Topics:

Objection to the Denial of Excess Liability Trust Fund Claim <= /o:p>

ELTF #200705054 / FID #14932

ELTF Submittal No. 3.

Pilot Travel Centers, LLC

Shelbyville, Shelby County, Indiana

2011 OEA 36, (08-F-J-4177)

[2011 OEA 3= 6, page 36 begins]

OFFICIAL S= HORT CITATION NAME: When referring to 2011 OEA 36 cite this case as

&nbs= p; Pilot Travel Centers, LLC, 2011 OEA 36.

TOPICS= :

final order

reconsideration

Excess Liability Trust Fund (ELTF)

underground storage tanks (UST)

annual fees

onsite

offsite

substantial compliance

summary judgment

compartments

combination of tanks

statutory construction

deference

resubmittal

directory

mandatory

back-up

documentation

due process

equitable esto= ppel

laches

emergency response

328 IAC 1-3-5

329 IAC 9-5-2

I.C. § 13-23-8-4(b)

I.C. § 13-23-9-2(d)

PRESIDING = JUDGE:

Catherine Gibbs

PARTY REPRESENTATIVES:

IDEM: = ; Julie Lang, Esq.

Petitioner: = ; Donald Snemis, Esq., Victoria Calhoon, Esq.; Ice Miller LLP

ORDER ISSU= ED:

April 4, 2011

INDEX CATE= GORY:

Land

FURTHER CA= SE ACTIVITY:

[none]

[2011 OEA 3= 6, page 37 begins]

&nbs= p;

STATE OF = INDIANA &= nbsp; &nbs= p; ) &= nbsp; &nbs= p; BEFORE THE INDIANA OFFICE OF

&= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; ) &= nbsp; &nbs= p; ENVIRONMENTAL ADJUDICATION

COUNTY OF MARION &= nbsp; )<= /p>

&nbs= p;

IN THE MA= TTER OF: &= nbsp; &nbs= p; &= nbsp; &nbs= p; )

&= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = )

OBJECTION= S TO THE DENIAL OF EXCESS &nb= sp; )

LIABILITY= TRUST FUND CLAIM &nb= sp; = ) &= nbsp;

NO. 20070= 5054 / FID NO. 14932 = &nb= sp; )

ELTF SUBM= ITTAL NO. 3 &n= bsp; = ; &n= bsp; ) &= nbsp; CAUSE NO. 08-F-J-4177

PILOT TRA= VEL CENTERS LLC &n= bsp; = ; <= /span>)

SHELBYVILLE, INDIANA &= nbsp; &nbs= p; &= nbsp; )

FINDINGS OF FACT, CONCLUSIONS OF LAW AND FINAL ORDER<= /u>

<= /span>This matter came before the Office of Environmental Adjudication (the OEA or the Court) on Petitioner Pilot Travel Centers LLC’s Motion to Reconsider = and Request for Entry of Final Order, filed by Pilot Travel Centers LLC (the Petitioner or Pilot), which pleadings are parts of the Court’s record; and the Court, being duly advised and having read the motion and response, = now enters the following findings of fact, conclusions of law and order:

Summary of the Decision

<= /span>The Petitioner appealed the Indiana Department of Environmental Management̵= 7;s (the IDEM) denial of its request for reimbursement from the Excess Liability Trust Fund (ELTF). The Court = has previously determined that (1) Onsite costs[1] were reimbursable at 83% eligibility[2] and = (2) Offsite costs were not reimbursable because the Petitioner was not in substantial compliance with 329 IAC 9-5-2(2) and (4)[3]. The Court allowed the IDEM to cond= uct a review of the Onsite costs to determine if (1) the Petitioner had provided sufficient back up documentation; (2) the costs are for activities that are clearly designated as not reimbursable in 328 IAC 1-3-5(d); or (3) costs exceeded the maximum amounts set out in 328 IAC 1-3-5(e).[4] The IDEM reimbursed the Petitioner= for 83%[5] of t= he undisputed Onsite costs, but continues to

[2011 OEA 3= 6, page 38 begins]

deny reimbursement for $2= 0,005.13[6] (the “Disputed Costs”) for various reasons. The Petitioner now contends that t= he Disputed Costs should be paid because (1) the Petitioner’s due process rights have been denied and (2) the IDEM should be estopped from asserting = new grounds for denial. The OEA d= enies the Petitioner’s motion for reconsideration and dismisses the disputed costs without prejudice and enters a final order in this matter.

