CLERK’S OFFICE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
APR 222004
SWIF-T FOOD MART,
)
STATE OF
ILL~NOJS
POlJ~ti~~
Controj Board
Petitioner,
)
)
v.
)
PCBO3-185
)
(UST appeal)
ILLINOIS ENVIRONMENTAL PROTECTION
)
AGENCY,
)
)
Respondent.
)
NOTICE OF FILING AND PROOF OF SERVICE
To:
Bradley Halloran, Hearing Officer
Illinois Pollution
Control Board
James R. Thompson Center
100 West Randolph Street, Suite 11-500
Chicago, Illinois 60601
John Kim
Division of Legal
Counsel
Illinois Environmental Protection Agency
1021 N. GrandAve. East
P.O. Box
19276
Springfield, IL 62794-9276
The undersigned certifies that an original
and nine copies of Petitioner’s Motion for
Leave to
File Reply Instanter, along with the original
and
nine copies of the proposed Petitioner’s
Reply Brief were served upon the Clerk of the Illinois Pollution
Control Board via FedEx,
and
one
copy
was served upon
the hearing officer and
the above party of record in this
case
by
enclosing
same in envelopes with postage fully prepaid, and
by depositing said envelopes in
a FedEx dropbox
or a
U.S.
Post Office Mail
Box
before
5:30
p.m.
in
Springfield;-Illinois
on
the~~41thy
of April,
2004.
tephen F. H~linger
Hedinger Law Office
2601
South
Fifth Street
Springfield, IL 62703
(217)
523-2753
phone
(217)
523-4366
fax
THIS FILING IS SUBMITTED ON RECYCLED PAPER
13
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
CLERK’S
OFFICE
SWIF-T FOOD MART,
)
APR
222004
)
STATE
OF ILLINOIS
Petitioner,
)
PolIution Control Board
V.
ILLINOIS ENVIRONMENTAL PROTECTION
AGENCY,
Respondent.
)
)
PCBO3-185
)
(UST appeal)
)
)
)
)
MOTION FOR LEAVE TO FILE REPLY INSTANTER
Petitioner, SWIF-T FOOD MART, through its undersigned attorney hereby requests leave
to
file instanter the attached proposed Petitioner’s Reply
Brief, in the event the Board allows
Respondent to file its proposed Response to Petitioner’s
Brief.
In support of this motion,
Petitioner
states as follows:
1.
Respondent’s
response was to
have been filed on or before April 6,
2004.
Respondent did not file the brief that day, but instead on April 7,
2004 submitted a
motion for leave to file instanter.
2.
As of the date of this motion, no ruling has yet been issued with respect to
Respondent’s motion.
Hence Petitioner at this time does not know whetherany
response exists requiring Petitioner’s reply.
3.
Those circumstances have likewise delayed Petitioner’s drafting of the proposed and
provisional reply, and of this motion.
4.
Accordingly, Petitioner asks this Board’s leave to file instanter the attached proposed
reply, in the event this Board allows Respondent’s motion
to file its response brief
instanter.
Respectfully submitted,
SWIF-T FOOD MART,
Petitioner,
By its attorney,
HEDING
LAW OFFICE
S~~en
F. Hed(nger
/
/
Hedinger Law
Office
2601
South Fifth Street
Springfield, IL 62703
(217) 523-2753 phone
(217) 523-4366 fax
2
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
CLERK’S
OFFICE
SWIF-T FOOD MART,
)
~
222004
)
STATE OF
ILLINOIS
Petitioner,
)
Pollution
Control Board
)
v.
)
PCBO3-185
)
(UST appeal)
ILLINOIS ENVIRONMENTAL PROTECTION
)
AGENCY,
)
)
Respondent.
)
PETITIONER’S REPLY BRIEF
Petitioner, SWIF-T FOOD MART, hereby submits its
reply to the proposed Response to
Petitioner’s Brief (hereinafter “Response Brief”), submitted
by Respondent ILLINOIS
ENVIRONMENTAL PROTECTION AGENCY (hereinafter “IEPA”).
