IN THE

MATTER OF:

AMENDMENTS TO REGULATION

OF

PETROLEUM

LEAKING

UNDERGROUND

STORAGE TANKS

35

ILL.

ADM. CODE 732

NOTICE

OF FILING

RECEIVED

CLERK’S

OFFfCE

DEC

1

3

2001

STATE OF ILLINOIS

Pollution

Control Board

To:

See Attached

Service List

Dated:

~e~1~1

e

r

II

,2001

~~LJC

One otlts Attorneys

J.

Randle Schick

Assistant Chief Counsel

Illinois

Department of Transportation

2300 South

Dirksen Parkway

Springfield,

IL

217/782-3215

r

n

~

,

‘~

,~

‘~

~

BEFORE THE lLLIN~l~

~aL4JTION ~dNTROL BOARD

01-26

)

)

)

(Rulemaking

—

Land)

/e

.///

PLEASE TAKE NOTICE that

I

have today filed with the Office of the Clerk of the

Illinois

Pollution Control

Board Comments of the Illinois Department of Transportation on the

proposed

amendments to

Regulation

of Petroleum Leaking Underground

Storage Tanks.

THE

ILLINOIS

DEPARTMENT OF TRANSPORTATION

By:

This filing submitted

on

recycled paper

---

CLERK’S OFFICE

BEFORE THE

ILLINOIS POLLUTION

CONTROL BOARD

DEC

132001

STATE OF ILLINOIS

IN THE

MATTER OF:

Pollution

Control

Board

)

)

R01-26

)

(Rulemaking-land)

Amendments to 35

III. Adm.

Code 732:

)

Regulation of Petroleum Leaking Underground

)

Storage Tanks.

)

COMMENTS OF THE

ILLINOIS

DEPARTMENT OF TRANSPORTATION

The Illinois

Department of Transportation

(“IDOT”) appreciates this opportunity to

comment on the proposed amendments to

the Petroleum Leaking

Underground

Storage Tanks

Regulations, 35

III. Admin.

Code

732.

lOOT generally supports the proposed amendments.

However, IDOT is concerned that amendatory language

allowing costs incurred for MTBE

remediation after receipt

of a

No

Further Remediation

Letter (“N FR Letter”) in subsection

732.606(kk)

might be construed to

preclude indemnification costs pursuant to a court order or

settlement agreement after receipt of an NFR Letter.

Specifically,

IDOT is concerned that costs

it

requests an owner or operator to reimburse, after an

NFR Letter has

been

issued,

in dealing

with contaminated

soil and groundwater that it has allowed to

remain under the highway

right-of-

way pursuant to

a highway

authority agreement with that owner or operator under 35

III. Admin.

Code 742.1020 will not be

indemnified

by the leaking

underground storage fund (“LUST Fund”)

because of subsection

732.606(kk).

lOOT believes that that result would

not be in

keeping with

the indemnification provisions of the Illinois Environmental Protection Act or in the spirit of the

risk-based

approach to

corrective

action found

in the Act.

IDOT proposes the following amendatory language for Section 732.606(kk):

kk)

Costs incurred for additional

remediation after receipt of a No Further Remediation

Letter for the occurrence for which the No Further Remediation Letter was

received,

---

except costs incurred for MTBE

remediation pursuant to subsection 732.310(l)(2) of

this

Part or indemnification

costs incurred

pursuant to a

court order or settlement

agreement

(including a highway

authority agreement under 35.

III. Admin.

Code

742.1020),

between the owner or operator and a third-party meeting the

requirements

of 415

ILCS 5/57.8(c).

The

double

underlined language

is proposed

by

IDOT.

IDOT has

some experience related to

this issue.

When

IDOT first entered into highway

authority agreements in

1997,

it attempted to include the following language

in the agreement:

If the release

of contaminants in

the right-of-way is from

a

leaking underground

storage tank of petroleum

and the conditions and

requirements of the Illinois

Environmental

Protection Act and regulations promulgated

by authority of that

Act have

been

met, reimbursement payments

to the Department pursuant to

this

Agreement may

be indemnified

by the

Leaking

Underground Storage Tank

Fund,

as the Illinois Attorney General

has reviewed and

approved this

Settlement Agreement under Section 57.8(c)of the Act.

The Department shall

provide sufficient documentation

to Owner/Operator for a

request for

indemnification

to

IEPA.

Owner/Operator shall reimburse the Department as

required by

this Agreement for costs indemnified

by the

Leaking

Underground

Storage Tank Fund within

30 days

of receipt of those funds.

