REC~VED
CLERK’S OFFICE
BEFORE THE
POLLUTION CONTROL BOARD
APR 09
2004
OF THE STATE
OF ILLINOIS
STATE
OF ILLINOIS
Pollution Control Board
Dorothy M. Gunn, Clerk
Stephen F. Hedinger
Illinois Pollution Control Board
Hedinger Law Office
JamesR. Thompson Center
2601
South Fifth Street
100 West Randolph Street
Springfield, IL
62703
Suite 11-500
Chicago, IL 60601
Bradley P. Halloran, Hearing Officer
Illinois Pollution Control Board
James R. Thompson Center
100 West Randolph Street
Suite 11-500
Chicago, IL
60601
PLEASE
TAKE
NOTICE
that
I
have today
filed with
the
office of the
Clerk of the
Pollution
Control Board a MOTION FOR LEAVE TO FILE
INSTANTER and RESPONSE TO PETITIONER’S
BRIEF,
copies of which are herewith served upon you.
Respectfully submitted,
ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
Respo
nt
J.i
Assistant Counsel
Special Assistant Attorney General
Division of Legal Counsel
1021
North Grand Avenue, East
P.O. Box 19276
Springfield, Illinois 62794-9276
217/782-5544
217/782-9143
(TDD)
Dated: April
7, 2004
SWIF-T-FOOD MART,
)
Petitioner,
)
v.
)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
)
PCB No. 03-185
(UST Appeal)
NOTICE
REC~VED
CLERK’S OFFICE
BEFORE THE POLLUTION CONTROL BOARD
OF THE STATE OF ILLINOIS
APR 09
2004
STATE OF ILLINOIS
SWIFTFOOD MART,
)
Pollution Control Board
Petitioner,
)
v.
)
PCB No. 03-185
ILLINOIS ENVIRONMENTAL
)
(1ST
Appeal)
PROTECTION AGENCY,
)
-
Respondent.
)
MOTION
FOR LEAVE TO FILE
INSTANTER
THE RESPONSE TO
PETITIONER’S BRIEF
NOW COMES
the Respondent, the
Illinois
Environmental
Protection Agency (“Illinois
EPA”), by one
of its
attorneys,
John J.
Kim, Assistant
Counsel
and
Special Assistant
Attorney
General, and, pursuant to
35
Iii.
Adm.
Code
101.500,
hereby requests that the Illinois Pollution
Control
Board
(“Board”)
grant
the
Illinois
EPA
leave
to
file
instanter
-
the
Response
to
Petitioner’s Brief.
In support ofthis motion, the Illinois EPA states as follows:
1.
Pursuant
to an order entered by the Hearing Officer on March 4, 2004,
the Illinois
EPA was
to file its Response to
the Petitioner’s Briefon or before April
6, 2004.
Unfortunately,
the current workload ofthe undersigned attorney, including filing ofa post-hearing brief with the
Board in
a different matter on April
5,
2004
(Saline County Landfill,
Inc.
v.
Illinois
EPA, PCB
04-117), has delayed the filing ofthe response.
2.
The Illinois EPA does not believe the Petitioner will be unduly prejudiced by this
one
day
delay
in
filing
the response.
A
courtesy copy
of this
response will be
telefaxed
to
opposing counsel to expedite his receipt ofthe response.
1
WHEREFORE,
for
the
reasons
stated
above,
the
Illinois
EPA
hereby
respectfully
requests that the Board grant the Illinois
EPA
leave to
file instanter the Response to
Petitioner’s
Brief.
Respectfully submitted,
ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
Assistant Counsel
Special Assistant Attorney General
Division ofLegal Counsel
1021 North Grand Avenue East
P.O. Box
19276
Springfield, Illinois 62794-9276
217/782-5544
217/782-9143 (TDD)
Dated: April 7, 2004
This filing submitted on
recycled paper.
2
REC~iVED
CLERK’S OFFICE
BEFORE THE POLLUTION CONTROL BOARD
APR 092004
OF
THE STATE
OF ILLINOIS
STATE
OF ILLINOIS
Pollution Control
Board
SWIF-T-FOOD MART,
)
Petitioner,
)
v.
)
PCB No. 03-185
ILLINOIS ENVIRONMENTAL
)
(UST Appeal)
PROTECTION AGENCY,
)
-
Respondent.
)
RESPONSE TO PETITIONER’S BRIEF
NOW COMES
the Respondent,
the Illinois
Environmental Protection
Agency (“Illinois
EPA”), by one of its
attorneys,
John J. Kim,
Assistant
Counsel
and
Special Assistant
Attorney
General, and, pursuant to
an
order entered by the Hearing Officer dated March
4,
2004,
hereby
submits
its
Response
to
the
Petitioner’s
Closing
Brief
(“Petitioner’s
brief’)
to
the
Illinois
Pollution Control Board (“Board”).
I.
