ILLINOIS POLLUTION CONTROL BOARD
December 14, 1994
MARATHON OIL COMPANY,
)
Petitioner,
v.
)
PCB 94—237
)
(UST Fund)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
Respondent.
ORDER OF THE BOARD (by R.C. Flemal):
This matter is before the Board on a motion for partial
summary judgment filed by the Illinois Environmental Protection
Agency (Agency) on November 2, 1994. The Agency claims that
there is no genuine issue of material fact as to whether Marathon
Oil Company’s costs at issue, totalling $93,91l.801, occurred
prior to Illinois Emergency Services and Disaster Agency
notification and therefore these costs are ineligible for
reimbursement from the Underground Storage Tank Fund. Marathon
Oil Company (Marathon) filed a reply and cross motion for partial
summary judgment on November 21, 1994.2
For the reasons stated below, the Board affirms the Agency’s
denial of $93,911.80 in corrective costs. The Board grants the
Agency’s motion for partial summary judgment in the amount of
$93,911.80 and denies Marathon’s cross motion for partial summary
judgment. Remaining at issue is $l,012.50~ in costs denied
reimbursement by the Agency.
The Agency’s Motion for Partial Summary Judgment itemized
a breakdown of Marathon’s costs incurred prior to ESDA
notification, totaling $93,911.80. In Marathon’s Reply and Cross
Motion for Partial Summary Judgment, it stated that costs of only
$93,843.24 were at issue, with no supporting breakdown. Having
reviewed the record, we find the amount at issue is $93,911.80.
2 Respondent’s Motion for Partial Summary Judgment will be
cited at “Resp. at .“; Petitioner’s Reply and Cross Motion
for Partial Summary Judgment will be cited as “Pet. at
~ A total of $94,924.30 in corrective action costs were
denied in Attachment A of the Agency’s Final Reimbursement
Decision; $93,911.80 are at issue for summary judgment;
$1,012.50 in costs remain unresolved.
2
BACKGROUND
Marathon leased and operated a gasoline service station on
the site at issue, 1544 Shermer and Illinois Streets, Northbrook,
Cook County, Illinois, 60062, from the period of May 12, 1969
through May 11, 1989. On April 14, 1988 four underground storage
tanks located at the site were removed. (Resp. at 1; Fiscal File
-
Book I, p. 86.)~ On September 4, 1989, Marathon submitted a
letter to the Agency which stated that “(a)ll tanks were in good
condition; no holes or leaks were observed. The tank removal was
witnessed by the City of Northbrook’s Fire Prevention Bureau, and
they noted no problems at that time.” (Agency Record, Technical
File
-
Book III, p.717.) According to the Agency’s Motion for
Partial Summary Judgment, there were no signs of corrosion or
leakage detected at the time the tanks were removed on April 14,
1988.
From September of 1989, the Agency and Marathon and its
contractor, corresponded and supplied technical reports and
documentation. (Agency Record, Technical File, Books I, II and
III, Documents 3 through 26.) Marathon proceeded with corrective
action through 1990 while in contact with the Agency. On or
about August 19, 1992, Marathon filed an application for
reimbursement with the Illinois Underground Storage Tank Fund
(Fund). (Resp. at 2; Fiscal File
-
Book I, p.81.) On September
8, 1992, the Agency sent a letter to Marathon stating that it had
been preliminarily determined that Marathon was eligible to seek
According to the Agency’s Motion for Partial Summary
Judgment and Marathon’s letter to the Agency dated September 4,
1989, all four (4) underground storage tanks located at the site
were removed in April 1988. Other reports in the Agency record
support this date, for example a letter from the site agent and
part owner, B.F. O’Neill & Co. stated that in “late 1988,
Marathon removed all underground tanks, pumps, etc.”, and a
letter from Ms. Carmen Yound, site owner, stated that Marathon
removed all underground tanks about a year before the lease
expiration date of May 11, 1989. Additional reports support a
removal date sometime prior to 1990: the LUST Reimbursement
prepared for Marathon by MAECORP, INC. Consulting Services
(Technical File
-
Book I, p.16) and all invoices itemizing
Marathon’s costs for corrective action reviewed by the Agency
covered the period from 5/23/90 to 11/13/90. However, Marathon’s
Petition for Review states that “Marathon excavated and removed
four underground storage tanks and associated contaminated soil
in October, 1990.” Based on the over 1000 pages submitted in
the Agency record, we find that the date of tank removal was
April, 1988 and that the October, 1990 is a clerical error in
Marathon’s filing. The Board will decide the instant matter
based upon pulling the tanks in April 1988.
