ILLINOIS POLLUTION CONTROL BOARD

April 17, 2003

RANTOUL TOWNSHIP HIGH SCHOOL

DISTRICT NO. 193,

Petitioner,

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY,

Respondent.

)

PCB 03-42

(UST Appeal)

PATRICK D. SHAW OF MOHAN, ALEWELT, PRILLAMAN & ADAMI APPEARED ON

BEHALF of PETITIONER; and

JOHN J. KIM, SPECIAL ASSISTANT ATTORNEY GENERAL, APPEARED ON BEHALF of

THE RESPONDENT.

OPINION AND ORDER OF THE BOARD (N.J. Melas):

On October 7, 2002, Rantoul Township High School District No. 193 (District or

Rantoul) timely filed a petition asking the Board to review a September 5, 2002 underground

storage tank (UST) fund reimbursement determination of the Illinois Environmental Protection

Agency (Agency).

See

415 ILCS 5/40(a)(1) (2002); 35 Ill. Adm. Code 105.404. The Agency

rejected the District’s proposed budget amendment to the high priority corrective action plan

concerning two leaking USTs at the District’s site located at 200 S. Sheldon Street in Rantoul,

Champaign County.

The District disputes the Agency determination regarding lack of documentation

concerning costs for bid proposals, relocation of underground utilities, removal of migration

pathways, backfill compaction and density testing, demurrage, specified personnel, and attorney

fees. The District contends and contends that all costs were necessary and required. For the

reasons below, the Board affirms the Agency’s denial decision on all costs except those related

to possible migration pathways, for which the Agency concedes reimbursement is appropriate.

After setting forth the facts and procedural history of this case and the legislative framework, the

Board will discuss the issues and explain its decision.

FACTS

The District operates a high school located at 200 South Sheldon Street, Rantoul,

Champaign County. Rec. 14. On May 20, 1997, the school district found a petroleum release

while removing two 500-gallon USTs. Rec. 100. Rantoul immediately notified the Illinois

Emergency Management Agency, and the release became UST fund Incident No. 970899. Rec.

100. Rantoul submitted a site classification completion report to the Agency on November 13,

1998. Rec. at 47. The report identified a gas line as a potential migration pathway. Rec. at 49.

The Agency rejected the site classification report due to Rantoul’s failure to demonstrate that

migration pathways were adequately addressed. Rec. at 47. Rantoul submitted another site

classification report on July 1, 1999. The Agency rejected this report for failure to define the

setback zone and adequately address migration pathways, and directed Rantoul to propose a

groundwater investigation plan. Rec. at 50, 52. On September 28, 1999, Rantoul submitted an

amended physical soil classification and groundwater investigation plan to the Agency. Rec. at

54. The Agency approved the plan with modifications. Rec. at 55. The Agency directed

Rantoul to do borings near the gas line to be analyzed for indicator contaminants. Rec. at 57.

As requested by the Agency, Rantoul took the borings. Rec. at 82-84. From the results,

Rantoul determined there were three manmade migration pathways impacted by the release.

Rec. at 78. The migration pathways were: (1) an underground gas line, approximately six feet

from the tank pit; (2) an underground water line located about three feet east of the tank pit; and

(3) a storm sewer line located approximately thirty feet from the tank pit. Rec. at 77-78; Rec. at

84. A professional engineer certified these migration pathways as threatening human health or

human safety or having the potential to cause explosions. Rec. at 66-67. The Agency classified

the site as “high priority.” Rec. at 66-67.

Rantoul hired a consultant, Applied Environmental Technologies (AET), to perform

corrective action. Rantoul submitted a high priority corrective action plan, including budget, to

the Agency on August 21, 2001. The Agency approved the plan and budget with modifications

on October 5, 2001. Rec. at 89. The Agency approved $163,631.96 in corrective action costs

out of a total of $185,662.32 requested by Rantoul. Rec. at 91, 146. AET began to define the

boundaries of the soil and groundwater contamination plumes for Rantoul. Rec. at 103-104. The

locations of the utilities, including the gas and water lines, were different in the final plans than

in the maps submitted to the Agency in the original corrective action plan. Tr. at 28, 32-33, 46.