BURDEN
OF PROOF
Pursuant
to
Section
105.112(a)
of the
Board’s
procedural
rules
(35
Ill.
Adm.
Code
105.112(a)), the burden ofproofshall be on the petitioner.
Therefore, Swif-T Food Mart (“Swif-
T”) must
demonstrate to
the Board that it has satisfied that burden.
It
cannot merely argue that
the Illinois EPA’s
decision or decision-making process was flawed; rather, Swif-T must present
evidence and arguments to demonstrates that, by virtue ofthe submittals to the Illinois
EPA that
led
to
the
decision
under
appeal,
it
satisfied
its
requirements
pursuant
to
the,
Illinois
En~ironmenta1
Protection Act
(“Act”) and underlying regulations.
The failure
by
Swif-T to
do
so means the Board must find in favor ofthe Illinois EPA and affirm the decision under appeal.
II.
STANDARD
OF REVIEW
Section 57.8(i) ofthe Act
(415 ILCS
5/57.8(i))
grants an individual the right to
appeal a
determination
of the
Illinois
EPA
to
the
Board
pursuant
to
Section
40 of the
Act
(415’
ILCS
1
5/40).
Section
40
of the
Act,
the
general
appeal
section
for permits,
has
been
used
by
the
legislature
as
the basis
for this
type
of appeal
to
the Board.
Thus,
when reviewing an
Illinois
EPA final decision ofineligibility for reimbursement from the Underground Storage Tank Fund,
the Board must
decide
whether or not the application
submitted
demonstrates
compliance with
the Act
and
Board
regulations.
Broderick
Teaming Company
v.
Illinois
EPA, PCB
00-187
(December 7, 2000).
In deciding
whether the Illinois
EPA’s
decision under appeal here was appropriate,
the
Board
must
look
to
the documents within the Administrative
Record
and
exhibits
presented at
hearing, along with hearing testimony.’
Based upon that information, evidence and testimony,
as
applied
to
the
Act
and
the Board’s
regulations,
the
Illinois
EPA
respectfully requests
that
the
Board enter an order affirming the Illinois EPA’s decision dated March 3, 2003.
III.
STATEMENT OF FACTS
The relevant facts are fairly straightforward.
On or about August
10,
1995,
the
Petitioner or one ofits agents reported a suspected release from underground storage tanks at the
Petitioner’s
facility at
1100
Belvidere Road in Waukegan,
Illinois.
The release
was reported to
the Illinois
Emergency Management Agency (“IEMA”), who in
turn assigned
Incident Number
951716.
Exs.
1,
2.
In September
1995,
the Petitioner submitted
an application to the Office of
the
State Fire Marshal
(“OSFM”)
seeking an eligibility and deductibility determination for three
und’erground
storage
tanks
that
had
releases
out
of
a
total
of eight
tanks
at
the
site.
The
Petitioner stated in the application that only three tanks had experienced releases.
Ex. 2, pp.
2, 4.
On
January
8,
1996,
OSFM
issued
a
decision
finding
that
three
tanks
were
eligible
for
reimbursement
in
response
to
the
“referenced
occurrence”
(identified
by
incident
number
References
to
the
Administrative
Record will
hereinafter be
made
as,
“AR,
p.
.“
Also, references
to
the
Respondent’s
exhibits
admitted
at
the hearing
will
hereinafter be
made
as,
“Ex.
#,
p.
.“
References
to
the
hearing transcript will hereinafter be made as, “TR, p.
.“
2
951716).
The decision further stated that a
deductible of $10,000.00
must be met
before costs
could be paid.
The decision was
a final decision that
could be
appealed to
the Board.
AR, pp.
74-76.
No evidence has been presented that any such appeal was filed.
On May 2,
1996,
the
Petitioner reported another suspected release
to
IEMA, this time
reporting that all
eight tanks
at the site had experienced a release.
A new number,
960723,
was
assigned by IEMA.
Ex.
5.
Following that date, the Petitioner submitted
another application for
an eligibility and deductibility determination to
OSFM, on or about February 19,
1999.
Ex.
6.
In
that application, the Petitioner stated that of the eight tanks at the site, all
eight had releases that
were reported to IEMA on May 2,
1996.
Ex. 6, p. 4.
Also in the application,
the Petitioner noted
that another incident (number 951716) had been reported at the site.
The application form states
in part:
5.
Occurrence
for which
you
intend
to
seek
reimbursement:
Incident
#
960723.
Other
incident
numbers
reported
at
the
site:
951716.
(A
separate
application must be
filed for each occurrence.
Please indicate if any of
the
additional
incident numbers
are erroneously reported incidents,
or a
second
reporting of the
same occurrence for which
you
intend
to
seek
reimbursement.)
Ex.
6,
p.
2.
There
is
no
statement or notation
by the
Petitioner
on
the form
that
indicates
it
believes
the 960723
incident number is
a re-reporting of the 951716
incident.
