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BEFORE THE POLLUTION CONTROL BOARD OF THE STATE OF ILLINOIS
NOTICE
BEFORE THE POLLUTION CONTROL BOARD OF THE STATE OF ILLINOIS
FACTS

BEFORE THE POLLUTION CONTROL BOARD

OF THE STATE OF ILLINOIS

MIDWEST PETROLEUM COMPANY, )

)

Petitioner,

)

) PCB No. 06-28

vs. ) (UST Appeal)

)

ILLINOIS ENVIRONMENTAL )

PROTECTION AGENCY, )

)

Respondent. )

NOTICE

Dorothy M. Gunn, Clerk John J. Kim

Illinois Pollution Control Board Assistant Counsel

State of Illinois Center Special Assistant Attorney General

100 West Randolph Street Division of Legal Counsel

Suite 11-500 1021 North Grand Avenue,

East

Chicago, IL 60601 P.O. Box 19276

Springfield, IL 62794-9276

Carol Webb

Hearing Officer

Illinois Pollution Control Board

1021 North Grand Avenue East

P.O. Box 19274

Springfield, IL 62794

PLEASE TAKE NOTICE that I have today filed with the office of the Clerk

of the Pollution Control Board a Brief of Petitioner, a copy of which is herewith

served upon you.

By __/s/ Curtis W. Martin__________

Curtis W. Martin, Attorney for

Midwest Petroleum Company,

Curtis W. Martin Petitioner

IL ARDC No. 06201592

SHAW & MARTIN, P.C.

Attorneys at Law

P.O. Box 1789

Mt. Vernon, Illinois 62864

Telephone (618) 244-1788

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

BEFORE THE POLLUTION CONTROL BOARD

OF THE STATE OF ILLINOIS

MIDWEST PETROLEUM COMPANY, )

)

Petitioner,

)

vs. ) PCB No. 06-28

) (UST Appeal)

ILLINOIS ENVIRONMENTAL )

PROTECTION AGENCY, )

)

Respondent. )

BRIEF OF PETITIONER

Petitioner, Midwest Petroleum Company (“Midwest”) by its attorneys,

Shaw & Martin, P.C., for its Brief in this cause, states as follows:

FACTS

Midwest is the Owner/Operator of a leaking underground petroleum

storage tank facility located at 529 Maple Street, Shiloh, St. Clair County,

Illinois with an Illinois Emergency Management Agency Incident No. 982804.

(AR, p. 104)1

United Science Industries, Inc. (“USI”), located in Woodlawn, Illinois, is the

environmental consultant performing the remediation activities at Midwest’s

facility. (AR, p. 104; TR, p. 7) As part of the remediation process for Midwest,

USI submitted to the Environmental Protection Agency (“Agency”) an Amended

Corrective Action Plan under cover letter dated August 13, 2004 (“Amended

CAP”). (AR, p. 101) The Amended CAP proposed an area of soil excavation,

transportation

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

1Citation to the administrative record will hereinafter be made as “AR, p. _____”

and citation to the transcript of the hearing of October 7, 2005 will hereinafter

be made as “TR, p._____”.

and disposal, traditionally known as a “dig and haul” project. (AR, p. 123, TR,

p. 15) Unlike a typical dig and haul project, however, the Midwest project also

involved the excavation of a substantial volume of clean overburden for use as

backfill to replace contaminated soil removed during the remediation activities.

(AR, p. 123; TR, p. 134, 152) The “clean overburden” is recognized as soil that

is not required to be removed during remediation, whereas contaminated soil is

required to be removed. (TR, p. 15-16, 95-96)

The Amended CAP proposed excavation and removal of contaminated soil

simultaneously with the backfilling of clean overburden. (AR, p. 118) The

segregation of clean overburden from contaminated soil was to be determined

by the screening of samples taken from the excavation walls and floor using a

thermal environmental photo-ionization detector (“PID”) and more precise

laboratory analysis. (AR, p. 123-24; TR, p. 95-96) The PID soil screening and

sampling is performed by a USI employee known as an environmental

technician, who is on site during the entire excavation process. (TR, p. 98,

102-03) The environmental technician’s data collection and communication

are essential to the proper advancement of the excavation, removal and

backfilling and were required to be performed as approved by the Agency in the

Amended CAP. (TR, p. 102-103)

