ILLINOIS POLLUTION CONTROL BOARD

December 1, 2005

 

IN THE MATTER OF:

 

PROPOSED AMENDMENTS TO:

REGULATION OF PETROLEUM LEAKING

UNDERGROUND STORAGE TANKS (35

ILL. ADM. CODE 732)

______________________________________

 

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R04-22(A)

(UST Rulemaking)

IN THE MATTER OF:

 

PROPOSED AMENDMENTS TO:

REGULATION OF PETROLEUM LEAKING

UNDERGROUND STORAGE TANKS (35

ILL. ADM. CODE 734)

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)

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R04-23(A)

(UST Rulemaking)

Consolidated

 

Proposed Rule. Second Notice.

 

OPINION AND ORDER OF THE BOARD (by G.T. Girard):

 

On January 13, 2004, the Illinois Environmental Protection Agency (Agency) filed two

proposals for rulemaking. On January 22, 2004, the Board accepted and consolidated the

proposals for hearing. The Board held numerous hearings and received substantial comment

before proceeding to first notice on February 17, 2005, pursuant to the Illinois Administrative

Procedure Act (IAPA) (5 ILCS 100/5-5

et. seq.

(2004). After an additional hearing and

numerous comments, the Board today adopts a second-notice proposal and opens a subdocket B

in this rulemaking, to address ongoing issues involving scope of work and reimbursement for

professional consulting services.

 

The Board’s authority in rulemaking proceedings stems from Section 5(b) of the

Environmental Protection Act (Act) (415 ILCS 5/5 (2004)), which provides that the Board “shall

determine, define and implement the environmental control standards applicable in the State of

Illinois and may adopt rules and regulations in accordance with Title VII of the Act.” 415 ILCS

5/5(b) (2004). Title VII of the Act sets forth the statutory parameters for rulemaking by the

Board. 415 ILCS 5/26-29 (2004). The Board may adopt a rule after hearing and determination

of the economic reasonableness and technical feasibility of the rule.

See

415 ILCS 5/27 (2004).

The Board’s decision is based on the record before the Board including all testimony and

 

SUMMARY OF TODAY’S ACTION

 

The Board today adopts the proposal for second notice pursuant to the IAPA (5 ILCS

100/5-5

et. seq.

(2004). Due to the comments received after the first notice began and in

consideration of the prior comments in this rulemaking, the second notice differs from the first

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2

notice proposal in one major aspect. That difference is in the reimbursement of professional

consulting services, which the Board will propose for second notice to be reimbursed on a time

and materials basis.

 

The Board also in this opinion opens a subdocket B for the purpose of developing scopes

of work to be used in reimbursing professional consulting services in the remediation of

underground storage tank (UST) sites in Illinois. Subdocket B will also examine issues

surrounding the hourly payment amounts and hours of work for professional services. The

Board will, at a future meeting, propose language for consideration on each of these issues. The

Board will hold at least one additional hearing on the language before proceeding to first notice

with an appropriate rule.

 

In addition to opening a subdocket, the Board today makes several changes to the

proposed rule in response to the comments. Some of the more significant changes include

allowing for reimbursement of handling charges for a subcontractor if the primary contractor has

a financial interest in the subcontractor and removing professional services from eligibility for

bidding. The Board also determines that some changes requested by the participants are not

necessary or supported by the record, such as adding mobilization charges for drill rigs and

adjusting maximum payment amounts for abandonment and removal of tanks.

 

The Board finds that the rule, as proposed for second notice, is economically reasonable

and technically feasible. The Board further finds that any negative economic impact has been

minimized by removal of the professional service lump sum payments to subdocket B. Finally,

the Board finds that the record supports the Board’s decision to proceed to second notice with the

remainder of the rule language.

 

BACKGROUND

 

On January 13, 2004, the Illinois Environmental Protection Agency (Agency) filed two

proposals for rulemaking. The proposal docketed as R04-22 amends Part 732 of the Board’s

leaking underground storage tank rules (UST rules). 35 Ill. Adm. Code 732. The proposal

docketed as R04-23 is a new Part 734 of the Board’s UST rules. On January 22, 2004, the Board

accepted and consolidated the proposals for hearing.

 

On February 18, 2004, the Board requested, pursuant to Section 27(b) of the Act (415

ILCS 5/27(b) (2004)), that the Department of Commerce and Economic Opportunity (DCEO)

conduct a study of the economic impact of the proposed rules. On April 2, 2004, DCEO notified

that Board that based on a review of the proposed rules and continued fiscal constraints DCEO

would not be performing an economic impact study. The response by DCEO was entered into

the Board’s record on that date.

 

Five groups of hearings were held before Board Hearing Officer Marie Tipsord. The

purpose of each set of hearings was to hear testimony and gather information concerning the

technical merits and economic impacts of the proposed rules. The first hearing was held on

March 15, 2004, in Chicago (Tr.1). The second group of hearings was held on May 25, 2004, in

Bloomington (Tr.2) and May 26, 2004, in Springfield (Tr.3). The third group of hearings was an

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3

additional two days held on June 21, 2004 (Tr.4) and June 22, 2004, (Tr.5) in Springfield. The

fourth and fifth groups were single days of hearing in Springfield on July 6, 2004 (Tr.6) and

August 9, 2004 (Tr.7). During those hearings the Board heard testimony from over 15 witnesses.

In addition, the Board received nine public comments in this proceeding before proceeding to

first notice.

 

On February 17, 2005, the Board proceeded to first notice with a rule that differed from

the Agency’s proposal in some aspects, while adopting the Agency’s proposal in total in other

aspects. Proposed Amendments to Leaking Underground Storage Tanks (35 Ill. Adm. Code 732,

734), R04-22, 23 (Feb. 17, 2005). The proposal was published in the

Illinois Register

on

March 11, 2005 (29 Ill. Reg. 3538 (Part 732) and 3705 (Part 734)).

 

In the first-notice opinion, the Board asked for input from the public as to whether

another hearing was necessary in this rulemaking. R04-22, 23 (Feb. 17, 2005) at 83. The Board

received several requests for an additional hearing and the Board held the sixth group of hearings

on July 27, 2005, (Tr.8) in Carbondale. On July 27, 2005, the Board heard testimony from the

Agency, CSD Environmental Services, Inc. (CSD), CW

3

M Company (CW

3

M) and United

Science Industries (USI). At the close of hearing, the date for final comments to be filed was

established as September 23, 2005. Tr. 8 at 212.

 

After publication of the first notice, the Board received 63 additional public comments.

A list of all the public comments follows. The Board has received over 70 public comments

since the inception of this rulemaking. The following is merely a list of the comments. Later in

this opinion, the Board will summarize the comments received by the Board after the proposal

was adopted for first notice, which address the substance of the proposal.

 

PC 1

Bill Fleischli of Illinois Petroleum Marketers Association and Illinois

Association of Convenience Stores

PC 2

Jay P. Koch, President of United Science Industries, Inc.

PC 3

Daniel J. Goodwin, P.E., on behalf of the American Council of Engineering

Companies of Illinois

PC 4

Illinois Environmental Protection Agency

PC 5

Nikki Loya of Maurer-Stutz, Inc.

PC 6

Professionals of Illinois for the Protection of the Environment

PC 7

Michael W. Rapps Engineering & Applied Science, Inc.

PC 8

Replaces PC 2 from Jay Koch, President of United Science Industries, Inc.

PC 9

CW

3

M Company

PC 10

Robert J. Pulfrey

PC 11

Daniel R. Rurak

PC 12

Lori K. Echols

PC 13

Sarah Blades

PC 14

Marvin Johnson

PC 15

Melanie Martin

PC 16

Rhonda McCowen

PC 17

Lisa Watson

PC 18

Monica A. Piasecki

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4

PC 19

Mark Owens

PC 20

Jay P. Koch

PC 21

Beth Giacomo

PC 22

Todd A. Piper

PC 23

Barry F. Sink

PC 24

Connie L. Connaway

PC 25

Dennis L. Schweigert

PC 26

Tyler Sink

PC 27

Duplicate

PC 28

Linda Tomaszewski

PC 29

Matthew P Cherry

PC 30

Jean Germann

PC 31

Sallie Minks

PC 32

Duane Doty

PC 33

Jim Bowling

PC 34

Ross Bunton

PC 35

Dan King

PC 36

Dennis Hillen

PC 37

Illinois Environmental Protection Agency

PC 38

Attorney General's Office, Jennifer A. Tomes, Assistant Attorney General,

Illinois

PC 39

Raymond T. Reott

PC 40

United Science Industries, Inc. (comments of 18 employees)

PC 41

Michael R. Oltman of Nokomis Tire & Auto Repair

PC 42

Wilma Schleifer of Schleifer Petroleum Co., Inc.

PC 43

Chris A. Barnes, President, Spectrulite Consortium, Inc.

PC 44

Kent and Hal Devore, former owners of Devore Marina, Inc.

PC 45

Bob Foerster, President, Bob's Service Center

PC 46

Jay Koch

PC 47

Daniel King

PC 48

Duane Doty

PC 49

Tom Mueller

PC 50

Kevin Majors of R. L. Hoener Company

PC 51

Greg Courson of Advanced Environmental Drilling & Contracting, Inc.

PC 52

Kevin Saylor, P.E., Environmental Division Manager of HDC Engineering and

clients of HDC Engineering

PC 53

John Komocar

PC 54

Becky Canty, Superintendent of Elverado Unit PC 196, Elkville, Illinois

PC 55

United Science Industries

PC 56

Gary R. Perkowitz, P.G. Manager, Environmental Services, Clayton Group

Services

PC 57

Don McNutt of Midwest Petroleum

PC 58

David E. Kennedy, Executive Director, American Council of Engineering

Companies of Illinois

PC 59

United Science Industries

PC 60

United Science Industries

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5

PC 61

Jay P. Koch

PC 62

Illinois Environmental Protection Agency

PC 63

CW

3

M Company

PC 64

CSD Environmental Services, Inc. by Cindy S. Davis, P.G., and Joseph

Truesdale, P.E., P.G.

PC 65

Senator John Sullivan of the 47th District

PC 66

United Science Industries comments of various entities

PC 67

United Science Industries comments and revised language

PC 68

United Science Industries sample budget and billing forms

PC 69

United Science Industries comments received from Senators Chris Lauzen,

Gary Dahl, Arthur Wilhelmi, Frank Watson, John Jones, David Luechtefeld

PC 70

Professionals of Illinois for the Protection of the Environment

PC 71

United Science Industries response to Illinois Environmental Protection

Agency

PC 72

CD copy of United Science Industries’ comments docketed as PC 61, PC 66,

PC 67, PC 68, and PC 69

 

SUMMARY OF TESTIMONY AND COMMENTS

 

This section of today’s opinion will summarize the testimony from the Board’s July 27,

2005 hearing, held in Carbondale, Illinois. Also in this section, the Board will summarize the

comments filed post-hearing by the testifiers at the July 27, 2005 hearing.

 

Illinois Environmental Protection Agency Testimony

 

Prior to the July 27, 2005 hearing in this proceeding, the hearing officer directed the

participants to prefile questions for the Agency. Several participants prefiled questions for the

Agency including Mr. Dan King (Exh. 95) and Mr. Jay Koch (Exh. 96) from USI, Ms. Cindy S.

Davis and Mr. Joseph W. Truesdale from CSD (Exh. 97), and CW

3

M (Exh. 94). The Agency

prefiled the answers to those questions (Exh. 98). Rather than summarize the answers to those

questions here, the answers will be discussed in connection with follow-up comments where

relevant. The Agency’s public comment (PC 62) will be summarized

infra

at 41.

 

Cindy S. Davis and Joseph W. Truesdale

 

Ms. Davis and Mr. Truesdale presented prefiled testimony jointly (Exh. 99) on behalf of

CSD, which will be referenced as CSD’s testimony. Ms. Davis and Mr. Truesdale both amended

the prefiled testimony (Exh. 100 and Exh. 101) at hearing and those will be referenced

individually. In addition, CSD filed a final public comment concerning this rulemaking (PC 64).

The following discussion will summarize the joint prefiled testimony and then the amended

testimony of Ms. Davis and Mr. Truesdale. Finally, the public comment will be summarized.

 

Joint Testimony (Exh. 99)

 

 

Handling Charges.

CSD owns Heartland Drilling (HDR) and has been denied handling

charges due to the direct financial interest of CSD. Exh. 99 at 1. CSD states the problem is that

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6

HDR does not own the landfill, backfill, trucking or supply companies used and HDR only

provides labor and equipment.

Id

. CSD indicates that if HDR included charges from the other

companies on invoice for HDR services, the Agency denies handling charges for HDR.

Id

. CSD

points out that the definition of handling charges include administrative, insurance, interest costs,

and a reasonable profit for procurement, oversight and payment of subcontracts and field

purchases.

Id

. CSD concedes that when hiring HDR “much of the cost of procurement for HDR

provided labor and equipment” is eliminated; however, the costs for administrative, insurance,

interest costs and reasonable profit for oversight and payment of subcontractors and field

purchases is not eliminated.

Id

.

 

CSD asserts that the professional liability insurance premium paid by CSD is based on

total sales of the company, which includes the costs of the subcontractors. Exh. 99 at 1. CSD’s

insurance company informed CSD that the costs of subcontractors are included because the

insurance company assumes a risk for those subcontractors under the professional policy. Exh.

99 at 1-2.

 

CSD maintains that any prime contractor should be entitled to a handling charge for any

subcontractor costs for which the prime contractor is responsible for administrative, insurance,

interest costs, and a reasonable profit for oversight and payment of subcontractors regardless of

whether there is a direct financial interest in the subcontractor. Exh. 99 at 2. CSD argues that

CSD is responsible for paying all subcontractors hired for the job.

Id

. CSD states that large

sums of money are borrowed to complete the job and pay subcontractors. If CSD provides the

Agency with proof that the subcontractor is paid, CSD should be entitled to “recoup” costs for

administrative, insurance, interest costs.

Id

.

 

 

Financing.

CSD also comments on the issue of financing of cleanups and indicated that

the Board should be aware that many consultants provide financing to their clients for cleanups.

Exh. 99 at 2. CSD testifies that many sites would not be remediated or even be going through

the remediation process if consultants did not offer this service.

Id

. According to CSD, many of

the clients are small businesses that lack the capital to pay for the services of consultants without

reimbursement from the leaking UST Fund.

Id

. CSD states that the financing arrangements are

simple and generally the consultant will wait for payment until reimbursement from the leaking

UST Fund is received and the consultant will not charge the owner/owners for costs which are

not reimbursed from the leaking UST Fund.

1

  

Id

. CSD indicates that in some cases,

subcontractors also agree to wait for reimbursement before being paid, while in other cases, the

consultant may pay the subcontractor.

Id

. To keep costs down, CSD notes that time is of the

essence concerning reimbursement.

Id

. CSD states that the longer the consultant must wait for

payment the more the consultant must borrow on the consultant’s line of credit to make payroll.

Id

.

 

CSD states that the implementation of maximum lump sum payments as proposed at first

notice will cut profit margins for many consultants to such an extent that consultants will no

1

At hearing, Ms. Davis testified that CSD is no longer offering contracts that do not charge for

costs not reimbursed because of potential shortcomings in the reimbursement process. Tr.8 at

140.

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7

longer be able to provide upfront financing. Exh. 99 at 2. CSD opines that if upfront financing

is eliminated, noncompliance will increase among small businesses and those with limited

financial means.

Id

. CSD testifies that this will result in more properties being subject to the

Brownfield’s initiative with additional encumbrances on that program.

Id

.

 

 

Threshold value.

CSD understands the need to control costs and CSD does not oppose

maximum lump sum payments that are fair and equitable, and if consultants know exactly what

is required to be submitted to achieve compliance. Exh. 99 at 2. CSD suggests that the Board

adopt the proposed maximum lump sum payments as threshold values. Exh. 99 at 3. CSD

recommends that budgets and reimbursement requests that are at or below these threshold values

would then be approved by the Agency without significant review.

Id

. CSD would still require

the owner/operator to submit actual costs for Agency review and approval.

Id

.

 

CSD notes that the Agency would use the information on actual costs submitted in a

triennial review to determine if threshold values need to be adjusted. Exh. 99 at 2. CSD opines

that the threshold values will provide incentive to the owner/operator and consultant because if

the project is completed at or below the threshold value, the costs will be more expeditiously

approved and reimbursed.

Id

. CSD suggests that if an owner/operator’s costs exceed the

threshold value, the owner/operator would be required to submit additional information to

support the increased costs and would be subject to a longer more detailed review by the

Agency.

Id

.

 

 

Scope of Work.

The Board’s rules at Section 732.110(a)/734.135(a) require that “[a]ll

plans, budgets, and reports must be submitted to the Agency on forms prescribed and provided

by the Agency.” CSD asks that the Board require the Agency to revise the forms to provide a

comprehensive list on each form of the tasks to be completed, including the expected minimum

number of maps, cross sections,

etc

. to be included in each report. Exh. 99 at 3. CSD also

requests that at anytime the Agency modifies the form, Subpart H maximum payments be

adjusted accordingly.

Id

.

 

In regards to Section 732.845/734.845, CSD notes that the Agency, throughout the

responses to the prefiled questions, indicted that tasks were included in Section 732.845/734.845.

Exh. 99 at 6. CSD asserts that the tasks have never been presented during this rulemaking

process in their entirety.

Id

. CSD opines that one of the goals of this rulemaking should be to

develop a fair system, transparent and open to the public, in an effort to streamline the leaking

UST program.

Id

. CSD suggests that the Board require the Agency to provide any and all task

lists, unit costs and quantity estimates used by the Agency to develop the maximum lump sum

prices proposed in Subpart H.

Id

.

 

 

Bidding for Professional Services.

CSD notes that professional services are not

normally bid and owners/operators of many gasoline stations do not employ environmental

professionals to help comply with regulations. Exh. 99 at 3. CSD states that smaller

owner/operators hire consultants and engineers to assist with the regulations.

Id

. CSD opines

that the bidding process for professional services does not seem feasible and should be reserved

for UST compliance costs other than professional services.

Id

.

 

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8

 

Abandonment Slurry.

CSD believes that the costs for abandonment slurry (flowable

fill) as required by Office of State Fire Marshal (OSFM) regulations concerning abandonment of

USTs should be further evaluated. Exh. 99 at 3. CSD offers that the labor costs for

abandonment of a UST is similar to labor costs for removal.

Id

. CSD notes that a current project

being undertaken would require a cost of $5,035 for the flowable fill alone and pursuant to

Subpart H the total reimbursement costs would be $9,450. Exh. 99 at 4. CSD recommends

revising Section 732.810/734.810 using the

RS Means Environmental Costs Handling Options

and Solutions

(

RS Means

) published costs for UST closure and the localization factor for Illinois.

Exh. 99 at Attach. A. Specifically CSD suggests Section 732.810/734.810 be amended as

follows:

 

a) Payment of costs associated with demolishing surface structures or

pavement over the tank(s); draining the tank(s); purging the tank(s) of

vapors; excavating the tank cover; removing the tank(s) and disposing of

the tank(s) or preparing the tank(s) for abandonment in place shall be

based on the following:

 

UST Volume

Threshold Payment Amount Per UST

1-2,000 gal.

  

$1,838.00

2,001-5,000 gal.

  

$3,826.00

5,001-15,000gal $5,826.00

15,001-20,000 gal.

  

$6,836.00

20,001-30,000 gal.

  

$8,610.00

 

b) In addition to the payment amounts specified in 732.810(a)/734.810(a) for

UST abandonment in-place, the following threshold payment amount of

$0.24 per gallon shall apply for equipment, labor and materials associated

with filling the tank(s) with inert material as specified in 41 Ill. Adm.

Code 170.670(d).

 

c) Payment of costs associated with material purchase, transportation and

backfilling the void left after removing and disposing of the tank(s) shall

be established in accordance with 732.825(b)/734.825(b), based on the

volume of the tank(s) removed.

 

d) Payment of costs associated with the replacement of concrete, asphalt, and

paving following removal or abandonment of tank(s) shall be established

in accordance with 732.840(b)/734.840(b).

Id

.

 

 

Section 732.845/734.845.

CSD raises three separate issues specifically concerning the

rates proposed in Section 732.845/734.845. The first is the sufficiency of the half-day rate for

advancing soil borings and installing monitoring wells. The second is whether the rates are

sufficient for multiple submissions of reimbursement applications. The third is the sufficiency of

the rates for amending a plan due to unforeseen circumstances. Each of these will be

summarized in turn below.

 

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9

CSD expresses concern with the $390 per half day, plus travel costs, for advancing soil

borings and installing monitoring wells. Exh. 99 at 4. CSD wishes to make the Board aware that

after soil logging, sampling and installation of monitoring wells, the wells must be developed

and casing elevations surveyed, the wells must also be purged, gauged and have groundwater

samples collected.

Id

. CSD maintains that these activities do not take place on the same day as

installations.

Id

. CSD further notes that hydraulic conductivity testing is performed only on one

or more wells and the field costs for hydraulic conductivity should only apply to the well on

which the testing is performed.

Id

. CSD suggests adding a rate for conducting each hydraulic

conductivity test to the rule, based on

RS Means

.

Id

.

 

CSD takes issue with the Agency’s responses to two prefiled questions concerning

whether or not the Agency included a particular number of applications for payment under

Section 732.845/734.845. Exh. 99 at 5. The Agency in response to CSD’s question indicates

that the Agency did not include a particular number of applications for payment under this

section and that the Agency included costs for application preparation in the maximum payment

amounts in Section 732.845/734.845. Exh. 98 at 34. The Agency then responded to a second

question that they did include costs for completion of applications for partial and final payment

every 90 days under this section.

Id

. CSD believes that the Agency’s responses are

contradictory. Exh. 99 at 5. CSD asserts that for the Agency to have included costs for

completion of applications for partial or final payment every 90 days, the maximum payment

amount under professional consulting services would have had to estimate the time required to

complete each subsection and assign a particular number of applications for payment. Exh. 99 at

6.

 

CSD also questioned the Agency response to a question concerning Section

732.845(f)/734.845(f). The Agency indicates that the rate was developed based on eight hours of

personnel time multiplied by the hourly rate. Exh. 98 at 34. CSD asked that, if a plan and the

budget must be amended due to unforeseen circumstances, wouldn’t that amendment fall under

the unusual or extraordinary circumstances provision in Section 732.860/734.860? Exh. 99 at 6.

The Agency’s response was that the sum of $640 was derived based on amending a plan due to

unforeseen circumstances and based upon eight hours of personnel time. Exh. 99 at 6. CSD

queries that if the amendment is truly unforeseen how could the Agency possibly foresee that the

circumstances will typically take eight hours to address.

Id

. CSD suggests a change to the rule

that would require reimbursement of amending plans or budgets because of unforeseen

circumstance pursuant to Section 732.850/734.850, on time and materials basis.

 

 

Triennial Review.

CSD suggests that the Agency’s procedures for conducting the

triennial review of costs in Subpart H should be available to the public. Exh. 99 at 4. CSD asks

that the Board require the Agency to develop written procedures for conducting the triennial

review and make those procedures public information.

Id

.

 

 

Alternative Technology.

CSD sought clarification through prefiled questions regarding

the Agency’s position on allowing the submission of alternative technologies in phases. Exh. 99

at 5. CSD is concerned that a significant amount of design costs could be expended to prepare

cost comparisons and submit the alternative technology to the Agency without having the

Agency’s review of the cost comparisons.

Id

. CSD opines that if the alternative technology

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10

corrective action plan were divided into phases, the Agency would have the opportunity in the

early planning stages to evaluate the technology being proposed.

Id

. CSD notes that this would

give the Agency the opportunity to offer guidance as to what the Agency may be looking for

when granting final approval.

Id

.

 

 

Standard of Review.

CSD believes that the Agency should develop a written standard

for the review of applications for reimbursement by Agency project managers. Exh. 99 at 6.

CSD opines that a written standard of review, available to both Agency staff and the public, will

streamline the UST program and ensure consistency in the program.

Id

.

 

Amended Testimony (Exhibits 100 and 101)

 

 

PIPE.

Ms. Davis testifies that she is the Acting Chairperson for the Board of Directors

for PIPE. Ms. Davis states that PIPE is not being represented at the July 27, 2005 hearing due to

“financial restraints in hiring representation as a group.” Exh. 101 at 1. Ms. Davis indicates that

instead, individual members of PIPE have chosen to proceed with testimony at the hearing on

their own.

Id

.

 

 

Petitions.

Ms. Davis amended her testimony to include signed petitions from clients of

CSD. Exh. 101 at 1. The petitions ask the Board to adopt regulations that assure the UST Fund

will continue to provide financial responsibility to cover all cost of environmental cleanup

incurred in order to: (1) comply with the UST regulations; (2) compensate environmental

professionals fairly; and (3) establish maximum payment amounts based on statistically valid

review of detailed and standardized scopes of work. Exh. 101 at 1-2; Attach. A. The signed

petitions also ask that the Board adopt a program that is transparent and allows all data and

information to be fully disclosed to the public.

Id

.

 

 

Task List.

Ms Davis testifies that she was a member of the American Consulting

Engineers Council of Illinois (ACECI)

ad hoc

group

2

that worked with the Agency prior to the

Agency proposing these amendments. Exh. 101 at 2. Ms. Davis states that the

ad hoc

group

provided to the Agency a list of reports that could be considered for lump sum payments.

Id

.

Ms. Davis indicated that the list of reports included a list of tasks for each report and an estimate

of the number of hours required to complete the tasks.

Id

. Ms. Davis notes that Mr. Chappel’s

testimony acknowledges that the Agency relied on the information provided by the

ad hoc

group.

Id

.

 

Ms. Davis argues that the Agency did not rely on the Agency’s own experience to

establish some of the maximum payment amounts for professional services. Exh. 101 at 2.

Rather, Ms. Davis testifies, the Agency relied on the

ad hoc

group’s recommendations about the

hours necessary to complete the tasks, while ignoring the task lists provided by the

ad hoc

group.

2

Ad Hoc Work Group on LUST Reimbursement Reform that was formed by ACECI and IPMA

at the request of the Agency. The Ad Hoc Work Group comprised of member firms of the two

organizations having substantial working experience with the LUST program, including

reimbursement, as it has actually been implemented over the last 10 years. Exh. 74 at 3. The

Work Group is referred to as ACECI in this discussion.

