ILLINOIS POLLUTION CONTROL BOARD
April 9, 1992
ENTERPRISE LEASING COMPANY,
)
Petitioner,
)
v.
)
PCB 91—174
(Underground Storage
ILLINOIS ENVIRONMENTAL
)
Tank Fund)
PROTECTI9N AGENCY,
)
Respondent.
KAY CRIDER, OF HINSHAW & CULBERTSON, APPEARED ON BEHALF OF THE
PETITIONER;
TODD F. RETTIG APPEARED ON BEHALF OF THE RESPONDENT.
OPINION AND ORDER OF THE BOARD (by J. Theodore Meyer):
This matter is before the Board on a petition for review
filed September 18, 1991, by petitioner Enterprise Leasing
Company (Enterprise) pursuant to Section 22.18b(g) of the
Environmental Protection Act (Act). (Ill.Rev.Stat. 1989, ch. 111
1/2, par. 1022.18b(g).) Enterprise seeks review of the Illinois
Environmental Protection Agency’s (Agency) August 15, 1991
partial denial of reimbursement from the Underground Storage Tank
(UST) Fund. A hearing was held on January 15, 1992, in Chicago,
Illinois. No members of the public attended.
The major dispute in this case is whether costs incurred in
association with a planned removal of TJSTs are “corrective
action” costs and are thus eligible for reimbursement from the
UST Fund.
BACKGROUND
This case involves the removal of underground storage tanks
and corrective action at a piece of property, owned by
Enterprise, located at 900 Dixie Highway, Chicago Heights,
Illinois. (R. A at 8)1 In October 1989 Enterprise hired
Heritage Remediation/Engineering, Inc. (HR/E) “to provide
environmental services to include the removal and documentation
of three underground storage tanks” at the Chicago Heights
facility. (R. B at 32.) HR/E began work at the site on January
16, 1990. (R. B at 41.) After removing the concrete and asphalt
pads over the UST5 and emptying the tanks of “residual products”,
1
“R. A” denotes citation to the Agency record, Book A, “R.
B” indicates citation to the Agency record, Book B, and “Tr.”
denotes citation to the hearing transcript.
132—79
2
HR/E dug a shallow explotatory test pit. Although HR/E had
believed that the USTs were not leaking, the test pit revealed
that the tanks were indeed leaking. (Tr. at 25.) There were
approximately 17 inches of free product three feet below the
surface. (R. B at 41.) Enterprise and HR/E notified the
Illinois Emergency Services and Disaster Agency (ESDA) of the
leak that same day (January 16, 1990). (Tr. at 26; R. B at 4-5.)
HR/E then performed additional work at the site before the tanks
were actually removed. This additional work included arranging
for,a ta~ikertruck, digging additional test pits, and pumping
19,800 gallons of free product from the cavity. (R. B. at 41-42;
Tr. at 59-60, 115.) Kevin Reinhard, senior project geologist for
HR/E, testified at hearing that this additional work would not
have been necessary if the USTs had not leaked. (Tr. at 66,
115.) HR/E also pumped approximately 1200 gallons of product
from the tanks themselves. (Tr. at 114.) This work was done on
January 18 and 19, 1990. The three USTs were destroyed between
January 18 and 22, 1990, and were disposed of between January 22-
30, 1990.2 (R. B at 54.) HR/E then continued with remediation
activities at the site, including additional excavation, soil
sampling, and transportation of residual fuels, contaminated
liquids, and contaminated soils. (R. B at 42—46.)
Enterprise subsequently filed an application for
reimbursement from the UST Fund with the Agency.3 There were a
number of communications between the Agency, Enterprise, and
HR/E. The invoices submitted in support of the claim for
reimbursement covered the period from November 1, 1989, through
October 31, 1990, and the total amount requested for
reimbursement was $146,176.70. (R. A at 156.) On August 15,
1991, the Agency issued its decision, finding that $98,487.43 was
reimbursable. The Agency listed eight separate amounts for which
reimbursement was denied. (R. A at 156-157.) Enterprise filed
its petition for review with the Board on September 18, 1991.
2 The record reflects some confusion as to the date the USTs
were actually removed. Enterprise’s application for
reimbursement states that the tanks were removed on January 20,
1990. (R. A at 10.) However, invoices show that work was
performed on January 16, 18, and 19, but not on January 20, which
was a Saturday. (R. A at 34—35, 38—49, 52, 63—68, and 72—79.)
The record does clearly indicate that destruction of the USTs
occurred between January 18 and 22, 1990, so it is clear that
removal of the tanks had at least begun on January 18, 1990. (R.
B at 54.)
~ The Board notes that although the application itself is
dated March 22, 1990 (R. A at 12), the date stamp indicating
receipt at the Agency is dated May 1990. The specific day of
receipt is illegible.