From the data gathered during the site investigation at the Midwest site,

Robert Pulfrey, a veteran in the professional and environmental geology fields

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

with experience as a United States Environmental Protection Agency corrective

action project manager, and the project manager for USI, prepared the

Amended CAP and Budget. (TR, p. 93-94) He estimated 270 hours for the

environmental technician to perform “[e]xcavation & overburden screening,

manifesting, sampling, surveying, [and] sample shipment.” (AR, p. 320) The

Amended CAP further proposed that simultaneous soil removal and backfilling

would require a total of 25 days to complete, and that the excavation would

occur in the second quarter of 2005. (AR, p. 118, 122; TR, p. 106) Mr. Pulfrey

testified that the 270 hours of environmental technician services equated to 27

days at 10 hours per day. (TR, p. 96) Mr. Pulfrey further acknowledged that a

plausible implication derived from the reference to 25 days to complete the

simultaneous soil removal and backfilling and the 27 days of total

environmental technician time was that two (2) days would remain for the

handling of the clean overburden. (TR, p. 97)

The Amended CAP and associated Budget was conditionally approved by

the Agency by letter dated September 1, 2004 under signature of Harry A.

Chappell, an Agency Unit Manager of the Leaking Underground Storage Tank

Section. (AR, p. 61-63) Mr. Chappell testified that although he signed the

September 1, 2004 letter, it was Mindy Weller who actually reviewed the

Amended CAP and associated Budget. (TR, p. 8-9) Ms. Weller did consult with

Mr. Chappell. (TR, p 8-9) The conditional Agency approval dealt with matters

not directly related to this appeal. (AR, p. 61-62)

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

Upon the Agency’s approval of the Amended CAP, excavation activities at

the Midwest site began on October 1, 2004. (TR, p. 62) The focus of the initial

stages of the excavation was the removal of the contaminated soil, which

ultimately took 28 days and was performed during the months of October and

November, 2004 and January, 2005. (AR, p. 25, TR, p. 106-08) During this

first phase of excavation, 12,460 cubic yards of contaminated soil was

addressed. (AR, p. 25) The map of the excavation is depicted in Petitioner’s

Exhibit 2. (TR, p. 108) At the conclusion of the first phase of excavation, Mr.

Pulfrey, in the process of reviewing the entire project, discovered he had erred

in the estimation of time associated with the complete excavation necessary for

the project. (TR, p. 109) Excavation of overburden was yet to be completed

and Mr. Pulfrey made a decision to complete that excavation and then submit

the additional information in an amendment request to the Agency. (TR, p.

109)

The remaining excavation was completed during February and March,

2005 and took 15 days. (AR, p. 25) During this time, 5,327 cubic yards of

clean overburden and 1,540 cubic yards of additional contaminated soil were

handled. (AR, p. 25; TR, p. 111) Once the entire excavation was completed,

Mr. Pulfrey submitted a request for approval of additional personnel costs by

an amended budget dated March 29, 2005 (“Amended Budget”). The Amended

Budget sought approval of time for activities associated with excavation over an

additional 16 days consisting of one additional day during the first phase of

excavation (28 days actual versus 27 days estimated) and 15 additional days

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

during the second phase of excavation. (AR, p. 138, 142; TR, p. 35-37) Like

the first phase of excavation, the services of the environmental technician

during the second phase of excavation made it possible for the distinction

between clean overburden and contaminated soil. (TR, p. 111-12)

The Amended Budget sought an additional 160 hours of environmental

technician time, consisting of 16 days at 10 hours per day, along with a few

additional hours for tasks performed by other USI employees including the

professional engineer, the project manager, the environmental specialist, and

clerical staff. (AR, p. 24, TR, p. 115-117) The hourly rates associated with the

additional time requested in the Amended Budget are the same as the rates

approved by the Agency on September 1, 2004. (AR, p. 24, 319-20) The total

additional personnel costs sought to be approved amounted to $13,555.00.

