ILLINOIS POLLUTION CONTROL BOARD
December 19,
1991
NORTH SUBURBAN DEVELOPMENT
)
CORPORATION,
)
Petitioner,
PCB 91—109
v.
)
(UST Reimbursement)
ILLINOIS ENVIRONMENTAL
)
PROTECTION AGENCY,
)
)
Respondent.
RICHARD
G. BERNET APPEARED ON BEHALF OF THE PETITIONER, AND
TODD
F. RETTIG AND RONALD
L.
SCHALLAWITZ APPEARED ON BEHALF OF
RESPONDENT.
OPINION OF THE BOARD
(by B.
Forcade):
This Opinion supports the Order of the Board of December
6,
1991.
The Illinois Supreme Court has specifically authorized
Pollution Control Board Opinions filed after the timely final
action of a Board Order. Waste Management of Illinois v.
Pollution Control Board, Docket Nos. 71001,
71003,
1991 WL 242476
(November 21,
1991).
This matter is before the Board on the June 24,
1991 filing
of a petition for review by North Suburban Development
Corporation
(“North Suburban”).
North Suburban seeks review of
the Illinois Environmental Protection Agency’s
(“Agency”)
determination of corrective action costs which are subject to
reimbursement from the Illinois Underground Storage Tank Fund
(“UST Fund”).
The Agency filed its record in this matter on July
19,
1991.
On September
9,
1991, the Agency filed a stipulation
of uncontested facts between North Suburban and itself.
The only
issue in this case is whether the Agency should have reimbursed
North Suburban for the remediation costs that it incurred prior
to its notification of the Illinois Emergency Services and
Disaster Agency (“ESDA”).
BACKGROUND
On July
7,
1989, North Suburban purchased property at 3250
West Touhy Avenue,
Skokie,
Illinois.
(Pet.
pp.
1-2).
Prior to
acquisition, North Suburban discovered that there were three
underground storage tanks
(“USTs”)
on the property,
a 5,200
gallon gasoline UST which was registered on June 30,
1988 and two
5,000 gallon heating oil tanks which were registered on August
128—263
2
24,
1990.
(Pet.
p.
2; Stip of Facts pars.
1,
2; Agency Rec.
pp.
114,
115—116;
Joint Ex.
2 pars.
1,
2).
Within one month of purchase, North Suburban hired American
Waste Haulers, Inc.
(“American Waste”)
tO remove the USTs.
(Pet.
p.
2).
On August
2,
1989,
North Suburban filed with the Office
of the State Fire Marshal
(“Fire Marshal”)
its Application for
Permit to remove the USTs.
(Pet.
p.
2).
North Suburban also
notified the Skokie Fire Marshal of its intent to remove the
USTs.
(Pet.
p.
2).
At the direction of the Skokie Fire Marshal
and pric5r to its removal of the USTs, American Waste obtained a
permit from the Agency for disposal of any contaminated soil.
(Pet.
p.
2).
On November 10,
1989, American Waste removed the
USTs in the presence of the Skokie Fire Marshal, who advised
North Suburban that he was also representing the Illinois State
Fire Marshal.
(Pet.
p.
2;
Stip of Facts pars.
3,
6; Agency Rec.
pp.
1,
114—116; Joint Ex.
2 pars.
3,
6).
Upon removal of the USTs, North Suburban manifested and
disposed of the tank contents and all visibly contaminated soil.
(Pet.
p.
2).
North Suburban also collected representative soil
samples from the excavations.
(Pet.
pp.
2-3).
On November 20,
1989,
Environmental Monitoring and Technologies,
Inc. sent North
Suburban its analysis of the soil samples.
(Pet.
p.
3;
Stip of
Facts pars.
7—20; Agency Rec. pp.
105—112; Joint Ex.
2 pars.
7-
20).
Such test results exceeded Agency cleanup objectives.1
(Pet.
p.
3).
On November 28,
1989,
North Suburban telephoned ESDA of the
release from its tanks.
(Pet.
p.
3; Stip of Facts pars.
21,
22;
Agency Rec.
p.
1; Joint Ex.
2 pars.
21,
22).
The Agency sent
North Suburban a Notice of Release letter, dated December 8,
1989.
(Pet.
p.
3; SUp of Facts par. 26; Agency Rec.
p.
92;
Joint Ex.
2 par. 26).