Also, the OSFM
form clearly states that the
incident number being provided
is
done for a separate
occurrence,
I
unless otherwise disputed or‘addressed by the Petitioner (which was not done here).
Based
on
that
1999
eligibility and
deductible application,
OSFM issued
a
second final
decision on November
18,
1999.
AR, pp.
71-73.
That final decision provides that
eight
tanks
are
now
eligible
for
reimbursement.
The
final
decision
also
states,
“The
Reimbursement
Eligibility
and
Deductible Application received on November 4,
1999
for the above referenced
3
occurrence has
been reviewed.
*
*
*
It has been
determined that
you
are
eligible
to
seek
payment of costs
in
excess
of $10,000.00.
The
costs
must
be
in
response
to
the
occurrence
referenced above and associated with the following tanks:
listing
of the eight tanks.”
AR, p.
71.
The letter identifies incident number 960723 as being the occurrence in question.
The final
decision
constituted
an
appealable
decision
issued
by
OSFM.
AR,
p.
72.
The
Petitioner
provided no evidence that an appeal ofthat decision was ever filed.
Following
receipt
of those
OSFM
decisions,
there
was
correspondence
between
the
Petitioner
and the
Illinois
EPA regarding whether or not
the
two
incident numbers
were re-
reports ofone incident, e.g., Exs.
7,
8 and 9.
On
April
9,
2001,
the
Illinois
EPA
issued
a
final
decision
approving
a
budget
that
contained
certain
costs
associated
with
physical
soil
classification
and
groundwater
investigation.
Ex.
10.
As part of the final decision, an
attachment was
included that listed
the
line item
approvals for different types of work.
Among the different
line items was
“Handling
Charges” in the amount of$211.08.
Ex.
10, p. 3.
On or about June 21,
2001,
the Illinois
EPA received a request for reimbursement from
the Petitioner for costs associated with the site classification work plan and budget.
Ex.
12.
The
request identified both incident numbers
on the first page ofthe request, though it later listed
the
960723
incident number for each of the
tanks
at the
site.
Ex.
12,
p.
2.
On July
25,
2Q01, the
Illirtois EPA issued
a
final decision approving reimbursement for some of the
costs
sought
for
reimbursement.
The
final
decision
includes
an
assessment
of a
$10,000.00
deductible,
and
references incident number 960723.
Ex.
14.
Since the Petitioner has presented no evidence
that
the final decision was ever appealed, any arguments based
on the content of the July
2001
final
decision
have
been ‘waived.
Also,
the
Petitioner
has
not
shown
that
the
Illinois
EPA has
4
approved any other reimbursement in association with incident number 960723.
In other words,
the July
25,
2001
final decision
is the only decision that approves payment
for costs
associated
with incident number 960723.
Later,
on
three different occasions
and
in three different
final decisions, the Illinois EPA
approved
either
the
budget
or
amended
budget
for
costs
associated
with
the
high
priority
corrective action plan (“HCAP”).
On March
19,
2002,
the Illinois
EPA issued
a final decision
approving with modifications
the proposed HCAP budget.
AR, pp.
77-81.
The final decision
included an attachment that
listed the approved amounts.
No
costs
were approved for handling
charges.
AR, p.
79.
On June
12,
2002,
the
Illinois
EPA
issued
another final
decision modifying
a
HCAP
budget for the Petitioner’s
site.’ AR,
pp.
82-84.
The final decision included an attached listing
line item approved amounts.
Again, no costs were approved for handling charges.
AR, p.
84.
Finally,
on
August
7,
2002,
the
Illinois
EPA
issued
another
final
decision
further
modifying the HCAP budget.
Ex.
18.
The attachment to
the final decision does not include any
costs
approved for the handling charge line item.
Ex.
18, p.
2.
Each ofthe three final decisions
approving
or
modifying
the
HCAP
budget
referenced
both
incident
numbers
(951716
and
960723).
AR, pp.
77,
82; Ex.
18.
The Petitioner has presented no evidence that any ofthe three
final decisions approving or modifying the HCAP budget were appealed.
~
On or about November 7,
2002,
the Petitioner submitted a reimbursement request to
the
Illinois
EPA.
AR,
pp.
14-84.
The request
sought
payments
associated
with
the HCAP
and
budget.
AR, p.
14.
The Petitioner listed both incident numbers on the first page of the request,
though it later referenced the 960723
incident number for each of the
eight tanks.
AR, pp.
14-
5
15.
The Petitioner also stated that the
costs
in the request were
incurred between December
1,
1995
to November 20, 2001.
AR, p.
66.
On March
3,
2003, the Illinois
EPA issued
a final decision in response to the November
2002 reimbursement request.
AR, pp.
1-3.
That decision, and the deductions made therein,
are
the subject of this
appeal.
Included in
the
final decision
is
the
assessment of the $10,000.00
deductible.