(AR, p. 23)

Included with the Amended Budget was a Justification prepared by Mr.

Pulfrey and the professional engineer on the Midwest project, Barry Sink.

(AR, p. 25; TR, p. 110) The Justification indicated that there was an

underestimation of the time required to excavate the clean overburden, and Mr.

Pulfrey testified that the approved Amended CAP should not have included

reference to the environmental technician’s tasks involving overburden. (AR, p.

320, TR, p. 98) More specifically, Mr. Pulfrey described that at the time he had

prepared the Amended CAP he had forgotten about the handling of the

overburden and by the time the first phase of the excavation was completed, he

had underestimated the time it would take to address it. (TR, p. 127) The

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

Justification also compared the daily production rate of cubic yard excavation

during the 28 day phase with that of the 15 day phase in an effort to explain

the necessity and reasonableness of the additional excavation associated hours

for which approval was requested. (AR, p. 25-26) Midwest also included in the

Justification information regarding a substantially greater than average

amount of rainfall during the initial phase of the excavation which negatively

impacted the production rate. (AR, p. 25-26)

By letter dated July 18, 2005, the Agency rejected the proposed Amended

Budget for seeking costs that are not reasonable. (AR, p. 1) The letter asserts

that the amount of time to excavate, transport, dispose and backfill

contaminated soils proposed in the Amended Budget extends over a span of

approximately five (5) months but the approved plan (referencing the Amended

CAP approved

September 1, 2004) does not include approval for soil remediation to include

such span of time. (AR, p. 1, TR, p. 14-15, 16-17)

Mr. Chappell, the lone witness for the Agency, testified that the only

basis for the Agency’s consideration of reasonableness as it applied to the

proposed Amended Budget was the information provided by Midwest in the

Amended CAP. (TR, p. 33, 35, 39-40, 52) He confirmed that the basis for the

rejection was the additional personnel costs deemed to be unreasonable over a

five (5) month period of time. (TR, p. 18, 26) Mr. Chappell recognized,

however, that the Amended CAP did not reference the excavation of clean

overburden. (TR, p. 27, AR, p. 118) He also did not dispute the assumption

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

that the approved Amended CAP provided for 27 days of environmental

technician time at 10 hours per day. (TR, p. 28-29) Mr. Chappell further had

no quarrel with Midwest’s representation of the volume of contaminated soil

excavated and removed during the 28 day period, nor with the additional

volume of contaminated soil excavated and removed and the volume of clean

overburden excavated during the subsequent 15 day period. (TR, p. 29-31)

Mr. Chappell also recognized the basis for Midwest’s proposed Amended

Budget was an underestimation of the time devoted for the environmental

technician and others’ duties to provide services related to the additional

excavation of both contaminated soil and overburden. (TR, p. 32) Finally, Mr.

Chappell testified that the Agency can consider and approve amendments when

underestimations in budgets occur. (TR, p. 33)

ARGUMENT

The Agency deemed the additional costs requested by Midwest in the

Amended Budget to be unreasonable as submitted because the Amended

Budget “indicates that the amount of time to excavate, transport, dispose and

backfill contaminated soils from this site continued over a span of

approximately five (5) months” and the Amended CAP approved by the Agency

September 1, 2004 does not include approval for soil remediation to include a

span of such time. (AR, p. 1)

Midwest has the burden of proof in addressing the Agency’s denial of the

additional personnel time in this matter. 35 Ill. Adm. Code 102.112(a).

Contrary to the Agency’s assertion, however, the Amended CAP established a

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

10 month span of time within which the dig and haul would be completed.

(AR, p. 122) In fact, the entire dig and haul was completed ahead of schedule.