3
reimbursement for corrective action costs. The Agency noted that
the decision in the letter did not constitute the Agency’s final
determination of eligibility.
On August 10, 1994, the Agency sent a letter to Marathon
advising them that a voucher would not be submitted to the
Comptroller’s Office for payment and that such letter constituted
the Agency’s final action with regard to the submitted invoices.
(Resp. at 2; Fiscal File
-
Book I, pp. 16—18.) Attachment A to
the Agency’s final determination letter disallowed a total of
$93,911.80 of corrective action costs because the costs were
incurred prior to Marathon’s notification to the Emergency
Services and Disaster Agency (ESDA)5. (Resp. at 2.)
It is undisputed that Marathon did not notify ESDA of the
release in question until after the $93,911.80 in corrective
actions costs were incurred. However, the actual date on which
ESDA was notified is unclear. The Agency asserts (and uses as
the basis for its eligibility determination) that ESDA
notification occurred on August 14, 1990. (Resp. at 2.)
Marathon claims that it did not give formal notice to ESDA until
1992. (Pet. at 2.)
ARGUMENTS
The primary issue before the Board is whether the Agency
should have reimbursed Marathon for corrective action costs
incurred prior to Marathon’s notification of ESDA.
The Agency’s Position
The Agency claims that Marathon’s corrective action costs
incurred prior to ESDA’s notification are not reimbursable from
the Fund. The Agency’s arguments are twofold. First, the Agency
claims that Marathon did not notify ESDA within 24 hours of the
discovery of the release pursuant to 35 Ill. Adm. Code 731.150.
According to the Agency, Marathon was first made aware that a
release had occurred at the site on July 28, 1989 via a report
issued by Giles Engineering Associates, Inc. to Marathon, but
failed to notify ESDA until August 14, 1990.
Second, the Agency argues that the costs at issue were
incurred prior to ESDA’s notification as required pursuant to 35
‘~
ESDA is currently called the Illinois Emergency
Management Agency.
4
Ill. Adm. Code 731.150.6 The Agency points to prior Board
decisions which held that costs incurred before ESDA was notified
of a release may not be reimbursed. (North Suburban Development
Corporation v. IEPA, PCB 91—109 (December 19, 1991); Kronon
Motor Sales, Inc. v. IEPA, PCB 91-138 (January 9, 1992), aff’d.
Kronon Motor Sales, Inc. v. Illinois Pollution Control Board and
IEPA, 609 N.E. 2d 678.)
In determining which statutory and regulatory notification
requirements apply to Marathon, the Agency argues that in this
case, the Board must look to the date the release was initially
discovered and apply the notice requirement in effect on that
date and time. (Agency motion citing, Pulitzer Community
Newspapers, Inc., v. Illinois Environmental Protection Agency,
PCB 90-142 (Dec. 20, 1990).) The Agency argues that the Board
should look to the date of the Giles Engineering Report
identifying a release on July 28, 1989 as the determinative date.
Consequentially, the Agency asserts both 415 ILCS
5/22.18b(d)(4)(D), effective July 28, 1989, and 35 Ill. Adm. Code
731.150, effective June 12, 1989, were the applicable laws in
effect at the time Marathon discovered the release.
