ALJDEC decisions subject to certification as final

06A-F120-DEQ · Department of Environmental Quality · 2008-02-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 4 through 7, 2008 APPEARANCES: Appellant Lone Star Service was represented by attorney Phillip Fargotstein (Fennemore Craig P.C.); the Arizona Department of Environmental Quality was represented by Assistant Attorneys General Joseph Mikitish and Sonia Overholser. ADMINISTRATIVE LAW JUDGE: Thomas Shedden TECHNICAL APPEALS PANEL (“TAP”): Mr. Edward A. Nemecek, RG, CPG (Hargis + Associates, Inc.); Mr. Randolph Marwig, PE (Western Technologies, Inc.); Mr. Donald P. Hanson, RG (Clear Creek Associates). _____________________________________________________________________ This consolidated matter involves 17 applications for reimbursement from the State Assurance Fund (“SAF”) for expenses incurred between January and December 31, 2006. The parties narrowed the scope of issues as the matter was pending and presented four technical issues to the TAP and two legal issues to the Administrative Law Judge.

TAP Issues Did the CAP require the combined MPE-LRP/SVE-PDB system to be designed to allow the operation of the MPE-LRP and SVE-PDB concurrently and consistently? For each month (January-December) in 2006, was the MPE-LRP portion of the system operated consistent with the CAP? For each month (January-December) in 2006, was the MPE-LRP portion of the system operated in a reasonable and cost-effective manner? Were the system modifications made by the Appellant in November 2006 (Applications 2953-87 and 88) reasonable, necessary and cost-effective? Legal Issues Did ADEQ err in its determination that the Appellant’s operation of the MPE-LRP for each month (January through December) in 2006 did not meet the requirements of A.R.S. § 49-1005(D)(3) for reasonableness and cost- effectiveness and that the Appellant was not eligible to receive reimbursement of the monthly rental costs? Did ADEQ err in its determination that the Appellant’s system modifications made in November of 2006 did not meet the requirements of A.R.S. § 49-1005(D)(3) for reasonableness and cost-effectiveness and that the Appellant was not eligible to receive reimbursement of the modification costs? FINDINGS OF FACT The Findings of Fact are in 3 sections: Background Facts prepared by the ALJ, and “Uncontested Material Facts” submitted by the parties and the TAP’s Findings of Fact both of which are reproduced below without change. BACKGROUND FACTS Appellant is Lone Star Service, owned by Mr. Ed Posada. Appellant hired Tierra Dynamic Integrated Environmental Services (referred to as “TDI” or “TDC”), which provided the services at issue. Appellant’s appeals were filed and the individual Notices of Hearing were issued on various dates and were consolidated for the instant hearing. The hearing took place on February 4 – 7, 2008, which included the time for the TAP and ALJ to deliberate and for the TAP to produce its Findings of Fact. Appellant presented the testimony of Ms. Jenny Conger, P.E. and Mr. Chris Miller, R.G. ADEQ presented the testimony of Mr. Wayne Pudney, R.G. Exhibits 1 through 89 were entered into evidence by stipulation; Exhibits through 95 were entered into evidence over the objection of ADEQ. Appellant also had Exhibit 96, which shows the disputed amounts, entered into evidence. During the hearing, witnesses drew sketches labeled 1 through 4 that were also admitted into evidence. The ALJ concludes that each of the three witnesses presented credible testimony, but their opinions on technical issues were not always in agreement with one another. During its deliberations the TAP considered what weight to accord these conflicting technical opinions. ADEQ gave its final approval of the Corrective Action Plan (“CAP”) on September 14, 2004. See Ex. 6 (approval letter signed by Jason Howard and Timothy Erwin); see also Exs. 4 (CAP) and 5 (preliminary approval letter). Mr. Miller was the primary author of the CAP, but Ms. Conger was also involved in its preparation. Neither Mr. Howard nor Mr. Erwin appeared or testified at the instant hearing. Mr. Pudney works in ADEQ’s Corrective Action section and reviewed the applications at issue to determine whether the applications meet the criteria for reimbursement from the State Assurance Fund (“SAF”). Mr. Pudney reviewed the CAP, but not until the applications at issue were being reviewed and he was not involved in ADEQ’s approval of the CAP. Remediation was to be accomplished by multi-phase extraction (“MPE”) using a liquid ring pump (“LRP”) and soil vapor extraction (“SVE”) using a positive displacement blower (“PDB”). The TAP was required to determine whether or not the CAP required that the MPE-LRP and SVE-PDB were to be run concurrently. Mr. Miller testified that the system was not intended or designed to have the two units run simultaneously. Ms. Conger made many of the decisions with respect to how the system was operated, but she made those decisions based on consultation with others at TDI. Generally, TDI operated the system to maximize the rate at which contamination was removed. ADEQ considers equipment to be operational if it is being operated in a manner that is consistent with its intended use. Equipment that is operational for 75% or more of the month is reimbursable subject to certain limits. Equipment that is operational for less than 75% of the month is evaluated to determine the reimbursement rate. See Ex. 7 (Schedule of Corrective Action Costs). Mr. Miller was of the opinion that the MPE-LRP and SVE-PDB would be considered as a single unit when assessed using the Schedule of Corrective Action Costs. THE PARTIES’ UNCONTESTED MATERIAL FACTS 1. The Applicant/Appellant is an Owner as defined by A.R.S. § 49- 1001.01. 2. All issues with respect to the appeals of the Department of Environmental Quality's ("ADEQ's") final determinations on Applications 2953-58 and -60 have been resolved prior to hearing. 3. The following table depicts the time periods covered by each application that is the subject of this consolidated appeal.