(TR, p. 23) When questioned further about the Agency’s basis for the

unreasonableness determination, Mr. Chappell could not provide specifics, but

rather only his supposition, which was only the Agency’s reliance upon the

information provided by Midwest in the Amended CAP. (TR, p. 33, 35) In fact,

Mr. Chappell did not review the Amended CAP prior to its approval. (TR, p. 8-

Midwest is permitted to request additional personnel costs under both

the Illinois Environmental Protection Act and the regulations promulgated

thereunder. Section 57.8(a)(5) of the Act, 415 ILCS 5/57.8(a)(5), provides, in

part, as follows:

In the event that costs are or will be incurred in addition

to those approved by the Agency, or after payment, the

owner or operator may submit successive plans containing

amended

budgets.

In addition, Section 732.405(e) of the Regulations, 35 Ill. Adm. Code

732.405(e), provides as follows:

If, following approval of any groundwater monitoring plan,

corrective action plan or associated budget plan, an owner

or operator determines that revised procedures or cost

estimates are necessary in order to comply with the

minimum

required

activities for the site, the owner or

operator shall submit, as applicable, an amended

groundwater monitoring plan, corrective action plan

or associated budget plan for review by the Agency. The

Agency

shall

review

and

approve, object or require

modifications of the amended plan in accordance with

the

procedures

contained

Subpart E of this Part.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

The applicable Subpart E procedure for the Agency’s review of the Amended

Budget submitted by Midwest in this case is governed by Section 732.505(c) of

the regulations, which provides that:

A full financial review shall consist of a detailed review of

the

costs

associated

with

each

element necessary to accomplish

the goals of the plan as required pursuant to the Act and

regulations. Items to be reviewed shall include, but not be

limited to, costs associated with any materials, activities or

services that are included in the budget plan. The overall

goal of the financial review shall be to assure that costs

associated

with

materials,

activities

and

services

shall

reasonable,

shall

consistent

with the associated technical

plan, shall be incurred in the performance of corrective action

activities, and shall not be used for corrective action activities

excess

those

necessary

to meet the minimum requirements

the

Act

and

regulations.

Despite Midwest’s request in accordance with the Act and regulations,

the Agency essentially refused to consider the justification for the additional

personnel costs proffered by Midwest. The Agency’s determination of

unreasonableness was completely devoid of any standard upon which to make

such determination.

(TR, p. 35) If this Board is to believe the Agency’s determination was based

solely upon the information provided by Midwest in the Amended CAP, then it

follows that had Midwest submitted a personnel budget of twice, three times or

more for the same activities such budget would have been approved. Common

sense dictates that not to be the case, but it begs the question that was never

answered by Mr. Chappell—on what standard was the Agency’s determination

of unreasonableness based? In the absence of any standard provided by the

Agency, as a matter of good engineering practice Midwest proffered an objective

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

standard. Midwest further demonstrated that the additional costs were

consistent with that standard and the associated technical plan, were incurred

in the performance of corrective action activities, and were not in excess of

those necessary to meet the minimum requirements of the Act and regulations.

(TR, p. 157)

The Agency approved the Amended CAP’s corrective action activities of

excavation, transportation, disposal and backfilling along with the associated

services. These associated services included the environmental technician’s

screening, manifesting, sampling, surveying and sample shipment, the

environmental specialist’s tracking weight tickets and manifests for excavated,

transported and disposed contaminated soil, the senior project manager’s

professional oversight, the professional engineer’s supervision, review and

certification of the Amended CAP, and the clerical work in preparation of the

documentation presented to the Agency. (AR, p. 319-320, 61) The Agency also

determined reasonable the hours and hourly charges for the above services.

