BEFORE THE POLLUTION CONTROL BOARD
OF THE
STATE OF ILLINOIS
TODD’S SERVICE
STATION,
)
RECEIVED
CLERK’S
OFFICE
Petitioner,
)
~
2
2
2003
vs.
)
SThTEOF
iLLINOIS
)
PCB No.
03-2
DollutIOfl
Control
Board
ILLNOIS
ENVIRONMENTAL
)
(UST Appeal
—
Pet’ition for Review and
PROTECTION AGENCY,
)
Hearing/Appeal)
)
Respondent.
)
PETITIONER’S
POST-HEARING BRIEF
NOW
COMES
the
Petitioner,
Todd’s
Service
Station,
and
its
contractor,
Midwest
Environmental
Consulting
&
Remediation
Services, Inc.
(“Midwest”)
by
their attorneys,
Elias,
Meginnes,
Riffle
&
Seghetti,
P.C.,
and
as
and
for
Petitioner’s
Post-Hearing
Brief,
states
as
follows:
BACKGROUND AND UNCONTESTED
FACTS
1.
Todd’s
Service
Station
retained Midwest
to
remediate
the
property
located
at
1303
Washington Road,
Washington,
Illinois,
LPC
#1790755036,
LUST
Incident
No.
981257
(the Property).
2.
The Property was classified as a High Priority
Site.
An initial
Corrective Action
Plan was prepared
and
submitted
the
initial
High
Priority
Site investigation
Corrective
Action
Plan
proposed
to
perform
preliminary
TACO
calculations.
The
final
Corrective
Action
Completion Report contained detailed TACO calculations
and groundwater modeling as well as
Highway Authority Agreements and engineered barriers.
Additional
personnel time
beyond the
initial CAP budget was needed to cover the costs associated with the site closure.
3.
The
Illinois
Environmental
Protection
Agency
(“IEPA”)
orally
authorized
Midwest
to
perform
the
additional
work.
Midwest,
with
the
prior
approval
of
the
JEPA,
performed the additional
work to obtain site closure.
4.
By letter dated April
18, 2002,
Midwest submitted a Budget Amendment,
seeking
payment
of
the
additional
amount
of
$7,483.58,
which
was
the
amount
reasonably
and
necessarily expended to complete the work on the project.
5.
By
letter dated May 23, 2002, the JEPA rejected the Budget Amendment.
6.
Subsequently, on June 3, 2002, Todd Birky ofMidwest spoke with Harry Chappel
and James Malcolm ofthe IEPA, and discussed the May 23, 2002,
rejection letter.
Midwest
was
informed that
the IEPA would
reconsider the denial ofthe Budget Amendment, if it received a
written request to do so.
7.
By letter dated June 4, 2002, Midwest made such a written request.
8.
By
letter dated June 7,
2002, the IEPA approved part of the previously submitted
Budget
Amendment,
but
rejected
the
remainder
thereof.
Specifically,
of
the
$7,483.58
requested,
$2,806.08
was approved,
and
$4,677.50
was rejected without comment.
That letter
was designated as a final and appealable order.
9.
Todd’s has paid Midwest the entire
$7,483.58.
10.
All
of the
personnel time,
which
comprises the
entire
$7,483.58
requested,
was
time
actually spent on the project.
11.
This
appeal
concerns
the
propriety
of the
$4,677.50
reduction
of the
amended
budget, which Petitioner respectfully maintains was
arbitrary and capricious.
12.
The hearing in this case was conducted on July
15, 2003.
2
SUMMARY OF CRUCIAL TESTIMONY
TODD BIRKY, ENVIRONMENTAL GEOLOGIST, MIDWEST
Mr.
Birky
oversaw the project
at
issue.
(Tr.
31)
He had worked on
approximately
75
petroleum contaminated sites.
(I~~.)
He prepared the budget which is
at issue in this
case.
(Iç.~)
The work performed pursuant to that budget included the TACO calculations
and modeling, two
Highway
Authority Agreements,
and the plans
and
budget work.
(Tr.
32).
Mr.
Birky
testified
that he
had frequent phone
contact with James Malcolm of the IEPA regarding the work which
was performed in the field.
(I4~)The project was complicated because ofthe presence of fiber
optic
lines (which
limited
the
locations
for subsurface
sampling).
(Iç~.)
Mr.