This provision

shall

survive

a

“No Further Remediation” determination for the Site and

last for the

duration of this Agreement.

The Illinois

EPA objected to this language and would

not approve agreements with this

language

in them.

It considered these

costs

to be

remediation costs

after the NFR Letter,

and,

therefore,

ineligible under subsection 732.606(kk).

It continues to take that position.

The

Department has

entered into nearly five hundred highway authority agreements without this

language.

---

However,

IDOl respectfully disagrees and

believes that this subsection does not govern

indemnification costs

under subsection 5/57.8(c) of the Illinois

Environmental Protection Act.

There are two types of costs for which Section 5/57.8

contemplates reimbursement from the

LUST Fund:

1)

corrective

action costs,

under subsection

5/57.8(a), and

2)

indemnification

costs under subsection

5/57.8(c).

Corrective action

costs

may well be

ineligible after an

NFR Letter if subsection 732.606(kk) says

they are.

Indemnification

costs,

however, are different than

corrective action costs,

as Section

5/57.8

recognizes

in

many subsections by referring to “costs of corrective action or

indemnification.”

They relate to costs

arising from a “legally enforceable judgment entered

against the owner or operator” or a “settlement with a third-party

due to

a release of petroleum

from

an

underground storage

tank.”

415 ILCS 5/57.8(c)

Indemnification costs

arise from claims by third-parties which result in

a judgment or

settlement

agreement that

may arise before,

during or after an NFR Letter.

As the Board

noted

on

page 9 to the preamble to

this proposed

rule, “The Agency also

stated that the NFR Letter

does

not necessarily relieve the owner or operator for off-site

contamination.”

The proposed

rule recognizes that

in

Section 732.411 (f), where it states, “The owner or operator is not relieved

of responsibility to clean

up

a release that has

migrated beyond the property boundary

even

where off-site access

is denied.”

It is this off-site

contamination and costs associated with

it with

which IDOT is concerned,

and which are dealt with

by highway authority agreements and

the

indemnification

provision

in the Act.

A highway authority

agreement is both

an

institutional control under Section

35

III.

Admin.

Code 742.1020 and a settlement agreement under Section

5/57.8(c) of the Act.

As an

institutional control,

it invariably is used

by the owner or operator to obtain

an NFR Letter. When

that

is obtained, under the Agency’s policy,

that is when it ceases to

be effective as a settlement

agreement to the owner or operator.

As a result of that policy, the owner or operator has to

---

make a

Hobson’s choice to:

1) either avoid entering the agreement and expend vast sums of

money remediating the highway right-of-way and

restoring pavement so that it can possibly

obtain reimbursement of those costs from the LUST Fund, or 2) enter

into the agreement and

obtain the NFR Letter and

risk that IDOT will some day excavate through the contaminated area

and request

reimbursement for those

costs for which the ownerwill, according

to

the Agency,

no

longer be eligible for reimbursement.

IDOl

has had

several “mom

and

pop” owners refuse

to enter the agreement for that

reason,

and their sites,

IDOT believes,

are still

unresolved.

Many

mom and

pops have

reluctantly entered an agreement despite this issue,

and

IDOT may soon be pursuing

reimbursement from some of them.

They will not be

reimbursed from the LUST Fund,

and will

face severe financial

hardship from our claim.

lOOT does not believe the

law requires that

result.

lOOT believes that its settlement agreement/highway authority agreement and the

circumstances surrounding it comply with the requirements for indemnification found

in

subsection 5/57.8(c).

In accordance with that subsection,

it is a settlement with a third party due

to a release of petroleum from an

underground storage tank,

and the Attorney General has

reviewed and

approved its

reasonableness.

This subsection also

requires that “the owner or

operator has

satisfied the requirements of subsection

(a) of this Section.”

These requirements

are

not obvious, nor do they

all seem

to fit indemnification

circumstances very well.

The Board

has not adopted any rules

that would clarify what those

requirements are.

Perhaps now

it would

wish

to do so.

Apparently, the requirements that are referred to are found

in

subsection

5157.8(a)(6).

That subsection provides:

(6)

For purposes

of this Section, a complete application

“for

payment.

.

.

after

completion

of any other required activities

at

the underground storage tank site”

shall consist of:

---

(A)

A certification from a

Licensed

Professional

Engineer as required

under this Title

and

acknowledged by the owner or operator.

(B)

A statement of the amount approved

in the plan and the amount actually sought

for payment along

with a

certified statement

that the amount

so sought shall

be

expended in conformance with the approved

budget.

(C)

A copy of the Office of the State Fire Marshal’s eligibility

and deductibility

determination.