|Application Numbers |Time Period | |2953-61 |January 1, 2006 through February 7, | | |2006 | |2953-62 |February 1, 2006 through March 2, | | |2006 | |2953-64 |March 1, 2006 through April 4, 2006 | |2953-67 |April 1, 2006 through May 1, 2006 | |2953-70 |May 1, 2006 through June 1, 2006 | |2953-74 |June 1, 2006 through July 1, 2006 | |2953-77 |July 1, 2006 through July 31, 2006 | |2953-80 |August 1, 2006 through August 31, | | |2006 | |2953-82 |August 7, 2006 through September 29, | | |2006 | |2953-84 |October 1, 2006 through October 31, | | |2006 | |2953-86 |November 1, 2006 through November 31,| | |2006 | |2953-87 |October 1, 2006 through November 31, | | |2006 | |2953-88 |June 1, 2006 through December 7, 2006| |2953-89 |December 1, 2006 through December 31,| | |2006 | |2953-90 |November 7, 2006 through December 29,| | |2006 |

4. There are two release areas associated with this site, designated 2953.01 and 2953.02. 5. The 2953.01 release of regulated substances was reported to ADEQ on August 5, 1993 pursuant to A.R.S. § 49-1001 et seq. 6. The 2953.02 release of regulated substances was reported to ADEQ on October 11, 1996 pursuant to A.R.S. § 49-1001 et seq. 7. The 2953.01 and 2953.02 releases are gasoline releases. 8. Both soil and groundwater have been impacted by the releases above established regulatory action levels. 9. Historical data from October 1, 1996 to November 7, 2002 indicates that the depth to groundwater in monitoring well TDI-2 ranged from 159.58 feet below measuring point (bmp) to 164.13 feet bmp. The measuring point was the top of the well casing. The groundwater elevation fluctuated 4.55 feet from October 1996 to November 2002. Groundwater level measurements were not collected from November 8, 2002 through January 30, 2006. During operation of the MPE/SVE system, groundwater elevations from January 31, 2006 through October 25, 2006 ranged from 154.16 to 155.76 feet bmp. 10. Maximum free product thickness of 20 inches was observed on the groundwater surface in monitor well TDI-7 (April 7, 2000). Maximum free product thickness of 7.1 inches was observed on the groundwater surface in TDI-1 (April 1, 1997). Maximum free product thickness of 14.5 inches was observed on the groundwater surface in TDI-2 (December 18, 1999). 11. The last measurements of free product thickness prior to the start of remediation activities in January 2006 were recorded in November of 2002 at which time TDI-7 no longer contained observable free product while TDI-2 reportedly contained 10 inches of free product. At the time of remedial system startup, the free product thickness in wells TDI-2 and TDI- is not known. Free product was observed when the extraction from TDI-2 was initiated, but accurate measurement was not collected. (3rd PSSR, Table 2, footnote 6.) Pre-MPE, free product thickness was noted for TDI-7 at 0.0 to 0.04 feet. (3rd PSSR, Table 2, MPE Extraction Well Summary.) 12. Soil boring samples collected from the vadose zone beneath the site consisted primarily of clay and sandy clay with interbedded layers of silt. In addition, there are limited zones dominated by weak-to strongly- cemented sand and gravel. 13. Soil boring samples collected from the saturated zone beneath the site consisted primarily of sandy clay/silty clay with very fine grained to very coarse grained sand. 14. Slug tests conducted by the Appellant prior to submission of the CAP indicated an average hydraulic conductivity of 0.084 feet/day. The Appellant calculated a 7.1 feet/year groundwater flow velocity assuming a soil formation porosity of 0.3. 15. Soil contamination on the site exceeding the ADEQ minimum groundwater protection levels ("GPLs") includes benzene and ethyl benzene at levels up to 110 mg/kg (January 16, 1998) and 130 mg/kg (September 16, 1998), respectively. The soil corrective action standards in the approved CAP are 0.71 mg/kg for benzene and 120 mg/kg for ethyl benzene. 16. The Appellant in the CAP estimated the total volume of soil contaminated above GPLs to be approximately 500,000 cubic feet. 17. The approved CAP reported groundwater contamination on the site exceeded the ADEQ Arizona Water Quality Standards ("AWQS") for benzene, toluene, 1,2-dichloroethane, 1,2,4- trimethylbenzene and 1,3,5- trimethylbenzene. The CAP reported the following maximum contaminant concentrations detected in the groundwater on the site and the corresponding AWQS.

|Chemicals of Concern |Highest |AWQS (ug/L) | | |Concentration | | | |Detected (ug/L) | | |Benzene |11,000 |5 | |(TDI-10 on 8/30/01) | | | |Toluene |8,100 |1,000 | |(TDI-10 on 11/06/97) | | | |1,2-dichloroethane |110 |5 | |(TDI-10 on 8/30/01) | | | |1,2,4-trimethylbenzen|500 |12 | |e | | | |(TDI-10 on 5/6/97) | | | |1,3,5-trimethylbenzen|200 |12[1] | |e | | | |(TDI-10 on 8/30/01) | | |