Malcolm
of the
IEPA
made
the
suggestion
to
do
off-site
sampling
across
a
major
roadway.
(Ide)
That
suggestion
significantly
added to
the cost ofthe project.
(Tr.
36).
The
off-site testing
and the
necessity of obtaining two
(2) Highway Authority Agreements were
a major portion of the costs
involved in this case.
Mr. Birky
identified Petitioner’s Exhibit
1
(which was admitted without objection) as the
personnel page
of the budget amendment which
was
submitted.
(Tr.
37).
He was personally
involved
in the preparation of that document.
Mr. Birky testified that Midwest spent at least the
number of hours depicted
on
Petitioner’s
Exhibit
1
in connection with the amended budget for
the project in question.
(Tr. 38).
AL
GREEN, PRESIDENT
OF MIDWEST
Mr. Green testified that Midwest has been in business since 1991,
and has been involved
in well over 300 LUST Fund projects.
(Tr.
13).
Mr.
Green provided an
overview of the project
in
question, the
difficulty
encountered,
and
the communication
and
approvals from
the
IEPA.
3
He testified extensively regarding the process of obtaining
the Highway Authority Agreements
and the additional work necessitated by the off-site testing.
Mr.
Green
identified
Petitioner’s
Exhibit
1
as
the
personnel
summary
sheet
from
the
corrective action plan budget amendment submitted to
the IEPA by Midwest.
(Tr. 22).
He testified regarding that Exhibit as follows:
(by Mr. Riffle)
Q.
I want to
spend
some time
looking at this
in detail.
I want to ask
you
a
couple general
questions
first.
Does this
document,
page
1
of Exhibit
1,
accurately
depict
the
number of hours
that
Midwest
spent
solely
in
connection
with the
scope ofwork covered by the amended budget?
A.
Actually there were probably more hours spent.
This was what we
deemed to
be
reasonable
and
acceptable to
submit in
as far as the time that
was
spent.
Q.
As
to each of the categories where
you have
specific hours
listed,
can you testify
unequivocally that Midwest spent at least that many hours on each
of those
categories for each of those
classifications of individuals
solely on
the
amended budget phase ofthe project?
A.
Yes.
(Tr. 22-23).
With respect to the hourly fee changes, Mr. Green testified as follows:
(by Mr. Riffle)
Q.
Looking now
at the hourly
rates,
I note that the
JEPA
challenged
three of those
rates.
They
happen
to
be
the
first three
on
that
listing.
If my
records
are
accurate,
they
reduced
the
hourly
fee
for
environmental
hydrogeologist from
$98.00
to
$85.00.
In your experience
in
the
environmental
field
is
the
$98.00
an
hour
amount
that
Midwest
charged
for
environmental
hydrogeologist reasonable and customary?
A.
Yes.
Q.
Turning now to
the
professional geologist
category
that
reduced
that from $110.00
to
$100.00,
in your view was the $110.00 an hour rate that you
charged reasonable and customary?
A.
Yes.
Q.
Thirdly,
they
have
reduced
the
senior
environmental
manager
category
from
a
$110.00
to
a
$100.00.
In your experience
is
a
$110.00
an hour
for senior
environmental manager
a reasonable
and customary
amount to
charge
for those tasks?
A.
Yes.
(Tr. 23-24).
4
Mr. Green testified as follows regarding the scope ofwork related to the amended budget,
and the reasonableness ofthe amounts charged:
A.
It would
have been for the actual TACO and tier for closure of the
site, the model
and calculation, the Highway Authority Agreements, and the final
closure documentation, the report to
the EPA and the final reimbursement for that
work.
Q.
The
total
amount
you
charged
for
that
phase of the
project
was
$7,483.58?
A.
Yes.
Q.
Has
that
amount
indeed
been
paid
by
Todd
to
Midwest
Environmental?
A.
Yes.
Q.
In your
experience
was
$7,483.58
a
reasonable
total
amount
to
charge for the scope ofwork that was covered by the amended budget?
A.
Yes.
Q.
In
your
experience
have
you
seen
instances
where
significantly
higher amounts have been charged for that type ofscope ofwork?
A.
Yes.
(Tr.
24-25).
HARRY
CHAPPEL, IEPA, UNIT MANAGER,
LEAKING UNDERGROUND STORAGE TANK SECTION
Mr. Chappel testified that he signed the June 7, 2002, letter which modified (reduced) the
amended budget.
