ILLINOIS POLLUTION CONTROL BOARD
December
6,
1991
WALTER
J. MAQUET and MARLENE
J. MAQUET,
d/b/a MAQtJET’S 66,
Petitioners.,
PCB 90—136
v.
)
(Underground Storage
)
Tank Fund)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
)
Respondent.
FREDERICK A. BERNARDI, APPEARED ON BEHALF OF THE PETITIONER;
RONALD SCHALLAWITZ, ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
APPEARED ON BEHALF OF THE RESPONDENT.
OPINION
AND
ORDER OF THE BOARD
(by B.
Forcade):
This matter is before the Board on a petition for review
filed on July 23,
1990,
by Petitioners Walter J. Maquet and
Marlene J.
Maquet, doing business as Maquet’s
66
(hereinafter
“the Naquets”).
The petition sought review of a decision by the
Illinois Environmental Protection Agency
(hereinafter
“Agencytt)
on June 20,
1990, determining that a $50,000 deductible should
apply to the Maquet’s request for reimbursement from the
underground storage tank fund.
A hearing was held on this matter
in Pekin,
Illinois on August 29, 1991.
On October
1,
1991,
Petitioner filed a Brief.
On October 17,
1991,
the Agency filed
a Post Hearing Brief.
On October 30,
1991, Petitioner filed
a
Reply Brief.
On November 22,
1991,
Petitioner filed a letter
making a one-word correction to the October 30,
1991 Reply Brief.
This proceeding involves a retail gasoline dispensing
station owned by the Maquets at 1311 N.
8th Street in Pekin,
Illinois.
In early 1989, the Maquets were considering a sale of
the station to the Illico Independent Oil Company
(hereinafter
“Illico”).
On Monday June
5,
1989, and continuing for two or
three days afterward,
the underground storage tanks, pump islands
and concrete pad were removed.
Soil samples were taken during
tank removal; these soil samples later showed contamination.
Since the tanks were removed in early June,
1989,
contamination
from the tanks must have occurred prior to that time.
The
question in this proceeding is whether the Maquets had actual or
constructive knowledge of the contamination on the statutorily
established date of July 28,
1989.
After contamination was
found,
the appropriate state agencies were informed and the
contamination was cleaned up.
128—2 7
2
As a result of the expenditures associated with clean up of
the contamination, on May 22,
1990 the Maquets submitted an
“Application for Reimbursement from the Underground Storage Tank
Fund for Corrective Action Costs” to the Agency.
The Agency’s
determination of June. 20,
1990
(and the amended determination of
August 22,
1990)
concluded that the Maquets met all of the
prerequisites for eligibility and reimbursibility under the
Illinois Environmental Protection Act (hereinafter “the Act”),
Ill. Rev.
Stat,
ch.
111 1/2, para.
1001,
et.
secT.
The Agency
further determined that the appropriate deductible was
$50,000.’OO, because the Maquets had “actual or constructive
knowledge” prior to July 28,
1989,
that a release had occurred.
The Naquets disagree that they had such knowledge.
If the
Maquets did not have such actual or constructive knowledge, the
appropriate deductible under that provision would be $10,000.
This presents the sole issue in the proceeding and it is
primarily an issue of fact.
The provision of the Act governing the dispute in this
proceeding is Section 22.l8b(d) (3) (C) (ii), which provides:
ii.
If the costs incurred were in response to a release of
petroleum which first occurred prior to July 28,
1989,
and the owner or operator had actual or constructive
knowledge that such a release had occurred prior to
July 28,
1989, the deductible amount under subparagraph
(A)
of paragraph
(3)
of this subsection
(d)
shall be
$50,000 rather than $10,000, unless subparagraph
(B) (I)
applies,
in which case the deductible amount shall be
$100,000.
If the costs incurred wer.e in response to a
release of petroleum which first occurred prior to July
28,
1989, but the owner or operator had no actual or
constructive knowledge that such
a release had occurred
prior to July 28,
1989, the deductible amount shall be
as provided under subparagraph
(A)
or
(B)
of paragraph
(3)
of this subsection
(d), whichever is applicable.