Statement of the Case

1. &n= bsp; The Petitioner applied for reimbursement from the Excess Liability Trust Fund (the ELTF) of corrective action costs incurred = in remediating a release of petroleum from the underground storage tanks locat= ed at its facility in Shelby= County.

&nb= sp;

2. &n= bsp; The Petitioner received notice of the IDEM’s denial of reimbursement from the ELTF on September 4, 2008 (Submittal #3).<= span style=3D'mso-spacerun:yes'> On September 18, 2008, the Petitio= ner timely filed its Petition for Adjudicatory Hearing and Administrative Review and Request for Stay of Effectiveness of ELF Determination. This case was assigned Cause No. 08-F-J-4177.

&nb= sp;

3. &n= bsp; The Petitioner received another denial of ELTF reimbursement (Submittal #4) for additional costs on February 13, 2009. On February 26, 2009, the Petition= er timely filed a second Petition for Adjudicatory Hearing and Administrative Review and Request for Stay of Effectiveness. This case was assigned Cause No. 09-F-J-4231.

4. &n= bsp; The two denials were consolidated under Cause No. 08-F-J-4177.

5. &n= bsp; Summary judgment was granted in Pilot’s favor= on May 25, 2010 (the May 25, 2010 Order) in regards to the Onsite Costs. In addition, the Court concluded t= hat the Petitioner was eligible to receive only 83% of its reimbursable costs because the Petitioner had paid only 83% of annual underground storage tank registration fees.

6. &n= bsp; The IDEM filed a Motion to Reconsider on June 1, 2010. The Petitioner filed its Motion to Reconsider on June 11, 2010.&nbs= p; On June 17, 2010, the presiding Environmental Law Judge (the ELJ) modified the May 25, 2010 Order. The Court ordered the following:&nb= sp; The corrective action costs incurred for on-site corrective action activities are eligible for reimbursement at a rate of 83% eligibility. The IDEM shall determine which cos= ts are reimbursable pursuant to 328 IAC 1-3-5 and shall notify the Petitioner no l= ater than June 25, 2010 and pursuant to I.C. §13-23-9-2(e)[7], not later than seven (7) days after the IDEM approves such costs as eligible for reimbursement, forward a copy of the request for reimbursement to the Audit= or of the State.

[2011 OEA 3= 6, page 39 begins]

7. &n= bsp; Subsequent to the May 25, 2010 Order, IDEM made a partial payment to Pilot for its "Onsite Costs." The parties stipulated, and the Co= urt agreed, that the parties should have additional time to work out any remain= ing differences as to "Onsite Costs."

8. &n= bsp; On July 14, 2010 a hearing was held. The hearing was limited to the iss= ue of whether Pilot's "Offsite Costs" in the amount of $195,702.60 (83%= of $235,786.27, which were Pilot's total Offsite Costs) were reimbursable under the ELTF statutes and regulations. The Court issued Findings of Fact, Conclusions of Law and Order on September 8, 2010. The Court determined that Pilot was not eligible to receive reimbursement of the “Offsite Costs” as it was not in substantial compliance with the regulations promulgated under Title 13, Article 23 of the Indiana Code.

9. &n= bsp; As the parties had not reached an agreement about reimbursement of the Onsite costs, the September 8, 2010 Order was not a fi= nal order.

10. On February 7, 2011, the Petitioner filed Pilot Travel Centers LLC’s Mot= ion to Reconsider and Request for Entry of Final Order. The IDEM filed its Response to Pilot’s Motion to Reconsider and Request for Entry of Final Order on February 22, 2010.

FINDINGS OF FACT

1. &n= bsp; All findings of fact[8] previously entered by the ELJ in this matter are incorporated herein.

2. &n= bsp; The ELJ determined in the June 17, 2010 Order that “The IDEM may deny costs only on the basis that (1) the Petitioner has not provided sufficient back up documentation; (2) the costs are for activi= ties that are clearly designated as not reimbursable in 328 IAC 1-3-5(d); or (3) costs that exceed the maximum amounts set out in 328 IAC 1-3-5(e). The IDEM may NOT deny costs reques= ted in Submittals #3 and #4 on the basis that the Petitioner does not have an appr= oved CAP or emergency measures.”[9]

3. &n= bsp; The IDEM has reimbursed Pilot for eligible Onsite Costs. The IDEM continues to = deny reimbursement for $20,005.13 (83% of $24,102.57). The reasons given for the denial we= re (1) lack of back-up documentation; (2) costs exceeded the reasonable costs set = in 328 IAC 1-3-5; and (3) costs were incurred for corrective action taken off-site.

