March 7, 2012
DEEP Says Legislation Needed to End UST Program
Bill Should Set Formula for Payment of Claims and Deadline for Last Claims
The Connecticut Department of Energy and Environmental Protection (DEEP) says the time has come to transition from a taxpayer only-funded cleanup program for discharges from underground fuel tanks to one that puts financial responsibility where it rightfully belongs - on private industry.
Speaking to legislation concerning the state’s Underground Storage Tank (UST) Fund that is now before the Environment Committee (S.B. No. 375
), DEEP Commissioner Daniel C. Esty said, “In these difficult financial times state government can no longer afford to pay millions of dollars a year - much of it to multinational corporations – for the cleanup of fuel discharges at private businesses.”
“Instead, we need to responsibly honor existing claims and enact legislation that puts an end to a system that has corporations relying on state government to shoulder costs they should assume themselves,” Esty said. “There are viable options for businesses that must have access to funds to respond to releases from underground storage tanks, including private insurance, surety bonds, letters of credit and self insurance.”
Esty said DEEP is committed to working closely with the General Assembly, the Governor’s Office and industry leaders on the final language of legislation needed to properly address this issue.
According to Esty, the key principles of this legislation should include a fiscally responsible approach to payment of existing claims and claims that could be submitted before the program ends, which will be accomplished with $5 million in funding proposed by Governor Malloy.
DEEP believes the transition from the UST program can best be accomplished through legislation that:
• Assigns applicants to one of four categories to allow for an “asset” test:
o Municipalities and third parties (those whose live adjacent to or near a gas station and whose property has been affected by a release)
o Small Business Owners (4 Stations or less)
o Mid-Size Stations Owners (4 to 100 stations)
o Large Station Owners (More than 100 stations)
• Establishes a system for prioritizing payment of approved applications – including applications that will be approved after passage of this legislation. Under this system:
o Municipalities/small business owners paid in full, with expected full payout to all members of this group within two-three years.
o Mid to large size station owners will be given the option of getting paid starting at 20 cents on the dollar or less, with the payout rising 5 cents per year.
Phase Out of Reimbursement by UST Fund
• No new applications for large stations beginning October 1, 2012
• No new applications from mid-sized station owners beginning October 1, 2013, provided DEEP is notified of the release by October 1, 2012
• No new applications for municipalities/small business owners beginning October 1, 2014, provided DEEP is notified of the release by October 1, 2013
Federal and state laws require those who store motor fuel (gasoline, diesel, aviation fuel, etc) in underground tanks to have a financial assurance for the cost of responding to leaks from these tanks.
In Connecticut, the state, through the UST Petroleum Clean-Up program, has provided the funds to meet these requirements since the early 1990s.
Facilities that qualify for the program include the more than 1,480 gasoline service stations registered with the state Department of Consumer Protection as well as “captive” stations serving municipalities or commercial fleet operations.
• The Underground Storage Tank Petroleum Cleanup Program currently has:
o $17 million in approved claims that have not yet been paid
o $81.6 million in claims that have been submitted but not yet processed or approved
• Of the $81.6 million in pending claims:
o 64% - or $51.9 million – are from Large stations (owner of more than 100 stations)
o 33% - or $26.7 million – are from Mid-Size stations (owners of 4 to 100 stations)
o 3% - or $2.9 million – are from small businesses or municipalities
The Underground Storage Tank Petroleum Cleanup Program Review Board rules on claims and determines monetary payouts. The work of the board has been supported by DEEP staff.