ILLINOIS POLLUTION CONTROL BOARD
April 17, 2003
RANTOUL TOWNSHIP HIGH SCHOOL
DISTRICT NO. 193,
Petitioner,
v.
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
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PCB 03-42
(UST Appeal)
PATRICK D. SHAW OF MOHAN, ALEWELT, PRILLAMAN & ADAMI APPEARED ON
BEHALF of PETITIONER; and
JOHN J. KIM, SPECIAL ASSISTANT ATTORNEY GENERAL, APPEARED ON BEHALF of
THE RESPONDENT.
OPINION AND ORDER OF THE BOARD (N.J. Melas):
On October 7, 2002, Rantoul Township High School District No. 193 (District or
Rantoul) timely filed a petition asking the Board to review a September 5, 2002 underground
storage tank (UST) fund reimbursement determination of the Illinois Environmental Protection
Agency (Agency).
See
415 ILCS 5/40(a)(1) (2002); 35 Ill. Adm. Code 105.404. The Agency
rejected the District’s proposed budget amendment to the high priority corrective action plan
concerning two leaking USTs at the District’s site located at 200 S. Sheldon Street in Rantoul,
Champaign County.
The District disputes the Agency determination regarding lack of documentation
concerning costs for bid proposals, relocation of underground utilities, removal of migration
pathways, backfill compaction and density testing, demurrage, specified personnel, and attorney
fees. The District contends and contends that all costs were necessary and required. For the
reasons below, the Board affirms the Agency’s denial decision on all costs except those related
to possible migration pathways, for which the Agency concedes reimbursement is appropriate.
After setting forth the facts and procedural history of this case and the legislative framework, the
Board will discuss the issues and explain its decision.
FACTS
The District operates a high school located at 200 South Sheldon Street, Rantoul,
Champaign County. Rec. 14. On May 20, 1997, the school district found a petroleum release
while removing two 500-gallon USTs. Rec. 100. Rantoul immediately notified the Illinois
Emergency Management Agency, and the release became UST fund Incident No. 970899. Rec.
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100. Rantoul submitted a site classification completion report to the Agency on November 13,
1998. Rec. at 47. The report identified a gas line as a potential migration pathway. Rec. at 49.
The Agency rejected the site classification report due to Rantoul’s failure to demonstrate that
migration pathways were adequately addressed. Rec. at 47. Rantoul submitted another site
classification report on July 1, 1999. The Agency rejected this report for failure to define the
setback zone and adequately address migration pathways, and directed Rantoul to propose a
groundwater investigation plan. Rec. at 50, 52. On September 28, 1999, Rantoul submitted an
amended physical soil classification and groundwater investigation plan to the Agency. Rec. at
54. The Agency approved the plan with modifications. Rec. at 55. The Agency directed
Rantoul to do borings near the gas line to be analyzed for indicator contaminants. Rec. at 57.
As requested by the Agency, Rantoul took the borings. Rec. at 82-84. From the results,
Rantoul determined there were three manmade migration pathways impacted by the release.
Rec. at 78. The migration pathways were: (1) an underground gas line, approximately six feet
from the tank pit; (2) an underground water line located about three feet east of the tank pit; and
(3) a storm sewer line located approximately thirty feet from the tank pit. Rec. at 77-78; Rec. at
84. A professional engineer certified these migration pathways as threatening human health or
human safety or having the potential to cause explosions. Rec. at 66-67. The Agency classified
the site as “high priority.” Rec. at 66-67.
Rantoul hired a consultant, Applied Environmental Technologies (AET), to perform
corrective action. Rantoul submitted a high priority corrective action plan, including budget, to
the Agency on August 21, 2001. The Agency approved the plan and budget with modifications
on October 5, 2001. Rec. at 89. The Agency approved $163,631.96 in corrective action costs
out of a total of $185,662.32 requested by Rantoul. Rec. at 91, 146. AET began to define the
boundaries of the soil and groundwater contamination plumes for Rantoul. Rec. at 103-104. The
locations of the utilities, including the gas and water lines, were different in the final plans than
in the maps submitted to the Agency in the original corrective action plan. Tr. at 28, 32-33, 46.