The Response Brief is
currently
pending a ruling on IEPA’s “Motion for Leave to
File Instanter the Response to
Petitioner’s Brief,” and Petitioner asks that this Board consider this Reply Brief in the event leave is
granted for filing the IEPA’s response.
(As of the submittal of this reply, no ruling has been made
on IEPA’s motion).
For its reply, Petitioner states as follows:
A. Clarification ofIssues Presented
IEPA’s record in this
case is more than a little bit confusing.
Indeed, the actual record is
only
some 84 pages in length, but an additional
19
relevant documents were submitted as agreed
exhibits at the start of the hearing, which nearly doubled the size of the record.
Unfortunately, in its
Response Brief the IEPA has attempted to capitalize on the confusion it has created in order to
bolster the slim reeds supporting the final decision at issue.
This reply, therefore, focuses upon
setting the record straight against IEPA’s mischaracterizations and misrepresentations.
To start, the IEPA attempts to support its decision by arguing in favor of the cutting of
$8,275.18 from the Handling Charges category ofPetitioner’s
reimbursement submittal.
That
deduction was made in the first numbered paragraph of the “Attachment A” of the IEPA’s March
3,
2003 final decision letter which is at issue.
(R.3; see
generally R.1-R.3).
The IEPA’s response
supports the “Handling Charges” decision by claiming that:
“It is clear on the face ofthe
reimbursement request that of the $8,275.18
sought in handling charges reimbursement, none had
been approved to date though
an amendment was requested.
So based on nothing more than the
content of the ieimbursement 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.” (Response Brief, at
14-15 (citation to Record omitted)).
The IEPA truly is tilting at windmills, for Petitioner is
not challenging in this appeal the
$8,275.18 deduction!
There is no
reason for the IEPA to
expend time and energy (its own and
Petitioner’s and this Board’s) reviewing issues that have not been raised by Petitioner.
If anything,
the fact that IEPA can only support that portion ofits dec~siôn
reveals the paucity ofjustification for
the decision that j~
being challenged.
Inasmuch as it apparently is not yet clear,
Petitioner will once again express just what is at
issue in this case:
IEPA’s second numbered paragraph ofthe March 3, 2003 letter deducted
$13,808.86 because “there
cannot be a percentage markup and
a-handling charge both requested
and there has not been any handling charges approved in a budget.”
This decision was wrong
because (a) there is no authority for limiting the applicant to either “a percentage markup
on
a
handling charge” and in any event these charges had already ~
approved (moreover, ironically
the “handling charge” component had been denied in the same letter!), and (b) the amount Ji~~i
been
approved in the budget.
In addition,
the March
3, 2003 decision imposed a second deductible for
2
the site, arbitrarily and contrary to a previous decision in which the IEPA
had imposed only a single
deductible and had
expressly agreed with Petitioner in doing so.
The Response Brief mentions several decisions which were not appealed, including Office
of State Fire Marshal (OSFM) deductible/eligibility
decisions, and earlier IEPA decisions.
(~,
~
Response Brief, at 3:
“No evidence has been presented that any such appeal
of
OSFM
decisions
was filed;” see
~
Response Brief, at 4:
“The Petitioner provided no evidence that an
appeal of that IEPA
original reimbursement decision, applying a single $10,000 deductible
was
everfiled.”).
Apparently IEPA regrets these earlier rulings, but the fact is that the
sole issue in this case is
whether the IEPA’s March 3, 2003
decision was correct, and not any ofthose
earlier decisions.
Indeed, Petitioner obtained satisfactory relief with respect to the decisions cited by the IEPA, and so
no reason would
have existed to have appealed.
The more pressing and clearly relevant question
raised in this case is why the IEPA feltjustified and empowered to change final decisions it had
made.
There is no such justification, nor any such power, and Petitioner is therefore entitled
to
the
sum sought in this appeal.
B. The Second
$
10.000 Deductible Was Wrongly Applied
IEPA claims that no prior decision had been rendered concerning the applicability of a
single $10,000 deductible.
The facts reveal otherwise.
Petitioner submitted an application for reimbursement way back
in May 2001.
(Ex.
12).
