C L~!ii

CLERK’S OFFICE

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

STATE

~AY

ILUMOIS

2OC~

PoIlut~onControj Board

INTHEMATTEROF:

)

PROPOSED AMENDMENTS TO:

)

R04-22

REGULATION PETROLEUM LEAKiNG

)

(Rulemaking

UST)

UNDERGROUND STORAGE TANKS

)

ILL. ADM. CODE 732

)

iN THE MATTER OF:

)

PROPOSED AMENDMENTS TO:

)

R04-23

REGULATION PETROLEUM LEAKING

)

(Rulemaking

UST)

UNDERGROUND STORAGE TANKS

)

Consolidated

ILL. ADM. CODE 734

)

RESPONSE

PROFESSIONALS

OF ILLINOIS FOR THE PROTECTION OF THE

ENVIRONMENT

(“PIPE”) TO ILLINOIS

ENVIRONMENTAL

PROTECTION

AGENCY’S MOTION FOR

EMERGENCY RULEMAKING

NOW COMES the Professionals ofIllinois for the Protection ofthe Environment

(“PIPE”), by and through its attorney Claire A. Maiming, and, objects to the Illinois Environ-

mental Protection Agency’s (“Agency”) Motion that the Board adopt revised Part 732 and create

newPart 734 on an emergency basis.

First, PIPE appreciates that a process needs to be developed which effectively, effi-

ciently, expeditiously

and fairly

reviews work plan budgets and submittals for reimbursement

from the underground storage tank fund. That review should be based upon actual costs, indus-

try standards, documented expenditures, scope of work and budget and project plan presentations

which are certified by licensed professional engineers and geologists as required by the Illinois

Environmental Protection Act (“Act”),

415

ILCS 5/I et. seq., and corresponding Board rules.

As is most likely evident to the Board, because of the significant increase in underground storage

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tank appeals, there has been a noticeable breakdown in the workability ofthe reimbursement

program in the East few years. That breakdown results from various factors, and PIPE submits

that changes in the Agency’s administration ofthe program over the course ofthe last several

years are at the heart of those factors.

First, the Agency began the routine utilization of a “rate sheet” which PIPE maintains

that was developed in an arbitrary fashion and without public promulgation, inconsistent with

the Environmental Protection Act (“Act”) and the Administrative Procedures Act.

ILCS

10/5

Second, the Agency has discontinued affording any deference or consideration to the certifica-

tions ofthe licensed professional engineer and geologists that are required by the Act. Third,

instead of reviewing a portion of the various types ofbudgets, plans and other claims for reim-

bursement, as contemplated by the Act (see

415

ILCS

5/57.2(c),

the Agency reviews each and

every submittal, at various different decision-making points and, as a result, the Agency’s LUST

Unit has grown substantially. Fourth, there is no longer any communication, written or other-

wise, from the Agency to the requestor regarding the Agency’s reasons for amendment ofbudg-

ets or denial ofcosts. Finally, the most recent statutory changes, made well over two years ago,

have never been incorporated into regulatory language and, accordingly, the procedural admini-

stration ofthe LUST program pursuant to these changes has never been subject to public com-

ment or Board review

—

until now.

Now, after years of operating the program without public rulemaking, the Agency moves,

without citing any legal authority, that the Board adopt these important rules, again without pub-

lic review, in wholesale and emergency fashion. The Board should resist this particular effort

and allow this important rulemaking to proceed in regular and expeditious fashion, with all the

public participation and Board oversight contemplated by the Act.

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In order to ensure that the reimbursement process works as intended by the underground

storage tank legislation, PIPE is participating in the Board’s rulemaking docketed as R04-22 and

R04-23. Incorporated as a not-for-profit professional association on April 6, 2004, PIPE is an

association of professionals (engineers, geologists and other professionals), businesses, and con-

tractors who are employed or contracted to remediate, protect and enhance the environment and

protect human health and safety. The membership consists ofprofessional consultants, engi-

neers, laboratories, contractors and other stakeholders vital to the remediation ofLUST incidents

in Illinois. Already, a great number ofthe businesses who are contracted by owners and opera-

tors ofleaking underground storage tank sites to remediate those sites, many ofwhich appeared

at the Board’s first hearing in this matter, are members of PIPE.

PIPE desires to cooperate with the Agency in an effort to establish a methodology for the

Agency’s review ofcosts associated with leaking underground storage tanks. Both parties have

recently had the opportunity to meet and share their respective concerns and, importantly, their

commitment to a mutual goal: making the best use of the resources ofthe fund, so that LUST

sites can continue to be remediated and Illinois’ environment can continue to be protected and

enhanced. PIPE is interested in an expeditious and fair reimbursement process, one that recog-

nizes both the reasonableness ofthe actual costs associated with remediation, as well as a defer-

ence that should be afforded the professionaljudgment that is inherent in the professional engi-

neer’s or geologist’s certification required by the Act and Board rules.

