ILLINOIS POLLUTION CONTROL BOARD
May 7,
1992
PLATOLENE 500,
INC.,
)
Petitioner,
v.
)
PCB 92-9
)
(Underground Storage Tank Fund
Reimbursement Determination)
)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
)
Respondent.
NICK ANDERSON, APPEARED PRO SE;
TODD RETTIG, APPEARED ON BEHALF OF RESPONDENT.
OPINION
AND
ORDER OF THE BOARD
(by B.
Forcade):
This matter comes before the Board on a petition for review
filed by Platolene 500,
Inc.
(Platolene)
on January
9,
1992,
pursuant to Ill. Rev.
Stat.
1991,
ch.
111 1/2, par 1022.18b(g)
and 1040.
Platolene seeks review of particular costs for which
the Environmental Protection Agency (Agency) denied eligibility
for reimbursement from the Underground Storage Tank Fund (fund).
A hearing was held on March 10, 1992,
in Greenup, Illinois.
No
members of the public attended the hearing.
Respondent filed its
post-hearing brief on April
3,
1992.
Platolene did not file a
brief.
FACTS
On April
3,
1990,
Platolene, while removing three
underground storage tanks from their property, discovered that a
release
of petroleum had occurred.
Platolene notified the
Emergency Services and Disaster Agency and began remediation of
the property.
In May of 1990 Platolene submitted an application
for reimbursement to the Agency.
(R. at 55.)
On December 5,
1991, the Agency informed Platolene that seven cost items were
being deducted from the amount requested for reimbursement
because the costs were determined to be ineligible for
reimbursement.
(R.
at 417.)
The following costs were considered
ineligible for reimbursement;
1.
$2,821.76,
for an adjustment in handling charges.
2.
$8,330.00,
for costs associated with replacement of
concrete and/or asphalt.
133—259
2
3.
$5836.00,
for tank removal costs because tanks were not
removed in response to a release.
4.
$995.80,
for costs lacking supporting documents.
5.
$1,680.00, for laboratory rush charges.
6.
$1,970.00, for standby charges.
7.
$2,640.00,
for costs associated with the analysis of 24
BTEX’~.jQ
samples for which the Agency did not receive
the results.
(R.
at 419.)
On January
6,
1992, Platolene filed its petition for review
of the costs for which reimbursement was not allowed.
On January
28,
1992, Platolene filed an amended petition stating the reason
it was challenging the Agency’s determination that the costs were
ineligible for reimbursement.
Platolene is not challenging the
deduction of the charges associated with the removal of the tanks
(Item
#
3).
The burden of proof
is on the petitioner in appeals
of reitabursability.
(Sections 22.18b(g) and 40(a)(l).)
The issue
before the Board is whether Platolene has shown that the above
costs are eligible for reimbursement from the fund.
DISCUSSION
Replacement of Concrete
Platolene argues that the Agency’s guidance manual lists the
cost for the replacement of concrete as a reimbursable cost and
that they should be allowed to replace the concrete that needed
to be removed in order to access the leaking tank and the
contaminated soil.
(Tr.
at 15.)
Douglas Oakley, of the Agency,
testified that replacement costs for concrete are not reimbursed
because replacement of concrete does not constitute a corrective
action.
(Tr. at 38.)
The Agency further argues that the
replacement of concrete is not the reassembly of a structure as
required by the guidance manual and an in—house decision was made
at the Agency not to reimburse concrete replacement costs.
(Tr.
at 50.)
Section 22.13(a)
of the Act provides that monies from the
fund may be used for the following purposes:
***
The level of Benzene, Ethylbenzene, Toluene and Xylene
present
in a sample commonly referred to as BETX.
133—260
3
3.
to assist in the reduction and mitigation of damage
caused by leaks from underground storage tanks,
***
5.
for payment of costs of corrective action incurred by
and indemnification to operators of underground storage
tanks as provided in Section 22.18b of this Act.
Section 22.l8b(a)
of the Act provides that “an
owner or
operator is eligible to receive money from the Underground
Storage Tank Fund for costs of corrective action or
indemnification”
if they meet the listed requirements.
The
Agency had determined that Platolene was eligible for
reimbursement in June of 1990 and subject to a $10,000
deductible.