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11

Id

. Ms. Davis asserts that when the Agency “disregarded a critical part” of the

ad hoc

group’s

recommendation, the proposal was rendered invalid.

Id

. Ms. Davis maintains that the purpose

of the task list was to provide a detailed listing of the work that needed to be accomplished for

each report and to account for the hours needed to accomplish each task. Exh. 101 at 2-3.

 

Ms. Davis points to certain recommendations made by the

ad hoc

group to support her

position. Exh. 101 at 3. Specifically, Ms. Davis notes that the

ad hoc

group estimated that

preparation of a conventional high priority corrective action plan would take 64 hours, as would

the preparation of a corrective action completion report.

Id

. Ms. Davis states that the

ad hoc

 

group estimated the completion of a reimbursement request would require an additional 32

hours.

Id

. However, Ms. Davis maintains that the Agency’s proposal, estimating 64 hours,

includes the reimbursement request.

Id

. Ms. Davis argues that for this reason the

ad hoc

group

never intended that the Agency should use the estimated hours without the task list.

Id

.

 

Ms. Davis’s amended testimony ( Exh. 101 at 3.) asks that the Board:

 

1. require for those maximum payment amounts derived from the

ad hoc

group that

the task list be added to the rule;

 

2. allow reimbursement to be billed separately so that an owner/operator may

request reimbursement every 90 days as allowed by the statute;

 

3. allow any additional tasks the Agency requests above and beyond the task list

added to the rule to be treated as an extraordinary condition; and

 

4. provide that the maximum rates be threshold values. Exh. 101 at 3.

 

 

Agency Experience.

Ms. Davis’s amended testimony includes a list of maximum rates

which she states are based on the Agency’s “experience” and not on consultation with ACECI.

Exh. 101 at 4; Attach. C. Ms Davis states that she has “no knowledge” of any employee in the

UST section, other than Mr. Chappel, who has ever been employed as an environmental

consultant to perform UST work in Illinois. Exh. 101 at 4. Ms. Davis questions the Agency’s

basis for establishing the maximum rates, and she notes that it is the owner/operator and the

environmental consultant that will suffer if the maximum rates are incorrect.

Id

. Ms. Davis

urges the DCEO to evaluate the financial impact of this rulemaking.

Id

.

 

Ms. Davis’s amended testimony asks that the Board require the Agency to provide the

task list used by the Agency in estimating the costs to conduct the work items listed in

Attachment C of Ms. Davis’ testimony. Exh. 101 at 5.

 

 

Other States.

Mr. Truesdale offers testimony ch

allenging conclusions made by Mr.

Harry Chappel regarding states that Mr. Chappel indicated had similar programs to Illinois. Exh.

100 at 1. Mr. Truesdale agrees that the six states discussed (Texas, Arizona, Oklahoma, South

Carolina, Indiana, and Colorado) do have “some type of ‘fund’ based reimbursement schedules

somehow memorialized in regulations or other guidance within each respective program.”

Id

.

---

 

12

Mr. Truesdale testifies that scopes of work or task lists are included in at least two of the states,

Texas and South Carolina. Exh. 100 at 2.

 

Public Comment

 

CSD filed a final comment with the Board addressing the alternatives proposed by

CW

3

M and USI. PC 64. CSD stated that both proposals are excellent and superior to the

Board’s first-notice proposal. PC 64 at 1. CSD offered specific comments in several specific

areas which will be discussed below. In addition, CSD offered general comments concerning

this rulemaking process and those will also be discussed below.

 

 

Expedited Threshold Values vs. Agency’s Proposed Maximum Payments.

CSD

notes that USI’s statistical analysis concluded that the Agency’s proposed maximum payment

amounts were significantly lower that the amounts historically reimbursed by the Agency. PC

64 at 1. CSD points out that they too testified that the maximums were 50% below what had

been historically reimbursed. PC 64 at 1-2. CSD also notes that the Agency’s testimony

indicated the maximums were averages in some cases. PC 64 at 2. CSD states that using

average numbers, as the maximum payment amount is inappropriate.

Id

.

 

CSD supports the concept, discussed at the July 27, 2005 hearing, of using the proposed

amounts as expedited or threshold amounts. PC 64 at 2. CSD believes that such a system

provides an incentive to consultants and contractors to try and complete the work at that

expedited or threshold level.

Id

. In return, CSD comments that the consultant or contractor is

rewarded with a quicker turn around for review and payment.

Id

. CSD does not believe that

actual numbers should be placed in regulations to allow for more flexibility.

Id

. However, the

method for developing the numbers should be in the rules according to CSD.

Id

. CSD supports

the wording proposed by CW

3

M for determining expedited and maximum payment amounts.

Id

.

 

 

Scope of Work/Typical Site.

CSD comments that at the July 27, 2005 hearing, the

consulting community presented many different site scenarios to the Agency. PC 64 at 3. CSD

indicates that this was done in an attempt to demonstrate that without a definition of typical,

consultants will be unable to determine if circumstances are unusual or extraordinary for

purposes of Section 734.860.

Id

. CSD asks that this rulemaking establish a procedure to

determine what is typical.

Id

. CSD suggests that the Board combine the suggestions of USI and

CW

3

M and provide for a generic task list.

Id

. CSD then suggests that the scope of work be

outlined in regulations to be developed by the LUST Advisory Committee, and posted on the

Agency’s web site.

Id

   

 

 

LUST Advisory Committee.

As proposed, CSD points out that the LUST Advisory

Committee is made up of ten members, and CSD believes the number should be an odd one. PC

64 at 3. CSD recommends adding two seats for members of PIPE to the Advisory Committee.

Id

. CSD also suggests that the Advisory Committee be responsible for developing standardized

forms for submittals, guidance documents, and evaluation of expedited and maximum rates to

ensure the rates reflect prevailing market rates. PC 64 at 4. CSD opines that giving such

responsibility to the Advisory Committee will force the Agency and consultants to repair the

strained relationship resulting from this rulemaking.

Id

.

---

 

13

 

 

Due Process.

CSD opines that the regulations as

proposed at first notice do not provide

due process for owner/operators who cannot afford to appeal an Agency decision to the Board.

PC 64 at 4. CSD notes that in one instance alone, the cost of the appeal to the Board was over

$45,000 and most owner/operators cannot afford to spend this sum to appeal to the Board.

Id

.

CSD recommends that the Board adopt an alternative formal procedure for decision regarding

reimbursement other than filing an appeal with the Board.

Id

. CSD suggests that if the Board

does not include such alternative in the rule, legislative action may be necessary.

Id

.

 

 

Costs Incurred After Issuance of a No Further Remediation Letter (NFR).

CSD

supports addition of four items to Section 734.630(gg) as proposed by CW

3

M. PC 64 at 4.

These four items include incremented costs incurred by a highway authority, costs associated

with a previously unknown migration pathway, costs of contamination beyond previously

defined contamination plumes, and costs associated with properties where access was previously

denied. PC 64 at 45.

 

 

Mobilization Charges for Drill Rigs.

CSD does not believe the maximum payment

amount proposed in Section 734.820 is adequate to allow for mobilization of two pieces of

equipment. PC 64 at 5. CSD notes that both CW

3

M and USI proposals add mobilization as a

separate item to the drilling charge, and CSD supports this change.

Id

.

 

 

Proof of Payment.

CSD reiterates concerns regarding the proof of payment to a

subcontractor. PC 64 at 5. CSD states that a subcontractor will often wait for payment if a

consultant is financing the remediation until reimbursement.

Id

. If proof of payment is required,

a consultant may have to borrow money to complete remediation.

Id

.

 

 

General Comments.

CSD comments that they have spent numerous hours in hearings,

testifying and preparing comments in this rulemaking and yet CSD feels that the time has been to

no avail. PC 64 at 5. CSD feels that the rulemaking proceeding has been frustrating considering

the testimony presented challenging the Agency’s proposal.

Id

. CSD does not understand how

such a rule can proceed to second notice when there is no support for the rule in the regulated

community.

Id

. CSD states that if the Board adopts the rule, CSD will have no choice but to

seek help from the legislature and file any and all appeals necessary. PC 64 at 6.

 

CW

3

M Company

 

CW

3

M prefiled testimony and appeared at the July 27, 2005 hearing to present that

testimony. On behalf of CW

3

M, Mr. Vince Smith, Ms. Carol Rowe, and Jeffrey Weinhoff

appeared to respond to any questions (Tr.8 at 101). CW

3

M also filed a final public comment

concerning this rulemaking (PC 63). In the following paragraphs, the Board will first summarize

the testimony and then the final comment. The summary will begin with a general discussion of

CW

3

M’s testimony and then a more detailed account of the suggested changes to the proposed

rule will follow.

 

General Testimony

 

---

 

14

CW

3

M testified generally in six areas. First, CW

3

M expressed disappointment that the

Board’s first notice proposal did not reflect more of the comments from industry including

members of PIPE and CW

3

M. Second, CW

3

M takes issue with the Agency’s stated intent to

produce savings using the proposed rule, especially absent a defined scope of work in the rules.

Third, CW

3

M believes that the proposed rules will result in a poorly designed system. Fourth,

CW

3

M takes issue with the Agency’s statements that lengthy reviews are generally the fault of

incomplete applications. Fifth, CW

3

M continues to maintain that the OSHA requirements are

applicable to work performed at a UST site. Sixth, CW

3

M points to apparent contradictions in

the Agency’s answers to prefiled questions concerning information to be filed with a

reimbursement request for a lump sum payment. The Board will summarize each of these six

issues in turn.

 

 

Board’s First Notice.

CW

3

M testifies that the company has expended considerable

amounts of time researching environmental cost data from numerous sources in preparing

testimony for this proceeding. Exh. 106 at 2. CW

3

M intended, with its prior submissions in this

proceeding, to provide “credible supported data to illustrate flaws in the rates initially proposed

by the Agency and subsequently published by the Board” for first notice.

Id

. CW

3

M states:

“[i]t is most disturbing to us that the data presented by CW

3

M, PIPE and other experienced

consultants representing hundreds of years of experience was largely ignored in favor of

adopting the Agency’s proposal that was recognized as based only on the Agency’s experience in

reviewing reports.”

Id

.

 

CW

3

M notes that the Agency admitted that Mr. Chappel was the only employee involved

with the UST program who had worked in the private sector and he only worked for six years in

the private sector. Exh. 106 at 2. CW

3

M is even more disturbed by the Board publishing rates

which are not “based on any scientifically or statistically recognized methods” especially after

the Agency testimony “was proven to be incorrect” asserts CW

3

M.

Id

. CW

3

M alleges that

because the Agency and the regulated community did not approach this proceeding in unison, the

Board “felt it had no choice but to defer” to the Agency.

Id

.

 

CW

3

M concedes that the Agency does have “some experience” in reviewing budgets and

payment requests. Exh. 106 at 2. However, CW

3

M asserts that the Agency does not have

experience in the business of conducting or costing the planned work or anticipating and

resolving problems in the field.

Id

. CW

3

M argues that the collective experience of PIPE,

ACECI and the other participants should be taken into consideration for “good government” to

prevail in this proceeding.

Id

.

 

CW

3

M also argues that there is a major inconsistency within the testimony and the

proposed rates that has not been resolved. Exh. 106 at 2. That inconsistency, according to

CW

3

M, is the notion that the proposed rates are consistent with rates historically or currently

deemed reasonable by the Agency.

Id

. CW

3

M notes that the Agency’s testimony indicated that

the proposed rates would be inclusive of ninety percent of the costs of sites remediated in

Illinois.

Id

. However, CW

3

M asserts that the Agency has provided no “scientifically valid data

to support this assertion” and the Agency did not use a statistically unbiased, randomly selected

data as a basis for the proposed rates. Exh. 106 at 2-3. In contrast, CW

3

M offers a list of

contracts awarded by the Illinois Department of Transportation (IDOT) for corrective action at

---

 

15

leaking UST sites. Exh. 106 at 3; App.C. CW

3

M indicates that the contracts were awarded after

competitive bidding, and using the proposed rates in this rulemaking only 11 out of 39 projects

would be deemed reasonable. Exh. 106 at 3.

 

CW

3

M also points out that numerous professional service providers have testified that the

Agency’s proposed rates are substantially less than the rates that have historically been deemed

reasonable and reimbursed.

Id

. CW

3

M asserts that if the proposed rates were reflective of the

current market and were consistent with historically reimbursed rates, these proceedings would

have been less controversial.

Id

.

 

 

Cost Savings/Scope of Work.

Another contradiction according to CW

3

M in this

proceeding is the Agency’s statements that the proposal is necessary to protect the UST Fund.

Exh. 106 at 3. CW

3

M asks that if the rates are consistent with current or historically approved

payment amounts, where is the savings?

Id

. CW

3

M also asks how the average rates or median

costs become maximum payment amounts?

Id

. CW

3

M opines that the Agency wants to save

costs by forcing industry to accept substantially less than prevailing market rates for work at a

UST site.

Id

. CW

3

M also opines that the Agency is forcing the industry to comply with “secret

or undefined” scopes of work.

Id

.

 

CW

3

M argues that now that the rate structure has been proposed, without a defined scope

of work, the Agency will attempt to force fit additional tasks into lump sum rates. Exh. 106 at 3.

To support this argument, CW

3

M points to the Agency’s response to prefiled questions for the

July 27, 2005 hearing. CW

3

M asserts that the Agency “has refused to disclose” what tasks were

included when the rates were developed.

Id

. Further, CW

3

M opines that either the Agency lacks

the experience necessary to develop a scope of work or the Agency intends that any task that

may come up will be included in the lump sum payment.

Id

.

 

CW

3

M characterizes the general theme of the Agency’s responses to questions regarding

the addition of a defined scope of work as “that any additional task should automatically be

assumed to be included.” Exh. 106 at 8. CW

3

M asserts that during earlier hearings, the

Agency’s summaries of 45-Day report fees did not include the cost for preparing early action

reimbursement claims in the lump sum payment.

Id

. CW

3

M asserts that now the reimbursement

process is a part of the lump sum payment.

Id

. CW

3

M maintains that the list of tasks continues

to grow.

Id.

 

 

CW

3

M strongly urges the Board to develop scopes of work for identified tasks or to

adopt procedures which will standardize the Agency’s review. Exh. 106 at 7. CW

3

M testifies

that throughout this proceeding PIPE and others have argued for inclusion of a defined scope of

work, because without such definition the rules would be vague. Exh. 106 at 6. CW

3

M states

that there is nothing in the rule to prevent an Agency reviewer from requiring more detail or

information beyond the items required for each report.

Id

. CW

3

M testifies that based on

CW

3

M’s experience the identical types of content or level of detail are not treated the same by

each Agency reviewer.

Id

. CW

3

M states that submittals are often tailored to the individual

reviewer.

Id

.

 

---

 

16

 

Design of the System.

CW

3

M believes that a poorly designed system of determining

maximum rates can have a serious impact on owners/operators and consultants with little impact

on how the Agency does business. Exh. 106 at 4. CW

3

M interprets the Board’s first-notice

opinion as the Board relying on the use of bidding and the unusual and extraordinary

circumstances provisions in the rule to adjust for flawed rates.

Id

. However, CW

3

M argues that

the Agency has testified that there will be very few reasons to accept or approve unusual or

extraordinary circumstances.

Id

.

 

CW

3

M argues that the futures of the businesses participating in this rulemaking are at

stake. Exh. 106 at 4. CW

3

M notes that the Agency compared the UST reimbursement program

with the problems facing the health care industry; however, CW

3

M believes the Agency’s rates

will create the same problems facing health care.

Id

. CW

3

M argues that there will be

insufficient insurance to cover costs of cleanup and service providers will be driven out of

Illinois.

Id

. CW

3

M believes that sites might not be cleaned up because the cost of cleanup not

covered by the UST Fund will be so great that owner/operators will not be able to pay for

cleanup.

Id

. Furthermore, CW

3

M believes the Agency’s intent with these proposed rules is to

interrupt free enterprise and force owner/operators to choose the closest consultant. Exh. 106 at

10.

 

CW

3

M asserts that a review of the record indicates that the Agency’s rate structure is not

supported because there are too many holes in the data used to develop the rates. Exh. 106 at 4-

5. CW

3

M maintains that “good government” implies that changes impacting businesses should

be carefully and properly evaluated. Exh. 106 at 4. These proposed rules include rates based on

pulling a “few non-representative files” and conducting a “subjective” review, according to

CW

3

M.

Id

.

 

 

Length of Review.

CW

3

M takes issue with the Agency’s assertion that review time is

largely based upon the quality of the submittal. Exh. 106 at 7, citing R04-22, 23 (Feb. 17, 2005)

at 17. Based on CW

3

M’s experience, the time a review takes is dependant on the Agency

reviewer. Exh. 106 at 7. CW

3

M states that certain Agency reviewers complete their review

quickly while others typically use the entire review time.

Id

. CW

3

M also claims that there have

been numerous denials based on missing information that was actually included in the

application.

Id

. The application must then be resubmitted or the location of the information

brought to the attention of the Agency reviewer. This increases CW

3

M’s costs through no fault

of CW

3

M and the rules for lump sum payments do not address this situation.

Id

.

 

CW

3

M refers to the Agency’s response to prefiled questions that the maximum payment

amounts will encourage submission of complete plans and reports. Exh. 106 at 8. CW

3

M asserts

that they and others who do UST work have being doing so for years and the consultants know

full well what constitutes a complete report.

Id

. However, CW

3

M feels the approval rate of

applications is largely based on whom the Agency reviewer may be.

Id

. CW

3

M offers statistics

to support this proposition and notes that the persons with the lowest approval rates are the

individuals who helped to develop this proposal. Exh. 106 at 8; App. E.

 

 

OSHA Requirements.

CW

3

M insists that under the requirements of OSHA, two

consulting personnel are required on-site for field tasks and all the proposed rates must be

---

 

17

adjusted to reflect the OSHA requirements. Exh. 106 at 10. CW

3

M argues that under 29 C.F.R.

§1910.120, a “buddy system” is required for hazardous waste operations. Exh. 106 at 9. CW

3

M

agrees that under CERCLA, petroleum products are not considered a hazardous substance.

Id

.

However, CW

3

M argues that petroleum products are a hazardous waste under the provisions of

OSHA.

Id

, citing 29 C.F.R. §1910.120.

 

 

Information in Reimbursement Requests.

CW

3

M expresses confusion over potentially

conflicting statements by the Agency in response to prefiled questions. Exh. 106 at 10. For

lump sum payments, the Agency responded to a prefiled question by CSD that for a lump sum

payment for soil removal and disposal, consultants will be required to submit invoices that

identify the work performed, parties that conducted the work and dates the work was performed.

Exh. 98 at 30. According to CW

3

M this contradicts a statement from the August 9, 2004 hearing

wherein the Agency indicated that only an invoice stating the task completed is required. Exh.

106 at 10, citing Tr.8 at 109-10. CW

3

M asserts that any reimbursement request requiring a

greater level of detail should be reimbursed on a time and material basis rather than a lump sum

payment.

Id

.

 

Suggestions for Specific Rule Changes

 

In addition to the comments from CW

3

M generally discussing provisions of the proposed

rules, CW

3

M offered specific suggestions for changes to the proposed rule. The following

paragraphs will describe those proposed changes and the reasons for CW

3

M suggesting the

changes.

 

 

Section 734.100.

CW

3

M suggests clarifying amendments to subsection (a) and the

addition of subsection (d). Exh. 106 at 11. CW

3

M included subsection (d) to clarify that the

proposed rules should not be used as final rules until the rules are adopted pursuant to the Act

and the IAPA.

Id

.

 

 

Section 734.135.

CW

3

M proposed language to allow for documentation of reports

delivered by hand or private delivery service to the Agency. Exh. 106 at 12.

 

 

Section 734.320(b)(2)(A) and 734.330(a)(1).

CW

3

M suggests adding the word

“projected” before the phrase “post-remediation use of the property” in both sections. Exh. 106

at 12. CW

3

M “objects to the need to characterize the post-remediation uses of the site and the

surrounding properties.”

Id

. CW

3

M believes that only in limited instances will the owner of the

site know the future uses of the property.

Id

. If the site is an active fuel station and the

owner/operator plans to continue to use the site for fuel sales, the future use is definable.

Id

.

However, if the site is closed or about to be closed and the owner plans to sell the site, future use

is not definable.

Id

. CW

3

M also believes that defining the use of surrounding properties would

be difficult.

Id

.

 

CW

3

M argues that the decision to conduct remediation or rely upon land use or

institutional controls should be decisions left to the owner and not the Agency. Exh. 106 at 12.

CW

3

M asserts that property owners should not be “discriminated against” or disallowed

remediation by the Agency based solely on potential future use of the property.

Id

.

---

 

18

 

 

Section 734.340(b).

CW

3

M suggests changes to “reflect that more than one alternative

technology may not always be available.” Exh. 106 at 13. CW

3

M notes that depending on site

characteristics two additional alternative technologies may not be available to be implemented.

Id

. CW

3

M argues that if there are not additional alternative technologies available, the available

alternatives should be cost compared.

Id

. CW

3

M opines that a list of alternatives considered

could be provided along with explanations as to why the alternatives were eliminated from

consideration.

Id

.

 

 

Section 734.505.

CW

3

M suggests adding language “to attempt to eliminate the standard

response of the Agency” that something “exceeds the minimum requirements of the Act” in

denials. Exh. 106 at 13. CW

3

M asserts that such language does not provide an owner/operator

with an explanation of the Agency’s decision and limits the owner/operator’s ability to respond.

Id

. CW

3

M argues that with a more specific Agency response, the owner/operator should be able

to provide a more focused response and reduce the number of additional submittals.

Id

.

 

 

Section 734.510.

CW

3

M suggests changes to this section to ensure that the Agency

documents and maintains records of the Agency’s technical and fiscal review. Exh. 106 at 14.

CW

3

M’s suggested language further seeks to ensure that those records are a part of the record of

the site.

Id

.

 

 

Section 734.605.

CW

3

M suggests that proof of payment of a subcontractor when

requesting handling charges be eliminated. Exh. 106 at 14. CW

3

M maintains that requiring

proof of payment is unduly burdensome because of the number of projects, subcontractors, and

payments managed by CW

3

M.

Id

. Further, CW

3

M asserts that the requirement will increase the

costs necessary to perform the work.

Id

. CW

3

M argues that the owner/operator or the prime

contractor is responsible for defining terms of payment, not the Agency.

Id

.

 

CW

3

M opines that a proof of payment requirement could also increase the number of

reimbursement preparations and submittals to the Agency. Exh. 106 at 14. CW

3

M notes that

particularly with larger projects during the corrective action phase of the site remediation,

reimbursement requests are made almost immediately for some or all of the work to minimize

financing costs.

Id

. CW

3

M asserts that obtaining proof of payment prior to such immediate

submittals would be difficult and result in additional submittals for handling charges.

Id

.

 

 

Section 734.605(j).

CW

3

M recommends revisions to subsection (j) to allow for

submissions for reimbursement requests later than one year after an NFR letter has been issued.

CW

3

M asserts these changes are proposed to accommodate owners/operators experiencing

uncontrollable situations creating delays and the Agency’s need to archive files and maintain an

accounting of future liabilities. Exh. 106 at 14. CW

3

M opines that the proposed language will

accomplish the intent of the Agency’s proposal while allowing exceptions for rare

circumstances. Exh. 106 at 15.

 

CW

3

M argues that the proposed one-year submittal limitation may cause “severe

hardship” for owners/operators or their beneficiaries. Exh. 106 at 15. CW

3

M indicated that in

CW

3

M’s experience appeals to the Board may be pending and settlement negotiations in

---

 

19

progress and final disposition of a case may take more than a year.

Id

. CW

3

M asserts that in

such cases the owner/operator would be prevented from submitting claims until the appeal is

settled or a decision by the Board is reached.

Id

. Another instance where a delay in submittals

may occur, according to CW

3

M, is if an owner/operator is incapacitated, has an illness,

bankruptcy, or even a death.

Id

.

 

 

Section 734.625.

CW

3

M suggests adding additional eligible costs. Exh. 106 at 16.

Specifically, CW

3

M suggests that governmental fees are often unavoidable and as such should be

reimbursable.

Id

. CW

3

M further suggests that compaction costs should be added as an eligible

cost for reimbursement because compaction during the backfill process can return the site to one

with a stable foundation suitable for redevelopment.

Id

. Finally, CW

3

M suggests adding a

specific provision for payment of handling charges incurred for field and other direct expenses.

Id

.

 

 

Section 734.630.

CW

3

M offers several suggestions to this section. The Board will

address each in turn below.

 

 

Subsection (gg).

CW

3

M recommends including costs incurred: (1) by a Highway

Authority Agreement after issuance of an NFR letter; (2) because of corrective action after

closure necessitated by discovery of unknown contaminants, migratory pathways, or access to

property previously denied; (3) for remediation needed to reinstate an NFR letter after a prior

NFR letter was voided by the Agency due to no fault of the property owner. Exh. 106 at 17.

CW

3

M believes that reimbursement from the UST Fund should be allowed, even though an NFR

letter was issued, in each of the above-mentioned circumstances.

Id

. As to the Highway

Authority Agreement, CW

3

M indicates that the owner could be in a no win situation because

remediation beneath a roadway might not have been allowed.

Id

. However, if the highway

authority incurs corrective action costs after closure and issuance of an NFR, the owner is

expected to reimburse the highway authority.

Id

.

 

CW

3

M also believes that access to the UST Fund should be allowed if necessitated by

discovery of unknown contaminants or migratory pathways. Exh. 106 at 17. CW

3

M argues that

modeling may fail and contamination left in place could require additional remediation.

Id

.

 

CW

3

M lists two situations where an NFR letter might become void through no fault of

the property owner. Exh. 106 at 17-18. First, if there is a subsequent discovery of contaminants.

Exh. 106 at 18. Second, an Agency approved plan to leave contaminants in place failed and the

contamination becomes a threat to human health.

Id

.

 

 

Subsection (oo).

CW

3

M recommends that this subsection be deleted and payment for

handling charges for subcontractors be allowed where the primary contract has a financial

interest be allowed. Exh. 106 at 18. CW

3

M asserts that there are “handling charges” incurred by

a prime contractor who has a financial interest in the subcontractor.

Id

. CW

3

M indicates that

banks do not discount interest rates because of a financial interest in a subcontractor and

insurance companies do not give a discount.

Id

. Administrative and oversight costs also do not

change when the prime contractor has a financial interest in a subcontractor, according to

---

 

20

CW

3

M.