132—80
3
ARGUMENTS OF THE PARTIES
Enterprise challenges three of the eight items for which the
Agency denied reimbursement. These three disputed items total
$28,880.92. First, Enterprise challenges the Agency’s
determination on item 2——that $27,871.68 of costs associated with
tank removal are not reimbursable because the tanks were not
removed in response to a release of petroleum, and therefore are
not corrective action costs. Enterprise states that the Agency’s
denial of reimbursement for these costs is based upon the
Agency’s position that costs associated with planned tank
removals are not corrective action, and therefore are not
reimbursable under Section 22.18b(a)(3). Enterprise argues that
the statute does not distinguish between planned and unplanned
tank removals, but hinges on whether the costs were corrective
action costs taken to clean up a release of petroleum. In
support of its position, Enterprise points to the definition of
“corrective action”:
“Corrective action” means 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
it not limited to, release investigation, mitigation of
fire and safety hazards, tank removal, soil
remediation, hydrogeological investigations, free
product removal, ground water remediation and
monitoring, exposure assessments, the temporary or
permanent relocation of residents and the provision of
alternate water supplies. (Ill.Rev.Stat. 1989, ch. 111
1/2, par. 1022.l8(e)(1)(C).)
Enterprise contends that once HR/E discovered that the area
around the USTs was contaminated, and once ESDA was notified of
the release, all actions taken after that time were pursuant to
corrective action to clean up the release. Thus, Enterprise
maintains that the entire $27,871.68, incurred after ESDA was
notified on January 16, 1990, should be reimbursed.
Second, Enterprise challenges the Agency’s determination on
item 3--that $585.00 for equipment charges for an air compressor
and air blower were not reimbursable because Enterprise failed to
demonstrate that the costs were reasonable. Enterprise states
that the Agency found these costs to be unreasonable because
there was insufficient documentation that the charges were needed
for corrective action. Enterprise contends that Mr. Reinhard
testified at hearing that the charges were incurred pursuant to
corrective action. (Tr. at 46—47.) Therefore, Enterprise argues
that it should be reimbursed for the $585.00 in equipment
charges.
Finally, Enterprise challenges the Agency’s decision on item
132—81
4
4—-that $424.24 was not reimbursed due to reductions in allowable
laboratory charges. The Agency found that Enterprise had not
demonstrated that the costs were reasonable as submitted.
Enterprise notes that the Agency found that the costs per sample
were too high, and thus reduced the reimbursable cost per sample.
Enterprise argues that the Agency provided no support for the
belief that the costs were too high. Enterprise points to the
testimony of Mr. Reinhard that the disputed costs were
commensurate with fees charges by other labs in the area and that
he was ayzare of other labs which charged more than the disputed
costs. (Tr. at 116, 121.) Therefore, Enterprise argues that the
charges are customary within the industry and should be
reimbursed.
In response to Enterprise’s argument that the $27,871.68 of
costs associated with tank removal should be reimbursed, the
Agency contends that those costs are not corrective action costs.
The Agency maintains that in order to be corrective action costs,
those costs must be incurred in response to a preidentified
release. In support of its position, the Agency cites to the
Board’s decision in Rosman v. Illinois Environmental Protection
Agency (December 19, 1991), PCB 91-80. The Agency points to the
Board’s statement in Rosman that “the only way tank removal can
be classified as corrective action is if that removal was
undertaken in response toa preidentified release.” (Rosman,
slip op. at 7.) The Agency contends that because the disputed
costs were not incurred in response to a preidentified release,
they are not corrective action costs and are not reimbursable.
As to Enterprise’s claim that $585.00 in equipment costs
should be reimbursed, the Agency argues that there was no
demonstration that those charges were incurred in response to a
preidentified release. Therefore, the Agency contends that the
costs are not corrective action costs and are not reimbursable.
Finally, the Agency maintains that the disputed $424.24 in lab
costs was not reimbursed because Enterprise failed to demonstrate
that the costs were reasonable. The Agency states that the lab
used by HR/E in this case is a lab owned by the same organization
that owns and controls HR/E (Tr. at 119), that only one of the
other labs used by HR/E charges more (Tr. at 121), and that Mr.
Reinhard’s testimony that the fees were reasonable was based on
the fees charged by only five other labs. (Tr. at 120—121.)
Thus, the Agency argues that Enterprise clearly failed to show
that the fees were reasonable.
BOARD CONCLUSIONS
After a review of the record and the arguments of the
parties, the Board reverses the Agency’s determination on item 2,
and affirms the Agency’s decision on items 3 and 4. The Board
agrees with Enterprise that the $27,871.68 in tank removal
charges did constitute corrective action. Although the Agency
132—82
5
argues that the charges are not corrective action because they
were not incurred in response to a preidentified release, the
Board believes that the Agency has read the decision in Rosman
too narrowly. In Rosman, the Board stated that simply because a
tank removal is planned does not rule out the possibility of the
removal being corrective action. (Rosman, slip op. at 7.) The
Board’s decision in that case focused on whether the tank removal
met the statutory definition of “corrective action”. That
definition 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 activities such as tank removal, soil remediation, and
free product removal. (Ill.Rev.Stat. 1989, ch. 111 1/2, par.
1022.18(e) (1) (C).) Both requirements must be met in order for
c~oststo be reimbursed as corrective action.
in this case, the actions taken after Enterprise notified
ESDA meet both parts of the definition of corrective action.