AET submitted an amended budget on behalf of Rantoul Township on May 8, 2002, requesting a

total of $241,303.63 in corrective action costs. Rec. at 8.

The Agency denied $77,671.67 in costs proposed in the budget amendment in a letter

dated September 5, 2003, approving only the $163,631.96 in corrective action costs approved in

the original budget. Rec. at 8, 16. The letter states that the submitted budget amendment

contains personnel costs that lack sufficient documentation. Rec. at 3, par. 1. The letter states

the budget amendment includes costs for unnecessary and unreasonable overnight mail charges

and costs for relocating underground utilities that that are not corrective action costs. Rec. at 3,

par. 2, 3. Costs associated with compaction of backfill materials, including personnel and

contractor time and the rental of soil compactors, were denied as not corrective action costs.

Rec. at 3, par. 4. Costs associated with the removal of “possible migration pathways” were

denied as not corrective action costs. Rec. at 4, par. 5. The Agency denied costs for demurrage.

Rec. at 4, par. 6. Finally, handling charges were approved only to certain percentages of the

cost. Rec. at 5, par. 7.

PROCEDURAL HISTORY

Rantoul filed this petition with the Board on October 7, 2002. A hearing was held in

Springfield on February 18, 2003, at which Mr. Donald Grammer, a professional engineer at

Applied Environmental Technologies, and Mr. Jay Gadosh, an Agency employee, testified. On

March 14, 2003, Rantoul waived the decision deadline in this proceeding until May 15, 2003.

LEGAL FRAMEWORK

The Board's authority to review an Agency budget determination in UST reimbursement

claims arises from Section 57.7(c)(4)(D) and 57.8(i) of the Environmental Protection Act (Act).

415 ILCS 5/57.7(c)(4)(D), 57.8(i) (2002). Section 57.7(c)(4)(D) grants owners and operators the

right to appeal an Agency determination on a proposed plan to the Board in accordance with the

procedures of Section 40 of the Act. 415 ILCS 5/40 (2002). Section 57.8(i) of the Act grants the

right to petition the Board to review the Agency denial or partial payment of a UST fund

reimbursement request in the manner provided in Section 40 of the Act.

When seeking reimbursement from the UST Fund at a high priority site, the owner or

operator must supply the Agency with “an accounting of all costs associated with the

implementation and completion of the corrective action plan.” 415 ILCS 5/57.7(c)(1)(B). The

owner or operator must prove that the costs associated with the budget are reasonable, will be

incurred in performing corrective action, and will be used to satisfy only the minimum

requirements of the Act. 415 ILCS 57.7(c)(4)(C). If the Agency denies the budget, the Agency

must provide the owner or operator in writing within 120 days: (1) the sections of the Act or

Board regulations that would be violated if the budget were approved; (2) an explanation of the

Board regulations that may be violated if the budget were approved; (3) the specific information

that the Agency deems the budget lacks; and (4) the specific reasons why the Act and Board

regulations would not be met if the budget were approved. 415 ILCS 57.7(c)(4)(D).

Regarding legal defense costs, Section 732.606(g) of the Board rules provides:

Costs ineligible for payment from the Fund include but are not limited to: . . .

Legal defense costs including legal costs for seeking payment under these

regulations unless the owner or operator prevails before the Board and the Board

authorizes payment of legal fees [415 ILCS 5/57.8(l)]. 35 Ill. Adm. Code

732.606(g).

DISCUSSION

Costs Not Deemed Corrective Action

Bid Proposals

Rantoul argues that the Agency should reimburse it for $11,820 in costs to prepare the

bid proposals because bid preparation is a condition precedent for school districts to comply with

Section 57.7 of the Act. Br. at12. Rantoul explains that letting bids is necessary for a school

district prior to awarding a bid to a contractor pursuant to the Illinois Constitution and the School

Code. Ill. Cost. Art. 7, Sec. 8; 105 ILCS 5/10-20.21. Furthermore, Rantoul contends that the

letting of bids proves Rantoul chose the most reasonable cost alternative. The Agency’s denial

letter stated: “Bid proposals are not required for compliance with the LUST Program; therefore,

activities related to the Bid Specifications must be removed from the budget.” Rec. at 4.

