considered whether SB 1291 necessitates any change to the rules. Below, the

Board will discuss each of these issues and any corresponding changes to the rules for second

notice.

In addition, the Board has made some minor changes to the rules for clarity and

consistency, and to comply with changes that JCAR has requested. Certain of those changes

will be discussed below, but most do not merit discussion. However, all changes from the

proposed rules at first notice are double-underlined in the order that follows this opinion.

Section 740.705: Preliminary Review of Estimated Remediation Costs

This section establishes a procedure by which a Remediation Applicant may obtain the

Agency’s preliminary review of estimated remediation costs. It implements Section 58.14(d)

of the Environmental Protection Act, which provides in part: “A Remediation Applicant may

obtain a preliminary review of estimated remediation costs for the development and

implementation of the Remedial Action Plan by submitting a budget plan along with the

Remedial Action Plan.” Pub. Act 90-123, eff. July 21, 1997 (added 415 ILCS 5/58.14). If

actual remediation costs are less than those the Agency has approved in a preliminary review,

the Agency is not required to further review those costs and may approve the costs as

submitted. See Pub. Act 90-123, eff. July 21, 1997 (added 415 ICLS 5/58.14).

A Remediation Applicant obtains a preliminary review by submitting a budget plan for

remediation costs to the Agency. At first notice, the Agency proposed language to clarify the

timeframes under which it would review budget plans and related Remedial Action Plans. The

Board generally accepted those changes, making other minor modifications for clarity. In PC

4, the Agency confirmed that those changes are consistent with the Agency’s intent and clarify

the Agency’s proposed language. PC 4 at 2.

Section 740.705(a)(2) calls for the budget plan to contain line item estimates of the

costs that the Remediation Applicant anticipates.

Subsection (a)(2) sets forth a non-exhaustive

list of items (

e.g.

, types of site investigation activities and remedial activities) that may be

involved in the development and implementation of the Remedial Action Plan. Since the list is

non-exhaustive, JCAR requested that Section 740.705(a)(2)(C)(ix), which states “Other

treatment costs,” and Section 740.705(a)(2)(E), which states “Other costs not included

above,” be deleted as unnecessary. The Board agrees and makes these changes for second

notice.

Section 740.710: Application of Final Review of Remediation Costs

To be eligible for the tax credit, a Remediation Applicant must submit an application

for final review of remediation costs (application) to the Agency and have the Agency approve

the application. Tr.1 at 54-55. This section sets forth the information required in the

application and procedures for the Agency’s review of the application.

As proposed by the Agency, Section 740.710(a)(4) required a Remediation Applicant to

include in its application the following certification: “None of the costs included in this

application have been or will be reimbursed from any state government grant, the

Underground Storage Tank Fund, or any policy of insurance[.]” The Agency argued that

costs covered by insurance or other sources should not be considered eligible. The RCGA

strongly disagreed, arguing that the statute allowed the exclusion of only those remediation

costs for which a federal tax deduction or credit is taken. Exh. 5 at 8-9. The RCGA relied on

the following statutory language:

For the purposes of this Section, “unreimbursed eligible remediation costs”

means costs approved by the Illinois Environmental Protection Agency

(“Agency”) under Section 58.14 of the Environmental Protection Act that were

paid in performing environmental remediation at a site for which a No Further

Remediation Letter was issued by the Agency and recorded under Section 58.10

of the Environmental Protection Act, and does not mean approved eligible

remediation costs that are at any time deducted under the provisions of the

Internal Revenue Code . . . . In no event shall unreimbursed eligible

remediation costs include any costs taken into account in calculating an

environmental remediation credit granted against a tax imposed under the

provisions of the Internal Revenue Code. Pub. Act 90-123, eff. July 21, 1997

(added 35 ILCS 5/201(l)).

The RCGA also argued that because only parties who have not caused or contributed to the

contamination may receive tax credits, and because parties that clean up contaminated

properties are providing a public service at their own risk, public policy favored a broad

The Agency noted at hearing that a budget plan may contain not only estimated costs, but

also costs already incurred, such as where investigative activities have been performed before

submittal of a Remedial Action Plan. Tr.1 at 49.

interpretation of “unreimbursed eligible remediation costs.” Exh. 5 at 9; Tr.2 at 74-78, 88-

89.

At first notice, the Board generally agreed with the RCGA and modified this portion of

the certification to read as follows:

None of the costs included in this application have been or will be deducted at

any time under the Internal Revenue Code or taken into account in calculating

an environmental remediation credit granted against a tax imposed under the

provisions of the Internal Revenue Code[.]

Similarly, in the list of ineligible costs, the Board added costs for which a federal tax

deduction or credit is taken, and deleted costs reimbursed by insurance, government grant, or

the Underground Storage Tank Fund. See 35 Ill. Adm. Code 740.730(e).

In its public comment filed after first notice, the Agency stated that it disagrees with

the Board’s resolution of this issue. The Agency concluded, however, that “the Board’s

proposed revision only limits the Agency’s ability to perform initial screening for the

Department of Revenue (“DOR”). The Agency believes that the issue ultimately will be

resolved by the DOR and, therefore, does not further contest the change.” PC 4 at 2.

The Board notes that the legislature has passed SB 1291, which awaits the Governor’s

signature. Among other things, SB 1291 would eliminate references in Section 201(l) of the

Income Tax Act to the exclusions for deductions and credits under the Internal Revenue Code.

As of today, the Governor has not signed SB 1291 into law. Accordingly, for second notice,

the Board will not delete the references in the rules to the Internal Revenue Code deductions

and credits. Nevertheless, if the Governor signs SB 1291 before the Board’s final adoption of

these rules, the Board may make appropriate changes at the request of JCAR.

Section 740.715: Agency Review of Application for Final Review of Remediation

Costs

Before discussing the comments that the Board received on this section, it is necessary

to outline the relationship between Sections 740.705 and 740.715. As stated above, Section

740.705 addresses the Agency’s review of estimated costs before the cleanup. Under Section

740.705, a Remediation Applicant may have the Agency approve a budget plan before

beginning the cleanup. The budget plan will have line item estimates of costs for various

activities. The Remediation Applicant is not required to submit a budget plan to be eligible for

the tax credit, and may instead simply submit an application for final review of costs after the

cleanup (see Section 740.710). The intended advantage of submitting the budget plan is to

give the Remediation Applicant comfort, before the cleanup starts, that its costs will be

allowed.

As part of the Agency’s final review of costs after the cleanup, Section 740.715(c)

allows a Remediation Applicant who previously obtained Agency approval of a budget plan to

certify that actual remediation costs were at or below specific line item costs in the approved

budget plan. Where the Remediation Applicant does this, the Agency may, but is not required

to, conduct further review of the actual costs incurred for certified line items. Where the

Remediation Applicant’s certification does not apply to all line items approved in the budget

plan, the Agency must review the costs for the uncertified line items as if no budget plan had

been approved.

Both Senator Watson and the RCGA commented that these rules do not adequately

assure developers, in advance, as to which cleanup costs will be eligible for the tax credit.

Senator Watson commented:

[I]t appears that the Board has not given full consideration to the

concerns of developers that they know in advance what costs would be

reimbursed through the credits. I understand that these deals are often passed

over because the developer cannot receive necessary assurances of the costs. To

the extent that the Rules as they are currently drafted fail[] to adequately address

this fact, they should be reconsidered. PC 6 at 2.

Similarly, the RCGA stated:

[T]he failure to address the issue of how best to give the developer

certainty with respect to costs will doom this program to failure. It is

imperative that the developers know in advance what they may reasonably

receive before undertaking the project. PC 5 at 2.

These comments echo issues raised at the hearings in this rulemaking. For example, at

the first hearing, Board Member Hennessey asked Mr. King the following:

Do you contemplate during the [] final review that you might actually revisit

decisions about the type of clean-up technology; for example, in the example

that you gave, excavation was a remedy, basically. Do you anticipate that the

Agency might be able to look at costs that are finally submitted and say . . .

what you really should have done is vapor extraction or some other type of

remedy altogether different from what was proposed, and [that] ultimately may

have been cheaper . . . but wasn't in [your] budget . . . ? Tr. 1 at 23.

Mr. King responded as follows:

No. In that example, that would not be something that we would

reconsider. . . . [I]f we have approved a type of activity relative to

remediation, we are not going to come back and say, oh, wrong one. We

changed our minds. That would be inappropriate, I think. Tr.1 at 24.

At the second hearing, Mr. Eugene Schmittgens, attorney for the RCGA, asked

whether uncertified line items would be reviewed as if no budget plan had been approved:

[I]f the Remedial Action Plan approved includes digging up 120 cubic yards of

dirt and taking it off site, and there was a cost overrun with that line item

dealing with the removal of the 120 cubic yards of that dirt, does that mean the

Agency is going to revisit whether or not another remediation technology should

have been considered or should have been undertaken? Tr.2 at 46.

Mr. King responded: “No, that’s not what the language is intending.” Tr.2 at 46. Mr.

Schmittgens then asked:

[W]ouldn't it be easier just to have a remedial action applicant just provide you

information to justify the reasons for the overrun rather than undertaking what

the courts would term a de novo review of that line item? Tr.2 at 47.