18. ADEQ received the Corrective Action Plan ("CAP") dated April 27, 2004 for the releases, on April 30, 2004. A complete copy of the CAP is provided as Exhibit 4. The parties believe that the following excerpts from the CAP are relevant. 5.2.1 5.5.3 6.4.3 Figure 10 5.3.2 6.4.2 6.4.4 19. If the City of Douglas’ Aquifer Protection Permit allows for discharge of treated effluent into the city’s sanitary sewer system, a discharge permit would be required by the City of Douglas to discharge treated groundwater to the city's sewer system. 20. The Appellant did not apply for a discharge permit from the City of Douglas. 21. At an informal appeal meeting conducted on August 8, 2007 for applications 2953-82, -89 and -90, the Appellant's consultant indicated that they elected not to obtain a City of Douglas permit to discharge treated groundwater to the city sewer and why. No amendment of the CAP was requested by the Appellant. 22. The Appellant did not install a shallow-tray air stripper and an activated carbon adsorption system on the site. 23. An MPE pilot test was conducted on October 2 and 3, 2002. Wells TDI-2 and TDI-10 were tested. A total of 167 gallons of water were generated during the test. The groundwater extraction rate from TDI-2 dropped from 87 gallons in the initial 4 hours and 41 minutes (~0.31 gpm) of operation, to 42 gallons in 5 hours and 15 minutes (~0.13 gpm). After 9.5 hours of water level recovery in TDI-2, extraction resumed at a rate of gallons of water in 3 hours and 31 minutes (~0.05 gpm). MPE was then performed on TDI-10, which produced at a rate of 28 gallons in 3 hours and minutes (0.13 gpm). TDI-10 contained 2.28 feet of water at the beginning of MPE pilot testing in that well. During the MPE pilot testing, the vacuum was adjusted to various levels to ascertain optimal operating conditions. Vacuums on the drop tube ranged from 8.8 inches of mercury to 25.5 inches of mercury. 24. Preliminary Corrective Action Plan approval was given by ADEQ in a letter dated June 22, 2004. The preliminary CAP approval states that:

... ADEQ has determined that the implementation of MPE in accordance with the revised CAP should ensure adequate protection of public health, welfare, and the environment; provide for the maximum beneficial use of the soil and waters of the state; and is reasonable, necessary, technically feasible and cost-effective. 25. Item 4 of the Preliminary Corrective Action Plan approval letter by ADEQ dated June 22, 2004 indicated that based on the high concentrations of groundwater contaminates reported in the CAP, the preliminary CAP approval included a requirement that one additional existing monitor well (TDI-18) be connected to the MPE/SVE system 26. Corrective Action Plan Final Approval was given by ADEQ in a letter dated September 14, 2004. The final approval required compliance with the June 22, 2004 Preliminary Corrective Action Plan approval requirements. 27. The ADEQ case manager for Lone Star, Jason Howard, left the ADEQ in the spring of 2006. TDC sent an email to ADEQ on 18 April 2006 inquiring as to the new case manager for the site. TDC also sent an email to ADEQ on 25 April 2006 asking for the new case manager information. TDC received information from ADEQ that Mr. Tim Ediger was the new case manager. TDC contacted Mr. Ediger via email on 22 May 2006. 28. On June 2, 2006, ADEQ sent the Applicant Notification Letters regarding Applications 2953-61, -62 and -64. The Notification Letters stated, in part, that:

According to Table 1, Summary of MPE System Operational Data, MPE (via the liquid ring pump) is only operated during site visits. During the month of January 2006, MPE operated for 23.82 hours. In reviewing the Department approved CAP, information could not be located where MPE would be operated only during site visits. Please provide clarification on this issue.

According to MBF Environmental Invoice No. TDC-064130, the liquid ring pump, positive displacement blower, and 700 scfm burner unit are itemized. The burner unit and PD blower seem to correlate to the dollar amount for Cost Schedule Item Number 130. Please provide justification for the requested $5,000.00 monthly rental rate for the liquid ring pump (may be in the form of quotes, purchase price, etc.). 29. On June 2, 2006, ADEQ received the Appellant's Periodic Site Status Report, August 2004 - May 2006 ("1st PSSR"). According to the 1st PSSR: a. Under the heading "Work Performed This Period and Discussion of Results," subheading "Multi-Phase Extraction Remedial System Start Up," the 1st PSSR states the following:

High VOC inlet concentrations and unstable extraction flows were observed during MPE start-up operations, which prevented the liquid-ring blower to be [sic] operated without direct TDC supervision. These unstable flow conditions caused the burner temperature to fluctuate erratically and frequently exceed the high temperature alarm set point. When exceeded, the high temperature alarm relay opens an automatic dilution valve, which allows fresh air to enter the vacuum side of the blower and cool the burner temperature to normal range. This causes a rapid decrease in the extraction inlet vacuum, which can damage the liquid-ring blower. The manufacturer specifications for the liquid-ring blower state that a minimum blower inlet vacuum of inches of Hg must be maintained. TDC personnel monitored the MPE unit continuously while operating the liquid-ring blower to prevent potential blower damage. During the MPE system start-up period when TDC personnel were not on site, the MPE unit was operated using the positive displacement blower. Since the positive displacement blower is not limited by a minimum vacuum requirement, TDC was able to operate the MPE unit relatively uninterrupted during the start-up period.

MPE operations have subsequently been performed in attended cycles, with the system being switched to PD mode when operating unattended. However, the most current system operations have been substantially more stable and MPE operations have been performed overnight unattended. Future adjustments may allow for longer MPE operation times. b. A section entitled "Evaluations and Interpretations" in the 1st PSSR stated the following:

The MPE system is able to extract the water contained within the wells and maintain that depressed level at a low extraction rate. This drawdown exposes submerged soil contamination while simultaneously extracting and volatizing the free product.

