Tier II Fund Solvency Experiences and Analysis

Transcription

1 Tier II Fund Solvency Experiences and Analysis Mike Trombetta & Terry Wadsworth Montana Department of Environmental Quality & Petroleum Tank Release Compensation Board

2 Agenda 1. Program Background Tier II Fund Solvency Report Recommendations 3. Cash-Flow and Fund Solvency Analysis

3 1. Program Background

4 FRFE Releases - Confirmed / Closed New Releases Confirmed each Year Leak Detection Deadline Tank Upgrade Deadline Number of Releases LUST Program Reorganized 50 0 Releases Closed each Year State Fiscal Year

5 FRFE Backlog Over Time FRFE Backlog Number of Releases Confirmed Each Year Closed Each Year LUST Program Reorganized State Fiscal Year

6 FRFE Releases Closed Each Year 120 Number of Releases LUST Program Reorganized All Releases Closed FRFEs Closed State Fiscal Year FRFEs Confirmed

7 FY15 Active Releases n=1191 Pre-dates Fund 26 Compliance Issues 100 Max Paid Out 6 Federal Government 56 Railroad 5 FRFE 753 $21 Million (Avg $57K) $96 Million (Avg $73K) Terminal 24 Eligible - not Fed Reg 221

8 Program Influences New Releases Confirmed each Year LUST Program Reorganized New Priority System Database Re-Focus Permanent Section Manager Petroleum Mixing Zones (PMZ) EPA 2013 Tier II Fund Solvency Recommendations LUST Trust Brownfields Reorganized Petroleum Brownfields Revitalization Act $400,000 Pilot Risk Assessor $1 million Orphan Fund Releases Closed each Year Closure Mandate EPA Backlog Study New Database PMZ Updated

9 Tier II Fund Solvency Report

10 2013 Tier II Fund Solvency Recommendations DEQ and Fund develop a comprehensive strategic plan standardized deadlines relieve bottlenecks Share Unified Strategic Goals Standardized Deadlines for New Releases Facilitated Strategic Planning Significantly more Coordination (DEQ Fund)

11 2013 Tier II Fund Solvency Recommendations Snapshot assessment of releases Sites needing assessment Sites in active cleanup Life-Cycle Planning for Each Release Database Developed to Support Ongoing Effort (Evaluate Each Open Release) Cash-Flow Large Cost Cleanup Scheduling Balanced Against Assessment & Closure

12 2013 Tier II Fund Solvency Recommendations Develop Risk-based Closure Process Petroleum Mixing Zones Close with Groundwater Contamination > Standards Established 2011 Rules Updated 2014, Statute Updated 2015 Require ICs Requested by Owner 2013 Created Bureau Risk Assessor 2014 Risk Assessment Training/Procedures nd Risk Assessor 2015/2016 Updating RBCA

13 2013 Tier II Fund Solvency Recommendations Establish new protocols and deadlines Increase rates of enforcement Continued Enforcement Compliance Policy Refined Ability-to-Pay Process

14 2013 Tier II Fund Solvency Recommendations Establish a low interest loan for co-pay Incentives to upgrade USTs and cleanup sites Took over cleanup ($400,000 Pilot Program) $1 Million Orphan Share Fund Refined Ability-to-Pay Process More Coordination with Brownfields Program Montana Petroleum Brownfields Revitalization Act Other Grant Opportunities

15 2013 Tier II Fund Solvency Recommendations Standard operating plan for DEQ and Fund Develop new Database Cost controls and deadlines New Database UST + LUST + All other Cleanup Programs Completion = 2016 $2.7 million Budget (without soft costs) Tremendous Staff Effort (mostly managers) Will Align and Standardize Work Effort DEQ Fund Workplan Tracking Unit Costs

16 2013 Tier II Fund Solvency Recommendations Increasing cleanup productivity DEQ Contractor to Close Releases RP Contractor to Close Release Alternative funding Synergy With Other Funds Better calculate cleanup costs (actuarial review) Scheduled (Winter 2015/2016)

17 3. Available Cash-Flow and Fund Solvency

18 200 Average Cleanup Costs Cleanup Costs, dollars in thousands Average Release Cleanup Costs 20 0

19 200 Average Cleanup Costs Cleanup Costs, dollars in thousands Unresolved Releases ($146,235) Both Types of Releases ($80,030) Resolved Releases ($32,355) 0

20 Average Cleanup Costs Based on Year Closed Cleanup Costs, dollars in thousands Average Cleanup Costs Linear Least Squares y = x R² =

21 Average Cleanup Costs Average Cleanup Costs UnResolved Releases Cleanup Costs, dollars in thousands Both types of Releases Resolved Releases

22 8.0 Annual Revenue 7.0 Revenue, Dollars (millions) ¾ /gal Annual Revenue (Millions) y = x R² =

23 1200 FRFE Backlog Projection Closed Each Year (60) Closed Each Year (55) 200 Confirmed Each Year (19) Years

24 The Question If cash-flow is guaranteed (no sunset), and all high-risk sites are addressed, and it will take 20 years to close the backlog, is the fund solvent?