(Tr.
51).
With
respect
to
the
“deductions”
for
the
number
of
hours
and
rates
approved,
Mr.
Chappel testified as follows
on direct examination:
The numbers reflected on
this table that show hours approved, are
the
hours
that
I
deemed
reasonable
for
the
additional
efforts
in
preparing
the
second budget and the Highway Authority Agreements and that I felt were above
and beyond the original budget was approved.
(by Mr. Kim)
Q.
What
did
you
base
what
you
believe
to
be
reasonable
on
those
specific deductions?
A.
My experience in preparing budgets
and reviewing them.
(Tr. 68).
5
On cross-examination Mr.
Chappel testified that
he had never been to the site in question
and
furthermore,
at
no point made an investigation of the unique data regarding the site, stating
in pertinent part, as follows:
(by Mr. Riffle)
Q.
Would
it
be
fair
to
say
that
every
site
where
you’re
doing
environmental clean-up has its own differences from site to site?
A.
Yes.
Q.
Do you
see
quite
a
variation in
the budget
proposed in
different
LUST sites that come by your office?
A.
Yes.
Q.
Do you review the environmental data relating to this site?
A.
No.
Q.
Have you ever been on that site?
A.
No.
Q.
Have
you ever reviewed the
maps or plans or anything
related to
the site?
A.
No.
Q.
Did
you
ever
speak with
Mr.
Malcolm
about that
difficulty
with
the utility lines that was encountered in terms of where the boring locations could
be located.
A.
Not that I remember.
(Tr. 81).
Mr.
Chappel
was
not
aware
of
the
processes
followed
in
obtaining
the
Highway
Authority
Agreements,
or the
difficulties
encountered.
(Tr.
69-70).
He
was
not
aware
that
obtaining
Highway
Authority
Agreements
can
be
a
tedious
and
time-consuming
process,
testifying as follows:
A.
I have no experience.
(Tr. 70)
With respect to the budget review process, Mr. Chappel testified as follows:
(by Mr. Riffle)
Q.
Do you have
any
generic rules
or rules of thumb
as to
how much
time you can approve for a particular NFR project?
A.
How many hours?
Q.
Right.
A.
That I can allot?
Q.
Right.
That you would normally allot
for an NFR.
6
A.
In determining a budget submittal, the number ofhours?
Q.
Correct.
A.
No, we don’t.
Q.
It’s entirely subjective?
A.
Correct.
(Tr. 73).
With respect to
reasonableness of hourly rates, Mr. Chappel testified as follows:
(by Mr. Riffle)
Q.
Do
you
take
into
consideration
the
reputation
and
ability
of
contractors when you determine the appropriateness ofhourly rates?
A.
No.
Q.
Regardless ofwhether somebody is very good or not so good, they
are going to get the same hourly rate?
A.
To the extent humanly possible, I try to do that,
yes.
(Tr. 75-76).
With respect to
the number of hours
actually expended by Midwest
on this project,
Mr.
Chappel testified as follows:
(by Mr. Riffle)
Q.
Do you
have any
specific
evidence that
the
hours claimed
in the
amended budget were not actually expended by
Midwest on this project?
A.
No, I do not.
(Tr.
71).
(by Mr. Riffle)
Q.
You
don’t
know
how
many
hours
actually
were
expended
by
Midwest on this project, correct?
A.
No.
(Tr. 77).
ARGUMENT
It
is
undisputed that
Midwest
expended
at
least
the number of hours
set
forth
in
the
amended budget (Petitioner’s Exhibit
1)
in order
to
properly
complete the project.
(Tr.
22-23;
38;
71; 77).
It is also undisputed that these hours were reasonably necessary, and were expended
at
the
direction
of the
IEPA
(or,
at
the
very
least,
with
their
full
approval).
(Tr.
32).
7
Additionally,
it
is
undisputed that
difficulties were
encountered on
the project
which
required
off-site testing, and the procurement oftwo
Highway Authority Agreements.
The
IEPA
has
never
articulated
any
valid
reason
for rejecting
more
than 62
of the
amount requested in the Amended Budget, other than Mr. Chappel’s testimony that the reduction
was based
on his
“experience
in preparing budgets
and reviewing them.”
(Tr.
68).
However,
Mr. Chappel has acknowledged that he had no evidence that the hours claimed were not actually
expended (Tr.