Although the overall VOC concentrations have reduced during this reporting period, individual well VOC concentrations are still high enough to warrant continued operation under the current system configuration. However, it appears that it may soon be appropriate to switch the system to a catalytic oxidizer. During the next monitoring period, the system will continue to be optimized and monitored for the appropriate time to make that switch.

By projecting the accumulative VOC mass removal curve shown on Chart 1, TDC has estimated that the 95% maximum removal criterion may be achieved by the one year operation date (4, January 2007).

It is difficult to determine a groundwater contamination trend using only one investigative sampling event. However, the groundwater concentrations observed during the 4 May 2006 sampling event are significantly lower than they have historically been within the site monitor wells.

c. The 1st PSSR states, within the section entitled “MPE Operations Water Management” that:

Water produced during MPE activities to date has totaled approximately 1,100 gallons. This water is stored on-site in poly-tanks pending disposal. This water was transported off- site by Liquid Environmental Solutions to their recycling facility on 17 May 2006. d. A complete copy of the 1st PSSR is provided as Exhibit 13. The parties believe that the following diagrams are relevant to the issues. Figure 2; Appendix 2 (Figure 4, Pre-Built Remedial Design System Layout), and As Built MPE Manifold

30. On August 15, 2006, ADEQ received the Appellant's Periodic Site Status Report, April - June 2006 ("2nd PSSR"). According to the 2nd PSSR: a. The 2nd PSSR states that:

Water produced during MPE activities to date has totaled approximately 1,100 gallons, 415 gallons of which was produced during the April - June 2006 monitoring period. This water is stored on-site in poly-tanks pending disposal. This water was transported off-site by Liquid Environmental Solutions to their recycling facility on 17 May 2006. b. The "As-Built System Layout" included as Figure 2 in the 2nd PSSR is identical to that contained in the 1st PSSR. 31. On September 20, 2006, in response to the receipt of the Appellant's 2nd PSSR, ADEQ sent a letter to the Appellant entitled "Progress Reporting Notice of Deficiency." The Progress Reporting Notice of Deficiency stated the following:

According to the approved CAP and the conditions for its approval, as stated in the Preliminary Corrective Action Plan Approval: Consent Order L-6-04 letter dated June 22, 2004, 'The MPE system's design, installation, operation, maintenance, monitoring, evaluation, optimization and reporting should be conducted in a manner consistent with established MPE industry standards, technical guidance documents and vendor specifications. ADEQ recognizes that site-specific deviations from these standards might be necessary but that ... a summary of any deviations, supporting rationale, and a statement of the limitations and assumptions of any such deviations, are to be incorporated into the initial and subsequent periodic reports...'

Based on a review and evaluation of the 2nd Quarter PSSR, it appears that the MPE/SVE system is being operated in a manner that is neither reasonable nor cost-effective in comparison to current MPE/SVE guidance ADEQ is requesting a resubmittal of the 2nd Quarter PSSR .... Failure to submit a corrected 2nd Quarter PSSR may result in an enforcement action. ADEQ is requesting that the following issues be addressed in the re-submittal and in subsequent Quarterly PSSR submittals:

…

1. ... Address what measures have and are being taken to remedy the reported operational problem(s) that will allow unattended liquid-ring blower operation and when these problems will be corrected. In addition, include a detailed evaluation that specifically states the operational strategy with regard to each of the MPE/SVE system's components, i.e. past/current/future use of the MPE component and the SVE component. Include in this discussion an assessment of the operational effectiveness of each component and support for the analysis, evaluations, interpretations, and performance-based recommendations based on operational data.

2. ... an evaluation of the performance-based measures and recommendations for a) continuing system operation as approved; b) significantly redirect, reduce, or otherwise adjust extraction flow rates; c) initiate "cycled" system operation; ... e) expand on MPE system design and operation; or f) propose other modifications.

3. ... The reported tabular data appear consistent with parameters that are typically monitored during the operation of a SVE system but inconsistent with the parameters that are typically monitored during MPE system operation. 32. TDC, Appellant's consultant, sent an email to Mr. Tim Ediger on September 2006 requesting a facility meeting to discuss the “Progress Reporting Notice of Deficiency”. TDC also emailed a request to Mr. Ediger on 2 October 2006. At the request of Mr. Ediger, a written request for facility meeting, signed by Appellant, was emailed and hand delivered to ADEQ on 26 October 2006. This request contained a proposed meeting agenda which included in Item 5 “Discuss reasonable compensation for remedial equipment necessary to conduct corrective actions.” On 10 November 2006, TDC sent an email to Mr. Ediger inquiring as to the status of the facility meeting request. On 13 November 2006, TDC sent an email to Mr. Ediger inquiring as to the status of Appellant's facility meeting request. On 16 November 2006, TDC sent an email inquiring as to the status of the facility meeting request. ADEQ responded with an email on 16 November 2006 that stated ADEQ’s response to the facility meeting request would be in the mail the next day. On 21 November 2006, TDC received the ADEQ response which required Appellant's written acceptance of the agenda. TDC submitted the written acceptance of the facility meeting agenda to the ADEQ on 5 December 2006. 33. At the direction of ADEQ, during the January 11, 2007 facility meeting, it was agreed that “ADEQ is not requesting that the previous periodic site status report, that was found to be deficient by ADEQ, be revised and resubmitted.” Therefore, a revised 2nd Quarter PSSR was not submitted to ADEQ. 34. On January 26, 2007, ADEQ received the Appellant's Periodic Site Status Report, July - December 2006 ("3rd PSSR" reporting 3rd and 4th quarter data). According to the 3rd PSSR: a. Under the heading "Work Performed This Period and Discussion of Results," subheading "Multi-Phase Extraction Remedial System & M," the 3rd PSSR states the following:

... During this O&M period, the system was checked and adjusted at least twice a month to ensure optimal operation. System optimization includes adjusting the system to maximize the flow rate and VOC production, while maintaining system stability and reducing propane consumption..