Id

. CW

3

M notes that the definition of financial interest is so broad that the ownership

of the subcontractor by the prime contractor could even be a minority interest.

Id

.

 

 

Subsection (ccc).

CW

3

M suggests deleting the provision requiring the use of a

groundwater ordinance if one is in place. Exh. 106 at 19. CW

3

M asserts that the Agency did not

consider the effect on property values if the Agency “forces” an owner/operator to leave

contamination in place and not reimburse for groundwater remediation.

Id

. CW

3

M opines that

this could have a major effect on a property owner and an owner/operator should have the option

to remediate the contamination and be reimbursed for the costs.

Id

.

 

 

Section 734.665.

CW

3

M offers language changes to the auditing provision. Exh. 106 at

19. These changes are offered, according to CW

3

M, to assure that the Agency’s audits do not

exceed the Agency’s statutory authority and to assure that the audits are consistent with audits

performed in other Agency programs.

Id

. CW

3

M agrees that the Agency has the authority to

perform audits under the Act.

Id

. However, CW

3

M believes that authority is limited to

reviewing portions of the plans and reports submitted to the Agency.

Id

.

 

 

Subpart H.

CW

3

M offers language changes in Subpart H, which CW

3

M believes more

accurately reflect the testimony, regarding how the Agency intends to apply Subpart H. Exh.

106 at 20. CW

3

M asserts that the costs proposed by CW

3

M are based on costs actually

experienced by PIPE members, and the aggregate experience of hundreds of person years, IDOT

competitively bid projects, and

RS Means

or the National Construction Estimator. Exh. 106 at

21. CW

3

M offers several suggestions to this Subpart. The Board will address each in turn

below.

 

 

Section 734.810.

CW

3

M argues that the costs provided by the Agency foe the removal

and abandonment of tanks are outdated considering 2003 revisions to OSFM rules. Exh. 106 at

21. Among the new requirements in the OSFM rules are additional safety equipment and the

removal of all product piping as part of the tank removal.

Id

. CW

3

M also believes the Agency

collected data on tank removal regardless of whether or not there had been a release.

Id

. CW

3

M

asserts that cost for removal of a tank without release is lower than removal of a tank with a

release.

Id

.

 

 

Section 734.820.

CW

3

M suggests that a drilling contractor should be allowed travel

expenses similar to professional consulting personnel. Exh. 106 at 21. CW

3

M argues that larger

equipment is less economical to move than passenger vehicles.

Id

.

 

 

Section 734.825.

CW

3

M offers an alternative rates for soil removal and disposal. Exh.

106 at 22. These rates, according to CW

3

M, are based on rates paid for excavation and disposal

at sites where IDOT bid the project.

Id

. CW

3

M argues that the bids were given competitively

and were presumably the lowest bid. Exh. 106 at 23.

 

 

Section 734.830.

CW

3

M suggests adding the word non-hazardous to clarify instances

where the costs for drum disposal would be appropriate. Exh. 106. at 25. CW

3

M also

recommends adding a mobilization fee or “stop fee” for a drum disposal contractor in this

section.

Id

.

---

 

21

 

 

Section 734.840.

CW

3

M asserts that the testimony provided by CW

3

M prior to the Board

adopting the first-notice proposal demonstrates the numerous flaws with the proposed rates in

this section. Exh. 106 at 25. CW

3

M offers rates which CW

3

M claims are “consistent with

prevailing rates, and include

all

work and oversight necessary to complete the task.”

Id

.

 

 

Section 734.845.

CW

3

M proposes rates using the same total number of hours to prepare

reports as the Agency used; however, CW

3

M further broke down the hours into “a more realistic

distribution of the type of personnel who work on the project.” Exh. 106 at 25. CW

3

M used the

same hourly rates as the Agency used as well.

Id

. CW

3

M asserts that the rates contained in the

proposal more accurately reflect the costs and distribution of work to complete the reports.

Id

.

 

CW

3

M notes that the rates reflect the presence of two consulting professionals as

required by OSHA and travel rates have been revised to reflect distance further from the site.

Exh. 106 at 26. CW

3

M has added rates for determining the rate of movement of groundwater at

a site.

Id

. CW

3

M also suggests lowering the excavated rate to 200 cubic yards per half day

because the half-day was reduced from five hours to four hours.

Id

.

 

Public Comment

 

CW

3

M’s final comment reiterates many of the arguments made in CW

3

M’s prefiled

testimony for the July 27, 2005 hearing. PC 63. In addition CW

3

M offers comments on the

proposal filed by USI.

Id

. The following paragraphs summarize CW

3

M’s comment.

 

CW

3

M has modified the alternative rulemaking language submitted for the July 27, 2005

hearing in response to the testimony offered at that hearing; however, CW

3

M was not able to file

a joint proposal with the other participants. PC 63 at 1-2. CW

3

M states that a joint proposal

could violate antitrust laws and therefore, the consultants have filed separate final comments. PC

63 at 2. CW

3

M believes that the July 27, 2005 hearing demonstrates that all the consultants are

aligned regarding the first-notice proposal’s problems and the solutions to those problems.

Id

.

CW

3

M notes that the consultants have differing approaches as to how the regulations should be

developed to correct rate deficiencies.

Id

.

 

CW

3

M has modified the alternative rulemaking language to allow the proceedings to

move forward while providing for long-term rate establishment by the UST program that is fair

and reasonable. PC 63 at 3. Further, CW

3

M believes that the modified language will protect the

ongoing remediation of UST sites in Illinois.

Id

. CW

3

M concedes that neither USI nor CW

3

M

has developed the perfect rule; however, CW

3

M opines that both proposals are closer to a fair

and equitable rule than the Agency’s proposal.

Id

. CW

3

M notes that the alternative rulemaking

language needs some polishing and re-crafting to enable the language to work within the entire

framework of the regulations.

Id

. CW

3

M believes that the concept of threshold or expedited and

maximum rate development needs additional thought and input from the Board and Agency to

convert the concept into rules.

Id

. CW

3

M also believes however that the solution can satisfy the

needs of the parties and the needs of the program.

Id

.

 

---

 

22

CW

3

M comments that a “carrot” to entice consultants into attempting to perform a task at

the “threshold” rate would be the speeding up of the review process. PC 63 at 4. CW

3

M opines

that speeding up the review process would allow reimbursement to move at a quicker pace.

Id

.

CW

3

M presents language that will allow the Agency to develop an expedited review process for

budget requests that meet the threshold or expedited values.

Id

. CW

3

M offers that initially the

Agency’s proposed rates be used as interim threshold or expedited values until a process is in

place to collect and evaluate program cost data.

Id

. CW

3

M maintains that the Agency’s rates are

seriously flawed and do not represent true costs and CW

3

M is not endorsing the rates. PC 63 at

4-5. However, CW

3

M believes that Agency’s rates can be used on an interim basis. PC 63 at 5.

 

CW

3

M comments that the phase totals presented by USI at the July 27, 2005 hearing

indicate a deficit exceeding 60% for consultant services over the life of a project. PC 63 at 5.

CW

3

M opines that USI’s data “invalidates the credibility of the entire Agency rate structure” and

the Agency’s experience in the UST program.

Id

. CW

3

M asserts that every entity, including

CW

3

M, who have offered opinions on Subpart H throughout this proceeding have tried to make

this point.

Id

. CW

3

M points out that the Agency’s experience was questioned concerning the

issue of OSHA regulations, which CW

3

M reiterated in the testimony for the July 27, 2005

hearing. PC 63 at 5-6. Also, CW

3

M agrees that while bidding may be an option in some cases,

bidding adds unnecessary time delays and expense to the UST program through the bid

procedure. PC 63 at 6. CW

3

M believes that bidding for consulting services is not practical, nor

is bidding for turnkey consultants who can do the work themselves.

Id

.

 

CW

3

M opines that if the rates were reflective of the market and consistent with rates

previously deemed reasonable by the Agency, these proceedings would not have been as

controversial. PC 63 at 6. CW

3

M comments that the Agency may even have secured the support

of the industry.

Id

. CW

3

M maintains that to move these proceedings forward and lessen the

animosity between industry and the Agency, the rates that are developed must be real and

reasonable rates.

Id

.

 

CW

3

M points out that the Act requires that all reasonable costs be reimbursed. PC 63 at

6. CW

3

M opines that developing lump sum payments may be in violation of the Act.

Id

.

CW

3

M believes that payment requests, particularly for personnel costs, should be submitted on

time and material basis. CW

3

M notes that if consultants are required to cap submittals at the

maximum payment amount, but have incurred costs more than that amount, the consultant will

clearly be on the losing side of lump sum payments. PC 63 at 6-7. Alternatively, CW

3

M argues

that if a lump sum maximum payment is reimbursed where the costs incurred are not actually at

the maximum payment amount, the reimbursement may be more than the reasonable cost. PC 63

at 7.

 

CW

3

M opines that the Agency wants to realize a cost savings in the UST Fund by forcing

industry to accept substantially less reimbursement than prevailing market rates or even rate

previously deemed reasonable. PC 63 at 7. CW

3

M maintains that the impetus to include rates in

a rulemaking was the invalidation of the Agency’s rate sheets.

Id

. CW

3

M asserts that now that

the rate structure has been invalidated, without a defined scope of work, the Agency will attempt

to force fit additional tasks into the lump sum rates.

Id

. CW

3

M asserts that the Agency has

refused to disclose what tasks were included when developing the rates or what should be

---

 

23

included.

Id

. CW

3

M argues that either the Agency lacks the experience to define the scope of

work or the Agency intends that any task that may come up will be deemed a part of the lump

sum payment.

Id

.

 

CW

3

M has included in the alternative rulemaking language task lists and scopes of work.

PC 63 at 8. However, CW

3

M believes that final task lists and scopes of work would best be

developed jointly by the Agency and the LUST Advisory Committee.

Id

. CW

3

M further

believes that the task lists and scopes of work should be published periodically by the Agency

outside the confines of the rules to allow modification without a rulemaking proceeding.

Id

.

CW

3

M also believes the rate structure should be managed in the same way.

Id

. CW

3

M asserts

that this would allow for a rate structure that can reflect temporary costs increases.

Id

.

 

CW

3

M interprets the Board’s first-notice opinion to mean that with bidding and the

unusual and extraordinary circumstances provisions the rates can be adjusted to market

conditions. PC 63 at 8. CW

3

M concedes that this could be plausible; however, the Agency has

testified that there will be few reasons for them to accept or approve unusual or extraordinary

circumstances.

Id

. CW

3

M reiterates that bidding is not practical. PC 63 at 8-9. For these

reasons CW

3

M argues alternative rates need to be provided. PC 63 at 9.

 

CW

3

M asserts that a failure to adopt adequate rates will not impact how the Agency does

business, but can have a serious impact on owners/operators and consultants. PC 63 at 9.

CW

3

M maintains that the future of CW

3

M’s business is at stake.

Id

. CW

3

M comments that the

UST Fund was established to protect the environment and assist owners/operators.

Id

. CW

3

M

argues that the UST Fund was not created to establish a “bureaucratic regime” in Illinois.

Id

.

 

 

Agency’s Proposed Rates.

CW

3

M interprets the Board’s first-notice adoption of the

Agency’s rates, not as an endorsement of the rates but as the only alternative available. PC 63 at

10. CW

3

M notes that significant testimony was presented, prior to the adoption of the first-

notice opinion, indicating that only limited input from industry was used for developing rates for

professional consulting services.

Id

. Further, CW

3

M asserts the testimony establishes that the

information was misused by the Agency.

Id

. CW

3

M had hoped to provide alternative rates;

however, CW

3

M does not believe enough data exists to quantify personnel costs on a per task

basis.

Id

.

 

CW

3

M argues that the testimony presented by USI at the July 27, 2005 hearing confirms

that the Agency’s proposed rates are inadequate and severely flawed. PC 63 at 10. CW

3

M

maintains that the data relied upon by the Agency cannot be converted into rates and defended by

any acceptable statistical analysis. PC 63 at 10-11. CW

3

M notes that USI was able to

successfully extract relevant and defensible data for the phases of UST remediation; however,

CW

3

M was unable to use the data prepared by USI to develop the normal technical situation to

correspond to each phase of UST remediation.

Id

. Thus, CW

3

M argues the importance of a

scope of work in developing rates.

Id

.

 

 

CW

3

M’s Proposal.

CW

3

M believes that the alternative rulemaking language proposed

by CW

3

M utilizes the basic framework proposed by the Agency. PC 63 at 11. However, CW

3

M

believes that the alternative rulemaking language offers an opportunity to create a rule that meets

---

 

24

the requirements of the Act, allows owners/operators to be fairly reimbursed, and establishes a

forum for the Agency and affected parties to work together to refine the process.

Id

. CW

3

M

argues that the gap between the Agency and the owners/operators and consultants has been

apparent at every stage of this proceeding and the gap represents payment of reasonable costs.

Id

. CW

3

M argues that the Agency’s rates will force many consultants out of business because

consultants cannot operate at a loss and owners/operators cannot or will not assume the financial

liability for costs when the Act guarantees reimbursement. PC 63 at 11-12.

 

 

USI’s Proposal.

CW

3

M comments that CW

3

M could accept USI’s proposal or a

melding of the two proposals by the Board. PC 63 at 13. CW

3

M proposed using the Agency’s

rates as expedited interim rates; however, CW

3

M believes that USI’s rates are much closer to

real world and actual market conditions.

Id

. Further, CW

3

M believes that USI’s rates reflect

unit rates historically and currently deemed reasonable by the Agency.

Id

.

 

 

Summary.

CW

3

M feels that the rule as proposed is not ready for second notice. PC 63

at 14. CW

3

M maintains that there has been no support of the Agency’s proposal or the Board’s

first-notice proposal.

Id

. CW

3

M argues that the Board needs to be more responsive to the

numerous public comments and testimony.

Id

. CW

3

M opines that the Board has the authority to

“direct the Agency to re-evaluate” the proposed rates and the alternative rate structure.

Id

.

CW

3

M asserts that the record confirms the Agency’s rates are flawed and without proper

evaluation of the real UST data, maximum rates should not be established. PC 63 at 14-15.

CW

3

M argues that in the time that has passed since the first hearing, the data could have been

collected and analyzed. P 63 at 15.

 

CW

3

M asserts that if the Board fails to respond to the testimony and the record,

owner/operators and consultants will seek legislative intervention to correct the flaws in the

proposed rule. PC 63 at 15. CW

3

M argues that the Board should:

 

1. Utilize the alternative proposals submitted by USI and CW

3

M, along with

information presented in hearing and the public comment period to

reconfigure Subpart H, and bring the revised proposal through First Notice

again, or

 

2. Utilize the alternative proposals submitted by USI and CW

3

M to

reconfigure Subpart H, remove all rates and present a method for which

the rates can be developed using properly collected and analyzed data and

bring this revision through First Notice again, or

 

3. Sever Subpart H and proceed with its redevelopment while finalizing the

technical portions of [Part] 732 and [Part] 734 and redirect the participants

to work together to come forward with a more appropriate rule, which has

public support outside the Agency. PC 63 at 16.

 

United Science Industries, Inc.

 

---

 

25

Mr. Jay Koch, President and CEO of USI, presented the bulk of the testimony on behalf

of USI. In addition to Mr. Koch, Mr. John Hundley, Mr. Duane Doty, Mr. Barry Sink, Mr. Dan

Ruark, Mr. Dan King, Mr. Ross Bunton, Mr. Cory Eversgerd, and Mr. Steve Rigdon appeared

and helped in development of the prefiled testimony and exhibits presented at hearing. Tr.8 at

116-17. The following will summarize the testimony by topic with references to the relevant

testifier where appropriate. In addition, USI responded in writing to questions posed by the

Agency after the July 27, 2005 hearing (PC 59). The answers to those questions as well as USI’s

final comments will be included under the appropriate topics. Finally, any new issues raised in

response to the Agency’s questions or in the final comments will be discussed.

 

General Comments

 

Mr. Koch testifies that he is speaking not only on behalf of USI and USI’s clients but also

“for a class of underground storage tank owner/operator” that have been absent from this

proceeding. Exh. 109 at 2. Mr. Koch claims that this “class” of UST owners/operators consist

of “small business person, the retiree, the estate, the widow, the school district, the church, the

agricultural cooperative, etc.” that have one or two incidents to remediate.

Id

. Mr. Koch states

that this group owns 88% of all leaking USTs in the State with nearly 62% of those yet to be

remediated.

Id

. Mr. Koch opines that these citizens and small businesses are typically not well

capitalized or well represented.

Id

.

 

Mr. Koch states that the small owner/operator has several special needs, but there are

three things which are most immediate. Exh. 109 at 3. First, the small owner/operator needs to

have the record “set straight” in this proceeding.

Id

. Second, the small owner/operator needs the

Board to listen closely to the testimony challenging the Agency’s position.

Id

. Third, the small

owner/operator, who is the real beneficiary of this rule, wants the Board to understand and to act.

Exh. 109 at 4.

 

Mr. Koch states that USI and its employees “are with the small owner/operator” and

always have been. Exh. 109 at 5. Mr. Koch claims that inherent in USI’s mission is the

protection of the small owner/operator’s well-being, property values, and peace of mind.

Id

. Mr.

Koch testifies that over 100 owners/operators from throughout the State have signed a petition

expressing a desire for a fair and objective rule.

Id

. In addition to having signed a petition, more

than 80 owners/operators signed and sent to USI “Requests for Representation” that are attached

to USI’s testimony. Exh. 109 at 5; Attach. 4.

 

The Agency questioned USI concerning the petitions and requests for representation

attached to USI’s testimony. PC 59 at 11. USI states that each owner/operator individually

reviewed the petition and signed of their own accord.

Id

. USI did not inquire nor does USI

believe it to be their responsibility to inquire, how each owner/operator decided to sign the

petitions.

Id

. USI points out that the Board concluded that the proposed rates were not

developed based on a statistically defensible method and the Agency admits that the some

maximum payment amounts are averages.

Id

. As to the parties that signed the request for

representation, USI notes that the parties reviewed most of the testimony although some portions

of the testimony were amended at the last moment. PC 59 at 12.

 

---

 

26

Small Owner/Operator

 

USI provides testimony “to quantify and highlight the critical importance and unique

characteristics” of the small owner/operator. Exh. 109 at 7. USI testifies that they will present

evidence to validate the importance and need: (1) for reducing overall leaking UST liabilities in

the State for the small owner/operator; (2) for promulgating UST regulations that address the

specialized needs of the small owner/operator; and (3) for the unique role of consultants in

managing small owner/operator sites.

Id

.

 

 

Breakdown of Small Owner/Operator.

USI testifies that the Agency’s database lists a

total of 8,566 open incidents with a potentially responsible party (PRP) listed and 895 open

incidents without a PRP. Exh. 109 at 8. The database, according to USI, indicates that 5,620

PRPs are responsible for one or more incidents and there is a total of 4,991 small

owners/operators responsible for 5,342 open incidents.

Id

. Based on these figures, USI asserts

that small owners/operators are the largest single group of PRPs remaining in the program and

are responsible for the majority of all remaining leaking UST environmental liabilities in the

State.

Id

.

 

 

Unique Characteristics of Small Owner/Operator.

USI opines that the small

owner/operator has numerous distinctive characteristics. Exh. 109 at 8. For example, USI notes

that over 19% of the small owners/operators discussed above are listed as individuals; while a

majority, 67% are small to medium sized businesses. Exh. 109 at 9. The remainder of the group

consists of school districts, government, church, and small to medium sized communities.

Id

.

Based on USI’s experience, additional key characteristics of the small owner/operator include:

1) limited financial resources, and management and technical resources; 2) the property is

considered a valuable asset; and, 3) they want to address their environmental liabilities.

Id

.

 

USI asserts that small owners/operators are highly dependent on the financial resources

of the UST Fund as compared to larger PRP groups. Exh. 109 at 11. USI maintains that this

dependence includes both the need for 100% reimbursement of approved items and the need for

timely payment.

Id

. Furthermore, USI argues that the site property is an important asset and the

small owner/operator and the regulations must allow for the preservation of that asset.

Id

.

 

 

Unique Role of Consultants.

USI states that, based on the Agency’s database, USI is

the consultant on 328 open incidents and 204 of those are owned or operated by the small

owner/operator group. Exh. 109 at 12. USI has “operated successfully” in the leaking UST

market for over 15 years and USI states that they have “a deep understanding” of the leaking

UST market.

Id

. USI argues that the role of consultant for a small owner/operator is

“significantly different” than for a larger PRP.

Id

.

 

USI asserts that the key components of the unique relationship between the small

owner/operator and the consultant include that the consultant is often the “sole source” for the

duration of the project. Exh. 109 at 13. USI maintains that the consultant typically manages all

aspects of the work and discussions with the Agency.

Id

. USI testifies that the consultant will

discuss optional approaches, but implements approaches which protect property values.

Id

. USI

asserts that the consultants “very carefully schedule and manage” all activities to achieve 100%

---

 

27

reimbursement due to the financial hardships experienced by small owner/operators.

Id

. Finally,

according to USI, consultants wait on payment from the leaking UST Fund to pay the ongoing

cost of cleanup.

Id

.

 

USI asserts that the small owner/operator is highly dependant on their consultant when

compared to larger PRPs. Exh. 109 at 14. The relationship is often trust based with the small

owner/operator and the consultant is relied upon to ensure that regulatory requirements are met.

Id

. USI argues that the regulatory process must recognize the unique needs of the small

owner/operator.

Id

.

 

Reasons for Rulemaking

 

According to USI, the Agency’s “most notable” reason for this rulemaking is a need to

reform the budgeting and reimbursement procedures. Exh. 109 at 22, citing R04-22, 23 (Feb. 17,

2005) at 15, 22, 24. USI asserts that the Agency’s statement raises the questions of what is the

need and what reforms are needed. Exh. 109 at 22. USI asserts that the Agency has convinced

the Board that these reforms are needed for nine reasons. Exh. 109 at 22-23. Those reasons are:

 

1. To streamline the preparation and review of budgets and applications for

payment. Exh. 109 at 22, citing R04-22, 23 (Feb. 17, 2005) at 15;

 

2. To make the program more cost effective. Exh. 109 at 22, citing R04-22,

23 (Feb. 17, 2005) at 26;

 

3. To reduce the time spent on reviewing budget an reimbursement issues by

Agency personnel.

Id

;

 

4. To improve consistency in Agency decisions. Exh. 109 at 23, citing R04-

22, 23 (Feb. 17, 2005) at 17;

 

5. To control cleanup expenses. Exh. 109 at 23, citing R04-22, 23 (Feb. 17,

2005) at 27;

 

6. To expedite cleanups.

Id

;

 

7. To reimburse owners/operators in a more timely fashion.

Id

;

 

8. To reduce the amount of time consultants will need to prepare budgets and

payment applications.

Id

;

 

9. To reduce “abuses of the system” the Agency believes are occurring. Exh.

109 at 23, citing R04-22, 23 (Feb. 17, 2005) at 27

 

USI concedes that each of these nine reasons seem reasonable on the surface; however

USI believes a closer examination is warranted. Exh. 109 at 23. USI notes that the reasons

numbered one, three, six, seven, and eight above, all express a goal of streamlining, creating

---

 

28

efficiency, expediting or reducing processing time.

Id

. USI argues that the Agency’s motives

are questionable, because the Agency has rejected proposals from industry that would also

achieve the goal of streamlining, creating efficiency, expediting or reducing processing time.

Exh. 109 at 23-24. USI points to three examples of the Agency’s rejection of proposals which

would assist in streamlining, creating efficiency, expediting or reducing processing time. Exh.

109 at 24. Those examples are all three suggestions from PIPE and include developing a

database, reducing review time to less than 120 days, and issuing a “draft denial letter” to an

applicant.

Id

.

 

USI believes that the addition of a bidding process in the Agency’s third

errata

sheet

demonstrates that the Agency’s real motive is not streamlining and expediting. Exh. 109 at 24.

USI asserts that anyone with knowledge or experience in bid preparation knows that the

introduction of competitive bidding will add “levels of complexity and administration” to the

reimbursement process. Exh. 109 at 25. USI also believes that the “blasé approach” that the

Agency used to develop the rates proposed in Subpart H belies the Agency’s stated goals.

Id

.

USI argues that the leaking UST section is scientifically orientated and such an approach does

not reflect the scientific orientation of the UST section.

Id

.

 

USI questions the Agency’s stated “motives” numbered two and five above, relating to

cost effectiveness and control, when the Agency has not performed an analysis of the anticipated

cost savings. Exh. 109 at 25. USI asserts that if there is a genuine desire for cost savings, one

would want to analyze and forecast the savings if only for one’s own curiosity.

Id

. USI opines

that “it also seems reasonable that if one was genuinely concerned about cost reduction or the

control of cleanup expenses” one would want to be in a position to defend the proposal.

Id

. USI

argues that the Agency’s failure to analyze cost savings or use a statistically reliable means to

develop maximum payments belies the Agency’s goal of cost effectiveness and control.

Id

.

 

USI maintains that while the Agency’s failure to analyze cost savings or use a statistically

reliable means to develop maximum payments “calls into question” whether the Agency’s “true

objective” is cost reduction, the Agency’s “outright rejection” of requests to define a scope of

work, in the context of the provisions for bidding, “is an absolute formula for financial disaster

for the” UST program. Exh. 109 at 26. USI argues that increasing levels of risk will increase the

costs of products and services and it is only logical to assume that the Agency’s refusal to define

a scope of work increases the level of uncertainty and risk in the bidding process.

Id

. USI

asserts that this will drive bid prices higher and escalate total costs for the UST Fund. Exh. 109

at 26-27. Furthermore, USI asserts that without the scope of work defined, each consultant will

prepare bid specifications uniquely and the cost of Agency review will also increase. Exh. 109 at

27. USI asserts that the Agency’s refusal to define a scope of work along with the addition of a

provision for bidding is not only inconsistent with the Agency’s stated goals, but also counter-

productive.

Id

.

 

USI goes on to argue that the Agency’s refusal to define a scope of work is inconsistent

with the Agency’s stated goal of achieving consistency in Agency decisions. Exh. 109 at 27.

USI ponders how straightforward review of a bidding specification by the Agency will proceed

without a defined scope of work.

Id

. USI asserts that the only consistency in a system so poorly

designed will be consistent chaos and appeals.

Id

. USI asserts that as long as the Agency

---

 

29

maintains that a defined scope of work is not needed for each task, the Agency cannot “claim” a

desire for consistency.