The final decision references
incident number 951716.
AR,
p.
1.
Other than this
final decision, the Petitioner has presented no
evidence that any
other payments for costs have
been approved in reference to
the 951716 incident number.
Thus,
the March 2003
final decision
is the only one that has approved costs in conjunction with the 951716 incident number.
At the hearing in this
case, the Illinois EPA staff responsible for making the deductions
were
called
to
testify.
Eric
Kuhiman,
a
project
manager
in
the
Illinois
EPA’s
Leaking
Underground Storage Tank (“LUST”) Section,
testified that he determined that two
deductibles
should apply for the
site based on the fact that
OSFM had issued two deductible decisions.
TR,
pp. 36-37.
Mr. Kuhlman
also testified that his
interpretation that
two
deductibles should
apply was
shared
by
his
supervisor,
Harry Chappel.
TR,
p.
64.
He
also
stated
that if he
felt that
his
position,
and
that
of
his
supervisor’s,
was
correct,
and
there
was. a
possibility
that
earlier
decisions were incorrect, the proper thing to do would be to rectify any error and state th~
correct
pos?tion.
TR,p.66.
As
to
his
involvement
in
the
issuance
of approvals
for budgets
for
the
HCAP,
Mr.
Kuhlman
answered
the
question of whether amounts
in
the
line
items
of approved
budgets
should be considered as maximum amounts, minimum amounts, or guaranteed amounts in terms
6
of reimbursement.
He testified that any approved proposed budget is
the maximum amount an
owner or operator ofan underground storage tank could receive.
TR, p. 79.
Niki Weller of the Illinois
EPA also
provided testimony.
She
explained the method by
which
she
deducted
certain
markups
included
in
the November
2002
reimbursement request.
TR,
pp.
121-125.
She
also
testified that
the
Illinois
EPA believes
there is
a
prime
contractor
associated
with
corrective action
that
should receive a handling charge.
TR,
p.
125.
Between
subcontractors
and
the
prime contractor,
only
the prime
contractor should
receive
a
handling
charge.
I4~.
IV.
THE ILLINOIS EPA
PROPERLY ASSESSED A $10,000.00
DEDUCTIBLE
The Petitioner argues that the Illinois EPA’s decision to apply the $10,000.00 deductible
to
the present reimbursement request was
contrary to
law
and
fact.
Nothing
could be
further
from the truth, since the Illinois EPA’s decision is strongly supported both legally and factually.
A.
The Illinois EPA
did not reconsider or reverse any past decision
The Petitioner alleges that based
upon a prior
submittal, the Illinois EPA had previously
rendered a final decision on the issue of how many deductibles should apply, the answer being
that
only
one
was
appropriate.
Petitioner’s
brief,
p.
6.
This
is
a
false
statement,
and
not
surprisingly the referenced “prior submittal”
is neither identified or explained.
Here,
there have been only
two
approvals of payment
for costs
associated
with
either
inci~lentnumber 951716
or 960723.
The first was issued on July
25,
2001,
for incident number
960723,
and
a
$10,000.00
deductible was
assessed.
Ex.
14.
No
appeal
was
taken
from
that
decision.
Also, that decision did not include
any statement regarding the Illinois
EPA’s position
as
to whether a
separate deductible should
apply for incident number
951716,
since
that
issue
was not
raised.
There
was
simply no
reason for any
gratuitous
statement of that
kind ‘to
be
7
included in the final decision.
And, regardless of whether one or both incident numbers
should
have been
associated with that
final
decision, the
fact
is
that the
Petitioner did not
appeal
the
decision.
Therefore,
any complaints or arguments associated with that decision have long since
been waived.
The second
approval
for costs
is
the decision now under review.
That decision clearly
identifies incident number 951716
as the occurrence in question, and the
$10,000.00 deductible
associated with that occurrence was properly applied.
But no
final decision issued by the Illinois
EPA
has
been
revisited
or reconsidered
in
any
way,
since
no
previous
decision
approving
reimbursement ofcosts
for incident number 951716 has ever been issued other than the decision
under
review.
There
is
simply no
past decision that
could have been
reconsidered.
The
only
possible
fact
that
the
Petitioner
can
claim
was
contradicted
were
pieces
of
correspondence
between the Petitioner and the Illinois EPA.
However, any representations made by the Illinois
EPA in
any such correspondence has not been
shown to
have played any part in
any past final
decision.
At best,
the
Petitioner might be
able
to
argue
that
the
Illinois
EPA has
changed its
interpretation ofthe question ofwhether one or two deductibles apply—but the Petitioner cannot
argue that
the
Illinois
EPA has
reconsidered a
final decision.
Unless and
until
multiple
final
decisions
have
been
reached
on
the
same
issue,
the
Illinois
EPA
cannot
be
said
to
have
contradicted itself.