That application
specifically stated that it was submitted with respect to
both incident numbers 95-1716 and 96-0723. (Ex.
12, p.
1).
Contemporaneously, the IEPA and
Petitioner’s consultant had exchanged communications with respect to the two
incident numbers
(Ex. 7;
Ex. 8; Ex.
9), summarized by the memo ofJay Gaydosh (the project manager assigned to
3
Petitioner’s site at the time), dated January 20, 2000,
in which
IEPA agreed that “the 1996 release
was a rereporting of the
1995 Incident.
Therefore, all reporting requirements should be addressed
through the 95-17 16 Incident number.” (Ex. 9).
Petitioner’s May 2001
reimbursement application sought a total of $1 1,~7
1.08.
The IEPA
reached its final decision on that application on July
25,
2001.
(Ex.
14).
Consistent with
its
discussions with Petitioner, IEPA considered only one
incident number to be relevant, applied a
$10,000 deductible to
“this claim,” and approved payment of the remaining $1,971.08.
Despite the
fact that Petitioner’s application had proceeded under both incident numbers (the very first page
reveals that Petitioner considered the requestto be with respect to:
“IEMA Incident No.:
951716/960723”) (Ex.
12), the IEPA did not apply any of the remaining $1,971.08 to the 95-1716
incident number.
IEPA suggests that Petitioner should have appealed the July 2001
decision—but why?
That
decision granted to Petitioner everything Petitioner has requested—Petitioner has never disputed,
after all, that one $10,000 deductible must be applied.
Rather than attempting to shift the blame to
Petitioner, IEPA shouldhave expended its energy explaining why in 2001
only one deductible was
determined applicable
as to an
application that cited
i~ffi
incidentnumbers,
and explaining what
authority exists for itto have reconsidered that fmal decision and attempted to impose another
$10,000 deductible in 2003.
But IEPA failed to
provide any evidence to support the reconsideration.
Indeed, the
evidence of record clearly reveals that Eric Kuhlman, the project manager responsible for the
reconsideration, disagreed with the earlier decisions made by Jay Gaydosh (a peer of Kuhlman’s
with
substantially more experience) and by Eric Ports (supervisor to both Gaydosh and Kuhiman).
Kuhlman, in fact, was the one who applied the single $10,000 deductible in 2001
upon the advise
and
direction, respectively, of Gaydosh and Ports; by 2003, though, Ports was no longer Kuhlman’s
4
supervisor, so Kuhlman procured a new opinion from his
new boss, Harry Chappel, even though
Cliappel had been in the LUST position even less time than Kuhiman.
Chappel said apply a second
deductible, and Kuhlman did.
This is a blatant reconsideration, driven by the project manager’s dissatisfaction with
the
first instructions
he was given.
Had the IEPA attempted to impose two deductibles in 2001, when it
was presented with an application that on
its face proceeded under both incident numbers, then
Petitioner could have appealed at that time, and failing such an appeal, Petitioner would now be
bound by the results (IEPA acknowledges this in
its Response Brief).
IEPA
did not do
that—instead, it rendered a final decision that applied Only
a single deductible.
Just as Petitioner
would be bound by an
adverse decision, so is IEPA actually bound by the decision actually made.
Mr. Kuhlman simply lacks authority to reconsider and change his mind depending on who his
current boss
is.
The IEPA also argues that the “two deductible” conclusion was a foregone conclusion fipm
the date ofthe OSFM’s deductible and eligibility decisions.
“The IEPA
has no choice but to
follow the decisions issued by OSFM, since those determinations are delegated solely to OSFM.”
(Response Brief, at
10).
The “decision” by which Petitioner is purportedly bound, according to the
IEPA, is form instructions included on the application for an
eligibility/deductible decision in
1999,
paragraph
5
of which requests identification ofthe “occurrence
for which you intend to seek
reimbursement” and of any
other “incidentnumbers reported at the site,” following which this
admonition is made:
“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, pg. 2).
The IEPA’s protestations prove too much.
First, of course, there is the matter ofIEPA’s
own July 2001
final decision rejecting the concept oftwo
deductibles and applying only one.