(R. at 71.)
The arguments raised by Platolene and the Agency give rise
to two questions:
(1)
What is the role of the guidance manual?
(2)
When does corrective action stop and restoration begin?
To answer these questions, the Board first looks at the language
of the statute, then at any regulations and next at any
applicable prior decisions.
(1) Role of guidance manual:
Section 22.18b(f) of the Act authorizes the Agency “to adopt
reasonable and necessary rules for the administration of this
Section.”
While the Agency has not formally adopted any rules on
reimbursement,
it has published a guidance manual to assist the
applicant in understanding the UST program.
(Tr. at 29.)
The
applicable sections from the Spring 1990,
“Guidance Manual for
Petroleum-Related LUST Cleanups in Illinois” reads as follows
(emphasis added):
A.
Eligible Costs
The IEPA will only reimburse the owner/operator for the
following work related to the study and/or remediation
of an UST release if the work is deemed necessary by an
Illinois Registered Professional Engineer, and the
costs for labor,
equipment, materials,
overhead and
profit are reasonable:
***
3.
The dismantling and reassembling of structures
costing less than $10,000
in response to a reported
133—26
I
4
release, upon certification by the engineer that
removal was necessary to perform remedial action.
(footnote).
A structure means anything above grade,
including
but not limited to:
-pad
—paving
(concrete or asphalt)
—curbs—signs
-buildings
—canopies
—support columns
-support beams
The guidance manual is provided by the Agency for assistance
in complying with the statutory requirements related to LUST
clean ups.
The guidance manual can not be given the same force
as a rule or regulation, since the guidance manual has not been
subjected to the applicable notice and comment requirements of
the Illinois Administrative Procedure Act
(APA).
The guidance
manual must be consistent with the statute and cannot alter or
supersede the requirements of the statute.
A state agency cannot
impose by regulation or practice requirements inconsistent with
the statute conferring authority on it.
(Hernandes v.
Fahner
(1985),
135 Ill.App.3d 372,
381—382,
481 N.E.2d 1004,
1011, See
also EPA v. John Vander
(1991),
219 Ill.App.3d 975, 579 N.E.2d
1215.)
The guidance manual states that reimbursement is only
allowed for work related to the study and/or remediation of an
UST release.
This statement in the guidance manual correlates to
the provision of the statute of allowing reimbursement only for
corrective action.
The guidance manual clearly describes concrete as a
structure and states that the dismantling and reassembly of
structures are eligible costs.
However, to be entitled to
reimbursement the dismantling or reassembling must be certified
as necessary by an engineer, must be in response to a release and
the work related to the study or remediation of the release.
There is nothing in the statute or regulations that directly
addresses the guidance manual requirements concerning the removal
and reassembly of structures.
The statute does not detail
specifics for reimbursement but instead leaves the requirements
for reimbursement to the Agency t~odevelop.
The Agency could have promulgated
its own regulations on the
subject of which costs are reimbursable.
In fact,
Section
1
‘33—262
5
22.18b(f)
of the Act explicitly authorizes the Agency to
“adopt
reasonable and necessary rules for the administration of
the
Fund).”
Moreover, Section 3.09 of the Administrative Procedure
Act,
Ill.
Rev.
Stat.
1989,
ch.
127, par.
1003.09, defines a
“rule” as follows:
“Rule” means each agency statement of general
applicability that implements,
applies,
interprets,
or prescribes law or policy, but
does not include
(a) statements concerning
only the internal management of an agency and
not affecting private rights or procedures
available to persons or entities outside the
agency,
(b)
informal advisory rulings...
(C)
intra—agency memoranda or
(d) the
prescription of standardized forms.
The guidance manual is clearly an Agency statement of
general applicability.
It implements a policy of the Agency and
is not a statement dealing with the internal management of the
Agency.
The guidance manual does affect the rights and
procedures available to people and entities outside the Agency.
Therefore the guidance manual is
a rule according to the APA
definition.
Courts have declared rules invalid which have not
been promulgated in conformity with the requirements of the APA
and filed with the Secretary of State.
Ill.
Rev. Stat.
1985,
ch.
127 par.