Id

.

 

USI states that having refuted eight of the Agency’s “motives” for this rulemaking

proposal, USI next considers the Agency’s concerns about the perceived abuses of the system

(number nine above). Exh. 109 at 28. USI finds this concern, voiced by Mr. King, a “baffling

comment” to be made by someone of Mr. King’s stature because the Agency has been given the

responsibility to oversee the UST program and determine the reasonableness of reimbursement

requests. Exh. 109 at 28. USI states that considering the program requires pre-approvals of

budgets and work plans before reimbursement claims can be processed and the Agency has the

authority to audit all data, reports, plans, documents, and budgets, USI finds “it almost

impossible to conclude” that the Agency cannot already stop abuses of the system.

Id

.

 

Given the Agency’s actions and testimony during this proceeding, USI opines that

rationalizing the Agency’s motives is difficult if not impossible. Exh. 109 at 29. Furthermore,

USI offers one additional Agency “motive” for the rulemaking and that is the UST Fund deficit

of approximately $25 million a year.

Id

. USI notes that all the parties to this proceeding are

aware of transfers from the UST Fund in recent years, so USI asserts the Agency’s testimony

regarding the transfers should not be “weighted too heavily” in this proceeding.

Id

. And if there

were truly a funding crisis, USI asks why the Agency has not notified owner/operators as

required by 35 Ill. Adm. Code 732.503(h)?

Id

.

 

USI states that, within industry circles, other motives for this rulemaking have been

discussed. Exh. 109 at 29. One motive, suggests USI, is that the Agency has been asked to

reduce expenditures so the UST Fund monies can be siphoned off to other state programs.

Id

.

Another motive recited by USI is that “regulators view the UST Fund as their ‘cash cow’” and

want to protect the fund to protect the regulators’ jobs.

Id

. USI also suggests that one of the

Agency employees “is driving these changes as means of settling a vendetta against former

competitors.”

Id

. Perhaps the Agency is opposed to business practices of some consultants and

the Agency wants to use this rule to diminish those consultants, suggests USI. Exh. 109 at 29-

30. Whatever the true “motives” for this rulemaking, USI argues that the Agency must keep the

needs of the small owner/operator at the forefront. Exh. 109 at 30.

 

The Agency asks USI to explain whether USI believes that any of these motives are true

and if so to provide evidence to support the USI’s belief. PC 59 at 5. USI states that the

“fundamentally flawed” portions of the Agency’s proposal are “highly irrational and without

merit.”

Id

. USI opines that the Agency’s defense of the proposal in light of facts disclosed at the

July 27, 2005 hearing is “highly peculiar” and if the Agency continues to rigidly defend the

proposal “such unfounded obstinacy would certainly support the theories that are circulating”

within the industry.

Id

.

 

Historical Administration of UST Fund

 

USI opines that a close examination of the Board’s first-notice opinion and order “leaves

little doubt” that absent competitive bidding and unusual and extraordinary circumstances

provisions, the Board would have been reluctant to accept the maximum payment amounts

---

 

30

offered by the Agency. Exh. 109 at 31. USI points to the Board’s language concerning

reimbursement for bid preparation on a time and material basis and asserts that the Board

indirectly acknowledges the potential insufficiency of the maximum payment amounts by

adopting the bidding process.

Id

. USI maintains that the Board’s decision to reject the Agency’s

proposed lump sum for bid preparation and review “speaks volumes” concerning the entire rate

structure. Exh. 109 at 32.

 

USI points out that in the Board’s first-notice opinion and order, the Board indicated a

willingness to consider alternative rates if they had been presented. Exh. 109 at 32. USI states

that USI and other members of PIPE were “cautioned prior to the 2004 hearings to not discuss

rates amongst one another for legal reasons.”

Id

. Therefore, USI and other members of PIPE

refrained from discussion alternative rates and instead used other solutions such as

RS Means

.

Id

. USI, however, agrees with the Board that ra

tes should be based on actual experience in the

UST program in Illinois and

RS Means

and other sources “do not specifically track costs”

associated with the UST program in Illinois.

Id

.

 

The Agency further questioned USI’s statements regarding the decision by PIPE not to

provide alternative rates prior to the July 27, 2005 hearing. PC 59 at 7. USI stated that legal

counsel advised against discussing prices and rates as a group and PIPE decided to follow that

advice. PC 59 at 8-9. USI states that individual competitors can address price issues and USI

has submitted and will continue to submit USI’s own views on pricing. PC 59 at 9.

 

USI notes that the Agency’s testimony indicated that the rates proposed by the Agency

were developed using the Agency’s experience as a basis and the Agency believes the rates will

be inclusive of over 90% of the sites in Illinois. Exh. 109 at 32. USI states that: “USI is not

objectionable to most of the rates provided in [Sections] 734.810 through 734.840.”

Id

. As to

the rates USI does not object to, USI states that USI’s experience in UST work in Illinois

indicates that the billing methods, units of measure and prices are “not highly inconsistent with

those prevailing in the market today.” Exh. 109 at 32-33. USI goes on to state that to the extent

the maximum rates are inconsistent with prevailing market rates or insufficient, the scope of

work for these activities is defined to accommodate the competitive bidding provisions and the

unusual or extraordinary circumstances provisions in Section 734.855 and 734.860. Exh. 109 at

33.

 

USI does take issue with the maximum rates in Section 734.845 and argues that the

record “is significantly in error” as the record pertains to the consistency of maximum payment

amounts in that section. Exh. 109 at 33. USI opines that the Agency’s experience in

administering the UST program is of little value for developing maximum rates, except for the

labor rates proposed in Appendix E.

Id

.

 

USI’s experience in UST work is significant and from 2002 through 2004, USI

submitted, on behalf of clients, over 14% of all reimbursement claims to the Agency. Exh. 109

at 33. USI notes that historically, USI’s reimbursement rate is well above the statewide average.

Id

. USI claims that USI’s fee schedule items are “routinely and consistently” approved by the

Agency in budget proposals and reimbursement requests.

Id

. Because of this experience, USI

has observed numerous examples where the maximum payment amounts proposed by the

---

 

31

Agency deviate from the rates currently and historically approved by the Agency.

Id

. USI

included in their testimony a fee schedule for rates currently being reimbursed. Exh. 109 at 33-

34; Attach. 9. According to USI, this fee schedule included charges for professional

instrumentation, equipment and materials, and supplies; items that have been omitted from the

Agency’s proposed maximum payment amounts. Exh. 109 at 34. USI suggests adding payment

amounts for instrumentation, equipment and materials, and supplies that are routinely used by

professionals.

Id

.

 

USI performed a review of the professional costs associated with 69 randomly selected

sites to evaluate the current and historical reimbursement practices of the Agency on projects

other than those performed by USI. Exh. 109 at 34. USI obtained records for the sites using the

Freedom of Information Act (5 ILCS 140/1

et. seq.

(2004)).

Id

. USI selected sites which had

received NFR letters after January 1, 2003. Exh. 109 at 296. USI asserts that the results of this

survey “prove that the maximum payment amounts for professional services” proposed by the

Agency are “not even close to being consistent with the costs that the Agency currently

approves.” Exh. 109 at 34. USI maintains that the maximum payment amounts in Subpart H

would dramatically reduce the number of professional service hours and the costs that the

Agency currently considers reasonable and necessary. Exh. 109 at 34-35.

 

In preparing the data from the survey, USI reports the data by total professional service

hours and charge per phase of the project. Exh. 109 at 35. USI presents the data in this fashion

because a task-by-task analysis would be meaningless.

Id

. USI maintains that the Agency has

never implemented a standardized task structure against which costs must be reported and

historically consultants have grouped varying work activities into tasks.

Id

. According to USI,

there is no conformity in the Agency’s files for this grouping and in fact, USI found 145 “task

conventions” associated with early action, 382 “task conventions” associated with the site

classification phase, and 516 “task conventions” associated with corrective action in the survey.

Id

. USI argues that as a result of this lack of standardization the only “accurate means of

assessing professional service cost” is to assess on a project level or phase-by-phase.

Id

.

 

USI notes that Subpart H created 28 “tasks” for professional services while USI uses 98

distinct tasks in the current billing procedures for UST Fund projects. Exh. 109 at 35-36.

Further, USI points out that in the 69 projects reviewed by USI, there were 900 unique task

conventions associated with professional services alone. Exh. 109 at 36. USI concedes that

consolidation and standardization of tasks may have merit; however, the Agency’s approach was

flawed, inaccurate, and inconsistent with current Agency practices.

Id

.

 

USI asserts that the Agency has attempted to establish that the tasks associated with the

maximum payment amounts requires a similar level of effort from one project to the next and

this is simply not the case. Exh. 109 at 36. USI has provided documentation from two separate

incidents that were remediated using conventional techniques. Exh. 109 at 36; Attach X. The

level of required correspondence, documentation and professional consulting effort and the

amount reimbursed by the Agency are substantially different due to the variance in the scope of

work for the two projects.

Id

.

 

---

 

32

USI argues that the Agency has also attempted to establish that the Agency’s review is

uniform and consistent. Exh. 109 at 36. USI does not agree. Exh. 109 at 37. USI provides

information that the reviewers are erratic and can be impacted by unit managers. Exh. 109 at 37;

Attach. 16.

 

Specific Non-Objectionable Provisions

 

USI reviewed the maximum payment amounts set forth in the proposed rule in Sections

734.810-734.840 to determine if USI had any objection to the payment amounts. Exh. 109 at 37.

USI applied several “tests” to the maximum payment amounts in order to establish that the

amounts are acceptable.

Id

. The first test was whether the “unit of measure” assigned to the

work activity was appropriate to the work being performed. Exh. 109 at 37-38. The second test

was whether the regulations provided sufficient detail to allow a scope of work to be authored for

a bid specification to allow for competitive bidding. Exh. 109 at 38-39. The third test was

whether USI believes the price accurately reflects prevailing market prices and the whether the

price includes conditions likely to be encountered at most sites in Illinois. Exh. 109 at 39.

 

USI notes that there are 109 maximum payment amounts in Sections 734.810-734.840

and USI performed the three tests on each of those amounts. Exh. 109 at 40. USI states that

with the exception of omitting a maximum payment amount for mobilization for the drilling

activities in Section 734.820, USI has found the maximum payment amounts acceptable.

Id

.

USI believes that the amounts are appropriate and workable, and USI has no objection to

implementation of these amounts.

Id

.

 

The Agency notes that USI has completely rewritten Section 734.810-734.840 in the draft

rule (PC 55). PC 59 at 17. The Agency asks if USI has no objection to these sections why USI

has rewritten them.

Id

. USI states that USI does not object to the “concept” behind the Agency

language; however USI believes the concept behind the rule can be rewritten so that the rule is

simpler and does not require the body of the rule to be rewritten if a rate change is warranted.

Id

.

USI has suggested placing rates in an Appendix rather than the body of the rule. USI envisions

that the rate in the appendix would be an expedited rate and an unpublished maximum rate could

be calculated for each of these sections. PC 59 at 31-41. USI also envisions a “bid unit rate” and

unusual and extraordinary circumstances to be included in the range of rates reasonable for these

sections.

Id

.

 

Specific Objectionable Provisions

 

USI asserts that key portions of Subpart H are based upon conjecture and not fact, are

poorly crafted, and will lead to arbitrary results by Agency personnel. Exh. 109 at 41. USI

argues that key portions of Subpart H as published at first notice are so poorly conceived and

conceptually flawed that the “mere passage is likely to have immediate, deleterious or ruinous

impact” on UST owners/operators in Illinois.

Id

. USI opines that there are five concepts

associated with Subpart H that must be addressed before proceeding to second notice. The

following sections will discuss each of the five concepts USI has raised.

 

---

 

33

 

Lack of Standards and Definitions.

USI concedes that consolidating work activities

into “tasks” is a good concept and necessary for accurate and administratively efficient long term

cost containment. Exh. 109 at 42. However, USI maintains that Subpart H attempts to group

“costs” into “tasks” and then to maximum payment amounts for each “task” and this is confusing

absent standards and definitions.

Id

.

 

USI points to the language in Section 734.800 as proof of the confusion. Exh. 109 at 43.

USI notes that in subsection (a), the rule states that “all costs” are grouped into “tasks” set forth

in Sections 734.810-734.850 and the maximum payment amount for each task is set forth in

those sections.

Id

. Next in subsection (b), USI notes the language of the rule indicates that the

“costs listed under each task” in Sections 734.810-734.850 “identify only some of the costs

associated with each task” and are not an exclusive list.

Id

. Finally in subsection (c), USI notes

that language indicates that Subpart H sets forth the only methods that can be used to determine

the maximum amounts that can be paid for eligible corrective action costs and whether a costs is

eligible is determined by 35 Ill. Adm. Code 734.Subpart F.

Id

.

 

USI argues that after reading Section 734.800, one is not certain whether the maximum

payment amounts in Subpart H are for “costs” or “tasks” or some combination of the two. Exh.

109 at 43. Also, the language of subsection (c) would appear to directly contradict the “all costs”

language in subsection (a).

Id

. USI opines that one interpretation of subsection (c) also would

allow for payments in excess of the maximum payment amounts if the costs are “eligible

corrective action costs” pursuant to 35 Ill. Adm. Code 734.Subpart F. Exh. 109 at 43-44. USI

asserts:

 

This is the case since it is obvious that the maximum payment amounts in Subpart

H “identify only some of the costs associated with each task” and do not provide

an “exclusive list of

all costs

associated with each

task

” ([Section] 734.800(b)).

Exh. 109 at 44.

 

USI opines that the Agency might argue that payments in excess of the maximum

payment are precluded by Section 734.630(aaa). Exh. 109 at 44. However, USI asserts that

since the Agency has omitted many professional consulting tasks that are necessary to complete

corrective action and has failed to provide a scope of work, it will be impossible for the Agency

to demonstrate that costs are ineligible pursuant to Section 734.630(aaa).

Id

. USI states that as

part of the prefiled questions to the Agency before the last hearing, at least 21 questions were

posed to the Agency regarding scope of work.

Id

. USI indicates that the questions all sought a

definition or disclosure from the Agency as to where certain costs are accounted for in Subpart

H.

Id

. USI asserts that the Agency failed or refused to identify specific “tasks” where “costs”

are allocated in most instances and in other instances the answers demonstrate how confusing the

rule will be to administer. Exh. 109 at 44-45.

 

USI allows that the literal interpretation discussed above is not the one espoused by the

Agency. Exh. 109 at 45. USI points to additional areas of confusion such as the fact that the

word “task” is used only in Subpart H but no where else in the rule.

Id

. Also USI notes that the

word “activities” is being deleted from Section 732.601 and 734.605 while “activities” are

referenced in Section 734.850(b).

Id

.

---

 

34

 

 

Use of ACECI Estimated Personnel Hours.

USI notes that the Agency based the

maximum payment amounts in Section 734.845 on the number of professional consulting hours

estimated by ACECI and provided to the Agency. Exh. 109 at 46. However, USI argues that the

Agency used those estimates without including the specific, definable, and objective scope of

work the estimates were predicated upon.

Id

. USI asserts that the practitioners participating in

the

ad hoc

group from ACECI qualified the number of hours that were provided to the Agency

for each task developed. Exh. 109 at 50. USI states that the

ad hoc

group recognized the

importance of a scope of work for any professional service so the group qualified the number of

hours provided to the Agency by specifying a scope of work for each task.

Id

. USI further states

that the group informed the Agency that the quantity of hours needed for each task would change

if the scope of work was other than the one specified by the group.

Id

.

 

USI asserts that after the Agency received the information from the

ad hoc

group, the

Agency changed the scope of work by modifying and/or consolidating several tasks. Exh. 109 at

51. Furthermore, USI asserts the Agency omitted the scope of work that the group had listed for

each task.

Id

. USI argues that the scope of work for each task was the “very foundation” for

ACECI’s determination of what number of hours was appropriate to complete a task.

Id

.

 

USI testifies that the Agency has testified that the “rates” in Subpart H are generally

consistent with the rates currently reimbursed. Exh. 109 at 46. USI opines that “generally” is a

broad characterization and in the case of professional consulting services, “rates” are only one

component of costs.

Id

. USI states that costs are determined by multiplying the rates per unit of

measure by the quantity of units required to complete the service.

Id

.

 

USI states that in the 15 plus years that the Agency has administered the UST Fund, the

Agency has never issued a standardized list of “tasks” to be used. Exh. 109 at 47. As a result,

USI testifies that consultants have been forced to arbitrarily group professional service work

activities into arbitrary tasks.

Id

. USI asserts that this has led to an unidentified and potentially

infinite number of unique tasks reported to the Agency.

Id

. Thus, USI asserts the Agency has no

valid, accurate or scientifically defensible means of determining what quantity of professional

service hours are normal for the various tasks.

Id

.

 

 

No Defined Scope of Work.

USI asserts that the failure to include a defined scope of

work for professional service tasks listed in Section 734.845 is the most serious conceptual flaw

of the proposed rulemaking. Exh. 109 at 53. USI claims this is particularly so when considering

there are only two methods for establishing alternative payment amounts.

Id

. Those two

alternatives are competitive bidding and the extraordinary provisions, neither of which will work

for professional service tasks. Exh. 109 at 54, 57-58.

 

 

Competitive Bidding.

USI asserts that there are fundamental impediments in using

competitive bidding for professional services without a scope of work. Exh. 109 at 54. One

problem is that bid specifications that cover all costs that are included in the maximum payment

amount cannot be prepared.

Id

. Second, bids that truly cover all costs will be difficult to obtain.

Id

. Third, demonstrating that the bid covers all costs will be difficult.

Id

.

 

---

 

35

USI maintains that the concept of competitive bidding for professional services should

not be included in this rule. Exh. 109 at 54. USI argues that the Agency personnel reviewing

bids for professional services will have no guidance, absent a scope of work, and thus the review

will be arbitrary. Exh. 109 at 55. The result of the arbitrary review, according to USI, is that the

Agency will either end up defending the decisions before the Board or courts or the Agency will

develop internal standards. Exh. 109 at 55. As a result USI insists the Agency will be

developing a scope of work through these two courses. Exh. 109 at 55-56.

 

USI argues that the prefiled questions by Mr. King to the Agency included 21 questions

“primarily designed to assist in assessing the Agency’s ability to adequately and objectively

administer” maximum payment amounts from Section 734.845 and the competitive bidding

provisions of Section 734.855. Exh. 109 at 56. USI asserts that 16 of the Agency’s answers

failed to provide enough detail to determine how professional service costs should be allocated.

Exh. 109 at 56-57, Attach 18.

 

 

Unusual and Extraordinary Circumstances.

USI argues that the lack of a defined scope

of work effectively precludes the use of this provision for professional consulting services. Exh.

109 at 57. USI asserts that determining what cost and corresponding Section 734.845 maximum

payment amount are to be considered for comparison when determining whether to use the

unusual or extraordinary circumstances provision is impossible. Exh. 109 at 57-58. Further, USI

maintains if what is ordinary is not defined; owner/operators and consultants will be unable to

define extraordinary. Exh. 109 at 58.

 

 

Conversion of Professional Service Payment.

USI believes that another conceptual

flaw in this proposed rulemaking is the attempt to immediately convert payments for

professional services for a time and material basis to a lump sum basis. Exh. 109 at 59. USI

notes that since the inception of the UST program, the Agency has reimbursed professional

service on a time and materials basis.

Id

. USI states that this is how consultants and engineers

bill their services.

Id

. USI asserts that time and materials is a reasonable and logical approach

because a task can have various scopes of work or even an inherently unpredictable scope of

work. Exh. 109 at 59-60. Further, USI argues that professional consulting services are

intellectual in nature and time and materials billing is appropriate. Exh. 109 at 60.

 

USI notes that as discussed above, determining that the maximum payment amounts are

reasonable absent a defined scope of work is difficult because the proposed rule has attempted to

aggregate costs into tasks. Exh. 109 at 60. USI opines that even if a scope of work had been

provided, the best anyone could do would be to estimate the time for each task.

Id

. USI asserts

that immediately converting from time and materials to lump sum based on a flawed system will

hamper the cleanup of the environment and threaten small businesses. Exh. 109 at 61.

 

USI believes that with the inclusion of a defined scope of work, some professional

consulting services can be converted to lump sum payments in time. Exh. 109 at 61-62. USI

opines that this should be done in phases and at the onset of this proposed rule, professional

services should be billed and reimbursed on a time and materials basis. Exh. 109 at 62.

 

---

 

36

 

Use of Averages as Maximums.

USI notes that the Agency has proposed the adoption

of average historical costs as the maximum in many instances. Exh. 109 at 62. USI asserts that

this is inherently problematic. Exh. 109 at 63. USI opines that the Agency may have proposed

the average because if a higher number were published consultants would raise their prices to the

higher price.

Id

. USI further opines that this would drain the UST Fund and using the average

would not have the same effect.

Id

. However, USI argues that using the average is just as

problematic for several reasons.

Id

.

 

USI asserts that using the historical averages will create an artificially low price and

cause havoc for the owners/operators. Exh. 109 at 63-64. USI argues that if the averages are

adopted, many consultants costs will be higher than the maximum payment amounts and

consultants will either no longer provide services or the owner/operator will be required to pay

the difference. Exh. 109 at 64. USI states that in either case the owner/operator loses.

Id

.

 

A second problem, according to USI, is that requiring an owner/operator to seek only the

maximum payment amount will skew the Agency’s data and eliminate the Agency’s ability to

review prevailing market rates. Exh. 109 at 64. USI also believes that using an average as a

maximum will result in “administrative upheaval and a flood of appeals” neither of which will

streamline the process.

Id

. Finally, USI opines that due to varying conditions throughout the

state, using the average could result in a complete reimbursement at one site but not at another

site.

Id

.

 

Solutions

 

USI provided draft regulations addressing the flaws discussed above. USI states that the

draft regulations have been prepared with the goals of streamlining the preparation and review of

budgets and payment applications, improving consistency of review, and creating a cost-

containment program based on real market statistics from Illinois in mind. Exh. 109 at 65. The

following paragraphs will give a brief overview of USI’s suggested changes offered by USI.

 

 

Lack of Standards and Definitions.

USI proposes that key terms be clearly defined and

adds definitions for words and phrases such as expedited unit rate, extended cost, extraordinary

unit rate, maximum unit rate, reasonable quantity, and standard products and services. Exh. 109

at 66; Attach 20; PC 55. USI also provided detailed descriptions of fieldwork.

Id

.

 

 

ACECI Hours and Defined Scope of Work.

USI proposes implementing a cost-

containment rule using time and materials billing for professional services. Exh. 109 at 67. USI

also proposes adoption of a defined scope of work.

Id

.

 

 

Conversion of Professional Services Payments.

USI recommends using the

standardized system of tasks discussed above to develop a database to support conversion of

from time and materials to lump sum payments for professional services. Exh. 109 at 67.

 

 

Use of Averages as Maximums.

USI proposes adopting the unit pricing rates as a level

that will be presumed acceptable and not be subject to further review or reduction. Exh. 109 at

68. USI suggests that a second level of pricing that will be higher than the published rates may

---

 

37

be adopted which are in fact the maximum rates.

Id

. USI suggests that these rates remain

unpublished and known only to the Agency and be set by a statistically sound method.

Id

.

 

USI asserts that a key component of the draft regulations is the allowance for collection

of real market pricing data and adjustment of unit pricing based on such data. Exh. 109 at 69.

USI notes that the Agency has expressed concerns that if consultants know that pricing data is

being collected and attempt to manipulate the data may be made.

Id

. USI asserts that four key

facets of the draft regulations will minimize potential for manipulation.

Id

. Those four facets

are:

 

1. Use of published expedited unit price schedule at which pricing is known

to be acceptable.

 

2. Use of unpublished maximum payment amounts will discourage excessive

pricing.

 

3. Use of statistically sound unit quantity determination will play a major

role in keeping costs in line.

 

4. Task standardization will provide consultants (and competitive bidders)

the information needed to adequately, correctly, and completely plan what

work is required and in what way it will be paid. Exh. 109 at 70.

 

 

Concern about Professional Consulting Services Cost Levels.

USI states that there is

real concern that absent historical standardization of tasks, appropriate total pricing levels cannot

be set for professional services which vary in effort. Exh. 109 at 70. USI proposes using time

and material billing status under the draft regulations initially to allow for collection of data.

Id

.

USI is recommending an approach that addresses control of costs at the unit price level.

Id

. USI

cautions however that another component to total cost is the quantity of units being performed.

Id

. USI has used the data on the total number of professional personnel hours typically used in

the past per phase of work to quantify units being performed.

Id

.

 

USI recommends that the LUST Advisory Committee or similar committee establish a

certain quantity of hours per project phase as an appropriate quantity for the performance of all

professional services required by that phase. Exh. 109 at 70. USI’s draft regulations would have

the Agency use this quantity of hours as a “barometer to monitor reasonableness” of professional

services costs proposed or incurred throughout the phase of the project. Exh. 109 at 71. USI

suggests this as an interim measure until data can be collected.

Id

.

 

To ensure the collection of data, USI’s proposal would have all costs proposed and or

incurred reported to the Agency using the standardized tasks and scope of work suggested above.

Exh. 109 at 71. After data has been collected, USI proposes establishing lump sum expedited

rates based on the data.

Id

. USI notes that as an alternative to tracking data at the phase level,

data could be tracked at the task level, which would be a more accurate means of analyzing data.

Id

. However, according to USI, there are more than 900 task name conventions used by various

consultants in recent years so there is no historical task data.

Id

.

---

 

39

to overrule the legislature and the Board and the Agency must carry out the legislature’s intent.

Exh. 109, Attach. 23 at 8.

 

 

TACO.

Mr. Hundley argues that limiting reimbursement to Tier 2 TACO levels and the

requirement to use groundwater ordinances are inappropriate. Exh. 109, Attach. 23 at 10. Mr.

Hundley asserts that there is no statutory basis for these proposals.

Id

. Mr. Hundley notes that

the legislature has acknowledged the use of TACO; however, the legislature did not limit the use

of TACO to Tier 2 objectives.

Id

. Furthermore, Mr. Hundley asserts that the legislature had

directed an owner/operator to design the plan to mitigate any threat to human health, human

safety, or the environment resulting from a leaking UST.

Id

. Mr. Hundley maintains that had

the legislature intended to limit the cleanup of a site, the legislature would not have use the

phrase “any threat” in the statute. Exh. 109, Attach. 23 at 11.

