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UNDERGROUND STORAGE TANK CLEANUP FUND

Lisa BabcockState Water Resources Control Board

CUPA ConferenceFebruary 4, 2013

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PRESENTATION OUTLINE1. OVERVIEW OF RECENT CHANGES2. FUND STATS – QUARTERLY & ANNUAL REPORTS3. AB 1715 AND REVIEW SUMMARY REPORTS4. LOW-THREAT POLICY CASE REVIEWS5. LOP CONTRACTS6. LOOKING FORWARD7. FRAUD

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1. OVERVIEW OF RECENT CHANGES

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DRIVERS TO USE UST CLEANUP FUND MORE EFFECTIVELY

• 2009 Audit and Task Force Recommendations• Fraud, Waste, Abuse • State Water Board Resolutions (5 since 2008)• Low Threat Policy• Recent Laws: AB 358, AB 291, AB 1701, AB 1715• Reduced Revenues• Unintended Consequences – Greenhouse gasses• Current Fund Sunset Date < 3 years – Fiscal Cliff

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CHALLENGES FOR CLEANUP FUND• AVERAGE case has been open 17 years –

every year more costs are incurred that may not be reasonable and necessary

• Many cases not yet assessed, therefore not being either remediated (if necessary) or closed (17 yr X $30K/yr monitoring only = $510K)

• Dramatic increase in corrective action costs over time:– Closed claims averaged $180,000/claim– Current claims averaging $500,000/claim and counting– Current claims projected total > $750,000/claim– # open claims >$1M reimbursed to date = 469 or 15%

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RECENT STATE WATER BOARD STEPS AFFECTING CLEANUP FUND

• State Water Board moving aggressively to close low-threat cases so that resources can be used to clean up the remaining high-priority cases (especially cases without viable responsible parties)

- Res. No. 2009-42 directed actions to review and close cases- Res. No. 2012-0016 adopted UST Low-Threat Closure Policy- Res. No. 2012-0061 delegated closures that meet Policy criteria to Executive Director- Res. No. 2012-0062 approved Plan for Policy implement- ation and additional program improvements

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2. FUND STATS – QUARTERLY & ANNUAL REPORTS

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QUARTERLY REPORT/ANNUAL REPORT• Posted on Fund website• Quarterly Report

– Fund Stats by Quarter– Status of claims– RRs received, reviewed, paid– Accounts receivable owed to Fund– Five year reviews– Year-end Summary

• Annual Report

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CLAIMS BY PRIORITY CLASS since 1992 (July 2012) PRIORITY

CLASSCLOSED CLAIMS

ACTIVECLAIMS

PRIORITY LIST

CLAIMS

CLAIM REIMURSE

-MENTS

A 409 42 0 $0.04B

B 3,521 1,585 40 $1.40B

C 3,030 965 87 $1.16B

D 1,228 444 4,562 $0.60B TOTAL =15,913 8,188 3,036 4,689 $3.20B

Claims $183.2M

71.8%

Special Accounts $15.0M

5.9%

Regulatory Oversight $25.5M 10.0%

State Overhead 3.4%Board of Equalization 1.3%Cal EPA 0.3%SWRCB Admin/Other 1.6%SWRCB Office of Enforcement 0.4%

SWRCB Fund 5.2%

-Commingled Plume-EAR Account

-SWRCB-RWQCB-LOP

*Dollars in the Millions

UST CLEANUP FUND ANNUAL EXPENDITURES

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RECENT FUND ACTIONS Active claims

• Reimbursed most costs incurred prior to July 2011• Provide annual budget for ongoing work• Requiring RRs include information required by law• Priority payments or budgets for site closeout claims,

cases affecting water supply wells, cases with significant free product per Res. 2012-0062

Priority List claims• Activating A’s, B’s, and Schools as they come onto list• Activating D’s as necessary to meet 14% law

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3. AB 1715: 5-YEAR REVIEWS &

REVIEW SUMMARY REPORTS

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AB 1715 Health & Safety Code 25299.39.2

• “The Legislature finds and declares that the State Water Resources Control Board should expediently process underground storage tank cases…”

• Added to 5-year review process

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FUND MANAGER DETERMINATION• Fund Manager Determination that

Case Appropriate for Closure• Document as Review Summary

Report (RSR)• Opportunity for Agency Comment• Freeze Existing and New Directives• Exceptions to Freeze