1004(c), See Senn Park Nursing Center v. Miller (1984),
104 I11.2d 169,
470 N.E.2d 1029 and Kaufman Grain Co.
v. Director
of the Department of Agriculture
(1989),
179 Ill.
App.
3d 1040,
1047,
534 N.E.2d
1259.
Since the guidance manual is a rule that
was not promulgated according to the APA, and is of the type the
courts have found invalid, the Board is not bound by the manual,
and the manual has no legal
or regulatory effect in this
proceeding.
Looking at the guidance manual by itself, the language could
arguably be read as providing that the cost of the replacement of
concrete is eligible for reimbursement.
While Platolene argues
that they relied on this interpretation in submitting their
application for reimbursement, the Board cannot enforce the
provisions of the guidance manual for the reasons expressed
above.
Furthermore, a look at the statute will show that this
provision of the guidance manual conflicts with the requirements
of the statute.
Therefore,
in reviewing the Agency’s
determination, the Board next looks to the statute to see if the
Agency’s interpretation is correct.
(2) Corrective action or restoration:
Corrective action is defined in Section 22.18(e) (1) (C)
of the
Act as:
I
33—263
6
.an action to stop, minimize, eliminate, or clean up
a release of petroleum or its effects as may be
necessary or appropriate to protect human health and
the environment.
This includes but is not limited to,
release investigation, mitigation of fire and safety
hazards, tank removal, soil remediation,
hydrogeological investigations, free product removal
and groundwater remediation and monitoring,
exposure
assessments, the temporary or permanent relocation of
residents and the provision of alternate water
supplies.
Corrective action as defined in the Act relates to actions that
are taken to control or clean—up a release.
Restoration is
defined as the act of bringing back to an original condition. The
American Heritage Dictionary, Second College Edition
(1985).
In the process of removing underground storage tanks and the
subsequent remediation of the site there are a variety of tasks
to be performed.
Some of the functions can clearly be classified
as either corrective action or restoration.
For other functions
determining if it is corrective action or restoration may not be
as obvious.
In reviewing Platolene’s application the Agency
viewed the initial destruction of the concrete as part of
corrective action and the replacement of the concrete as not
corrective action.
(Tr. at 38.)
Under the facts of this case,
actions that occurred prior to
backfilling the excavation site would be considered as corrective
action, and those actions which occurred after backfilling would
be considered restoration.
The majority of the actions that
Platolene performed between the time that the contamination was
discovered until the site was backfilled were intended to stop,
minimize, eliminate or clean—up the release of petroleum.
The
excavation site was filled only after all contamination had been
removed from the site.
Once the contamination was removed the
actions by Platolene were no longer related to the clean up of
the ‘release but were intended to restore the property to its
original condition.
Backfilling the site would be considered
corrective action even though it occurred after the contamination
had been removed because it is an action necessary to protect
human health and the environment.
(Section 4(v) (4).)
Leaving the
excavation site open creates a potential hazard.
The Board notes
that these general rules will not universally apply to all
factual situations and that the particular facts surrounding the
action and the purpose of the action will ultimately determine
whether that action
is corrective action or restoration.
In Enterprise Leasing Company v. IEPA (April
9,
1992), PCB
91-174, _____PCB
,
the Board determined that the proper
inquiry to be made in determining reimbursability is whether the
activity meets both parts of the statutory definition of
133—264
7
corrective action.
The definition of corrective action consists
of two inquiries:
whether the costs are incurred as a result of
action to “stop minimize, eliminate,
or clean up a release of
petroleum”,
and whether those costs are the result of such
activities as tank removal, soil remediation and free product
removal.
(Ill. Rev.
Stat.
1989,
ch.
111 1/2, par.
1022.18(e) (1) (C).)
When reviewing reimbursement determinations
the proper standard is to apply the statutory definition of
corrective action.
•The replacement of concrete under the facts
presented in this case does not satisfy the definition of
corrective action.
Platolene has presented no argument to show that their
replacement of concrete satisfies the statutory requirements for
corrective action required for reimbursement.
Platolene’s
replacement of the concrete was not an action to stop, minimize,
eliminate,
or clean up a release of petroleum,
nor did it protect
human health or the environment.
The act of installing concrete
is not an action comparable to the acts specified in the statute
as eligible for reimbursement.
