ILLINOIS POLLUTION CONTROL BOARD
July 9,
1992
BURWELL OIL SERVICE,
INC.,
)
Petitioner,
)
v.
)
PCB 92—42
)
(Underground Storage Tank Fund
ILLINOIS ENVIRONMENTAL
)
Reimbursement Determination)
PROTECTION AGENCY,
)
)
Respondent.
ROBERT G.
HECKENKAMP, HECKENKAMP,
SIMHAUSER
& LABARGE, APPEARED
ON BEHALF OF PETITIONER.
DANIEL P. MERRIMAN, ILLINOIS ENVIRONMENTAL PROTECTION AGENCY,
APPEARED ON BEHALF OF RESPONDENT.
OPINION
AND ORDER
OF THE BOARD
(by N. Nardulli):
This matter is before the Board on the March 16,
1992
petition for review filed by Burwell Oil Service, Inc.
(Burwell)
Pursuant to Section 22.18b(g)
of the Environmental Protection Act
(Act)
(Ill.
Rev.
Stat.
1991,
ch. 1111/2,
par.
1022.18b(g)),
Burwell seeks review of the Illinois Environmental Protection
Agency’s
(Agency) determination that a $50,000 deductible applies
to Burwell’s claim for reimbursement from the Underground Storage
Tank Fund
(Fund)
(Ill.
Rev. Stat.
1991,
ch.
111 1/2, par.
1022.18b(d)(3)(C)(ii)).
A hearing was held in Springfield,
Illinois on May 29,
1992 at which no members of the public
attended.
On June 19,
1992, the Agency filed a motion for leave
to file its brief instanter.
The Agency’s motion is granted.
BACKGROUND
In September of 1980,
Burwell purchased a service station
located at 1400 East Sangamon Avenue, Springfield, Illinois.
(Tr. at 26;
R.
1,
22.)
Burwell operated the station from
September 1980 through July 1988.
(Tr. at 26-27.)
Three
underground storage tanks
(USTs)
located on the property were
removed September 15,
1988.
(Tr. at 28—29;
R.
8,
22.)
At the
time of removal, no apparent soil contamination was found and the
excavation site was filled.
(Tr. at 29;
R.
8.)
Prior to selling
the property in 1990, the purchaser performed soil tests.
(Tr.
30;
R.
10.)
These tests revealed contamination near the site
where the USTs had been located.
(Tr.
at 31;
R.
13-17.)
On August 23,
1990, Burwell submitted an application for
reimbursement from the Fund.
(R.
21.)
The application listed
the release as a “tank system leak” and that only one tank had
leaked.
(R.
22—25.)
In response to the question “Has there been
a release from this UST system?” Burwell stated that with regard
Q135~OOLL
2
to two of the USTs “inventory records did not indicate a
release”.
(R.
23,
25.)
For one of the USTs, Burwell stated that
there had been a release and referred to attached notes.
(R.
24.)
These attached notes included a report of Rapps Engineering
referencing inventory records indicating the following product
loss during 1988: April 986 gallons; Nay 354 gallons; June 362
gallons; and July 203 gallons.
(R.
9.)
The Rapps report stated
that it was suspected that these~losses may have occurred from
one of the three tanks and that a Kent-Moore tightness test
performed on one UST in Nay—June of 1988 was inconclusive.
(R.
9.)
Burwell stated in its application that it first became aware
of the release on August 1,
1990.
(R.
22.)
On August 30,
1990, the Agency notified Burwell that the
information contained in the application indicated that the
release occurred prior to July 28, 1989 and that Burwell had
knowledge of the release prior to that date.
(Pet. Notion to
Supp. Rec.
Ex.
B.)
Consequently, the Agency applied a $50,000
deductible to Burwell’s claim for reimbursement.
(~J
In
December of 1991,
Burwell submitted a “renewed application for
reimbursement” documenting $78,537.77
in corrective actions
costs.
(~~
R.
31.)