It shall be theburcien of the owner or operator to
prove to the satisfaction of the Agency that the owner
or operator had no actual or constructive knowledge
that the release of petroleum for which
a claim is
submitted first occurred prior to July 28,
1989.
FACTUAL DISCUSSION
The Naquets leased the station from about
1967 until 1985
when they purchased the station.
(Tr.
163).
In early 1989 Mr.
Brent Glassey,
an agent with Clifton-Strode Real Estate Agency
approached the Maquets about selling the station to Illico.
On
April
10,
1989 Illico caused soil samples to be taken from the
property and sent for analysis to Randolph and Associates
(Randolph and Associates subsequently became Environmental
128—28
3
Science and Engineering,
Inc.;
all subsequent references to
either name will be “ESE”).
Laboratory analyses showed no
contamination.
(Tr. 47; Pet. Ex.
1).
Subsequently,
a “Contract to Purchase Real Estate” was
negotiated between the Maquets and Illico.
That contract was
signed April 28,
1989, and an addendum was signed May
8 and 15,
1989; the contract called for a closing date on or before June
25,
1989.
(Tr.
130—132; Record 000053—000054).
Illico retained
Misco Services to remove the underground storage tanks
(Tr.
17);
1~hatremoval took place from about June 4 to June 6.
(Tr.
81-
82).
During the removal Mr. Donald May of Illico was present and
took soil samples from the tank bed for conveyance to ESE.
(Tr.
83).
The closing did not take place on June 25, because the real
estate agent,
Mr. Glassey, had moved to Florida and the soil
sample analysis results were not finished.
(Tr.
15).
On July 19,
the soil an~1ysisresults from ESE were received by Illico, they
showed significant contamination; Illico did not inform the
Maquets of the soil analysis results.
(Tr.
19).
Nine~dayslater,
July 28,
1989,
is the statutory time of significance.
In September 1989 Mr. Stropes of the Stropes Real Estate
Agency approached the Maquets about selling the station and
entered into an exclusive listing contract with them on September
14
or 17,
1989.
(Tr. 43,
51,
136).
Mr. Stropes approached Mr.
Golwitzer of Illico about purchasing the station and on October
25,
1989 a Contract to Purchase was signed.
(Tr.
52; Record
000055).
Mr. Golwitzer and Illico kept the results of the June
5,
1989 soil samples from the Maquets until after this October
25,
1989 signing.
On October 27,
1989, the Maquets received the
test results
(showing contamination)
for the first time.
(Tr.
55—
56,
148).
On behalf of the Naquets, Mr. Stropes contacted the
Emergency Services and Disaster Agency on October 27,
1989,
to
report the release.
(Record 000003).
On November 10-14,
1989,
the Maquets signed a contract with ESE to develop a clean up
proposal.
They had never previously had a contract with ESE or
any other organization regarding testing at the station.
(Tr.
137-139; Pet.
Ex.
2).
The contamination was subsequently cleaned
up and the Maquets applied for reimbursement from the fund.
I. Agency Position
The Agency does not specifically argue that the Maquets had
“actual” knowledge of the contamination before July 28,
1989.
The Agency states that it had no information to establish actual
knowledge and premised its decision on “constructive” knowledge.
(Tr. 251-253).
The Agency decision was premised upon two
factors.
The first factor was a telephone conversation of June
14,
1990 between Mr. Bur Filson of the Agency and Mr. Don May of
Illico.
The second factor was the Agency’s assumption that ESE
was retained for the June
5,
1989 sample analysis by the Maquets,
rather than by Illico.
128—29
4
The June 14, 1990 telephone conversation forms the primary
basis for the Agency decision.
Mr. Filson of the Agency
initiated the call because he had information indicating that,
“there should have been some knowledge that the release first
occurred prior to July 28,
1989.”
(Tr. 205).
Mr. Filson
summarized the conversation with Mr. May of Illico on an Agency
telephone conversation record sheet.