(D)

Proof that approval

of the payment requested will not result

in the limitations set

forth

in

subsection (g) of this Section being

exceeded.

(E)

A federal taxpayer identification number and

legal status disclosure certification

on

a form prescribed and provided

by the Agency.

Presumably any owner or operator that obtained

LUST Fund reimbursement for its

corrective

action and obtained an NFR Letter has

complied with these requirements.

The

Agency

nevertheless would no doubt

review compliance with these

requirements

at the time the

owner or operator submits an

application for

reimbursement for costs of indemnification,

before,

during

or after receipt of an

NFR Letter.

Compliance with

requirements

A,

C, 0 and

E should

be

relatively straightforward.

How to achieve

compliance with requirement

B,

however,

in any

indemnification

scenario is not apparent to this petitioner.

How is the amount of a third party

settlement for costs or a court order for costs incurred due to

a release

of petroleum

onto off-site

property supposed to fall within an

owner’s approved plan

and

an approved

budget?

In

IDOT’s

context,

how does an owner or operator presented with our claim for

reimbursement under a settlement agreement obtain plan

and budget approval?

IDOT’s

experience has

been that the amount of contaminated soil that needs to be removed

from an

excavation and deposited

in a

landfill can only

be determined

at the time of the highway project

is being

performed.

For instance,

our construction activities

can vary from our design plans.

There is really

no opportunity to obtain plan

and budget approval

in advance of the project that

---

would be

meaningful, unless it were simply a review of our contract specifications for dealing

with the contaminated soil and our bid

items,

such as,

“$55 per cubic yard for disposal of

contaminated soil,”

for reasonableness.

A review by the Agency after the project,

however,

would make more sense.

A rule would

help clarify whether requirement

B makes sense in

the

indemnification

context, and

specify a

more meaningful Agency review for reasonableness of

the settlement activities and cost amounts.

IDOT would

be happy to work with the Agency,

Board and others to

develop such a

rule.

To

further support its argument,

IDOT

has attached a copy

of pages 81

and 82 from

an

August 6,

1999 draft of a proposed

rule change

to Section 732.606(kk) from the Agency to

the

Illinois Environmental Regulatory

Group, as Exhibit A.

The Agency

proposal would

have

included indemnification as an

ineligible cost after receipt of an

NFR Letter.

That proposal

would indicate that the Agency thought that reimbursement for indemnification had

not yet,

but

needed to

be,

ruled

out after an NFR Letter.

IDOT does

not know why this amendatory

proposal was removed from

subsequent drafts.

The inference is that indemnification is not

prohibited

by this subsection, even though the Agency, to the petitioner’s

knowledge, still

takes

the position that it is not willing to open up

LUST Fund

reimbursement after an

NFR Letter.

That

it is now willing to do so for MTBE

cleanup shows that

its post NFR Letter policy is not really

written

in stone and

does not have

to be.

lOOT does

not only believe

that the Agency’s position on

indemnification is not in

accord

with the Illinois

Environmental Protection Act,

but also

not with the spirit of Brownfield and risk-

based cleanup initiatives.

The Agency’s position drives the owner or operator toward the

cleanup of the right-of-way now so that LUST Fund reimbursement

can

be an

obtained option.

That cleanup is totally unnecessary

to

protect human health and environment

because the

owner or operator could instead enter into a highway

authority agreement to do

so.

The

Agency,

however, cannot force the owner or operator to choose the latter risk-based option,

but

its policy is driving

it

to the former.

---

That cleanup is not in the interest of the Agency,

as it forces the Agency to expend

large

sums of LUST Fund dollars on an

avoidable and expensive cleanup of the right-of-way.

That

cleanup

is not

in the interest of the owner or operator who needs LUST Fund

reimbursement,

your mom

and

pops, who will have to take the risk of spending large

sums of money to cleanup

the right-of-way for which

at

best it will have to wait

for reimbursement and

at worst will be

denied

part of the reimbursement.

That cleanup is also not in the interest of the Illinois

Department of Transportation.

lOOT

has no desire to

shut down

its roads and

have concrete torn up for a corrective action

that could

be

avoided by

a

highway authority agreement.

The right-of-way in these urban areas, where

many gas

stations are found,

is also complicated,

full of utilities and storm sewers,

so that work

in these

areas

is difficult.

For all of these reasons,

it makes good

policy sense to encourage

highway authority agreements, especially for small scale gas

station owners,

by allowing claims

after

an

NFR Letterto be

indemnified by the LUST

Fund.

Respectfully submitted,

ILLINOIS

DEPARTMENT OF TRANSPORTATION

By:

~

~LJ

J.