AET submitted an amended budget on behalf of Rantoul Township on May 8, 2002, requesting a
total of $241,303.63 in corrective action costs. Rec. at 8.
The Agency denied $77,671.67 in costs proposed in the budget amendment in a letter
dated September 5, 2003, approving only the $163,631.96 in corrective action costs approved in
the original budget. Rec. at 8, 16. The letter states that the submitted budget amendment
contains personnel costs that lack sufficient documentation. Rec. at 3, par. 1. The letter states
the budget amendment includes costs for unnecessary and unreasonable overnight mail charges
and costs for relocating underground utilities that that are not corrective action costs. Rec. at 3,
par. 2, 3. Costs associated with compaction of backfill materials, including personnel and
contractor time and the rental of soil compactors, were denied as not corrective action costs.
Rec. at 3, par. 4. Costs associated with the removal of “possible migration pathways” were
denied as not corrective action costs. Rec. at 4, par. 5. The Agency denied costs for demurrage.
Rec. at 4, par. 6. Finally, handling charges were approved only to certain percentages of the
cost. Rec. at 5, par. 7.
PROCEDURAL HISTORY
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Rantoul filed this petition with the Board on October 7, 2002. A hearing was held in
Springfield on February 18, 2003, at which Mr. Donald Grammer, a professional engineer at
Applied Environmental Technologies, and Mr. Jay Gadosh, an Agency employee, testified. On
March 14, 2003, Rantoul waived the decision deadline in this proceeding until May 15, 2003.
LEGAL FRAMEWORK
The Board's authority to review an Agency budget determination in UST reimbursement
claims arises from Section 57.7(c)(4)(D) and 57.8(i) of the Environmental Protection Act (Act).
415 ILCS 5/57.7(c)(4)(D), 57.8(i) (2002). Section 57.7(c)(4)(D) grants owners and operators the
right to appeal an Agency determination on a proposed plan to the Board in accordance with the
procedures of Section 40 of the Act. 415 ILCS 5/40 (2002). Section 57.8(i) of the Act grants the
right to petition the Board to review the Agency denial or partial payment of a UST fund
reimbursement request in the manner provided in Section 40 of the Act.
When seeking reimbursement from the UST Fund at a high priority site, the owner or
operator must supply the Agency with “an accounting of all costs associated with the
implementation and completion of the corrective action plan.” 415 ILCS 5/57.7(c)(1)(B). The
owner or operator must prove that the costs associated with the budget are reasonable, will be
incurred in performing corrective action, and will be used to satisfy only the minimum
requirements of the Act. 415 ILCS 57.7(c)(4)(C). If the Agency denies the budget, the Agency
must provide the owner or operator in writing within 120 days: (1) the sections of the Act or
Board regulations that would be violated if the budget were approved; (2) an explanation of the
Board regulations that may be violated if the budget were approved; (3) the specific information
that the Agency deems the budget lacks; and (4) the specific reasons why the Act and Board
regulations would not be met if the budget were approved. 415 ILCS 57.7(c)(4)(D).
Regarding legal defense costs, Section 732.606(g) of the Board rules provides:
Costs ineligible for payment from the Fund include but are not limited to: . . .
Legal defense costs including legal costs for seeking payment under these
regulations unless the owner or operator prevails before the Board and the Board
authorizes payment of legal fees [415 ILCS 5/57.8(l)]. 35 Ill. Adm. Code
732.606(g).
DISCUSSION
Costs Not Deemed Corrective Action
Bid Proposals
Rantoul argues that the Agency should reimburse it for $11,820 in costs to prepare the
bid proposals because bid preparation is a condition precedent for school districts to comply with
Section 57.7 of the Act. Br. at12. Rantoul explains that letting bids is necessary for a school
district prior to awarding a bid to a contractor pursuant to the Illinois Constitution and the School
Code. Ill. Cost. Art. 7, Sec. 8; 105 ILCS 5/10-20.21. Furthermore, Rantoul contends that the
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letting of bids proves Rantoul chose the most reasonable cost alternative. The Agency’s denial
letter stated: “Bid proposals are not required for compliance with the LUST Program; therefore,
activities related to the Bid Specifications must be removed from the budget.” Rec. at 4.