[2011 OEA 3= 6, page 40 begins]

Applicable Law

<= /span>In Murphy v. Terrell, 938 N.E.2d 823, 827 (Ind. Ct. App. 2010), the Indiana Court of Ap= peals held that due process required certain minimum procedures. The Supreme Court in Goldberg v. Kelly, 397 U.S. 254, 267-268, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970), = held “The fundamental requisite of due proce= ss of law is the opportunity to be heard. The hearing must be at a meaningful time and in a meaningful manner. In the present context these principles require that a recipient have timely and adequate notice detailing the reasons for a proposed termination, and an effective opportunity to defend by confronting= any adverse witnesses and by presenting his own arguments and evidence orally.” The Court of A= ppeals went on to say, “The Supreme Court also held that the opportun= ity to be heard must be tailored to the capacities and circumstances of t= hose who are to be heard, that the individual be allowed to be represented by counsel, if he so chooses, and that the decision maker's conclusion regardi= ng eligibility rest solely on the legal rules and evidence adduced at the hear= ing. Id. at= 268-71. However, hearings need not take the form of a judicial or quasi-judicial tr= ial. Id. at= 266.”

<= /span>The Indiana Tax Court addressed equitab= le estoppel in Hi-Way Dispatch v. Indiana Dep’t of State Revenue, 756 N.E.2d 587, 598 (Ind. Tax Ct. 2001). The Court held “The elements of equitable estoppel are: (1) a representation or concealment of material fact; (2) made by a person with knowledge of the fact and with the intention that the other party act upon it; (3) to a party ignorant of the fact; (4) which ind= uces the other party to rely or act upon it to his detriment.” Further, the Court held that equitable estoppel cannot be appli= ed to governmental agencies unless the “public interest would be threatened= by the government's conduct”. Id. at 599-600.

The Cour= t, in Hi-Way Dispatch, also addressed wh= ether laches may be asserted as a defense against a government agency. “The defense of laches has t= hree elements: (1) inexcusable delay in asserting a right; (2) an implied waiver arising from knowing acquiescence in existing conditions; and (3) circumstances resulting in prejudice to the adverse party.” Hi-Way Dispatch at 600.

CONCLUSIONS OF LAW

1.&n= bsp; The Office of Environmental Adjudication (“OEA”) has jurisdiction over the decisions of the Commissioner= of the Indiana Department of Environmental Management (“IDEM”) and= the parties to this controversy pursuant to I.C. § 4-21.5-7, et seq.

2.&n= bsp; This is a Final Order issued pursuant to I.C. § 4-21.4-3-27. Findings of Fact= that may be construed as Conclusions of Law and Conclusions of Law that may be construed as Findings of Fact are so deemed.

[2011 OEA 3= 6, page 41 begins]

3.&n= bsp; The Petitioner requests that the ELJ reconsider its conclusion that the IDEM should be allowed to review the Onsite Costs for compliance with the rules. The Petitioner argues that this conclusion deprives Pilot of due process because the IDEM should be barred from asserting new grounds for denial after an ap= peal has been initiated. Further, = Pilot argues that the IDEM should be estopped from denying any of the Disputed Co= sts as it failed to identify all reasons for denying reimbursement in the initi= al determinations made on September 4, 2008 and February 26, 2009.

4.&n= bsp; As the IDEM points out, an applicant to the ELTF has more than one opportunity to submit an application for reimbursement. If an application, in whole or in = part, is denied, the applicant may choose to appeal the denial to the OEA or to resubmit the application with additional justification for IDEM to reverse = its initial decision. An applican= t can resubmit until such time as there is no new evidence for IDEM to consider.<= span style=3D'mso-spacerun:yes'> At this point in time, the applica= nt can appeal the denial to the OEA. &= nbsp;

5.&n= bsp; Moreover, the OEA has determined on previous occasi= ons that the language stating that “the administrator shall notify the claimant of all reasons for a denial or partial denial” in I.C. § 13-23-9-2(d) is directory, not mandatory.[10]

6.&n= bsp; The rules at 328 IAC 1-3-5 are clear that adequate documentation is necessary for reimbursement. These rules, the IDEM’s writ= ten guidance and the IDEM’s common practice provide sufficient support fo= r a conclusion that the Petitioner should have known that certain types of documentation, such as boring logs and manifests, were necessary.[11] This defeats any argument by Pilot= that estoppel is appropriate as there i= s no evidence that the IDEM misrepresented or concealed these requirements or th= at Pilot was ignorant of the requirements.

