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OAH 16-1010-20865-2 |
STATE OF
OFFICE OF
ADMINISTRATIVE HEARINGS
FOR THE MINNESOTA
DEPARTMENT OF COMMERCE PETROLEUM TANK
RELEASE COMPENSATION BOARD
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In
the Matter of the Minnesota Department of Commerce, |
RECOMMENDATION
ON MOTION FOR SUMMARY DISPOSITION |
The Petroleum Tank
Release Compensation Board (Board) filed a motion for Summary Disposition on
December 4, 2009. The Applicant, All
Petro Connection, Inc. (All Petro), filed its Memorandum in Opposition to the
Board’s motion on December 18, 2009. The
Board and All Petro filed their Reply Memoranda on December 28, 2009, and
January 7, 2010, respectively. The ALJ
heard oral argument on February 13, 2010.
The record closed on March 5, 2010, upon receipt of the parties’ post-argument
submissions.
Michael J.
Tostengard, Assistant Attorney General, appeared on behalf of the Board. Daniel W. Voss, Esq., appeared on behalf of
All Petro.
STATEMENT
OF ISSUE
How is the Board’s
reimbursement rule, Minn. R. 2890.1300, to be applied to a situation where a
limited site investigation (LSI) was prepared and, thereafter, a remedial site investigation
(RI) was specially requested by the Minnesota Pollution Control Agency (MPCA)?
Based on the record
in this matter, and for the reasons set forth in the accompanying Memorandum,
the Administrative Law Judge (ALJ) makes the following:
RECOMMENDATION
1. That the Board’s Motion for Summary Disposition be GRANTED; and
2. That the Board’s denial of Applicant’s request for additional payment of $1,238.00 be UPHELD.
Dated this 26th day of March, 2010.
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/s/ Manuel J. Cervantes |
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MANUEL J. CERVANTES |
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Administrative Law Judge |
NOTICE
This
report is a recommendation, not a final decision. The Commissioner of the
Minnesota Department of Commerce will make the final decision after a review of
the record. The Commissioner may adopt,
reject or modify the Findings of Fact, Conclusions, and Recommendations. Under Minn. Stat. § 14.61, the final decision
of the Commissioner shall not be made until this Report has been made available
to the parties to the proceeding for at least ten days. An opportunity must be afforded to each party
adversely affected by this Report to file exceptions and present argument to
the Commissioner. Parties should contact
Glenn Wilson, Commissioner, Minnesota Department of Commerce,
If
the Commissioner fails to issue a final decision within 90 days of the close of
the record, this report will constitute the final agency decision under Minn.
Stat. § 14.62, subd. 2a. The record
closes upon the filing of exceptions to the report and the presentation of
argument to the Commissioner, or upon the expiration of the deadline for doing
so. The Commissioner must notify the
parties and the Administrative Law Judge of the date on which the record
closes.
Under Minn. Stat. §
14.62, subd. 1, the agency is required to serve its final decision upon each
party and the Administrative Law Judge by first class mail or as otherwise
provided by law.
MEMORANDUM
The ALJ and the Board have
jurisdiction in this matter pursuant to Minn. Stat. §§ 14.50 and 115C.12, and Minn.
R. 2890.0110 and 2890.4600. Applicant
was given notice of the hearing in this matter and the Board has complied with
all relevant procedural and statutory requirements.
The Board has moved for summary
disposition of this matter, asserting that no factual issues remain for
hearing. The Board maintains that the
undisputed facts support a determination that Applicant was paid in full for
services provided and is not entitled to further payments under
Summary disposition is the
administrative equivalent of summary judgment.[1] Summary disposition is appropriate where
there is no genuine issue as to any material fact and one party is entitled to
judgment as a matter of law.[2] A genuine issue is one that is not a sham or
frivolous. A material fact is a fact
whose resolution will affect the result or outcome of the case.[3] The parties have agreed that there are no genuine issues of
material fact and that this matter can be resolved as a matter of law.