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FUND MANAGER RECOMMENDATION

• Permission from O/O to close• Fund Manager Recommendation

to close• Triggers max. $10K/year corrective

action costs• Adds monitoring

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FUND MANAGER RECOMMENDATION

• 60 day comment period per Low-Threat Policy

• Closure order signed by Exec Director if passes Low-Threat Policy criteria or by State Water Board if passes Res. 92-49 per Res. 2012-0061

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5-YEAR REVIEW PRODUCTS

• Review Summary Report, with• Checklist for Policy (3 page) or, if

fails, Checklist for Res. 92-49, and • Summary of Basic Case Information

(Conceptual Site Model) using GT data

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5-YEAR REVIEW PRODUCTS

Review Summary Reports (RSRs)• RSR-Concur• RSR-Additional Work• RSR-Closure = Fund

Manager Determination• UST Case Closure RSR = Fund

Manager Recommendation

AB 1715 & REVIEW SUMMARY REPORTSDRAFT RSR -

Concur

DRAFTRSR –Addl Work

DRAFTRSR -

Closure

45-day Regulator Review

RSR - Concur

RSR –Addl Work

RSR - Closure

Case Closure

RSR

Freeze Directives

Limit $10K/year

RP Permission to Close

Case ClosureOrder

60-day Public Comment

<6 months

<60-days<365-days Closure Letter

Submit Final RR

Abandon wells

Dispose waste

FIVE-YEAR REVIEW

Requested consultation

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4. RES. 2012-0062 FUND LOW-THREAT POLICY CASE REVIEWS

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STATE WATER BOARD RES. 2012-0062

• State Board prefers agency close cases that meet Policy

• GT Online Checklist not needed for cases that meet Policy

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STATE WATER BOARD RES. 2012-0062• Fund staff review cases where

5-Year Review has recommended agency pursue closure

• If agency will NOT close case soon, Fund staff reviews case against Low-Threat Policy criteria and, if necessary Res. 92-49

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CASES MEETING CLOSURE CRITERIA

Fund Manager UST Case Closure RSR includes BOTH

• Determination that freezes directives AND

• Recommendation that limits reimbursement to $10K

• Public notice 60 days

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CASES MEETING CLOSURE CRITERIA

Executive Director Order•Up to 6 mos for waste removal & well destruction

•Up to 30 days for notification from agency that closure activities completed

•Up to 30 days for State Board closure letter

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CASES NOT MEETING CLOSURE CRITERIA

• Issue a revised 5-Year Review recommendation (“RSR-Concur” or “RSR-Further Work”)

• Make GT Online Checklist available for agency to document impediments to closure and Path to Closure

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5. LOP CONTRACTS

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LOP FY 13/14 Contracts• Transition administration to Cleanup

Fund• Res. 2013-0001 adopted “Underground

Storage Tank Local Oversight Program Procedures and Criteria for Certification” on Jan 8

• Requires LOP certification applicants submit proposed budget for FY 13/14 by Feb 7 to Cleanup Fund Manager

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LOP FY 13/14 Contracts• Expect LOP contract language to tie

back to :–LOP certification criteria–Activities required by Res. 2012-0062 –Performance measures developed

pursuant to Res. 2012-0062• As caseloads change from year to year,

contract dollars may change.

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6. LOOKING FORWARD

UST Cleanup Fund

Where do we go from here?

xxx xxx

Low-Threat Policy

UST CLEANUP FUND

FUND SUNSET 1/1/2016

0.7 1.2 1.4 2.00 .6

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3***

13/1

4***

14/1

5***

15/1

6***

$0

$50

$100

$150

$200

$250

$300

$350

$20

$83.4 $88.1 $92.2

$104.6

$130.0

$163.2

$194.0 $198.4

$199.2

$197.3 $204.0

$217.2

$256.7

$178.7

$240.5

$254.6 $247.1

$230.6

$282.1

$323.5 $305.6

$264.3

$224.7

$185.1

$92.5

Storage Fee Revenues$M ***Projected

Total Projected Revenues ~$5 Billion

0.9 .1.3

Storage Fee (cents per gallon stored)

Fiscal Year

Mill

ion

Do

llars

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FUND SUNSET/PROGRAM WIND-DOWN

• Current Fund sunset date now <3 years away• Focus on moving cases towards closure OR What cases are left whenever the Fund sunsets? • Need for deadlines for an orderly wind-down:

—Switch to other financial assurances mechanisms for operating USTs

—Deadline for new claim eligibility and resolution of eligibility disputes

—Deadline for submittal and processing of requests for reimbursement

CLEANUP FUND PROGRAMS THAT HELP WITH WIND-DOWN

• Schools Account = higher priority for reimbursement

• Commingled Plume Account = pools maximum available

• Orphan Sites (OSCA) = Brownfields

• Emergency, Abandoned, Recalcitrant (EAR) = serious problem sites

EAR Account = 33

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7. FRAUD

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FRAUD AGAINST UST CLEANUP FUND

• Office of Enforcement’s investigations and/or arrests for alleged fraud against Fund: E2C, Hayden Environmental, Ami Adini & Assoc., PW Environmental

• Fraud against UST Cleanup Fund may be widespread & Fraud Unit continues numerous investigations

• UST Cleanup Fund administration making adjustments with goal of fraud prevention

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REPORT FRAUD

http://www.waterboards.ca.gov/water_issues/programs/ustcf/fraud.shtml

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REFERENCED WEBSITESUST Cleanup Fund including Quarterly

Report: http

://www.waterboards.ca.gov/water_issues/programs/ustcf/

UST Program:

http://www.waterboards.ca.gov/water_issues/programs/ust/

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AB 1715:Sections shown in logic/

process order

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AB 1715Five Year Review: Existing Provision• 25299.39.2.(a) (1) The manager responsible

for the fund shall notify tank owners or operators who have an active letter of commitment that has been in an active status for five years or more and shall review the case history of their tank case on an annual basis unless otherwise notified by the tank owner or operator within 30 days of the notification.

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AB 1715Fund Manager Determination – Appropriate for Closure: New Provision• 25299.39.2.(a) (1)(A) If the manager

determines that closure of the tank case is appropriate based upon that review, the manager shall provide a review summary report to the applicable regional board and local agency summarizing the reasons for this determination and

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AB 1715

Fund Manager Determination – Opportunity for Agency Comment: New• 25299.39.2.(a) (1)(A) … shall provide the

applicable regional board and local agency with an opportunity for comment on the review summary report.

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AB 1715Fund Manager Determination - Freeze on Existing and New Directives: New• 25299.39.2(a)(4) After the manager provides a

review summary report to the applicable regional board and local agency in accordance with subparagraph (A) of paragraph (1), the regional board or local agency shall not issue a corrective action directive or enforce an existing corrective action directive for the tank case until the board issues a decision on the closure of the tank case, unless one of the following applies:

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AB 1715Fund Manager Determination - Exceptions to Freeze on Directives: New• 25299.39.2(a)(4)(A) The regional board or local agency

demonstrates to the satisfaction of the manager that there is an imminent threat to human health, safety, or the environment.(B) The regional board or local agency demonstrates to the satisfaction of the manager that other site-specific needs warrant additional directives during the period that the board is considering case closure.(C) After considering responses to the review summary report and other relevant information, the manager determines that case closure is not appropriate.(D) The regional board or local agency closes the tank case but the directives are necessary to carry out case-closure activities.

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AB 1715Fund Manager Recommendation – Case Closure to Board: Old• 25299.39.2(a) (1) (B) If the manager determines that closure

of the tank case is appropriate, the manager, with approval of the tank owner or operator, may make a recommendation to the board for closure.(C) The board may close any tank case or require the closure of any tank case where an unauthorized release has occurred if the board determines that corrective action at the site is in compliance with all of the requirements of subdivisions (a) and (b) of Section 25296.10 and the corrective action regulations adopted pursuant to Section 25299.3.

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AB 1715Fund Manager Recommendation - Opportunity for Public Comment: Revised• 25299.39.2(a)(1)(D) Before closing or requiring

closure of an underground storage tank case, the board shall provide an opportunity for reviewing and providing responses to the manager's recommendation to the applicable regional board and local agency, and to the water replenishment district, municipal water district, county water district, or special act district with groundwater management authority if the underground storage tank case is located in the jurisdiction of that district.

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AB 1715Fund Manager Recommendation - Limit on Reimbursement: Revised• 25299.39.2(a)(2) Except as provided in

paragraph (3), if the manager recommends closing a tank case pursuant to paragraph (1), the board shall limit reimbursement of subsequently incurred corrective action costs, including costs for groundwater monitoring, to ten thousand dollars ($10,000) per year.

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AB 1715Fund Manager Recommendation – Exceptions to Limit: Old• 25299.39.2(a)(3) The board may allow

reimbursement of corrective action costs in excess of the ten thousand dollar ($10,000) limit specified in paragraph (2) if the board determines that corrective action costs related to the closure will exceed this amount, or that additional corrective action is necessary to meet the requirements specified in subdivisions (a) and (b) of Section 25296.10.