On February 10,
1992,
the Agency notified
Burwell that, after applying the $50,000 deductible and
subtracting $170 for costs incurred prior to ESDA notification,
it would be reimbursed $28,365.77.
Burwell seeks review only of
the Agency’s imposition of the $50,000 deductible.
DISCUSSION
The issue is whether Burwell met its burden of establishing
that it did not have knowledge of the release prior to July 28,
1989 such that the Agency incorrectly applied the $50,000
deductible rather than the minimum $10,000 deductible.
The
Agency asserted that Burwell failed to meet its burden.
Alternatively, the Agency argues that evidence introduced by
Burwell at hearing actually established that corrective action
costs were not incurred as a result of a release from the subject
UST5.
At hearing, the Agency moved to “amend the pleadings” to
add the additional finding that Burwell is not eligible to access
the Fund.
(Tr. 127-28.)
The Agency also raises this argument in
its brief.
In Clinton County Oil Co.
v. IEPA (March 26,
1992), PCB 91-
163, the Board ruled that the Agency cannot amend its denial
letter after it has reached a final determination on eligibility.
(See also, Clinton County Oil Co.
v. IEPA (June 4,
1992), PCB 91—
163.)
Pursuant to Clinton, the Board denies the Agency’s motion
to amend the pleadings to add the additional finding that Burwell
is ineligible to access the Fund.
Moreover, the Board disagrees with the Agency’s contention
that testimony at hearina presented by Burwell is inconsistent
01 35-OO~42
3
with the application for reimbursement and that this testimony
establishes that no release occurred from Burwell’s USTs.
C.
Eugene Burwell, president of Burwell Oil, testified regarding the
loss of product and its relation to the release.
(Tr. at 63—65.)
According to Mr. Burwell, at the time of the inventory-reported
loss, he believed that there was some other explanation, such as
human error,
for the loss other than a tank leak.
(Tr.
at 59,
64.)
While he could never prove a leak to himself, he stated
that the subsequently revealed contamination and the Rapps report
explanation for the leak led him to state in the application that
there had been
a release.
(Tr. 64—65.)
These statements merely
seem to indicate some confusion on Burwell’s part as to the exact
explanation as to how the leak occurred from the USTs.
Ronald
Dye,
of Rapps Engineering, testified that his study of the site
indicated that a release occurred but that he could not pin-point
which of the three tanks had leaked.
(Tr. at 104-05,
110-13.)
In the context of explaining the import of the product losses,
these statements merely indicate that Burwell cannot state with
exact certainty where in the tank system the release occurred.
When considered in light of the record as a whole, the testimony
does not negate Burwell’s statement in its application that there
was a release from one of the three USTs.
The Board now addresses the issue of whether the imposition
of the $50,000 deductible is proper.
Section 22.18b(d) (C) (ii)
of
the Act imposes a $50,000 deductible where the owner/operator had
actual or constructive knowledge of the release before July 28,
1989.
(Ill. Rev. Stat.
1991,
ch.
111 1/2,
par.
1022. 18b(d) (C) (ii).)
The burden is on the owner/operator to
prove to the satisfaction of the Agency ~:hatit did not have such
knowledge.
(~~)
Burwell contends that it did not have
knowledge of the release until 1990 when the results of the soil
borings indicated contamination near the location of the
previously removed USTs.
The Agency contends that Burwell had
constructive knowledge of the release in 1988 by virtue of the
inventory records indicating a product loss.
Burwell’s application states that there was a release from
one of three USTs.
(R. 23-25.)
Burwell supported its statement
that one of the tanks had leaked with the report of Ronald Dye of
Rapps Engineering.
(R. 9-11.)
This report provided that monthly
inventory records indicated product losses during the months of
April, May, June and July totalling 1,905 gallons.
(R.
9.)
While the nature of the loss was unclear, the report indicates
that Burwell suspected that one of the tanks had leaked.
(R.
9;
Tr. 51.)
As a result of these losses a Kent—Moore tank tightness
test was performed on one of the USTs.
(R.
9; Tr. at 43.)
Although the results of this test were inconclusive, another test
was not performed.