 

Mr. Hundley asserts that cleanup to Tier 1 versus Tier 2 will indisputably affect the future

property use, value and salability. Exh. 109, Attach. 23 at 11. Also, Mr. Hundley maintains that

TACO focuses on risk to human health, while the UST program requires cleanup if there is a

threat to human health, safety or the environment. Exh. 109, Attach. 23 at 12. Mr. Hundley

argues that the Agency cannot ignore the language of the statute.

Id

.

 

The Agency questioned USI further regarding the statements made in the legal

memorandum and USI responded. PC 59 at 19-21. USI states that the memorandum does not

suggest that all remediation under Tier 2 of TACO fails to provide protection for human health.

PC 59 at 19. However, USI contends that remediation under Tier 2 of TACO does not provide

as much protection as Tier 1 of TACO.

Id

.

 

 

Audit and Record Retention.

Mr. Hundley argues that Section 734.665 is beyond the

Agency’s statutory authority and Mr. Hundley takes issue with the Board’s decision to the

contrary at first notice. Exh. 109, Attach. 23 at 13. Mr. Hundley argues that the statute gives the

Agency only the authority to audit “data, reports, plans, documents and budgets

submitted

”

pursuant to the Act.

Id

. Mr. Hundley asserts that audit is defined by the Act and the definition

of audit does not extend the audit provisions to all documents.

Id

. Mr. Hundley argue that the

legislature has made clear that he Board and the Agency are given authority consistent with the

provisions of the Act and requiring the regulated entity to maintain copies of not only what was

submitted to the Agency but also all documents pertinent to the submission to the Agency is

beyond the requirements of the Act. Exh. 109, Attach. 23 at 14-15.

 

Response to Agency Questions

 

In response to the Agency’s 36 questions, USI expressed a desire to address two

“suggestive subtleties” in the Agency’s questions. PC 59 at 1. The remaining responses to the

Agency’s questions have been incorporated above where appropriate. The following paragraphs

address the two general issues USI addressed.

 

 

Implication that USI Takes Exception to Board Publishing Rule at First Notice.

USI

asserts that the Agency’s questions imply that USI takes exception to the Board publishing the

rule for first notice. PC 59 at 1. USI clarifies that USI is not at odds with the Board and in fact

---

 

40

empathizes with the position the Board was placed in at first notice.

Id

. USI recognizes that the

rulemaking process is an open and public process and first notice is merely a milestone in that

process. PC 59 at 2. USI argues that first notice is not the conclusion of the process and the

Board may make substantive changes to the proposed rule in response to public comment prior

to proceeding to second notice. PC 59 at 2, citing 35 Ill. Adm. Code 102.606.

 

USI empathizes with the Board because at the time the Board moved to first notice the

Board was faced with a “highly controversial, confusing and incomplete record.” PC 59 at 2.

USI asserts that the Board’s adoption of a first notice proposal similar to the Agency’s original

proposal was not an adoption by the Board of the Agency’s proposal.

Id

. Rather, USI argues,

the Board’s publication of a first-notice rule was a means of moving forward and forcing the

participants to identify and focus upon critical portions of the proposed rule.

Id

. USI states that

for these reasons, USI focused primarily on the issues the USI believes are the largest remaining

issues in the rulemaking.

Id

.

 

USI argues that for the Agency to imply that the rule as proposed at first notice is the

Board’s proposal or even the Board’s final position with regard to Subpart H is inappropriate.

PC 59 at 3. USI believes that the post first-notice rulemaking process is a substantive process

involving continued receipt of information by an impartial decisionmaker.

Id

. USI does not

believe that the post first-notice rulemaking process is “window dressing” as USI asserts the

Agency would like the participants to believe.

Id

.

 

 

USI’s Business Operations.

USI notes that a number of the Agency’s questions concern

USI’s business operations and financial performance. PC 59 at 3. USI argues that these

questions are not relevant to the testimony offered by USI on July 27, 2005, or to this

rulemaking.

Id

. USI asserts that it is but one consultant performing UST work in Illinois and the

subject matter of USI’s testimony was much broader in scope than USI’s business alone.

Id

.

USI provided testimony based on a “statistically reliable survey of information in the Agency’s

own files” that provided a range of professional consulting hours, rates, and costs that the

Agency has historically reimbursed.

Id

.

 

USI also provided a national survey of profitability of environmental engineering and

consulting firms from across the nation. PC 59 at 3. USI asserts that considering that this

rulemaking is an industry wide and statewide rulemaking with national costs data in the record,

USI business operations and financial performance are not important. PC 59 at 4.

 

Public Comments

 

USI filed numerous public comments in this proceeding. Three of the comments (PC 55,

PC 60, and PC 67) were documents reflecting the suggested rule changes and the draft rule

discussed as a part of USI’s testimony. PC 59, discussed above, was USI’s responses to Agency

questions. Numerous documents titled “Statement of Support” or “Request for Delay” were

signed by various companies and individuals and filed as PC 66. USI filed a sample budget and

billing form that was docketed as PC 68. USI also submitted copies of letters and documents

from Illinois State Senators and those are discussed

infra

at 50 (PC 69). PC 72 is a CD of USI’s

final comments. USI’s comments filed as PC 61 and 71 will be discussed here.

---

 

41

 

USI’s states that the random sampling and analysis performed by USI focused on

professional consulting costs that the Agency has historically reimbursed. PC 61 at 1.

Specifically, USI examined the historical costs reimbursed for professional consulting services

typically rendered during each phase of a UST remediation.

Id

. USI argues that the data

gathered by USI demonstrates that the maximum payment amounts proposed for professional

consulting services will cut UST Fund benefits to owner/operators by 50%.

Id

.

 

In contrast, USI opines that the Agency’s testimony was designed to lead one to believe

that the maximum payment amounts for professional consulting service were not distinctly

different from the historical reimbursement amounts. PC 61 at 2. USI reexamined the data used

by the Agency and found striking contrasts between the actual case files and the testimony

concerning the data developed by the Agency. PC 61 at 2-4. USI points out these contrasts and

suggests that the conclusions drawn by the Agency based on the Agency’s data were incorrect.

Id

.

 

USI also filed a response to the Agency’s comment in this proceeding (PC 71). USI

defends its positions noting that the expedited unit rates and services suggested by USI is not

“elaborate” or “difficult to decipher” in anyway. PC 71 at 1. USI believes that the creation of a

database is essential and that a database will not complicate or lengthen the reimbursement

process.

Id

.

 

Illinois Environmental Protection Agency’s Public Comment

 

The Agency states that “time does not permit” the Agency to provide detailed comment

on all suggestions and issues that have been raised and to do so would “diminish by its length”

the usefulness of the Agency’s final comment. PC 62 at 1. The Agency states that absence of a

comment on any testimony or public comment should not be construed as the Agency’s

acquiescence in or support for the testimony or comment. PC 62 at 2.

 

The Agency’s final comment is divided into three sections. The first section contains

comments on testimony from the July 27, 2005 hearing and is divided by the Sections of the rule.

The second section contains comments addresses public comments submitted to the Board in

response to the Board’s first-notice proposal. The third section suggests a few non-substantive

changes to the rule. The following section will follow the Agency’s organization and summarize

the comment.

 

Comments on Testimony

  

 

The Agency supports the rules as proposed by the Board at first notice and requests that

the Board proceed with adopting the rules. PC 62 at 2. The Agency believes that as a whole the

proposed rules will allow for reimbursement of reasonable remediation costs from the UST

Fund.

Id

. The Agency also believes that the proposal establishes reasonable and appropriate

rules for implementation of statutory changes in the leaking UST program enacted in 2002.

Id

.

The Agency comments specifically on some requested amendments to the proposal on a section-

by-section basis. The following paragraphs will summarize the Agency’s comments.

---

 

42

 

 

Section 734.100.

In response to CW

3

M’s suggestion that the Board further amend the

applicability section of the rule “to clarify that the proposed rules should not be used as final

rules before the rulemaking process has been completed,” the Agency comments that no

additional change is necessary. PC 62 at 2. The Agency notes that the suggested changes will

not take effect until the rule is adopted and therefore the stated purpose could not be

accomplished. PC 62 at 2-3. The Agency further notes that CW

3

M also suggests changing the

word “applies” to “is intended” but such a change would convert this applicability section to an

intent section. PC 62 at 3. CW

3

M also suggests limiting the scope of Part 734 to changes

implementing the statutory amendments in P.A. 92-0554 and P.A. 92-735; however, the Agency

asserts that the proposed amendments do not implement only those two public acts.

Id

. The

Agency maintains that the proposed rules implement the rest of the UST program’s statutory

provisions including two other public acts enacted in 2002.

Id

. Lastly, the Agency comments on

CW

3

M’s suggestion that a new subsection (d) be added to address payment for work already

approved prior to the effective date of the rules. The Agency believes that Section 734.100(a)(2)

already addresses that issue.

Id

.

 

The Agency points out that the Board examined the language in Section 734.100 in the

first-notice opinion and the Board made revisions to ensure that the rule would not have a

retroactive effect. PC 62 at 3. The Agency does not believe that the additional language changes

suggested by CW

3

M are necessary, nor did CW

3

M provide adequate justification for changing

the rules. PC 62 at 3-4.

 

 

Section 734.340(b).

The Agency responds to CW

3

M’s suggestion that the rule reflect

that only available alternatives should be cost compared. PC 62 at 4. The Agency feels this

change is unnecessary as the language in Section 734.340(b) already states that if an

owner/operator is seeking to use an alternative technology the owner/operator must demonstrate

that the costs “is not substantially higher than other available alternative technologies.”

Id

. The

Agency states that if a particular technology is not available, no cost comparison is required; and

the Agency would not require comparison to an alternative technology that cannot be used.

Id

.

 

 

Section 734.505.

The Agency does not believe that the rule needs to include language

requiring more specific reasons for Agency’s decisions. PC 62 at 4. The Agency points out that

the proposed rule already includes the statutory requirements that any rejection or modification

of a plan, budget, or report by the Agency must include “[a] statement of specific reasons why”

the Act or regulations may be violated if the plan, budget, or report is approved. PC 62 at 4-5.

 

 

Section 734.510.

The Agency takes issue with CW

3

M’s suggested changes to Section

734.510(b). PC 62 at 5. The Agency states that CW

3

M’s suggestion deletes standards the

Agency has long been required to use when conducting financial reviews and replaces the

standards with a requirement that the Agency determine that the costs are consistent with Part

734.

Id

. The Agency asserts that this change is inappropriate because by statute the Agency

must determine if the costs are reasonable, are incurred in performance of site investigation or

corrective action, are not for activities in excess of those required to meet the Act.

Id

, citing 415

ILCS 5/57.7(c)(3) (2004). The Agency comments that the standards in Section 734.510(b)

repeat the long existing standards in Section 734.505(c), and those standards mirror the statutory

---

 

43

requirements for reviewing costs.

Id

. The Agency argues that the standards should stay in the

rule.

Id

.

 

 

Section 734.605.

The Agency disagrees with suggestions by CW

3

M that rule be changed

concerning the proof of payment of subcontractors, before handling charges will be reimbursed.

PC 62 at 5-6. The Agency concedes that a businesses’ workload increases as the number and

complexity of projects increase; however increased workload should not excuse proper

documentation of costs. PC 62 at 6. The Agency notes that the Board took notice of the fact that

the existing rules for UST reimbursement already prohibit payment of handling charges if the

primary contractor has not paid the subcontractor.

Id

. Further, the Agency notes that the Board

already considered deleting the proof of payment requirement and rejected the request.

Id

.

However, the Board did provide additional language to clarify that proof of payment can be met

in many ways, points out the Agency.

Id

. The Agency believes the Board’s proposed language

is appropriate and the changes suggested by CW

3

M are not necessary. PC 62 at 7.

 

The Agency also takes issue with CW

3

M’s suggested changes to the one-year deadline

for submittal of reimbursement applications after an NFR letter has issued. PC 62 at 7. The

Agency believes that the suggested change nullifies the one-year deadline for submitting

reimbursement applications because the deadline can be extended for any reason.

Id

.

 

 

Section 734.625.

In response to suggestions by CW

3

M that additional items be added to

the list of eligible costs, the Agency comments that the list is not an exclusive list. PC 62 at 7.

The Agency states that Section 734.625(a) merely contains examples of costs that may be

eligible and eligibility of a certain cost is not dependant upon listing in this section.

Id

. The

Agency states that adding the costs suggested by CW

3

M will not make those costs any more

eligible.

Id

. The Agency comments that attempting to identify in the rules every cost that is

eligible would create a massive list in the rules.

Id

.

 

 

Section 734.630.

The Agency responds to several suggested changes to this section. The

Board will summarize each of those responses below.

 

 

Section 734.630(w).

The Agency does not believe that deletion of the word

“compaction” from this subsection, as suggested by CW

3

M, is appropriate. PC 62 at 8. The

Agency asserts that costs associated with compaction of backfill have long been ineligible for

reimbursement and sufficient justification for a change has not been offered.

Id

. The Agency

further argues that returning the subsurface of a site to pre-excavation condition that is suitable

for redevelopment is not required as a part of corrective action and thus exceeds the minimum

requirements of the Act. PC 62 at 8, citing

e.g.

, McDonald’s Corporation v. IEPA, PCB 04-14

(Jan. 22, 2004). Furthermore, the Agency comments that the Board in this proceeding has

already addressed the issue of compaction costs. PC 62 at 9, citing R04-22, 23 (Feb. 17, 2005) at

82.

 

 

Section 734.630(gg).

The Agency notes that currently costs incurred after issuance of an

NFR letter are generally ineligible for reimbursement. PC 62 at 9. The exceptions to this

ineligibility are specified in the rule.

Id

. The Agency points out that at first notice the Board

proposed three new exclusions to the prohibition against reimbursement. PC 62 at 9. CW

3

M has

---

 

44

suggested additional exclusions, all of which the Agency believes are inappropriate. PC 62 at 9-

11.

 

First, the Agency argues that reimbursement for incremental costs incurred by a highway

authority would be inappropriate. PC 62 at 10. The Agency asserts that the Board determined in

a prior rulemaking that costs incurred pursuant to highway authority agreements are not eligible

for reimbursement. PC 62 at 10, citing Regulation of Petroleum Leaking Underground Storage

Tanks: Amendments to 35 Ill. Adm. Code 732, R01-26 (Feb. 21, 2002). Thus, the Agency

argues reimbursement is improper.

Id

.

 

Second, the remaining exclusions suggested by CW

3

M are also not appropriate, argues

the Agency. PC 62 at. 11. The Agency states that the Agency agrees with the Board’s statement

in a R01-26 that “absent special circumstances such as MTBE contamination, the UST Fund

should not be used to pay for remediation costs once the Agency issues an NFR letter.” PC 62 at

11, citing R01-26. The Agency points out that the Board further noted that “an NFR letter does

not absolve a UST owner or operator from liability for cleaning up off-site releases, even where

an NFR letter has been issued.”

Id

. The Agency states that the Board has already acknowledged

in previous rulemakings that while an owner/operator may be liable for remediation after

issuance of an NFR letter, remediation conducted after the issuance of the NFR letter is not

eligible for reimbursement from the UST Fund. PC 62 at 11.

 

The Agency argues that the changes suggested by CW

3

M are not consistent with the

exclusions added by the Board. PC 62 at 12. The Agency asserts that the changes suggested by

CW

3

M do not address activities related to corrective action conducted prior to the issuance of an

NFR letter, nor do they address activities conducted pursuant to the Board’s UST rules or Board

or court order.

Id

. The Agency does not believe the changes are appropriate or that CW

3

M has

provided sufficient justification to warrant a change in the proposal.

Id

.

 

 

Section 734.630(oo).

The Agency states that CW

3

M and CSD suggest a change to allow

the payment of handling charges when the prime contractor and subcontractor are related

entities. PC 62 at 12. The Agency characterizes CW

3

M and CSD’s arguments as centering on

the fact that the prime contractor incurs costs for administration, insurance, and interest costs,

and a reasonable profit for procurement, oversight, and payment of the subcontract.

Id

. The

Agency asserts that unlike where a third party is the subcontractor, the primary contractor does

not incur many of these costs when a related entity is subcontracted. PC 62 at 13. Further the

Agency argues that “where such costs are incurred for related subcontractors they are the result

of the prime contractor’s or its owner’s decision to conduct business through multiple entities

instead of a single entity.”

Id

. The Agency states that there are many reasons for conducting

business through several entities; but one result is an increase in the cost of conducting business.

Id

. The Agency does not believe the UST Fund should be used to cover such additional costs.

Id

.

 

 

Section 734.630(aaa).

The Agency does not believe the deletion of the word

“maximum” in the phrase “maximum payment amount” is appropriate. PC 62 at 13. The

Agency states that the change was suggested by CW

3

M; however no supporting testimony was

offered, according to the Agency.

Id

. The Agency states that the Board considered and declined

---

 

45

to change the phrase “maximum payment amount” in the first-notice opinion and the Agency

agrees with the Board’s decision.

Id

.

 

 

Section 734.630(ccc).

The Agency does not believe that the deletion of this subsection as

suggested by CW

3

M is necessary. PC 62 at 14. The Agency states that the proposed rule does

not require the reclassification of groundwater by an adjusted standard so CW

3

M’s reliance on

35 Ill. Adm. Code 620.260 has not been adequately explained, according to the Agency.

Id

. In

response to CW

3

M’s claim that this subsection has a negative effect on property values, the

Agency asserts that the effect of remediation on property values is not a factor in UST Fund

reimbursement.

Id

. The Agency asserts that reimbursement for the UST Fund is limited to costs

necessary to meet the requirements of the Act and use of a groundwater ordinance as an

institutional control meets the minimum requirements.

Id

.

 

 

Section 734.665.

The Agency is opposed to changes in auditing language proposed by

CW

3

M. PC 62 at 15. The Agency argues that although the owner/operator is the individual

charged with providing the plans, reports, budgets, and applications to the Agency, those

documents are often submitted directly by the consultant.

Id

. The Agency maintains that in

many cases the owner/operator’s only involvement is signing the documents and as a result the

owner/operator is unlikely to have additional information about the documents.

Id

. The Agency

asserts that limiting the Agency’s review to information maintained by the owner/operator would

limit the review to the document the Agency already has, in most instances.

Id

. The Agency

asserts that the Agency needs to review information maintained by the owner/operator’s

consultant in order to conduct a complete and proper review of the information for the

owner/operator.

Id

.

 

The Agency further states that providing a list of documents required during an

inspection is impossible because the Agency cannot know what information is in the possession

of the consultant or owner/operator until the Agency conducts the review. PC 62 at 15. The

Agency does not believe that the suggested changes are necessary or that CW

3

M has provided

sufficient justification to warrant a change. PC 62 at 15-16.

 

 

Section 734.800.

The Agency argues that the changes suggested by CW

3

M and CSD

would entirely alter the intent and effect of Subpart H. PC 62 at 17. The Agency states that the

rates in Subpart H are

maximum

payment amounts, not “speed bumps” for reimbursement.

Id

.

The Agency asserts that allowing reimbursement above the maximum payment amounts outside

of the bidding and unusual or extraordinary circumstances provisions would render those

provisions superfluous. The Agency also believes that the changes suggested by CW

3

M would

result in frequent attempts to exceed the “threshold” amounts in the rules rather than routine

requests at or below those rates.

Id

.

 

As to the suggested change to allow for tasks not specifically listed under a maximum

payment amount to be reimbursed separately, the Agency believes that such a change will

eventually result in Subpart H becoming a reimbursement on time and materials basis for every

item not specifically identified in the rules. PC 62 at 18. The Agency states that developing an

all-inclusive list of costs associated with each task identified in Subpart H would be impossible.

Id

.

---

 

46

 

The Agency summarizes CW

3

M’s next suggested change as amending the proposal to

eliminate the submission of cost breakdowns and invoices for costs paid by lump sum or unit of

productions and to allow for payment in excess of maximum payment amounts if the applicant

justifies the reasonableness on a time and materials basis. PC 62 at 19. The Agency asserts that

CW

3

M does not provide any additional testimony to support these changes.

Id

. As to the first

change, the Agency states a description of the supporting documentation the Agency believes is

necessary in a reimbursement application is already in the record of this proceeding, but one item

would be an invoice with minimum information to document the costs requested for

reimbursement.

Id

. In response to the second change, the Agency notes that the Board’s

proposal allows for exceeding the maximum payment amounts via bidding and the unusual or

extraordinary circumstances provisions.

Id

.

 

The next suggested change the Agency comments on is CW

3

M’s suggestion that a new

subsection (d) be added to allow for reimbursement for emergency activities on a time and

material basis. PC 62 at 19. The Agency argues that the record contains nothing to demonstrate

that emergency activities need to be reimbursed differently than non-emergency activities.

Id

.

The Agency states that under the proposal emergency activities will be reimbursed to the same

extent and in the same manner as non-emergency activities and the Agency does not believe the

suggested change is necessary.

Id

.

 

 

Section 734.810.

The Agency opposes CW

3

M’s suggestion to exclude several costs from

the maximum payment amounts allowed for UST removal and abandonment and instead to

reimburse on a time and materials basis. PC 62 at 20. The Agency states that CW

3

M does not

provide any reasoning for excluding the costs, nor does CW

3

M explain how the maximum rates

suggested by CW

3

M were calculated.

Id

.

 

CW

3

M suggests changing the maximum payment amounts for UST removal and

abandonment. PC 62 at 20. The Agency states that CSD also suggests changing the amounts

and bases the payment amounts on

RS Means

calculations.

Id

. CW

3

M and CSD have suggested

different payment amounts, according to the Agency.

Id

. The Agency notes that PIPE had

previously suggested alternative amounts based on the

RS Means

calculations and the Board

rejected those suggestions in the first-notice opinion. PC 62 at 21, citing R04-22, 23 (Feb. 17,

2005) at 81.

 

The Agency argues that CSD and CW

3

M have not provided sufficient testimony to show

why the Board should adopt their suggested rates over those proposed. PC 62 at 21. The

Agency further argues that CSD and CW

3

M have not provided sufficient testimony as to why the

bidding and unusual or extraordinary circumstances provisions will not allow for reasonable

reimbursement in excess of the maximum payment amounts when required.

Id

.

 

 

Section 734.820.

According to the Agency, CW

3

M recommends that a provision be

added to make the maximum payment amounts for travel associated with professional consulting

services also applicable to drilling costs to cover drilling contractors’ mobilization charges. PC

62 at 22, citing Exh. 106 at 21. USI also takes issue with the omission of a maximum payment

---

 

47

amount for mobilization. PC 62 at 22, citing Exh.109 at 40. The Agency does not believe the

suggested changes are necessary. PC 62 at 22.

 

The Agency states that the Agency provided testimony that mobilization costs were

include in the drilling rates proposed by the Agency. PC 62 at 22, citing Tr.3 at 46-47. Further,

the Agency states the Board’s proposal includes mobilization charges in the maximum payment

amounts for drilling. PC 62 at 22. The Agency counters that the rates proposed by CW

3

M to be

made applicable to drilling were developed and intended to be used with professional consulting

services.

Id

. The Agency asserts that neither CW

3

M or USI have provided sufficient additional

testimony to support their suggested changes and the Agency does not believe the changes are

necessary.

Id

.

 

 

Section 734.825.

The Agency summarizes CW

3

M’s suggested changes as: (1) basing

maximum payment amounts upon amounts approved by IDOT; (2) changing the “swell factor”

and “weight/volume” conversion factor to 1.2 tons per cubic yard; and (3) adding $14.25 per

cubic yard for “additional expenses” associated with the transportation of soil that is temporarily

stockpiled on-site or off-site. PC 62 at 23. The Agency opposes all of these changes. PC 62 at

23-25.

 

Concerning the amounts approved by IDOT, the Agency reiterates that Exhibit 89 was

presented by the Agency at hearing. PC 62 at 23. Exhibit 89 is a letter from IDOT which states

that costs in IDOT’s contracts should not be used to justify or compare with costs proposed by

the Agency in this rulemaking.

Id

. The Agency notes that the Board considered testimony by

CW

3

M on this issue and the Board declined to make a change.

Id

. The Agency asserts that

CW

3

M has not provided sufficient additional testimony to support this change.

Id

.

 

The Agency points out that CW

3

M previously suggested a “swell factor” and

“weight/volume” conversion factor of 1.68 tons per cubic yard. PC 62 at 24. The Agency

continues on to note that the Board received a great deal of comment and testimony prior to first

notice regarding “swell factor” and “weight/volume” conversion, and the Board proposed a 1.5

per cubic ton conversion factor.

Id

. The Agency asserts that CW

3

M does not provide any

testimony regarding how the suggested “swell factor” and “weight/volume” conversion factor of

1.2 was calculated or why the conversion factor should now be 1.2 instead of 1.68.

Id

.

 

The Agency states that CW

3

M does not provide testimony sufficient to establish why the

Board should adopt a rate of $14.25 for additional expenses. PC 62 at 24. Rather, the Agency

argues that CW

3

M merely suggest arbitrarily increasing the maximum amount by a sum roughly

equal to the transportation charge for hauling contaminated soil to a landfill even in cases where

the soil is stockpiled on-site. PC 62 at 24-25. The Agency does not believe this change is

necessary.

 

 

Section 734.830.

The Agency opposes CW

3

M suggestion that a mobilization fee or

“stop fee” be included for drum disposal in this section. PC 62 at 25. The Agency states that the

proposed rule’s maximum payment amount already includes a “stop fee” or other travel fees

associated with drum disposal.

Id

. Further, the Agency argues that the fees in Section

734.845(e) were developed and intended to be used for travel costs associated with professional

---

 

48

consulting service, not drum disposal.

Id

. The Agency asserts that CW

3

M has not provided any

additional testimony to show why a “stop fee” must be added to the maximum payment amounts

proposed by the Board.

Id

.

 

 

Section 734.840.

The Agency disagrees with CW

3

M’s suggestion to change the

maximum payment amounts associated with concrete, asphalt, and paving. PC 62 at 26. The

Agency notes that CW

3

M supports the suggested change by referencing testimony offered prior

to the Board’s adoption of the first-notice proposal and CW

3

M states that the suggested rates are

consistent with prevailing rates. PC 62 at 26, citing Exh. 106 at 25. The Agency argues that the

Board has already considered CW

3

M’s prior testimony and declined to make changes. PC 62 at

26. Further, the Agency asserts that CW

3

M has not provided additional testimony to show why

the Board should adopt the suggested change.

