Appendix E Summary of Petroleum UST Cleanup Fund Regulations
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1 Appendix E Summary of Petroleum UST Cleanup Fund Regulations State of California In accordance with federal regulations, owners/operators of underground storage tanks (UST) are required to demonstrate through insurance coverage or other acceptable mechanisms that they can pay for for cleanups resulting from leaks that may occur from their leaking USTs. The State of California created a UST Cleanup Fund (Fund) to help UST owners/operators meet financial responsibility requirements and receive partial reimbursement for these cleanups. UST owners/operators who qualify for Cleanup Funds are deemed to have complied with the financial responsibility requirements. Objective The Fund regulations are found in the California Code of Regulations (CCR) Title 23, Division 3, Chapter 18. The Fund is designed to allow eligible UST owners/operators to: 1) Comply with federal and state financial responsibility requirements regarding coverage of cleanup costs; 2) Obtain reimbursement for cleanup costs, incurred after January 1, 1988, resulting from an unauthorized release of petroleum; and 3) Obtain reimbursement for damages awarded to third parties (such as an adjacent property owner), which may include medical expenses, actual losses of wages or business income, actual expenses for remedial actions, and damages equal to the fair market value of any property rendered unsuitable for beneficial use. Third party compensation costs are costs for which a UST owner/operator is legally obligated to pay, whether or not the owner/operator receives reimbursement from the Fund, for bodily injury or property damage resulting from a release of petroleum from a UST. Compensation must be made pursuant to a court-approved settlement, a final judgment (other than a default judgment), or an arbitration award. Funds are disbursed only after costs are incurred and do not cover the removal, repair, retrofit or installation of USTs. Guide to Addressing Former Gas Station Sites Appendix E 1
2 Federal Financial Responsibility Requirements As stated in 40 Code of Federal Regulations (CFR), Section , Subpart H, Part 280, the U.S. EPA requires that UST owners/operators meet certain minimum financial responsibility requirements. The UST Cleanup Fund is designed as a mechanism to allow UST owners/operators to comply with the financial responsibility requirements up to $1,000,000. To use the Fund, the following requirements must be met: 1) Demonstrate financial responsibility for at least the following amounts: $0 for Priority Class A, $5,000 for Priority Class B and C, and $10,000 for Priority Class D. The reason for this financial responsibility is that when the claimant begins to receive reimbursement, a deductible will be applied for the appropriate amount in the claimant s Priority Class. When applying, the claimant must submit proof of ability to pay the deductible. Priority Classes are discussed below. 2) Maintain eligibility to participate in the Fund. UST owners/operators that own 101 or more USTs are required to demonstrate their own financial responsibility for the amount above $1,000,000. Eligibility Requirements To be eligible for the Fund, the following requirements must be met: 1) The claimant must be or have been the owner or operator of the UST which is the subject to the claim (federal and state governments are not eligible); 2) The tank must meet the state definition of a petroleum UST (hydraulic lift tanks, vaults, and farm tanks are not eligible); 3) The claimant must have been in compliance with applicable permit requirements to own / operate the UST; Waiver Criteria for above permit requirement All must apply prior to submitting claim: 1. Claimant was unaware of permit requirements prior to 1/1/90 and there was no intent to avoid requirements 2. Claimant has complied with the financial responsibility requirements 3. Claimant must obtain and pay for all currently required permits. 4. Claimant must pay all due UST fees. (Applies if tank had product inside after 1/1/91) 5. For a claimant who is granted a waiver, the deductible is doubled. Guide to Addressing Former Gas Station Sites Appendix E 2