On July 28, 1989, Section 22.l8b(d) (4) (D) of the Act, 415
ILCS 5/22.l8b(d)(4)(D) stated:
Request for partial or final payment for claims under
this section shall be sent to the Agency and shall
satisfy the following:
D. The owner or operator notified the state of the
release of petroleum in accordance with applicable
requirements;
The applicable notification requirements were, and are
currently, found at 35 Ill. Adm. Code 731.150. That section
required and currently requires:
6
There is no issue that the only regulations applicable in
this case are the identical in substance rules at 35 Ill. Adm.
Code Part 731. On September 22, 1994, Illinois’ new LUST rules
became effective. However, Marathon has not opted into the new
LUST program. Moreover, the Agency and Marathon find
determination made on August 10, 1994, predates the effective
date of the new regulations.
5
Owners and operators of UST systems shall report to the
ESDA within 24 hours and follow the procedures in
Section 731.152 for any of the following conditions:
a) The discovery by owners and operators or others of
released regulated substances at the UST site or
in the surrounding area (such as the presence of
free product or vapors in soils, basements, sewer
and utility lines or nearby surface waters).
Both parties agree that 35 Ill. Adm. Code 731.150 was in
effect at all times relevant to this action and required notice
to ESDA within 24 hours. Because Marathon initially discovered
the release on July 28, 1989 and the did not report to ESDA until
August 14, 1990 (or later), the Agency contends it is entitled to
partial summary judgment as to the corrective action costs
incurred prior to that ESDA notification, totaling $93,911.80.
Marathon’ s Position
Marathon admits that the deducted expenses at issue were all
incurred in 1990 and that it did not give
formal
notice to ESDA
until 1992. However Marathon argues that it gave
actual
notice
to the
Agency
in a letter from Mr. G.D. Sheely on September 4,
1989. (Pet. at 2; Technical File, Book 111, pp. 716—730.)
Marathon contends that it corresponded with the Agency regularly
throughout the remediation and over a two—year period beginning
in September of 1989. (Pet. at 2; Technical File, books, I, II
and III, Documents 3 through 26.) Therefore Marathon claims that
the Agency had actual notice of the release prior to the
corrective action incurred in 1990 and gave no indication it
intended to disallow the expenses. (Pet. at 2.)
Marathon argues that the reason for requiring notice to ESDA
is to notify the State of “an emergency or disaster that may
threaten the public health or welfare and require immediate
governmental response”. (Pet. at 3.) Marathon contends that at
this site no such response was needed, none was made, and the
reniediation was at all times under the supervision of the Agency.
Relying on the court in ChemRex. Inc. v. Illinois Pollution
Control Board, and Illinois Environmental Protection Agency, 195
Ill. Dec. 499, 257 Ill. App. 3d 274, 628 N.E.2d 963 (1st District
1993), Marathon contends that its rights concerning the
reimbursement were fixed by the statutory requirements in effect
when it notified the Agency of the release and commenced
remediation, September 4, 1989. Marathon additionally argues
that when it gave notice to the Agency, remediated the tanks, and
incurred the costs at issue, there was no statutory consequence
6
connected to failure to give notice to ESDA within 24 hours.
Marathon cites to language added to 415 ILCS 5/22.18b(d) (4) (D)7,
which was not effective until September 6, 1991:
Requests for partial or final payment for claims under
this Section shall be sent the Agency and shall satisfy
all of the following:
D. The owner or operator notified the State of
the release of petroleum in accordance with
applicable requirements. Costs of corrective
action or indemnification incurred before
providing that notification shall not be
eligible for payment.
415 ILCS 5/22.l8b(d) (4)
Because there was no such statutory language or consequence prior
to 1991, Marathon argues that Section 22.18b(d) (4) (D) should not
be applied retroactively in the absence an express retroactivity
provision. Marathon claims that this amendment was meant not to
clarify the law but indicated a change in the law because there
was no prior reimbursement consequence if ESDA were not notified.
DISCUSSION
At all times pertinent to the instant matter there was a
statutory requirement at 415 ILCS 5/22.l8b(d)(4)(D) that for
expenses to be reimbursable an applicant must have “notified the
State
...
in accordance with applicable requirements”. One of
these applicable requirements was that Marathon was required to
notify ESDA. Marathon did not notify ESDA prior to incurring the
$93,911.80 in expenses, and accordingly these expenses are not
eligible for reimbursement.