First, the actions taken after ESDA notification were for the
purpose of stopping, minimizing, eliminating, or cleaning up a
release of petroleum. Second, the actions taken were of the type
listed in the statutory definition: tank removal, free product
removal, etc. Simply because Enterprise had planned to remove
the USTs does not bar tI)e. costs from being reimbursed as
corrective action costs when those activities meet the statutory
definition.
The Board does find that its inclusion of the statement in
Rosman that tank removal is corrective action only when in
response to a preidentified release was erroneous. The Board
does not believe that tank removal must be a result of a
preidentified release in order to constitute corrective action.
The proper inquiry is whether the activity meets both parts of
the statutory definition of corrective action. It was this
inquiry which was at the heart of the Rosman decision.4 Because
the actions taken by Enterprise after ESDA notification meet the
statutory definition, the $27,871.68 is reimbursable as
corrective action costs.
The Board notes that the definition of corrective action in
Section 22.18(e) (1) (C) was recently amended by P.A. 87-323 to
specifically provide that corrective action does not include
removal of USTs if the UST was removed or permitted for removal
by the Office of State Fire Mar3hal prior to notification of a
release of petroleum. However, that amendment does not apply in
‘~
The Board notes that the Agency could not have relied on
the Rosman decision when determining reimbursability in the
instant case. The Agency decision in this case was made on
August 15, 1991, and the Rosman decision was not issued by the
Board until December 19, 1991.
132—83
6
this case. P.A. 87-323 was approved and effective on September
6, 1991, after the disputed costs were incurred in 1990 and after
the Agency reached its decision on reiinbursability on August 15,
1991.
The Board affirms the Agency’s decisions on items 3 and 4.
Although Enterprise contended in its brief that Mr. Reinhard
testified that the $585.00 in charges for the air compressor and
air blower were incurred pursuant to corrective action, the Board
does not, interp~etMr. Reinhard’s testimony as being that clear.
When asked if the equipment charges were incurred pursuant to
corrective action, Mr. Reinhard answered “I am not certain on
that.” (Tr. at 46—47.) The fact that he then answered “Yes”
when asked if those charges were incurred after the discovery
that the USTs were leaking and after ESDA was notified does not
mean that he testified that the charges were corrective action
costs. In any event, although the Agency states in its brief
that the equipment charges were denied because there was no
demonstration that the charges were corrective action, the August
15, 1991 Agency letter states that those charges were denied
because Enterprise had failed to demonstrate that the charges
were reasonable. (R. A at 156.) Julie Hollis, the Agency
employee who reviewed Enterprise’s application for reimbursement,
testified that there was nothing in the file to support the
necessity of this equipment in the tank removal. (Tr. at 85.)
Enterprise has not pointed to any information in the record which
shows that the equipment charges were indeed reasonable. The
burden of proof is on the petitioner in appeals of Agency
determinations of reimbursability. (Sections 22.l8b(g) and
40(a)(1).) Enterprise has not carried that burden in
demonstrating that the equipment charges were reasonable. Thus,
the Agency’s decision on item 3 is affirmed.
The Board also affirms the Agency’s reduction of $424.24 in
lab costs. Although Mr. Reinhard testified that one of the five
other labs used by HR/E had a higher cost per sample than the lab
used in this case, Enterprise provided no documentation that the
cost per sample was reasonable. Enterprise never submitted
actual costs charged by any of the other labs that HR/E uses, nor
did Mr. Reinhard testify as to actual figures. Indeed, the fact
that four of five labs charge lower prices gives rise to an
inference that the cost per sample in this case was not
reasonable. In any event, the Board finds that Enterprise did
not carry its burden of demonstrating that the full cost per
sample was reasonable.
In sum, the Board finds that the $27,871.68 in tank removal
costs are corrective action costs and are therefore reimbursable.
The Board affirms that Agency’s decision that $585.00 in
equipment charges and $424.24 in lab charges are not
reimbursable.
132—84
7
This opinion constitutes the Board’s findings of fact and
conclusions of law.
ORDER
The Board hereby reverses the Agency’s August 15, 1991
determination in item 2 that $27,871.68 for costs associated with
tank removal are not reimbursable. The Agency’s determinations
in items 3 and 4 that $585.00 in equipment charges and $424.24 in
lab costs are not reimbursable is hereby affirmed. This case is
remanded to the Agency for disbursement of the $27,87l,68 amount,
consistent with this opinion and order. This docket is closed.
IT IS SO ORDERED.
J. Marlin dissented.
Section 41 of the Environmental Protection Act
(I1l.Rev.Stat. 1989, ch. 111 1/2, par. 1041) provides for appeal
of final orders of the Board within 35 days. The Rules of the
Supreme Court of Illinois establish filing requirements.
I, Dorothy N. Gunn, Clerk of the Illinois Pollution Control
Board, hereby cert~y that the abo~ye opi~iionand order was
adopted on the
~
day of
~--~L
,
1992, by a vote
of
_____
.
/1
‘2
~
~
Dorothy M. GiØin, Clerk
Illinois PoAution Control Board
132—85