9~-23—C4;

4:10PM

2

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

RECE~VEDCLERK’S

OFFICE

REGULATIONSINTI-IEMATTEROF.

PROPOSED

AMENDMENTS

OF PETROLEUMTO

))

R04-22

(Rulemaking

-

Land)

Pol(ut~OnSTATEOFILL~OtS

SEP

Control

23 2001i

Board

LEAKING

UNDERGROIUND

STORAGE)

TANKS (35 ILL

ADM.

CODE 732)

)

RESPONSE TO

HEARING

OFFICER’S REQUEST FOR COMMENTS;

RE: ADDITIONAL

HEARINGS

AGENCY PROPOSAL TO AMEND 35 ILL

ADM.

CODE

1. Discussion

As towhether

the

Board should entertain

additional hearings

in the subject

rulemaking,

most

who have followed

the

proceedings will respond “of course”. However,

the

logical fo1low~

up, i.e.,

“what then

shall we

discuss”,

is less easily answered. I held out hope

that

the

parties

in

the

proceedings could reach an accord.

That hasn’t

happened. The participants at

this

point

are

at such severe loggerheads that compromise over the proposed regulations, in

their

present

form,

xnay be impossible.

The R04-22/23

rulemaking,

from the outset

and

to

this

point,

has

been

anything

but

satisfying.

Most

frustrating has

been

the

lack of a clearly articulated purpose or a definitive

cause

and

effect connection

that

might

justify the

proposal. Adding to the frustration was

the

emergence of an assortment of unresolved side issues

during the

proceedings. Of

consequenc; it is not at

all

clear at this moment that adoption of the proposed

regulations

will have a

worthwhile impact

on

the Agency’s

LUST program, beyond codifying what is

essentially

the

slzwus qz~v.

One

cannot, for

exampie,

concludc that

adoption

of

rule

X

will

result in

affect

Y, at some measurable benefit Z. As it stands, the Board is offered a roll of

the

dice. How well will these

rules

work?

Who

knows?

The

rationale

for R04-22/23 has

variously

been

given

as

a need to reform the

system..,..”,”....,.

to

streamline

the LUST

remecliation

process

“, “...

.clarify

remediatIon

requirements...

.“,

and, to

reform

the

budget

reimbursement process

This vague

rationale

became

clearer

during the course of the hearings. The record

now identifies

that

the

Agency

perceives the LUST Fund to be

in

danger of depletion due, in some part, to

possible abuses ot attempted abuses of the reimbursement system.

Yet,

there is no

compelling evidence to corroborate

these

suspicions,

and still

no

unifying purpose.

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9—23—04;

4:10PM

2177376641

:~

3

2.

Purpose

and Principles

Occasionally mentioned during the hearings is the statute, i.e., Section

57.7

(c)

(4)(

C), that

(paraphrasing) calls

upon

the Board

to promulgate a procedure that will assure

that

LUST

relatedreimbursements

are

reasonable. Although the statute

makes

reference to companion

statutes

that

have since been repealed, the legislative intent

seems dear. In this regard,

the

pursuit

ofreasonableness is consistent

with

much of the Agency’s presentation in the subject

rulemaking. Can

it

then

be said that

the purpose

of this rulemaking,

simply

stated, is to

promulgate a procedure that will

ensure

that LUST Fund reimbursements

are

reasonable.

Secondly, the

Agency-, through

the now abandoned

“rate sheet”, has in

the

past accepted the

burden of

judging

the reasonableness of reimbursement requests.

Can

it then be stated as

principle that the

burden

of proof in

this

regard belongs with

the

regulators? If so, the

problem will have been properly

framed.

That

said, the

issue then reduces to one of

process.

3.)

The

Record

Scattered amongst the

testimony, commentaty, and

submissions

found

in the record of the

instant proceedings are

assorted opinions

and observations

that

call

into question the

viability

of

the

proposed regulations.

~Vliile

sound

inquiry

was made into the proposed

regulations,

the

loose ends

that

continue to dangle do not foster a

great

deal of confidence in

the regulations.

They include

but

are

not limited to:

• A fairly

universal

beliefthat

two

sets of

nearly identical

regulations

are

not needed

when

one would do.

• The

finding

that a data-base does not

exist

to describe, in

any

level of

detail, the past

use

of LUST

Fund expenditures

(approximately $500,000,000 to date). As such, there is no

way to gauge

the

economic

impact

of the proposed

regulations,

or those related

regulations that currently exist. This

is an uncomfortable vacuum.