(AR, p. 319-320, 61)

In light of the Agency approval of the Amended CAP’s corrective action

activities, the related hours of service, and hourly charges therefore, Midwest

offered an objective standard of daily production by which reasonableness of

the time for the activities could be gauged. Barry Sink, a licensed professional

engineer of 24 years and the professional engineer for the Midwest project,

testified that in his experience with the Agency, a production rate of 500 cubic

yards per day has been deemed reasonable. (TR, p. 165) The undisputed

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

evidence is that within 28 days 12,460 cubic yards of contaminated soil was

excavated, transported and disposed, which is an average daily production rate

of 445 cubic yards. (AR, p. 25, TR, p. 36-37) Given that the Agency approved

27 days of the environmental technician’s services, it follows that a rate of

production ranging from 445 to 500 cubic yards of excavation activities should

be deemed reasonable.

Not to be forgotten is the excess rain during the period

of time of the initial 28 days of excavation to which Mr. Pulfrey and Mr. Sink

testified adversely effected production of excavation, but which Mr. Chappell

dismissed out of hand.

(TR, p. 35, 114, 153)

It should be emphasized that the additional 16 days of excavation

activities for which Midwest seeks approval dealt primarily with overburden

that had been overlooked at the time the Amended CAP was presented to the

Agency. Further, the reference in the Amended CAP to simultaneous

overburden handling and contaminated soil disposal was error, a fact not

contested by the Agency. (TR, p. 32-33, 97-98, 149-50) There are no different

corrective action activities proposed in the Amended Budget than those

contained within the Amended CAP already approved by the Agency. (AR, p.

24) The gravity of the error and need for the Amended Budget are illustrated

by considering the volume of additional excavation following the initial 28 days.

During the additional 15 days of excavation, 6,867 cubic yards of soil, both

contaminated and clean overburden, were addressed. (AR, p. 25-26) Requiring

Midwest to address an additional 6,867 cubic yards of soil in the two (2)

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

remaining days provided for in the Amended CAP, or over 3,400 cubic yards

per day, is absurd. (TR, p. 139-40, 151) Yet, that is the standard to which the

Agency seeks to hold Midwest, despite its justification for additional hours and

compensation to cover the additional volume of soil addressed. Therein lies the

arbitrary and capricious nature of the Agency’s July 18, 2005 decision.

The additional hours requested for the activities are set forth in the G-1

page of the Amended Budget. (AR, p. 24) The majority of the hours are

associated with the environmental technician, being 160 hours consisting of 16

days at 10 hours per day for screening overburden with the PID, sampling the

overburden stock piles, surveying and collecting wall and floor samples, and

shipping of samples.

(AR, p. 24) Additional hours are also requested for the environmental specialist

consisting of one hour per day for 16 days associated with additional tracking

of weight tickets for additional excavated, transported and disposed

contaminated soil. (AR, p. 24) Additional senior project manager hours are

requested for additional professional oversight during 18 additional days, as

explained by Mr. Pulfrey, and for preparation of the Amended Budget and

justification submitted to the Agency on March 29, 2005. (AR, p. 24, TR, p.

117) Finally, one additional hour of professional engineer time is requested for

certification of the Amended Budget. (AR, p. 24) The hourly rates requested

for the additional hours associated with the above activities is the same as

previously approved by the Agency. (AR, p. 24, 318-20) Mr. Pulfrey and Mr.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

Sink both testified that based on their experience and training the additional

personnel time sought for approval was reasonable. (TR, p. 119, 153)

Focusing once again upon the rate of production, this time for the second

15 days of excavation, reveals 5,327 cubic yards of overburden and an

additional 1,540 cubic yards of contaminated soil, for a total of 6,867 cubic

yards. This equates to an average daily production rate of 458 cubic yards, a

more productive rate than realized during the first phase of excavation and well

within what could independently objectively be deemed reasonable. (AR, p. 26)

The unrebutted testimony of both Mr. Pulfrey and Jeff Schwartz, the manager

of field operations at the Midwest site, indicates that the environmental

technician’s services, which comprise the bulk of the additional costs sought to

be approved, were necessary to determine the respective volumes of

contaminated soil and clean overburden to be used as backfill and were

required services under the approved Amended CAP. (TR, p. 58-59, 111-12)