71) and that he did not know how many hours were expended by Midwest
on the
project
(Tr.
77).
He
claimed not
to
be
aware of the actual field activities,
Highway Authority
Agreements, or difficulties
encountered
on
the project.
He
never reviewed the environmental
data relating to the site.
(Tr.
81).
He apparently did not consult with Mr. Malcolm in making his
determination regarding the deductions (although it appears that
Mr. Malcolm
was actually the
author ofthe June 7, 2002
letter in which
$4,677.50
ofthe amended
budget amount of $7,483.58
was rejected).
Petitioner
respectfully
maintains
that
the
reduction
of
$4,677.50
from
the
Amended
Budget
was
improper, rising
to the level
of being
arbitrary and
capricious.
If the IEPA had
a
defined standard for reviewing budgets, and followed that standard, it would probably be entitled
to
a deferential standard of review, and petitioner would be required to establish that the decision
at
issue
was
arbitrary
and
capricious.
(See,
e.g.,
Town of Sugar Loaf v.
Illinois
Environmental
Protection
Agency,
305
Ill.App.3d
483,
712
N.E.2d
393,
238
Ill.Dec.
671
(5th
Dist.
1999)).
Even
under
that
standard,
Petitioner
should
prevail,
because
the
determination
at
issue
was,
indeed,
arbitrary
and capricious.
In City of East St.
Louis v.
East
St.
Louis Financial Advisory
Authority,
the
Illinois
Supreme
Court
explained
that
failure
to
follow
guidelines
set
by
the
legislature
is
grounds
for a finding
that the
agency’s decision
is
arbitrary
and
capricious.
188
8
lll.2d
474,
722
N.E.2d
1129,
243
Ill.Dec.
60
(1999);
see
also
Greer
v.
Illinois
Housing
Development
Authority,
122
Ill.2d
462,
505-06,
120
Ill.Dec.
531,
524
N.E.2d
561
(1988).
Absent such guidelines, however,
deferential review is not evenpossible.
Here it is clear that there is no established standard, and certainly no written standard,
applied by the IEPA.
Rather, the determination is purely subjective, varies from unit to unit, and
is not
susceptible to any meaningful comparison or analysis.
In the absence ofsuch criteria,
Petitioner respectfully maintains that discretionary review is not appropriate, and the higher
standard of arbitrary and capricious should not apply.
(~4)
Regardless of what standard is
applied, however, the deductions should be reversed.
CONCLUSION
For all
of the
foregoing
reasons, Todd’s
Service
Station
respectfully
requests
that
the
Final
Decision
be
reversed
or
modified
by
increasing
and
accepting
the
budget
as
initially
proposed, thereby allowing additional reimbursement in the amount of$4,677.50.
Respectfully submitted,
Todd’s Service Station, Petitioner
By:
-
Robert M. Riffle
Its Attorney
ROBERT M. RIFFLE
Janaki Nair
Elias, Meginnes, Riffle & Seghetti, P.C.
416 Main Street, Suite
1400
Peoria, IL 61602
(309) 637-6000
603-925
9
CERTIFICATE OF SERVICE
The undersigned certifies that on August 21, 2003,
a copy ofthe foregoing document was
served upon each party to this
case by
X
Enclosing a true copy of same
in an
envelope
addressed to the
attorney of record of each
party as
listed
below, with first
class postage fully prepaid, and
depositing each of said
envelopes in the
United States
Mail at
5:00 p.m. on
said date.
Personal deliveryto the attorney of record of each
party at the
address(es) listed below
Facsimile transmission with confirmation
by
United States Mail
—
Via Federal Express
-
Express Package
Service
-
Priority Overnight
Dorothy M. Gunn, Clerk
Illinois
Pollution Control Board
James
R. Thompson Center
100 W. Randolph Street
Suite 11-500
Chicago, IL 60601
Carol Sudman
Hearing Officer
Pekin City Hall
Council Chambers
100
South Capital Street
Pekin, IL 61554
John J. Kim
Assistant Counsel
Special Assistant Attorney General
Division ofLegal Counsel
1021 N. Grand Ave., East
P.O.
Box
19276
Springfield,
IL
62794-9276
Robert M. Riffle
Janaki Nair
Elias, Meginnes, Riffle & Seghetti,
P.C.
416 Main Street, Suite
1400
Peoria, IL 61602
(309) 637-6000
603-925
10