Based upon the pleadings and affidavits
submitted, the underlying facts in this matter are as follows:
·
The Petroleum
Tank Release Compensation Board is a unit of the Department of Commerce. The Board is responsible for reimbursement of
eligible costs incurred in the clean up of petroleum releases.[4]
·
All Petro accepted
the lowest proposal for consultant services of Omni Environmental, Inc. (Consultant)
of $1,600.00 to prepare an LSI in connection with a petroleum release at its
site at Parkside Gas and Groceries in
·
On February 6,
2009, All Petro filed a second application for reimbursement. The application
stated that an LSI report had been prepared and a Remedial Site Investigation
(RI) report had been subsequently prepared at the request of the MPCA. All
Petro requested payment of $3,875 more in its supplemental reimbursement application.
·
On April 3,
2009, the Board approved an additional payment of $2,637 for reimbursement and
denied $1,238 because it asserted that the claim exceeded the maximum costs
specified in Minn. R. 2890.1300, subp. 6 F (3) (2007).
·
On May 13,
2009, the Board reconsidered All Petro’s application. A representative of All Petro’s consultant
was in attendance, presented argument, but did not supplement the documentary
record. All Petro asserted that it is
entitled to up to the maximum amount under Minn. Rule 2890.1300, subp. 6 G in
addition to the items reimbursable in Minn. Rule 2890.1300, subp. 6 F (3). Based on the record before it, the Board
upheld the decision not to reimburse the $1,238 in controversy. On June 4, 2009, All Petro’s Consultant
appealed the decision.[7]
·
The Board
challenged the admission and consideration of the affidavits of the
Consultant’s employees, Matthew N. Gikas, Jeffrey Beck, and Kyle Raverty, which
were attached to All Petro’s response to the Board’s motion on the ground that Minn.
R. 2890.4600, subp. 2 limits the appeal record to documents submitted to the Board
for its consideration. The challenged
affidavits were not submitted to the Board and were not considered by the Board
when it reviewed All Petro’s appeal on May 13, 2009.
IV.
Applicable Law
Minn.
R. 2890.0015, in relevant part, states,
Subp. 57. Investigation report.
"Investigation report" means the
comprehensive form and associated attachments required by the agency to
document remedial investigation activities.
Subp. 58. Investigation report preparation (full
RI).
"Investigation report
preparation (full RI)" means the labor and materials necessary to complete
and submit the investigation report to the agency when a full remedial
investigation is necessary, including, but not limited to, aquifer
determination, data analysis, data entry, drafting, photocopying, report
review, shipping, and word processing.
Subp. 59. Investigation report preparation (LSI
only).
"Investigation report
preparation (LSI only)" means the labor and materials necessary to
complete and submit the investigation report to the agency when only a limited
site investigation is necessary, including, but not limited to, aquifer
determination, data analysis, data entry, drafting, photocopying, report
review, shipping, and word processing.
Subp. 91. Prima facie unreasonable.
"Prima facie unreasonable" means
unreasonable absent proof by a preponderance of the evidence.
Minn.
R. 2890.4600, subp. 2, in relevant part, states,
On
appeal, the Office of Administrative Hearings must determine whether the
evidence submitted to the board
entitles the applicant to reimbursement and whether the board’s determination
is otherwise consistent with or contrary to law.
Minn. R. 2890.1300 MAXIMUM PRELIMINARY LABOR
CHARGES, subp 1, in relevant part, states,
When a task listed in this
part is performed during the limited site investigation or full remedial
investigation step of services…, the cost is prima facie unreasonable when it
exceeds the amount specified for it in the proposal for consultant services or
the maximum cost specified for it in this part when the task was started,
whichever is less.
Minn.
R. 2890.1300, subp. 6 states, in part, as follows:
F. Investigation report preparation (full RI)
has a maximum cost of:
* * *
(3) for a full remedial investigation report submitted in
response to a documented special request made by the agency after a limited
site investigation report was submitted to the agency, the maximum cost for
investigation report preparation (LSI only), plus:
(a) $1,120;
* * *
(c) $150 per soil boring drilled in response to the documented
special request made by the agency after a limited site investigation report
was submitted to the agency; and
(d) $195 per well installed in response to the documented
special request made by the agency after a limited site investigation report
was submitted to the agency.