Even
5
if that decision was wrong because OSFM had already decided the issue (as IEPA now claims), it is
too late for IEPA now to change its
mind, just as IEPA says (repeatedly) that it is too late for
Petitioner to complain about final decisions.
Second, the instructions of the application for eligibility/deductible determination do not
constitute a final decision.
If it does, then IEPA
must acknowledge that its July
2001 final decision
is based on the May 2001
application Petitioner submitted.
And in that case, again, IEPA has
attempted to reconsider a final decision, which it is not permitted to
do.
Third, contrary to
IEPA’s claim, the actual final OSFM decision in this matter supports
Petitioner’s position.
Neither OSFM final decision says anything
about two deductibles applying
to
the site; both, in fact, say “you are eligible to
seek payment of costs in excess of $10,000.
The costs
must be in response to the occurrence referenced above and associated with the identified
tanks.”
(~
Ex.
12, which includes copies of both OSFM decisions).
The decisions also
identify other
tanks at the site and note that “yjour
application indicates that there has not been a release from
these tanks under this incident number.
You may be eligible to seek payment of corrective action
costs associated with these tanks if it is
determined that there has been a release from one or more of
these tanks.
Once it is determined that there has been a release from one or more ofthese tanks you
may submit a separate application for an eligibility determination to seek corrective action costs
associated
with this/these tanks” (emphasis added).
The OSFM expressly distinguishes between its eligibility and deductible decisions; these are
separate
issues, with separate standards for decision.
The final decisions in this
case clearly reveal a
single deductible, with new eligibility decisions forthcoming based upon subsequent occurrences.
This is
consistent with the Environmental Protection Act, and
is consistent with
the IEPA’s
original
decisions in this case.
6
Fourth, and finally, the IEPA’s claim in the Response Brief to be bound by the OSFM
decision is contrary to its own testimony in this very case.
Ex.
8,
drafted by Doug Oakley (manager
of the LUST reimbursement sector), states that decisions concerning the number of deductibles to
apply is made by the LUST technical
unit.
(~
Tr.
25).
Kuhlman explained that to do so,
technical
staff is called
upon to
review OSFM reports to
interpret “as whether it’s an
original release or a re-
reporting.” (Tr. 25
—
Tr. 26).
In fact, the technical unit is specifically trained to make such
decisions. (Tr. 26).
Kuhiman acknowledged that the “training” consisted ofjob experience (Tr. 26
—Tr. 27), and
he admitted that Eric Ports and Jay Gaydosh both had
been with the technical
unit
substantially longer than he, and correspondingly had more experience and were thus better trained
than he. (Tr. 27). In any
event, the f~ci~
introduced in this case reveal that the deductible issue
is
decided by the IEPA’s LUST
technical unit, not by the OSFM.
The IEPA’s claim that Petitioner
was bound by OSFM decisions which were not final, either as to IEPA or Petitioner, is no more
than a “smoke screen” attempt to shift focus away from the final decision reached
on the issue
by
Ports, Gaydosh and
Kuhiman in 2001.
The IEPA has also attempted to explain its interpretation of the deductible provisions of the
Environmental Protection Act, but its
attempt turns
the statute into hash.
According to
IEPA,
although Section
57.8(a)(4)
(415 ILCS
5/57.8(a)(4))
unequivocally provides that “only
one
deductible shall apply per underground storage tank ~jt~,”what it really means is that only
one
deductible shall apply per occurrence.
The IEPA reaches this
conclusion by reference to
the last
paragraph of Section
57.9(b),
which provides that “a
deductible shall apply annually for each site
at which costs were incurred under a claim submitted pursuant to this Title, except that if corrective
action in response to an occurrence takes place over a period of more than one year, in
subsequent
years, no deductible shall apply for costs incurred in response to such occurrence.”
The IEPA says
that if Section 57.8(a)(4) is
interpreted according to
its clear terms, it would “render
other
7
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 of multiple occurrences should not be allowed for, and only one
deductible should
apply per site if there is only
one occurrence.” (Response Brief, at
12).
One would assume that if the General Assembly intended to be interpreted as suggested by
IEPA, it would have said
so, and certainly would not have been so unambiguous with what it
41c1
say.