North Suburban, via
a letter dated
December 22,
1989, provided the Agency with its initial soil
sample analysis and its contingency plan.
(Pet.
p.
3,
Ex.
B;
Stip. of Facts pars.
27—31,
Ex.
B; Joint Ex.
2 pars.
27-31,
Ex.
B).
As a result of its initial soil sample analysis, North
Suburban continued to excavate contaminated soil from the site
until November 29,
1989.
(Pet.
p.
3).
At that time,
North
Suburban obtained a second set of soil samples which indicated
1The Board notes that ESDA’s incident ID form indicates that
North
Suburban
discovered
the
release
on
November
24,
1989.
(Agency
Rec.
p.
1).
However,
North
Suburban’s application
for
reimbursement
and the stipulation
of uncontested
facts
indicate
that North Suburban discovered the release on November 20,
1989.
(Agency Rec. pp.
113-115; Stip of Facts par.
20; Joint Ex.
2 par.
20)
128—264
3
that its site had been successfully remediated.
(Pet.
p.
3;
St
of Facts par.
24; Agency Rec.
pp. 99-104; Joint Ex.
2 par.
24).
On February 22,
1990,
North Suburban submitted the analyses to
the Agency and,
on March 30,
1990,
the Agency issued North
Suburban a “clean closure” letter confirming that further
remediation was not necessary.
(Pet.
p.
3,
Exs.
C,
D; 1stip of
Facts pars.
25,
32,
34,
35,
Ex.
F of attached Ex.
A; Agency Rec
pp.
99-111; Joint Ex.
2 pars.
25,
32,
34,
35, Ex F of attached
Ex. A).
On June 7,
1990, North Suburban submitted an application
f
reimbursement of corrective action costs from the Leaking
Underground Storage Tank Fund
(“Fund”) to the Agency.
(Pet. p~
3—4, Ex.
E; Stip. of Facts pars.
36,
38,
39,
Exs. A,
C; Joint
I
2 pars.
36,
38,
39, Exs.
A,
C).
On July 11,
1990, North Subur~
submitted a second application form to the Agency after a new
application form became available.
(Pet.
p.
4,
Ex.
F; Stip.
of
Facts pars.
40,
42,
Exs.
D,
E.; Joint Ex.
2 pars.
40,
42,
Exs.
t
E).
On September 25,
1990,
at the Agency’s request,
North..,
Suburban submitted additional documentation., including another
copy of its completed application form, to the Agency.
(Pet.
r
4;
Stip.
of Facts pars.
43,
45,
Exs.
F,
G; Joint Ex.
2 pars.
4
45,
Exs.
F, G).
By letter dated October 25,
1990, the Agency made the
eligibility determination regarding North Suburban’s Applicatic
for Reimbursement.
(Pet.
p.
4,
Ex.
G; Stip of Facts par. 46;
Agency Rec. pp.
120—121; Joint Ex.
2 par.
46).
In the letter,
the Agency stated that North Suburban was subject to a $15,000.
deductible, that the costs associated
s.iith the cleanup of the
t
heating oil tanks as well as any costs incurred prior to July
;
1989, were ineligible,
and that it would deduct $500.00 from U
amount as
a late UST registration fee.
(Pet. p.
4,
Ex.
G; Ager
Rec. pp.
120-121).
Specifically, the letter stated,
in part,
~
follows:
...The Agency has reviewed the application
and determined you to be eligible to seek
reimbursement from the Fund for corrective
action costs,
accrued on or after July 28,
1989,
in excess of $15,000.00.
In addition,
$500.00 for the late registration of the
underground storage tank(s) at the above
location will be deducted from the amount
reimbursed in response to this claim....
•
.
.The review of your Application indicated
that the $100.00 tank registration fee was
paid after July 28,
1989 which resulted in
the application of the above deductible
amount for this claim....
128—265
4
Please note, only the corrective action costs
associated with the 5,200 gallon gasoline
tank are eligible for reimbursement.
The
costs associated with the two 5,000 gallon
heating oil tanks are ineligible for
reimbursement as these tanks are not defined
as underground storage tanks....
By letter dated November 30,
1990, North Suburban requested
the Agency to reconsider its imposition of the late fee.
(Pet.
p.
5,
EC.
H; Stip of Facts. par.
47; Agency Rec.
pp.
117-118).
The Agency responded by letter dated December 13,
1990.
(Pet.
p.
5,
Ex.
I; Stip of Facts par.