G.
Investigation
report preparation (LSI only) has a maximum cost of $3,477.50, ….
V. Arguments of
the Parties
The Board moves
the ALJ to grant its motion for summary disposition based on its interpretation
and application of
In contrast, All Petro
argues that it is not limited by its initial bid for an LSI only and that Minn.
R. 2890.1300, subp. 1, is not applicable to this matter at all. All Petro argues that the maximum for a
specially requested RI is not at all tied to the amount bid for an LSI, nor the
amount charged for an LSI.[9] Instead, when the MPCA requested the RI, Minn.
R. 2890.1300, subp. 6 G permits All Petro to establish a new LSI maximum of up
to $3,477.50 [$3,825.25].[10]
VI. Analysis
As a threshold matter, the ALJ
addresses the scope of the record on appeal.
All Petro correctly cites Minn. Stat. §115C.12 as the enabling authority
permitting the Office of Administrative Hearings to hear this matter. It is also correct that the statute is silent
as to the scope of the record on appeal before the ALJ. All Petro, therefore, asserts that there can
be no limitation on the scope of the record and that the affidavits of Gikas,
Raverty, and Beck should be considered. These
affidavits were not considered by the Board because they were prepared on
December 17, 2009, subsequent to the Board hearing of May 13, 2009.
Pursuant to Board rule, however, it is
clear that upon appellate review before the ALJ, the record is limited to the
evidence submitted to the Board. “On
appeal, the Office of Administrative Hearings must determine whether the evidence submitted to the Board
entitles the Appellant to reimbursement and whether the Board’s determination
is otherwise consistent with or contrary to law.”[11]
All Petro further argues that the ALJ
should ignore Minn. R. 2890.4600.[12] The ALJ is not at liberty to ignore a validly
promulgated rule. If All Petro believes
that the Board exceeded its authority in promulgating Minn. R. 2890.4600, its
recourse is to challenge the validity of the rule by bringing a declaratory
action in the Court of Appeals.[13] Therefore, the ALJ has no authority to consider
the affidavits of Gikas, Raverty, or Beck.
The parties agree that the
RI costs payable, under Minn. R. 2890.1300, subp. 6 F (3) is $2,637.[14] The controversy, however, revolves around All
Petro’s assertion that the starting point for determining the amount of the LSI
cost is not limited by the amount of its bid, which was accepted. All Petro asserts it is entitled to increase
the LSI portion up to the maximum of $3,825.25 enunciated in subp. 6 G when an RI is requested subsequent to the
completion of an LSI. The ALJ disagrees.
Subp. 6 G applies when an LSI only is
requested, which was the case at the onset of the All Petro project. Under Minn. R. 2890.1300, subp. 6 G, the Consultant
could have proposed up to the maximum of $3,825.25 for the LSI work of the All
Petro project. But because the bid
process was competitive, the Consultant did not do so.[15] Instead, the Consultant bid $1,600, a bid low
enough to secure the contract to do the LSI work. When the Consultant completed the LSI only,
it was paid in full for that work. The
amount of that payment, under the Board’s interpretation of the rule, became
fixed as the LSI only maximum cost. When
the MPCA specially requested a full RI report after the LSI report was completed,
subp. 6 F (3) became applicable and governs the cost subsequently payable for
the RI work.
In determining what the maximum LSI
cost is, it is necessary to look at the general rule which applies to subp. 6 F (3).
When a task listed in this part is performed during the limited site
investigation or full remedial investigation step of services…, the cost is
prima facie unreasonable when it exceeds the amount specified for it in the
proposal for consultant services or the maximum cost specified for it
in this part when the task was started, whichever is less.