Mr. King responded that “in practice I think that's what will happen.” Tr.2 at 47.

When asked what further review the Agency would undertake of a certified line item,

Mr. King responded as follows:

Sometimes what happens with these types of cases or situations is information

reaches us in an independent sort of way, either through some review of

something under another program or somebody is going out and inspecting a

site. You know, it could turn out that based on that additional information there

is some reason to believe that the costs that are indicated in that line item were

not actually incurred. Tr.2 49-50 (emphasis added).

Mr. King agreed that if the Agency undertakes such further review, it would entail review of

cost documentation to ensure the costs were actually incurred. Tr.2 at 50.

The Board finds that several items of agreement emerge from this portion of the record:

1) once the Agency approves an activity (

e.g.

, excavation of contaminated soil), it

will not revisit the appropriateness of that activity when reviewing the

application for final review; and

2) if the Agency decides to further review a certified line item, the review will be

limited to confirming that the costs approved in the budget plan were actually

incurred.

The Board agrees, as Senator Watson and the RCGA imply, that the rules proposed at

first notice do not fully reflect these agreements. Accordingly, the Board changes Section

740.715(c)(2) for second notice as follows:

If the budget plan determinationdecision and certification are submitted pursuant

to subsection (c)(1) of this Section, the Agency may, but is not required to,

conduct further review of the certified line item costs incurred for development

and implementation of the Remedial Action Plan and may approve such costs as

submitted. The Agency’s further review shall be limited to confirming that

costs approved in the Agency’s budget plan determination were actually

incurred by the RA for development and implementation of the Remedial Action

PlanIf the certification in subsection (c)(1) of this Section does not apply to all

line items as approved in the budget plan, the Agency shall conduct its review

of the costs for the uncertified line items as if no budget plan had been

approved.

As modified, subsection (c)(2) addresses only certified line items. The stricken language

above from subsection (c)(2) is now the first sentence in a new subsection (c)(3) addressing

uncertified line items (new language is italicized):

If the certification in subsection (c)(1) of this Section does not apply to all line

items as approved in the budget plan, the Agency shall conduct its review of the

costs for the uncertified line items as if no budget plan had been approved.

that review, the Agency shall not reconsider the appropriateness of any

activities, materials, labor, equipment, structures or services already approved

by the Agency for development and implementation of the Remedial Action

Plan.

The listing of “activities, materials,” etc. is borrowed from Sections 740.725(a), 740.725(b),

and 740.730(w).

The Board’s proposed changes to Section 740.715(c) should give developers adequate

assurance, in advance, as to which cleanup costs will be eligible for the tax credit.

Section 740.720: Fees and Manner of Payment

This section sets forth the fees that a Remediation Applicant must submit with its

budget plan and application for final review. As proposed at first notice, the review fees

would be waived or reduced if (1) the total remediation costs are $100,000 or less; and (2) the

Remediation Applicant certifies that the remediation site is (a) entirely within an enterprise

zone as defined in the Illinois Enterprise Zone Act, 20 ILCS 655, and (b) entirely within one

or more census tracts that DCCA has determined to contain a majority of households

consisting of low and moderate income persons.

In its public comment, the Agency pointed out that the legislature deleted the latter part

of the second requirement (relating to low and moderate income households) from the Income

Tax Act and the Environmental Protection Act by passing SB 1705. If the Governor signs the

bill into law, the Agency recommended that the Board delete the parallel language regarding

this requirement contained in the first notice version of Section 740.720(c)(2), as follows:

The RA must submit written certification in accordance with regulations of the

Department of Commerce and Community Affairs (DCCA) that the remediation

site is located entirely within an enterprise zone as defined in the Illinois

“RA” stands for “Remediation Applicant.” See 35 Ill. Adm. Code 740.120.

Enterprise Zone Act [20 ILCS 655] and entirely within one or more census

tracts that have been determined by DCCA to contain a majority of households

consisting of low and moderate income persons. The certification shall be

submitted with the budget plan or application for final review and shall clearly

identify the remediation site by name, address, tax parcel identification

number(s) and Illinois inventory identification number. PC 4 at 2-3.

As of today, the Governor has not signed SB 1705. Accordingly, the Board cannot

accept the Agency’s proposed revision at this time. If the Governor signs this bill between

second notice and the Board’s final adoption of these rules, the Board could make the

Agency’s suggested change if JCAR requests it.

Section 740.725: Remediation Costs; Section 740.730: Ineligible Costs

Public Comments of Senator Watson and the RCGA

Both the RCGA and Senator Watson commented that “eligible remedation costs”

should be more broadly construed than they are in the first notice rules. Senator Watson, a

sponsor of the legislation that created the tax credit, stated:

This legislation is designed to encourage the development of sites which

are either contaminated, or perceived to be contaminated. Because the

legislation excludes the individual or entity which contaminated the sites from

receiving the tax credits created by this bill, only completely innocent

developers are able to seek the benefits of the bill.

To encourage such developers to use the credits, we intended that the bill

be liberally construed to award credits. In addition, we specifically declined to

define costs which would be eligible for the credits to give the Agency the

flexibility to define those costs as necessary to encourage developers to use the

program. Again, the purpose was to allow a developer to receive the credits,

not preclude them. Developers seeking to remediate these properties should be

encouraged and rewarded for doing so. The lack of a definitive statement

regarding the costs to be awarded should not, in my opinion, be construed to be

a statement by the legislature that the eligible costs should be narrowly

construed. PC 6 at 1-2.

In a similar vein, the RCGA commented:

[W]e remain concerned that the Board and the Agency have taken too

narrow an approach regarding the application of the credits. We believe that the

Rules fail to properly acknowledge the fact that the developers undertaking the

remediation and development of these sites are not otherwise required to do so.

The Rules, as proposed[,] fail to recognize this fact. We believe it is improper

to pattern the Rules after the Underground Storage Tank program because that

program compensates the party causing the contamination.

In the case of the remediation tax credits, the developer should be given

greater opportunity to receive compensation for its costs. These individuals are

taking great risk and are serving an important need in the State of Illinois.

The RCGA also feels that the Agency fails to recognize that the

legislation was drafted without strict definitions of eligible costs because it was

intended that the issue would be negotiated during these proceedings. The

impact of the Rules as published in the first notice is that this agreement is being

used against the developers and others who may wish to take advantage of the

credits. PC 5 at 1-2.

While neither the RCGA nor Senator Watson proposed any specific amendments

to the proposed rules in these comments, the Board assumes that these comments are in

part directed at the Board’s decision not to adopt the following language that the RCGA

proposed at first notice:

If the Agency has approved a Remedial Action Plan in accordance with Section

740.750, then the costs associated with the activities of the approved Remedial

Action Plan shall be considered eligible remediation costs. Only costs

associated with activities contained in an approved RAP will be eligible costs

for purposes of receiving a remediation tax credit. Exh. 6 at 4.

Discussion

As an initial matter, the Board agrees that, as the RCGA argued, some of the costs

identified as eligible or ineligible in these proposed rules are similar to those deemed eligible

or ineligible under the Underground Storage Tank (UST) Fund program. However, the Board

notes that the similarities between the costs deemed eligible and ineligible under these two

programs inevitably arose because they both involve remediation of contaminated properties.

For example, in both programs, eligible costs generally include the costs of destroying or

dismantling and reassembling above-grade structures to the extent necessary to remediate the

property. See 35 Ill. Adm. Code 732.605(a)(18) (UST Fund program) and 35 Ill. Adm. Code

740.725(a)(15) (tax credit program). The Board finds the inclusion of these costs reasonable

in both programs. In the context of this rulemaking, the Board finds it appropriate to look to

the UST Fund program for guidance on what costs should appropriately be considered costs of

remediation rather than costs of development.

Second, the Board continues to believe that the RCGA’s proposed language is

overbroad. As the Agency explained, Remedial Action Plans have “very comprehensive levels

of information,” including information about the planned development of the site. Tr.2 at

101. The Agency believes this information is useful, but would not want the consequence of

its approval of such a plan to mean that non-remedial activities are eligible for the tax credit.

See Review of Remediation Costs for Environmental Remediation Tax Credit (Amendments to

35 Ill. Adm. Code 740) (April 16, 1998), R98-27, slip op. at 19. The Board agrees and

continues to believe that the language that the RCGA has proposed could encompass the costs

of development unrelated to remediation. The statute authorizes a tax credit for remediation

costs, not development costs.

Nevertheless, the Board believes that several changes to Sections 740.725 and 740.730

would encourage brownfield redevelopment while ensuring that tax credits are used for

remediation costs. First, the Board wishes to revise the proposed Section 740.730(f), which

describes certain ineligible costs. At first notice, this section read as follows:

Costs associated with material improvements that serve incidentally as

engineered barriers and that are not primarily designed or intended to eliminate

or mitigate exposures to, or migration of, regulated substances or pesticides[.]

At the first hearing, Mr. King described how the Agency envisioned Section 740.730(f) should

work. The Board quotes extensively from the transcript because the hypotheticals in Mr.