Multi-phase extraction (MPE) has been conducted at the site to remove contaminated groundwater and free product from the [sic] beneath the site building, as well as dewater the submerged contaminated soil. The liquid ring pump, which is an integral part of the on-site remediation system, was used to conduct each liquid/vapor extraction event.

... It was determined that, depending on the well and groundwater conditions at the time, a maximum of three wells could be operated simultaneously by the liquid ring pump. ...

Due to the depth to groundwater at this site, liquid extraction could only be accomplished using the MPE unit's liquid ring (LR) blower. Vapors are also extracted when operating in the LR mode. When the system is operating using the positive displacement (PD) blower, liquid is not extracted (with the exception of condensate). Because each well casing has only one lateral extraction pipe connected to it, switching from liquid/vapor (LR mode) to vapor only (PD mode) extraction is accomplished at the wellhead either by using a bypass valve, or by raising the drop pipe to a depth above the water level within the well.

During the period between July and November 2006, liquid/vapor (LR mode) extraction events were conducted on a periodic basis, with the system running in PD mode in between these events. A typical MPE event had duration of up to two days, during which extraction was performed on up to three wells at a time. During the month of December, TDC attempted to operate the system in continuous LR mode. However, operation soon reaffirmed TDC's previous evaluations that operating the system in the alternating LR mode/PD mode manner greatly improved the system run time and VOC production. During December when the unit was left unattended, the drop pipes were adjusted up to control the total flow of liquid from the wells. The flow rate was calculated and adjusted so that the capacity of the poly storage tanks would not be exceeded before the next site O&M visit. ... b. The statements quoted regarding the simultaneous use of three wells during MPE activities were the first time this information was conveyed to ADEQ. c. The 3rd PSSR states that:

Water produced during remediation activities during this monitoring period totaled approximately 937 gallons. Water produced during remedial activities is stored on-site in poly- tanks pending disposal. On 7 December 2006, 600 gallons of petroleum contaminated water was picked up by Red J Environmental Corporation and delivered to Liquid Environmental's Phoenix, Arizona facility for disposal. Appendix 5 contains copies of the water management documents. Based upon the fact that no measurable amounts of free product were observed within the extraction fluid, the estimated mass of hydrocarbons in the petroleum contaminated water is negligible. d. The "As-Built System Layout," included as Figure 2 in the 3rd PSSR, is identical to that contained in the 1st and 2nd PSSRs. e. As agreed in the January 11, 2007 facility meeting with ADEQ, Table 2 of the 3rd PSSR contains a small table which for the first time presents information on which wells were used for MPE activities from January through December 2006. 35. Two of the recovery wells installed on the site (LSS-MPE-1 and LSS-MPE-2) were constructed as tri-completion wells containing two SVE recovery casings screened in the vadose zone and one MPE recovery casing screened above and into the groundwater. The MPE casings contain a one- inch drop pipe for fluid and vapor extraction. The remaining four MPE recovery wells on the site (TDI-2, TDI-7, TDI-10 and TDI-18) were converted from monitoring wells by installing MPE drop pipes and related equipment. 36. The MPE and SVE extraction wells were connected to the remediation system through a single manifold. 37. A burner capable of maintaining flow rates up to 700 standard cubic feet per minute ("scfm") was utilized during the January through December 2006 time period to treat vapors extracted from the subsurface and the unit was operated at all times that the positive displacement blower or liquid ring pump were operated. 38. The LRP and PDB were never operated simultaneously. 39. The remediation system as constructed is not capable of operating both the liquid ring pump and the positive displacement blower simultaneously in part because the trailer-mounted remediation system included what has been described by the Appellant as a switch that allowed only independent operation of the MPE-LRP or SVE-PDB and not concurrent operation of the two systems. 40. According to the Appellant, site-specific conditions did not allow for full-time, unmonitored MPE operations to be conducted on the site. 41. The positive displacement blower installed at the site was not intended to extract Groundwater from the site. The MPE-LRP was installed at the site to extract free product. 42. In November and December of 2006 the Appellant claims to have made modifications to the remedial system intended to allow the MPE system to operate continuously and unattended. These modifications were made in response to ADEQ's September 20, 2006 Progress Reporting Notice of Deficiency. 43. During December 2006 the LRP operated for the first and only time for more than 24 hours unattended. The PDB was not operated during the month of December. 44. The Periodic Site Status Report August 2004 - May 2006, dated June 2, 2006 (1st PSSR), and Periodic Site Status Report, April - June 2006 (2nd PSSR), dated August 15, 2006 (2nd PSSR), and Periodic Site Status Report, July - December 2006, dated January 26, 2007 (3rd PSSR), contain various tables that depict the monthly run times, flow rates and the amount of volatile organic compound mass removed/volatized. 45. The following table details the amount of time the liquid ring pump was operated each month from January 2006 through December 2006.