No one
disputes that the work performed was a limited site investigation. Likewise, as it pertains to the maximum cost
of the LSI only, no one disputes that the lesser of the costs was the
Consultant’s proposal for consultant services, not subp. 6 G’s maximum of
$3,825.25. In its supplemental claim for
the RI, the Consultant submitted costs in excess of the amount allowed by
$1,238, and hence, the Board found them to be prima facia unreasonable. The burden shifted to All Petro to show a
reason why the costs were not unreasonable under the circumstances.[16] All Petro did not submit any additional
information to the Board explaining why the costs were reasonable in this instance;
rather it simply argued that the Board misinterpreted the rules, that Minn. R.
2890.1300, subp. 1 is not applicable to the present situation, that when an RI is
specially requested by the MPCA, it is not limited by its proposal for
consultant services, and could charge up to $3,825.25 for an LSI only, the maximum
costs permitted in Minn. R. 2890.1300, subp. 6 G. The ALJ does not find support for All Petro’s
interpretation of the relevant rules and adopts the Board’s interpretation.
All Petro does not dispute that for
purposes of an LSI only,
In ascertaining the intention of the Board
when promulgating rules, tribunals can presume that: (1) the Board does not intend a result that
is absurd, impossible of execution, or unreasonable; (2) the Board intends the
entire rule to be effective and certain; (3) the Board does not intend to
violate the federal or state constitution; . . . and (5) the Board intends to
favor the public interest over any private interest.[18] When Minn. R. 2890.1300 is read as a whole, it
is clear that subparts 1 and 6 must be read together to give the calculation requirements
clarity and meaning. It is in the public
interest that the Board enforces competitive bidding rules in an effort to keep
investigative and remedial costs as low as possible.
All Petro also challenged the Board’s
interpretation as unlawful rulemaking. Based on the Board’s interpretation of the
relevant rules by their plain meaning and for the reasons stated above, the ALJ
finds to the contrary; the Board’s interpretation of the rules was not unlawful
rulemaking. Moreover, there is nothing
in this record that shows that the Board’s interpretation of the rules is
different or inconsistent with prior application of the rules.
M. J. C.
[1]
[2] Sauter v.
Sauter, 70 N.W.2d 351, 353 (
[3] Illinois
Farmers Insurance Co. v. Tapemark Co.,
273 N. W.2d 630, 634 (
[4]
[5] The bid process was subject to Minn. R.
2890.4600. The rule evinces an intent to
keep investigative and remedial costs as competitive and low as possible.
[6] In addition to the $1,600 payment for consultant
services, the Consultant was paid for extra soil borings, mapping, and property
owner notification pursuant to
[7] During the course of these proceedings, it became
apparent that All Petro agreed to permit the Consultant, Omni Environmental, to
pursue the appeal of the Board’s denial of reimbursement.
[8] All Petro’s Memorandum in Opposition to the Board’s
Motion, p. 4., n. 4. This amount is
arrived at by adding $1,232 [F. (3)(a)] + $330 [for 2 soil borings under F.
(3)(c)] + $1075 [for 5 well drillings under F. (3)(d)] = $2,637. The specified amounts in the rules have been
increased by 10% since their implementation.
Ex. 19, Transcript of Board Meeting, dated May 13, 2009, Fischer
testimony, p. 2.
[9] All Petro’s Memorandum in Opposition to the Board’s
Motion, p. 8.
[10] The specified amounts in the rules have been
increased by 10 % since their implementation.
Ex. 19, Transcript of Board Meeting, dated May 13, 2009, Fischer
testimony, p. 2. The actual maximum
amount is $3,825.25.
[11] Minn. R. 2890.4600, subp. 2.
(Emphasis added.)
[12] All Petro’s Memorandum in Support of Considering
Affidavits, dated February 23, 2010.
[13]
[14] All Petro’s Memorandum in Opposition to the Board’s
Motion, p. 4., ftnt 4. This amount is
arrived at by adding $1,232 [F. (3)(a)] + $330 [for 2 soil borings under F.
(3)(c)] + $1075 [for 5 well drillings under F. (3)(d)] = $2,637. The specified amounts in the rules have been
increased by 10 % since their implementation.
Ex. 19, Transcript of Board Meeting, dated May 13, 2009, Fischer testimony,
p. 2.
[15] See
[16] See Minn.
R. 2890.0015, subp. 91.
[17] See
[18]