The reasonableness of the objective production rate proposed by Midwest

can be confirmed by reference to this Board’s opinion and Order of February

17, 2005 entitled “In the Matter of: Proposed Amendments to: Regulation of

Petroleum Leaking Underground Storage Tanks (35 Ill. Adm. Code 732)” in

which this Board provided the first notice of proposed rules regarding

maximum payment amounts. In this first notice, the Board notes the payment

amounts are proposed by the Agency “in most cases.” One such proposed rule

is Section 734.845 entitled “Professional Consulting Services,” which includes

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

field work. In particular, proposed Rule 734.845(c)(2)(A) provides a maximum

payment for field work as follows:

For conventional technology, a total of $390.00 per half-day,

not to exceed one half-day for each 225 cubic yards, or

fraction thereof, of soil removed and disposed, plus

travel costs in accordance with subsection (e) of this

Section.

Thus, although not a final rule, proposed Section 734.845(c)(2)(A) provides

insight that the Agency deems a range from 226 to 450 cubic yards per day to

be a justification for a maximum payment of $780.00 per day for conventional

technology, i.e. dig and haul activities such as in the Midwest project.

Measured by this proposed standard of reasonableness, and/or Midwest’s

proposed production rate, in the vacuum of no other standard provided by the

Agency, Midwest demonstrated that the services and costs incurred were

necessary to address the additional soil excavation and to meet the minimum

requirements of the Act and regulations and should be approved. The Agency’s

denial of the additional personnel costs was therefore arbitrary and capricious.

CONCLUSION

Based upon the foregoing facts and the applicable sections of the Act and

regulations promulgated thereunder, Midwest has met its burden of proof that

the additional personnel costs sought to be approved in its Amended Budget of

March 29, 2005 are associated with the corrective action activities and

services, are reasonable, are consistent with the associated technical plan, and

were not used for corrective action activities in excess of those necessary to

meet the minimum requirements of the Act and the regulations promulgated

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

thereunder. Accordingly, Midwest requests that this Board reverse the

Agency’s decision of July 18, 2005 and determine that its Amended Budget of

March 29, 2005 be approved as reasonable, justifiable, necessary, consistent

with generally accepted engineering practices and eligible for reimbursement

from the Underground Storage Tank Fund. Midwest further requests the

opportunity to petition this Board for the recovery of its attorney’s fees and

costs incurred in this cause, pursuant to 415 ILCS 5/57.8(l) and 35 Ill. Adm.

Code 732.606(g), in the event this Board rules in Midwest’s favor.

Respectfully

submitted,

SHAW

MARTIN,

P.C.

BY _/s/ Curtis W.

Martin__________________

Curtis

Martin,

Attorney

for

Midwest Petroleum Company,

Petitioner

Curtis W. Martin

IL ARDC No. 06201592

SHAW & MARTIN, P.C.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

Attorneys at Law

123 S. 10th Street, Suite 302

P.O. Box 1789

Mt. Vernon, Illinois 62864

Telephone (618) 244-1788

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005

CERTIFICATE OF SERVICE

I, the undersigned attorney at law, hereby certify that on October 28,

2005, I served true and correct copy of a Brief by electronically filing to the

following person:

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board

State of Illinois Center

100 West Randolph Street

Suite 11-500

Chicago, IL 60601

and by placing true and correct copies in properly sealed and addressed

envelopes and by depositing said sealed envelopes in a U.S. mail drop box

located within Mt. Vernon, Illinois, with sufficient postage affixed thereto, upon

the following named persons:

Carol Webb

John J. Kim

Hearing Officer

Assistant Counsel

Illinois Pollution Control Board Special Assistant

1021 North Grand Avenue East Attorney General

P.O. Box 19274

Division of Legal Counsel

Springfield, IL 62794 1021 North Grand Avenue, East

P.O. Box 19276

Springfield, IL 62794-9276

_/s/ Curtis W. Martin_________________

Curtis W. Martin, Attorney for

Petitioner, Midwest Petroleum Company

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 28, 2005