|Month |Run Time (Hours)| |January 2006 |23.82 | |February 2006 |0.00 | |March 2006 |18.07 | |April 2006 |5.53 | |May 2006 |23.02 | |June 2006 |1.54 | |July 2006 |2.66 | |August 2006 |0.00 | |September 2006 |0.00 | |October 2006 |0.00 | |November 2006 |43.83 | |December 2006 |130.65 |

46. The following table details the amount of time the positive displacement blower was operated each month from January 2006 through December 2006.

|Month |Run Time (Hours)| |January 2006 |623.11 | |February 2006 |633.58 | |March 2006 |591.62 | |April 2006 |707.97 | |May 2006 |548.2 | |June 2006 |603.38 | |July 2006 |313.71 | |August 2006 |97.33 | |September 2006 |255.12 | |October 2006 |678.79 | |November 2006 |650.87 | |December 2006 |0.00 |

47. The following table details the amount of time the burner unit was operated each month from January 2006 through December 2006 and the available hours during those months.

|BURNER UNIT RUN TIMES | |Month |Run Time (Hours) |Available Hours |Percentage | |January 2006 |646.93 |744 |87.0 | |February 2006 |633.58 |672 |94.3 | |March 2006 |609.69 |744 |82.0 | |April 2006 |713.50 |720 |99.1 | |May 2006 |571.22 |744 |76.8 | |June 2006 |604.92 |720 |84.0 | |July 2006 |316.37 |744 |42.5 | |August 2006 |97.33 |744 |13.1 | |September 2006 |255.12 |720 |35.4 | |October 2006 |678.79 |744 |91.2 | |November 2006 |694.70 |720 |96.5 | |December 2006 |130.65 |744 |17.6 |

48. During the month of January 2006, liquid extraction was conducted on all six MPE wells on site. During each of the other months in which liquid extraction was conducted, a maximum of four wells (May 2006) and as few as one well (June and July 2006) were utilized for liquid extraction. 49. The following table details the amount of volatile organic compound ("VOC") mass removed by the MPE and SVE systems through active removal and calculated (by the Appellant) biodegradation during 2006 according to the Appellant's periodic site status reports.

| |MPE |SVE | | |Month |Mass |Percentag|Volatili|Mass |Percentag|Volatili|Cumulativ| | |Removed |e of |zed Mass|Removed|e of |zed Mass|e | | |(lbs) |Cumulativ|Removal |(lbs) |Cumulativ|Removal |Monthly | | | |e Monthly|Rate** | |e |Rate** |Total | | | |Total |(lbs/hou| |Monthly |(lbs/hou|Mass | | | | |r) | |Total |r) |(lbs) | |January |528 |2.1 |12.1 |24900 |97.9 |20.5 |25428 | |2006 | | | | | | | | |February |0 |0 |NA |16380 |100.0 |14.2 |16380 | |2006 | | | | | | | | |March 2006|191 |2.0 |2.5 |9321 |98.0 |6.4 |9512 | |April 2006|25 |0.3 |1.8 |9481 |99.7 |6.1 |9506 | |May 2006 |213 |3.3 |3.0 |6165 |96.7 |3.9 |6378 | |June 2006 |5 |0.2 |0.7 |2777 |99.8 |1.7 |2782 | |July 2006 |6 |0.6 |0.3 |1017 |99.4 |1.6 |1023 | |August |0 |0.0 |NA |909 |100.0 |2.8 |909 | |2006 | | | | | | | | |September |0 |0.0 |NA |3756 |100.0 |5.5 |3756 | |2006 | | | | | | | | |October |0 |0.0 |NA |6653 |100.0 |2.4 |6653 | |2006 | | | | | | | | |November |239 |4.4 |0.7 |5246 |95.6 |2.5 |5485 | |2006 | | | | | | | | |December |586 |100.0 |0.5 |0 |0.0 |NA |586 | |2006 | | | | | | | | |Totals for|1793 |2.1 |2.1 |86605 |98.0 |6.7 |88398* | |Year | | | | | | | |

*The Appellant's January 26, 2007 Periodic Site Status Report (3rd PSSR) lists this total as 88401 lbs. because of numerical rounding. **Mass removal rates are based on number of hours operated. 50. The following table depicts the results of vapor samples collected for laboratory analysis during the 2006 remedial operations:

51. The Periodic Site Status Report August 2004 - May 2006, dated June 2, 2006 (1st PSSR), on page 5, Periodic Site Status Report, April - June 2006, dated August 15, 2006 (2nd PSSR), on page 2, and Periodic Site Status Report, July - December 2006, dated January 26, 2007 (3rd PSSR) on pages 3 and 4 under the "MPE/SVE Operations Water Management" section, state that water produced during remedial activities "... is stored on- site in poly-tanks pending disposal." This water was transported off-site by or delivered to Liquid Environmental solutions for disposal. 52. During December 2006, the drop pipes were adjusted up to control the total flow of liquid from the wells so that the capacity of the poly storage tanks would not be exceeded before the next periodic site visit.

THE TAP’S FINDINGS OF FACT

1. Did the CAP require the combined MPE-LRP/SVE/PDB system to be designed to allow the operation of the MPE-LRP and SVE-PDB concurrently and consistently? No

• Based on the testimony of the two registrants,[2] there was never an intent to operate both the LRP and the PDB concurrently. • Also, Mr. Miller testified that the system was actually designed prior to submittal of the CAP. As designed, the system could not be run concurrently. • While the CAP did not “require” that both systems be operated concurrently, Mr. Pudney interpreted the CAP as indicating that concurrent operation was required. It is unknown whether ADEQ assumed that the LRP and PDB would be operated concurrently and consistently or alternately when the CAP was approved.