Actions such as the replacement of concrete by Platolene
serve to restore the facility to its original condition.
While
restoration actions may be beneficial to the property owner and
society, they do not serve to stop or minimize the leak or
protect human health or the environment.
Doug Oakley described the fund as an evolutionary process
where determinations are made “in—house”
as to certain costs.
(Tr. at 50.)
Instead of promulgating rules on UST reimbursement
the Agency chose to develop the UST reimbursement program by
establishing “in-house” procedures and through the adjudication
of contested cases.
Basically,
this consists of the Agency
rendering its decision, which is then appealed to the Board.
The Agency interprets statutory language and applies it to a
particular set of facts in determining which costs are eligible
for reimbursement.
When the Agency’s decision is appealed to the
Board,
the Board determines whether the Agency’s application of
the statute was correct.
The Board interprets the statutory
language as it applies to the set of facts of the appealed case,
i.e. adjudicating the contested case.
While this is an
acceptable procedure for interpreting the statute and
establishing Agency policy,
it places the applicant in the
difficult position of working with a program that is not well
defined and constantly changing.
The applicant must depend on
the statute, Agency personnel and, opinions from adjudicated cases
to determine the policies relating to the UST program.
The lack
of specific guidelines for the UST fund increases the confusion
of the applicant and complicates the reimbursement program.
The
applicant
is forced to proceed with the remediation of the site,
uncertain as to which costs are reimbursable.
133—265
8
The Board affirms the Agency determination that the cost of
the replacement of concrete is not a reimbursable item since the
replacement of concrete
is not a corrective action.
The guidance
manual
is a rule according to the APA definition.
Since the
guidance manual was not adopted according to APA requirements,
the guidance manual has no legal or regulatory force or effect.
Costs Lacking Supporting Documents
The Agency contends that Platolene did not supply sufficient
documentation to show that $995.80 worth of charges listed on
various invoices were reasonable.
The invoices submitted by
Platolene included an invoice that charged for work performed
after the invoice date,
(R.
at 251,
252), an invoice for work at
another site
(R. at 403)
and an overcharge for manifests obtained
from the Agency.
(R.
at 184.)
When requesting reimbursement from the fund, the owner or
operator must provide an accounting of all costs, demonstrate the
costs are reasonable and provide either proof of payment or
demonstrate financial need for joint payment.
(Section
22. l8b(d) (4) (C).)
The documents submitted regarding the above
charges do not show that the costs are reasonable.
In fact,
•the
documents on their face represent these costs as unreasonable.
Platolene did not present any testimony at hearing explaining why
these costs should be considered reasonable.
Platolene has not
shown the $995.80 in costs to be reasonable, therefore
reimbursement will not be allowed.
The Agency also deducted $2,640.00 for costs associated with
24 BETX samples because the results from the samples were not
submitted to the Agency.
The invoices submitted to the Agency
show that 30 BETX samples were sent for analysis
(Tr. at 398,
400) but results from only 6 of the samples were received by the
Agency.
(Tr.
at 81.)
The results from the samples are necessary
for the Agency to verify that the tests were performed and to
determine if the costs were reasonable.
Platolene was unable to
explain what happened to the test results or why they were not
submitted to the Agency.
The Agency’s denial of reimbursement of
the cost for the tests on the 24 samples for which result were
not received,
is affirmed.
Rush Charges
The Agency, prior to hearing reviewed the charges for rapid
turnaround for results from lab tests on soil samples and
determined that $220.00 of the charges are eligible for
reimbursement; therefore the amou~ntin dispute for rush charges
is reduced to $1,460.00.
Becky Lockart,
of the Agency, testified
that the Agency considers rush charges reimbursable when they are
taken to show whether the clean up objectives have been satisfied
for closure.
(Tr.
at 27.)
She further testified that the Agency
13’3-•-266
9
does not reimburse for rush charges when the samples are taken
from groundwater monitoring wells or soil borings because they
are not considered reasonable.
(Tr. at 28.)
Platolene argues
that the rapid turnaround on some of the samples was requested to
prevent delay on the project and avoid problems associated with
stopping work until the test results are received.
(Tr. at 17.)
While the Board agrees with Platolene that circumstances may
require that test results be received as quickly as possible,
Platolene did not provide any details as to the specific reasons
that rapid turnaround was required for these samples.