7.&n= bsp; In addition, Pilot argues that the IDEM should be estopped from denying any costs because Pilot is unable to produce the back= -up documents due to the amount of time between the time that the costs were incurred and the time that the OEA issued its initial decision in this matter. This is unpersuasive.= Corrective actions frequently take several years to complete so it is common and reasonable for the owner or operator of USTs to maintain documentation for the life of a project. Approximately a year passed between= the time this appeal was initiated (September of 2008 and February of 2009) and= the time that the motion for summary judgment was filed (March 2010). The Petitioner consented to the de= lay while it negotiated with the IDEM about this matter. As this delay can partially be attributed to the Petitioner, the Petitioner’s complaint about any ha= rm it incurred because of this delay does not have a legal basis.

[2011 OEA 3= 6, page 42 begins]

8.&n= bsp; To the extent that the doctrine of laches may be asserted against the IDEM, again, the evidence does not support such a conclusion. Nothing in the IDEM’s conduct supports a conclusion that the IDEM inexcusably delayed asserting its need to review the costs for compliance with the rules. While the IDEM arguably took too mu= ch time to review the initial applications, the Petitioner had alternatives to waiting for the IDEM to conclude its review, such as filing an appeal under I.C. § 4-21.5-3 for the IDEM’s failure to issue a determination.=

9.&n= bsp; The Petitioner has failed to assert a convincing pu= blic policy reason for applying either e= stoppel or laches against the IDEM.

10.&= nbsp; The Court has previously determined that it was appropriate to allow the IDEM an opportunity to review the Onsite costs for compliance with 328 IAC 1-3-5. As Pilot has not been deprived of = an opportunity to present evidence and argument to the OEA as to why the IDEM erred in denying reimbursement, Pilot has not been deprived of due process. Further, the ELJ fin= ds no grounds, in this case, to find that the IDEM should be barred upon the doct= rine of laches or equitable estoppel from denying reimbursement for previously unspecified reasons.

11.&= nbsp; However, as previously discussed, an ELTF applicant may resubmit a claim for reimbur= sement if the applicant can produce evidence that the IDEM erred in its denial. In accordance with this principle,= if Pilot can produce the documentation that the IDEM requires, it can resubmit= for reimbursement of the Disputed Costs. Therefore, the Disputed Costs should be dismissed without prejudice.

FINAL ORDER

            <= /span>IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that (1) Pilot Travel Centers LLC’s Motion to Reconsider is DENIED; (2) Pilot Travel Centers LLC’s claims regarding the Disputed Cost= s are DISMISSED WITHOUT PREJUDICE; a= nd (3) Pilot Travel Centers LLC’s Request for Entry of Final Order is GRANTED. The Court enters the Findings of F= act, Conclusions of Law and Order entered May 25, 2010; Order Partially Denying = and Partially Granting Motion to Reconsider entered June 17, 2010; Findings of Fact, Conclusions of Law and Order entered September 8, 2010 and this Order= as FINAL ORDERS.

You= are hereby further notified that pursuant to provisions of I.C. § 4-21.5-7= -5, the Office of Environmental Adjudication serves as the Ultimate Authority in the administrative review of decisions of the Commissioner of the Indiana Department of Environmental Management.&nb= sp; This is a Final Order subject to Judicial Review consistent with applicable provisions of I.C. § 4-21.5. Pursuant to I.C. § 4-21.5-5-5= , a Petition for Judicial Review of this Final Order is timely only if it is fi= led with a civil court of competent jurisdiction within thirty (30) days after = the date this notice is served.

[2011 OEA 3= 6, page 43 begins]

            IT IS SO ORDERED this 4th day of April, 2011 in Indianapolis, IN.       &nb= sp;            =             &nb= sp;

Hon. Catherine Gibbs

Environmental Law Judg= e

[2011 OEA 36: end of decision]

=

2011 OEA 36 in .doc format

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