Id

.

 

 

Section 734.845.

The following discussion will be divided into two sections as the

Agency’s comment responds first to suggestion by CW

3

M and then to comments by USI.

 

 

CW

3

M.

The Agency characterizes CW

3

M’s suggestion as “changing the maximum

payment amounts for professional consulting services into absolute payment amounts.” PC 62 at

27. The Agency asserts that with such changes, the rules would mandate that the Agency

reimburse the full maximum payment amount for a task regardless of the actual cost or charge

for the task.

Id

. The Agency does not believe that an owner/operator should be reimbursed for

the full maximum payment amount if the owner/operator is charged less than that amount.

Id

.

The Agency asserts that amounts exceeding the total charged to the owner/operator would not be

reasonable, would not have been incurred in the performance of corrective action or site

investigation, and would be in excess of costs necessary to meet the minimum requirements of

the Act.

Id

. The Agency asserts that the amounts would therefore be ineligible for

reimbursement.

Id

.

 

The Agency also opposes CW

3

M’s suggested changes to the maximum payment amounts

throughout the section. PC 62 at 27. The Agency argues that the changes are not supported by

additional testimony from CW

3

M and are unnecessary.

Id

.

 

 

USI.

The Agency states that “[a]lthough USI believes the maximum payment amounts

set forth” in other sections of Subpart H “are appropriate” and USI has no “objection” to those

rates, USI suggests wholesale changes to Section 734.845. PC 62 at 28. The Agency

characterizes USI’s suggestion as “an elaborate and difficult to decipher system for calculating a

series of different payment amounts” the Agency must use in reviewing reimbursement requests

for professional consulting services.

Id

. The Agency notes that some payment amounts

developed will be published while others would remain unpublished and known only to the

Agency.

Id

. Further, the Agency notes

that the changes include a database software to assist in

the gathering of data for future development of rates. PC 62 at 28-29.

 

The Agency’s response to USI’s wholesale changes, is that USI submitted significant

information “at the last hour” regarding a “concept” for reimbursement of professional

consulting services. PC 62 at 30. The Agency asserts that USI has not provided sufficient

---

 

49

testimony to show why the Board should abandon the maximum payment amounts proposed and

begin developing rules for a reimbursement system similar to the concept submitted by USI.

Id

.

 

More specific criticism by the Agency is that the database software is complicated,

confusing to understand, and cumbersome to use. PC 62 at 29. The database software requires

breakdown of costs into minute detail with little to no quality control, according to the Agency.

Id

. The Agency also does not believe that the large majority of consulting firms would embrace

the use of the database software.

Id

. Finally, the Agency feels implementation and maintenance

of such a database would require significant resources the Agency does not have.

Id

.

 

As to the concept proposed by USI, the Agency states that the use of rates not adopted in

rules or otherwise made public is inappropriate. PC 62 at 29. The Agency points out that

litigation resulted in the past from the Agency’s use of reimbursement rates not adopted by rule.

Id

. The Agency opines that setting up a system of generally applicable rates not adopted in rules

only invites additional litigation.

Id

.

 

The Agency argues that whether USI’s concept will result in reimbursement of

reasonable remediation costs is not clear. PC 62 at 30. The Agency asserts that USI could not

provide the amount or range of amounts an owner/operator would be reimbursed under USI’s

concept.

Id

. However, the Agency maintains that based on USI’s data the amounts could be

high.

Id

.

 

Response to Comments

 

The Agency next commented on six points from the public comments received by the

Board during the first-notice period. The following paragraphs summarize those comments.

 

 

Cost Associated with Preparing and Submitting Applications.

Concerning prefiled

testimony from CSD regarding the costs of preparing and submitting reimbursement

applications, the Agency states such costs are included in the amounts proposed for professional

consulting services in Section 734.845. PC 62 at 31. The Agency believes the proposed

amounts are sufficient to cover reasonable costs associated with the preparation and submission

of reimbursement applications.

Id

. The Agency states that the frequency with which an

owner/operator submits an application is left to the owner/operator.

Id

.

 

 

Groundwater Ordinance.

The Agency states that in PC 39, the premise of the comment

is that defining the extent of groundwater contamination is unnecessary if there is a local

ordinance as an institutional control. PC 62 at 31-32. The comment indicates that the such

investigation is unnecessary due to “preexisting” groundwater institutional controls.

Id

. The

Agency responds that there are no “preexisting” groundwater ordinance institutional controls.

PC 62 at 32.

 

The Agency maintains that to use a groundwater ordinance as an institutional control, the

owner/operator must demonstrate that the TACO requirements for using an institutional control

have been satisfied. PC 62 at 32. The Agency states that a part of the TACO requirements

includes delineation of groundwater contamination.

Id

. The Agency argues that use of a

---

 

50

groundwater ordinance as an institutional control does not meant that the ordinance will be

approved for another site in the same municipality.

Id

.

 

 

Bidding.

In response to ACECI’s comment that federal and state governments are

required to use “Qualification Based Selection” rather than bidding, the Agency states that the

laws cited by ACECI are inapplicable. PC 62 at 34. The Agency asserts that professional

service costs being reimbursed from the UST Fund are for services procured by the

owner/operator, not the Agency.

Id

.

 

 

Letters from USI.

The Agency opines that based on a letter from USI, the Board is sure

to receive additional form letters and petitions concerning the proposed rules. PC 62 at 35. The

Agency concedes that they have every right to register their opinion; but the Agency “suspects”

the opinions are based on USI’s characterization of the rulemaking and not a careful review of

the record.

Id

.

 

Suggested Non-Substantive Changes to the Proposal

 

The Agency suggested several non-substantive changes to the rule, which correct

scrivener’s errors, as well as minor grammatical changes.

 

COMMENTS

 

In addition to the participants above who offered both testimony and comments, the

Board received comments from groups, individuals, and businesses, who did not testify. In all

after first notice, the Board received over 60 comments, more than 20 comments were filed

asking for an additional hearing in Southern Illinois. The Board responded to those comments

and held the July 27, 2005 hearing in Carbondale. The following discussion will summarize the

remaining comments.

 

Comments from Senators

 

Senator John Sullivan filed a comment with the Board noting that several constituents

had contacted him concerning the proposed rule. PC 65. Senator Sullivan asked that the Board

carefully review all proposed changes and the impacts on small businesses and municipalities.

Id

.

 

The Board received a comment from Senator Chris Lauzen asking that a ruling be

delayed until a more suitable solution can be developed. PC 69

3

. Senator Lauzen expresses

concerns that the rules as proposed are not justifiable and will potentially reduce property values

while imposing improperly calculated maximum payment rates.

Id

.

 

The Board received a comment from Senator Gary Dahl, who has concerns that the

proposed rules are inequitable and lack a rational basis. PC 69. Senator Dahl believes that the

changes as proposed would not be in the best interest of property owners, municipalities,

3

PC 69 was submitted by USI.

---

 

51

taxpayers, and Illinois.

Id

. Senator Dahl asks why the rules are being changed at this time and

for the justification for the rules.

Id

.

 

Senator Arthur Wilhelmi signed a request for delay of this rulemaking, while Senator

John Jones signed a statement of support for USI’s revisions. PC 69. Senator Frank Watson

signed both a statement of support and a request for delay.

Id

. Senator David Luechtefeld also

signed both a statement of support and a request for delay.

Id

.

 

Professionals of Illinois for the Protection of the Environment (PIPE)

 

PIPE comments that the Board’s sole concern with the UST Fund should be the broad

purpose of the leaking UST regulations. PC 70 at 2. PIPE asserts that the broad purpose is “to

provide assurance” that the UST program meets the goal for which the program was established,

the remediation of Illinois leaking UST sites that are eligible for reimbursement through the UST

Fund.

Id

. PIPE argues that before moving to second notice the Board should be convinced that

the adoption of this proposed rule will result in the remediation of more sites and not less.

Id

.

 

PIPE asserts that the rule is very controversial without supporters except the Agency and

perhaps the Board. PC 70 at 2. PIPE notes that the most vocal opponents are members of PIPE

who are small Illinois companies that remediate a substantial percentage of the UST sites for

downstate owners outside of urban markets. PC 70 at 3.

 

PIPE argues that the evidence in this proceeding establishes that owners/operators will be

required to pay out of pocket a large percentage of the actual cost of remediation. PC 70 at 3.

PIPE states that where this is not possible there will likely be no remediation.

Id

. PIPE opines

that given the evidence, how can the Agency’s proposed rates be considered reasonable

reimbursement?

Id

.

 

PIPE also comments that the rule is fatally flawed because the rule does not include a

scope of work for the tasks and thus fails to identify what actual work the Agency will consider

reimbursable. PC 70 at 4. Further, the Agency has refused to design a process that allows for

cost disputes to be effectively resolved and if the rule is adopted, there will be a “virtual vacuum

of review.”

Id

.

 

PIPE argues that they and other participants have presented information and evidence in

this rulemaking and the Act does not require participants to provide a viable rule as alternatives.

PC 70 at 4. The Board is acting in a quasi-legislative capacity, and this is a fact-find proceeding,

according to PIPE.

Id

. PIPE asserts that without substantial changes, the Agency’s proposal is

not ready for review by JCAR at second notice. PC 70 at 5. PIPE asks the Board to substantially

amend the rule, even if the rule must return to first notice.

Id

. Alternatively, PIPE asks the

Board to write an opinion that analyzes the approach submitted by PIPE members and directs the

Agency to work with participants to develop a new first-notice proposal.

Id

.

 

American Council of Engineering Companies of Illinois (ACECI)

 

---

 

52

ACECI comments that there are two issues ACECI has with this proposal. First, ACECI

takes issue with price bidding instead of “Qualification Based Selection” of professional

services. PC 58 at 1. Second, ACECI takes issue with the lack of a clearly defined scope of

work.

Id

.

 

 

“Qualification Based Selection” vs. Bidding.

ACECI asserts that the bidding process in

Section 734.855 for professional services is not consistent with federal and state policy. PC 58 at

1. ACECI states that federal agencies are required to use “Qualification Based Selection” when

procuring professional services and Illinois has a similar law which also requires “Qualification

Based Selection” for professional services.

Id

. ACECI believes that for the Agency to require

bidding by private tank owners when bidding goes against public policy for government agencies

is unreasonable.

Id

. ACECI recommends that professional services be exempt from the bidding

process.

Id

.

 

 

Scope of Work.

ACECI has a continuing concern with the lack of a clear delineation of

the scope of work for professional services. PC 58 at 2. ACECI asks that the Board add scopes

of work to the appendix using the information provided by Mr. Daniel Goodwin in his testimony

for the May 11, 2004 hearing.

Id

. ACECI also believes that the maximum rates are too low for

some tasks based on the estimated hours in Mr. Goodwin’s testimony.

Id

. Also ACECI notes

that there are tasks necessary for site investigation which is not included in Section 734.845.

Id

.

 

Concerns of Small Businesses

 

The Board received comments from eight different individuals or businesses that

expressed the same basic sentiment. Those comments were:

 

PC 41 Michael R. Oltman of Nokomis Tire & Auto Repair

PC 42 Wilma Schleifer of Schleifer Petroleum Co., Inc.

PC 43 Chris A. Barnes, President, Spectrulite Consortium, Inc.

PC 44 Kent and Hal Devore, former owners of Devore Marina, Inc

PC 45 Bob Foerster, President, Bob's Service Center

PC 49 Tom Mueller

PC 51 Greg Courson of Advanced Environmental Drilling & Contracting, Inc.

PC 53 John Komocar

 

In essence, each of these commenters indicated a lack of support for revisions which would

result in an increased cost to them as owners/operators of USTs. The commenters expressed

their reliance on environmental professionals and the UST Fund to cleanup their sites. The

commenters urged the Board not to adopt a rule that was not thoroughly supported by scientific

or statistical data.

 

Ms. Becky Canty, Superintendent of Elverado Unit #196 Schools in Elkville, Illinois,

submitted PC 54. Superintendent Canty indicated that Elverado Unit 196 is involved in a single

incident cleanup and based on her observations she presents these comments. PC 54 at 1.

Superintendent Canty states that trying to make specifications from generalizations is never a

good process, as one size does not fit all.

Id

. Superintendent Canty notes that the UST Fund

---

 

53

tremendously assists owners/operators who are forced to function within stretched and strained

budgets. PC 54 at 2. The process is incredibly complicated and reliance on the consultants is

critical to the effectiveness of a proper cleanup.

Id

. Superintendent Canty insists that

owners/operators should not be held hostage to an inflexible system.

Id

.

 

Kevin Majors with R.L Hoener Company commented that his company does not support

the maximum payment amount for tank removal. PC 50. Mr. Majors states that there are too

many factors in pulling or abandoning tanks and setting a price is difficult.

Id

.

 

HDC Engineering filed a comment that includes petitions signed by clients of HDC

Engineering. PC 52. The petitions are identical to those submitted by USI and CDS discussed

above.

 

Specific Issues Concerning the Proposed Rule

 

Midwest Petroleum filed a comment regarding the proposal’s limitation for

reimbursement to Tier 2 TACO and the inability to access the UST Fund after issuance of an

NFR. PC 57. Midwest Petroleum recounted a situation where, at the urging of an Agency

project manager, an environmental land use control (ELUC) and groundwater restrictions were

applied.

Id

. According to Midwest Petroleum both the adjoining property owner and IDOT will

hold Midwest Petroleum liable if contamination is found at a later date.

Id

. Midwest Petroleum

expresses concern that if the Board adopts the rule, Midwest Petroleum will be unable to access

the UST Fund for cleanup at those sites.

Id

.

 

Clayton Group Services comments that many of the amounts are substantially lower that

competitive prices for the Chicago area. PC 56. Clayton Group Services also takes issue with

the bidding process noting that the bidding process is cumbersome and questioning whether costs

associated with preparing the bids would be eligible for reimbursement.

Id

. Clayton Group

Services states that it would not bid a project if payment were based on the maximum payment

amounts or be subject to the bidding process.

Id

.

 

Mr. Raymond T. Reott of Reott Law Offices LLC offered specific language changes to

the proposed rule. PC 39 at 1-2. Mr. Reott comments that an ambiguity exists in the language in

several places where investigation of a site is required if the most stringent Tier 1 remediation

objectives have not been met. PC 39 at 1. Mr. Reott notes that such investigation is not

warranted if the only migration pathway has been severed by a preexisting institutional control.

Id

. Specifically, Mr. Reott states that in Chicago a groundwater ordinance exists as an

institutional control and requiring investigation of a site where the only migration would be a

groundwater pathway is not warranted.

Id

. Mr. Reott also suggest that clarifying language be

added in Section 734.630(ccc) to include soil remediation in situations like those in Chicago. PC

39 at 2.

 

UST FUND PROGRAM AND REIMBURSMENT

 

Section 57 of the Act states that the intent and purpose of the leaking UST program is:

 

---

 

54

1. to adopt procedures for the remediation of UST sites due to the release of

petroleum;

 

2. to establish and provide procedures for the leaking UST program which

will oversee and review any remediation required for leaking USTs and

administer the UST Fund;

 

3. to establish a UST Fund intended to be a State fund by which persons may

satisfy financial responsibility under applicable State law and regulations;

 

4. to establish requirements for eligible owners/operators of USTs to seek

payment for any costs associated with physical soil classification,

groundwater investigation, site classification and corrective action from

the UST Fund;

 

5. to audit and approve corrective action efforts performed by Licensed

Professional Engineers. 415 ILCS 5/57 (2004).

 

“Corrective Action” is defined as activities associated with compliances with the provisions of

Section 57.6 and 57.7 of the Act. 415 ILCS 5/57.2 (2004). “Site investigation” is defined as

activities associated with compliances with the provisions of subsection (a) of Section 57.7 of the

Act.

Id

.

 

Section 57.7(c)(3) of the Act provides:

 

In approving any plan submitted pursuant to subsection (a) or (b) of the Section,

the Agency shall determine, by a procedure promulgated by the Board under

Section 57.14, that the costs associated with the plan are reasonable, will be

incurred in the performance of site investigation or corrective action, and will not

be used for site investigation or corrective action activities in excess of those

required to meet the minimum requirements of this Title. 415 ILCS 5/57.7(c)(3)

(2004).

 

This language is repeated in Section 57.7(4)(C) of the Act, as amended by P.A. 92-574. Thus,

the Act requires reimbursement for activities necessary to “meet the

minimum

requirements” of

the Act.

 

The Board has long held that costs that are not corrective action will not be reimbursed.

See

McDonald’s Corporation v. IEPA PCB 04-14 (Jan. 22, 2004); Rosman Enterprise Leasing

Company v. IEPA, PCB 91-174 (Apr. 9, 1992); and Platolene 500 v. IEPA, PCB 92-9 (May 7,

1992). The Board has found that items such as compaction of backfill, concrete replacement,

and pumping and disposal of water are not eligible for reimbursement, if not corrective action.

See

McDonald’s Corporation v. IEPA PCB 04-14 (Jan. 22, 2004); Richard and Wilma Sayer v.

IEPA, PCB 98-156 (Jan. 21, 1999); Clarendon Hills Bridal Center v. IEPA, PCB 93-55 (Feb. 16,

1995).

 

---

 

55

SUMMARY OF FIRST-NOTICE ACTION BY THE BOARD

 

The Board’s first-notice opinion examined 20 issues and determined that many changes

were necessary to proceed with the proposal. The Board amended the language of the

applicability section to clarify that the rules could not be applied retroactively, in response to

comments from PIPE. R04-22, 23 (Feb. 17, 2005) at 63. The Board amended the language

concerning the removal of free product. R04-22, 23 (Feb. 17, 2005) at 64. The first-notice

proposal also clarified that only available alternative technologies should be compared to one

another and conventional technologies. R04-22, 23 (Feb. 17, 2005) at 65. The Board added a

procedure to allow for bidding of tasks when the maximum payment amounts are too low. R04-

22, 23 (Feb. 17, 2005) at 67. The Board amended the language to allow for additional

mechanisms to prove payment to subcontractors. R04-22, 23 (Feb. 17, 2005) at 72. The Board

decided not to declare permit and government fees as ineligible costs. R04-22, 23 (Feb. 17,

2005) at 74. The Board also allowed for Stage 3 site investigation plans to be reimbursed based

on time and materials. R04-22, 23 (Feb. 17, 2005) at 80. The Board did not make substantive

changes to the remainder of Subpart H, nor did the Board adopt scopes of work. However, the

Board requested additional comment on those issues as well as many others.

 

Contrary to the charges of several commenters after proceeding to first notice, the Board

did not “ignore” other suggestions from industry. In fact some of the changes made were

changes suggested by participants other than the Agency. Where the Board decided not to adopt

suggestions from groups such as PIPE, CSD, or CW

3

M, the Board explained those decisions.

For example in deciding not to adopt PIPE’s proposed alternative rates the Board stated:

 

The Board is not convinced that basing rates on

RS Means

in and of itself is

appropriate. Although as indicated above, the Agency’s method for developing

the maximum payment amounts had statistical limitations, the Agency’s rates

were based on real data from actual sites in Illinois. Therefore, the Board rejects

alternative rates, such as

RS Means

, and the Board will propose the rates as

developed by the Agency for first notice. R04-22, 23 (Feb. 17, 2005) at 81.

 

Thus, the Board examined the rates proposed and determined that the data from actual sites in

Illinois was the appropriate data to consider when writing the Board’s first-notice opinion.

 

The Board regrets that some of the participants believe their comments have not been

heard, but the Board disagrees. A comprehensive reading of the Board’s first-notice opinion

demonstrates the Board’s careful consideration of all points of view in developing the first-notice

proposal. The Board will continue to consider all the comments in developing the second-notice

proposal.

 

SECOND-NOTICE ISSUES

 

The Board has dissected the following list of issues to be discussed in the second-notice

opinion.

 

1. General;

---

 

56

 

2. Professional Consulting Services (Section 732.845/734.845);

 

3. Maximum payment rates;

 

4. An Agency database;

 

5. The Agency review process;

 

6. The applicability section (Section 732.100/734.100);

 

7. Alternative technology (Section 732.407/734.340);

 

8. Tier 2 TACO cleanup objectives and groundwater ordinances (Section

732.408/734.410 and 732.606(fff)/734.630(ccc));

 

9. Eligibility of costs incurred after issuance of an NFR letter (Section

732.601(j)/734.605(j) and 732.606(kk)/734.630(gg);

 

10. Handling Charges (Section 732.606(ss)/734.630(oo) and Section

732.601(b)(10)/734.605(b)(10));

 

11. Auditing provisions (Section 732.614/734.665);

 

12. Maximum payment amount for abandonment and removal of tanks (Section

732.810/734.810);

 

13. Mobilization charges for drill rigs (Section 732.820/734.820);

 

14. Soil Removal and Disposal (Section 732.825/734.825)

 

15. Drum disposal (Section 732.830/734.830);

 

16. Maximum payment amounts for concrete, asphalt, and paving (Section

732.840/734.840);

 

17. Bidding of professional services (Section 732.855/734.855)

 

18. The economic impact of the rulemaking;

 

19. Miscellaneous.

 

DISCUSSION

 

The Board’s discussion will follow the list of issues outlined above. The Board will first

discuss certain general concepts and then proceed to more substantive issues. Finally, the Board

---

 

57

will discuss miscellaneous comments from the participants and list any additional changes to the

proposal.

 

1. General

 

Before discussing the specific issues of this proceeding the Board would like to address

some of the general comments and issues raised. The first comments in this category are the

comments from Senator John Sullivan, Senator Chris Lauzen, Senator Gary Dahl, Senator Arthur

Wilhelmi, Senator John Jones, Senator Frank Watson, and Senator David Luechtefeld. PC 65;

PC 69. The Senators each expressed concerns about the economic impact of the rules and some

asked that the rulemaking be delayed. In response to each of their concerns, the Board notes that

we have carefully reviewed the testimony, comments and vast amount of information in this

proceeding. As is reflected by today’s opinion, the Board takes the concerns of industry very

seriously and the Board has attempted to address the concerns raised by the participants.

 

Second, the Board wishes to address the testimony from USI regarding the indefensibility

of the proposed rates in Subpart H of the rule. USI’s testimony, concerning the 69 sites

reviewed, refers to the rates for professional consulting services. The post-hearing comments of

both CSD and CW

3

M could be read to imply that USI’s statistical data is applicable to all the

rates in Subpart H. However, USI clearly states in the final comment that the data being

challenged concerns professional consulting services. Exh. 109 at 37-38.

 

A third area of comments the Board will address here are the comments from PIPE, CSD,

and CW

3

M suggesting that legislative action may be taken, if the Board does not address certain

issues. Some of those issues will be discussed in more detail below. However, while the Board

understands the position of industry in this rulemaking, some of the changes that PIPE, CSD, and

CW

3

M are seeking are not within the Board’s authority to grant. As discussed below, allowing

development of a standard of general applicability outside the rulemaking process would surely

be in violation of the Act and the IAPA. Likewise, as discussed

infra

54, the Board made

changes to the rule in response to industry concerns prior to proceeding to first notice and the

Board will make additional changes here today.

 

2. Professional Consulting Services (Section 732.845/734.845)

 

As noted in the summary of first-notice testimony and comments, the proposed maximum

payment costs associated with professional consulting services set forth at Section

732.845/734.845 continues to be a major issue of contention between the Agency and the

regulated community. The participants, including PIPE, CSD, ACECI, USI and CW

3

M express

serious concerns regarding the provisions of Section 732.845/734.845. The participants contend

that the proposed maximum payment amounts for professional services are flawed since the

proposal does not define the “scope of work” associated with the payments amounts. PIPE,

CSD, ACECI, USI and CW

3

M also question the Agency’s methodology used in developing the

hourly payment cost for professional consulting services.

 

The participants argue that the rules do not provide any feasible options for establishing

alternate maximum payment costs for professional consulting services. In this regard, the

---

 

58

participants argue that the proposed bidding process is inappropriate for establishing alternative

maximum payment costs, and the provisions for “extraordinary and unusual circumstances” is

not a workable option without a defined scope of work. The participants also maintain that the

hourly payment cost for professional services is significantly lower than the actual cost incurred

by the consultants.

 

The Agency supports the rules as proposed by the Board at first notice. The Agency

maintains that the proposed payments costs are reasonable, and reflect activities that must be

performed to meet the regulatory requirements. In the following sections, the Board provides a

brief background on the proposed payment provisions, and a discussion of the issues concerning

the scope of work and maximum payment costs for professional consulting services.

 

Background

 

Briefly, the Board’s first notice regulations pertaining to payment for professional

consulting services is based on the Agency’s initial proposal with one substantive change

regarding the payment for Stage 3 site investigation under Part 734. The proposed provisions at

first notice in Section 732.845/734.845 include the following maximum payment costs for

professional consulting services:

 

1. Early action and free product removal: preparation for abandonment or removal

of USTs; early action field work and field oversight, preparation of 20-day and

45-day reports; and preparation and submission of reports.

 

2. Site evaluation and classification required under Section 732.307 and 732.312.

 

3. Stage 1 and Stage 2 site investigation required pursuant to Sections 734.315 and

734.320.

 

4. Low priority and high priority corrective action under Part 732.

 

5. Corrective action required under Part 734, Subpart C.

 

6. Travel, including travel time, per diem, mileage, lodging, meals, etc.

 

7. Amendment of corrective action plan.

 

In addition, the proposed regulations require payment of costs associated with a number of

activities on either a daily charge basis or on a time and material basis. While the regulations

specify maximum payment amounts for various tasks, they do not prescribe a detailed scope of

work associated with each task. The methodology used by the Agency in developing maximum

payment costs is described in the Board first-notice opinion.

See

R04-22, 23 (Feb. 17, 2005) at

25.

 

Although, the regulated community voiced concern regarding the lack of definition of

“scope of work” in the Agency’s proposal, the Board declined, at first notice, to define the

---

 

59

“scope of work” associated with the lump sum payments mainly because of the inclusion of a

bidding process for establishing alternative maximum payment costs, and the provision for

addressing “extraordinary and unusual circumstances” in the proposed rule. Additionally, the

Board relied on the Agency’s experience and testimony that the maximum payments account for

variability from site to site.

 

Participants’ Concerns

 

The regulated community has submitted extensive testimony and comments on the issue

of scope of work and the maximum payment amounts in Section 732.845/734.845 since the

adoption of the first-notice proposal. The testimony and comments express continuing concerns

about the lack of a scope of work as well as the time and rates proposed at first notice. The

following is a brief summary of some of the concerns.