King’s testimony will serve as the basis for later discussion. Mr. King testified:

[I]f you had a design for a project, and that design included a parking lot, for

instance, and they decided to -- and if they found some contamination on the

property and then decided to redesign the project so that now the parking lot

could serve as a barrier over the contamination, we would see -- in that kind of

situation, because of the fact they have redesigned the project to place an

engineered barrier over the contamination, that that would not be -- that would

not be incidental. That would be an eligible cost. If, for instance -- on the

other hand, if they had the project designed, and there was to be a building in a

parking lot, and they found contamination where they were going to be building

anyways, and so they got -- they came in and justified that as an engineered

barrier, we would consider that to be then that engineered barrier only working

incidentally, in that situation will not be remediation cost. We came up with

another example. If you think about a site being designed with a site berm, and

sometimes sites will be designed with a berm around the perimeter so that

people don't have to observe what is going on on the other side for purposes of

work activities. And normally you thought about putting a site berm six feet

high, if the berm were being designed for those site purposes, and it turned out

there was contamination there under there, it could serve as an engineered

barrier; but again, it would be an incidental reason. If, on the other hand, the

contamination -- let's just say that the contamination went beyond the bounds of

the existing or the initially-designed berm, and they decided to extend the berm

an additional 100 feet to cover the contamination and have it serve as an

engineered barrier, in that case it could be -- it could be eligible as a

remediation cost, but we wouldn't -- we would say that not at six feet high, you

know. In essence they would get it to three feet high, because that would be the

amount of cover they would need for the additional cover. So the additional six

feet on top of that would not be considered remediation cost. Tr.1 at 30-33

(emphasis added).

At the second hearing, Ms. Kelsey Lundy of the RCGA testified on Section 740.730(f):

It is important that the Agency clarify under what circumstances a cost would be

denied. The application of this restriction on a Brownfields project is

important. There are a number of industrial structures which can be

incorporated into engineered barriers. Parking lots can be relocated to provide

caps. Loading docks can be constructed to incorporate berms to prevent the

migration of contaminants. These are but two examples of structures which can

have multiple uses. It does not make economic sense to require the construction

of two structures when one can provide the benefit of two. Creative design

changes should be encouraged to make these projects as economically viable as

possible by incorporating a number of uses into one structure. Tr.2 at 68-69

(emphasis added).

The Board finds that the manner of Agency review under Section 740.730(f) described

by Mr. King may prove difficult to implement. The question of ineligibility would turn on

whether a barrier (such as a parking lot, berm, or concrete pad) was “originally designed” to

cover contamination or whether it had to be “redesigned” to do so. The language itself of

subsection (f) invites difficult inquiries into intent (“not primarily designed or intended to

eliminate or mitigate . . .”). These distinctions could present difficult issues of proof and it is

questionable whether they advance any policy objective.

The Board therefore proposes the following change to Section 740.730(f) for second

notice:

Costs associated with material improvements to the extent that such

improvements are not necessary to achieve remediation objectives pursuant to an

approved Remedial Action Plan in accordance with Section 740.450 of this Part

that serve incidentally as engineered barriers and that are not primarily designed

or intended to eliminate or mitigate exposures to, or migration of, regulated

substances or pesticides[.]

This approach will not require the Agency or the Board to determine which design

came first or whether a structure was primarily intended to eliminate or mitigate contaminant

exposure. The question instead will turn on the extent to which the structure is not necessary

to achieve the remediation objectives. In Mr. King’s hypothetical of the six foot berm, the

costs for the extra three feet of berm would not be eligible where only three feet are necessary

for an engineered barrier under the approved Remedial Action Plan. Whether the berm was

originally designed for that location and whether it was primarily intended for aesthetic reasons

or as a contaminant barrier would be irrelevant. The modified subsection (f) is also more

consistent with Sections 740.725(a)(13) and (14), which allow costs for barriers to the extent

necessary to achieve remediation objectives pursuant to an approved Remedial Action Plan.

At first notice, Sections 740.725(a)(13) and (14) referred only to barriers of “clay, soil or

other appropriate geologic materials.” For clarity on cost eligibility and for consistency with

the requirements on engineered barriers in the Tiered Approach to Corrective Action

Objectives (see 35 Ill. Adm. Code 742.1105), the Board expands the list of materials in

Furthermore, if the structure is in fact serving as an engineered barrier, then it is fair to

construe the costs as “remediation” costs, even if the structure happens to also serve another

purpose associated with “development.” It must also be remembered that with a statutory

limit on the tax credit of $40,000 per year and $150,000 per site, this credit will not be

funding large development projects by itself. See Tr.2 at 76 (Ms. Lundy of the RCGA

testified: “These credits are but one tool to create a cleaner environment in the State of

Illinois. In and of themselves, they are insufficient to finance the entire [brownfields]

project.”)

The Board makes a similar change to the ineligible costs described in Section

740.730(k):

Costs associated with replacement of above-grade structures destroyed or

damaged during remediation activities to the extent such destruction or damage

and such replacement is not necessary to achieve remediation objectives

pursuant to an approved Remedial Action Plan in accordance with Section

740.450 of this Part[.]

This modification is consistent with the intent behind the subsection as expressed by the

Agency at hearing. See Tr.1 at 33, 82-84; Tr.2 at 28-30. It also makes subsection (k) more

consistent with Section 740.725(a)(12), which allows costs for the removal or replacement of

concrete, asphalt, or paving to the extent such removal or replacement is necessary to achieve

remediation objectives pursuant to an approved Remedial Action Plan. Mr. King provided

examples of how these provisions should work:

[I]f you had contamination under an existing parking lot, let's say, and the

conclusion relative to the Remedial Action Plan was that that contamination

needed to be removed, breaking up and removing the concrete, and then

removing that contamination underneath, that would be all part of remedial

action and that would be an eligible item as would backfilling. . . . However,

the paving would only become eligible if it was necessary as an engineered

barrier. If it was not needed as an engineered barrier then the replacement of

the paving would not be an eligible item. . . . [I]f you are building a building

above that pavement grade, that barrier grade, we want to make it clear that you

cannot build a building and take that . . . as an environmental remediation tax

credit. Tr.2 at 29-30.

The Board agrees. In the last example of this passage, the building is not serving as an

engineered barrier, but rather is built on top of an engineered barrier. The Board believes that

its proposed modifications clarify how these related provisions will work.

Sections 740.725(a)(13) and (14) at second notice to read as follows: “clay, soil, concrete,

asphalt or other appropriate geologic materials.” Mr. King testified that the list of materials

proposed by the Agency was not intended to exclude other materials from eligibility. Tr.1 at

85-86.

The Board declines to make any further changes to Sections 740.725 or 740.730. The

Board emphasizes that as modified, Section 740.725 does not allow the Agency to exclude

legitimate remediation costs. Section 740.725(a) lists sixteen specific types of remediation

costs that may be eligible, and Section 740.725(b) provides that other costs will be eligible “if

the RA submits detailed information demonstrating that those items are essential for

compliance with this Part 740, 35 Ill. Adm. Code 742 and the approved Remedial Action

Plan.”

To the extent that Section 740.725 does identify specific costs that are eligible, the

Board believes that it provides predictability that should encourage remediation of brownfields.

Section 740.730(l)

At first notice, the Agency proposed to allow, as eligible costs, a Remedation

Applicant’s costs of obtaining a special waste generator identification number not to exceed

$25. Exh. 2 at 5, 6. The Board rejected this proposal, adopting instead the RCGA’s proposal

to exclude only those costs of obtaining that identification number in excess of the lesser of

$250 or actual time spent. See Review of Remediation Costs for Environmental Remediation

Tax Credit (Amendments to 35 Ill. Adm. Code 740) (April 16, 1998), R98-27, slip op. at 17.

In its public comment following the first notice, the Agency maintained its objection to

this revision, stating that it “is at a loss to anticipate any circumstances where $250 would be

justified but will be unable to reject that amount as ‘unreasonable’ because it has been

endorsed in the rules.” PC 4 at 3. Upon further reflection, the Board agrees that $250 may

be excessive, and its inclusion in the rules may make it difficult for the Agency to reject that

figure. However, the Board believes that a $25 cap is still too low. The Board concludes that

$100 is a more appropriate cap, and includes it in this second notice. For clarity, the Board

also moves this provision from Section 740.730, which contains exclusions, to Section

740.725, which lists eligible remediation costs, and revises the language accordingly (see

Section 740.725(a)(16)).

Section 740.730(i)

Lastly, as an ineligible cost, the Agency’s proposed Section 740.730(i) referred to costs

incurred as a result of “negligence or unprofessional conduct as defined in Section 25 of the

Professional Engineering Practice Act of 1989.” The definitions of that statute are in Section

4 rather than Section 25, and they do not include a definition of “unprofessional conduct.”

Instead, there is a definition of “negligence in the practice of professional engineering.” See

225 ILCS 325/4(l). The Board makes corresponding changes to Section 740.730(i).

CONCLUSION

At second notice, the Board replaces the word “essential” in Section 740.725(b) with the

word “necessary” for consistency and to avoid any potential suggestion that the Agency is to

apply varying standards of review. The Board makes the same change in Section 740.730(w).