The Agency argues that just because letting bids is required by the School Code, it does

not mean that the Agency should reimburse for that activity through the UST Fund. Resp. at 6.

The Agency maintains that letting bids is not a corrective action

The Board affirms the Agency’s decision. The Board recognizes that by law, school

districts must let bids before awarding a bid to a contractor and agrees that letting bids can help

show a cost is reasonable. However, the Board finds that costs incurred for preparing the bid

specifications are not costs incurred for performing corrective action. Though the costs incurred

for bid specifications themselves are not reimbursable, they are useful for showing that other

costs are eligible for reimbursement, specifically that the corrective action costs are reasonable.

The Board affirms the Agency’s denial of these costs.

Relocation of Underground Utilities

Rantoul argues that there was no way to work around the utility lines at issue and that the

utilities were active and could not be simply removed. Br. at 15; Reply at 8. Rantoul contends

the utility lines had to be relocated or the school would have had to be closed down.

The Agency maintains that while the costs of removing utility lines can be reimbursable,

the costs of relocating utility lines are not. Resp. at 8. In its denial letter, the Agency notes that

the costs of removing the utility lines exceed the minimum requirements for corrective action

necessary to comply with the Act, Section 57.5(a), and Board rules, Section 732.606(o). 415

ILCS 5/57.5(a); 35 Ill. Adm. Code 732.606(o). The Agency concludes that relocating utility

lines is not corrective action. Resp. at 8.

Budget Certification Form

. Rantoul argues that the Agency’s budget certification form

is illegal in form and intent. Br. at 17. Both Rantoul and a professional engineer working at the

site signed a statement provided by the Agency certifying that Rantoul is not seeking

reimbursement for costs associated with utility replacement. Rec. at 27. Rantoul contends that

the statement, called a budget certification form, is an illegal form. Br. at 17. Rantoul maintains

this is so because the form requires a certified engineer to agree not to include costs associated

with utility replacement, among other costs, in the budget certification form for reimbursement.

Most of the costs listed come from the language of the Act or Board rules. However, the Act and

Board rules do not contain specific language regarding utility replacement. Therefore, Rantoul

contends that by creating a form prohibiting those particular costs from reimbursement, the

Agency has essentially executed a “backdoor” rulemaking regarding such costs, citing Platolene

500 v. IEPA, PCB 92-9, at 7-8 (May 7, 1992).

The Agency maintains that the budget certification form is not its justification for

denying reimbursement to Rantoul for utility relocation. Rather, the Agency denied costs for

replacement and/or relocation because utility relocation is not corrective action. Rec. at 3-4.

The budget certification form, with the engineer’s signature, is simply proof that Rantoul

acquiesced to this position, according to the Agency. Resp. at 11.

Along with an application for payment, the Act requires certification from a professional

engineer, acknowledged by the owner or operator. 415 ILCS 5/57.8(a)(6)(A). Under Section

732.606(o), “costs for corrective action activities and associated materials or services exceeding

the minimum requirements necessary to comply with the Act” are ineligible costs. 35 Ill. Adm.

Code 732.606(o). The Board finds the budget certification form did not conflict with the

requirements of the Act or Board rules.

Rantoul’s argument thatrelocation of the underground utilities was necessary for it to

complete site remediation shows Rantoul’s hardship in completing construction, but does not

prove relocation was a corrective action. Relocation itself was not necessary to comply with the

minimum corrective action requirements of the Act and Board rules. Accordingly, the Board

finds the Agency properly denied costs associated with the relocation of underground utilities.

Removal of Possible Migration Pathways

The Agency concedes that costs related to the removal of old drain lines should have

been approved in the amended budget request. Resp. at 11-12. The costs amount to $889.50 for

excavation, removal, and plugging of possible migration pathways. The Board remands this to

the Agency for approval.

Backfill Compaction and Density Testing

Rantoul alleges that costs to compact backfill materials are eligible for payment from the

UST fund because the Agency approved the costs in the original budget. Br. at 21.