Ran

le Schi

k

Assistant Chief Counsel

Illinois Department

of Transportation

2300 South Dirksen Parkway

Springfield,

IL

62764

217/782-3215

Dated:

~

j9e~r~

if

,2001

This Comment is on

recycled paper

---

8/6199

DRAFT

minimum requirements of the

Act and regulations:

z)

Costs incurred after completion ofearly action activities in accordance with Subpart

B

by owners or operators choosing, pursuant to

Section 732.300(b) ofthis Part, to conduct

remediation sufficient to satisfy the remediation objectives;

aa) Costs

incurred

after

completion

of

site

classification

activities

in

accordance

with

Subpart C by owners oroperators choosing, pursuant to Section

73 2.400(b) or (c) of this

Part,

to conduct remediation sufficient to satisfy

the remediation objectives:

bb) Costs ofalternative technology that exceed the costs ofconventional technology;

cc)

Costs forinvestigative activities and related services ormaterials for developing

a High

Priority

corrective

action

plan

that

are

unnecessary

or

inconsistent

with

generally

accepted engineering practices or unreasonable costs for justifiable activities, materials

or services:

dd) Costs

to

prepare site classification plans

and

associated

budget

plans

under

Section

732.305.

to

perform

site

classification

under

Section

732.307,

or

to

prepare

site

classification

completion

reports

under

Section

732.309,

for

sites

where

owners

or

operators have elected to classify under Section 732.3 12;

ee) Costs

to

prepare site classification

plans

and

associated

budget

plans

under

Section

732.3

12.

to

perform

site

classification

under

Section

732.312.

or

to

prepare

site

classification

completion

reports

under

Section

732.3 12.

for

sites

where

owners

or

operators have performed classification

activities under Sections 732.305. 732.307.

or

732.309:

ff)

Costs requested that are based on mathematical

errors:

gg)~Costs

that lack supporting documentation;

hh) Costs proposed as part of a budget plan that are unreasonable;

ii)

Costs incurred during’ early action that are unreasonable;

jj)

Costs incurredat a site that has entered the Site Remediation Program under Title XVII

and 35

Iii. Adm.~Code

740; ~4

kk) Costs incurred for additional

remediation.ncluding indenmnification.

after receipt ofa

81

EXHI BIT

---

8/6/99

DRAFT

No Further Remediation Letter for the occurrence for which the No Further Remediation

Letter was received, except costs

incurred for MTBE remediation~pursuant

to

Section

732.3 10(i)(2~

ill

Handlin,g charges for subcontractor’s costs that have been billed directly to the owneror

operator:

and

~

Handling

charges

for subcontractor’s costs

when

the contractor has

not

paid

the

subcontractor.

(Source:

Amended at 21111.

Reg.

3617, effective July

1,

1997)

Section 732.607

Payment for

Handling Charges

Handling charges are eligiblefor payment only ifthey are equal to or less than the amount

determined by thefollowing table:

SUBCONTRA CT

OR FIELD

24’

PURCHASE COST;

SO -55,000

S5.00l -575000

515.001

-S50,000

S50.001

-5100.000

5/00,000

-

Section 732.608

ELJGIBLE HANDLING CHARGES

ASA PERCENTAGE OF COST

12

$600 PLUS 10

OFAMOUNT OVER $5,000

$1,600 PL US 8

OFAMOUNTOVER S15,000

$4,400 PL US 5

OFAMOUNTO VER 550,000

S6,900

PLUS

2

OF AMOUNT

OVER

5/00000

(Section

57.8(gf) ofthe

Act):

Apportionment of Costs

a)

The Agency may apportion payment of costs if:

1)

The

owner

or operator

was deemed eligible

to

access

the fund for

payment

of

corrective action costsfor some,

but not all, ofthe underground storage tanks at the

site,’ and

2)

The

owner or operator failed to jusr~j5iall costs

attributable

to

each underground

storage tank at the site.

(Derived from Section

5 7.8(m) ofthe Act)

b)

The Agency

will

determine, based on

voiume

or number of tanks,

which

method

of

82

---

R01-26

SERVICE LIST

In the Matter of:

Amendments to Regulation of

Petroleum Leaking Underground

Storage

Tanks:

35

Iii.

Adm.

Code 732

Revised May 17,

2001

Liss

Kenneth W.

Ludewig

Pat

company

Black & Veatch

Kuhlmann Design Group

Chemical Industry Council of Illinois

Inland/Chappel Environmental

Pioneer Environmental

Sidley Austin Brown & Wood

Division of Legal Counsel

Illinois Environmental Protection Agency

Wildman, Harrold,

Allen& Dixon

Attorneyat Law

Arcadis

Goodwin Environmental Consultants, Inc.