• Reimbursement

requests

currently require an inordinate length

oftime for processing, up

to

four

mouths

(120 days), the

statutory maximum.

This

is then followed by more

delay

at the Office of

the Comptroller.

There is no

evidence

to

indicate

that the proposed

regulations will

cause

improvement in the length

of

time required

for reimbursement.

Because

time

is

money

in

commerce,

there

can

be

little

doubt that reimbursement delays

actuallyadd

to the

cost

of

the program.

• The

existing regulatory ~stem

for

processing reimbursement pacicages,

upon which

the

subject regulations are patterned, has spawned an unprecedented number

of

Board

appeals.

• Current methods

for processing reimbursements,

and

the

regulations that are

proposed.

contain

elerncnts of

subjectivity that

open

the

door for

actual

or perceived

bias.

The

record

suggests

that some

individuals

believe

that they

have receIvedbiased

treatment.

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9—23—04; 4:iOpj\fl

2177376641 ;#

4

• The proposal to fix costs for various tasks and materials itt lieu of the free market has

not been

shown

to have a

cost-saving benefit.

Some evidence indicates that

abandonment

of

free-market practices will actually

cause significant increases in LUST

Fund expenditures.

• The current system for processing reimbursements

is

seemingly

very expensive relative

to costs in

similar states.

• The statutory requirement

that budget proposals

are to be approved subject to audits is

being ignored. In contradiction

to the

statute and legislative intent, all budget packages

are being hilly reviewed.

• The scope of work for which consultants would be compensated has not been

presented.

• Questionable methods have been used to establish proposed cost

caps. These

indude

but are not limited to the use of quasi-random data acquisition, reliance on inadequate

sample sizes, use of biased data, and failure to correct for distribution type.

Foregoing all came forth during the instant proceedings. Whether any or all are entirely true

is not this author’s point. These issues are on the table. The Board cannot be comfortable

with the prospect of adopting the proposed regulations until these issues have been

satisfactoxily addressed.

4.)

Criteria

Desirable elements of a process to detenriine reasonableness,

and which

offer

a measure of

the

soundness of the

process, might

arguably include the following qualities:

It should be non-controversial

It should be uncomplicated

It should be unbiased and objective

It should be timely and efficient

It should be cost effective

The

proposed regulations represent a

process. But,

that process is, in essence, the

Agency’s

existing

LUST reimbursement process,

albeit with

a codified rate

sheet.

As such, the

proposed regulations might

well

be judged on how

well the existing

process matches

against

these desirable qualities.

One

would be hardpressed to surmise that the

system fulfills

any

of

these desired

qualities.

The system, as is, and as it would likely

continue to function

under

the

proposed regulations, is labor intensive

with line item reviews,

expensive, controversial,

and

requires high maintenance to continually fix costs in accordance with technology trends,

inflation, and

other

circumstances.

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9—23—04:

4:

i

opr~i

5)

Opinion

2177876641 ;#

5

The proposed

regulations are

conceptually flawed,

particularly in their abandonment

of the

free market in favor of

setting cost caps. I believe that the Board should askthe Agency

to

-withdraw the subject proposals in favor of a

new

approach. In

this regard, the employment

of a

management consultant with a data

processing background could be

vexy beneficial.

The processing of reimbursement requests is essentially

the review

of numbers, something

that is inherently objective.

There

should be no more need for a person to

review each

and

evexy reimbursement submission than there is for the

Internal

Revenue Service to audit

each

and evety tax return.

The

task

of processing of

cost reimbursements (i.e., numbers) clearly

lends itself to the use of computers. The

immediate

benefits to computerizing

the system

include added efficiencies in

time and

expense, total objectivity,

and the

creation of an

ongoing database that

can

track costs

and

reject

“statistical

outliers”.

Better

yet, the record

in this proceeding suggests that automating the system

could save the LUST Fund several

millions dollars each

year.

I

have the utmost

respect for all of the

parties that have participated in this rulemaking

but,

for all the reasons given herein, I

believe that

the State ofIllinois would be best served if

this

matter were to begin anew with a fresh focus.

Respectfully

submitted,

Dated:821

South Durkin

9~3

Drive

President

Rapps Engineering &

Applied Science, Inc.

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9—23—04;

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2177876641

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