 

USI asserts that the failure to define the scope of work is a serious conceptual flaw of the

proposed rules. Exh. 109 at 53. The participants state that the inclusion of a competitive bidding

process for establishing alternative maximum payment fails to address their concern regarding

the lack of definition of scope of work. First, USI and ACECI assert the concept of competitive

bidding for professional services should be removed from the rules. Exh. 109 at 54; PC 63 at 9;

PC 58. In this regard, ACECI states that bidding for professional services is inconsistent with

the federal and state policy of procuring professional services on the basis of qualifications. USI

maintains that even if the Board decides to retain competitive bidding for professional services,

the proposed provisions would be impractical without a defined scope of work. Exh. 109 at 54-

55. USI argues that it will be impossible for the Agency reviewers to make determinations on

alternate bids without guidance on specific costs to be included in each maximum payment.

Id

.

 

The participants also state that they will be unable to use the “extraordinary and unusual

circumstances” provision at Section 732.860/734.860 to establish alternative payment cost

without a defined scope of work. USI states that it will impossible to determine if a situation is

“extraordinary or unusual” in the absence of standardized scope of work defining the “ordinary”

situation. Exh. 109 at 58. Further, CW

3

M states that the “extraordinary or unusual

circumstances” provision may not be available for developing alternative costs because of the

Agency’s position that there will be very few reasons to accept or approve unusual or

extraordinary circumstances. PC 63 at 8.

 

Additionally, USI argues that the exclusion of a specific “scope of work” from the

regulations and inclusion of “include, but limited to” language in the rules creates a very broad

and undefined level of service. Exh. 109 at 52. USI asserts that while the Agency used the

scope of work and time (hours) requirements developed by the

ad hoc

work group to determine

the proposed maximum payment costs, the Agency changed or modified the

ad hoc

work

group’s “scope of work” and did not include the “scope of work” for each “task” in Section

732.845/734.845. Exh. 109 at 51. USI maintains that the number of hours for performing

various tasks presented by the

ad hoc

work group was very specific to the associated “scope of

work” and were never intended to be used in the “include, but not limited to” framework

proposed by the Agency in Section 732.845/734.845. Exh. 109 at 52. In this regard, CW

3

M

notes that failure to include scope of work would result in additional tasks not considered in the

---

 

60

development of the payment costs being included in the lump sum payments. PC 63 at 7.

ACECI, PIPE, USI, and CW

3

M have submitted alternate proposals addressing the inclusion of

“scope of work” for professional consulting services. Exh. 74, Attach. B; PC. 6; Exh. 109; PC

63.

 

Regarding the maximum payment rates proposed for Section 732.845/734.845, USI

performed a review of 69 randomly selected sites to evaluate current and historical

reimbursements for professional services. Exh. 109 at 34. As a result of this review, USI and

CW

3

M argue that the rates proposed in Section 732.845/734.845 are not consistent with the rates

historically reimbursed by the Agency. Exh. 109 at 34; PC 63 at 5-6. Further, CW

3

M asserts

that the maximum payment rates are inconsistent with OSHA requirements, which must be met

at UST sites. PC 63 at 5-6. USI also argues that the Agency proposed the use of average costs

for maximum payment amounts and this will cause havoc for owners/operators. Exh. 109 at 64.

PIPE and CW

3

M both argue that if the rates proposed were more closely related to current

reimbursement rates, this rulemaking would not have been as controversial and industry may

have even supported the rule. PC 63 at 6; PC 70 at 2.

 

Discussion and Findings

 

Upon a review of the testimony and comments, the Board agrees with the participants

that a well-defined scope of work will be helpful in addressing concerns regarding payment for

professional services. The Board’s adoption of the first notice provisions at Section

732.845/734.845 was premised on the belief that the alternative bidding process, and the

“unusual or extraordinary circumstances” provision would provide alternative means of

establishing maximum payment costs. However, as discussed in more detail below, the Board

finds that the bidding process is not appropriate for choosing professional services.

Supra

at 74.

Further, given the Agency’s position that the “unusual or extraordinary circumstances” provision

is not meant for addressing alternative maximum payment costs on a routine basis, the Board

agrees with the participants that Section 732.860/734.860 do not provide for an alternative means

for establishing alternate payment costs for professional consulting services. Moreover, the

Board agrees with the participants that it would be difficult for a consultant to demonstrate that

the costs above the maximum payment costs are due to extraordinary or unusual circumstances

without a defined scope of work.

 

The Board also agrees that the maximum payment rates for professional services in

Section 732.845/734.845 should be examined more closely. In particular, given the evidence

provided by USI’s review of 69 randomly selected sites, the Board is convinced that the rates

need to be adjusted to reflect the actual scope of work and current market rates.

 

In light of the above, the Board finds that the proposed framework for maximum payment

costs for professional services needs to be revised. Specifically, the rule must include a scope of

work for the tasks for which the rules specify lump sum payment amounts and lump sum rates

which more accurately reflect current and historical reimbursement rates. The rules must also

allow for payments based on time and materials for any work performed beyond the specified

scope of work that is required to meet the applicable regulatory requirements. Further, the Board

agrees with PIPE and CW

3

M that it is prudent to allow all participants and the Agency to provide

---

 

61

further input on the revisions to Section 732.845/734.845. In view of this, the Board will

propose changes to Section 732.845/734.845 in a rulemaking subdocket for further

consideration. The Board will discuss the alternate proposals submitted by the participants and

the proposed revisions to Section 732.845/734.845 in Subdocket B of this rulemaking.

 

3. Maximum Payment Amounts

 

In this section, the Board will generally address the issue of maximum payment amounts.

Later in the opinion the Board will discuss specific rates and how the Board will address the

concerns about those rates.

 

The issue of whether the maximum payment amounts proposed in Subpart H are

sufficient is an ongoing source of disagreement not just between the Agency and industry, but

also within the industry. Industry has provided alternative proposals since the Board adopted the

first notice. Generally, those alternative proposals would have the Board establish rates that are

“threshold” or “expedited” amounts, which would be approved by the Agency without a lengthy

review.

See

Exh. 99 at 2-3; PC 63 at 3; and Exh. 109 at 68. The alternative proposals also

suggest a system where either rates or scopes of work are developed outside the rulemaking

process.

See

Exh. 109 at 68; PC 64 at 3.

 

In addition to the alternative proposals, the comments and testimony received since first

notice challenge the Agency’s experience relied upon in developing the maximum rates as well

as the use of historical averages as a maximum rate.

See

Exh. 101 at 4; PC 64 at 1-2; PC 63 at 5;

Exh. 109 at 63-64. The statutory authority for adoption of maximum rates was also challenged.

PC 109, Attach 23.

 

Alternative Proposals

 

The Board greatly appreciates the time and effort expended in developing alternative

proposals in this proceeding. The Board will adopt some of the suggestions contained in those

proposals as discussed later in this opinion. However at this time, the Board is not prepared to

adopt the use of “threshold” or “expedited” amounts in place of the maximum payment amounts

in Subpart H. The reasons for this are two-fold. First, the Board believes that the mere adoption

of these rates will expedite the review process for remediation at UST sites in Illinois. As one of

the concerns from the participants is that the review of applications takes too much time, this

should alleviate some of the time necessary to review the reasonableness of the reimbursement

request.

 

Second, CW

3

M’s alternative proposal and USI’s alternative proposal include provisions

that would have rates and/or scopes of work developed outside the rulemaking process and

published outside the rulemaking process. CSD also supports this type of development. USI’s

proposal even suggests that the Agency develop maximum rates that are not published.

Obviously the Agency opposes this concept, as does the Board. The Board cannot adopt a

procedure that allows for development of a standard of general applicability outside the

procedures of the Act and the IAPA, because that procedure would be a violation of both

statutes. Thus, the Board finds that adopting the concepts proposed by CW

3

M’s and USI’s

---

 

62

alternative proposal would result in a process that violates the Act and the IAPA. Therefore, the

Board will not adopt the concept.

 

Sufficiency of Rates

 

The Board notes that USI stated that in general the rates proposed in Subpart H are

acceptable with the use of both the bidding process and the unusual and extraordinary

circumstance provisions. In making this determination, USI employed three tests. The first test

was whether the “unit of measure” assigned to the work activity was appropriate to the work

being performed. Exh. 109 at 37-38. The second test was whether the regulations provided

sufficient detail to allow a scope of work to be authored for a bid specification to allow for

competitive bidding. Exh. 109 at 38-39. The third test was whether USI believes the price

accurately reflects prevailing market prices and the whether the price includes conditions likely

to be encountered at most sites in Illinois. Exh. 109 at 39. However, USI does challenge the

maximum rates for professional consulting services.

 

CW

3

M’s alternative proposal would use the Agency’s proposed rates as interim rates

until a process is in place to develop a database to be used in developing rates. PC 63 at 4.

CW

3

M specifically states that CW

3

M does not endorse the rates as proposed.

Id

.

 

In proceeding to first notice with the proposal the Board stated:

 

The Board will not discuss each and every proposed lump sum maximum

payment amount; however, the Board has carefully reviewed all the rates

proposed by the Agency. Other than the rates discussed in more detail in this

opinion, the Board finds the rates are reasonable and supported by the record.

R04-22, 23 (Feb. 17, 2005) at 79.

 

Given the acceptance by USI, and even CW

3

M, of many of the maximum payment amounts

listed in Subpart H, the Board finds that the maximum payment amounts, except as discussed

below, are reasonable and supported by the record. The Board, as discussed above, further finds

that absent a defined scope of work, the record does not support the rates for professional

services in Section 732.845/734.845. The Board will amend the rule to allow for professional

services to be reimbursed based on time and materials basis.

 

Statutory Authority

 

As discussed above and in the Board’s first-notice opinion, Section 57.7(b)(2) of the Act

allows reimbursement for corrective action that mitigates “any threat to human health, human

safety, or the environment resulting from the underground storage tank release.” 415 ILCS

5/57.7(b)(2) (2004). Section 57.7(c) of the Act (415 ILCS 5/57.7(c) (2004)) requires the Agency

to determine that costs associated with any plan “are reasonable, will be incurred in the

performance of site investigation or corrective action, and will not be used for site investigation

of corrective action activities in excess of those required to meet the minimum requirements of

this Title.” 415 ILCS 5/57.7(c) (2004). The Board has examined a substantial and detailed

record in this proceeding and based on that examination, the Board has found the maximum

---

 

63

payment rates to be “reasonable” and not in “excess” of activities necessary to meet the

“minimum” requirements of the Act. For this reason, employing maximum payment rates is

consistent with the Act and therefore appropriate for the Board to adopt.

 

4. An Agency Database

 

An ongoing issue in this proceeding has been the quality of the data available to develop

rates. Participants asked prior to first notice and again after first notice that the Board require the

Agency to develop a database sufficient to support rates. More specifically, both USI and

CW

3

M, in their alternative proposals, suggest that additional data be developed concerning the

maximum payment amounts in Subpart H. USI offered testimony concerning the use of

Automated Budget and Reimbursement Approach (ABRA) to collect data concerning both rates

and scope of work. Exh. 109 at 72. The Agency is concerned that the database software

presented by USI is complicated, confusing to understand, and cumbersome to use. PC 62 at 29.

The Agency also does not believe that the large majority of consulting firms would embrace the

use of the database software.

Id

. Finally, the Agency feels implementation and maintenance of

such a database would require significant resources the Agency does not have.

Id

.

 

The Board addressed the issue of requiring the Agency to develop and maintain a

database concerning reimbursement rates and scopes of work at in the first-notice opinion. The

Board stated:

 

The Board acknowledges that many participants have made meaningful

comments about the value of an electronic database to track reimbursement rates.

However, the Board will not require the Agency to develop an electronic database

of reimbursement information. The Board is not convinced that an electronic

database is necessary to administer either these specific rules or the UST program.

R04-22, 23 (Feb. 17, 2005) at 68.

 

The Board appreciates the efforts of USI to seek out the development of a system that will allow

for collection of data concerning reimbursement rates as well as the scope of work for tasks.

However, the participants are in effect asking the Board to direct the Agency to maintain or

developed a process to be used internally by the Agency. The Board is unwilling to direct the

Agency to do so, especially given the financial consequences to the Agency for the development

and maintenance of such a process. And as stated at first notice, the Board is not convinced that

an electronic database is necessary to administer either these specific rules or the UST program.

Therefore, the Board will not direct the Agency to either use the ARBA system or develop a

system for collection of data concerning reimbursement rates.

 

5. Agency Review Process

 

The issue of how the Agency performs reviews of materials submitted in the UST

program and the length of time such reviews take has been discussed from the beginning of this

rulemaking process. Most recently, CSD expresses concern that due process is not afforded to

owners/operators who cannot afford to appeal an adverse Agency decision to the Board. PC 64

at 4. CSD demands that the Board provide an alternative to appeals to the Board in the rule or

---

 

64

legislative action may be necessary.

Id

. CW

3

M takes issue with Agency suggestions that the

length of time a review takes is because of the submissions by consultants. Exh. 106 at 7.

CW

3

M argues and provides statistics to demonstrate that review times often are dependent on the

Agency reviewer.

Id

. CW

3

M also asks that the Board require the Agency to include more detail

in denial letters. Exh. 106 at 13.

 

These same issues were raised prior to first notice, although worded somewhat

differently. At hearing and in comments, PIPE sought issuance of a pre-denial letter, shortened

review times, and alternative dispute resolution procedures. PC 6 at 21 and Tr.7 at 215-16.

CSD, a member of PIPE, now maintains that “due process” is not afforded because some

owners/operators cannot afford to appeal to the Board.

 

The Board disagrees with CSD and finds that the review process under Section 57.7 of

the Act (415 ILCS 5/57.7 (2004)) provides applicants with due process. Specifically, Section

57.7 (415 ILCS 5/57.7 (2004)) allows an applicant to appeal an adverse decision of the Agency

to the Board pursuant to Section 40 of the Act (415 ILCS 5/40 (2004)). If a party appeals a

decision to the Board under the UST program and prevails, attorney fees are reimbursable.

See

 

415 ILCS 5/57.8(l) (2004). Further, the legislature has adopted a provision that allows a 90-day

extension of the appeal period (

see

415 ILCS 5/40(a)(1) (2004)) to provide for an opportunity for

ongoing dialogue between applicants and the Agency. Thus, the statutory language currently

addresses the inability to “afford” an appeal and the concept of responding to denial reasons

before an appeal, so there is no need for additional language.

 

The level of detail in the denial letter is also addressed in statutory language. As the

Board noted in the first-notice opinion:

 

As to the concerns that the Agency’s denial letters lack specificity, the Board is

cognizant of that concern. However, Section 57.7(c)(4) (or (c)(4)(D)) (415 ILCS

5/57.7(c)(4) (or (c)(4)(D)) (2002))

4

sets forth the requirements for the Agency’s

denial letter. Section 57.7(c)(4) of the Act (415 ILCS 5/57.7(c)(4) (2002))

provides that any Agency action to disapprove or modify a plan submitted

pursuant to this Title shall be accompanied by:

 

(A) an explanation of the Sections of this Act which may be

violated if the plans were approved;

 

(B) an explanation of the provisions of the regulations,

promulgated under this Act which may be violated if the

plans were approved;

 

(C) an explanation of the specific type of information, if any,

which the Agency deems the applicant did not provide the

Agency; and

4

The language in the Act concerning the contents of the Agency’s denial letter is identical in all

four public acts; except that, the numbering and lettering differs from public act to public act.

---

 

65

 

(D) a statement of specific reasons why the Act and the

regulations might not be met if the plan were approved.

(415 ILCS 5/57.7(c)(4) (2002))

 

The Board notes that the language of Section 57.7(c)(4) (415 ILCS 5/57.7(c)(4)

(2002)) clearly outlines the required content of a plan disapproval or modification

by the Agency. The Board is not convinced that additional language is necessary

to effectuate the legislative intent of Section 57.7(c)(4) (415 ILCS 5/57.7(c)(4)

(2002)). R04-22, 23 (Feb. 17, 2005) at 70.

 

Nothing in the additional comments from CW

3

M convinces the Board that additional language in

the rule will be more effective than the plain language of the statute. Therefore, the Board

declines to make the changes suggested.

 

6. Applicability Section (732.100/734.100)

 

Participants have expressed concerns that the rule may have a retroactive effect and that

the applicability of the rule should be clarified. CW

3

M suggests several changes in the

applicability section of the rule. CW

3

M’s proposed changes add language referencing the P.A.

92-0554 and P.A. 92-735 and specify that the rules do not apply retroactively. Prior to first

notice, PIPE made suggestions to this same section because of concerns that the rule may be

applied retroactively. The Board made minor changes prior to first notice to address PIPE’s

concerns. R04-22, 23 (Feb. 17, 2005) at 63. The Agency opposes the changes suggested by

CW

3

M because the Agency believes that the references to the public acts would limit the scope

of the rule. The Agency is also concerned that the CW

3

M’s proposed changes would convert an

applicability section into an intent section. Finally, the Agency believes the rule already reflects

that the rule will not be applied retroactively.

 

The Board agrees with the Agency’s concern that the language proposed by CW

3

M

referencing the public acts could limit the scope of the rules. Also, the Board believes that the

language is clear that the rule does not have a retroactive application. In any event, a rule is not

effective until filed with the Secretary of State pursuant to Section 5-40 of the IAPA (5 ILCS

100/5-40 (2004)). The Board therefore declines the suggestions made by CW

3

M to reference the

public acts and to add language regarding retroactive application of the rule. However, CW

3

M

has suggested a change in the second sentence that the Board will accept. CW

3

M suggests

changing “[i]t does” to “[t]hese amendments do” and the Board will make that change.

 

7. Alternative Technology (Section 732.407/734.340)

 

During the first-notice period, the comments and testimony raised issues concerning

alternative technology. CSD questions whether the Agency had considered allowing for

submission of alternative technology in phases, which would allow the Agency the opportunity

at early stages to evaluate the technology proposed. Exh. 99 at 5. CW

3

M offered language that

CW

3

M believes reflects that there may not always be more than one available alternative

---

 

66

technology. Exh. 106 at 13. The Agency did not respond to CSD’s comment and does not

believe that CW

3

M’s suggested change is warranted. PC 62 at 4.

 

The Board appreciates the concerns about alternative technology raised by CSD and the

Board is disappointed that the Agency did not address CSD’s concern either at hearing or in

public comment. Unfortunately, the record does not provide the Board with sufficient

information on how to implement a procedure allowing submission of alternative technologies in

phases. Therefore, the Board must decline to make this change, as the record does not provide

enough support for the Board to make the change.

 

CW

3

M has again asked the Board to specify that only

available

alternative technologies

should be considered; specifically, CW

3

M would add, “if other alternative technologies are

available which are capable of being implemented.” PC 63 at 51. The Board addressed this

issue at first notice and indicated that the language would be amended to clarify that only

available

technologies needed to be considered.

See

R04-22, 23 (Feb. 17, 2005) at 65. The

Board added the phrase “if other alternative technologies are available and are technically

feasible” to subsection (b).

Id

. The Board invited additional comment on this issue. A review

of the Board’s first-notice order indicates that the language was placed in Section 732.407, but

not Section 734.340. The Board will correct that error at second notice. The Board’s language

added at first-notice is nearly identical to the language proposed by CW

3

M. Therefore, the

Board finds that additional language changes are not necessary in this section beyond adding

language to Section 734.340.

 

8. Tier 2 TACO Cleanup Objectives and Groundwater Ordinances (Sections

732.408/734.410 and 732.606(fff)/734.630(ccc))

 

In the Board’s first-notice opinion the Board invited additional comment on the issue of

limiting reimbursement to Tier 2 TACO standards and the participants responded to that request.

In addition, the Board received additional comment on the use of groundwater ordinances as

institutional controls when remediating UST sites.

 

CW

3

M argues that the required use of a groundwater ordinance should be deleted

because the Agency did not consider the effect on property values if the owner/operator is

“forced” to leave contamination in place. Exh. 106 at 19. The Agency does not believe that

deletion of this subsection is necessary. PC 62 at 14. The Agency asserts that the effect of

remediation on property values is not a factor in UST Fund reimbursement.

Id

. The Agency

maintains that reimbursement is limited to costs necessary to meet the minimum requirements of

the Act and use of a groundwater ordinance as an institutional control meets the minimum

requirements of the Act.

Id

.

 

Mr. Reott offered specific language to clarify that if there is a preexisting groundwater

ordinance, certain investigative steps would not be needed. PC 39 at 1-2. The Agency disagrees

with Mr. Reott’s suggestion because the Agency maintains that there are no preexisting

groundwater ordinances as institutional controls. PC 62 at 31-32. The Agency states that to use

a groundwater ordinance as an institutional control, the owner/operator must demonstrate that

TACO requirements have been met to allow use of an institutional control. PC 62 at 32.

---

 

67

 

Mr. Hundley, on behalf of USI, argues that the limitation of reimbursement for cleanup to

Tier 2 TACO levels and the requirement that the groundwater ordinance be used are

inappropriate. Exh. 109, Attach 23 at 10. Mr. Hundley asserts that there is no statutory basis for

these proposals and although the legislature has acknowledged TACO, the legislature has not

limited reimbursement to Tier 2 TACO levels.

Id

. Mr. Hundley notes that the statutory

language of the Act requires an owner/operator to design a plan to mitigate any threat to human

health, human safety, or the environment resulting from a leaking UST.

Id

. Mr. Hundley also

argues that cleanup to Tier 2 rather than Tier 1 will indisputably affect future property use, value,

and salability. Exh. 109, Attach 23 at 11. Mr. Hundley notes that TACO focuses on risks to

human health while the UST program requires cleanup if there is a threat to human health,

human safety, or the environment.

Id

.

 

Midwest Petroleum also filed a comment expressing concerns with allowing

reimbursement to Tier 2 TACO values. PC 57. Midwest Petroleum discussed a situation where

an ELUC was used but Midwest Petroleum still had contractual liability for any future failure of

the ELUC.

Id

.

 

Concerning the use of Tier 2 TACO cleanup objectives, the Board stated at first notice:

 

The Board has reviewed the comments of the participants and the Agency on the

issue of limiting reimbursement to Tier 2 cleanup objectives. The Board is

convinced that limiting cleanup cost reimbursement to Tier 2 TACO objectives is

appropriate. As noted above, Tier 2 objectives are derived by using site-specific

data rather than the conservative default values used in determining Tier 1

objectives. Thus, in most cases cleanup to Tier 2 objectives would be less

expensive, but equally protective of human health and the environment as cleanup

to Tier 1 objectives. The UST Fund is designed to reimburse reasonable costs for

remediation that mitigates “any threat to human health, human safety, or the

environment resulting from the underground storage tank release.” 415 ILCS

5/57.7(b)(2) and (c)(3) (2002). Furthermore, the Board does not find a

contradiction between the regulatory language and this limitation. The Agency’s

proposed language is consistent with existing language and does not create

inconsistencies with the existing regulatory language or language proposed in this

proceeding. R04-22, 23 (Feb. 17, 2005) at 76.

 

The Board finds nothing in the additional comments that convinces the Board to alter our

position. The Board respectfully disagrees with Mr. Hundley that the use of Tier 2 objectives is

inappropriate. As the Board stated at first notice, the Act authorizes reimbursement for

reasonable costs to mitigate “any threat to human health, human safety, or the environment

resulting from the underground storage tank release.” 415 ILCS 5/57.7(b)(2) and (c)(3) (2004).

The statutory language does not require reimbursement for cleanup beyond that standard and the

Tier 2 objectives meet the statutory requirements.

 

On the issue of a groundwater ordinance as an institutional control, the Board found such

an institutional control was appropriate at first notice. The concerns about future property values

---

 

68

are not persuasive. The purpose of the UST program includes the establishment of requirements

for eligible owners/operators of USTs to seek payment for any costs associated with physical soil

classification, groundwater investigation, site classification and corrective action from the UST

Fund. 415 ILCS 5/57 (2004). In determining if reimbursement is appropriate the Agency shall

determine that:

 

the costs associated with the plan are reasonable, will be incurred in the

performance of site investigation or corrective action, and will not be used for site

investigation or corrective action activities in excess of those required to meet the

minimum requirements. 415 ILCS 5/57.7(c)(3) (2004).

 

Nothing in the statute requires that costs necessary to increase salability, value or future use are

reimbursable. Therefore, the Board finds that use of Tier 2 TACO and groundwater ordinances

as institutional controls are consistent with the provisions of the Act and the suggested changes

are not warranted.

 

9. Eligibility of Costs Incurred after the Issuance of an NFR Letter (Sections

732.601(j)/734.605(j) and 723.606(kk)/734.630(gg))

 

On the proposed language requiring that applications for reimbursement be filed within

one year of the issuance of an NFR letter, the Board asked for additional comment in the first-

notice opinion. R04-22, 23 (Feb. 17, 2005) at 66. CW

3

M has suggested adding an exception to

allow for application for reimbursement more than one year after issuance of an NFR letter.

CW

3

M also recommends adding exceptions or exclusions to the prohibition against any

reimbursement after issuance of an NFR letter. CSD supports the addition of these exceptions.

The Agency opposes the suggested changes to both sections.

 

Regarding CW

3

M’s proposed exception to the one-year deadline, the Board addressed

this issue at first notice and invited additional comment, particularly regarding Part 731 sites and

other potential exceptions. R04-22, 23 (Feb. 17, 2005) at 66. A review of the Board’s first-

notice opinion and the record in this proceeding indicates that CW

3

M’s comments during first

notice are very similar to the comments offered prior to first notice. That being the case, CW

3

M

has not offered additional comment that convinces the Board to alter the first-notice proposal

concerning the one-year limitation.

 

As to the additional exceptions to reimbursement after issuance of an NFR, the Board is

also unconvinced. As the Agency points out, the Board has previously addressed some of these

issues in prior rulemakings and decided not to include the exceptions. Also as noted in the

Board’s first-notice opinion:

 

The Board is not convinced that owners or operators should be allowed back into

the UST Fund after a NFR letter has been issued for a site. The NFR letter

concept is predicated on finality. R04-22, 23 (Feb. 17, 2005) at 76.

 

CW

3

M and CSD have not provided sufficient justification for the Board to revisit this issue and

alter the Board’s positions. Therefore, the Board declines to make this change.

---

 

69

 

10. Handling Charges (Section 732.606(ss)/734.630(oo) and Section

732.601(b)(10)/734.605(b)(10))?