49; Agency Rec. p.
122; Joint Ex.
2
par.
49).
In that letter, the Agency again determined that North
Suburban had to pay the $500.00 late fee as a condition to
reimbursement.
(Pet.
p.
5,
Ex.
I; Agency Rec.
p.
122).
Subsequent to such time, North Suburban, on February
15,
1991,
April
5,
1991,
and May 10,
1991,
submitted additional
documentation of remediation costs that it incurred.
(Stip. ~of
Facts pars.
50,
52,
54, Exs. H,
I,
J; Joint Ex.
2 pars.
50,
52,
54,
Exs.
H,
I,
J).
In a letter dated May 20,
1991, the Agency completed the
second part of its two-part review of North Suburban’s
application and denied North Suburban any reimbursement for
$39,711.37
of expenses incurred prior to ESDA notification.
(Pet.
pp.
6-7,
Ex.
A; Stip of Facts par.
57; Agency Rec. pp.
124-125;
Joint Ex.
2 par.
57).
This is the amount in conflict.
DISCUSSION
As previously stated, the sole issue presented is whether
remediation costs incurred by North Suburban prior to
notification to ESDA are reimbursable from the Fund.
I. North Suburban’s Position
In the instant case, North Suburban argues that there is no
support for the Agency’s decision in the Act, regulations,
or the
Agency’s two guidance documents and that,
as a result, the Agency
has contravened its statutory charge to “adopt reasonable and
necessary rules” pursuant to Section 22.18(f)
of the Act.
(Pet.
Br.
4).
North Suburban also argues that the Agency’s decision
conflicts with the Section 22.18(e) (1) (C)
of the Act which
defines corrective action as:
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
investiqation, mitigation of fire and safety
128—266
5
hazards, tank removal, solid remediation....
(Pet.
Br.
pp.
4-5).
Specifically, North Suburban argues that the Agency is attempting
to limit the definition by excluding pre-ESDA notification costs
even though the definition contains no timing requirement and
North Suburban’s costs fall within the definition.
(Reply Br.
p.
2).
In support of its argument, North Suburban notes that the
Act’s only timic~grestriction on otherwise reimbursable costs are
those
irtcurred before the effective date of the Act
(i.e. July
28,
1989)
and that had the legislature intended to further limit
access to the Fund based upon the date corrective action costs
were incurred,
it would have done so in the text of the statute.
(Pet.
Br.
p.
5; Reply Br.
p.
2).
North Suburban argues that the legislature recently amended
the Act to exclude corrective action costs incurred prior to ESDA
notification and that the amendment contains no retroactive
clause that would make the amendment applicable to North
Suburban’s application forreinthursement.
(Reply Br.
p.
2).
North Suburban also argues that the legislature’s action
indicates that a formal revision, through amendment or
promulgation of new regulations, rather than informal Agency
interpretation,
is necessary to further limit access to the Fund.
(Id.).
Finally, North Suburban argues that the Agency should be
estopped from denying reimbursement because it failed to give
North Suburban any notice of its position on the reimbursability
of pre-ESDA costs until 10 months after North Suburban first
submitted its application and
7 months after the Agency approved
North Suburban’s access to the Fund.
(Pet.
Br. pp.
5-6; Reply
Br.
pp.
3,
4—5).
Over the course of the eleven month period
between North Suburban’s submission of its application
(June
7,
1990)
and its receipt of the Agency’s May 20,
1991 letter, North
Suburban had numerous telephone conversations,
as well as an
April
1,
1991 meeting, with the Agency regarding its application
for reimbursement.
(Pet.
pp.
5-6,
Ex.
K; Stip of Facts par.
56,
Ex. K
-
par.
10; Joint Ex.
2 par.
56,
Ex. K
—
par.
10).
During
that span of time,
the Agency did not inform North Suburban that
it considered North Suburban’s ESDA notification untimely or of
the Agency’s policy regarding the non-reiinbursability of costs
incurred prior to notification of ESDA.
(Pet.
p.
5-6; Stip of
Facts par.
58,
Ex. K
—
par.
12; Joint Ex.
2 par.
58,
Ex. K
-
par.
12).
II. The Agency’s Position
The Agency,
on the other hand,
cites to Section
22.l8b(d)(4)(D)
of the Act and 35 Ill. Adm. Code 731.150 as
support for its determination that pre—ESDA notification costs
128—26 7
6
are non—reimbursable.