3 4) An unauthorized petroleum release must have occurred and been reported to the responsible regulatory agency; 5) The claimant must undertake necessary cleanup actions in accordance with state requirements. Priority Classes Because claims for the Fund will exceed available funding for a number of years, the Fund utilizes a priority system, which is established by law, to first reimburse those claimants that are least able to pay the cleanup costs. Claims will be placed in one of four priority classes (A through D, from highest to lowest priority). 1) Priority Class A Residential This class applies to (1) owners/operators of a tank which is located at the residence of a person on property used exclusively for residential purposes at the time of discovery of the release; or (2) owners/operators of a tank at a residence with a capacity of 1,100 gallons or less that contained heating oil. The UST must have been used exclusively for residential purposes. 2) Priority Class B Small Businesses Local Governmental Entities Nonprofit Organizations The second class applies to a small business which is independently owned and operated and not dominant in its field of operations. The business cannot have gross annual receipts for the three years preceding its application to the Fund that exceeds the maximum receipts specified for that industry group by the State Office of Small and Minority Business (OSMB). Cities, counties, districts, and nonprofit organizations with a total annual revenue of less than $7 million are eligible for Priority Class B. 3) Priority Class C Small Businesses Local Governmental Entities Nonprofit Organizations The third class applies to a business that employs fewer than 500 full-time and part-time employees, is independently owned and operated, and not dominant in its field of operations. Cities, counties, districts, and nonprofit organizations that exceed the annual revenue of $7 million, but have less than 500 full-time and part-time employees, are eligible for Priority Class C. 4) Priority Class D All Other UST Owners and Operators Guide to Addressing Former Gas Station Sites Appendix E 3
4 Deductible All claimants are subject to a deductible which is based on the priority class. Where the claimant failed to meet the eligibility requirement with regard to permitting but has met the criteria for a waiver of such requirement, the deductible is double the amount otherwise applicable. See Eligibility Requirements, Section 3 for critera. Priority Class Deductible Deductible with Permit Waiver Class A $0 $0 Class B $5,000 $10,000 Class C $5,000 $10,000 Class D $10,000 $20,000 Claims Processing and Three-Bid Requirement A claims application must first be provided in order for the Fund to determine reimbursement eligibility. If the claim is determined to be eligible for funding, it will be placed on the priority list in the appropriate priority class by the date the completed claim was received by the Fund. When a claim becomes reachable on the priority list and funding is available, a Letter of Commitment (LOC) is issued to the claimant. The LOC is the legal document used to obligate funds toward cleaning up a contaminated site. Issuance of a LOC does not guarantee that the costs claimed in the application are eligible or will be reimbursed by the Fund. After being issued a LOC, a claimant may submit a request for reimbursement of costs incurred to date. Claimants are required to obtain at least three bids or proposals for future work if they file a claim with the Fund. At a minimum, claimants should receive three bids for subsurface investigations and three bids for conducting corrective action. Where three bids have been obtained, the Fund will generally limit reimbursement to the lowest bid or proposal. The claimant may request the Fund to preapprove reimbursable costs prior to starting cleanup actions. If the proposed project activities are completed as presented for those preapproved costs, then reimbursement is virtually assured. If the costs requested exceed the preapproval amount, justification must be provided with the reimbusement request. The Fund will review the request to ensure compliance with regulatory agency directives and ensure that the costs are reasonable and necessary. Guide to Addressing Former Gas Station Sites Appendix E 4
5 Appeals Process There are three levels of appeals that may be taken by a claimant that disagrees with a Division staff decision. 1) The Fund Manager may be requested to review a decision rendered by Fund staff. A Fund Manager Decision is rendered within 30 days of the appeal request. 2) A claimant may appeal to the Division Chief for review of a Fund Manager Decision. A Final Division Decision is rendered within 30 days of the appeal request. 3) A claimant may petition the for review of the Final Division Decision. The petitioner may request a hearing with the Board to present an oral argument or to present new factual information not presented to the Division Chief. Location and Phone Number UST Cleanup Fund Program 1001 I Street Sacramento, CA (916) Mailing Address UST Cleanup Fund Program P.O. Box Sacramento, CA Web Site References 1. California Environmental Protection Agency,, Division of Clean Water Programs, Petroleum Underground Storage Tank Cleanup Fund Regulations, November 27, Guide to Addressing Former Gas Station Sites Appendix E 5
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