‘
a
Even
assuming
arguendo
that
the
Illinois
EPA
did
change
its
interpretation
of this
situation, the Board has recognized that the Illinois EPA’s
prior actions, if in error,
are properly
remedied by correcting the
error, not perpetuating it.
State Bank ofWhittington v.
Illinois EPA,
PCB 92-152
(June
3,
1993);
Chemrex,
Inc.
v.
Illinois
EPA, PCB 92-123
(February 4,
1993).
Again,
the Illinois
EPA has not taken any past action other than to make certain statements in
8
correspondence.2
But
even
if that
were
to
be
taken as
a
memorialization of some
kind,
the
proper course of action would be to
correct the wrong interpretation and
proceed with the right
decision.
The Illinois
EPA believes that it is
unnecessary to go to those lengths to justify its final
decision, but if taken to
that extreme the Board has recognized that
the final decision here, and
the reasoning thereto, i~
the correct means of resolution.
B.
The OSFM decisions required that the Illinois EPA apply
two
deductibles
Mr.
Kuhlman testified that his
decision to
apply a deductible in
this
final decision was
based
on
the
fact
that
OSFM
had
issued
two
separate
decisions,
imposing
two
separate
deductibles.
TR, pp.
36-37.
The Board has noted that the Illinois EPA must act in accord with
the
division
of responsibilities
established
in
the
Act’s
regulatory
scheme.
Since
neither
the
Illinois EPA does not have the authority to review decisions made by OSFM, the Illinois EPA is
bound
to
accept OSFM’s
decisions.
Kean
Oil
Co.
v.
Illinois
EPA, PCB
92-60 (September
5,
1996), p. 6.
Here,
it
is
clear
from
OSFM’s
eligibility
and
deductible
application
forms
and
final
decisions that
the Petitioner
sought,
and
received,
two
different
deductible
determinations
for
two
different
occurrences.
There
is
no
question
that
in
response
to
the
September
1995
application,
the
Petitioner
received
a
decision
that
incident
number
951716
related
to
an
occurrence
that
was
subject
to
a
$10,000.00
deductible.
Similarly,
the
application
form
the
Petifioner filed with OSFM in
February
1999
clearly asked whether any other incident number
reported at the site was for a re-reporting ofthe same occurrence.
Ex.
6, p. 2.
The Petitioner did
not indicate that incident number 951716
referenced a different
occurrence than that referenced
by incident number 960723.
2
Correctly, the Petitioner
has not made
any unfounded arguments that
any
past statements
in
correspondence act to
estop
the Illinois
EPA
from
the
action takenin
the March 2003
fmal decision.
9
Accordingly, the final (unappealed)
decision issued
by OSFM in November
1999
clearly
stated that the occurrence for incident number 960723 was the subject ofthe final decision.
AR,
p.
71.
Since
the
Petitioner
did
not
appeal
either
of the
OSFM
final
decisions,
there
is
no
conclusion that can be
reached
other than the Petitioner agreed with
OSFM
that
a
$10,000.00
deductible applied
to
two
separate occurrences,
one referenced by
incident number 951716
and
the other by incident number 960723.
The Illinois EPA has no choice but to
follow the decisions
issued by OSFM, since those determinations are delegated solely to
OSFM.3
Based
on the information provided by the Petitioner to OSFM, and the OSFM decisions,
there is no
doubt that there were two
occurrences at the site.
The Petitioner argues
that nothing
generated
by
OSFM
or
found
in
the
administrative
record
supports
a
finding
that
two
occurrences
were
involved.
Petitioner’s
brief,
p.
8.
That
statement
totally
ignores
the
information that
the
Petitioner itself provided,
the
decisions
(and
wording therein)
issued
by
OSFM,
and the
failure
by the Petitioner to
appeal
the OSFM decisions.
In fact and
law, there
were two occurrences at the site, and the Petitioner cannot dispute that finding.
C.
The Illinois EPA’s application of a deductible is consistent with the Act and regulations
The
Petitioner
claims
that
the
imposition
of
a
deductible
here
was
based
on
a
clear
misunderstanding ofstatutory requirements.
Petitioner’s brief, p.
8.
Just the opposite is
true, as
the Illinois EPA’s interpretation ofthe
Act and underlying regulations is well-founded, while the
position taken by the Petitioner is misleading at best.
~ The
Illinois
EPA properly
applied
incident
number
951716
to
the present
final decision.
The
reimbursement
request submitted by the Petitioner was
somewhat confusing in that at times both incident numbers were listed,
and
at other times only one incident number was listed.
AR, pp.
14-15.
However,
from a practical standpoint,
since the
Petitionerdid
not provide any apportionment of costs
between
one incident
number to the
other,
the
Illinois
EPA
had to apply the
951716 number based on the dates the costs were incurred.
The Petitionercertified that the costs in
the reimbursement request were incurred from December
1,
1995
to November
20, 2001.