(Agency Br.
p.
2).
Section
22.18(b) (d) (4) (D)
states:
Requests for partial or final payment for
claims under this section shall be sent to
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;
Additionally,
the Board’s RCRA regulations, at 35
Ill. Adm.
Code
731.150, state:
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....
In response to North Suburban’s estoppel argument, the
Agency argues that it has uniformly interpreted the Act and
regulations to require ESDA notification within 24 hours of the
discovery of a release and that pre—ESDA notification costs are
not reimbursable.
(~.
p.
6).
The Agency also argues that it
would be unreasonable to require the Agency to inform an
applicant that specific costs were not reimbursable prior to its
complete review of all the information submitted by an applicant
pursuant to Sections 22.18(b) (a), 22.18(b) (d) (3), and
22.18(b) (d) (4)
of the Act.
(~.
pp. 6—7).
Specifically, the
Agency notes that the Act envisions the following two-step review
process:
1)
a review of the application to determine whether the
applicant is eligible to access the Fund and what the appropriate
deductible is pursuant to Sections 22.18(b) (a) and 22.18(b) (d) (3)
of the Act, and 2)
a review of the costs pursuant to Section
22.18(b)(d)(4)
of the Act.
(u.).
Finally, the Agency argues
that its two-step review process provided North Suburban with the
opportunity to raise its concerns regarding individual cost
determinations.
(Id.
p.
7).
CONCLUSIONS
The Board concludes that the Agency made the proper
128—268
7
decisions an~made them in a proper manner.
First,
the Agenc:
required to make an initial decision on eligibility pursuant
Section 22.l8b(a) which states:
a.
An owner or operator is eligible to receive money
f:
the Underground Storage Tank Fund for costs of
corrective action or indemnification only if all of
following requirements are satisfied:
1.
Neither the owner nor operator of the undergro
storage tank is the United States Government;
2.
The underground storage tank does not contain
which is exempt from the provisions of Section
of The Motor Fuel Tax Law;
3.
The costs of corrective action or indeinnificat.
were incurred by an owner or operator as a res~
of a release of petroleum,
but not including a
hazardous substance,
from an underground stora
tank;
4.
The owner or operator has registered the tank
accordance with Section 4 of “An Act to regula
the storage,
transportation,
sale and use of
gasoline, volatile oils and other regulated
substances”, approved June 28,
1919, and paid
the Underground Storage Tank Fund all fees
required for the tank in accordance with Secti~
4 and
5 of such Act and regulations adopted by
Office of State Fire Marshal;
5.
For costs of indemnification,
in addition to
i
(1) through
(4), the provisions of subsection
have been met.
*
*
*
The Agency made its eligibility decision in a timely manner
a
made it correctly.
North Suburban met the eligibility
requirements when the tank removal was done,
met the requirem’
when the Agency decision was made, and meets the requirements
today.
Having met the eligibility requirements’, the Agency
c’
not legally deny eligibility because the costs were not
reimbursable.
Nothing in the Act allows the Agency to consid~
ESDA notification in making an eligibility decision; therefori
the Agency’s “failure” to cite ESDA notification issues in ma
its eligibility determination is perfectly appropriate.
Later,
the Act requires the Agency to make a reimbursabi
decision under Section 22.l8b(d)(4), which states
(Emphasis
Added):
128—269
8
4.
Requests for partial or final payment for claims u
this Section shall be sent to the Agency and shall
satisfy all of the following:
A.
The owner and operator are eligible under
subsections
(a) and
(c)
of this Section;
B.
Approval of the payments requested will not resul
in the limitations set forth in subsection
(b)
of
this Section being exceeded;
C.
The owner or operator provided an accounting of
all costs, demonstrated the costs to be reasonabi
and provided either proof of payment of such cost
or demonstrated the financial need for joint
payment to the owner or operator and the owner’s
or operator’s contractor in order to pay such
costs;
D.
The owner or operator notified the State of the
release of petroleum in accordance with app1icabl~
requirements
E.
The owner or operator notified the Agency of any
initial corrective measures taken and demonstratec
such measures to be consistent with the final
corrective action approved by the Agency;
and
F.
The owner or operator submitted plans for final
corrective action to the Agency and performed the
corrective action
in accordance with the plans
approved by the Agency.
*
*
*
*
The Board’s regulations, at 35 Ill.