PIPE is working with the Agency toward that end. PIPE’s understanding, as a result of

its discussions with the Agency, is that the Agency will be asking the Board to refrain from act-

ing on this emergency Motion pending further discussions. PPE has indicated a continued will-

ingness to discuss, to the extent it may be deemed necessary, an interim agreed approach to the

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review of LUST reimbursement claims until a rule can be formally promulgated by the Board.

These efforts should narrow the issues and controversy currently before the Board and allow, the

rulemaking to proceed more smoothly. Nonetheless, PIPE objects to the Agency’s specific re-

quest for emergency rulemaking in this matter since, with all due respect, any “emergency” is of

the Agency’s own making: a result of its routine application ofan arbitrary “rate sheet” and its

avoidance ofpublic rulemaking.

Recently, the Board admonished the Agency for utilizing the rate sheet without promul-

gating it as a rule. In

Illinois Ayes Oil Company v. Illinois Environmental Protection Agency

(“Ayers

“)

(PCB 03-214, April 1, 2004), the Board considered a contested reimbursement issue,

where the Agency denied Ayers a substantial part ofits requested reimbursement, based upon the

Agency’s application ofits “rate sheet” and concomitant,”reasonableness” determination. At

hearing, witnesses for CSD Environmental (the remediation company responsible forthe

Ayers

site and now a member ofPIPE) credibly testified as to the reasonableness ofits remediation

project and related costs. While the Board opined that the Agency’s rate sheet was invalidly

promulgated, the Board nonetheless considered the Agency’s application ofthe rate sheet as the

Agency’s interpretation of“reasonableness.” The Board’s decision, which cost the petitioner

more to pursue than the actual dollar amount in dispute, in essence declared that the position of

CSD Environmental was more reasonable than that ofthe Agency.

On January 22, 2003, CW3M Company, Inc., another environmental remediation com-

pany and also now a member ofPIPE, filed suit in Sangamon County seeking to enjoin the

Agency from its standard use ofa rate sheet to determine “reasonableness” ofremediation and

related costs under the Act. The matter was not heard until April 21, 2004 and, upon the motion

of the Agency, the court declared the matter moot because ofthe Board’s decision in

Ayers.

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Nonetheless, the court admonished the Agency to discontinue the use of a standard rate sheet that

had not been promulgated as a rule. See

CW3M Company, Inc. v. Illinois Environmental Protec-

tion Agency,

Circuit Court ofSangamon County, NO. 03-MR-0032 (April 21, 2004).

Based in large part upon the above-referenced challenges to the Agency’s use ofthe rate

sheet as a “rule” regarding “reasonableness,” the Agency now seeks to have the Board promul-

gate its proposed rule as an emergency rule. In support thereof, the Agency asserts: “Without

the rate sheet, the Illinois EPA lacks a standard methodology for determining whether the costs

submitted for approval in budgets and applications are reasonable. A standard methodology for

determining the reasonableness ofcosts is included in the proposed rules currently before the

Board.” (See Agency Motion at page 2).

Thus, while the Agency has been reviewing LUST fund claims for well over ten years,

certainly prior to the routine use of an established rate sheet, the Agency now seeks the Board’s

immediate blessing ofthe use ofits rate sheet, now incorporated into regulatory language, via

this Motion for Emergency Rulemaking. PIPE strongly objects to the Board’s sanctioning ofthis

rate sheet by incorporating it into formal Illinois administrative regulation for various reasons.

First and foremost, Illinois caselaw is clear: a state agency cannot create its own emer-

gency and then, in justification ofemergency rulemaking, assert the existence of a situation that

“reasonably constitutes a threat to the public

interest, safety, or welfare.” See 5 ILCS 100/5-45;

Senn Park Nursing Center v. Miller,

104 Ill. 2d 169, 83 111. Dec. 609, 470 N.E. 2d 1029 (1984).

See also,

Citizen ‘sfor a Better Environment v. Illinois Pollution Control Board,

152 Ill.App.3d

105, 105 Ill. Dec. 297, 504 N.E.2d 166 (1st. Dist. 1987): “the need to adopt emergency rules in

order to alleviate an administrative need, which, by itself, does not threaten the public interest,

safety or welfare, does not constitute an “emergency.” The policy reasons underlying this case-

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law are clear: government should not be able to create its own emergency and then use that

emergency as a justification to administer its program in a way that forecloses legitimate and re-

quired public input. In this case, those policy reasons are even more evident because it is the

very foreclosure ofthe right to participate that here creates the claimed emergency.