The date that the
second
incident was reported to IEMA was in May
1996; therefore, at least some if not all of the costs in the reimbursement
request must
have
been attributed
to
incident
number
951716.
It
was
reasonable
and
appropriate
to
apply
the
951716 incident number to the review of the reimbursement request.
10
The Petitioner claims that
only one deductible shall apply per
underground
storage tank
site.
~
In support of that allegation, the Petitioner cites to
Section
57.8(a)(4)
of the Act (415
ILCS
5/57.8(a)(4)).
However, a careful reading ofthat
section indicates a different conclusion.
Section 57.8 provides in pertinent part:
Section 57.8.
*
*
*
Ifan owner or operator is eligible to access the Underground
Storage
Tank
Fund
pursuant
to
an
Office
of
State
Fire
Marshal
eligibility/deductible final determination letter issued in
accordance with Section
57.9,
the owner or operator may submit a complete application for final or partial
payment to the Agency for activities taken in response to
a confirmed release.
*
*
*
(a)
*
*
*
The owner or operator may submit an application for payment
for activities performed at a site after completion ofthe requirements of Sections
57.6
and
57.7,
or
after
completion
of
any
other
required
activities
at
the
underground storage tank
site.
*
*
*
(4)
Any deductible, as determined pursuant to the Office ofthe
State
Fire
Marshal’s
eligibility
and
deductibility
final
determination
in
accordance with Section
57.9,
shall be subtracted from any payment invoice paid
to
an
eligible
owner
or
operator.
Only
one
deductible
shall
apply
per
underground storage tank
site.
This
language shows that,
read as a whole, two points are made.
First, the context of the
language
in
the
beginning
of
Section
57.8
of the
Act
makes
reference
to
a
single
OSFM
eligibility/deductible final decision, not multiple decisions for the same site as was the case here.
Also, there are repeated references to Section
57.9
ofthe Act (415 ILCS
5/57.9).
Section
57.9(b)(3)
ofthe Act (415 ILCS
5/57.9(b)(3))
provides in part that, “A de~Iuctible
shari apply annually for each site at which costs were incurred under
a claim submitted pursuant
to
this
Title,
except
that if corrective action
in
response
to
an
occurrence
takes place over
a
period ofmore than one year, in subsequent years, no deductible shall apply for costs incurred in
response to such occurrence.”
11
Ifthe Board were to
accept the Petitioner’s
argument that
only one deductible can ever be
applied to
an
underground
storage
tank
site,
regardless of how
many occurrences
have
taken
place, then there would be no need for any ofthe language cited above.
There would
simply be
one deductible period.
Also,
Section 57.9(b) makes repeated references to tying a deductible to
an occurrence, just as done in the OSFM final decisions.
That is
the correct interpretation, that a
separate
deductible is
applied to each separate occurrence.
If that
is
the case, then the language
in Section
57.9(b)
makes sense.
Also, in
Section
732.603(b) of the
Board’s regulations
(35 Ill.
Adm.
Code
732.603(b)),
the rules regarding deductibles are set forth.
Included is Section 732.603(b)(2), which states that
only one deductible shall apply per occurrence.
Again, if the Petitioner’s
argument is
followed,
then the Board’s regulation has no meaning.
The
Illinois
EPA
interprets
the
Act
and
the
Board’s
regulations
to
mean
that
one
deductible
shall
apply
to
one
separate
occurrence.
Multiple
occurrences
result
in
multiple
deductibles, as is
undoubtedly the position ofOSFM given the language in their final decisions.
The Petitioner
has
misconstrued
some of the language
in
Section
57.8(a)(4)
of the
Act,
and
reading it in
a vacuum renders
other provisions of the Act and
Board regulations meaningless.
Rather,
the
language
relied
on
by
the
Petitioner
should
be
interpreted
to
mean that
multiple
deductibles without any finding or consideration ofmultiple
occurrences
should not be
~llowed
for, 4and only one deductible should apply per site if there is only one occurrence.
Further,
the Board’s
regulations
provide
the answer in
the
proper
interpretation
of the
language in question found in Section
57.8(a)(4).
Section 732.603(b) ofthe Board’s regulations
contains other deductible rules, such as if multiple incident numbers are issued for a single site in
the
same
calendar year,
then only
one
deductible
shall
apply for those
incidents,
even
if the
12
incidents
relate
to
more than one
occurrence.4
Also,
the rule
is
stated
that
if more than
one
deductible determination
is
made, the higher deductible
shall apply.
Thus,
if OSFM for some
reason
issues
multiple
deductibles
for the same
occurrence,
only
the
,~
higher
deductible
shall
apply.
This
is
consistent
with
the
language
in
Section
57.8(a)(4)
of the
Act
that
only
one
deductible
shall
app1~’per
site;
notably,
Section
57.8(a)(4)
is
not
couched
in
terms
of
an
occurrence
as
is
done
in
Section
57.9
of the
Act
and
in
Section
732.603
of the
Board’s
regulations.