Additionally, Rantoul contends these costs were necessary to create a proper bed for asphalt or

concrete as an engineered barrier. Br. at 22. Rantoul argues that because it relied on the

Agency’s approval of the original budget in spending money to backfill the area in question, the

Agency should reimburse for the costs of compaction in the amended budget as well. Br. at 21.

The Agency responds that pursuant to Section 732.606(w) of the Board rules, costs

associated with the compaction of backfill material are ineligible for payment from the UST

fund. Resp. at 12; 35 Ill. Adm. Code 732.606(w). The Agency concedes that the costs were

originally approved, but states that the approval was a mistake, understandable because of the

volume of budget requests the Agency reviews every year.

The Agency also characterizes Rantoul’s argument as a claim of collateral estoppel

against the Agency. Resp. at 13. The Agency continues that to collaterally estop the

government, the moving party must show the government made a misrepresentation with

knowledge that the misrepresentation was untrue. Medical Disposal Services, Inc. v. IEPA, 286

Ill. App. 3d 562, 677 N.E.2d 428 (1st Dist. 1997). The Agency contends that in this case the

approval was a mistake, and that the Agency did not knowingly misrepresent that the compaction

costs could be approved. Resp. at 13.

The Board finds that none of the backfill compaction costs are reimbursable. As noted by

the Agency, backfill compaction costs are ineligible pursuant to the Board rules. 35 Ill. Adm.

Code 732.606(w). The purposes of the UST fund are narrow. Strube v. PCB, 242 Ill. App. 3d

822, 610 N.E.2d 717, 851 (3rd Dist. 1993). The Act establishing the UST fund limits

reimbursement for high priority sites to corrective action that mitigates any threat to human

health, human safety or the environment resulting from the UST release. 415 ILCS

5/57.7(c)(1)(A). Additionally, the Board has held that an action playing primarily a restorative

role, even if partially contributing to corrective action, is not necessary to meet the minimum

requirements of the Act. Eugene Graham v. IEPA, PCB 95-89 slip op. at 30 (Aug. 24, 1995).

Rantoul has failed to show that backfill compaction associated with the installation of the

engineered barrier will mitigate any threat to human health, human safety or the environmental

resulting from the release. The amended petition states the engineered barrier was needed for

bus traffic. Rec. at 20. Therefore, it appears from the record that the purpose of the engineered

barrier and related backfill compaction is to restore the site for bus traffic.

The Board also notes that Rantoul did not claim that collateral estoppel requires the

Agency to approve costs for backfill compaction. Rantoul did not contend the Agency

knowingly misrepresented that it would reimburse the compaction costs in the original petition.

Rather Rantoul argued that the Agency approved backfill compaction costs contained in the

original budget because the corrective action plan called for an engineered barrier. However, for

the reasons stated above, the Board affirms the Agency’s denial of all of the backfill compaction

costs.

Demurrage

Rantoul argues that $11,820 in demurrage costs are reimbursable because they are for

additional personnel time of the School District’s professional engineer and professional

geologist, and not for delay, as the Agency has characterized the cost. Reply at 11-12. Rantoul

maintains that wet weather and problems with compaction commanded additional engineering

services. Reply at 12.

The Agency maintains that its definition of demurrage was correct and that the Agency

was proper in denying these costs as ineligible. Resp. at 14. The Agency points out that in the

past the Board has interpreted demurrage to mean “standby charges.” Clarendon Hills Bridal

Center v. IEPA, PCB 93-55, slip op. at 28 (Feb. 16, 1995). The Agency contends there is no

support in the Act, Board rules, or Board precedent for Rantoul’s interpretation. Resp. at 14.

The Board determines that the retention of the professional engineer and geologist

beyond the predicted number of hours does not fall within the definition of demurrage.

Demurrage relates to the detention of a vehicle or vessel beyond the time necessary for loading

or unloading. Clarendon Hills, PCB 93-55, slip op. at 28-29. Therefore, the Agency was

incorrect in characterizing these costs as demurrage. However, the extra hours the engineer and

geologist spent on November 19 and 26, 2001, related to backfilling. Rec. at 31. The Board has

determined above that backfilling compaction is not a reimbursable activity. Furthermore,

preparing the bid specifications was determined not a reimbursable activity, so the Agency also

properly denied the additional costs of coordinating such specifications. Rec. at 0034.