Section
57.8(a)(4),
contrary
to IEPA’s fanciful interpretation, provides that once OSFM has
made a deductible determination, that deductible is to be subtracted from any payment invoice, and
the deductible amount
is to be subtracted
only once “per underground storage tank ~
It does not
say, or mean, that the deductible applies per site per occurrence; it simply says per site.
As for the Section
57.9(b)
language quoted above, it is a perfect compliment to the Section
57.8(a)(4)
scheme, without re-writing the statute as proposed by the IEPA.
Pursuant to Section
57.9(b),
the “per site” limitation of Section 57.8(a)(4) is modified
to allow for a new deductible
if
a
new occurrence occurs at a site
~ii~
~
j~fi~
response action has been completed as to the original
occurrence.
Hence, if an underground
storage tank site experienced an occurrence in 1995 for
which a $10,000 deductible applies, and response action as to that occurrence is completed in
1997,
only one deductible would apply.
If there was another occurrence at the same site in
1996, still only
the original deductible would apply as provided by Section
57.8(a)(4);
however,
if the occurrence
did not happen until
1999, then a new deductible would apply pursuant to Section
57.9(b).
Not only does Petitioner’s
interpretation make sense of the
entire statute, and give effect to
the clear words used by the legislature, but it also comports with
reality.
Kuhiman admitted, during
the hearing, that the contamination from the two purported occurrences has commingled,
and that it
would
be virtually impossible
to separate the two occurrences for remediation purposes.
Remediation will not be completed for either incident number until remediation is completed for
8
both incident numbers. (Tr.
41
—
Tr. 42).
Moreover, the decision as to which incident number to use
is
made purely upon the whim of the LUST managers—and the reimbursement manager may
choose
a different number than the technical staff manager, as happened here!
It is therefore
completely arbitrary for the IEPA to decide in some cases to apply one
deductible while in others to
apply two, when in either event the remediation
will be the same anyway.
Clearly the General
Assembly understood
the arbitrariness
and absurdity of a scheme where the IEPA, on a whim, can
double the deductible amount even though remediation is unaffected.
Hence it created a scheme to
limit the deductible per site, but still to allow for a new deductible if in fact incidents were discreet
and apportionable (i.e., if the first occurrence is remediated at least a year before the second
occurrence).
Hence, here only one deductible should have been subtracted from Petitioner’s
reimbursement.
C. The $13.808.86 Was Wrongly Deducted
Petitioner’s November 7, 2002 reimbursement application
sought, among other things,
$229,800.00 under the category of “Field Purchases and Other Costs.” (Ex.
11).
That amount
had
previously been accepted by Kuhiman as part of the approved budget, and the information
submitted
specifically explained the basis for all costs requested for approval, including mark-ups
of subcontractors.
Both the budget approval request and the submittal correspondence specifically
informed Kuhlman of these mark-ups.
Kuhlman did not reject the budget amounts as excessive or unreasonable,
and he did
not
reject them as being included in the wrong line-item category; particularly, he did not send the
budget request back to Petitioner with instructions
to separate out
the various mark-ups and put
those in the “Handling Charges” line
item.
Had he done any ofthese things, Petitioner could have
appealed (Kuhlman’s budget decision is a final, appealable decision), or Petitioner could have re-
9
submitted
to satisfy
procedural objections such as using the wrong line item.
Again,
had Kuhlrnan
done any of these things and Petitioner not appealed, Petitioner would now be
stuck with
the result.
Kuhlman approved, though, and so there was nothing for Petitioner to
appeal.
Nor was there any
reason for Petitioner to expect any
response from the reimbursement unit other than approval of
payment, since the payment request was exactly
the same amount as the approved budget, in exactly
the same categories.
The reimbursement reviewer, Weller, was not satisfied with Petitioner’s submittal as
approved by Kuhlman.
IEPA, in
its Response Brief, asserts that Weller denied the $13,808.86
because she thought it should properly have been included in the “Handling Charges” category
rather than “Field
Purchases and Other Costs,” and she didn’t think subcontractors should be
entitled
to any markups.