The Board finds that the Agency’s proposal, with the Board’s revisions, is

economically reasonable and technically feasible. The Board adopts the following proposal for

second notice.

ORDER

The Board proposes for second notice the following amendments to 35 Ill. Adm. Code

740. Deletions from first notice are shown as double-underlined strike-outs, and additions

from first notice are double-underlined. The Clerk of the Board is directed to file these

proposed rules with the Joint Committee on Administrative Rules.

TITLE 35: ENVIRONMENTAL PROTECTION

SUBTITLE G: WASTE DISPOSAL

CHAPTER I: POLLUTION CONTROL BOARD

PART 740

SITE REMEDIATION PROGRAM

SUBPART A: GENERAL

Section

740.100

Purpose

740.105

Applicability

740.110

Permit Waiver

740.115

Agency Authority

740.120

Definitions

740.125

Incorporations by Reference

740.130

Severability

SUBPART B: APPLICATIONS AND AGREEMENTS FOR REVIEW AND EVALUATION

SERVICES

Section

740.200

General

740.205

Submittal of Application and Agreement

740.210

Contents of Application and Agreement

740.215

Approval or Denial of Application and Agreement

740.220

Acceptance and Modification of Application and Agreement

740.225

Termination of Agreement by the Remediation Applicant (RA)

740.230

Termination of Agreement by the Agency

740.235

Use of Review and Evaluation Licensed Professional Engineer (RELPE)

SUBPART C: RECORDKEEPING, BILLING AND PAYMENT

Section

740.300

General

740.305

Recordkeeping for Agency Services

740.310

Request for Payment

740.315

Submittal of Payment

740.320

Manner of Payment

SUBPART D: SITE INVESTIGATIONS, DETERMINATION OF REMEDIATION

OBJECTIVES, PREPARATION OF PLANS AND REPORTS

Section

740.400

General

740.405

Conduct of Site Activities and Preparation of Plans and Reports by Licensed

Professional Engineer (LPE)

740.410

Form and Delivery of Plans and Reports, Signatories and Certifications

740.415

Site Investigation -- General

740.420

Comprehensive Site Investigation

740.425

Site Investigation Report -- Comprehensive Site Investigation

740.430

Focused Site Investigation

740.435

Site Investigation Report -- Focused Site Investigation

740.440

Determination of Remediation Objectives

740.445

Remediation Objectives Report

740.450

Remedial Action Plan

740.455

Remedial Action Completion Report

SUBPART E: SUBMITTAL AND REVIEW OF PLANS AND REPORTS

Section

740.500

General

740.505

Reviews of Plans and Reports

740.510

Standards for Review of Site Investigation Reports and Related Activities

740.515

Standards for Review of Remediation Objectives Reports

740.520

Standards for Review of Remedial Action Plans and Related Activities

740.525

Standards for Review of Remedial Action Completion Reports and Related

Activities

740.530

Establishment of Groundwater Management Zones

SUBPART F: NO FURTHER REMEDIATION LETTERS AND

RECORDING REQUIREMENTS

Section

740.600

General

740.605

Issuance of No Further Remediation Letter

740.610

Contents of No Further Remediation Letter

740.615

Payment of Fees

740.620

Duty to Record No Further Remediation Letter

740.625

Voidance of No Further Remediation Letter

SUBPART G: REVIEW OF REMEDIATION COSTS FOR ENVIRONMENTAL

REMEDIATION TAX CREDIT

Section

740.700 General

740.705 Preliminary Review of Estimated Remediation Costs

740.710 Application for Final Review of Remediation Costs

740.715 Agency Review of Application for Final Review of Remediation Costs

740.720 Fees and Manner of Payment

740.725 Remediation Costs

740.730 Ineligible Costs

Appendix A

Target Compound List

Table A

Volatile Organics Analytical Parameters and Required Quantitation

Limits

Table B

Semivolatile Organic Analytical Parameters and Required Quantitation

Limits

Table C

Pesticide and Aroclors Organic Analytical Parameters and Required

Quantitation Limits

Table D

Inorganic Analytical Parameters and Required Quantitation Limits

Appendix B

Review and Evaluation Licensed Professional Engineer Information

AUTHORITY: Implementing Sections 58 through 58.14 and authorized by Sections 58.5,

58.6, 58.7, 58.11 and 58.14 of the Environmental Protection Act [415 ILCS 5/58 through

58.14].

SOURCE: Adopted in R97-11 at 21 Ill. Reg. 7889, effective July 1, 1997; amended in R98-

27 at 22 Ill. Reg. _____________, effective __________________.

NOTE: Capitalization denotes statutory language. In this Part, the abbreviation μg is used to

indicate micrograms.

SUBPART A: GENERAL

Section 740.100

Purpose

The purpose of this Part is to establishESTABLISH THE PROCEDURES FOR THE

INVESTIGATIVEINVESTIGATION AND REMEDIAL ACTIVITIESREMEDIATION AT

SITES WHERE THERE IS A RELEASE, THREATENED RELEASE, OR SUSPECTED

RELEASE OF HAZARDOUS SUBSTANCES, PESTICIDES, OR PETROLEUM AND FOR

THE REVIEW AND APPROVAL OF THOSE ACTIVITIES. (Section 58.1(a)(1) of the Act)

The purpose of this Part is also to establish procedures to be followed to obtain Illinois

Environmental Protection Agency review and approval of remediation costs before applying

for the environmental remediation tax credit under Section 201(l) of the Illinois Income Tax

Act [35 ILCS 5/201(l)].

(Source: Amended at 22 Ill. Reg. ______, effective ___________)

Section 740.120

Definitions

Except as stated in this Section, or unless a different meaning of a word or term is clear from

the context, the definition of words or terms in this Part shall be the same as that applied to the

same words or terms in the Environmental Protection Act.

“"Act”" means the Environmental Protection Act [415 ILCS 5].

“Agency” means the Illinois Environmental Protection Agency.

"AGENCY" MEANS THE ILLINOIS ENVIRONMENTAL PROTECTION

AGENCY. (Section 3.01 of the Act)

“"Agency travel costs”" means costs incurred and documented for travel in

accordance with 80 Ill. Adm. Code 2800 and 3000 by individuals employed by

the Agency. Such costs include costs for lodging, meals, travel, automobile

mileage, vehicle leasing, tolls, taxi fares, parking and miscellaneous items.

“"AGRICHEMICAL FACILITY”" MEANS A SITE ON WHICH

AGRICULTURAL PESTICIDES ARE STORED OR HANDLED, OR BOTH,

IN PREPARATION FOR END USE, OR DISTRIBUTED. THE TERM

DOES NOT INCLUDE BASIC MANUFACTURING FACILITY SITES.

(Section 58.2 of the Act)

“"ASTM”" MEANS THE AMERICAN SOCIETY FOR TESTING AND

MATERIALS. (Section 58.2 of the Act)

“"Authorized agent”" means a person who is authorized by written consent or

by law to act on behalf of an owner, operator, or Remediation Applicant.

“"Board”" means the Pollution Control Board.

“"Contaminant of concern”" or "REGULATED SUBSTANCE OF

CONCERN" MEANS ANY CONTAMINANT THAT IS EXPECTED TO BE

PRESENT AT THE SITE BASED UPON PAST AND CURRENT LAND

USES AND ASSOCIATED RELEASES THAT ARE KNOWN TO THE

REMEDIATION APPLICANT BASED UPON REASONABLE INQUIRY.

(Section 58.2 of the Act)

“"Costs”" means all costs incurred by the Agency in providing services

pursuant to a Review and Evaluation Services Agreement.

“Groundwater management zone” or “GMZ” means a three dimensional region

containing groundwater being managed to mitigate impairment caused by the

release of contaminants of concern at a remediation site.

“"Indirect costs”" means those costs that incurred by the Agency which cannot

be attributed directly to a specific site but are necessary to support the site-

specific activities, including, but not limited to, such expenses as managerial

and administrative services, building rent and maintenance, utilities, telephone

and office supplies.

“"Laboratory costs”" means costs for services and materials associated with

identifying, analyzing, and quantifying chemical compounds in samples at a

laboratory.

“"LICENSED PROFESSIONAL ENGINEER”" orOR “"LPE”" MEANS A

PERSON, CORPORATION OR PARTNERSHIP LICENSED UNDER THE

LAWS OF THIS STATE TO PRACTICE PROFESSIONAL ENGINEERING.

(Section 58.2 of the Act)

“"Other contractual costs”" means costs for contractual services not otherwise

specifically identified, including, but not limited to, printing, blueprints,

photography, film processing, computer services and overnight mail.

“"PERSON”" MEANS INDIVIDUAL, TRUST, FIRM, JOINT STOCK

COMPANY, JOINT VENTURE, CONSORTIUM, COMMERCIAL ENTITY,

CORPORATION (INCLUDING A GOVERNMENT CORPORATION),

PARTNERSHIP, ASSOCIATION, STATE, MUNICIPALITY,

COMMISSION, POLITICAL SUBDIVISION OF A STATE, OR ANY

INTERSTATE BODY, INCLUDING THE UNITED STATES

GOVERNMENT AND EACH DEPARTMENT, AGENCY, AND

INSTRUMENTALITY OF THE UNITED STATES. (Section 58.2 of the Act)

“"Personal services costs”" means costs relative to the employment of

individuals by the Agency. Such costs include, but are not limited to, hourly

wages and fringe benefits.