Adm. Code 731.150,
state:
Owners and operators of UST systems shall report to the ESD.~
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..
Accordingly, at the time of leak detection in this proceeding,
the regulatory requirements that existed required North Suburban
to give notification to ESDA within 24 hours,
and the statutory
language required North Suburban to provide the Agency with proof
of notification as a condition for payment of such claims.
Again,
the Agency made this reimbursement decision in a timely
128—270
9
manner and made it correctly.
The costs incurred by North
Suburban were not reimbursable when the tanks were removed, were
not reimbursable when the Agency made its decision and are not
reimbursable today.
The Agency made the correct decision under
this Section of the Act;
it did not change its mind about the
earlier decision under Section 22.18b(a)
ol the Act.
The North Suburban estoppel argument does not have merit.
North Suburban incurred all of its removal costs six months prior
to contacting the Agency in any manner.
All costs were expended
almost dne year prior to the Agency determination on.eligibility,
and over eighteen months prior to the Agency decision on
reimbursable costs.
North Suburban could not have “relied” on
the Agency decision in making its expenditures.
Reasonable
reliance
is a necessary element of estoppel.
North Suburban has
not identified any remediation costs that it expended based upon
the Agency position in this proceeding.
North Suburban has repeatedly characterized the controlling
law in this proceeding as, the Agency’s “secret position”
(Brief
p.5),
the Agency’s “undisclosed interpretation”
(Reply Brief
p.3), and similar statements.
North Suburban repeatedly asserts
that the Agency failed to inform them of this requirement.2
This
“secret position” or requirement is actually the Board regulation
found at
35 Ill.
Adm. Code 731.150.
That regulation was in force
and effective from June 12, 1989.~ That regulation required
notification of ESDA with 24 hours of leak detection.
North Suburban has never asserted that the ~egu1ation does
not apply to
it.
North Suburban has never asserted that Section
731.150
is not a requirement regarding notice to the State.
North Suburban has never asserted that it complied with Section
731.105.
Failure to comply with Section 731.150 not only
precludes the Agency from reimbursement of remediation costs,
it
subjects North Suburban to enforcement liability under the Act.
North Suburban also asserts that subsequent statutory
amendments support its position.
In fact, North Suburban argues
that the legislature recently amended the Act to exclude
corrective action costs
incurred prior to ESDA notification and
2The Agency states that its interpretation of the applicable
law has never changed
(Tr.
33—34),
and that North Suburban never
inquired
about
whether pre—notification
costs were reimbursable
(Tr.
36).
North
Suburban’s
counsel admitted he never
inquired
about the reimbursability of pre—notification costs
(Tr.
19-20).
31n other words,
that regulation was in place and effective
prior
to
the
time
North
Suburban
purchased
the
property
in
question,
prior
to any
leak detection,
and prior to any Agency
determinations in this proceeding.
128—271
10
that the amendment contains no retroactive clause that would make
the amendment applicable to North Suburban’s application for
reimbursement.
(Reply Br.
p.
2).
North Suburban also argues
that the legislature’s action indicates that a formal revision,
through amendment or promulgation of new regulations, rather than
informal Agency interpretation is necessary to further limit
access to the Fund.
(u.).
The old statutory language of Section
22.18b(d) (4) (D) including the amendments recently added by HB-
1741
(as underlined)
state:
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.
Contrary to North Suburban’s assertions this does not reflect a
new statutory initiative to exclude pre-notification expenses~.
The old language would have excluded, all remediation costs when
ESDA was not notified within 24 hours,
even if ESDA was notified
more than 24 hours later but before remediation costs were
incurred.
The new language makes it clear that costs incurred
after notification can be compensated even if the 24 hour
notification requirement is not met.
Since pre—notification
costs are excluded under both the old and the new statutory
language, this argument is misplaced.
Accordingly,
for the foregoing reasons, the Board hereby
affirms the Agency’s determination regarding the non—
reimbursability of costs incurred prior to North Suburban’s
notification of ESDA.
The above Opinion constitutes the Board’s findings of fact
and conclusions of law in this matter.
IT IS SO ORDERED.
Board Members J. Anderson and M. Nardulli dissented
I, Dorothy N. Gunn,
Clerk of the Illinois Pollution Control
Board,
hereby certify that the above Opinion was adopted on the
/~~day of
~
,
1991,
by a vote of
b~~~Z-i
~7i.
Illinois P
Control Board
128—272