The Board rejects Marathon’s contention that its dealings
with the Agency through the course of this matter constituted
sufficient notification to the State. It is uncontested that 35
Ill. Adm. Code 731.150 was in effect at all times relevant to
these proceedings. Section 731.150 specifically requires that
“(o)wners and operators of UST systems shall report to ESDA
(emphasis added)” a release or suspected release. The Board
~ Marathon cites to 415 ILCS 5/22.18(d) (4) (D). However,
Marathon quotes from 415 ILCS 5/22. 18b(d) (4) (D). The Board will
assume that Marathon intended to cite 415 ILCS 5/22.l8b(d)(4)(D),
which was effective September 6, 1991.
7
finds that Marathon’s claim that it gave actual notice to the
Agency on September 4, 1989 is insufficient to meet the
applicable requirements at Section 731.150. Section 731.150
requires notice to be given to ESDA, ~ to the Agency.
Accordingly, Marathon did not notify the State “in accordance
with the applicable requirements”.
The Board similarly finds no merit in Marathon’s contention
that notification to ESDA of the Northbrook release was
unnecessary because the release did not constitute a threat
sufficient to warrant ESDA’s involvement. Whether there is ESDA
notification is a matter of law, not a matter of owners’ value
judgments.
The Board also finds no merit in Marathon’s contention that
it is only those costs incurred after September 6, 1991 for which
non—notification constitutes a bar for reimbursement. It was
settled law prior to the September 6, 1991 amendment that costs
incurred prior to ESDA notification were not reimbursable.
(e.g., Kronon Motor Sales, Inc., v. Illinois Pollution Control
Board, 609 N.E.2d 678 (Ill. App. 1 Dist. 1992).) Moreover, when
the September 6, 1991 amendment became effective, the Board again
reviewed and addressed the issue, and was compelled to find that
the amendment “does not reflect a new statutory initiative to
exclude pre—notification expenses” (North Suburban Development
Corporation v. IEPA, PCB 91-109 (December 19, 1991)), but rather
a statutory codification of a statutory interpretation well—
settled in case law. Therefore because pre—notification costs
are excluded under both the old and the new statutory language,
the Board is not applying the 1991 amendment retroactively, but
instead following well-established case law.
In determining which statutory and regulatory notification
requirements apply, the Board finds the same outcome whether it
applies the test urged by Marathon (the law that was in effect
when it notified the Agency of the release and commenced
remediation) or the test put forth by the Agency (the date the
release was initially discovered).
As a final matter, the Board addresses Marathon’s
observation that the Agency gave no indication prior to actual
denial that it intended to disallow Marathon’s corrective action
expenses. In this observation Marathon appears to imply that the
Agency acted improperly, and that judgment should thereby be
granted to Marathon. The Board can not accept this implication.
First, the Agency’s technical guidance and clean site assessment
are distinct from reimbursement determinations. Second, Marathon
was incorrect in relying on the Agency’s September 8, 1992
predetermination letter. The Agency specifically stated in their
letter that it was not a final eligibility determination. The
Agency could not know whether all of the applicable requirements
have been met until the application had been submitted. The fact
8
that the Agency choose not to specifically address the ESDA
requirement did not preclude the Agency from denying those costs
at the final determination stage. (North Suburban Development
Corporation v. IEPA, PCB 91—109 (December 19, 1991).)
Based upon the above findings the Board hereby affirms the
Agency’s determination regarding the non—reimbursability of costs
incurred prior to Marathon’s notification of ESDA, totalling
$93,911.80. There remains $1,012.50 in denied corrective costs
at issue. The Board directs the parties to file a status report
as to the disposition of these costs.
IT IS SO ORDERED.
I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control
Boa1r~.hereby certi.~ythat the above order was adopted on the
/if~
day of
___________________,
1994, by a vote of
~i’-c-~
7
~
/~
Dorothy M. 3~nn, Clerk’
Illinois PQ~JLutionControl Board