The costs
for laboratory rush charges will not be reimbursed because
Platolene did not show that the charges were reasonable due to
the conditions at the clean-up site.
Standby Charges
The $1,970.00 adjustment for standby charges are for costs
associated with idle equipment or trucks that were parked at the
site.
(Tr. at 35.)
Ron Beavers, of Armor Shield, the contractor
for Platolene, testified that the standby charges resulted from
rainy weather and things not moving along at the site.
(Tr. at
18.)
He further testified that if the equipment was not left
waiting on site,
the subcontractor would have charged for travel
time in returning the equipment to the subcontractor’s facility
and bringing it back to the site when needed.
(Tr. at 19.)
The
Agency argues that these costs are not sufficiently linked to
corrective action and are not reasonable.
The Board finds that standby charges can be related to
corrective action.
The procurement of trucks and equipment are
required to perform the excavation and to transport contaminated
soil.
The scheduling of equipment will not always coincide with
the completion of work at the site.
Under these circumstances
the equipment must stand idly by waiting until the equipment is
needed.
Whether the standby charges are reasonable depends on
the amount of standby charges and the particular conditions at
the site.
However, Platolene failed to provide specific details
of the delays to justify the hours of standby charges on the
invoices submitted to the Agency.
The invoices submitted by
Platolene list in excess of 40 hours for stand—by equipment.
Some pieces of equipment are charged for 12 hours of stand—by
time
in one day.
Platolene did not reveal any specific
circumstances explaining the hours of standby charges to show
that they were reasonable.
Handling Charges
Handling charges are figured at 15
of the total
reimbursable costs.
The $2821.76 deduction ‘in handling charges
is due to the costs that the Agency found to be ineligible for
reimbursement.
The handling charge must be adjusted to reflect
I
33—267
10
the $220.00 in laboratory rush charges that the Agency determined
to be reimbursable.
Therefore Platolene should be reimbursed the
$220.00 for the rush charges plus $33.00 in handling charges.
CONCLUSION
For a cost to be eligible for reimbursement from the fund,
the cost must be related to a corrective action and the applicant
must provide the necessary documentation to show that the cost is
reasonable.
The Board finds that Platolene’s replacement of
concrete was not an action to stop, minimize, eliminate or clean
up a release of petroleum and therefore it does not constitute a
corrective action.
The Board finds that Platolene’s cost for the
replacement of concrete is not related to corrective action and
therefore is not a reimbursable cost.
The Agency has reviewed
the laboratory rush charges and determined that $220.00 of the
charges are reasonable; therefore Platolene is entitled to
reimbursement for this cost plus a 15
handling charge.
Platolene has failed to prove that the other contested costs are
reasonable.
Therefore these costs are not reimbursable and the
Agency’s denial of reimbursement of these costs is affirmed.
This opinion constitutes the Board’s finding of fact and
conclusions of law in this matter.
ORDER
The Board finds that Platolene did not meet its burden of
proof
in showing that the challenged costs were related to
corrective action and reasonable.
Therefore, the Board affirms
the Agency’s denial of reimbursement for the cost of concrete
replacement, for costs lacking supporting documents, for standby
charges and the cost of test for which results were not submitted
to the Agency.
The Board partially affirms the Agency’s denial
of rush charges and handling charges and instructs the Agency to
reimburse Platolene for a portion of these charges as stated by
the Agency at hearing.
This matter is remanded to the Agency to
reimburse Platolene for $220.00 in rush charges plus the 15
handling charge for the rush charges that the Agency has
determined to be eligible for reimbursement.
IT IS SO ORDERED.
Section 41 of the Environmental Protection Act (Ill.Rev.
Stat. 1991 ch.
111 1/2, par 1041)
provides for the appeal of
final orders of the Board within 35 days.
The Rules of the
Supreme Court of Illinois establish filing requirements.
11
I, Dorothy N. Gunn, Clerk of the Illinois Pollution Control
Board, hereby certify that the above opinion and order was
adopted on the
/r~,
day of
~
,
1992,
by
a
vote
of
7-
‘2
•
/
/
/
~
~
~Dorothy N. 4unn,
Clerk
Illinois Pollution Control Board
133—269