“"PESTICIDE”" MEANS ANY SUBSTANCE OR MIXTURE OF

SUBSTANCES INTENDED FOR PREVENTING, DESTROYING,

REPELLING, OR MITIGATING ANY PEST OR ANY SUBSTANCE OR

MIXTURE OF SUBSTANCES INTENDED FOR USE AS A PLANT

REGULATOR, DEFOLIANT OR DESSICCANT. (Illinois Pesticide Act [415

ILCS 60/4])

“Practical quantitation limit” or “PQL” or “Estimated quantitation limit” means

the lowest concentration that can be reliably measured within specified limits of

precision and accuracy for a specific laboratory analytical method during routine

laboratory operating conditions in accordance with “Test Methods for

Evaluating Solid Wastes, Physical/Chemical Methods,” EPA Publication No.

SW-846, incorporated by reference at Section 740.125 of this Part. For filtered

water samples, PQL also means the Method Detection Limit or Estimated

Detection Limit in accordance with the applicable method revision in:

“Methods for the Determination of Metals in Environmental Samples,” EPA

Publication No. EPA/600/4-91/010; “Methods for the Determination of

Organic Compounds in Drinking Water,” EPA Publication No. EPA/600/4-

88/039; “Methods for the Determination of Organic Compounds in Drinking

Water, Supplement II,” EPA Publication No. EPA/600/R-92/129; or “Methods

for the Determination of Organic Compounds in Drinking Water, Supplement

III,” EPA Publication No. EPA/600/R-95/131, all of which are incorporated by

reference at Section 740.125 of this Part.

“"Reasonably obtainable”" means that a copy or reasonable facsimile of the

record must be obtainable from a private entity or government agency by

request and upon payment of a processing fee, if any.

“"Recognized environmental condition”" means the presence or likely presence

of any regulated substance or pesticide under conditions that indicate a release,

threatened release or suspected release of any regulated substance or pesticide

at, on, to or from a remediation site into structures, surface water, sediments,

groundwater, soil, fill or geologic materials. The term shall not include de

minimis conditions that do not present a threat to human health or the

environment.

“"REGULATED SUBSTANCE”" MEANS ANY HAZARDOUS

SUBSTANCE AS DEFINED UNDER SECTION 101(14) OF THE

COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION,

AND LIABILITY ACT OF 1980 (P.L. 96-510) AND PETROLEUM

PRODUCTS, INCLUDING CRUDE OIL OR ANY FRACTION THEREOF,

NATURAL GAS, NATURAL GAS LIQUIDS, LIQUEFIED NATURAL GAS,

OR SYNTHETIC GAS USABLE FOR FUEL (OR MIXTURES OF

NATURAL GAS AND SUCH SYNTHETIC GAS). (Section 58.2 of the Act)

“"REGULATED SUBSTANCE OF CONCERN”" or “"contaminant of

concern”" MEANS ANY CONTAMINANT THAT IS EXPECTED TO BE

PRESENT AT THE SITE BASED UPON PAST AND CURRENT LAND

USES AND ASSOCIATED RELEASES THAT ARE KNOWN TO THE

REMEDIATION APPLICANT BASED UPON REASONABLE INQUIRY.

(Section 58.2 of the Act)

“"RELEASE”" MEANS ANY SPILLING, LEAKING, PUMPING,

POURING, EMITTING, EMPTYING, DISCHARGING, INJECTING,

ESCAPING, LEACHING, DUMPING, OR DISPOSING INTO THE

ENVIRONMENT, BUT EXCLUDES (A) ANY RELEASE WHICH RESULTS

IN EXPOSURE TO PERSONS SOLELY WITHIN A WORKPLACE, WITH

RESPECT TO A CLAIM WHICH SUCH PERSONS MAY ASSERT

AGAINST THE EMPLOYER OFOR SUCH PERSONS; (B) EMISSIONS

FROM THE ENGINE EXHAUST OF A MOTOR VEHICLE, ROLLING

STOCK, AIRCRAFT, VESSEL, OR PIPELINE PUMPING STATION

ENGINE; (C) RELEASE OF SOURCE, BYPRODUCT, OR SPECIAL

NUCLEAR MATERIAL FROM A NUCLEAR INCIDENT, AS THOSE

TERMS ARE DEFINED IN THE federalFEDERAL ATOMIC ENERGY ACT

OF 1954, IF SUCH RELEASE IS SUBJECT TO REQUIREMENTS WITH

RESPECT TO FINANCIAL PROTECTION ESTABLISHED BY THE

NUCLEAR REGULATORY COMMISSION UNDER SECTION 170 OF

SUCH ACT; AND (D) THE NORMAL APPLICATION OF FERTILIZER.

(Section 3.33 of the Act)

“"REMEDIAL ACTION”" MEANS ACTIVITIES ASSOCIATED WITH

COMPLIANCE WITH THE PROVISIONS OF SECTIONS 58.6 AND 58.7 of

the Act, including, but not limited to, the conduct of site investigations,

preparation of work plans and reports, removal or treatment of contaminants,

construction and maintenance of engineered barriers, and/or implementation of

institutional controls. (Section 58.2 of the Act)

“"REMEDIATION APPLICANT”" orOR “"RA”" MEANS ANY PERSON

SEEKING TO PERFORM OR PERFORMING INVESTIGATIVE OR

REMEDIAL ACTIVITIES UNDER TitleTITLE XVII of the ActOF THE ACT,

INCLUDING THE OWNER OR OPERATOR OF THE SITE OR PERSONS

AUTHORIZED BY LAW OR CONSENT TO ACT ON BEHALF OF OR IN

LIEU OF THE OWNER OR OPERATOR OF THE SITE. (Section 58.2 of the

Act)

“REMEDIATION COSTS” MEANS REASONABLE COSTS PAID FOR

INVESTIGATING AND REMEDIATING REGULATED SUBSTANCES OF

CONCERN CONSISTENT WITH THE REMEDY SELECTED FOR theTHE

SITE. FOR PURPOSES OF Subpart G of this Part, “REMEDIATION

COSTS” SHALL NOT INCLUDE COSTS INCURRED PRIOR TO

JANUARY 1, 1998, COSTS INCURRED AFTER THE ISSUANCE OF A NO

FURTHER REMEDIATION LETTER UNDER Subpart F of this Part, OR

COSTS INCURRED MORE THAN 12 MONTHS PRIOR TO ACCEPTANCE

INTO THE SITE REMEDIATION PROGRAM under this Part. (Section 58.2

of the Act)

“Remediation objective” means a goal to be achieved in performing remedial

action, including but not limited to the concentration of a contaminant, an

engineered barrier or engineered control, or an institutional control established

under Section 58.5 of the Act or Section 740.Subpart D of this Part.

“Remediation site” means the single location, place, tract of land, or parcel or

portion of any parcel of property, including contiguous property separated by a

public right-of-way, for which review, evaluation, and approval of any plan or

report has been requested by the Remediation Applicant in its application for

review and evaluation services. This term also includes, but is not limited to,

all buildings and improvements present at that location, place, or tract of land.

“RESIDENTIAL PROPERTY” MEANS ANY REAL PROPERTY THAT IS

USED FOR HABITATION BY INDIVIDUALS, orOR where children have the

opportunity for exposure to contaminants through soil ingestion or inhalation at

educational facilities, health care facilities, child care facilities, or outdoor

recreational areas. (Section 58.2 of the Act)

“"Review and Evaluation Licensed Professional Engineer”" or “"RELPE”"

means the licensed professional engineer with whom a Remediation Applicant

(RA) has contracted to perform review and evaluation services under the

direction of the Agency.

“"SITE”" MEANS ANY SINGLE LOCATION, PLACE, TRACT OF LAND

OR PARCEL OF PROPERTY OR PORTION THEREOF, INCLUDING

CONTIGUOUS PROPERTY SEPARATED BY A PUBLIC RIGHT-OF-WAY.

(Section 58.2 of the Act) This term also includes, but is not limited to, all

buildings and improvements present at that location, place or tract of land.