SEECO Environmental

Services, Inc.

Clerk ofthe Board

Illinois Pollution Control Board

Herlacher Angleton Associates, LLC

Huff & Huff, Inc.

Carison Environmental, Inc.

United Science Industries, Inc.

Andrews

Engineering,

Inc.

Caterpillar

Tech Center

Karaganis

& White, Ltd.

United Environmental Consultants, Inc.

Senior Project Manager

Clayton Group Services, Inc.

Ross & Hardies

Pioneer Environmental

Address

101

N. WackerDrive,

Suite

1100

15 East Washington

9801 W. Higgins

Road,

Suite

515

601

W. Monroe

924

Cherokee Drive

144

Laconwood

1000

N. Halsted

Suite 202

Bank OnePlaza

10

South Dearborn Street

225

W. Wacker Drive,

Suite 3000

2621 Montego,

Suite

C

1021 North Grand Avenue East

P.O. Box

19276

225 W. WackerDrive,

Suite 3000

1035

South Second Street

35

East Wacker,

Suite

1000

400 Bruns Lane

7350 Duvon Drive

100 West Randolph Street

Suite 11-500

8731

BluffRoad

512 W. Burlington,

Suite

100

65 E. Wacker Place,

Suite

1500

P.O.

Box

360

3535

Mayflower Boulevard

BldF

P.O. Box

1875

150 N. Michigan

1000 N. Halsted

Suite 202

lname

Anderson

Aronberg

Bianco

Bonczyk

Carson, P.E.

Chappel,

P.E.

Consalvo

fhame

Scott

Gany

Christie

Bruce

Robert A.

Harry A.

Cindy

Dickett

William

G.

citystate

Chicago,

IL

Belleville, IL

Rosemont, IL

Springfield, IL

Springfield, IL

Springfield, IL

Chicago,

IL

Wildman, Harrold,

Allen& Dixon

CORE Geological Services, Inc.

Assistant Counsel

zip

60606

62220

60018

62704

62707

62707

60622

Dombrowski

Dye

Dyer

Falbe,

Esq.

~Fly~.i’i

Glenn

Goodwin, P.E.

Gray

Gunn

Herlacher

Huff, P.E.

James

Kelly,

PE

Leo P.

Ron

Judith S.

Lawrence W.

Neil F.

Sid

DanielI.

Collin W.

Dorothy

ThomasL.

JamesE.

Kenneth

Joe

Chicago,

IL

,

60603

Magel

Moncek

Nienkerk, P.G.

Barbara

George F.

Monte M.

Chicago,

IL

Springfield, IL

Springfield, IL

Chicago,

IL

Springfield, IL

Chicago,

IL

Springfield, IL

Tinley Park, IL

Chicago,

IL

Waterloo,

IL

LaGrange, IL

Chicago, IL

Woodlawn, IL

Springfield, IL

Peoria, IL

Chicago, IL

Palatine, IL

Downers Grove, IL

Chicago,

IL

Chicago, IL

Rieser

David

Smith

Wayne

60606

62704

62794-9276

60606-1229

62704

60601

62702

60477

60601

62298

60525

60601

62898

62707

61656-1875

60610

60067

60515

60601

60622

Suite

810, 414 N. Orleans

119 East Pahtine Road,

Suite

101

3140 Finley Road

Page

1 of2

---

R01-26

SERVICE LIST

In

the

Matter of:

Amendments to Regulation of Petroleum Leaking Underground Storage Tanks:

35

111.

Adm.

Code

732

Revised May

17, 2001

Hearing Officer

Illinois Pollution Control Board

Speedway Super America, LLC

Illinois

Petroleum Council

Counsel

Naval Training Center

Walker

Engineering

Gardner, Carton & Douglas

U.S. Army Environmental Center

100 West Randolph Street

Suite

11-500

P.O. Box

1500

P.O. Box

12047

250lA Paul Jones Street

500 W. Herrin Street

321

N. Clark

Street

Northern

Regional Environmental

Office,

Building E-4480

62448

60610

21010-5401

Sternstein

Joel J.

Strubel

Sykuta

Vlahos

Walker

Watson

Zolyak

Dan

David A.

Georgia

Rodger

John

GaiyT.

Chicago, IL

60601

45001

62791

60088-2845

Springfield, OH

Springfield, IL

Great Lakes,

IL

Herrin, IL

Chicago, IL

Aberdeen Proving

Ground, MD

Page 2 of 2