(R.
9; Tr. at 68, 99.)
The report stated
that Burwell was unable to provide any physical evidence such as
photographs or the results of the Kent-Moore test to document the
leak,
but that “evidence exists to support the theory that one of
O135-OOL~3
4
the tanks has leaked.”
(R.
9.)
According to the report,
“(t)he
most compelling piece of evidence of leakage from the tank system
is a soil boring taken ten feet south of the excavation area
(Boring
#
2).”
(R.
10.)
Boring #2 was drilled outside the
backfilled area into in—situ soils.
(R.
10,
14.)
Visual
contamination was encountered at a depth of five feet.
(R.
10.)
The report concluded that the absence of contamination near the
surface indicated a release from either
the tank vessel or
associated piping.
(R 10.)
The report also indicates that
Captain Greg Bestudick of the Springfield Fire Department was
unable to witness the entire tank removal because two of the
three tanks had been removed prior to his arrival and the
excavation was completely backfilled with sand preventing a
visual inspection of the site.
(R.
10; see also Tr.
86-95.)
Attached to the report are two documents signed by Gregory
Bestudick stating that he was present at the removal, that two
tanks had already been removed when he arrived and that he saw no
leaking or contamination.
(R.
5,
9.)
C. Eugene Burwell testified that he first became aware of
the release in 1990 after Rapps had performed the borings.
(Tr.
at 31—32.)
He also testified that the inventory records
indicating a product loss did not bother him because of
temperature adjustments “from where we purchased gasoline, the
way it is when we get it in the ground and the way it’s sold
within the system.”
(Tr. at 33,
61—63.)
According to Mr.
Burwell, this type of loss is customary and not something which
would cause him to think there had been a release.
(Tr. at 33.)
Burwell testified that the loss could be the result of human
error in taking the stick reading creating a difference between
purchase and sale amounts.
(Tr. at 34-39,
64.)
Burwell also
testified that the product losses decreased from 986 gallons in
April to 203 gallons in July indicated human error rather than a
leak.
(Tr.
at 39.)
However, Mr. Burwell admitted that the
initial loss in April led Burwell to monitor the tanks and to
perform a tank tightness test.
(Tr. at 41-43,
60.)
Naurie Spooner, general manager of Burwell, testified that
the three possible explanations for the product losses were human
error in the stick reading,
a wrong delivery or a leak.
(Tr. at
67.)
Spooner testified that the fact that the losses decreased
after the April loss led him to believe that they did not have a
leak.
(Tr. at 69.)
John Deornellas, maintenance supervisor for Burwell,
testified that he was present when the USTs were removed, and that
he did not notice any contamination.
(Tr.
at 87.)
He also
testified that Gregory Bestudick of the Springfield Fire
Department arrived after two of the tanks had been removed and
the third tank was in the process of being pulled.
(Tr. at 88.)
Deornellas testified that Bestudick examined the third tank and
found nothinq wronq with the tank.
(Tr. at 88.)
Because
01 35-OOL~
5
Bestudick wanted to inspect the bottom of the hole where the two
UST5 had been,
Deornellas testified that the dirt and sand were
removed so that Bestudick could inspect the hole.
(Tr. at 88-
89.)
Deornellas testified that Bestudick did not find any
evidence of contamination.
(Tr. 89.)
Ronald Dye of Rapps Engineering testified regarding the
report he prepared in support of the application.
(Tr. at 95)
He testified that Boring #2 was the only physical evidence .that
sported the theory that a release had occurred from one of the
USTs.
(Tr. at 104—05.)
Dye also testified as to his
conversation with Gregory Bestudick.
(Tr. at 121.)
According to
Dye,
Bestudick indicated that the tanks had been removed and the
excavation was completely backfilled with sand such that he was
unable to perform a visual subsurface inspection.
(Tr.
at 120—
21.)
Dye testified that he verified with Bestudick that he did
not see any contamination.
(Tr. at 122.)