 

The participants have filed additional comments on two issues involving handling

charges. One is whether a primary contractor with a financial interest in a subcontractor should

be reimbursed for handling charges incurred when dealing with that subcontractor. The second

is the issue of requiring proof of payment to a subcontractor before allowing reimbursement of

handling charges.

 

In the Board’s first-notice opinion, the Board proposed the Agency’s language, which

excludes handling charges for subcontractors where the primary contractor has a financial

interest in the subcontractor. However, the Board invited comment on this issue and stated that

“if sufficient information is added to the record, the Board will revisit this issue during the first-

notice period.” R04-22, 23 (Feb. 17, 2005) at 71. Both CSD and CW

3

M commented further on

this issue. CSD conceded that much of the cost for procurement is eliminated when using a

subcontractor in which CSD has an interest; however, costs for administrative, insurance, interest

costs, and a reasonable profit for oversight and field purchases is not eliminated. PC99 at 1.

CW

3

M agrees that administrative and oversight costs do not change when the primary contractor

has a financial interest. PC 106 at 18. Further, CW

3

M indicates that the definition of financial

interest is so broad, that the primary contractor could hold only a minority interest.

Id

. The

Agency asserts that when the prime contractor has a financial interest in the subcontractor, many

of the costs associated with hiring a subcontractor are not incurred. PC 62 at 12.

 

Based on this additional testimony and comment, the Board is convinced that there will

be times when a primary contractor with a financial interest in a subcontractor should be able to

recoup administrative and oversight costs. This would be true especially if the primary

contractor holds only a minority interest in the subcontractor’s operation. Therefore, the Board

will delete this provision from the list of costs ineligible for reimbursement. This will allow the

Agency to determine on a case-by-case basis if costs are incurred and handling charges are

appropriate.

 

On the issue of requiring proof of payment to a subcontractor, the Board at first notice

proposed a rule that requires proof of payment. R04-22, 23 (Feb. 17, 2005) at 72. However, the

Board did amend the Agency’s proposal to allow for additional mechanisms to establish proof of

payment and the Board invited additional comment.

Id

. CW

3

M argues that requiring proof of

payment is unduly burdensome and will add to the cost of remediation. PC 106 at 14. CW

3

M

also argues that obtaining proofs of payment will be difficult.

Id

. The Agency opposes this

change. PC 62 at 6.

 

In the Board’s first-notice opinion the Board stated:

 

The existing language in Section 732.606(ll) includes as an ineligible cost

“Handling charges for subcontractor’s costs when the contractor has not paid the

subcontractor.” The language proposed by the Agency is asking for proof that the

contractor has paid the subcontractor before allowing reimbursement. The

---

 

70

existing language provides that handling charges are only eligible reimbursement

costs if the contractor

paid

the subcontractor. To the Board, it would appear that

the Agency is merely requiring proof of a prerequisite which already exists. R04-

22, 23 (Feb. 17, 2005) at 72.

 

The Board’s first-notice language allowed cancelled checks, lien waivers or affidavits from the

subcontractor as proof of payment. The Board is not convinced by CW

3

M’s comments that

proof of payment is unduly burdensome. Therefore, the Board declines to make this change.

 

11 Auditing Provisions (732.614/734.665)

 

Issues were raised during the first-notice period concerning the Agency’s authority to

perform audits and the extent of those audits. CW

3

M and USI both took issue with the auditing

provisions. CW

3

M offers language changes to the auditing provision, which delete the engineers

and geologist from the section. Exh. 106 at 19. CW

3

M agrees that the Agency has the authority

to perform audits under the Act.

Id

. However, CW

3

M believes that authority is limited to

reviewing portions of the plans and reports submitted to the Agency.

Id

.

 

Mr. Hundley, testifying on behalf of USI, argues that Section 734.665 is beyond the

Agency’s statutory authority and Mr. Hundley takes issue with the Board’s decision to the

contrary at first notice. Exh. 109, Attach. 23 at 13. Mr. Hundley argues that the statute gives the

Agency only the authority to audit “data, reports, plans, documents and budgets

submitted

”

pursuant to the Act.

Id

. Mr. Hundley does not believe that the audit provisions extend to all

documents. Further, Mr. Hundley argues that the regulated entity should not be required to

retain all documents pertinent to the submissions, as well as copies of submissions to the

Agency.

Id

.

 

The Agency opposes the suggested change by CW

3

M because the Agency feels that in

many cases the only documents the owner/operator has are the same documents submitted to the

Agency. PC 62 at 15. The Agency maintains that the documents are often submitted directly by

the consultant and the owner/operator merely signs the documents.

Id

. Deleting the engineers

and geologist from this section would limit the Agency, in many cases, to reviewing only the

documents submitted to the Agency.

Id

.

 

As the Board stated at first notice, the Agency’s authority to: “‘audit’ is defined as ‘a

systematic inspection or examination of plans, reports, records, or documents to determine the

completeness and accuracy of the data and conclusions contained therein.’ 415 ILCS 5/57.2

(2004). Pursuant to Section 57.15 of the Act (415 ILCS 5/57.15 (2004)), the Agency has the

authority to ‘audit

all

data, reports, plans, documents and budgets submitted pursuant to this Title

[emphasis added].’ 415 ILCS 5/57.15 (2004).” R04-22, 23 (Feb. 17, 2005) at 66. The Board is

unconvinced by the arguments that the plain language of the statute limits the Agency’s review

to

only

the documents submitted to the Agency. Therefore, the Board finds no basis to alter the

Board’s first-notice determination concerning the Agency’s ability to audit data, reports, plans,

and budgets.

 

---

 

71

On the second area of concern raised by CW

3

M, that the consultants should not be

required to maintain records for the Agency inspection, the Board finds merit in this point. The

owner/operator is the individual who will be reimbursed and ultimately the owner/operator

should bear the responsibility for recordkeeping. The Board is unconvinced by the Agency’s

concern that the owner/operator might not have supporting documentation. If an audit is

performed and sufficient information to support the data, reports, plans, and budgets is not in the

owner/operator’s possession, the Agency can deny reimbursement. Therefore, the Board will

delete the requirement that the engineer or geologist maintain records that must be available for

Agency audit.

 

12. Maximum Payment Amount for Abandonment and Removal of Tanks (Section

732.810/734.810)?

 

Comments and testimony in reaction to the Board’s first-notice proposal raised again the

issue of the maximum payment amount for the abandonment and removal of tanks. CSD

expresses concerns that the maximum payment amount for abandonment of a UST is insufficient

to cover actual cost of abandonment. Exh. 99 at 3. CSD asserts that the cost for flowable fill

alone would be $5,035.

Id

. CSD recommends that the maximum payment amounts be amended

using

RS Means

published costs for UST closure. Exh. 99 at 4. CW

3

M argues that the

maximum payment amounts are outdated since the amendment of OSFM regulations concerning

tank removal and CW

3

M advocates a minimum removal amount of $6,300. Exh. 106 at 21. The

Agency argues that CSD and CW

3

M have not provided sufficient justification for a change and

have in fact suggested different rates. PC 62 at 20.

 

In the Board’s first-notice opinion, the Board addressed this issue in response to

comments from PIPE and stated:

 

PIPE proposed alternative rates for UST removal and abandonment. PC 6 at 11.

PIPE based the alternative rates on the 2004

RS Means Environmental Cost

Handling Options and Solutions

(

RS Means

).

Id

. PIPE believes that the

alternative rates are “eminently more justifiable as ‘reasonable’” rates than those

proposed by the Agency.

Id

.

 

The Board is not convinced that basing rates on

RS Means

in and of itself is

appropriate. Although as indicated above, the Agency’s method for developing

the maximum payment amounts had statistical limitations, the Agency’s rates

were based on real data from actual sites in Illinois. Therefore, the Board rejects

alternative rates, such as

RS Means

, and the Board will propose the rates as

developed by the Agency for first notice. R04-22, 23 (Feb. 17, 2005) at 81.

 

After careful review of the testimony provided by CSD, CW

3

M, and USI since first notice, the

Board is convinced that the rates as proposed at first notice are sufficient for abandonment and

removal of tanks. This is especially true given both CW

3

M’s and USI’s willingness to accept the

maximum rates as proposed at least as interim rates.

See

 

infra

at 61. Further, the provisions

allowing for bidding will help to address any shortfalls with this maximum payment rate.

 

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72

13. Mobilization Charges for Drill Rigs (Section 732.820/734.820)

 

Participants have raised an issue concerning the maximum rate for drilling and well

installation. CW

3

M and USI both propose adding mobilization charges as a separate payment

item. Exh. 106 at 21 and Exh. 109 at 40. CSD does not believe that the maximum payment

amount is sufficient to pay for the mobilization of more than one drill rig and CSD supports

CW

3

M’s and USI’s changes. PC 64 at 5. The Agency maintains that the maximum payment

amounts already include the cost for mobilization and the suggested use of the amounts in

Section 732.845/734.845 are not appropriate. PC 62 at 22. Specifically the Agency states that

the rates in Section 732.845/734.845 are for professional consulting services not drill rig

mobilization.

Id

.

 

The Board is cognizant of the concerns by CSD, CW

3

M, and USI. However, the Board is

equally cognizant of the fact that the rates proposed for mobilization by CW

3

M, and USI are

rates developed for travel by professional consultants. CSD, CW

3

M, and USI have not presented

evidence that the rates are equivalent and the Board cannot make that leap. Further, the Agency

offered testimony prior to first notice that the rate included mobilization and also the rule

language states that the maximum payment amount includes mobilization/demobilization.

Therefore, the Board finds the record does not support a change to the rule.

 

14. Soil Removal and Disposal (Section 732.825/734.825)

 

The issue of soil removal and disposal was discussed extensively prior to the Board

proceeding to first notice. CW

3

M again asks that the Board adopt rates for soil removal and

disposal based on rates from IDOT projects where the projects were bid. Exh. 106 at 22-23.

CW

3

M also proposes the use of a conversion factor of 1.05.

Id

. The Agency responds to CW

3

M

by summarizing the proposed changes to this section as: 1) basing maximum payment amounts

on amounts approved by IDOT; 2) changing the “swell factor” and “weight/volume” conversion

factor to 1.2 tons per cubic yard; and 3) adding $14.25 per cubic yard for “additional expenses”

associated with the transportation of soil that is temporarily stockpiled on-site or off-site. PC 62

at 23. The Agency opposes all of these changes. PC 62 at 23-25.

 

The Agency notes that IDOT provided a letter stating that the costs in IDOT’s contracts

should not be used to justify or compare costs in this rulemaking. PC 62 at 23, citing Exh. 89.

Further, the Agency notes that prior to first notice, CW

3

M proposed a conversion factor of 1.68.

PC 62 at 24. Finally, the Agency maintains that CW

3

M provided no justification for the

additional $14.25 per cubic yard that CW

3

M suggests adding.

Id

.

 

Prior to proposing this rulemaking for first notice, the Board examined the issue of what

conversion factor was appropriate. The Board stated:

 

First, the Board does not see a significant disparity between the Agency’s

proposed swell factor and the swell factor recommended by the other participants.

The Board is convinced that a swell factor of five percent applied to the total for

ETD is equivalent to a twenty percent swell factor and twenty percent is

appropriate. Regarding the conversion factor, the Board recognizes that the factor

---

 

73

ranges from one to two tons per cubic yard for different types of geologic

material. The conversion factor proposed by the Agency takes into consideration

various types of geologic material that occur at Illinois UST sites and the Board

finds that the record supports a 1.5 tons per cubic yard conversion factor. The

Board will proceed to first notice with the swell factor and conversion factor as

proposed by the Agency. R04-22, 23 (Feb. 17, 2005) at 74.

 

CW

3

M has presented the Board with no information that would convince the Board to change

the position taken by the Board at first notice concerning a conversion factor. As to the

remaining issues, the Board is also unconvinced that a change is warranted. IDOT has

specifically stated that the contract rates used by IDOT should not be used in this proceeding and

the Board is persuaded by that comment. Also as an owner/operator may seek bids for soil

removal and disposal if the maximum rates prove insufficient, the owner/operator can address

any shortcoming in the maximum rates. Therefore the Board declines to make the changes

suggested by CW

3

M.

 

15. Drum Disposal (Section 732.830/734.830)

 

Concerning the maximum payment amount for drum disposal, CW

3

M suggests that the

words “non-hazardous” be added to the language of the rule and suggests a “stop fee” in

accordance with Section 734.845(e) be added. Exh. 106 at 25. The Agency opposes a “stop fee”

for this section as the maximum payment amount already includes that cost. PC 62 at 25. The

Agency also notes that the travel fees in Section 734.845 are for travel costs associated with

professional consulting service, not drum disposal.

Id

.

 

The Board is unconvinced that a “stop fee” is required for drum disposal as the lump sum

payment amount includes “transportation” by the plain language of the rule. Further, the rates

proposed for mobilization or “stop fees” by CW

3

M are rates developed for travel by professional

consultants. CW

3

M has not presented evidence that the rates are equivalent to “stop fees” and

the Board cannot make that leap. Therefore, the Board finds that the record does not support the

addition of a “stop fee” for drum disposal and the Board will not make that change. The Board is

also unconvinced that adding the phrase “non-hazardous” is necessary and declines to do so.

 

16. Concrete, Asphalt and Paving (Section 732.840/734.840)

 

CW

3

M raises again the issue of maximum payment amounts for concrete, asphalt, and

paving and suggests that testimony offered prior to the Board’s adoption of the first-notice

proposal demonstrates that there are numerous flaws with the proposed rates. Exh. 106 at 25.

CW

3

M offers alternative rates.

Id

. The Agency opposes the alternative rates suggested by

CW

3

M. PC 62 at 26. The Agency notes that CW

3

M supports the alternative rates based on

testimony given prior to the Board’s first-notice proposal and the Board has already considered

that testimony and rejected the changes.

Id

. The Agency argues that CW

3

M has not offered any

new information to support the alternative rates.

 

The Board has reviewed the first-notice opinion and order and the testimony by CW

3

M.

The Board finds nothing which convinces the Board that the alternative rates proposed by CW

3

M

---

 

74

should be adopted. Further, given the support of USI for these rates as discussed

infra

at 61, the

Board finds that the rates as proposed are reasonable.

 

17. Bidding for Professional Services (732.855/734.855)

 

The Board received a great deal of comment and testimony concerning the concept of

bidding for professional services under the rule. The Board added the concept of bidding in the

first-notice opinion after the issue was raised during the hearing process. Some of the specific

comments include that CSD notes that bidding for professional services is not normally done and

many gasoline station owners/operators do not employ environmental professionals to assist with

regulations. Exh. 99 at 3. CSD believes that the bidding process should be reserved for UST

compliance costs other than professional consulting services.

Id

. CW

3

M agrees that bidding of

professional consulting services is not practicable although bidding may be an option in other

areas. PC 63 at 5. USI also believes that using competitive bidding for professional services is

problematic, especially without a defined scope of work. Exh. 109 at 54. USI argues that the

concept of bidding for professional services should not be included in this rule.

Id

. ACECI

challenges the propriety of requiring an owner/operator to bid out professional services, when the

State would be required to use qualification-based selection. PC 58 at 1.

 

The Board has carefully reviewed the comments and testimony concerning bidding for

professional consulting services. The Board is convinced that bidding for many of the lump sum

payment rates in Subpart H is a feasible alternative. This conclusion is supported by USI’s

comments concerning the acceptability of many of the rates in Subpart H.

See infra

61.

However, the Board is equally convinced that, especially absent defined scopes of work, bidding

for professional consulting services is not a feasible alternative. For an owner/operator to

prepare bid specifications and accept bids based on the rules as proposed for second notice

without a consultant, places a massive burden on owners/operators, especially small businesses

and municipalities. Therefore, the Board will exclude professional consulting services from the

bidding provisions at this time. Further, the Board notes that in today’s opinion the Board has

determined that professional consulting services will be reimbursed on time and materials and

therefore bidding for professional services is not necessary.

 

18. Economic Impact of the Rulemaking

 

A major concern of the participants in this rulemaking has been the economic impact of

the rules on owners/operators of UST sites in Illinois that have not yet been remediated. CSD,

CW

3

M, and USI all assert that the adoption of the proposed maximum payment amounts,

particularly for professional consulting services, will have a negative impact on owners/operators

and their consultants in Illinois. CSD states that adoption of lump sum payments will cut profit

margins so much that consultants will not offer upfront financing. Exh. 99 at 2. CSD believes

that without upfront financing, noncompliance will increase among many small businesses.

Id

.

CW

3

M asserts that the failure to adopt adequate rates will have a serious impact on

owners/operators and the future of CW

3

M’s business is at stake. PC 63 at 9.

 

USI comments that over 4,000 small owners/operators are responsible for sites yet to be

issued NFR letters in Illinois. Exh. 109 at 8. USI asserts that small owners/operators are even

---

 

75

more reliant on the UST Fund and need to be reimbursed for 100% of eligible costs. Exh. 109 at

11. USI specifically asked that the Board again request DCEO to perform an economic impact

study of the effects of the rule. Exh. 96 at 3-4.

 

The Board received comments from Senator Sullivan, Senator Lauzen, and Senator Dahl

expressing concerns about the effect of these proposed rules on small businesses and

municipalities in the State. PC 65 and PC 69. In addition PIPE states that the evidence in this

proceeding establishes that owners/operators will be required to pay large sums out of pocket

when remediating a UST site. PC 70 at 3.

 

Prior to proceeding to first notice and even before holding our first hearing in this matter

the Board asked DCEO, pursuant to Section 27(b) of the Act (415 ILCS 5/27(b) (2004)), to

perform an economic impact study. DCEO responded in April 2004 before the Board’s second

group of hearings. DCEO’s response indicated that due to financial constraints a study could not

be performed at that time.

 

The Board has proceeded with this rulemaking and gathered substantial testimony about

the economic impact of the proposed rules. The comments indicate that the main area of

negative economic impact concerns the professional consulting maximum payment rates without

a defined scope of work. Given the Board’s action today to open a subdocket on the scope of

work and maximum payments for professional consulting services, and in the meantime to allow

professional consulting to be reimbursed on time and material basis, the negative impact of the

rule has been substantially alleviated. Therefore, the Board finds that the rule as being proposed

for second notice is economically reasonable and that any adverse economic effect has been

minimized. However, the Board will again request an economic impact study from DCEO

pursuant to Section 27(b) of the Act (415 ILCS 5/27(b) (2004)) on the subdocket.

 

19. Miscellaneous

 

Throughout the comments and testimony the participants have addressed various

miscellaneous issues which do not fall within the categories of issues above. Therefore the

Board will address those remaining comments and testimony here.

 

Application for Reimbursement

 

CSD raises an issue concerning the number of applications for reimbursement that can be

submitted, the frequency of submission, and how the maximum payment amounts in Section

732.845/734.845 apply. Exh. 99 at 5. The issue is raised in response to the Agency’s answers to

prefiled question, which CSD believes are contradictory.

Id

. CSD also questioned the maximum

payment amounts for amending a plan for unforeseen circumstances under Section

734.845(f)/734.845(f). Exh. 99 at 6. The Agency responds to CSD’s concerns indicating that

the maximum payment amounts include the costs of preparing and submitting applications and

are sufficient to cover reasonable costs associated with the preparation. PC 62 at 31. The

Agency states that the frequency of submissions is left to the owner/operator.

Id

.

 

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76

The Board understands the concerns raised by CSD on these issues surrounding the

maximum payment amounts for professional services. As the Board has determined to proceed

to second-notice with a rule that will allow for payment on a time and material basis and to

examine the maximum payment amounts along with scopes of work in a subdocket, the Board

need take no action on CSD’s concerns today. However, the Board invites CSD and other

participants to raise these issues in subdocket B.

 

Triennial Review

 

Under Section 732.875/734.875, the Agency will review the reimbursement amounts at

least every three years. CSD asks that the Board require the Agency to develop written

procedures for conducting the review and make those procedures available to the public. Exh.

99 at 4. The specific language of Section 732.875/734.875 is:

 

No less than every three years the Agency must review the amounts set forth in

this Subpart H and submit a report to the Board on whether the amounts are

consistent with the prevailing market rates. The report must identify amounts that

are not consistent with the prevailing market rates and suggest changes needed to

make the amounts consistent with the prevailing market rates.

 

The Board understands the concerns expressed by CSD; however, the rule language already

requires that the Agency’s finding be reported to the Board. To ensure that the public is aware of

the results of the Agency’s review, the Board will announce receipt of the report on the Board’s

web page and in the

Environmental Register

. The Board will amend the rule language to reflect

this decision.

 

LUST Advisory Committee

 

CSD suggests that there should be an odd number on the Advisory Committee rather than

the current committee size of ten members. PC 64 at 3. CSD also suggests that because of

PIPE’s level of activity in this rulemaking, PIPE should be given two seats on the Advisory

Committee.

Id

. CSD further suggests that the Advisory Committee be given additional

responsibilities for things such as developing standardized forms and evaluation of maximum

payment amounts.

Id

. CSD, CW

3

M and USI all recommend using the Advisory Committee to

assist in the development of task lists or scopes of work.

 

The Board agrees that the Advisory Committee would be better served by having an odd

number of participants. The Board will therefore accept CSD’s suggestion and add a second

member of PIPE to the Advisory Committee. As to the suggestions by CSD, CW

3

M and USI

that the Advisory Committee assist in the development of task lists or scopes of work, in

subdocket B, the Board will address the issue of task lists and scopes of work. The Board

encourages the participants and the Advisory Committee to work with the Agency and the Board

in subdocket B.

 

Information in Reimbursement Requests

 

---

 

77

CW

3

M expressed confusion arising from responses by the Agency to prefiled questions.

Exh. 106 at 10. Specifically, CW

3

M is confused over what information must be included in a

reimbursement application for a lump sum payment.

Id

. CW

3

M maintains that at one point the

Agency indicated simply an invoice would be sufficient, while a later response seem to indicate

more substantial information would be required.

Id

. The Board does not share CW

3

M’s

confusion. Section 57.8(a)(6) of the Act (415 ILCS 5/57.8(a)(6) (2004)) specifies what must be

included in a complete application and the Agency’s answers are consistent with Section

57.8(a)(6) of the Act (415 ILCS 5/57.8(a)(6) (2004)). Therefore, the Board finds no change is

necessary.

 

Sections 732.110/734.135 and 732.505/734.510

 

CW

3

M suggests amending the language in both these sections. Specifically CW

3

M

suggests that language be added to allow for documentation of reports delivered by hand or

private delivery service to the Agency and language be added to ensure that the Agency

maintains records of the Agency’s review. Exh. 106 at 12, 14. The Board agrees that private

and hand delivery should be allowed and will therefore amend the language to reflect such

delivery. The Board notes that the record before the Agency includes “any information the

Agency relied upon in making its determination” (35 Ill. Adm. Code 105.410). The Board finds

that the phrase is sufficiently inclusive and finds no merit in adding language concerning the

content of the Agency’s record to the rule.

 

Sections 734.320(b)(2) and 734.330(a)(1)

 

CW

3

M asks that the word “projected” be added before “post-remediation use of the

property” because an owner/operator may not know for certain what the future use of the

property may be. Exh. 106 a 12. The Board will accept the suggestion by CW

3

M and will add

“projected” before “post-remediation use of the property” in the rule.

 

Section 732.605/734.625 and 734.630(w)

 

CW

3

M suggests adding several items to the list of eligible costs in the rule. Exh. 106 at

16. In response, the Agency comments that the list is not an exclusive list and Section

732.605/734.625 merely contains examples of costs that may be eligible and eligibility of a

certain cost is not dependant upon listing in this section. PC 62 at 7. The Board agrees with the

Agency that the list of costs eligible for reimbursement in Section 732.605/734.625 is not an

exhaustive list and is not meant to be one. The Board finds that the additions suggested by

CW

3

M are not necessary and declines to make the changes.

 

One specific suggestion by CW

3

M is that compaction of backfill be allowed as an eligible

cost and that compaction be deleted from the language in Section 734.630(w). Exh. 106 at 16,

75. The Agency opposes these changes and notes that ineligibility of costs associated with

compaction of backfill is a longstanding practice. PC 62 at 8. The Board agrees with the

Agency and finds no merit in amending the rule to alter the longstanding practice that

compaction of backfill is ineligible for reimbursement.

See

McDonald’s Corporation v. IEPA

PCB 04-14 (Jan. 22, 2004).

---

 

78

 

“Must” to “Shall” and “But Not Limited To”

 

Throughout the proposal, CW

3

M has suggested the Board change the word “must” to

“shall” and delete the phrase “but not limited to” from the rule. The Board has been

systematically replacing “shall” with “must” in all the Board’s rulemakings both for grammatical

reasons and in response to comments from JCAR. Therefore, the use of the word “must” is

grammatically correct and consistent with the Board’s practice. As to the phrase “but not limited

to” this phrase is a standard inclusion in all rules where a non-exhaustive list is given. Therefore,

removing the phrase “but not limited to” could be misinterpreted as limiting the eligible costs to

only those costs specified. The Board finds that this limitation is not supported by the record and

declines to remove the phrase.

 

Various Suggested Changes to the Proposed Rule

 

The Board notes that in addition to the specific changes discussed herein, many

participants and CW

3

M in particular, submitted suggested language changes throughout the rule.

The Board has reviewed all those suggested changes and unless specifically discussed in the

opinion or listed below, the Board did not accept the changes. The Board finds that those

changes not accepted were not necessary or were unsupported by the record.

 

The Board made several changes in response to comments from the Joint Committee on

Administrative Rules (JCAR) during first notice. In addition, the following changes, not

discussed previously, were made in response to comments:

 

1. Sections 732.410 and 732.612 were restored in place of “A” in the Table of

Contents;

 

2. In Section 732.307(j)(2), “Sections” was changed to “Section”;

 

3. In Section 732.309(a), “Licensed Professional Geologist” was added;

 

4. In Section 732.309(a)(2), “potables” was changed to “potable”;

 

5. In Section 732.606(eee), the reference to “this subsection (fff)” was changed to

“this subsection (ddd)”;

 

6. In Section 734.315(a)(1)(B) “a close as practicable” was changed to “as close as

practicable”;

 

7. In Section 734.345(a) “5/” was added to the statutory citation; and

 

8. In Section 734.350(d)(5) “a” was added before “potable.”

 

The Board has identified the changes, other than those suggested by JCAR, in the proposal using

double underling in today’s order.

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