The Agency argues that just because letting bids is required by the School Code, it does
not mean that the Agency should reimburse for that activity through the UST Fund. Resp. at 6.
The Agency maintains that letting bids is not a corrective action
The Board affirms the Agency’s decision. The Board recognizes that by law, school
districts must let bids before awarding a bid to a contractor and agrees that letting bids can help
show a cost is reasonable. However, the Board finds that costs incurred for preparing the bid
specifications are not costs incurred for performing corrective action. Though the costs incurred
for bid specifications themselves are not reimbursable, they are useful for showing that other
costs are eligible for reimbursement, specifically that the corrective action costs are reasonable.
The Board affirms the Agency’s denial of these costs.
Relocation of Underground Utilities
Rantoul argues that there was no way to work around the utility lines at issue and that the
utilities were active and could not be simply removed. Br. at 15; Reply at 8. Rantoul contends
the utility lines had to be relocated or the school would have had to be closed down.
Id
.
The Agency maintains that while the costs of removing utility lines can be reimbursable,
the costs of relocating utility lines are not. Resp. at 8. In its denial letter, the Agency notes that
the costs of removing the utility lines exceed the minimum requirements for corrective action
necessary to comply with the Act, Section 57.5(a), and Board rules, Section 732.606(o). 415
ILCS 5/57.5(a); 35 Ill. Adm. Code 732.606(o). The Agency concludes that relocating utility
lines is not corrective action. Resp. at 8.
Budget Certification Form
. Rantoul argues that the Agency’s budget certification form
is illegal in form and intent. Br. at 17. Both Rantoul and a professional engineer working at the
site signed a statement provided by the Agency certifying that Rantoul is not seeking
reimbursement for costs associated with utility replacement. Rec. at 27. Rantoul contends that
the statement, called a budget certification form, is an illegal form. Br. at 17. Rantoul maintains
this is so because the form requires a certified engineer to agree not to include costs associated
with utility replacement, among other costs, in the budget certification form for reimbursement.
Most of the costs listed come from the language of the Act or Board rules. However, the Act and
Board rules do not contain specific language regarding utility replacement. Therefore, Rantoul
contends that by creating a form prohibiting those particular costs from reimbursement, the
Agency has essentially executed a “backdoor” rulemaking regarding such costs, citing Platolene
500 v. IEPA, PCB 92-9, at 7-8 (May 7, 1992).
The Agency maintains that the budget certification form is not its justification for
denying reimbursement to Rantoul for utility relocation. Rather, the Agency denied costs for
replacement and/or relocation because utility relocation is not corrective action. Rec. at 3-4.
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The budget certification form, with the engineer’s signature, is simply proof that Rantoul
acquiesced to this position, according to the Agency. Resp. at 11.
Along with an application for payment, the Act requires certification from a professional
engineer, acknowledged by the owner or operator. 415 ILCS 5/57.8(a)(6)(A). Under Section
732.606(o), “costs for corrective action activities and associated materials or services exceeding
the minimum requirements necessary to comply with the Act” are ineligible costs. 35 Ill. Adm.
Code 732.606(o). The Board finds the budget certification form did not conflict with the
requirements of the Act or Board rules.
Rantoul’s argument thatrelocation of the underground utilities was necessary for it to
complete site remediation shows Rantoul’s hardship in completing construction, but does not
prove relocation was a corrective action. Relocation itself was not necessary to comply with the
minimum corrective action requirements of the Act and Board rules. Accordingly, the Board
finds the Agency properly denied costs associated with the relocation of underground utilities.
Removal of Possible Migration Pathways
The Agency concedes that costs related to the removal of old drain lines should have
been approved in the amended budget request. Resp. at 11-12. The costs amount to $889.50 for
excavation, removal, and plugging of possible migration pathways. The Board remands this to
the Agency for approval.