She therefore reversed Kuhiman’s approval and
denied reimbursement for
the approved budget amounts.
Petitioner’s opening briefexplained that Weller’s decision was a blatant reconsideration of
the final, appealable decision made by Kuhlman,
and that Weller has no basis or authority for doing
so, norfor arbitrarily deciding that contractors cannot be reimbursed for mark-ups charged by
subcontractors.
The only defense mounted in IEPA’s Response Brief is to cast doubt on Kuhlman’s
final approval by claiming that it was only for the maximum amount recoverable, and therefore
could be lowered by Weller.
This assertion defies fact and logic.
Kuhiman was presented with
exactly the same information Weller was given—IEPA even admits that the same form was used!
(“...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 correspond to requests made for
reimbursement.” Response Brief, at 14).
So when Kuhlman approved that “maximum” budget
amount,
he expressly considered that Petitioner’s “Field Purchases and Other Costs” all qualified
1O
arid added together to reach that maximum figure of$229,800.00
That “maximum” therefore
expressly included and approved the $13,808.86 that was subsequently cut by Weller.
It is no more
than sophistry (plausible but faulty or misleading argumentation) for IEPA
to argue that since
Kuhlman’s figure was a “maximum” Weller was free to reconsider his approval, and to
deny the
$13,808.86 that Kuhlman had already ruled to be
reimbursable.
Similarly, IEPA’s argument that a “full review,” such as that engaged in by Weller, was
permitted because the $13,808.86 should
have been in
“Handling Charges,” and $0 was approved
for “Handling Charges,” and therefore the $13,808.86 exceeded the approved budget—is pure
sophistry.
The point is that Kuhlman approved that amount as part of “Field Purchases and Other
Costs,” and the reimbursement requestfor that line item was exactly the same as the budget amount
approved for that line item.
No statutory basis existed for Weller to give a “full review” to this
reimbursement package,
and her actions amount to no more than an attempted
reconsideration of
Kuhlman’s final and appealable decision.
It bears noting that much ofIEPA’s argument is unsupported by any
evidence.
In particular,
no evidence supports IEPA’s contention that the $13,808.86 was in the wrong category.
It is
certainly not a given that these charges can only be considered “Handling Charges”—clearly
Kuhlman didn’t think so.
Equally plausible is an interpretation that “Field Purchases and Other
Costs” includes all expenses incurred by a contractor, including
necessary payments to
subcontractors for materials (including mark-ups) incurred
in performing their actions.
Finally, IEPA contends that
“ut
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 of the statutory and regulatory sliding scale”
(Response Brief, at
17), but
IEPA does not explain why, nor does it even cite
any authority that supports this bald assertion.
IEPA did cite Ted Harrison Oil Co.
v. Illinois EPA,
PCB 99-127 (July 24, 2003), but as this Board
11
is aware, that case determined that the handling charges were imposed by the contractor, and so no
need arose to
determine whether a subcontractor’s handling charges could be
reimbursed.
Directly
on point, though, is the Board’s language
in State Bank ofWhittington
v. Illinois EPA, PCB 92-
152, 1993 Ill. ENV LEXIS 490, at *23
(June 3, 1993):
“The Board concludes that it is inconsistent
for the Agency,
as a matter of policy, to
allow a 15
handling charge on the basis that this fairly
reflects overhead costs in the market place, and then turn around and deny the
15
handling charge
to
some persons
simply because they are not the prime contractor.”
The same is true here (doubly
so, in fact, since Weller’s denial first rejected any handling charges for the contractor, and then
rejected handling charges
(mark-ups) of the sub-contractor.
~
R.3).
D. Conclusion
Petitioner accordingly requests
that the Board reverse the decisions of IEPA imposing a
second $10,000 deductible and deducting $13,808.86 from the reimbursement.
Both
decisions were
wrong, as a matter of law and fact.
Respectfully submitted,
SWIF-T
FOOD MART,
Petitioner,
By its
attorney,
Hedinger Law Office
2601 South Fifth Street
Springfield, IL 62703
(217) 523-2753 phone
(217) 523-4366 fax
12