(Source: Amended at 22 Ill. Reg. ____, effective _____________)

SUBPART E: SUBMITTAL AND REVIEW OF PLANS AND REPORTS

Section 740.505

Reviews of Plans and Reports

ALL REVIEWS carried out under this CARRIED OUT UNDER THIS Part

SHALL BE CARRIED OUT BY THE AGENCY OR A RELPE (Review and

Evaluation Licensed Professional Engineer), BOTH UNDER THE DIRECTION

OF A LICENSED PROFESSIONAL ENGINEER. (Section 58.7(d) of the Act)

PLANS, REPORTS AND relatedRELATED ACTIVITIES WHICH THE

AGENCY OR A RELPE MAY REVIEW INCLUDE, but are not limited to:

SITE INVESTIGATION REPORTS AND RELATED ACTIVITIES;

REMEDIATION OBJECTIVES REPORTS;

REMEDIAL ACTION PLANS AND RELATED ACTIVITIES; AND

REMEDIAL ACTION COMPLETION REPORTS AND RELATED

ACTIVITIES. (Section 58.7(d)(2) of the Act)

ONLY THE AGENCY SHALL HAVE THE AUTHORITY TO APPROVE,

DISAPPROVE, OR APPROVE WITH CONDITIONS A PLAN OR REPORT

AS A RESULT OF THE REVIEW PROCESS, INCLUDING THOSE PLANS

OR REPORTS REVIEWED BY A RELPE. (Section 58.7(d)(3) of the Act)

Except as provided in subsection (d)(5) below and Section 740.705(cd) of this

Part, the Agency shall have 60 days from the receipt of any plan or report to

conduct a review and make a final determination to approve or disapprove the

plan or report, or approve the plan or report with conditions. All reviews shall

be based on the standards set forth in this Subpart E.

The Agency's record of the date of receipt of a plan or report shall be

deemed conclusive unless a contrary date is proven by a dated, signed

receipt from the Agency or certified or registered mail.

Submittal of an amended plan or report restarts the time for review.

The RA may waive the time line for review upon a request from the

Agency or at the RA's discretion.

The Agency shall not be required to review any plan or report submitted

out of the sequence for plans and reports set forth in this Part.

If any plans or reports are submitted concurrently, the Agency’s timeline

for review shall increase to a total of 90 days for all plans or reports so

submitted.

Upon completion of the review, the Agency shall notify the RA in writing of its

final determination on the plan or report. The Agency’s notification shall be

made in accordance with Section 740.215(b) of this Part. If the Agency

disapproves a plan or report or approves a plan or report with conditions, the

written notification shall contain the following information, as applicable:

An explanation of the specific type of information or documentation, if

any, that the Agency deems the RA did not provide;

A listing of the Sections of Title XVII of the Act or this Part that may be

violated if the plan or report is approved as submitted;

A statement of the specific reasons why Title XVII of the Act or this

Part may be violated if the plan or report is approved as submitted;

A statement of the reasons for conditions if conditions are required.

The Agency may, to the extent consistent with review deadlines, provide the

RA with a reasonable opportunity to correct deficiencies prior to sending a

disapproval. However, the correction of such deficiencies by the submittal of

additional information may, in the sole discretion of the Agency, restart the

time for review.

If the RA has entered into a contract with a RELPE under Subpart B of this

Part, the Agency shall assign plans and reports submitted by the RA to the

RELPE for initial review.

The RELPE's review shall be conducted in accordance with this Subpart

Upon completion of the review, the RELPE shall recommend to the

Agency approval or disapproval of the plan or report or approval of the

plan or report with conditions.

Unless otherwise approved by the Agency in writing, the RELPE shall

have 30 days to complete the review of a plan or report and forward the

recommendation to the Agency. If any plans or reports have been

submitted concurrently to the Agency, the RELPE shall have a total of

45 days to complete the review of all plans or reports so submitted,

unless otherwise approved by the Agency in writing.

The recommendation of the RELPE shall be in writing, shall include

reasons supporting the RELPE's recommendation, and shall be

accompanied by all documents submitted by the RA and any other

information relied upon by the RELPE in reaching a decision.

IF THE AGENCY DISAPPROVES OR APPROVES WITH CONDITIONS A

PLAN OR REPORT OR FAILS TO ISSUE A FINAL

determinationDETERMINATION WITHIN THE applicable review PERIOD

AND THE RA HAS NOT AGREED TO A WAIVER OF THE DEADLINE,

THE RA MAY, WITHIN 35 DAYS after receipt of the final determination or

expiration of the deadline, FILE AN APPEAL withTO THE BOARD.

APPEALS TO THE BOARD SHALL BE IN THE MANNER PROVIDED

FOR THE REVIEW OF PERMIT DECISIONS IN SECTION 40 OF THE

ACT. (Section 58.7(d)(5) of the Act)

(Source: Amended at 22 Ill. Reg. ______, effective _______)

SUBPART G: REVIEW OF REMEDIATION COSTS FOR

ENVIRONMENTAL REMEDIATION TAX CREDIT

Section 740.700

General

This Subpart sets forth the procedures to be followed by an RA to obtain Agency review and

approval of remediation costs before applying for the environmental remediation tax credit

under Section 201(l) of the Illinois Income Tax Act [35 ILCS 5/201(l)]. It contains procedures

for preliminary reviews of estimated remediation costs and final reviews of remediation costs

actually incurred, establishes fees for the Agency’s reviews, provides for appeals of Agency

determinationsdecisions, and includes examples of remediation costs and ineligible costs.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

Section 740.705

Preliminary Review of Estimated Remediation Costs

The RA for any remediation site enrolled in the Site Remediation Program may

request a preliminary review of estimated remediation costs by submitting a

budget plan along with the Remedial Action Plan required under Section

740.450 of this Part. No budget plan shall be accepted for review by the

Agency unless a Remedial Action Plan satisfying the requirements of Section

740.450 of this Part also has been submitted. The budget plan shall be

submitted on forms prescribed and provided by the Agency and shall include,

but not be limited to, the following information:

Identification of applicant and remediation site:

The full legal name, address and telephone number of the RA,

any authorized agents acting on behalf of the RA, and any contact

persons to whom inquiries and correspondence must be

addressed;

The address, site name, tax parcel identification number(s) and

Illinois inventory identification number for the remediation site

for which the environmental remediation tax credit is being

sought and the date of acceptance of the site into the Site

Remediation Program;

The Federal Employer Identification Number (FEIN) or Social

Security Number (SSN) of the RA.

Line item estimates of the costs that the RA anticipates will be incurred

for the development and implementation of the Remedial Action Plan,

including but not limited to:

Site investigation activities:

Drilling costs;

ii)

Physical soil analysis;

iii)

Monitoring well installation;

iv)

Disposal costs.

Sampling and analysis activities:

Soil analysis costs;

ii)

Groundwater analysis costs;

iii)

Well purging costs;

iv)

Water disposal costs.

Remedial activities:

Groundwater remediation costs;

ii)

Excavation and disposal costs;

iii)

Land farming costs;

iv)

Above-ground bio-remediation costs;

Land application costs;

vi)

Low temperature thermal treatment costs;

vii)

Backfill costs;

viii)

In-situ soil remediation costs.;

ix) Other treatment costs.

Report preparation costs.

E) Other costs not included above.

A certification, signed by the RA or authorized agent and notarized, as

follows:

I, __________________ [name of RA, if individual, or authorized

agent of RA], hereby certify that neither __________________ [“I”

if RA is certifying or name of RA if authorized agent is certifying],

nor any related party (as described in Section 201(l) of the Illinois

Income Tax Act [35 ILCS 5/201(l)]), nor any person whose tax

attributes ________________ [“I” if RA is certifying or name of RA

if authorized agent is certifying] have [has] succeeded to under

Section 381 of the Internal Revenue Code, caused or contributed in

any material respect to the release or substantial threat of a release of

regulated substance(s) or pesticide(s) that are identified and addressed

in the Remedial Action Plan submitted for the site identified above.

The original signature of the RA or authorized agent acting on behalf of

the RA.

The budget plan shall be accompanied by the applicable fee for review as

provided in Section 740.720 of this Subpart. Budget plans shall be mailed or

delivered to the address designated by the Agency on the forms. Requests that

are hand-delivered shall be delivered during the Agency’s normal business

hours.

The time for the Agency to review the budget plan begins on the date that the

Agency receives the budget plan. The Agency’s record of the date of receipt of

the budget plan shall be deemed conclusive unless a contrary date is proven by a

dated, signed receipt from registered or certified mail. The RA may waive the

time for review. The time frames for the Agency review are:

1) If the budget plan is submitted with the Remedial Action Plan, the

submission of the budget plan shall be deemed an automatic 60-day waiver

of the applicable review period for the Remedial Action Plan, as set forth in

Section 740.505(d) of this Part. In this instance, the Agency shall have 120

days from its receipt of the two documents to make aits final determination

on the two documents.

2) If the budget plan is not submitted with the Remedial Action Plan, the

budget plan may not be submitted until after the Agency has made a final

determination on the Remedial Action Plan. If the budget plan is submitted

after the Agency has approved or approved with conditions the Remedial

Action Plan, the Agency shall have 60 days from its receipt of the budget

plan to make a final determination on the budget plan.

3) If an amended Remedial Action Plan or amended budget plan is submitted

before an Agency final determination on the Remedial Action Plan and

budget plan, the Agency shall have 120 days from its receipt of the amended

document to make a final determination on the two documents.

4) If an amended budget plan is submitted without an amended Remedial

Action Plan and after the Agency’s final determination on the Remedial

Action Plan, the Agency shall have 60 days from its receipt of the amended

budget plan to make a final determination on the amended budget plan.