(Record 000063-000064).
That record attributes the following statement to Mr. May,
“Everything was’ fine around the UST’s, however a problem was
discovered around one of the islands.
At that point some
additional digging was done to try to find the extent and
I left
the site.”
(Record 000063).
At hearing, Mr Filson elaborated to
state that Mr. May had identified the problem as petroleum
contamination.
(Tr. 205).
Several of the comments attributed to
Mr. May during that conversation specifically state or clearly
imply that Mr. Maquet knew or should have known of the problem.
(Record 000063—000064; Tr.
202—207).
The second factor relied upon by the Agency was an
assumption regarding the relationship between ESE and the
Maquets.
When the application for reimbursement was submitted,
ESE was an Agent for the Maquets.
ESE did the analytical testing
on the June
5 soil samples which showed contamination, and ESE
had the results on July 13,
1989.
(Record 000056).
Mr. May in
his conversation with Mr. Filson indicated that the testing on
June 5,
1989 was left up to the Maquets.
(Record 000063).
Consequently, the Agency was under the impression that ESE was an
Agent of the Maquets in June and July 1989,
and that ESE had
knowledge of the contamination prior to July 28,
1989.
(Tr. 249-
250).
Therefore, the Agency concluded that the Naquets had
constructive knowledge of the contamination prior to the
statutory date and that a $50,000 deductible should apply.
II. The Macmet’s Position
The Maquets asserted that they had no actual knowledge of
contamination and that they had no agents to whom knowledge could
be attributed.
Mr. Naquet testified that he did not retain
anyone to analyze soil samples prior to July 28,
1989,
and that
none of the people involved in the business transaction regarding
the sale informed him that the property was contaminated prior to
July 28,
1989.
(Tr. 138—141).
Prior to July 28,
1989 neither ESE
nor Illico was an agent of the Maquets.
(Tr. 138-142).
During
tank removal Mr. Maquet would occasionally view the operation;
but the smell of gasoline did not indicate to him that
contamination was present.
(Tr.
145).
Mr. Maquet testified that
from about 1985 until the tanks were removed there was no loss of
inventory which would indicate leakage and that the pumps
dispensing gasoline never lost their prime
(a pump losing prime
would indicate leakage).
(Tr. 146-148).
128—30
5
Mr. May of Illico also provided testimony for the Maquets.
Mr. Nay’s testimony highlighted that he had misunderstood the
relationship between the Maquets and ESE.
Throughout his
participation in the tank removal and continuing through his
conversation with Mr. Filson of the Agency, Mr. May thought that
ESE had been retained by the Maquets to conduct the soil
analysis; Mr. Nay now understood that ESE had been retained by
Illico throughout this time period to do the analysis.
(Tr. 85,
94).
Mr. Golwitzer, President of Illico, testified that he had
retained and paid ESE to do all of the analytical work during
June an& July of 1989 on behalf of Illico.
(Tr.
17—22).
Additionally, Mr. May testified that he did not tell Mr.
Filson in the phone conversation that the problem surrounding
tank removal was a petroleum contamination problem because in
June of 1989 Mr. Nay did not know that there was a petroleum
contamination problem at the site.
(Tr.
90,
101).
When Mr. May
discussed the problem during that conversation, he was referring
to the problem of the property sale not taking place on time due
to the sample results not being ready.
(Tr.
95-96).
CONCLUSIONS
The statutory burden placed on the Maquets
is to prove they
had no actual or constructive knowledge of the contamination on
the date in question.
Section 22.l8b(d)(3)(C)(ii).
The Maquets
provided information to the Agency in the form of
a June
6,
1990
letter from ESE which repeatedly stated that the Maquets first
became aware of the contamination on October 27,
1990.
(Record
000058-000059).
The Agency accepted this as true.
(Tr.
236).
The Board finds that ESE did have actual knowledge of the
contamination of July 13,
1989 and that Illico had actual
knowledge on July 19,
1989.
This much is undisputed.