Bur Filson, project manager for the Agency’s Northern LUST
section, testified that he reviewed the application for
reimbursement and that the repeated product losses over a period
of four months and the performance of the Kent—Moore test would
indicate that there was a problem associated with the UST.
(tr.
at 139,
148.)
Filson also testified that the decrease in loss of
product from the initial loss in April did not necessarily negate
the concern that a release occurred.
(Tr. 150—52.)
According to
Filson:
T)here
is a tremendous surface area within the tank
alone where a hole or a breach in the system could
occur.
Then you also have the lines associated with
that.
If the release or if the hole stays in the tank
and it’s in the upper third of the tank, you are going
to see a loss of product only when the tank is full to
that point..
If it’s located lower in the tank
...
you
would see continual losses until the level was below
that point and/or water backfills the tank and forces
the product up.
If it’s associated with one of the
lines, depending on where it would be associated with
the line,
if it’s associated with a particular pump and
it only occurs when that pump is turned on and that
pump is not used with the same frequency as others,
then you may see a variance.
(Tr. at 150-51.)
Filson did state that if the tank was
repeatedly filled with the same number of gallons of gasoline on
a monthly basis, one could expect a continuous loss.
(Tr.
at
151.)
Burwell contends that it investigated the product losses by
monitoring the tanks and performing the Kent-Moore test and that
these actions ruled out the possibility of a tank leak.
0135-Q0~5
6
Therefore,
Burwell contends that it did not have constructive
knowledge of the release prior to July 28,
1989.
The Agency
contends that Butwell did not exercise reasonable care in
investigating the product losses or in performing the Kent—Moore
test.
Knowing that the Kent—Moore test was inconclusive, the
Agency asserts that a second tank tightness’ test should have been
performed.
Neither the Act or Board regulations define “constructive
knowledge.”
However, the Illinois Supreme Court has construed
“constructive notice” holding that one having notice of facts
which would put a prudent person on inquiry is chargeable with
knowledge of other facts which might have been discovered by
diligent inquiry.
(Miller v. Bullinaton
(1942),
381 Ill. 238,
44
N.E.
2d 850,
852.)
“Whatever is notice enough to excite
attention and put a party on his guard is notice of everything to
which inquiry might have led and every unusual circumstance is
a
ground of suspicion and demands investigation.”
(~~)
The record establishes that Burwell had notice of a
significant loss of product over a four month period.
While
there may have been several suspected explanations for these
losses, Burwell had an obligation to diligently investigate these
possibilities rather than accept the erroneous explanation of
human error in the stick test or in delivery.
Had Burwell
performed a second Kent-Moore tank test or performed a soil
boring upon notice of the product losses,
it likely would have
discovered the release.
Burwell is chargeable with knowledge of
the release by virtue of its knowledge of the product loss and
cannot be excused from such knowledge where it failed to perform
a diligent inquiry.
Based upon the facts presented, the Board finds that Burwell
failed to meet its burden of establishing that it did not have
constructive knowledge of the release prior to July 28,
1989.
Therefore,
the Agency’s imposition of the $50,000 deductible is
affirmed.
This opinion constitutes the Board’s findings of fact and
conclusions of law in this matter.
ORDER
For the foregoing reasons, the Board finds that Burwell oil
Service, Inc. had constructive knowledge of the release of
petroleum prior to July 28,
1989 and upholds the Agency’s
imposition of a $50,000 deductible on Burwell’s claim for
reimbursement from the UST Fund.
IT IS SO ORDERED.
.B.Forcade and R. Flemal dissent.
O.135-00~6
7
Section 41
of, the Environmental protection Act
(Ill. Rev.
Stat.
1991,
ch.
111 1/2, par.
1041) provides for the appeal of
final Board orders within 35 days.
The Rules of the Supreme
Court of Illinois establish filing requirements.
I, Dorothy M. Gunn,
Clerk of the Illinois Pollution Control
Board hereby certify that the above opinion and order was adopted
on the
~
day of
,
1992 by a vote of
_____
Don
I
P0
Control Board
0 135-00L7