Backfill Compaction and Density Testing
Rantoul alleges that costs to compact backfill materials are eligible for payment from the
UST fund because the Agency approved the costs in the original budget. Br. at 21.
Additionally, Rantoul contends these costs were necessary to create a proper bed for asphalt or
concrete as an engineered barrier. Br. at 22. Rantoul argues that because it relied on the
Agency’s approval of the original budget in spending money to backfill the area in question, the
Agency should reimburse for the costs of compaction in the amended budget as well. Br. at 21.
The Agency responds that pursuant to Section 732.606(w) of the Board rules, costs
associated with the compaction of backfill material are ineligible for payment from the UST
fund. Resp. at 12; 35 Ill. Adm. Code 732.606(w). The Agency concedes that the costs were
originally approved, but states that the approval was a mistake, understandable because of the
volume of budget requests the Agency reviews every year.
Id
.
The Agency also characterizes Rantoul’s argument as a claim of collateral estoppel
against the Agency. Resp. at 13. The Agency continues that to collaterally estop the
government, the moving party must show the government made a misrepresentation with
knowledge that the misrepresentation was untrue. Medical Disposal Services, Inc. v. IEPA, 286
Ill. App. 3d 562, 677 N.E.2d 428 (1st Dist. 1997). The Agency contends that in this case the
approval was a mistake, and that the Agency did not knowingly misrepresent that the compaction
costs could be approved. Resp. at 13.
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The Board finds that none of the backfill compaction costs are reimbursable. As noted by
the Agency, backfill compaction costs are ineligible pursuant to the Board rules. 35 Ill. Adm.
Code 732.606(w). The purposes of the UST fund are narrow. Strube v. PCB, 242 Ill. App. 3d
822, 610 N.E.2d 717, 851 (3rd Dist. 1993). The Act establishing the UST fund limits
reimbursement for high priority sites to corrective action that mitigates any threat to human
health, human safety or the environment resulting from the UST release. 415 ILCS
5/57.7(c)(1)(A). Additionally, the Board has held that an action playing primarily a restorative
role, even if partially contributing to corrective action, is not necessary to meet the minimum
requirements of the Act. Eugene Graham v. IEPA, PCB 95-89 slip op. at 30 (Aug. 24, 1995).
Rantoul has failed to show that backfill compaction associated with the installation of the
engineered barrier will mitigate any threat to human health, human safety or the environmental
resulting from the release. The amended petition states the engineered barrier was needed for
bus traffic. Rec. at 20. Therefore, it appears from the record that the purpose of the engineered
barrier and related backfill compaction is to restore the site for bus traffic.
The Board also notes that Rantoul did not claim that collateral estoppel requires the
Agency to approve costs for backfill compaction. Rantoul did not contend the Agency
knowingly misrepresented that it would reimburse the compaction costs in the original petition.
Rather Rantoul argued that the Agency approved backfill compaction costs contained in the
original budget because the corrective action plan called for an engineered barrier. However, for
the reasons stated above, the Board affirms the Agency’s denial of all of the backfill compaction
costs.
Demurrage
Rantoul argues that $11,820 in demurrage costs are reimbursable because they are for
additional personnel time of the School District’s professional engineer and professional
geologist, and not for delay, as the Agency has characterized the cost. Reply at 11-12. Rantoul
maintains that wet weather and problems with compaction commanded additional engineering
services. Reply at 12.
The Agency maintains that its definition of demurrage was correct and that the Agency
was proper in denying these costs as ineligible. Resp. at 14. The Agency points out that in the
past the Board has interpreted demurrage to mean “standby charges.” Clarendon Hills Bridal
Center v. IEPA, PCB 93-55, slip op. at 28 (Feb. 16, 1995). The Agency contends there is no
support in the Act, Board rules, or Board precedent for Rantoul’s interpretation. Resp. at 14.
The Board determines that the retention of the professional engineer and geologist
beyond the predicted number of hours does not fall within the definition of demurrage.