2. For each month (January-December) in 2006, was the MPE-LRP portion of the system operated consistent with the CAP? No

• There was testimony (Ms. Conger) and as noted in the CAP, the primary purpose of the MPE-LRP was free product (FP) removal. System was not operated in months (February and August) when FP was present or observed recently (within previous month), and was operated in months when FP was not observed. This is clearly inconsistent with the CAP. • Mr. Miller testified that it was TDI’s intent to run the LRP while TDI personnel were on site. That could equate to up to 40 hrs per month (TAP – Mr. Marwig/Nemecek interpretation). It was agreed by the TAP members that somewhere between 20 and 40 hours per month would be consistent with the CAP taking into account site and time specific circumstances. However, there are several months when it did not run at all regardless of whether FP was present. • When using this technology at this depth, operation can be more difficult. However, an advantage is ease of converting to SVE when FP not present. • Based on Uncontested Facts #45 and #49 it appears that longer operation (more than just a couple of hours) has the affect of producing increased mass removal rates. • Agree that Uncontested Fact #45 is accurate for debating MPE-LRP consistency. • Opinion on a month-by-month basis: • January – yes – This was the start up month for the system. PSSR Table (Exhibit 13) shows that on several days while staff were on site, the system was run in LRP mode. Because this was the startup month and because there was actual operation of the LRP system on several days, the + 24 hours of operation is consistent with the CAP. • February – no - There were zero hours of operation as per Uncontested Facts #45. As shown in PSSR #3 (Exhibit 52, Table 2) FP was present in well TDI-2 in the prior month. Since the primary intent of the LRP system was to remove FP, it would be inconsistent with the CAP not to operate the LRP system. Also, this is very early on in the remediation timeframe. Therefore, even if FP was not present, very high concentrations in groundwater would have still been present. Further, given the length of time FP was present, even after bailing, the system should have been run. • March – yes – The system was not operating upon arrival. Documentation is present that indicates the sequence of start up and shows that once operational, the system was switched to LRP mode (Exhibit 13, PSSR #1, Table 2). Also, TDI-7, one of the MPE wells, had to be rehabilitated due to silting. Because the system was operated to what appears to be the extent possible, operation is consistent with the CAP. • April – no - The run time hours of 5.53 are too low. Also, FP was present in TDI-7 in March (Exhibit #52, Table 2). Table 3 of the same exhibit indicates specifically on March 7 that 0.48-inches of FP was present. This demonstrates that the limited operation of the LRP system is not consistent with the CAP. • May – yes – The system was operated during both TDI site visits (Exhibit 13, Table 2). During one of the TDI site visits, the system was not operational due to power outage. Based on the documented events during that visit, the system was started and operated consistent with CAP. • June – no – The run time of 1.54 hours is too low. As noted in Uncontested Fact #45, the highest removal rate for the LRP system was observed in the prior month of May. • July – no – The run time of 2.66 hours is too low. Again, the run time is insufficient to determine if FP could have been withdrawn or what the site-specific conditions were during that month. • August – no - The run time of zero hours is not consistent with the CAP because FP was present in well TDI-7 at 0.48-inches on August 23 (Exhibit #52, Table 3). Also, as noted is PSSR #3 (Exhibit 52, field notes), field staff were onsite for five days during August. • September – no – Zero hours are not consistent with CAP because FP is still likely present. Also, refer to discussion for February. • October – no - Zero hours are not consistent with CAP because FP is still likely present. Also, refer to discussion for February. • November – yes – System modification has been completed based on ADEQ Notice of Deficiency. • December – yes –This month had the greatest number of run time hours.

3. For each month (January-December) in 2006, was the MPE-LRP portion of the system operated in a reasonable and cost effective manner?

• For those months that it was deemed that operation of the LRP was consistent with the CAP, it is also concluded that it was operated in a reasonable and cost effective manner. • Also, based on the EPA (Exhibit 85) and COE (Exhibit 84), the cost per pound of contaminant removal via LRP is well within the acceptable cost range. • Opinion on a month-by-month basis: • January – yes – This was the start up month for the system. PSSR Table (Exhibit 13) shows that on several days while staff were on site, the system was run in LRP mode. Because this was the startup month and because there was actual operation of the LRP system on several days, the + 24 hours of operation is reasonable and cost effective. • February – no - There were zero hours of operation as per Uncontested Facts #45. As shown in PSSR #3 (Exhibit 52, Table 2) FP was present in well TDI-2 in the prior month. Since the primary intent of the LRP system was to remove FP, it would be unreasonable not to operate the LRP system. Also, this is very early on in the remediation timeframe. Therefore, even if FP was not present, very high concentrations in groundwater would have still been present. Since the ultimate goal is remediation of soil and groundwater, lack of operation of the LRP is not reasonable, nor is it cost effective since the LRP unit was already onsite. • March – yes – The system was not operational upon arrival. Documentation is present that indicates the sequence of start up and that shows that once operational, the system was switched to LRP mode (Exhibit 13, PSSR #1, Table 2). Also, TDI-7, one of the LRP wells, had to be rehabilitated due to silting. Because the system was operated to what appears to be the extent possible, operation is reasonable and cost effective. • April – no - The run time hours of 5.53 are too low. Also, FP was present in TDI-7 in March (Exhibit #52, Table 2). Table 3 of the same exhibit indicates specifically on March 7 that 0.48-inches of FP was present. This demonstrates that the limited operation of the LRP system is not reasonable or cost effective. • May – yes – The system was operated during both TDI site visits (Exhibit 13, Table 2). During one of the TDI site visits, the system was shut down due to power outage. Based on the TDI site visits, the system was started and operated in a reasonable and cost effective manner. • June – no – The run time of 1.54 hours are too low. As noted in Uncontested Fact #45, the highest removal rate for the LRP system was observed in the prior month of May. Therefore, the lack of runtime is not reasonable or cost effective. • July – no – The run time of 2.66 hours is too low. Again, the run time is insufficient to determine if FP could have been withdrawn or what the site-specific conditions were during that month. Therefore, the lack of runtime is not reasonable or cost effective. • August – no - The run time of zero hours is not reasonable or cost effective because FP was present in well TDI-7 at 0.48-inches on August 23 (Exhibit #52, Table 3). Also, as noted is PSSR #3 (Exhibit 52, field notes), field staff were onsite for five days during August. • September – no – Zero hours are not reasonable or cost effective because FP is still likely present. Also, refer to discussion for February. • October – no - Zero hours are not reasonable or cost effective because FP is still likely present. Also, refer to discussion for February. • November – yes – System modification has been completed based on ADEQ Notice of Deficiency. • December – yes – This month had the greatest number of run time hours.