Thus,
applying
the
language
in
Section
57.8(a)(4)
to
an
argument
involving
deductibles and occurrences is misplaced.
V.
THE ILLINOIS EPA PROPERLY DENIED HANDLING CHARGES
The Illinois EPA’s
decision to
deduct handling charges from the reimbursement request
was proper for several reasons.
As stated in the final decision, the request for handling charges
exceeded the
approved
budgeted amount,
and
further it would
be
inappropriate
to
allow
both
percentage markups and a handling charge.
AR, p. 3.
A.
The handling charges were not approved in
a budget
The
Petitioner
argues
that
the
handling
charges
in
question,
which
in
reality
were
markups passed on from a subcontractor to the primary contractor, were nonetheless included in
the approved budget.
Petitioner’s
brief,
p.
9.
This
argument
is
based on the fact that
the
costs
that were deducted from the reimbursement request were included in costs that were approved as
“Fidld Purchases” in a June 12, 2002
final decision.
AR, pp. 82,
84.
In the reimbursement request that led to
final decision under appeal, the Petitioner noted
that $229,800.00 had been approved as “Field Purchases and Other Costs.”
AR, p.
16.
Also, the
‘~
This language
is not applicable
to the present situation since the
multiple incident numbers and occurrences were
not in the
same
calendar
year.
However,
the
language
provides
an
exception to
the
general rule
that
multiple
occurrences
result
in
multiple
deductibles
(i.e.,
unless
the
occurrences
are
in
the
same
calendar
year),
thus
recognizing the general rule itself.
13
Petitioner
apparently sought
an
amendment to
the amount
of handling
charges that
had
been
approved to date, as evidenced by the notation of“Amendment Requested.”
jç~That notation is
important
for
several
reasons.
First,
it
evidences
the
Petitioner’s
acknowledgment
that
an
amendment
in the amount
of handling
charges
approved
as of the date of submission of the
reimbursement
request
was
needed;
this
was
especially
true
since
no
costs
had
ever
been
approved for handling charges.
Also, it demonstrates
that, just as was done when the Petitioner
sought
costs
associated
with
site classification, there was a
separate
and
distinct
line
item
for
handling
charges on the Illinois EPA’s
forms that
directly corresponded to
the amount of costs
for handling charges that could be approved.
Section
732.405(b) of the
Board’s regulations
(35
Ill.
Adm.
Code
732.405(b))
clearly
states
that
any
owner
or
operator
of
an
underground
storage
tank
that
intends
to
seek
reimbursement shall submit a budget that will include, inter alia, a line item estimate ofall costs
associated
with
relevant
activities.
Section
732.405(b)
also
provides
that
budgets
shall
be
submitted on forms prescribed and provided by the Illinois EPA.
As
seen
by
the
first
page of the
“Budget
and
Billing
Form
for Leaking
Underground
Storage Tank Sites,” the budget and billing
form is intended to be used for submission of both a
budget
and
a
request
for
reimbursement,
depending
on
which
items
are
checked
by
the
owner/operator.
AR,
p.
14.
This
is
done
so that
approvals for budget
line
items
will, directly
cor~espondto
requests
made
for
reimbursement.
The
different
line
items
for
a
budget
or
reimbursement request are listed,
and
the items
listed in the “Amount approved in the Budget”
section
directly correspond
to
the
items
listed
in
the “Amount requested
for Reimbursement”
section.
AR, p.
16.
It
is
clear on the face of the reimbursement request that of the $8,275.18
14
sought
in
handling
charges
reimbursement,
none
had
been
approved
to
date
though
an
amendment was requested. j~
So based
on nothing more than the content of the reimbursement application
and the fact
that no handling charges had been approved in any budget as ofthe date ofthe final decision, the
deduction
of the handling
charges was
appropriate.
The
Petitioner was
required
to
provide
information in a breakdown required and
defined by the Illinois
EPA’s forms, and it did not do
so.
The Petitioner was required
to
have approved
budget
line
items
for
any
costs
sought
for
reimbursement, and it did not do
so.
Simply put,
the Petitioner’s own acknowledgments justify
the deductions.
As
for the
contention that
the
costs
were
included
in
the Field
Purchases
section and
therefore
should
be
approved,
a
simple
reading of the
costs
clearly
shows
that
the
markups
(though
improper
for reimbursement)
amounted
to
a
handling
charge
at
best.
In fact,
in
the
section ofthe reimbursement application where a breakdown ofhandling charges is to be
made,
legitimate
field
purchases
are
to
be
included.
AR,
pp.
62-63.
The
actual
costs
for
field
purchases
or subcontractors activities
are
to
be
listed
then totaled,
and
the
statutory
handling
charge
sliding
scale
(found
in
Section
57.8(f)
of the
Act
(415
ILCS
5/57.8(f))
and
Section
732.607 ofthe Board’s regulations (35 Ill.