The remaining personnel costs denied as demurrage include additional time spent by

consultants due to another group’s poor coordination and additional time necessary to coordinate

the job with the ongoing school construction. Rec. at 0024. Rantoul did not show these

activities were for corrective action nor that they were incurred to meet the minimum

requirements of the Act and Board regulations. The Board affirms the Agency’s denial of these

costs.

Costs Lacking Sufficient Documentation

Personnel Costs

Rantoul argues that the Agency erroneously denied reimbursement for personnel costs.

Rantoul contends that there is sufficient documentation to determine whether the additional

personnel costs relate to corrective action. Br. at 26. Rantoul acknowledges that remand with

respect to these charges may be necessary.

The Agency argues it properly denied the personnel charges. The Agency explains that

because the personnel costs were intermingled with costs deemed ineligible for approval, the

Agency could not determine how to apportion the costs. Reply at 14. The Agency also contends

it is Rantoul’s responsibility to show that the personnel costs related to some corrective action.

Reply at 15.

When requesting reimbursement from the fund, the owner or operator must provide an

accounting of all costs (415 ILCS 57.7(c)(1)(B)) and demonstrate the costs are reasonable and

will not be used for corrective action activities in excess of those required to meet the minimum

requirements of the Act (415 ILCS 57.7(c)(1)(C)). The documents Rantoul submitted regarding

the personnel charges do not show the costs are reasonable. Rantoul did not present any

testimony at hearing explaining how the Agency record demonstrates that these costs are

reasonable and associated with reimbursable corrective action activities. Therefore, the Board

finds the Agency was proper in denying these costs.

Attorney Fees

Rantoul requests the Agency pay Rantoul’s legal fees from the UST fund under the

prevailing party provision of the Act.

See

415 ILCS 5/57.8(l).

While the Board has discretion to award attorney fees in cases where the petitioner

prevails, the Board does not authorize payment of attorney fees in this proceeding. The Board

denies reimbursement of attorney fees on the grounds that Rantoul prevailed only on the issue of

costs related to the removal of possible migration pathways, to which the Agency conceded.

CONCLUSION

For the reasons stated above, the Board affirms the Agency’s denial of costs associated

with preparing bid specifications, relocating underground utilities, backfill compaction and

density testing, demurrage, personnel costs, and attorney fees. The Board reverses the Agency’s

denial of costs related to the removal of possible migration pathways.

This opinion constitutes the Board’s findings of fact and conclusions of law.

ORDER

For the reasons discussed above, the Board affirms the Agency’s September 5, 2003,

determination that costs to prepare bid specifications, relocate underground utilities, backfill

compaction and density testing, demurrage, personnel costs, and attorney fees are not

reimbursable. The Board reverses the Agency’s denial of costs related to the removal of possible

migration pathways, which the Agency also concedes are reimbursable, and remands this issue to

the Agency for approval in the form of a newly amended corrective action plan budget review

letter concerning Rantoul’s UST fund incident no. 970899 request.

IT IS SO ORDERED.

Section 41(a) of the Environmental Protection Act provides that final Board orders may

be appealed directly to the Illinois Appellate Court within 35 days after the Board serves the

order. 415 ILCS 5/41(a) (2002);

see also

35 Ill. Adm. Code 101.300(d)(2), 101.906, 102.706.

Illinois Supreme Court Rule 335 establishes filing requirements that apply when the Illinois

Appellate Court, by statute, directly reviews administrative orders. 172 Ill. 2d R. 335. The

Board’s procedural rules provide that motions for the Board to reconsider or modify its final

orders may be filed with the Board within 35 days after the order is received. 35 Ill. Adm. Code

101.520;

see also

35 Ill. Adm. Code 101.902, 102.700, 102.702.

I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, certify that the Board

adopted the above opinion and order on April 17, 2003, by a vote of 6-0.

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board