4. Were the system modifications made by the Appellant in November 2006 (Application 2953-87 and 88) reasonable, necessary and cost- effective?

• Yes – The modifications were reasonable and necessary because TDI were specifically requested to do so by ADEQ in their (Exhibit 29) September 20, 2006. The costs were reasonable based on Exhibit 96, which indicates a modest cost of less than $1,000.

CONCLUSIONS OF LAW ADEQ has jurisdiction over the issues presented by this appeal and authority to issue a Final Administrative Order in the matter. ADEQ may approve payment from the SAF for certain costs incurred in connection with corrective action activities undertaken at a property characterized as a LUST site. See A.R.S. §§ 49-1005 and 49-1052. Appellant bears the burden of proof and must establish by a preponderance of the evidence that the SAF should reimburse the cost of its corrective actions. See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). For the cost of corrective action to be reimbursable, it must be reasonable, cost-effective and technically feasible. See A.R.S. § 49- 1005(D)(3). Technical feasibility is not at issue in this matter based on the legal issues presented to the ALJ for resolution. The ALJ is required to adopt the TAP’s findings unless those findings are technically invalid. See A.R.S. § 49-1093(I).The TAP’s findings were the product of deliberation and review of the exhibits and witness testimony presented into evidence and the ALJ finds no basis to conclude that the TAP’s findings and conclusions are technically invalid. The ALJ recommends that the Director of ADEQ adopt the TAP’s findings. See A.R.S. § 49- 1093(J). The TAP concluded that the MPE-LRP portion of the system was operated consistently with the CAP and in a reasonable and cost-effective manner in January, March, May, November and December. Consequently, the ALJ concludes that ADEQ did err in its determination that the MPE-LRP operation during these 5 months was not eligible for reimbursement. Uncontested Fact 41 shows that the MPE-LRP was intended to be used to remove free product. The TAP found that free product was present or likely to be present in February, April, August, September and October. The MPE- LRP was not run at all in February, August, September or October and was run for only 5.53 hours in April and, consequently, the MPE-LRP was not operated in a manner that was consistent with its intended purpose during these 5 months. The TAP concluded that in February, April, June, July, August, September and October the MPE-LRP portion of the system was not operated consistently with the CAP and it was not operated in a reasonable or cost-effective manner. The ALJ concludes that ADEQ did not err in its determination that the MPE-LRP operation during these 7 months was not eligible for reimbursement. The TAP concluded that the system modifications made by the Appellant in November 2006 (Application 2953-87 and 88) reasonable, necessary and cost- effective because ADEQ requested the modifications be made. Based on the TAP’s conclusion and Uncontested Fact 32, which shows that ADEQ was slow to provide TDI with more specific instruction, the ALJ concludes that ADEQ did err in its determination that the modifications were not eligible for reimbursement. Because the preponderance of evidence shows that ADEQ erred when it determined that the MPE-LRP operations during January, March, May, November and December were not eligible for reimbursement, ADEQ should authorize payment for the MPE-LRP in those months, which based on Exhibit 96 totals $24,122.00. Because the preponderance of evidence shows that ADEQ erred when it determined that the system modifications made by the Appellant in November 2006 (Application 2953-87 and 88) were not eligible for reimbursement, ADEQ should authorize payment for those modifications, which based on Exhibit 96 totals $513.24. RECOMMENDED ORDER IT IS RECOMMENDED that the Director of ADEQ sustain this appeal in part by accepting the findings and recommendations of the TAP on the technical issues presented. IT IS FURTHER RECOMMENDED that the Director issue an order directing the SAF to pay Appellant Lone Star Service the sum of $24,635.24. Done this day, February 26, 2008

______________________________________ Thomas Shedden Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Stephen A. Owens, Director Department of Environmental Quality Attn: Judy Fought 1110 W. Washington, Sixth Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] 1,2,4 and 1,3,5 trimethylbenzene do not have an established AWQS. The numbers noted are Risk Based Level numbers. Risk-based levels are recommended screening levels which are protective of domestic uses of water. These levels are for guidance and are an appropriate point of departure for further consideration for potential health impacts due to receptor exposures. [2] ALJ Note: Mr. Miller and Ms. Conger are the two registrants.

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