Further, while the Agency claims that it needs an “emergency” fix because it can’t utilize

it’s rate sheet, the fix it seeks would delete long standing regulatory language (in Part 732) and

add an entirely new Part 734

—

all justified by a self created emergency and all without the requi-

site public participation. Even if the “fix” is limited to allowing the Agency to use its proposed

rates (e.g., Subpart H), as it claims is necessary, such “fix” will only serve to create, not dissi-

pate, havoc. This is so because, as is likely clear to the Board from its first hearing in this pro-

ceeding,. PIPE members seriously dispute the Agency’s claim that the proposal before the Board

is reflective ofa standard methodology for determining the reasonableness ofcosts. For the

Board to sanction these rates, without public input and Board review, even in emergency fashion,

is for the Board to legitimize the very rates that PIPE maintains have been arbitrarily established.

Since that hearing, PIPE has become aware of further information, which it plans to pre-

sent at the Board’s next hearing, which further undermines the claimed methodology and reason-

ableness ofthe Agency’s proposed reimbursement rates in this rulemaking. On the eve ofthe

CW3M court hearing in Sangamon County, the Agency finally responded to an FOIA request

that had previously been denied. (The denial was one ofthe issues before the court that, as a re-

sult of the Agency’s belated response, was also declared moot.) Three important documents

were, for the first time, released and have been reviewed by members of PIPE: an Agency 1998-

1999 sampling ofremediation sites; a 2003 rate sheet; and a 2004 rate sheet.

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PIPE will submit these documents as demonstration that proposed Subpart H and Appen-

dices were developed utilizing non-representative group ofsite remediations from as far back as

1998-1999. Even then, many of the rates in the 2003 rate sheet are less than these representative

amounts. Uncannily, in the 2004 rate sheet, they are lesser still. Thus, while one might presume

that the cost ofremediation and the cost of doing business in Illinois has risen during this period

of time, the rates, as determined “reasonable” by the Agency, have fallen. Simplyput, the

Agency’s rates are not a reasonable representation ofthe current costs ofremediation ofunder-

ground storage tank sites and should not be sanctioned by the Board, especially on an emergency

basis.

The Agency’s claim that it cannot make determinations of“reasonableness” without us-

ing emergency promulgated rates is without merit, especially since the Act requires a certifica-

tion ofa licensed professional engineer or geologist on virtually every cost associated with

LUST reimbursement. Indeed, the Act contemplates the Agency’s role as being one ofselected

“review” and “audit” ofthese remediation projects and, while a promulgated rate sheet may be

helpful, it is not a necessary pre-requisite to an Agency approval of costs associated with reme-

diation. To the extent the Agency believes that a consideration of standardized rates is appropri-

ate, PIPE agrees that such rates, if promulgated correctly and fairly, might well serve to expedite

the reimbursement process. When not promulgated fairly or correctly, however, the opposite is

the inevitable result. Further, there are various industry publications that the Agency reviewers

might draw from, including

RSMeans,

that annually publish standard rates for the construction

and environmental industries. However, these publications do not appear to have been utilized

by the Agency in its development of the proposal currently before the Board.

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Also, as the Board well knows, any emergency rule is only valid for 150 days and, given

the controversy currently evident in this rulemaking, the promulgation ofa permanent rule in 150

days would be a yeoman’s job. Thus, unless the stakeholders’ positions become less divergent

quickly, any emergency rule would likely terminate prior to a regular rule’s promulgation. In

order to facilitate this rulemaking, and in an attempt to create some degree ofharmony in the

processing ofLUST budgets, plans and reimbursement claims, PIPE is involved in an ongoing

dialogue with the Agency. As a result ofthose discussions, PIPE expects that the Agency will

request that the Board hold its request for emergency rulemaking in abeyance so that the parties

might continue to dialogue. The hope is that the Agency will present a more palatable proposal

to the Board. Unless and until that occurs, however, PIPE strenuously objects to the Agency’s

motion that the Board adopt Part 732 and Part 734 in emergency fashion.

Respectfully submitted,

P’~’L~L~

Claire A. Manning, Attomey~ (~

CLAIRE A. MANNING

Posegate & Denes, P.C.

Ill N. Sixth Street

Springfield, Illinois 62705

(217) 522-6152

(217) 522-6184 (FAX)

c laire~posegate-denes.corn

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