Rockford Drop Forge Co. v. Pollution Control Board

Citations: 221 Ill. App. 3d 505; 582 N.E.2d 253; 164 Ill. Dec. 45; 22 Envtl. L. Rep. (Envtl. Law Inst.) 21009; 1991 Ill. App. LEXIS 1955Docket: No. 2—91—0342

Court: Appellate Court of Illinois; November 20, 1991; Illinois; State Appellate Court

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Rockford Drop Forge Company (Rockford) appeals a decision from the Illinois Pollution Control Board (Board) that denied its request for reimbursement from the Underground Storage Tank Fund (Fund) for cleanup costs related to a leak from its underground storage tanks (USTs). The Illinois Environmental Protection Agency (IEPA) had previously denied Rockford's application, stating that the tanks were exempt from the UST regulations because they were used for storing heating oil for consumptive use on the premises. Rockford had registered the tanks in 1986, following guidance from an Office of the State Fire Marshall (OSFM) representative who indicated they would be covered by the UST Fund. The tanks, installed between 1925 and 1949, were primarily used to heat forge furnaces and also powered forklifts and equipment. In 1989, after converting to natural gas, Rockford discovered a leak from one of the tanks and incurred approximately $49,000 in cleanup costs. The Board upheld the IEPA's denial, emphasizing the relevance of the statutory definition of USTs, which excludes tanks used for heating oil for consumptive use. The Board's ruling was supported by a majority, with two members dissenting. The relevant statutory language, at the time, was derived from the Resource Conservation and Recovery Act, which similarly defines USTs as excluding tanks for heating oil used on-site.

Board regulations at the time defined underground storage tanks (USTs) similarly to section 6991(l)(b) of the Resource Conservation and Recovery Act (RCRA). The Board determined that Rockford's reimbursement claim hinged on the interpretation of "consumptive use" and "on the premises where stored." It concluded that the heating oil was for consumptive use since it was used on-site and not sold, considering the small percentage (10%-15%) used for forklifts as negligible. 

The Board addressed whether the geographic separation of the tanks on the west parcel from the forging furnaces on the east parcel affected the classification of use as "on the premises where stored." Citing Eureka Co. v. Environmental Protection Agency, the Board ruled that contiguous properties divided by a right-of-way are regarded as a single site. Thus, the Board found the oil in Rockford's tanks was indeed for use on the premises, despite the physical separation.

The Board acknowledged Rockford's good faith in registering the tanks with the Office of the State Fire Marshal (OSFM) and recognized the confusion stemming from the dual regulatory systems for USTs. It noted a statutory amendment under Public Act 86-1050, which later defined USTs to include heating oil tanks over 1,100 gallons used outside residential units. However, at the time of Rockford's reimbursement application, the tanks were defined as USTs under OSFM regulations but not under the Illinois Environmental Protection Agency (IEPA) statute, which excluded them.

Despite sympathizing with Rockford's situation, the Board concluded that the tanks were exempt from UST Fund coverage based on the IEPA statute and regulations in effect at the time. Two Board members dissented, arguing that Rockford should receive reimbursement due to its compliance with OSFM regulations and the conflicting definitions. They emphasized the need for government to avoid creating reliance on an irrational system. Rockford subsequently filed a motion for reconsideration, and the Board reaffirmed its denial in a written opinion on February 28, 1991.

The Board clarified the division of authority between the Illinois Environmental Protection Agency (IEPA) and the Office of the State Fire Marshal (OSFM) concerning the Underground Storage Tank (UST) statutory scheme. OSFM's authority is limited to the pre-corrective phase, post which IEPA takes over as the lead agency. Although OSFM can define UST for registration, IEPA is not obligated to follow that definition and must comply with the Environmental Protection Act and relevant regulations when evaluating reimbursement applications from the UST Fund.

Rockford appealed the denial of reimbursement, arguing that the language of section 22.18b of the Act mandates a reversal of this denial. Alternatively, Rockford contends that any conflict between the OSFM and IEPA definitions should entitle it to reimbursement based on fairness principles. The State maintains that Rockford's tanks did not meet the Act's UST definition at the time of its application, justifying the denial.

The appeal emphasizes the complexity of the UST regulatory framework and references established legal precedents that guide judicial interpretation of statutes, which courts generally defer to the agency interpretations, though not unconditionally. Rockford asserts that it met all eligibility criteria outlined in section 22.18b(a) of the Act for receiving funds from the UST Fund, highlighting several specific requirements that it claims to have fulfilled.

The analysis begins by determining the applicable definition of "underground storage tank" (UST) as used in the relevant legal section, specifically whether to follow the definitions set by the Office of the State Fire Marshal (OSFM) or the Illinois Environmental Protection Agency (IEPA). Rockford acknowledged that its tanks do not meet the IEPA's UST definition in effect at the time of its reimbursement application. According to section 22.12(a) of the Act, the IEPA is designated as the lead agency for UST program regulations. The definition of UST in section 22.18(e)(1)(A) references the Resource Conservation and Recovery Act (RCRA), which excludes tanks for storing heating oil for on-premises use. It is argued that it would be illogical for the IEPA to adopt a definition from OSFM regulations when a statutory definition exists. The identical wording of relevant sections in both the Act and OSFM statute raises questions about the validity of OSFM's conflicting regulations. The conclusion reached is that the UST definition from the Act governs, and thus the IEPA and Board correctly denied Rockford's reimbursement claim. While Rockford requests a reversal based on equitable considerations, the court finds no justification to override statutory requirements, noting that the definitions and regulations were clear when Rockford applied. The court also points out that the amendments effective from July 11, 1990, were not retroactive, reinforcing that Rockford's tanks fell under the RCRA exclusion and that no fundamental unfairness exists in this interpretation. Legislative intent for retroactivity must be explicitly stated, and amendments often signify a change in the law.

The amendments indicate a legislative intent to redefine "UST" to include tanks like Rockford's, effective July 11, 1990. Rockford claims it is a "victim of a taking" under the Illinois Constitution, arguing it paid a $100 registration fee for ten tanks in 1986 but is now denied coverage from the UST Fund. This claim is based on the takings clause, which mandates just compensation for private property taken for public use. Rockford references Citizens Utility Co. v. Metropolitan Sanitary District of Greater Chicago (1974) to support its argument, but the court finds that case does not bolster Rockford's position, as it reversed a trial court's finding of a taking. The statutory scheme indicates that the OSFM collects registration fees, which are deposited into the UST Fund, primarily for cleanup of UST leaks but also for administrative costs. The court views the registration fee as akin to a vehicle registration fee rather than an insurance premium that guarantees coverage. Consequently, the court concludes that Rockford has not experienced a governmental taking and affirms the Pollution Control Board's decision.