Demurrage relates to the detention of a vehicle or vessel beyond the time necessary for loading
or unloading. Clarendon Hills, PCB 93-55, slip op. at 28-29. Therefore, the Agency was
incorrect in characterizing these costs as demurrage. However, the extra hours the engineer and
geologist spent on November 19 and 26, 2001, related to backfilling. Rec. at 31. The Board has
determined above that backfilling compaction is not a reimbursable activity. Furthermore,
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preparing the bid specifications was determined not a reimbursable activity, so the Agency also
properly denied the additional costs of coordinating such specifications. Rec. at 0034.
The remaining personnel costs denied as demurrage include additional time spent by
consultants due to another group’s poor coordination and additional time necessary to coordinate
the job with the ongoing school construction. Rec. at 0024. Rantoul did not show these
activities were for corrective action nor that they were incurred to meet the minimum
requirements of the Act and Board regulations. The Board affirms the Agency’s denial of these
costs.
Costs Lacking Sufficient Documentation
Personnel Costs
Rantoul argues that the Agency erroneously denied reimbursement for personnel costs.
Rantoul contends that there is sufficient documentation to determine whether the additional
personnel costs relate to corrective action. Br. at 26. Rantoul acknowledges that remand with
respect to these charges may be necessary.
The Agency argues it properly denied the personnel charges. The Agency explains that
because the personnel costs were intermingled with costs deemed ineligible for approval, the
Agency could not determine how to apportion the costs. Reply at 14. The Agency also contends
it is Rantoul’s responsibility to show that the personnel costs related to some corrective action.
Reply at 15.
When requesting reimbursement from the fund, the owner or operator must provide an
accounting of all costs (415 ILCS 57.7(c)(1)(B)) and demonstrate the costs are reasonable and
will not be used for corrective action activities in excess of those required to meet the minimum
requirements of the Act (415 ILCS 57.7(c)(1)(C)). The documents Rantoul submitted regarding
the personnel charges do not show the costs are reasonable. Rantoul did not present any
testimony at hearing explaining how the Agency record demonstrates that these costs are
reasonable and associated with reimbursable corrective action activities. Therefore, the Board
finds the Agency was proper in denying these costs.
Attorney Fees
Rantoul requests the Agency pay Rantoul’s legal fees from the UST fund under the
prevailing party provision of the Act.
See
415 ILCS 5/57.8(l).
While the Board has discretion to award attorney fees in cases where the petitioner
prevails, the Board does not authorize payment of attorney fees in this proceeding. The Board
denies reimbursement of attorney fees on the grounds that Rantoul prevailed only on the issue of
costs related to the removal of possible migration pathways, to which the Agency conceded.
CONCLUSION
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For the reasons stated above, the Board affirms the Agency’s denial of costs associated
with preparing bid specifications, relocating underground utilities, backfill compaction and
density testing, demurrage, personnel costs, and attorney fees. The Board reverses the Agency’s
denial of costs related to the removal of possible migration pathways.
This opinion constitutes the Board’s findings of fact and conclusions of law.
ORDER
For the reasons discussed above, the Board affirms the Agency’s September 5, 2003,
determination that costs to prepare bid specifications, relocate underground utilities, backfill
compaction and density testing, demurrage, personnel costs, and attorney fees are not
reimbursable. The Board reverses the Agency’s denial of costs related to the removal of possible
migration pathways, which the Agency also concedes are reimbursable, and remands this issue to
the Agency for approval in the form of a newly amended corrective action plan budget review
letter concerning Rantoul’s UST fund incident no. 970899 request.
IT IS SO ORDERED.
Section 41(a) of the Environmental Protection Act provides that final Board orders may
be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the
order. 415 ILCS 5/41(a) (2002);
see also
35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.
Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois
Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The
Board’s procedural rules provide that motions for the Board to reconsider or modify its final
orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code
101.520;
see also
35 Ill. Adm. Code 101.902, 102.700, 102.702.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board
adopted the above opinion and order on April 17, 2003, by a vote of 6-0.
Dorothy M. Gunn, Clerk
Illinois Pollution Control Board