The Agency shall review the budget plan and the Remedial Action Plan to

determine, in accordance with Sections 740.725 and 740.730 of this Part,

whether the estimated costs are remediation costs. Upon completion of the

preliminary review, the Agency shall notify the RA in writing of its final

determinationdecision to approve, disapprove or modify the estimated

remediation costs submitted in the budget plan.

If a budget plan is disapproved or approved with modification of

estimated remediation costs, the written notification shall contain the

following information as applicable:

An explanation of the specific type of information or

documentation, if any, that the Agency deems the RA did not

provide;

The reasons for the disapproval or modification of estimated

remediation costs;

Citations to statutory or regulatory provisions upon which the

determinationdecision is based.

The Agency may combine the notification of its final

determinationdecision on a budget plan with the notification of its final

determinationdecision on the corresponding Remedial Action Plan.

The Agency’s notification of final determinationdecision shall be by

certified or registered mail postmarked with a date stamp and with return

receipt requested. The Agency’s determinationdecision shall be deemed

to have taken place on the postmarked date that the notice is mailed.

Revision and Resubmission

If the Agency disapproves a Remedial Action Plan or approves a

Remedial Action Plan with conditions in accordance with Subpart E of

this Part, the Agency may return the corresponding budget plan to the

RA without review. If the Remedial Action Plan is amended as a result

of the Agency action, the RA may submit a revised budget plan for

review. No additional fee shall be required for this review.

If the Remedial Action Plan is amended by the RA and the RA intends to

submit the Agency’s final determinationdecision on the budget plan in

accordance with Section 740.715(c) of this Subpart, the budget plan shall

be revised accordingly and resubmitted for Agency review. No

additional fee shall be required for this review.

If the Agency disapproves or modifies the budget plan or fails to issue a final

determination within the applicable review period, the RA may, within 35 days

after its receipt of the final determination or expiration of the deadline, file an

appeal withto the Board. Appeals to the Board shall be in the manner provided

for the review of permit decisions in Section 40 of the Act.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

Section 740.710

Application for Final Review of Remediation Costs

The RA for any remediation site enrolled in the Site Remediation Program may

submit an application for final review of remediation costs. No application shall

be submitted until a No Further Remediation Letter has been issued and the No

Further Remediation Letter (or an affidavit under Section 740.620(a)(2) of this

Part stating that the No Further Remediation Letter has issued by operation of

law) has been recorded in the chain of title for the site, all in accordance with

Title XVII of the Act and Subpart F of this Part. The application shall be

submitted on forms prescribed and provided by the Agency and shall include,

but not be limited to, the following information:

Identification of applicant and remediation site:

The full legal name, address and telephone number of the RA,

any authorized agents acting on behalf of the RA, and any contact

persons to whom inquiries and correspondence must be

addressed;

The address, site name, tax parcel identification number(s), and

Illinois inventory identification number for the remediation site

for which the environmental remediation tax credit is being

sought and the date of acceptance of the site into the Site

Remediation Program;

The Federal Employer Identification Number (FEIN) or Social

Security Number (SSN) of the RA;.

A true and correct copy of the No Further Remediation Letter(s) (or

affidavit(s) under Section 740.620(a)(2) of this Part stating that the No

Further Remediation Letter(s) has issued by operation of law) for the

remediation site as recorded in the chain of title for the site and certified

by the appropriate County Recorder or Registrar of Titles;

Itemization and documentation of remediation activities at the

remediation site for which the environmental remediation tax credit is

sought and for the costs of remediation incurred by the RA at the site,

including invoices, billings and dated, legible receipts along with

canceled checks or other Agency-approved methods of proof of

payment;

A certification, signed by the RA or authorized agent and notarized, as

follows:

I, ___________________ [name of RA, if individual, or authorized

agent of RA], hereby certify that:

The site for which this application for an environmental remediation tax

credit is submitted is the same site as the site for which the attached No

Further Remediation Letter was issued;

All the costs included in this application were incurred at the site and for

the regulated substance(s) or pesticide(s) for which the No Further

Remediation Letter was issued;

The costs submitted were paid by __________________ [“me” if RA is

certifying or name of RA if authorized agent is certifying] and are

accurate to the best of my knowledge and belief;

None of the costs included in this application were incurred before

January 1, 1998, or more than 12 months before the enrollment of the

site in the Site Remediation Program, or after the date of issuance of the

No Further Remediation Letter;

None of the costs included in this application have been or will be

deducted at any time under the Internal Revenue Code or taken into

account in calculating an environmental remediation credit granted

against a tax imposed under the provisions of the Internal Revenue Code;

Neither _________________ [“I” if RA is certifying or name of RA if

authorized agent is certifying], nor any related party (as described in

Section 201(l) of the Illinois Income Tax Act [35 ILCS 5/201(l)]), nor

any person whose tax attributes ________________ [“I” if RA is

certifying or name of RA if authorized agent is certifying] have [has]

succeeded to under Section 381 of the Internal Revenue Code, caused or

contributed in any material respect to the release or substantial threat of

a release of regulated substance(s) or pesticide(s) for which the No

Further Remediation Letter was issued.

The original signature of the RA or of the authorized agent acting on

behalf of the RA.

The application for final review shall be accompanied by the applicable fee for

review as provided in Section 740.720 of this Subpart. Applications shall be

mailed or delivered to the address designated by the Agency on the forms.

Requests that are hand-delivered shall be delivered during the Agency’s normal

business hours.

The Agency’s acceptance of a certification that neither the RA, nor any related

party (as described in Section 201(l) of the Illinois Income Tax Act [35 ILCS

5/201(l)]), nor any person whose tax attributes the RA has succeeded to under

Section 381 of the Internal Revenue Code, caused or contributed in any material

respect to the release or substantial threat of a release for which the

environmental remediation tax credit is requested shall not bind the Agency or

the State and shall not be used as a defense with regard to any enforcement or

cost recovery actions that may be initiated by the State or any other party.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

Section 740.715

Agency Review of Application for Final Review of Remediation Costs

The Agency shall review the application for final review of remediation costs to

determine, in accordance with Sections 740.725 and 740.730 of this Part,

whether the costs incurred are remediation costs.

The Agency shall have 60 days after the receipt of an application for final

review to make aits final determination on the application. The Agency’s

record of the date of receipt of the application shall be deemed conclusive unless

a contrary date is proven by a dated, signed receipt from registered or certified

mail. The RA may waive the time for review. Submittal of an amended

application restarts the time for review.

Further Review by the Agency

If a preliminary review of a budget plan has been obtained under Section

740.705 of this Subpart, the RA may submit, along with the application,

supporting documentation, and the applicable fee under Section 740.720

of this Subart, a copy of the Agency’s final determination on the budget

plan decision accompanied by a certification, signed by the RA or

authorized agent and notarized, as follows:

I, ________________ [name of RA, if individual, or name of

authorized agent of RA], hereby certify that the actual remediation

costs incurred at the site for line items [list line

items to which certification applies] and identified in the

aApplication for fFinal rReview of rRemediation cCosts are equal to

or less than the costs approved for the corresponding line items in the

attached budget plan determinationdecision.

If the budget plan determinationdecision and certification are submitted

pursuant to subsection (c)(1) of this Section, the Agency may, but is not

required to, conduct further review of the certified line item costs

incurred for development and implementation of the Remedial Action

Plan and may approve such costs as submitted. The Agency’s further

review shall be limited to confirming that costs approved in the Agency’s

budget plan determination were actually incurred by the RA for

development and implementation of the Remedial Action PlanIf the

certification in subsection (c)(1) of this Section does not apply to all line

items as approved in the budget plan, the Agency shall conduct its

review of the costs for the uncertified line items as if no budget plan had

been approved.

3) If the certification in subsection (c)(1) of this Section does not apply to

all line items as approved in the budget plan, the Agency shall conduct

its review of the costs for the uncertified line items as if no budget plan

had been approved. In that review, the Agency shall not reconsider the

appropriateness of any activities, materials, labor, equipment, structures

or services already approved by the Agency for the development and

implementation of the Remedial Action Plan.

Upon completion of the final review, the Agency shall notify the RA in writing

of its final determinationdecision to approve, disapprove or modify the

remediation costs submitted in the application. If an application is disapproved

or approved with modification of remediation costs, the written notification

shall contain the following information as applicable:

An explanation of the specific type of information or documentation, if

any, that the Agency deems the RA did not provide;

The reasons for the disapproval or modification of remediation costs;

Citations to statutory or regulatory provisions upon which the

determinationdecision is based.

The Agency’s notification of final determination shall be by certified or

registered mail postmarked with a date stamp and with return receipt requested.

The Agency’s determination shall be deemed to have taken place on the

postmarked date that the notice is mailed.

If the Agency disapproves or modifies the application for final review or fails to

issue a final determination within the applicable review period, the RA may,

within 35 days after receipt of the final determination or expiration of the

deadline, file an appeal withto the Board. Appeals to the Board shall be in the

manner provided for the review of permit decisions in Section 40 of the Act.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

Section 740.720

Fees and Manner of Payment

The fee for the preliminary review of estimated remediation costs conducted

under Section 740.705 of this Subpart shall be as follows:

Except as provided in subsection (a)(2) of this Section, the fee for the

preliminary review shall be $500 for each remediation site reviewed.