The Agency
has argued that Illico became the agent of the Naquets when
Illico agreed to remove the tanks,
a burden placed on the Maquets
in the original contract.
The Agency cites no legal precedent to
support a conclusion that contract negotiations between a seller
and buyer regarding duties and purchase price makes the buyer an
agent of the seller.
The Board has reviewed the remaining Agency
arguments imputing ESE or Illico’s knowledge to the Maquets and
finds those arguments without merit.
The Board finds that
neither ESE nor Illico was an agent of the Maquets prior to July
28,
1989 such that their knowledge can be attributed to the
Maquets.
Consequently, the Board finds no basis for the Agency
determination that the Maquets had “constructive” knowledge of
the contamination prior to July 28,
1989.
Accordingly, the
Board
will reverse the Agency determination and remand the matter for
further action consistent with this Opinion.
128—3 1
6
PROCEDURAL MATTERS
At page 23 of the Respondent’s Post Hearing Brief the Agency
states,
“Because of the error of the hearing officer in not
allowing an offer of proof to be made by the Agency, the Agency
requests a SANCTION of either....”
This presents several
problems.
First, while not specifically required by the
Procedural Rules, requests for sanctions are traditionally
presented to the Board by motion rather than by a request in the
middle of a Brief.
Second,
sanctions are traditionally sought
regardii~gconduct of a party of other person for unreasonably
failing to comply with a procedural rule or order of the Board or
hearing officer.
See 35
Ill. Adm. Code 101.280
-
281.
Here, the
Agency seems to seek a sanction against the Maquets premised on
a
ruling of the hearing officer.
When the Agency contests a ruling
of the hearing officer, the appropriate mechanism is to seek
review of that ruling pursuant to 35 Ill.
Adm. Code 101.247(b),
either in interlocutory appeal or upon final Board review of the
proceeding.
Finally, the Agency asserts as a basis for its procedural
contentions, “The hearing officer did not let Respondent’s
counsel make any offer of proof
(see top of page 76 of the
hearing transcript).”
(Respondent’s Brief,
p.
22).
At this stage
of the proceeding the Agency was conducting recross examination
of Mr. Stropes during the petitioner’s case in chief.
Upon
objection by petitioner, the hearing officer ruled that
a
question by the Agency was beyond the scope of redirect.
At that
point, the Agency attempted to call the witness during the
petitioners case in chief,
a request the hearing officer denied.
The Agency then stated its intention to call the witness during
its case in chief.
The hearing officer noted that the Agency had
not subpoenaed the witness,
and that the hearing officer lacked
the authority to hold the witness there.
Then on page 76 of the
transcript:
Agency:
So, although this is an adversarial proceeding
--
H.O.:
I’m not arguing with you, counsel, over my rulings.
I
have ruled.
I don’t have to argue with you.
Agency:
Thank you very much.
At no point in this exchange, or the transcript as a whole, does
the Agency request an opportunity to make an offer of proof.
Absent some request by the Agency to make an offer of proof,
the
Board can find no error in the record.
The Board finds the
Agency’s concerns about procedural impropriety by the hearing
officer and respondent’s counsel without merit.
128—32
7
This Opinion constitutes the Board’s findings of fact and
conclusions of law in this matter.
ORDER
The June 20,
1990 Agency determination of a $50,000.00
deductible in this matter is hereby reversed and this matter is
•remanded to the Agency.
Section 41 of the Environmental Protection Act,
Ill.
Rev.
Stat.
1987,
ch.
111½, par.
1041, provides for appeal of final
Orders of the Board within 35 days.
The Rules of the Supreme
Court of Illinois establish filing requirements.
IT IS SO ORDERED
Board Member J. Anderson Dissented.
I, Dorothy N. Gunn,
Clerk of the Illinois Pollution Control
Board, hereby certify that the aboye Opinion and Order was
adopted on the
~‘/~1-day of
/i~(~-,-x2~~-&--’
,
1991,
by a
vote of
_______
Ill
Control Board
128—33