Adm.
Code 732.607))
is then applied.
The inclusion
ofmarkups from a subcontractorto a prime contractor should not be included in the amo~intsthat
are ~ubjectedto the sliding scale.
Furthermore,
as
Mr.
Kuhiman
testified,
amounts
approved
in
a
budget
represent the
maximum amount that
may be approved for reimbursement.
TR, p.
79.
To instead interpret an
approval of a
budget line
item
to
mean that
such approval
also
constitutes
an
unconditional
approval ofa reimbursement request for that
amount defeats the purpose of conducting reviews
15
for
reimbursement.
Section
732.602(b)
of
the
Board’s
regulations
(35
Ill.
Adm.
Code
732.602(b)) provides that
a full review of any application for reimbursement may be
conducted
if the amounts
sought
for payment
exceed
the
amounts approved in
the
corresponding budget
plan.
Here,
the
amoñnt
sought
for handling
charges
clearly exceeded the
$0.00
approved
for
handling charges in prior budget approvals,
so a
full review was warranted.
A full review can
include
review
of the
invoices
and
receipts
that
support
the
claim.
35
Ill.
Adm.
Code
732.602(d).
Ms. Weller’s review ofthe invoices in question, identified in her testimony (TR, pp.
121-125),
was justified
and
allowed for
under
the
Board’s
regulations.
Ms.
Weller
did
not
reconsider in any way Mr. Kuhiman’s budget approvals; rather, his budget approvals were
what
triggered her full review ofthe documents presented for reimbursement.
He did not approve any
costs for handling charges, yet that was what was sought by the Petitioner in the reimbursement
request.
Ms.
Weller’s
actions
were
consistent
with
his
decision
and
the
Illinois
EPA’s
obligations pursuant to the Act and regulations.
B.
Handling charges
can only be allowed for the prime contractor
The Petitioner argues
that
the Illinois
EPA is
wrong in
taking
the position that
only
a
prime contractor can receive handling charges.
Rather, the Petitioner contends that parties other
than the prime contractor can charge
for handling
charges
and
have those
charges considered
elig~b1efor payment.
Petitioner’s brief,
p.
10.
In support
ofthis
contention, the Petitioner cites
to
the case of State Bank ofWhittington.
However, as the Board recognized in State Bank,
that
decision was issued without taking into
account the statutory
sliding scale for handling
charges.
State Bank,
fri.
8.
A more recent on persuasive position from the Board was articulated in Ted
16
Harrison Oil Co.
v.
Illinois
EPA, PCB 99-127 (July 24,
2003), in which the Board set
forth the
general rule that only the primary contractor may assess a handling charge.
The Illinois
EPA’s policy
and position on this
issue
is
consistent
and
supported by
the
Board’s
past
findings.
It
would
be
improper to
allow
for the
recovery of handling
charges
assessed by any party other than the primary contractor, and then only when calculated through
an application ofthe statutory and regulatory sliding scale.
VI.
CONCLUSION
For all the reasons and
arguments included herein, the Illinois EPA respectfully requests
that,the Board affirm its
decision as to the issues raised by the Petitioner.
Respectfully submitted,
ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
Res
nt
John
.Kim
Assistant Counsel
Special Assistant Attorney General
Division ofLegal Counsel
1021 North Grand Avenue, East
P.O. Box
19276
Springfield, Illinois
62794-9276
217/782-5544, 217/782-9143 (TDD)
Dated: April 7, 2004
This filing submitted on recycled paper.
17
CERTIFICATE OF SERVICE
I, the undersigned attorney at
law, hereby certify that on April 7,
2004, I served
true
and
correct
copies
of
a
MOTION
FOR
LEAVE
TO
FILE
INSTANTER
and
RESPONSE
TO
PETITIONER’S
BRIEF,
by
placing
true
and
correct
copies
in
properly
sealed
and
addressed
envelopes
and
by
depositing
said
sealed
envelopes
in
a
U.S.
mail
drop
box
located
within
Springfield,
Illinois, with sufficient First
Class Mail postage affixed thereto,
upon the following
named persons:
Dorothy M. Guim,
Clerk
Illinois Pollution Control Board
James
R. Thompson Center
100’West Randolph Street
Suite
11-500
Chicago, IL 60601
BradleyP.
Halloran, Hearing Officer
illinois Pollution Control Board
James R.
Thompson Center
100 West Randolph Street
Suite 11-500
Chicago, IL
60601
Stephen F. Hedinger
Hedinger Law Office
2601
South Fifth Street
Springfield,
IL
62703
ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
Special Assistant Attorney General
Div4sion of Legal Counsel
~1
021 North Grand Avenue, East
P.O. Box 19276
Springfield, Illinois 62794-9276
217/782-5544
217/782-9143 (TDD)
Assistant Counsel