There shall be no fee for a preliminary review if the requirements of

subsection (c) of this Section are satisfied.

The fee for the final review of remediation costs under Section 740.715 of this

Subpart shall be as follows:

Except as provided in subsection (b)(2) of this Section, the fee for the

final review shall be $1,000 for each remediation site reviewed.

The fee for the final review shall be $250 if the requirements of

subsection (c) of this Section are satisfied.

To obtain the fee waiver under subsection (a)(2) of this Section or the reduced

fee under subsection (b)(2) of this Section:

The total remediation costs for the site must be $100,000 or less; and

The RA must submit written certification in accordance with regulations

of the Department of Commerce and Community Affairs (DCCA) that

the remediation site is located entirely within an enterprise zone as

defined in the Illinois Enterprise Zone Act [20 ILCS 655] and entirely

within one or more census tracts that have been determined by DCCA to

contain a majority of households consisting of low and moderate income

persons. The certification shall be submitted with the budget plan or

application for final review and shall clearly identify the remediation site

by name, address, tax parcel identification number(s) and Illinois

inventory identification number.

The fee for a review under this Subpart G shall be in addition to any other fees,

payments or assessments under Title XVII of the Act and this Part. The fee

shall be paid by check or money order made payable to “Treasurer - State of

Illinois, for Deposit in the Hazardous Waste Fund.” The check or money order

shall include the Illinois inventory identification number and the Federal

Employer Identification Number (FEIN) or Social Security Number (SSN) of

the RA.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

Section 740.725

Remediation Costs

Activities, materials, labor, equipment, structure and service costs that may be

approved by the Agency as remediation costs for the environmental remediation

tax credit under Section 201(l) of the Illinois Income Tax Act [35 ILCS

5/201(l)] include, but are not limited to, the following:

Preparation of bid documents and contracts for procurement of

contractors, subcontractors, analytical and testing laboratories, labor,

services and suppliers of equipment and materials;

Engineering services performed in accordance with Section 58.6 of the

Act and implementing regulations at Sections 740.235 and 740.405 of

this Part;

Site assessment and remedial investigation activities conducted in

accordance with Sections 740.410, 740.415, 740.420 and 740.430 of

this Part;

Report or plan preparation conducted in accordance with Sections

740.425, 740.435, 740.445, 740.450 and 740.455 of this Part;

Collection, analysies or measurement of site samples in accordance with

Section 740.415(d) of this Part;

Groundwater monitoring well installation, operation, maintenance and

construction materials;

Removal, excavation, consolidation, preparation, containerization,

packaging, transportation, treatment or off-site disposal of wastes,

environmental media (e.g., soils, sediments, groundwater, surface

water, debris), containers or equipment contaminated with regulated

substances or pesticides at concentrations exceeding remediation

objectives pursuant to an approved Remediation Objectives Report in

accordance with Section 740.445 of this Part. Activities must be in

compliance with all applicable state or federal statutes and regulations;

Clean backfill materials in quantities minimally necessary to replace soils

excavated and disposed off-site that were contaminated with regulated

substances or pesticides at levels exceeding remediation objectives

pursuant to an approved Remediation Objectives Report in accordance

with Section 740.445 of this Part;

Transportation, preparation and placement of clean backfill materials

pursuant to an approved Remedial Action Plan in accordance with

Section 740.450 of this Part;

10)

Design, testing, permitting, construction, monitoring and maintenance of

on-site treatment systems pursuant to an approved Remedial Action Plan

in accordance with Section 740.450 of this Part;

11)

Engineering costs associated with preparation of a budget plan in

accordance with Section 740.705 of this Subpart or an aApplication for

fFinal rReview of rRemediation cCosts in accordance with Section

740.710 of this Subpart if prepared before the issuance of the No Further

Remediation LetterNFR letter (by the Agency or by operation of law);

12)

Removal or replacement of concrete, asphalt or paving to the extent

necessary to achieve remediation objectives pursuant to an approved

Remedial Action Plan in accordance with Section 740.450 of this Part;

13)

Clay, soil, concrete, asphalt or other appropriate geologic materials as a

cap, barrier or cover to the extent necessary to achieve remediation

objectives pursuant to an approved Remedial Action Plan in accordance

with Section 740.450 of this Part;

14)

Placement of clay, soil, concrete, asphalt or other appropriate geologic

materials as a cap, barrier or cover to the extent necessary to achieve

remediation objectives pursuant to an approved Remedial Action Plan in

accordance with Section 740.450 of this Part;

15)

Destruction or dismantling and reassembly of above-grade structures to

the extent that are necessary to achieve remediation objectives pursuant

to an approved Remedial Action Plan in accordance with Section

740.450 of this Part;.

16) Costs associated with obtaining a special waste generator identification

number not to exceed $100.

An RA may submit a request for review of remediation costs that includes an

itemized accounting and documentation of costs associated with activities,

materials, labor, equipment, structures or services not identified in subsection

(a) of this Section if the RA submits detailed information demonstrating that

those items are necessaryessential for compliance with this Part 740, 35 Ill.

Adm. Code 742 and the approved Remedial Action Plan.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

Section 740.730

Ineligible Costs

Costs ineligible for the environmental remediation tax credit under Section 201(l) of the

Illinois Income Tax Act [35 ILCS 5/201(l)] include, but are not limited to, the following:

Costs not incurred by the RA;

Costs incurred for activities, materials, labor or services relative to remediation

at a site other than the site for which the No Further Remediation Letter was

issued;

Costs for remediating a release or substantial threat of a release of regulated

substances or pesticides that was caused or contributed to in any material respect

by the RA, any related party (as described in Section 201(l) of the Illinois

Income Tax Act [35 ILCS 5/201(l)]) or any person whosewho tax attributes the

RA has succeeded to under Section 381 of the Internal Revenue Code;

Costs incurred before January 1, 1998, or more than 12 months before

enrollment of the site in the Site Remediation Program, or after the date of

issuance of a No Further Remediation Letter issued pursuant to Section 58.10 of

the Act and Subpart F of this Part;

Costs that have been or will be deducted at any time under the Internal Revenue

Code or taken into account in calculating an environmental remediation credit

granted against a tax imposed under the provisions of the Internal Revenue

Code;

Costs associated with material improvements to the extent that such

improvements are not necessary to achieve remediation objectives pursuant to an

approved Remedial Action Plan in accordance with Section 740.450 of this

Partthat serve incidentally as engineered barriers and that are not primarily

designed or intended to eliminate or mitigate exposures to, or migration of,

regulated substances or pesticides;

Costs or losses resulting from business interruption;

Costs incurred as a result of vandalism, theft, negligence or fraudulent activity

by the RA or the agent of the RA;

Costs incurred as a result of negligence in the practice of professional

engineering or unprofessional conduct as defined in Section 425 of the

Professional Engineering Practice Act of 1989 [225235 ILCS 325/425];

Costs incurred as a result of negligence or unprofessional conduct by any

contractor, subcontractor, or other person providing remediation services at the

site;

Costs associated with replacement of above-grade structures destroyed or

damaged during remediation activities to the extent such destruction or damage

and such replacement is not necessary to achieve remediation objectives

pursuant to an approved Remedial Action Plan in accordance with Section

740.450 of this Part;

Costs associated with obtaining a special waste generator identification number

in excess of the lesser of $250 or the actual time spent in obtaining a special

waste generator identification number;

lm)

Attorney fees;

mn)

Purchase costs of non-consumable materials, supplies, equipment or tools,

except that a reasonable rate may be charged for the usage of such materials,

supplies, equipment or tools;

no)

Costs for repairs or replacement of equipment or tools due to neglect, improper

or inadequate maintenance, improper use, loss or theft;

op)

Costs associated with activities that violate any provision of the Act or Board,

Agency or Illinois Department of Transportation regulations;

pq)

Costs associated with improperly installed or maintained groundwater

monitoring wells;

qr)

Costs associated with unnecessary, irrelevant or improperly conducted activities,

including, but not limited to, data collection, testing, measurement, reporting,

analysies, modeling, risk assessment or sample collection, transportation,

measurement, analysies or testing;

rs)

Stand-by or demurrage costs;

st)

Interest or finance costs charged as direct costs;

tu)

Insurance costs charged as direct costs;

uv)

Indirect costs for personnel, labor, materials, services or equipment charged as

direct costs;

vw)

Costs associated with landscaping, vegetative cover, trees, shrubs and aesthetic

considerations;

wx)

Costs associated with activities, materials, labor, equipment, structures or

services to the extent they are not necessaryessential for compliance with this

Part 740, 35 Ill. Adm. Code 742 and the approved Remedial Action Plan;

xy)

Costs determined to be incorrect as a result of a mathematical, billing or

accounting error;

yz)

Costs that are not adequately documented;

zaa)

Costs that are determined to be unreasonable.

(Source: Added at 22 Ill. Reg. ____, effective _____________)

IT IS SO ORDERED.

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

the above opinion and order was adopted on the 8th day of July 1998 by a vote of 5-0.

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board